CoreCivic wants to get out of the real estate business. Or at least it looks that way.
Last week, the country’s largest privatization prison corporation announced that it had suspended dividends to investors after its stock value dropped nearly 51 percent in the past year. It’s also considering revoking its status as a Real Estate Investment Trust (REIT), a corporate structure that allows it to dodge millions in federal taxes.
Why? Because CoreCivic—as well as GEO Group, the second largest privatization corporation—is facing a number of “financial headwinds,” as investors call them.
In April, Fitch downgraded CoreCivic’s credit rating “due to the negative capital access trends for private prison operators.” In other words, because a number of big banks have begun to sever ties with the industry.
We’re proud that our November 2016 report helped spur a movement that eventually forced all of CoreCivic’s and GEO Group’s banking partners to say “no more” to the companies. That made them work harder to find financing to build new prisons and immigrant detention centers. Late last year, even after CoreCivic struck a $250 million deal with a Japanese financial firm, investors remained worried about the future.
Then there’s COVID-19. As a real estate investor wrote, “The virus spreading inside its facilities could be a risk for [CoreCivic] and expose it to lawsuits if no proper precaution is taken.”
Finally—and likely most significantly—the #BlackLivesMatter movement is putting pressure on all levels of government to root out systemic racism. Black people are jailed at more than four times the rate of white people. When it comes to private prisons, companies like CoreCivic imprison people of color even more disproportionately than publicly operated prisons. This disparity has carried over to so-called alternatives to incarceration. In Cook County, Illinois, for instance, black people make up 24 percent of the population yet 67 percent of those on ankle monitors, which are provided by a private contractor.
Will all of this put a dent in the private prison industry? Will it gum up Alabama’s plans to build three new private prisons behind a shroud of secrecy?
Let’s hope so. Private prison corporations are a stain on an already unjust, bloated, and shameful criminal justice system. They spend millions of dollars every year influencing public officials on criminal justice issues. And the less money CoreCivic and GEO Group pocket, the more money we can spend on things like mental health care, well-funded schools, and affordable housing, things that actually keep our communities healthy and safe.
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