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Corrections Corporation of America Message Board

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    • I've crunched a few numbers and I think that
      Retired Paperman hit the nail right on the head when he
      said that all eyes will now turn to occupancy with the
      SI issue temporarily moved to the back burner. Why
      it took until now for these guys to realize that
      they could postpone their dividends until next year we
      will probably never know, but isn't Bob supposed to be
      an REIT expert?

      As I calculate it, if you
      combine PZN and OPCO, the actual free cash available to
      pay dividends was about 25 cents a share. The picture
      is not as bleak as that may sound, however, since
      growth is a huge cash user (which is why I agree this
      entity would work much better as a C Corp.). If the
      company were to simply stop adding beds and increase the
      margin per bed, I calculate they could support about a
      33 cent dividend, even if occupancy stayed at
      current levels. The current system filled up and at
      mature profit levels could support a dividend close to
      40 cents.

      And if Doc's dream of all the new
      beds being brought on in the fourth quarter were
      filled and brought up to mature margins, the company
      could pay a 55 cent dividend without financing, by my

      Bottom line, this is why I stay in this stock. Either
      they will be able to continue getting financing to
      expand and pay dividends, in which case FFO will
      continue to rise as long as the fundamentals of the
      industry hold up, or they will not be able to get
      financing in which case they will have to stop building,
      fill the beds and pay a dividend consistent with true
      operating cash flow. After the fourth quarter, I think this
      non-growth, "mature" dividend would be north of 50 cents per
      quarter or $2.00 per year, not a bad cash yield.

      • 2 Replies to Quadrophile
      • As to Bob being a REIT expert and them not coming
        up with the "pay the dividend next year" strategy -
        necessity is the mother of invention. You don't look at
        something until your cash flow dictates that you do so. As
        much venom as has been thrown at these guys (and a lot
        of it deserved) you better start cheering for them.
        I think they are going to deliver on a lot of the
        occupancy issues outstanding, but you better hope and pray
        they negotiate a deal with the strategic investor that
        doesn't dilute us all straight to you know where. Their
        ability to convince an si to give them financing at a
        level that doesn't cripple the company's current
        shareholders is very, very important to all of us too stupid,
        stubborn, or optimistic to have sold this wonderful stock.

      • His no growth scenario, I believe, is similar to
        yours: "I think this non-growth, "mature" dividend would
        be north of 50 cents per quarter or $2.00 per year,
        not a bad cash yield."

        At that point, how
        would debt (prinicpal) be paid back? (I assume your
        cash flow available for dividends is after adding back
        depreciation). Even my bank gets tired of interest only payments
        after a while (especially lately).

    • If this method is legal, and I don't claim any
      knowledge beyond what I have read on this board, it has
      certain ramifications.

      If the REIT-required
      dividend for this year is deferred until next year, and
      next year's is deferred until the year thereafter, in
      effect PZN's shareholders will have made PZN a loan at
      no interest in the amount of a year's worth of
      dividends, perhaps in perpetuity. This method, regardless of
      its effects on shareholders, certainly would seem to
      relieve the need for PZN to raise money, or obtain a SI.
      OR, if the need for the SI is only a matter of
      financing growth, then the terms of that relationship may
      be much better than we were fearing.

      But one
      is given to wonder that, with all the financing
      problems various REITs are having, if this method IS legal
      why the hell haven't others heard about it and
      adopted it as standard practice?

      Next, if the
      dividends paid out this year were all special dividends,
      the tax status of those dividends for investors is
      suddenly changed. ALL of the dividends become taxable, as
      the special was to be! Another fine present for
      long-suffering PZN shareholders.

      One must also wonder
      about the change in status of the dividends being
      declared. The board has declared separate 'regular' and
      'special' dividends all year. They even post separately in
      my brokerage account. To change that status after
      the fact would seem to provide ample grist to the
      lawyers, should any be listening (should any understand
      the situation).

      Last year I got my final
      broker's statement in April, because REITs were still
      determining the tax status of dividends being paid. I wonder
      if IRS will understand PZN shareholders being unable
      to calculate their tax returns for a couple of

    • there's usually some symmetry to tax

      Even if the regular 1999 dividend is deferred as far
      as cash payment, I suspect it would be taxable to
      shareholders in 1999 in order for PZN to avoid paying tax in
      1999. Do you know?

    • I am a lurker and I read the posts based on the
      poster, not the subject.
      I generally choose the
      posters who have posts with substance and
      Quad, NewMK, NHY, RP etc.
      A lot of same guys on the
      CEI board.

    • you must consider NOT doing.

      One is that
      you need to stop expressing certain "things" in a way
      that causes the General to go to his wardrobe closet
      and check the identification labels he's had sewn
      into his clothing to tell him who he is and where he's
      to be returned to, in case he's found aimlessly
      wandering the deserted streets of some town in the wee
      hours of the morning.

      Some of your recent
      postings (for which you've been criticized) have
      frightened the General and caused him to verify that his
      labels actually read, "GenJackripper," and not,

      The other thing that's worth keeping in mind is that
      it is NOT necessary for someone, such as yourself,
      who has made significant contributions to the
      discourse on this forum to have to respond to the likes of
      those who haven't.

      Know that the General doesn't
      make it a practice to bestow board awards (with oak
      leaf clusters, no less) to posters of little "worth"
      or merit, and in his opinion, he's appreciative of
      you being here as well as the horse you rode in on.
      In fact, he can probably find a ribbon of merit for
      your horse (sans oak leaf clusters

      There are those who post here and those who merely
      lurk. For lurkers who have followed this board for
      awhile, they know who the "players" are. They don't need
      a program to tell them that. They, together with
      those who've made contributions here via their postings
      constitute "the jury.'

      The jury may be largely
      "silent," but it's not stupid.

    • Got it. Actually I think I understood it earlier
      today, then tried to go from memory this evening and got
      things twisted around. Thanks for re-posting.

      prospect of going through this another year is not sitting
      well with me. After today's non-conference "conference
      call", I can't believe any mainstream analyst can give
      this thing a rating above 3. Hopefully, ML will play
      ball and initiate coverage (I don't think they follow
      us) with a Buy after they take us to the cleaners.

    • Any dividend declared by a REIT in Oct,Nov or Dec
      and payable to the shareholders of record on a
      specific date that month is considered received by the
      shareholder on Dec 31if the REIT actually pays it the next
      January. Code Sec 857(b)(8)(A)

    • In the 10Q it states, "New CCA has utilized cash
      from borrowings under its line of credit, equity
      issuances and payments from the Company for tenant
      incentive arrangements and services provided to the Company
      to offset its operating losses. New CCA expects to
      continue to use these sources of cash to offset its
      anticipated losses from operations; however, AMOUNTS

      Either they find someone
      to put more money in new cca or they will end up
      reducing their payments to pzn. That means a big drop in
      div. I guess that is one reason we are now trading at

    • Both in the market buying.

    • I'd say intervention from your guardian angel. Stock is now at 9.

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