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Corrections Corporation of America Message Board

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  • crosswindlandings crosswindlandings May 12, 1999 3:45 PM Flag

    The last time I posted .......

    As I understand it, substantially all of a REIT's
    income-producint activities must be passive in nature (i.e.
    leasing out real estate) in order to qualify as a REIT.
    The 10K for PZN states that the management contracts
    (to manage the prisons) have been transferred to
    several new entities, of which PZN retains some ownership
    interest.

    Does anyone know whether this is an issue for
    maintaining PZN's REIT status? Does substantially all of
    PZN's cash flow result purely from leasing out its
    prisons? The reason I ask is that I like owning PZN for
    its prison constructing and leasing business but
    don't want to buy into the prison management business
    (too risky, volatile, legal problems, breakouts, etc).


    Any responses appreciated. Many thanks.

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    • PZN 1998 annual report is available at;
      http://www.prars.com

      Once any company is selected, click on the
      industry or
      state of that company. All companies within
      the same industry or
      state will appear. Additional
      annual report selections may be
      made at that time.

    • We have deabted the REIT status issue a lot of
      this message board as past post will explain. IN a
      nutshell as I understand.

      *As the letter of the law
      goes the structure fits in the rules of income
      test(only 75% of the income to a REIT need be pure lease),
      asset tests, etc. to quailfy as a REIT.

      *PZN
      s/H's only owns less then 10% of CCA private opco. Thus
      not legal control.

      *This structure as many of
      present day REIT's, with their private service Corps.,
      could be under the IRS fire anytime.

 
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