Yes, PZN was formed as a captive REIT for CCA. However, upon the merger completion, CCA became PZN. So, the captive becomes the captor. OPCO is the captive of PZN. Some would argue that the market value of the stock has suffered because the market perceives PZN to be the captive of the privately held OPCO. Such a perception is wrong, IMO. OPCO is totally dependent on PZN. PZN can make OPCO disappear at any time, simply by merging with it.
Old CCA (and new PZN) always pursued a bricks and mortar strategy (WHC is still trying to catch up). As you of all people should be most aware (by your postings), the management side is frought with problems. What is unchanging is the acute shortage of beds for prisoners. If OPCO loses a mgmt contract in a PZN owned facility, where do you think the prisoners will go? Chances are they will stay in the PZN faility and be managed by either another private entity or by the government. I suspect the government would not balk at a lease value based on $75,000 per bed.
Remember, CCA got to where it was for a reason: there was a shortage of prison beds. There still is. That doesn't change wheteher or not you like CCA or PZN or REITs or Doc or whatever. Doc is telling us that as the "market" for beds evolves, the capital intensive strategy is the way to go. I believe he can read this better than his competitors, and that he can continue providing a product/service that appeals to governments.
Saying PZN is dependent on OPCO to make lease payments is too superficial. PZN is dependent on governments needing beds. OPCO is a conduit, and will be less important as such in the future as PZN leases directly to the government. OPCO's just there to meet REIT requirements.