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Corrections Corporation of America Message Board

  • GenJackripper GenJackripper May 10, 1999 9:44 PM Flag

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

    an NBR "heads up," I wound up with egg on my face
    (NBR failed to deliver as promo'd).

    So here I
    go, again.

    This evening's broadcast (on your
    local PBS TV station) of The Nightly Business Report,
    promo'd a segment scheduled to be on tomorrow's (Tuesday,
    5/11/99) broadcast that would appear to be bullish about
    REITs. They've titled it, The REIT Stuff.

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    • If your info. is accurate this is a temporary fee
      for startup..
      Start up cost are higher than normal
      operating cost, but you are
      inferring collusion to serve
      special interest.....This can be a
      legal matter
      against the clips....

    • A paperclip reit, unlike a pair shared reit
      (which is a real estate and operating company all under
      one corporate roof) is two separate companies, which
      have the same management and same directors. I'll
      preface this by saying I am not real knowledgeable about
      PZN, but from what I understand PZN is a paperclip
      reit. The reason the stock has been falling is that the
      reit has agreed to pay a fee to the operating company
      to subsidize losses that the operating company
      incurs on the start up of a new prison facility. This
      has the aura of conflict of interest. It is like the
      management taking the money out of the reit shareholder's
      pockets to supplement another company which management
      has an interest in. Prison had been paying a fee
      which was about $800 a bed, and they just agreed to up
      it to about $4,000 a bed. This will cut two
      percentage points off the ROI. This was all announced at the
      same time a bond offering is in the process. Investors
      are worried it might derail the bond offering.
      Analysts feel that management is unsympathetic to
      shareholder's interest.

    • For those who missed last Tuesday's (5/11/99)
      airing, hopefully this url will work. At least it did in
      a pre-posting

      When the Table of Contents for the 5/11/99 broadcast
      appears, click on The Return Of The REIT.

    • Thanks for the information: very helpful.

    • on paperclipped REITs. Isn't this discussion more
      germane to PZN than discussion of paired shares? My
      understanding of the paperclipped REIT issue has to do with
      delivering rents plus operating income to the REIT in the
      form of greater than the utility of mere rents. Abuses
      occur when non-related income (i.e. gambling income
      with hotel rents) is passed to the REITs. PZN OPCO
      seems to be attaching services implicit to the
      operations of a facility to the occupancy utility; not
      dissimilar to some services imbedded in an office rent
      (cleaning, security etc.) What's your take?

    • My question wasn't meant to be a critisism of
      your statement. I understand that HOT is the world
      biggest lodging co. and has big Gaming interests. My
      question, more specifically, is why did they sell off
      Ceasar's while continuing to expand their Hotel/Resort
      properties if gaming is that important to them? It appears
      they are trying to move away from gaming and
      concentrate more on Hotels and Resorts. Is that not really
      indicative of their direction?

    • of PZN's structure?

    • You should do your research before you


      777 Westchester Avenue
      Plains, NY 10604
      (914) 640-8100

      (602) 852-0984

      Casinos & Gaming

      Barry S, Sternlicht, Chmn./CEO

      Ronald C. Brown, Exec. VP/CFO
      Thomas C. Janson,

      Exec. VP/Counsel/Secy.


      HOT is a hotel operator and gaming company operating
      both directly and through its wholly owned
      subsidiaries. For the fiscal
      year ended 12/31/98, revenues
      rose 58% to $4.71 billion. Net income available to
      Common from continuing operations before
      extra item.
      and accounting change increased to $125 million vs. a
      loss of $270 million. Revenues benefited from the
      number of hotels due to the reverse acquisition of ITT.
      Net income reflects higher gross profit margins.

    • "(...HOT, was one which just converted to a C corp rather than get out of the casino business.)"

      If that is why HOT converted to a C corp, why did they just sell their casino assets?

    • The only way to be a reit and an OPCO, is to be a
      type of reit called a paired-shared reit(I think there
      are only 4 or 5 of this type. When the current reit
      laws were enacted years ago, the reits that were
      opco's were grandfathered, any subsequent company
      incorporating as a reit could not be operators. Legislation
      last year changed the paired shared reits status. When
      the hotel reits, that were paired-shared reits
      started buying casino's all over the country, the
      government thought that this tax free status was being too
      generous for these very profitable companies,(Starwood
      Lodging, HOT ,was one which just converted to a C corp
      rather than get out of the casino business.)The
      Legislation last year said that from now on reits could not
      buy or expand their operating companies but existing
      companies were grandfathered again. So there is a few out
      there. There is another type of reit called a paperclip
      reit. But thats for another day.

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