CCA PRISON REALTY TRUST, DEF 14A, 1998-03-23

CCA PRISON REALTY TRUST
DEF 14A, 1998-03-23
REAL ESTATE INVESTMENT TRUSTS

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<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )

Filed by the Registrant [X]

Filed by a Party other than the Registrant [ ]

Check the appropriate box:

<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>

CCA PRISON REALTY TRUST
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Organizational Documents)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1) Title of each class of securities to which transaction applies:

(2) Aggregate number of securities to which transaction applies:

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):

(4) Proposed maximum aggregate value of transaction:

(5) Total fee paid:

[ ] Fee paid previously with preliminary materials:

[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

(2) Form, Schedule or Registration Statement No.:

(3) Filing Party:

(4) Date Filed:
<PAGE> 2

[PRISON REALTY TRUST LOGO]

March 19, 1998

Dear Shareholder:

You are cordially invited to attend the first annual meeting of
shareholders of CCA Prison Realty Trust to be held at 10:00 a.m., Central
Daylight Time, on Wednesday, May 6, 1998, at the Loews Vanderbilt Plaza Hotel,
2100 West End Avenue, Nashville, Tennessee.

The formal Notice of the meeting, as well as the proxy statement and form
of proxy are included with this letter. A copy of the Company's 1997 Annual
Report to Shareholders is also enclosed for your review.

In addition to a discussion of the specific matters to be acted upon, which
are described in detail in the accompanying proxy statement, at the meeting
there will be a review of the Company's recently completed 1997 fiscal year, a
report on the progress of the Company and an opportunity for shareholders to ask
management questions of general interest.

Regardless of the number of shares you own, it is important that your views
be represented. Accordingly, whether or not you plan to attend the meeting in
person, I urge you to complete, sign, date and promptly return the enclosed
proxy card in the envelope provided. If you choose to attend the meeting, you
may revoke your proxy and personally cast your votes.

Your Board of Trustees and the Company's management look forward to
greeting those shareholders who are able to attend.

Sincerely,

D. Robert Crants, III
President

<PAGE> 3

CCA PRISON REALTY TRUST
10 Burton Hills Boulevard, Suite 100
Nashville, Tennessee 37215

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD WEDNESDAY, MAY 6, 1998

Notice is hereby given that the first annual meeting of shareholders (the
"Annual Meeting") of CCA Prison Realty Trust (the "Company") will be held at
10:00 a.m., Central Daylight Time, on Wednesday, May 6, 1998, at the Loews
Vanderbilt Plaza Hotel, 2100 West End Avenue, Nashville, Tennessee, for the
following purposes:

(1) To consider and elect four (4) Class I Trustees to serve until the
2001 annual meeting of the Company's shareholders and until their
respective successors are duly elected and qualified;

(2) To consider and approve the Non-Employee Trustees' Compensation Plan
(the "Plan"), whereby Non-Employee Trustees of the Company may elect
to receive the cash compensation they are entitled to for serving as
trustees of the Company in the form of Common Shares of the Company;

(3) To consider and ratify the action of the Board of Trustees in
selecting the firm of Arthur Andersen LLP to be the independent
auditors of the Company for the fiscal year ending December 31, 1998,
and to perform such other services as may be requested; and

(4) To transact such other business as may properly come before the Annual
Meeting and any adjournments or postponements thereof.

Pursuant to the bylaws of the Company, the Board of Trustees of the Company
has fixed the close of business on Monday, March 9, 1998, as the record date for
determination of shareholders entitled to notice of and to vote at the Annual
Meeting and at any adjournments or postponements thereof. Only shareholders of
record of the Company's Common Shares at the close of business on that date will
be entitled to notice of and to vote at the Annual Meeting and at any
adjournments or postponements thereof.

Your attention is directed to the proxy statement accompanying this Notice
of Annual Meeting for more complete information regarding the matters to be
presented and acted upon at the Annual Meeting.

All shareholders are cordially invited to attend the meeting in person.

By Order of the Board of Trustees

Vida H. Carroll, Secretary

March 19, 1998
Nashville, Tennessee

YOUR VOTE IS VERY IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING,
PLEASE COMPLETE, SIGN, AND DATE THE ENCLOSED PROXY CARD AND RETURN IT IN THE
POSTAGE-PREPAID ENVELOPE PROVIDED AS PROMPTLY AS POSSIBLE. IF YOU ATTEND THE
MEETING IN PERSON, YOU MAY WITHDRAW YOUR PROXY AND PERSONALLY CAST YOUR VOTE AT
THE MEETING.

<PAGE> 4

CCA PRISON REALTY TRUST
10 Burton Hills Boulevard, Suite 100
Nashville, Tennessee 37215

--------------------------

PROXY STATEMENT
FOR
THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD WEDNESDAY, MAY 6, 1998

--------------------------

This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Trustees of CCA Prison Realty Trust (the "Company") for
use at the 1998 Annual Meeting of Shareholders of the Company to be held on
Wednesday, May 6, 1998, and at any adjournments or postponements thereof (the
"Annual Meeting"). At the Annual Meeting, shareholders will be asked to vote:
(i) to elect four (4) Class I Trustees; (ii) to approve the CCA Prison Realty
Trust Non-Employee Trustees' Compensation Plan (the "Plan"); (iii) to ratify the
selection of Arthur Andersen LLP as the independent auditors of the Company for
the fiscal year ending December 31, 1998; and (iv) upon any other matters
properly brought before the Annual Meeting and any adjournments or postponements
thereof.

The Board of Trustees has fixed the close of business on Monday, March 9,
1998, as the record date for the determination of shareholders entitled to
notice of and to vote at the Annual Meeting (the "Record Date"). Only
shareholders of record of the Company's common shares, $0.01 par value per share
(the "Common Shares"), at the close of business on the Record Date will be
entitled to notice of and to vote at the Annual Meeting. As of the Record Date,
there were 21,576,000 Common Shares outstanding and entitled to vote at the
Annual Meeting. This Proxy Statement and the accompanying Notice of Annual
Meeting and proxy card are first being sent to shareholders entitled to notice
of and to vote at the Annual Meeting on or about Thursday, March 19, 1998. On
January 30, 1998, the Company completed an offering of 4,300,000 shares of its
8% Series A Cumulative Preferred Shares, $0.01 par value per share (the "Series
A Preferred Shares") (including 300,000 Series A Preferred Shares issued as a
result of the exercise of an over-allotment by the underwriters). Pursuant to
the terms of the Series A Preferred Shares, the holders of such shares do not
possess any voting rights. Holders of the Company's outstanding Common Shares as
of the close of business on the Record Date will be entitled to one vote for
each Common Share held by them.

The presence, in person or by proxy, of the Company's shareholders entitled
to cast a majority of all the votes entitled to be cast at the Annual Meeting is
necessary to constitute a quorum for the transaction of business at the Annual
Meeting. For all proposals, shares that reflect abstentions or "broker nonvotes"
(i.e., shares represented at the meeting that are held by brokers or nominees as
to which instructions have not been received from the beneficial owners or
persons entitled to vote such shares and, with respect to one or more but not
all issues, such brokers or nominees do not have discretionary voting power to
vote such shares) will be counted for purposes of determining whether a quorum
is present for the transaction of business at the meeting. However, pursuant to
Maryland law, neither abstentions nor broker nonvotes will have any impact on
the outcome of the vote for any proposal voted on at the Annual Meeting,
including the election of trustees.

Shareholders of the Company are requested to complete, sign, date and
promptly return the accompanying proxy card in the enclosed, postage-prepaid
envelope. Shares represented by a properly executed proxy received prior to the
vote at the Annual Meeting and not revoked will be voted at the Annual Meeting
as directed on the proxy. If a properly executed proxy is submitted and no
instructions are given,

<PAGE> 5

the proxy will be voted: (i) FOR the election of each of the four nominees for
Class I Trustee of the Company named in this Proxy Statement; (ii) FOR approval
of the Plan; and (iii) FOR ratification of the Board of Trustees' selection of
Arthur Andersen LLP as the Company's independent auditors for the fiscal year
ending December 31, 1998. It is not anticipated that any matters other than
those set forth in the Proxy Statement will be presented at the Annual Meeting.
If other matters are presented, proxies will be voted in accordance with the
discretion of the duly appointed proxy holders.

