Corrections Corp. of America, the largest private prison operator, said Monday it plans to convert into a real estate investment trust by selling itself to affiliate CCA Prison Realty Trust for $3.15 billion in stock.
Nashville-based CCA will own 34 prisons and manage 77 in the U.S., Puerto Rico, Australia and the U.K., up from 13. The company will concentrate on buying government-managed prisons, a more stable but slower growing business than its current focus of buying contracts to manage those jails, said Doctor Crants, chairman of both companies.
Analysts criticized the transaction, which comes just nine months after Corrections Corp. first sold shares of CCA to the public, because the company’s earnings will grow about 25 percent a year, about half what they had expected for Corrections Corp. Shares of Corrections Corp. fell $3.62, to a five-month low of $29.87.
Separately, the companies said they bought the assets of U.S. Corrections Corp., a privately held prison management company based in Louisville, for $255 million.
