- Farewell - or perhaps good riddance - to the Prison REIT sector. GEO Group announced last week that it's joining CoreCivic in abandoning the REIT structure, concluding a tumultuous 8-year run as REITs.
- Prison REITs were the worst-performing property sector since their REIT conversions in 2013 and consistently ranked at the bottom across performance metrics - particularly after their once-lucrative dividends were eliminated.
- Political hostilities aside, demand for private facilities - which have always been a "supplier of last resort" - has declined materially as incarceration rates in the U.S. revert towards the developed economy-average.
- The transparency of public markets and a relatively clean operating record did little to appease the uncompromising critics. Having been effectively "canceled" by public capital markets, privatization appears increasingly likely.
- The so-called "prison industrial complex" sure isn't as lucrative as critics claim. Prison management is a low-margin, labor-intensive business and a potential shift in the political winds from surging crime won't suddenly unlock underlying value.
For further details see:
Prison REITs: The Verdict Is In