A shareholder of record as of the Record Date may revoke a properly
submitted proxy at any time before it has been exercised by filing a written
revocation with the Secretary of the Company at the address of the Company set
forth above, by filing a duly executed proxy bearing a later date, or by
appearing in person and voting by ballot at the Annual Meeting. Any shareholder
of record as of the Record Date attending the Annual Meeting may vote in person
whether or not a properly submitted proxy has been previously given, but the
presence (without further action) of a shareholder at the Annual Meeting will
not constitute revocation of a previously given proxy.

The cost of soliciting proxies by the Board of Trustees will be borne by
the Company. Such solicitation will initially be made by mail. The Company has
retained Corporate Communications, Inc. to assist in the solicitation of
proxies. It is estimated that Corporate Communications' fees for such services
will be approximately $5,000, plus all out-of-pocket costs and expenses. In
addition, proxy solicitation may be made personally or by telephone by trustees,
officers and employees of the Company, none of whom will receive additional
compensation for these services. Forms of proxies and proxy materials will also
be distributed through brokers, custodians and other like parties to the
beneficial owners of Common Shares. The Company will reimburse such parties for
the reasonable out-of-pocket expenses incurred in connection with such
distribution.

PROPOSAL 1
ELECTION OF TRUSTEES

The Declaration of Trust of the Company, as amended (the "Declaration of
Trust"), provides that the Board of Trustees shall be divided into three
classes, as nearly equal in number as possible. One class of trustees is elected
at each annual meeting of shareholders, each trustee to hold office for a term
of three years and until his successor is duly elected and qualified. The
initial terms of service for the Class I Trustees expire at the Annual Meeting.
Accordingly, there are four seats on the Board of Trustees to be filled at the
Annual Meeting, and the Board of Trustees has nominated the four current Class I
Trustees for reelection as Class I Trustees, to hold office for a term of three
years until the 2001 Annual Meeting and until their successors are duly elected
and qualified. The terms of service for the Class II and Class III Trustees
expire at the 1999 Annual Meeting and the 2000 Annual Meeting, respectively.

Unless otherwise directed in the proxy, the persons named in the enclosed
proxy, or their substitute, will vote such proxy for the election of the four
nominees listed on the following page as Class I Trustees. If any nominee at the
time of election is unavailable to serve, a contingency not presently
anticipated, it is intended that the persons named in the proxy, or their
substitute, will vote for an alternative nominee who will be designated by the
Board of Trustees. Proxies may be voted only for the nominees named or such
alternates.

Under the Company's Bylaws (the "Bylaws") and Maryland law, the affirmative
vote of a plurality of all the votes cast at the Annual Meeting, assuming a
quorum is present, is sufficient to elect a trustee.

<PAGE> 6

Under Maryland law, the Declaration of Trust and the Bylaws, proxies marked
"withhold authority" will be counted for the purpose of determining the presence
of a quorum but such proxies and failures to vote (including proxies from
brokers or other nominees indicating that such persons do not have discretionary
power to vote shares in the election of trustees) will not be counted as votes
cast in the election of trustees and thus will have no effect on the result of
the vote.

CERTAIN INFORMATION CONCERNING THE BOARD OF TRUSTEES

Set forth below is information with respect to each of the thirteen
trustees of the Company, including the four nominees, all of whom joined the
Company upon its formation in April 1997 (except for Messrs. Cardin, Carell,
Eakin and Feldman, each of whom joined the Company as trustees on June 6, 1997),
and the executive officers of the Company. Independent Trustees are those
trustees who are not employees of the Company and are not otherwise affiliated
with Corrections Corporation of America, currently the sole lessee of the
Company's facilities ("CCA") (Messrs. Bell and Rusty Moore are not executive
officers of the Company but are otherwise affiliated with CCA. See "Certain
Relationships and Related Transactions.") Subject to the rights enumerated in
the Employment Agreements (as hereinafter defined), the executive officers of
the Company serve at the sole discretion of the Board of Trustees. Trustees'
ages are given as of the date of this Proxy Statement.

CLASS I NOMINEES FOR ELECTION AT THE 1998 ANNUAL MEETING
(TERMS TO EXPIRE IN 2001)
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Michael W. Devlin 38 Chief Operating Officer; Trustee
C. Ray Bell 56 Trustee
Monroe J. Carell, Jr. 66 Independent Trustee
Charles W. Thomas, Ph.D. 55 Independent Trustee

CLASS II CONTINUING TRUSTEES
(TERMS TO EXPIRE IN 1999)
NAME AGE POSITION
- ---- --- --------
D. Robert Crants, III 29 President; Trustee
John W. Eakin, Jr. 43 Independent Trustee
Ted Feldman 44 Independent Trustee
Jackson W. Moore 49 Independent Trustee
Rusty L. Moore 38 Trustee

CLASS III CONTINUING TRUSTEES
(TERMS TO EXPIRE IN 2000)
NAME AGE POSITION
- ---- --- --------
Doctor R. Crants 53 Chairman of the Board of Trustees
J. Michael Quinlan 56 Chief Executive Officer; Trustee
Richard W. Cardin 62 Independent Trustee
Joseph V. Russell 57 Independent Trustee
</TABLE>

3
<PAGE> 7

EXECUTIVE OFFICERS WHO ARE NOT TRUSTEES
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Vida H. Carroll 37 Chief Financial Officer; Secretary/Treasurer
Dana E. Moore 38 Vice President, Marketing
M. Susan Smith 34 Vice President, Finance
</TABLE>

CLASS I NOMINEES FOR ELECTION AT THE 1998 ANNUAL MEETING

MICHAEL W. DEVLIN is a Trustee and the Chief Operating Officer of the
Company. Mr. Devlin also serves as a principal of DC Investment Partners LLC, a
Tennessee limited liability company ("DC Investment Partners"), which serves as
general partner and/or investment advisor to five investment limited
partnerships and is responsible for managing the partnerships' investment
activities. From 1993 through 1995, Mr. Devlin was a Vice President in the
Business Development Group of Goldman Sachs & Company ("Goldman Sachs").
Immediately prior to joining Goldman Sachs, Mr. Devlin practiced law for four
years at the law firm of Davis Polk & Wardwell in New York, working on various
corporate transactions, including leveraged leasing. During that time, he
negotiated approximately $1.0 billion in leases, including triple net leases.
Mr. Devlin is a graduate of Yale University and the Duke University School of
Law.

C. RAY BELL is a Trustee of the Company. Mr. Bell is the President and
owner of Ray Bell Construction Company, Inc. ("Ray Bell Construction"). Ray Bell
Construction specializes in the construction of a wide range of commercial
buildings, including the construction on behalf of various government entities
and private companies, including CCA, of approximately 40 correctional and
detention facilities, consisting of over 15,000 beds in seven states. Mr. Bell
is a founding member of the Middle Tennessee Chapter of Associated Builders and
Contractors. Mr. Bell is a graduate of the University of the South.(2)

MONROE J. CARELL, JR. is an Independent Trustee of the Company. For the
past 18 years, Mr. Carell has served as Chief Executive Officer and Chairman of
the Board of Directors of Central Parking Corporation, a New York Stock
Exchange-listed company which provides parking services nationwide ("Central
Parking"). Since 1991, Mr. Carell has served as a trustee of Vanderbilt
University in Nashville and he is currently a member of the Board of Trust of
the Urban Land Institute. Mr. Carell is also a member of the Board of Directors
of Vanderbilt University Medical Center.(3)

CHARLES W. THOMAS, PH.D. is an Independent Trustee of the Company. Dr.
Thomas is a university professor who has taught and written on the criminal
justice and private corrections fields for over 28 years. Currently, he is a
Professor of Criminology and the Director of the Private Corrections Project
Center for Studies in Criminology and Law (the "Center") at the University of
Florida, Gainesville, positions he has held since 1980 and 1989, respectively.
While serving as Director of the Center, Dr. Thomas authored the Center's
Private Adult Correctional 1996 Facility Census (as well as prior editions). Dr.
Thomas was graduated from McMurry University in 1966 with a B.S. in Secondary
Education and from the University of Kentucky with a M.A. in Sociology in 1969
and a Ph.D. in Sociology in 1971.(2)(3)

THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR EACH OF THE NOMINEES LISTED
ABOVE.

