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Corrections Corporation of America Message Board

  • gregg54 gregg54 May 18, 1999 7:32 PM Flag

    sounds like they are stealing the share

    holders $$$$$$$$$$

    Prison Realty (NYSE:PZN
    - news) fell another $1.56 to $13.38 per share.
    Prison Realty, is structured as a REIT and is the
    nation's largest owner of prisons. Last Friday it reported
    it is raising, by $50 million, the amount that it
    will pay to Correction Corp., its closely-held
    affiliate, to manage and rent prisons. Prison Realty will
    now pay $4,000 per bed, a far cry from the $840 a bed
    number previously announced. Jerry Doctrow, an analyst
    with Legg Mason Wood Walker, says, 'That is a big
    transfer of cash from public shareholders to a private
    company.' Shares have fallen from $22, about 36% in the
    past three trading days.

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    • In the conference call Doc explained that the
      additional $3,140 was being paid to adjust for the time from
      which the Certificate of Occupancy was issued on the
      new facility to the point of full occupancy. The
      reason this was done was that the Lease payments begin
      based on full occupancy when the certificates of
      occupancy has been obtained. He said it was missed when
      they did the analysis and set the original rate of
      $840. He also said this was a very common practice in
      the real estate industry. I would like to hear some
      comments on that. I do not believe the money is paid or
      due to the operating company until the new facilties
      go online and only one in San Diego with 1,000 beds
      was completed in 1st qtr. I dont Arthur Anderson
      would allow the company to spread the payment over 12
      years if it did not meet Generally Accepted Accounting
      Principals. What I still do not understand an which was not
      adequately explained was the $840 fee paid on the
      beds that were not subject to the Tenant Allowance in
      the 1st qtr. These facilities would all be running at
      or near full occupancy so there would be no short
      fall to cover with the lease paid at 100% occupancy?
      Does anyone understand this? That number is about $18

      • 1 Reply to socksey
      • and don't forget the new 4 1/2% "success fee".
        Doc blew the conference call. He tried pooh-poohing
        the whole thing and in the process created more
        confusion. Doesn't make sense, because the reason for the
        call was to head off misunderstanding. Not only did he
        leave everyone confused, but there seems to be
        widespread doubt about the fundamental business now,
        although I'm sure it is overblown.

        If you had
        followed this thread (and CCA before it) you would know
        that I have held Doc in the highest esteem through
        thick and thin. He let us down on Friday. You can't
        really blame the analysts and the market this time
        around. Now he's stuck on the road trying to get the do
        or die debt deal done, and can't address the market
        noise. No wonder we're in a free fall.

    • Lehman Brothers is taking Doc and CFO around to
      institutions that may buy the debentures, so he can tell the
      story. The Lehman folks will say the things that Doc
      can't in his story because of SEC rules. As I
      understand it, Doc explains the past, Lehman explains the

    • Over a year ago, and before the merger
      announcement, I wrote on this board, as CCA's share price was
      slowly declining, that maybe it was time for an
      ownership shift - to larger institutions. CCA was becoming
      big enough that it needed to look more like a
      "blue-chip" and attract the big pension funds etc., rather
      than the growth & momentum funds.

      Perhaps what
      is going on is all part of that shift, with some
      bumps unitentionally provided by Doc.

      When the
      Legg Masons and J. C. Bradfords fade away, will they
      be replaced by the Lehman Brothers, Goldmans and
      Merrills? Perhaps.
      Won't happen overnight, but this is a
      large REIT and will ultimately get some big name

      Right now, they have one big firm covering them -
      PaineWebber. PW's analyst (Jonathan Litt) has had it in for
      this deal since day one, and he is, for some reason,
      influential. Based on what I've seen of his track record (e.g.
      PAH), he isn't worth listening to.

      Everybody who
      wants out, get out now; get it over with. We'll take
      our chances without you. For those who stay, keep
      reading Flipper's posts.

    • Is the past all that bad to ward off any funding. I don't think so but what do I know. When I die my tombstone will read "a man who made and lost more money than anyone he new"

    • Good or bad PZN is in the spotlight absoultly amasing how many calls I received on potential investors today and I'm not even in the field.

    • I was told yesterday that in Merrill Lynch's REIT
      PZN was their largest holding @ 5% of total. He did
      not know at this point whether they were buyers or
      sellers during this fiasco but you're right, some large
      institutions are still buying. I look for a bounce over the
      next couple of days. Dr. p & co. will have to cover
      their shorts which should drive the stock higher.

13.82+0.18(+1.30%)Sep 29 4:02 PMEDT