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CoreCivic suspends dividend, assessing alternative corporate structures

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CoreCivic suspends dividend, assessing alternative corporate structures

CoreCivic Inc. suspended its quarterly dividend while its board considers corporate structure and capital allocation alternatives.

The prison real estate investment trust tapped Moelis & Co. to act as financial adviser during the process. Bass Berry & Sims PLC and Latham & Watkins LLP will serve as legal advisers.

The process will also involve looking at potential opportunities to recycle capital invested in certain leased assets. The evaluation is expected to be finalized in the third quarter.

"While the unprecedented challenges posed by the COVID-19 pandemic continue to be a priority to ensure the safety of our staff and individuals in our care, we are also focused on creating long-term shareholder value and delivering on our company’s purpose," Damon Hininger, CoreCivic CEO, said in a release. "We believe alternatives to our current corporate structure and capital allocation strategy may better serve the interests of the Company, our shareholders, our employees, individuals in our care within our facilities, and the communities we care so deeply about."

Hininger also noted the company's securities have traded at "significant" discounts to their historic multiples in recent years and to multiples applied to other real estate asset classes for many years. "We do not believe these trading prices properly reflect our stable cash flow generation or the value of our real estate," he said.

The dividend suspension is not expected to impact the company's status as a real estate investment trust for the 2020 tax year, as it expects to reduce its minimum distribution requirement under provisions in the Coronavirus Aid, Relief, and Economic Security Act, or CARES Act.