- -----------------------
(1) Member of the Audit Committee of the Board of Trustees.
(2) Member of the Compensation Committee of the Board of Trustees.
(3) Member of the Independent Committee of the Board of Trustees.

4
<PAGE> 8

CLASS II CONTINUING TRUSTEES - TERMS TO EXPIRE IN 1999

D. ROBERT CRANTS, III is a Trustee and the President of the Company. Mr.
Crants also serves as a principal of DC Investment Partners. From 1990 through
1996, Mr. Crants was associated with Goldman Sachs, most recently serving as an
associate in the Goldman Sachs Special Investments Group. During his tenure with
Goldman Sachs, Mr. Crants was involved in structuring over $3.0 billion in real
estate transactions, including over $1.0 billion in real estate investment trust
public offerings. During this time, he also negotiated triple net leases for
shopping centers, free standing stores and other properties on behalf of several
clients. Mr. Crants was graduated from Princeton University in 1990 with an
A.B., summa cum laude, in Economics. Mr. Crants is the son of Doctor R. Crants.

JOHN W. EAKIN, JR. is an Independent Trustee of the Company. Mr. Eakin
founded Eakin & Smith, Inc., a real estate development and management company
("Eakin & Smith") in 1987, and served as its President from that time until
1996, when Eakin & Smith was merged with Highwoods Properties, Inc.
("Highwoods"), a publicly traded, self-administered and self-managed, office and
industrial real estate investment trust, based in Raleigh, North Carolina. Mr.
Eakin is a Senior Vice President and Director of Highwoods. Mr. Eakin is also a
member of the Board of Directors of Central Parking and a member of the advisory
board of First American National Bank of Nashville.(2)(3)

TED FELDMAN is an Independent Trustee of the Company. Mr. Feldman is
currently the Chief Operating Officer of StaffMark, Inc., a publicly-traded
provider of diversified staffing services to business, medical, professional and
service organizations and governmental agencies, a position he has held since
October 1996. Prior to joining StaffMark, Mr. Feldman founded HRA, Inc., a
Nashville provider of staffing services, in 1991, and served as its President
and Chief Executive Officer from that time until it merged with StaffMark in
March 1996.(2)(3)

JACKSON W. MOORE is an Independent Trustee of the Company and is the
Chairman of the Independent Committee of the Board of Trustees. Mr. Moore is
presently a Director of and is the President and Chief Operating Officer of
Union Planters Corporation, a publicly-traded, multi-state bank and savings and
loan holding company headquartered in Memphis, Tennessee, positions he has held
since 1986, 1989 and 1994, respectively. He is also Chairman of PSB Bancshares,
Inc. and a Vice President and Director of its subsidiary, The Peoples Savings
Bank in Clanton, Alabama. Prior to joining Union Planters, Mr. Moore practiced
law for 16 years. Mr. Moore is a graduate of the University of Alabama and
Vanderbilt University School of Law. Mr. Moore is not related to Rusty L.
Moore.(1)(3)

RUSTY L. MOORE is a Trustee of the Company. Since 1996, Mr. Moore has been
a principal of the Nashville law firm of Moore & Waechter, PLC and the President
of its affiliate, Bankers Title & Escrow Corporation. He is also a principal and
an executive officer of a privately-held real estate investment and property
management company that owns multi-family residential properties throughout the
Southeast. Mr. Moore has over 12 years of experience in negotiating and
structuring real estate transactions, including the development, acquisition,
leasing and financing of various types of property. Prior to forming Moore

5
<PAGE> 9

& Waechter, Mr. Moore was a partner at Stokes & Bartholomew, P.A. Mr. Moore was
graduated from the University of Tennessee, where he received a B.S. in Public
Administration in 1981 and a J.D. in 1985. Mr. Moore is not related to Jackson
W. Moore.(1)

CLASS III CONTINUING TRUSTEES - TERMS TO EXPIRE IN 2000

DOCTOR R. CRANTS is the Chairman of the Board of Trustees. Since June 1994,
Mr. Crants has served as the Chief Executive Officer and Chairman of the Board
of CCA, which he co-founded in 1983. In December 1997, he was appointed the
President of CCA. From June 1983 to June 1994, he served in various capacities
with CCA, including President, Chief Executive Officer, and Vice Chairman of the
Board of Directors. Mr. Crants was graduated from the United States Military
Academy at West Point in 1966, and received a joint MBA/J.D. degree from the
Harvard Business School and the Harvard Law School, respectively, in 1974. Mr.
Crants is the father of D. Robert Crants, III.

J. MICHAEL QUINLAN is a Trustee and the Chief Executive Officer of the
Company. Mr. Quinlan has been employed in the corrections and detention industry
for over 25 years. Prior to joining the Company, Mr. Quinlan served as the
Director of Strategic Planning for CCA for over three years. From July 1987 to
December 1992, Mr. Quinlan served as the Director of the Federal Bureau of
Prisons. In such capacity, Mr. Quinlan was responsible for the total operations
and administration of a federal agency with an annual budget of more than $2.0
billion, more than 26,000 employees and 75 facilities. In 1988, Mr. Quinlan
received the Presidential Distinguished Rank Award, which is the highest award
given by the United States government to civil servants for service to the
United States. In 1992, he received the National Public Service Award of the
National Academy of Public Administration and the American Society of Public
Administration, awarded annually to the top three public administrators in the
United States. Mr. Quinlan is a 1963 graduate of Fairfield University with a BSS
in History, and he received a J.D. from Fordham University Law School in 1966.
He also received a LLM from the George Washington University School of Law in
1970.

RICHARD W. CARDIN is an Independent Trustee of the Company. Mr. Cardin is a
certified public accountant and is currently a consultant and private investor.
Prior to his retirement in 1995, Mr. Cardin was affiliated with, and a partner
in, Arthur Andersen LLP, an international firm of independent public accountants
and consultants, for 37 years. From 1980 through 1994, Mr. Cardin served as the
managing partner of Arthur Andersen's Nashville office. Mr. Cardin is a member
of the Board of Directors of Atmos Energy Corporation.(1)(2)(3)

JOSEPH V. RUSSELL is an Independent Trustee of the Company. Mr. Russell is
the President and Chief Financial Officer of Elan-Polo, Inc., a Nashville based,
privately-held, worldwide producer and distributor of footwear. Mr. Russell is
also the Vice President of and a principal in RCR Building Corporation, a
Nashville based, privately-held builder and developer of commercial and
industrial properties. He also serves on the Board of Directors of Community
Care Corp., the Footwear Distributors of America Association and US Auto
Insurance Company. Mr. Russell was graduated from the University of Tennessee in
1963 with a B.S. in Finance.(1)(3)

6
<PAGE> 10

EXECUTIVE OFFICERS WHO ARE NOT TRUSTEES

VIDA H. CARROLL is Chief Financial Officer and Secretary/Treasurer of the
Company. From 1991 to 1996, Ms. Carroll, as a sole proprietor, worked as a
financial consultant, specializing in accounting conversions and systems design.
Prior to this time, she worked in public accounting, including working as an
audit manager with KPMG Peat Marwick. Ms. Carroll holds a Bachelor of Science
degree from Tennessee Technological University and is a certified public
accountant.

DANA E. MOORE is Vice President of Marketing of the Company. Prior to
joining the Company, Ms. Moore worked at CCA, beginning in 1991 as an Assistant
Warden. In 1993 she became CCA's Director of Business Development. At age 22,
she was elected to the first of two terms in the Tennessee House of
Representatives, becoming the youngest woman to hold a legislative seat in the
country. Ms. Moore is a graduate of East Tennessee State University, with a B.S.
in Political Science and Criminal Justice.

M. SUSAN SMITH is Vice President, Finance of the Company. Ms. Smith also
serves as Controller of DC Investment Partners. Ms. Smith was an audit manager
with Arthur Andersen LLP in Nashville from 1992 to 1996. While at Arthur
Andersen LLP, Ms. Smith worked primarily with a private investment company and a
large financial institution. Prior to this time, she worked in the banking
industry. Ms. Smith holds a Bachelor of Science degree from the University of
Tennessee and is a certified public accountant.

