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Prison REITs on counteroffensive after activist campaigns

CoreCivic Inc.'s and GEO Group Inc.'s valuations in the public real estate investment trust market so far have survived a potentially damaging week in the court of public opinion.

On Aug. 6, civilians protesting perceived injustices in the correctional REIT's business practices descended on CoreCivic's headquarters in Nashville, Tenn., and attempted to block entrances to the building, with some reportedly locking themselves to cement-filled barrels. About 20 were arrested.

The next day, another group of activists gathered at GEO Group's temporary headquarters in Boca Raton, Fla., to protest the company's dealings with U.S. Immigration and Customs Enforcement, or ICE, over the latter's controversial family detention practices. The GEO Group demonstration was part of a larger coordinated move, led by activist group Dream Defenders and documented in social media with the hashtag #ShutDownGEO, to dispute the legitimacy of the company's business.

In a rare public display, both GEO Group and CoreCivic this week went on a counteroffensive to discredit what they said were egregious mischaracterizations of their business. GEO Group went so far as to send a cease-and-desist letter to its antagonist.

"Their allegations are outrageous and based on malicious lies about our company and our role as a long-standing service provider to the government," Pablo Paez, a GEO Group spokesman, said of Dream Defenders in an email. He called the group's campaign against the company "nothing but a deliberate attempt to advance a controversial public policy agenda aimed at abolishing ICE."

Damon Hininger, CoreCivic's president and CEO, took a similar tack on the company's Aug. 9 earnings call. "While we know this is a highly charged emotional issue for many people, much of the information about our company being shared by special interest groups is outright wrong and politically motivated, resulting in many reaching misguided conclusions about what we do," the executive said.

Both companies in turn denied the claim that properties they own or manage are used to house unaccompanied minors, or that they unduly influence legislative decision-making around incarceration standards. Both CoreCivic and GEO Group have upped their campaign contributions in recent years, cresting in the 2012 and 2016 election years, respectively, according to the nonpartisan website OpenSecrets.org.

Geo Group and CoreCivic's share prices remained remarkably steady through the week's turmoil, and what captivated some members of the public does not seem to be of interest to analysts or investors. There were, notably, no questions about recent protests during the Q&A segments of the companies' second-quarter earnings calls.

CoreCivic shares rose 0.75% between market close on Aug. 3 and Aug. 8, while GEO Group shares increased 2.07%, and the MSCI US REIT (RMZ) index fell 0.67%.