• The United States has the largest prison population in the world. The swelling prison population, combined with limited state and federal resources, facilitated the rise of privately-owned prison facilities.
• Undoubtedly the most controversial real estate sector, Prison REITs have been under assault from the hard-line “woke” culture that sees private prisons as conspirators in a powerful “prison industrial complex”.
• Prison REITs haven’t been very effective conspirators. Prison ownership remains a challenging, low-margin business with poor historical investment returns. Prison REITs trade at deep discounts with dividend yields above 10%.
• While the hard evidence debunks many of the claims made by the loudest critics, Prison REITs face a potential existential crisis if the political winds shift unfavorably in the 2020s.
• Despite the “cancel culture,” we see opportunity for speculative investors willing to assume the political risk. Modernization of outdated public facilities would be a win-win for investors and inmates alike.

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