COMMITTEES OF THE BOARD OF TRUSTEES

Audit Committee. The Company's Audit Committee (the "Audit Committee")
consists of Messrs. Cardin, Jackson W. Moore, Rusty L. Moore and Russell
(Chairman). The Audit Committee makes recommendations concerning the engagement
of independent public accountants, reviews with the independent public
accountants the plans and results of the audit engagement, approves professional
services provided by the independent public accountants, reviews the
independence of the independent public accountants, considers the range of audit
and non-audit fees and reviews the adequacy of the Company's internal accounting
controls. During 1997, the Audit Committee held one meeting.

Compensation Committee. The Company's Compensation Committee (the
"Compensation Committee") consists of Messrs. Bell, Cardin (Chairman), Eakin,
Feldman and Thomas. The Compensation Committee determines compensation,
including awards under the Company's 1997 Employee Share Incentive Plan for the
Company's executive officers (the "Share Incentive Plan") and the Non-Employee
Trustees' Share Option Plan, as amended (the "Non-Employee Trustees' Plan") (the
Share Incentive Plan and the Non-Employee Trustees' Plan are herein collectively
referred to as the "Company's Plans"). The Compensation Committee also
administers the Company's Plans and will administer the Company's Non-Employee
Trustees' Compensation Plan if such is approved by the shareholders at the
Annual Meeting. For a further discussion of the Non-Employee Trustee's
Compensation Plan, see "Proposal 2 - Approval of Non-Employee Trustee's
Compensation Plan." During 1997, the Compensation Committee held one meeting.

Independent Committee. The Company's Independent Committee consists of the
seven Independent Trustees. Pursuant to the Company's Bylaws, the Independent
Committee must approve of the following actions of the Company's Board of
Trustees: (i) the election of the operators for the Company's properties; (ii)
the entering into of any agreement with CCA or its affiliates; and (iii) the
consummation of any transaction between the Company and CCA or its affiliates;
including, but not limited to, the negotiation, enforcement and renegotiation of
the terms of any lease of any of the Company's properties. Jackson

<PAGE> 11

W. Moore is the Chairman of the Independent Committee. During 1997, the
Independent Committee held two meetings.

MEETINGS OF THE BOARD OF TRUSTEES

During 1997, the Board of Trustees held four meetings and no trustee
attended fewer than 75% of the aggregate of all meetings of the Board and the
committees, if any, upon which such trustees served and which were held during
the period of time that such person served on the Board of Trustees or such
committee.

COMPENSATION OF TRUSTEES

The Company pays its Non-Employee Trustees (as hereinafter defined) annual
compensation of $12,000 for their services (the "Annual Retainer"). In addition,
Non-Employee Trustees receive a fee of $1,000 for each meeting of the Board of
Trustees which they attend. Non-Employee Trustees attending any committee
meetings receive an additional fee of $500 for each committee meeting attended
(collectively, the "Meeting Fees") (the Annual Retainer and Meeting Fees paid to
Non-Employee Trustees are collectively referred to as the "Fees"). In December
1997, the Company's Board of Trustees and Compensation Committee adopted the
Non-Employee Trustees' Compensation Plan, pursuant to which trustees who are not
employees of the Company or CCA or any of their affiliates or subsidiaries (the
"Non-Employee Trustees") will be eligible to elect, on an annual basis, to
receive up to 100% of their Fees in Common Shares. The effectiveness of the
Non-Employee Trustees' Compensation Plan is conditioned on its approval by the
Company's shareholders at the Annual Meeting. For a further discussion of the
Non-Employee Trustees' Compensation Plan see "Proposal 2 Approval of the
Non-Employee Trustees' Compensation Plan." Non-Employee Trustees are reimbursed
for reasonable expenses incurred to attend trustee and committee meetings.
Trustees who are employees of either the Company or CCA or their affiliates are
not paid any fees for serving as trustees. Non-Employee Trustees also
participate in the Non-Employee Trustees' Share Plan, whereby they receive
options to purchase 5,000 Common Shares for each year of service with the Board
of Trustees. All other trustees of the Company are eligible to participate in
the Share Incentive Plan.

EMPLOYMENT AGREEMENTS

J. Michael Quinlan, D. Robert Crants, III and Michael W. Devlin have
entered into employment agreements with the Company effective June 1, 1997, for
terms of four years (the "Employment Agreements"). The agreements provide for
annual compensation in the amounts set forth under "Executive Compensation" and
incentive compensation determined by the Compensation Committee on the terms set
forth therein. Each Employment Agreement includes provisions restricting the
officers from competing, directly or indirectly, with the Company during the
term of their employment and, except in certain circumstances, for three years
after termination of employment. Under applicable Tennessee law, which governs
the interpretation and enforceability of the Employment Agreements, specific
performance is not available as a remedy for violation of the agreements;
however, the Company may generally enforce the provisions of the agreement
against the employee if the provisions contained therein are deemed reasonable.
In particular, Tennessee courts will enforce noncompetition provisions such as
the ones contained in the Employment Agreements provided the restrictions
contain a reasonable geographic scope and duration, will impose no undue
hardship on the employee, and would cause serious damage and injury to the
Company if violated. Also, the courts will enjoin violations of the
noncompetition provision if the scope of employment

8
<PAGE> 12

is deemed to require special skills and competence of the employees that could
not be attained by another employee of average competence.

Pursuant to the Employment Agreements, the Company generally may terminate
each employee's employment with 30 days' prior written notice upon the happening
of any one of the following events: (a) any act of the employee which
constitutes fraud, gross misconduct, gross negligence or a material breach of
the employment agreement; (b) frequent and repeated failure to perform services
which have been reasonably requested by the Board of Trustees and which are
consistent with the terms of the employment agreement; (c) the death of the
employee; (d) the disability of the employee; or (e) a decision by the Company
to terminate its business and liquidate; provided that the Company generally may
not terminate an employee's employment under clause (a) or (b) unless it
provides the employee with 15 days' notice of the conduct giving rise to the
Company's right of termination and gives the employee a reasonable period of
time to cure. Each employee may terminate his employment upon 30 days' written
notice to the Company.

9
<PAGE> 13

EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The following table sets forth certain summary information concerning the
compensation paid by the Company for the Company's last completed fiscal year
(July 15, 1997 - December 31, 1997) to the Company's Chief Executive Officer and
its two executive officers whose cash compensation from the Company in 1997
exceeded $100,000 on an annualized basis (the "Named Executive Officers").

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL -------------
COMPENSATION SECURITIES
------------ UNDERLYING
BASE OPTIONS(#)(2) SHARE BONUS
NAME AND PRINCIPAL POSITION YEAR SALARY($)(1) BONUS OPTION AWARD(#)(3)
- --------------------------- ---- ------------ ----- ------------- -----------
<S> <C> <C> <C> <C> <C>
J. Michael Quinlan . . . . . . . 1997 150,000 -- 375,000 --
Chief Executive Officer
D. Robert Crants, III . . . . . 1997 100,000 -- 225,000 150,000
President
Michael W. Devlin . . . . . . . 1997 100,000 -- 225,000 150,000
Chief Operating Officer
</TABLE>

- ------------------
(1) Amounts given are annualized salaries for the year ended December 31, 1997.
(2) Options to purchase all but 25,000 shares of the shares shown for each
officer above vest in 25% increments over a three-year period with the
first increment having vested on July 15, 1997 and are exercisable at a
price of $21 per share, the per share offering price of the Company's
initial public offering. The balance vests in 25% increments over a
three-year period with the first increment having vested on December 2,
1997 and are exercisable at a price of $37.81 per share, the per share
market price of the Company's Common Shares on the date of the grant.
(3) Represents Common Shares issued as a development fee and as reimbursement
for actual costs incurred in connection with the promotion and formation of
the Company, the consummation of the Company's initial public offering, and
the closing of the purchase of nine correctional and detention facilities
upon the consummation of the Company's initial public offering.

10
<PAGE> 14

OPTION/SAR GRANTS IN LAST FISCAL YEAR

The following table sets forth information concerning share options granted
during the 1997 fiscal year to each of the Named Executive Officers. Each of the
options, when vested, is exercisable to purchase Common Shares of the Company.

