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CoreCivic Change in Structure and Capital Strategy Opens New Opportunities

CoreCivic | 8/6/20 11:36 AM

Yesterday afternoon, I announced that CoreCivic will become a taxable C-Corp on Jan. 1, 2021, a decision that concluded the study of our status as a Real Estate Investment Trust (REIT) that we announced in mid-June. While our decision to become a REIT in 2013 was right at the time, I believe this move puts our company in a better position to improve our already strong financial position over time, and ultimately move our share price back to levels that reflect our strong fundamental business.

This decision will allow us to build on our unprecedented leadership of supporting life-changing reentry programs, policies, and services that address America's recidivism crisis, and help those in our care succeed with their next step in life. The changes made by the Board of Directors and management team will be hugely important for CoreCivic and our shared future.

Under our new C-Corp structure, we expect to gain flexibility in the ways we invest the very substantial free cash flow that our company generates through investment-grade contracts with our government partners.

To put it simply, we believe the money we pay in interest on borrowed funds as a REIT can be better used to serve investors in all of our securities, and the long-term interests of our company, our partners, taxpayers, and those in our care.

We expect to reduce debt, and in subsequent steps, return capital to investors. As an employee with lifelong interest and background in front-line operations, I’m also excited that we will be able to make investments in mission-critical growth opportunities. Possibilities include new facility development, updating and modernizing older facilities, existing facility utilization, and providing community services and facilities that promote successful reentry for those in our care.

Yesterday's announcement also included news that our company will explore the possibility of selling our non-core real estate outside of the criminal justice system portfolio that we lease to federal and state governments. We will be able to use the proceeds of any sale to further reduce debt, which could accelerate the benefits of our strategy. We can also invest proceeds in higher-returning development opportunities that help us build value. If we proceed, those sales will be completed around late 2020 to early 2021.

As we move forward, I remain confident in our company and our greatest asset – our team. I am always humbled to bear witness to the important, life-changing work of our people. Each day they manage their jobs, along with the added challenges of COVID-19, with competence, energy, and the utmost professionalism. This inherent strength is what propels us forward and makes us successful.

CoreCivic’s greatest advantage is our embedded and longstanding culture of service excellence. I am proud to be part of it today, and in the future as we work to make an even bigger difference in the lives of the people and communities we serve.


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Topics: News