CoreCivic Lease Agreements and ESG Strategy
Key Credit Considerations
Credit Highlights
Strength of
1
Counterparty and
Lease
Essentiality of
2
Facilities
•
•
•
•
•
3
Cash flow Certainty
•
Strength of Sponsor
& Project Parties
5
High Quality Asset
Advancement of
•
6
ESG Objectives
•
•
•
7
Construction Risk
•
Source: State of Alabama, Executive Budget 2020
ADOC's obligations are expected to be fully funded through annual appropriations, budgeted for and provided by the State of Alabama
The Project's Maximum Annual Lease Payment represents a modest portion of the State of Alabama's $2.3 billion approved appropriations from the
State General Fund
For FY 2020, ADOC received a budgetary increase of approximately $53 million to $540 million in General Fund appropriations, more than 10%
over FY 2019 budgeted General Fund Appropriations
Lease terms provide significant protections for lenders including protection from payment performance deductions and repayment of 100% of all
Lessor Outstanding Debt obligations, including make-whole, in all situations including Lessor Default
The State's three new facilities will replace up to 11 existing ADOC facilities while ADOC is expected to refurbish two to four other facilities
CoreCivic's facilities will comprise 40-50% of the State's rated capacity after the new facilities are constructed and existing facilities are refurbished
Lease payments are made by ADOC based on availability of project and lessor performance
Deductions for lessor performance failures will be capped in order to protect debt service
CoreCivic believes itself to be the largest private prison owner in the U.S., owning or managing approximately 73 correctional, detention, and re-entry
facilities
CoreCivic has enlisted industry leading partners Caddell, DLR Group, and R&N Systems Design, all of whom have extensive experience building
correctional facilities
The newly constructed correctional facilities will employ state of the art technology resulting in a safe, highly efficient, and cost-effective correctional
facility
The Project will materially improve the quality of life for inmates with improved mental health, physical health, education, rehabilitation programs, and
religious services as well as improved efficiency, resiliency, and sustainability of the prison facilities
Straight forward construction on "clean" sites
Caddell is a highly experienced contractor with prior experience constructing correctional facilities as well as working with CoreCivic
ADOC's prepayment amount following a lease default will cover 100% of all lessor secured debt obligations (including make whole) in the event of a
failure to achieve Substantial Completion by the Long Stop Date
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