<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
VALUE AT
ASSUMED ANNUAL
INDIVIDUAL GRANTS RATES OF
------------------------------ SHARE PRICE
NUMBER OF PERCENT OF TOTAL APPRECIATION
SECURITIES OPTIONS/SARS FOR OPTION
UNDERLYING GRANTED TO EXERCISE TERM (1)
OPTIONS/SARS EMPLOYEES IN PRICE ------------------------
NAME GRANTED(#) FISCAL YEAR(2) ($/SH) EXPIRATION DATE 5%($) 10%($)
- ---- ------------ -------------- ------ --------------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
J. Michael Quinlan 350,000 30.9% $21.00 July 15, 2007 $4,623,500 $11,714,500
25,000 2.2 37.81 December 2, 2007 594,750 1,507,000

D. Robert Crants, III 200,000 17.7 21.00 July 15, 2007 2,642,000 6,694,000
25,000 2.2 37.81 December 2, 2007 594,750 1,507,000

Michael W. Devlin 200,000 17.7 21.00 July 15, 2007 2,642,000 6,694,000
25,000 2.2 37.81 December 2, 2007 594,750 1,507,000

</TABLE>

- ------------
(1) Amounts reflect assumed rates of appreciation set forth in the
U.S. Securities and Exchange Commission's (the "Commission") exercise
compensation disclosure rates.
(2) Based on 1,133,000 shares underlying options granted to employees in 1997.

AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION/SAR VALUE

The following table sets forth information with respect to the value of
share options at year-end. The Named Executive officers exercised no share
options during the 1997 fiscal year.

<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS/SARS AT OPTIONS/SARS
FISCAL YEAR-END(#) AT FISCAL YEAR-END($)(1)
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- --------------------------- -------------------------
<S> <C> <C>
J. Michael Quinlan 93,750/281,250 $2,109,782/$6,329,344
D. Robert Crants, III 56,250/168,750 1,223,844/3,671,531
Michael W. Devlin 56,250/168,750 1,223,844/3,671,531
</TABLE>

- ---------------
(1) The value of the unexercised in-the-money options at December 31, 1997 is
based upon the closing market price of the Company's Common Shares at such
date.

11
<PAGE> 15

Report of the Compensation Committee

Objectives of Executive Compensation. The Company's executive compensation
program is intended to attract, retain and reward experienced, highly motivated
executives who are capable of leading the Company effectively and continuing its
growth and profitability. The Company's objective is to utilize a combination of
cash and equity-based compensation to provide appropriate incentives for
executives while aligning their interests with those of the Company's
shareholders.

The Company presently compensates its executive officers through a
combination of annual base salary and option awards under the applicable
employee benefit plans. Because the Company was not formed until April 1997, the
Company did not award cash bonuses to the Company's executive officers in 1997,
although it may do so in the future. The Company's goal is to provide total
compensation to its executive officers which is competitive with those levels of
total compensation paid in the real estate investment trust industry for
companies of similar size, makeup and performance. However, total compensation
of the Company's executive officers is based largely upon performance of the
Company by combining conservative annual base salaries with performance-based
incentives.

Compensation Committee Procedures. The Company's executive compensation
program is administered under the direction of the Board of Trustees'
Compensation Committee, which currently consists of C. Ray Bell, Richard W.
Cardin (Chairman), John W. Eakin, Jr., Ted Feldman and Charles W. Thomas (the
"Compensation Committee"). Because the Company was not formed until April 1997,
the compensation of the Company's executive officers for the remainder of 1997
was set shortly after such formation and was based largely on (i) an expectation
of the Company's results for the year ended December 31, 1997, (ii) the prior
and the expected efforts of the executive officers in the promotion and
formation of the Company, and (iii) the expected successful completion of the
Company's initial public offering. Accordingly, the compensation of the
Company's executive officers in 1997 largely consisted of conservative base
salaries, Company Common Share issuances and option grants.

In determining the executive officers' initial base salaries and
performance-based incentives and the performance-based incentives granted to the
executive officers at the end of the fiscal year ended December 31, 1997, the
Board of Trustees and the Compensation Committee, as applicable, took into
consideration the above referenced factors and examined comparable executive
compensation made by a peer group of real estate investment trusts of similar
size, makeup and performance as reported in the SNL Executive Compensation
Review 1997 -- REITS (the "SNL Review"). While the companies consisting of the
SNL Review may not be identical to the companies used to calculate the NAREIT
Total Return Equity Index, to which the Company's share performance is compared
in this proxy statement, the Compensation Committee believes that the
compensation information in such survey is comparable since it contains real
estate investment trusts of similar size, makeup and performance to that of the
Company.

The Compensation Committee expects that future compensation determinations
for the Company's executive officers for each fiscal year will be made each
April after audited financial statements for such year become available and are
filed with the Securities and Exchange Commission, and upon a review of the
salaries of comparable real estate investment trusts as disclosed in future SNL
Reviews and publicly held documents. At that time, cash bonuses, if any, will be
determined for the past year's performance and base salaries for the following
fiscal year will be set.

12
<PAGE> 16

The Compensation Committee exercises its independent discretion in
determining the compensation of the Named Executive Officers, and its members
may consult periodically by telephone prior to the meeting at which compensation
decisions are made.

Each element of the Company's executive compensation for the fiscal year
ended December 31, 1997, as well as the compensation of the Chief Executive
Officer for such year, is discussed separately below.

Base Salary. Shortly after formation of the Company in April 1997, the
Board of Trustees set the 1997 base salaries for the Company's executive
officers in accordance with the policies and considerations stated above. For
the year ended December 31, 1997, the Company's Named Executive Officers (other
than its Chief Executive Officer, who is discussed separately below) received
the following base salaries (the amounts shown have been annualized to reflect a
full year of operation): D. Robert Crants, III - $100,000; and Michael W. Devlin
- - $100,000.

Development Fee. D. Robert Crants, III and Michael W. Devlin also served as
promoters of the Company prior to its formation and were instrumental in the
development, formation and promotion of the Company and the successful
completion of its initial public offering. Moreover, in connection with the
foregoing, Messrs. Crants, III and Devlin incurred certain substantial costs
related to property due diligence, employee compensation, travel and overhead.
Accordingly, the Company's Board of Trustees (with Messrs. Crants, III and
Devlin abstaining) authorized, and Messrs. Crants, III and Devlin each received
upon consummation of the initial public offering, 150,000 of the Company's
Common Shares as a development fee and as reimbursement of actual costs incurred
in connection with the promotion and formation of the Company, the consummation
of the initial public offering, and the closing of the purchase of nine
facilities from Corrections Corporation of America.

Share Options. Long-term incentives are provided through the grant of share
options. The Compensation Committee believes that the grant of share options
align an executive's long-term objectives with those of the Company's
shareholders. The Company's Share Incentive Plan is administered by the
Compensation Committee, which has the power to determine, among other things,
those individuals to whom options will be granted, the number of shares
issuable, the type of options granted and other terms and conditions of the
options.

In July 1997, upon consummation of the Company's initial public offering,
the Board of Trustees, in accordance with the policies and considerations set
forth above, awarded the following options to purchase Common Shares to the
Named Executive Officers (other than its Chief Executive Officer, who is
discussed separately below) in connection with the formation of the Company and
initial public offering: D. Robert Crants, III - 200,000; and Michael W. Devlin
- - 200,000. Furthermore, in December 1997, as a result of the Company's
performance from the commencement of its operation on July 18, 1997 through
December 31, 1997, and the performance of the Company's Common Shares in
comparison to the NAREIT Total Return Equity Index, after consulting the SNL
Review, and in accordance with the above stated policy, the Compensation
Committee awarded options to purchase the following numbers of Common Shares to
the Company's Named Executive Officers (other than its Chief Executive Officer,
who is discussed separately below) D. Robert Crants, III - 25,000; and Michael
W. Devlin - 25,000.

13
<PAGE> 17

COMPENSATION OF CHIEF EXECUTIVE OFFICER

Base Salary. Shortly after formation of the Company in April 1997, the
Board of Trustees set the 1997 base salary for the Company's Chief Executive
Officer, J. Michael Quinlan, in accordance with the policies and considerations
stated above. For the year ended December 31, 1997, the Company's Chief
Executive Officer received an annualized base salary of $150,000.

Share Options. In July 1997, upon consummation of the Company's initial
public offering, the Board of Trustees, in accordance with the policies and
considerations set forth above, awarded the options to purchase 350,000 Common
Shares to the Chief Executive Officer, in connection with the formation of the
Company and initial public offering. Furthermore, in December 1997 as a result
of the Company's performance from the commencement of its operation on July 18,
1997 through December 31, 1997, and the performance of the Company's Common
Shares in comparison to the NAREIT Total Return Equity Index, and after
consulting the SNL Review, and in accordance with the above stated policy, the
Compensation Committee awarded options to purchase 25,000 Common Shares to the
Company's Chief Executive Officer.

Tax Deductibility of Compensation. Section 162(m) of the Internal Revenue
Code of 1986, as amended, limits the deductibility on the Company's tax return
of compensation over $1 million to any of the Named Executive Officers of the
Company unless, in general, the compensation is paid pursuant to a plan which is
performance-related, non-discretionary and has been approved by the Company's
shareholders. The Compensation Committee's policy with respect to Section 162(m)
is to make every reasonable effort to ensure that compensation is deductible to
the extent permitted while simultaneously providing Company executives with
appropriate rewards for their performance. Any grants of options under the Share
Incentive Plan are designed to satisfy the performance-based compensation
requirements of Section 162(m).

Submitted by the Compensation Committee:
C. Ray Bell
John W. Eakin, Jr.
Richard W. Cardin (Chairman)
Ted Feldman
Charles W. Thomas, Ph.D

14
<PAGE> 18

Performance Graph

The following graph provides a comparison of the cumulative total
shareholder return on the Company's Common Shares compared to the cumulative
total return of the Standard & Poor's ("S&P") 500 Index and the National
Association of Real Estate Investment Trusts ("NAREIT") Total Return Equity
Index (the "Index") for each of the six months ended December 31, 1997. The
graph assumes an investment of $100 on June 30, 1997, a reinvestment of
distributions and/or dividends and actual increase of the market value of the
Company's Common Shares relative to the initial investment of $100. The
comparisons in this table are required by the Securities and Exchange Commission
(the "Commission") and are not intended to forecast or be indicative of possible
future performance of the Company's Common Shares.

[graph]

6/30/97 7/31/97 8/31/97 9/30/97 10/31/97 11/30/97 12/31/97
------- ------- ------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
CCA Prison Realty Trust* $100.00 $107.36 $114.72 $132.04 $120.67 $124.61 $157.69
NAREIT Index $100.00 $102.99 $102.79 $111.00 $108.17 $110.01 $112.17
S&P 500 Index $100.00 $107.96 $101.91 $107.49 $103.90 $108.71 $110.58
</TABLE>

* The Company's Common Shares did not begin trading in the New York Stock
Exchange until July 15, 1997. Accordingly, this table and graph reflect the
Company's performance from that date only.

15
<PAGE> 19

PRINCIPAL SHAREHOLDERS AND SECURITY OWNERSHIP OF
MANAGEMENT

COMMON SHARES

The following table sets forth, as of February 28, 1998 except as otherwise
indicated, the beneficial ownership of Common Shares for (i) each shareholder of
the Company that the Company believes holds more than a 5% beneficial interest
in the Company, (ii) each trustee of the Company, and (iii) the trustees,
nominees and executive officers of the Company as a group.

<TABLE>
<CAPTION>
PERCENTAGE OF
NUMBER OF COMMON COMMON SHARES
NAME OF BENEFICIAL OWNERS SHARES BENEFICIALLY OWNED(1) BENEFICIALLY OWNED(2)
- ------------------------- ---------------------------- ---------------------
<S> <C> <C>
Baron Capital Group, Inc.(3) 3,282,600 15.2%
767 Park Ave., 24th Floor
New York, NY 10153
The Prudential Insurance Company of America(4) 1,642,000 7.6
751 Broad Street
Newark, NJ 07102
Zweig-DiMenna entities(5) 1,214,100 5.6
900 Third Avenue, 30th Floor
New York, NY 10022
Doctor R. Crants 526,000(6) 2.4
J. Michael Quinlan 93,750(7) *
D. Robert Crants, III 206,250(8) *
Michael W. Devlin 206,250(8) *
C. Ray Bell 15,000(9) *
Richard W. Cardin 6,500(9) *
Monroe J. Carell, Jr. 15,000(9) *
John W. Eakin, Jr. 12,500(9) *
Ted Feldman 7,500(9) *
Jackson W. Moore 15,000(9) *
Rusty L. Moore 7,200(9) *
Joseph V. Russell 25,000(9) *
Charles W. Thomas, Ph.D 5,500(9) *
All executive officers and trustees
as a group (16 persons) 1,166,575(10) 5.3%

</TABLE>
- ----------------

* Represents beneficial ownership of less than 1% of the outstanding Common
Shares.

(1) Includes shares as to which such person directly or indirectly, through any
contract, arrangement, understanding, relationship, or otherwise has or
shares voting power and/or investment power of these terms are defined in
Rule 13d-3(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). Common Shares underlying options to purchase Common
Shares, which are exercisable, or become exercisable within sixty days
after February 28, 1998, are deemed to be outstanding for the purpose of
computing the outstanding Common Shares owned by the particular person and
by the group, but are not deemed outstanding for any other purpose.
(2) Based on 21,576,000 Common Shares issued and outstanding.

<PAGE> 20

(3) Includes shares beneficially owned by Ronald Baron, Baron Capital Group,
Inc., ("BCG"), BAMCO, Inc., Baron Capital, Inc. ("BCI"), Baron Capital
Management, Inc. ("BCM") and Baron Asset Fund ("BAF"). BAMCO and BCI are
subsidiaries of BCG. BCM is a subsidiary of BCI. BAF is an investment
advisory client of BAMCO, and Ronald Baron owns a controlling interest in
BCG. BCG, BCI and Ronald Baron disclaim beneficial ownership of shares held
by their controlled entities to the extent such shares are held by persons
other than BCG, BCI and Ronald Baron. BAMCO and BCM disclaim beneficial
ownership of shares held by their investment advisory clients. Pursuant to
the authority granted to the Board of Trustees under the Company's
Declaration of Trust, the Board has waived the Ownership Limit contained in
the Declaration of Trust after obtaining such representations and
undertakings from Baron Capital Group, Inc. and its affiliates to assure
the Company's status as a REIT would not be adversely affected by exempting
it from the Ownership Limit. The foregoing information is based solely on
information provided to the Company by BCG and its related entities and
information obtained in a Schedule 13G filed by BCG and its related
entities with the Commission on February 17, 1998.
(4) Based solely on a Schedule 13G filed with the Commission on February 12,
1998 by The Prudential Insurance Company of America ("Prudential"),
Prudential may have direct or indirect voting and/or investment discretion
over all the shares indicated, which are held for the benefit of its
clients by its separate accounts, externally managed accounts, registered
investment companies, subsidiaries and/or other affiliates. Prudential does
not admit that it is beneficial owner of any of the shares shown. The
number of Common Shares beneficially owned and reported in the table is
based solely on information provided to the Company by Prudential as of
March 13, 1998.
(5) Includes 162,500 Common Shares beneficially owned by Zweig-DiMenna Special
Opportunities, L.P.; 596,300 beneficially owned by Zweig-DiMenna
International Limited; 116,400 beneficially owned by Zweig-DiMenna
International Managers, Inc., on behalf of a discretionary account; 265,100
beneficially owned by Zweig-DiMenna Partners L.P.; and 73,800 beneficially
owned by Gotham Advisors, Inc., on behalf of a discretionary account. The
foregoing information is based solely on information provided to the
Company by Zweig-DiMenna and its related entities and information obtained
in a Schedule 13D filed by or on behalf of each such person with the
Commission on October 27, 1997.
(6) Includes 50,000 Common Shares issuable upon the exercise of vested options
and an aggregate of 238,000 Common Shares held equally in two trusts for
the benefit of his two children other than D. Robert Crants, III.
(7) Includes 93,750 Common Shares issuable upon the exercise of vested options.
(8) Includes 56,250 Common Shares issuable upon the exercise of vested options.
(9) Includes 5,000 Common Shares issuable upon the exercise of vested options.
(10) Includes 266,875 Common Shares issuable upon the exercise of vested
options.

17
<PAGE> 21

Series A Preferred Shares

The following table sets forth the beneficial ownership of Series A
Preferred Shares for (i) the only four trustees of the Company who beneficially
owned Series A Preferred Shares as of February 28, 1998, and (ii) the trustees,
nominees and executive officers of the Company as a group. No executive officers
of the Company owned any Series A Preferred Shares as of February 28, 1998.

<TABLE>
<CAPTION>
NUMBER OF SERIES A PERCENTAGE OF SERIES
PREFERRED SHARES A PREFERRED SHARES
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED(1) BENEFICIALLY OWNED(2)
- ------------------------ --------------------- ---------------------
<S> <C> <C>
C. Ray Bell 5,000 *
Monroe J. Carell, Jr. 5,000 *
Rusty L. Moore 500 *
Joseph V. Russell 20,000 *
All executive officers and trustees 30,500 *
as a group (16 persons)
</TABLE>
- ---------------

* Represents beneficial ownership of less than 1% of the outstanding Series A
Preferred Shares.

18
<PAGE> 22

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's executive officers and trustees, and
persons who own more than 10% of a registered class of the Company's equity
securities ("10% Holders"), to file reports of ownership and changes in
ownership with the Commission and the New York Stock Exchange. Executive
officers, trustees and 10% Holders are required by Commission regulation to
furnish the Company with copies of all Section 16(a) forms that they file. To
the Company's knowledge, based solely on review of the copies of such reports
and amendments thereto furnished to the Company and on written representations
that no other reports were required during or with respect to the fiscal year
ended December 31, 1997, all Section 16(a) filing requirements were made timely
with the exception that one report filed timely by the Company's Chief Financial
Officer was amended to report an additional transaction.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

On July 18, 1997, the Company consummated its initial public offering and
used the proceeds thereof to purchase nine correctional and detention facilities
(the "Initial Facilities") from CCA and certain of its subsidiaries for an
aggregate purchase price of $308.1 million.

The Company acquired the real property and all tangible property associated
with each of the Initial Facilities. Simultaneously with the sale of the Initial
Facilities, CCA entered into agreements with the Company to lease the facilities
from the Company pursuant to long-term, non-cancellable triple net leases which
require CCA to pay all operating expenses, taxes, insurance and other costs (the
"Leases"). All of the Leases provide for base rent with certain annual
escalations and have primary terms ranging from 10-12 years which may be
extended at the fair market rates for three additional five-year periods upon
the mutual agreement of the Company and CCA.

On July 18, 1997, CCA and certain of its subsidiaries also entered into
option agreements (the "Option Agreements") pursuant to which CCA and certain of
its subsidiaries granted the Company exclusive options to acquire any or all of
five correctional facilities until July 18, 2000 for a purchase price equal to
CCA's cost of developing, constructing and equipping such facilities plus 5% of
such costs. The Option Agreements provide that if acquired, such option
facilities could be leased to CCA on terms substantially similar to those
contained in the Leases. As of December 31, 1997, the Company had exercised its
option to acquire two such facilities for an aggregate purchase price of $108.6
million. In addition, in connection with the sale and leaseback arrangements,
the Company and CCA entered into a right to purchase agreement (the "Right to
Purchase Agreement") pursuant to which the Company has an option to acquire at
fair market value and lease-back to CCA any correction or detention facility
acquired or developed and owned by CCA in the future for a period of three years
following the date inmates are first received at such facility. For facilities
acquired during the first five years of the Right to Purchase Agreement, the
initial annual rental rate for facilities leased back to CCA will be the greater
of (i) fair market rental rate as determined by the Company and CCA, or (ii) 11%
of the purchase price of such facilities. For facilities acquired thereafter,
the initial annual rental rate on such facilities will be the fair market rental
rate as determined by the Company and CCA. Additionally, CCA will grant the
Company a right of first refusal to acquire any CCA-owned correctional or
detention facility should CCA receive an acceptable third party offer to acquire
any such facility. As of January 5, 1998, the Company had acquired two
facilities pursuant to the Right to Purchase Agreement for an aggregate purchase
price of $74.3 million.

<PAGE> 23

Doctor R. Crants is the Chairman, Chief Executive Officer and President of
CCA and the Chairman of the Board of Trustees of the Company. D. Robert Crants,
III, President of the Company, is the son of Doctor R. Crants. Doctor R. Crants
and D. Robert Crants, III, as well as certain other trustees or officers of the
Company or directors or officers of CCA, also own, directly or indirectly,
shares in both companies. D. Robert Crants, III and Michael W. Devlin, Chief
Operating Officer of the Company, are principals of DC Investment Partners,
which serves as the general partner and/or investment advisor of five private
investment partnerships. Doctor R. Crants and certain other trustees of the
Company and directors of CCA are investors in one or more of the private
investment partnerships managed by DC Investment Partners. M. Susan Smith also
serves as controller of DC Investment Partners. Rusty L. Moore, a trustee, is
the spouse of a shareholder of Stokes & Bartholomew, P.A., tax and securities
counsel to the Company. Stokes & Bartholomew, P.A. also provides legal services
to CCA. J. Michael Quinlan and Dana E. Moore are former employees of CCA. C. Ray
Bell, a Trustee, is the principal of a construction company which, as a part of
its business, builds correctional and detention facilities, including facilities
for CCA.

Pursuant to the Company's Bylaws, the Independent Committee of the
Company's Board of Trustees must approve actions of the Company's Board of
Trustees regarding the election of the operators for the Company's properties
(including CCA), the entering into of any agreement with CCA or its affiliates,
and the consummation of any transaction between the Company and CCA or its
affiliates, including, but not limited to, the negotiation, enforcement and
renegotiation of the terms of any lease of the Company's properties. See -
"Proposal One - Election of Trustees - Committees of the Board of Trustees -
Independent Committee."

PROPOSAL 2
APPROVAL OF NON-EMPLOYEE TRUSTEES' COMPENSATION PLAN

On December 2, 1997, the Board of Trustees adopted the CCA Prison Realty
Trust Non-Employee Trustees' Compensation Plan (the "Plan"), subject to
shareholder approval. As of the date of this Proxy Statement, there have been no
issuances of Common Shares made pursuant to the Plan. Accordingly, shareholders
are now being asked to approve the Plan. The following is a brief description of
the material terms of the Plan. Such description is qualified in its entirety by
reference to the full text of the Plan, which is set forth as Appendix A hereto.
Readers are urged to refer to the Plan for a complete description of the Plan,
and the summary of the principal features of the Plan which follows is qualified
entirely by such reference.

Purpose of the Plan. The purpose of the Plan is to encourage equity
ownership in the Company by Non-Employee Trustees whose continued services are
considered essential to the Company's continued progress and thus to provide
them with a further incentive to remain as trustees of the Company.

Eligible Participants. Under the Plan, trustees of the Company who are not
employees of the Company or CCA or any subsidiary or affiliate of the Company or
CCA would be eligible to participate in the Plan (a "Non-Employee Trustee").
Should the proposed slate of trustees be approved by the shareholders, nine
trustees will be eligible to participate in the Plan.

Administration. The Board of Trustees or a committee consisting of two or
more non-employee trustees, each of whom is a "non-employee trustee" as defined
in Rule 16b-3 of the Exchange Act, shall supervise and administer the Plan (the
"Committee"). Currently, the Plan is administered by the

<PAGE> 24

Compensation Committee. Members of the Compensation Committee receive no
additional compensation for their services in connection with the administration
of the Plan.

Number of Shares Subject to the Plan. A total of 50,000 Common Shares are
to be reserved for issuance pursuant to the Plan. The Company expects to
register the shares with the Commission after the Annual Meeting, if the Plan is
approved by shareholders.

Form of Awards. Under the Plan, a Non-Employee Trustee may elect to receive
up to 100 percent of the value of his Annual Retainer and Meeting Fees in the
form of Common Shares of the Company (a "Common Share Payment") in lieu of cash.
The term "Annual Retainer" under the Plan means the amount of cash compensation
to be paid to each Non-Employee Trustee annually as determined by the Board of
Trustees. Currently, Non-Employee Trustees receive an Annual Retainer of
$12,000. The term "Meeting Fees" under the Plan means the amount of cash
compensation a Non-Employee Trustee will be entitled to receive for attending
meetings, whether annual or special, of the Board and of any committee of the
Board on which the Non-Employee Trustee serves, or for any other fees to be paid
to the members of the Board, but shall not include reimbursement for expenses.
Currently, each Non-Employee Trustee is entitled to receive a fee of $1,000 for
attendance at each meeting of the Board and a fee of $500 for attendance at each
meeting of any committee of the Board in which he serves.

Plan Operation. Payment of the Annual Retainer and Meeting Fees, whether in
the form of Common Shares or in cash, pursuant to this Plan, shall be made as
follows:

(a) The amount of each Non-Employee Trustee's Annual Retainer to be paid in
Common Shares, if any, and the amount to be paid in cash, if any, shall be
prorated and paid quarterly, in equal amounts, on the Payment Dates (i.e., if
the Annual Retainer for trustees is $12,000 for a given Election Period, a
participating trustee will be paid $3,000 in a combination of cash and/or Common
Shares in accordance with such trustee's annual election on June 30, September
30, December 31 and March 31 (each, a "Payment Date")).

(b) Unless otherwise specified by resolution of the Board of Trustees, any
compensation to be paid in Common Shares, if any, or in cash, if any, for
Meeting Fees (other than for reimbursement of reasonable expenses) shall be made
on or as of the Payment Date next succeeding the date on which such Meeting Fees
have been earned or are otherwise payable.

(c) The number of Common Shares to be issued in payment of an Annual
Retainer and/or Meeting Fees that have been denominated in dollars shall be
calculated on the basis of the Fair Market Value on the first business day
preceding the Payment Date as of which such Common Shares are to be issued. The
term "Fair Market Value" under the Plan means the mean of the highest and lowest
selling prices for the Common Shares on the New York Stock Exchange on the date
in question as reported in the Wall Street Journal.

Effective Date and Term. The Plan shall become effective upon approval by
the Company's shareholders and shall terminate only upon action of the Board of
Trustees.

Amendments. The Board of Trustees shall have the right to amend the Plan at
any time for any purpose; provided, that following approval of the Plan by the
Company's shareholders, the Company will seek shareholder approval for any
change to the extent required by applicable law, regulation or rule or any rule
or regulationof the New York Stock Exchange (or any other applicable national
stock exchange).

21
<PAGE> 25

Adjustments. In the event of any merger, consolidation, reorganization,
recapitalization, share dividend, share split, or other change in the corporate
structure or capitalization affecting the Company's present Common Shares, at
the time of such event, the Board or the Committee shall make appropriate
adjustments to the number (including the aggregate number of shares that may be
issued under the Plan) and kind of shares to be issued under the Plan and the
price of any Common Share Payment.

Federal Income Tax Consequences. A Non-Employee Trustee who elects to
receive his compensation in the form of a Common Share Payment recognizes
ordinary income and the Company receives a deduction in an amount equal to the
fair market value of the Common Share Payments as and when they become payable.
The rules governing the tax treatment of Common Share Payments, however, are
quite technical. Therefore, the description of the federal income tax
consequences herein is necessarily general in nature and does not purport to be
complete. Moreover, statutory provisions are subject to change, as are their
interpretations, and their applications may vary in individual circumstances.
Finally, the tax consequences under applicable state and local income tax laws
may not be the same as under the federal income tax laws.

Vote Required. The favorable vote of a majority of Common Shares cast at
the Annual Meeting is required for approval of the Plan.

Board Recommendation. The Board of Trustees has determined that it is in
the best interests of the Company to further link the interests of the
Non-Employee Trustees with the success of the Company. The Board feels that the
Plan is a simple, straightforward way for Non-Employee Trustees to achieve a
meaningful level of ownership in the Company. The Board of Trustees believes
that the Company's ability to make a Common Share Payment will provide
significant incentives to Non-Employee Trustees who contribute and are expected
to contribute materially to the continued success of the Company.

THE BOARD OF TRUSTEES THEREFORE RECOMMENDS A VOTE FOR APPROVAL OF THE
NON-EMPLOYEE TRUSTEES' COMPENSATION PLAN BY THE SHAREHOLDERS.

PROPOSAL 3
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS

The Board of the Company, upon the recommendation of the Audit Committee,
has selected the accounting firm of Arthur Andersen LLP to serve as independent
auditors of the Company for the fiscal year ending December 31, 1998. Arthur
Andersen LLP has served as the Company's independent auditors since the
Company's formation in April 1997 and is considered by management of the Company
to be well qualified. The Company has been advised by that firm that neither it
nor any member thereof has any financial interest, direct or indirect, in the
Company or any of its subsidiaries in any capacity. A representative of Arthur
Andersen LLP will be present at the Annual Meeting, will be given the
opportunity to make a statement if he or she so desires and will be available to
respond to appropriate questions.

Although the Company is not required to submit the ratification and
approval of the selection of its independent auditors to a vote of shareholders,
the Board of Trustees believes that it is sound policy to do so. The favorable
vote of a majority of Common Shares cast at the Annual Meeting is required for
ratification of the selection of Arthur Andersen LLP. In the event that the
majority of the votes cast are

<PAGE> 26

against the selection of Arthur Andersen LLP, the trustees will consider the
vote and the reasons therefor in future decisions on the selection of
independent auditors.

THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR RATIFICATION OF ARTHUR ANDERSEN
LLP AS THE COMPANY'S INDEPENDENT AUDITORS.

SHAREHOLDER PROPOSALS FOR 1999 ANNUAL MEETING

For a proposal of a shareholder to be presented to the Company's 1999
Annual Meeting of shareholders and included in the Company's proxy statement
pursuant to Rule 14a-8 of the Exchange Act ("Rule 14a-8"), the Secretary of the
Company must receive written notice thereof on or before November 19, 1998. Such
a proposal must also comply with the requirements as to form and substance of
the Commission.

For a proposal of a shareholder to be presented at the Company's 1999
Annual Meeting of shareholders, other than a shareholder proposal included in
the Company's proxy statement pursuant to Rule 14a-8, it must be received at the
principal executive offices of the Company after February 6, 1999 and on or
before March 6, 1999, unless the 1999 annual meeting of shareholders is
scheduled to take place on or before April 6, 1999 or after July 6, 1999, in
which case shareholder notice must be delivered no earlier than the 90th day
prior to such annual meeting and not later than the 60th day prior to such
annual meeting or the 10th day following the day on which public announcement of
the date of such meeting is first made. The Company's Bylaws provide that any
shareholder wishing to nominate a trustee or have a shareholder proposal, other
than a shareholder proposal included in the Company's proxy statement pursuant
to Rule 14a-8, considered at an annual meeting must provide written notice of
such nomination or proposal and appropriate supporting information and
documentation, as set forth in the Bylaws, to the Company at its principal
executive offices not less than 60 days nor more than 90 days prior to the
anniversary of the immediately preceding annual meeting of shareholders (the
"Anniversary Date"); provided, however, that in the event that the annual
meeting is scheduled to be held more than 30 calendar days prior to the
Anniversary Date or more than 60 days after the Anniversary Date, such
nominations or proposals must be delivered to the Company not earlier than the
90th day prior to the annual meeting date and not later than the 60th day prior
to the date of the annual meeting date or the 10th day following the date of the
public announcement of the date of such meeting is first made. Any such proposal
should be mailed via certified mail, return receipt requested to: CCA Prison
Realty Trust, Attention: Vida H. Carroll, 10 Burton Hills Boulevard, Suite 100,
Nashville, Tennessee 37215.

ANNUAL REPORT AND FORM 10-K

All shareholders of record on the Record Date will receive with this Proxy
Statement a copy of the Company's 1997 Annual Report to Shareholders. The Annual
Report to Shareholders, however, is not part of the proxy solicitation
materials. Any shareholder who desires a copy of the Company's 1997 Annual
Report to Shareholders, or the Company's Annual Report on Form 10-K for the year
ended December 31, 1997, as filed with the U.S. Securities and Exchange
Commission, may obtain a copy without charge by addressing a request to CCA
Prison Realty Trust, Attention: Vida H. Carroll, 10 Burton Hills Boulevard,
Suite 100, Nashville, Tennessee 37215.

23
<PAGE> 27

OTHER MATTERS

The Board of Trustees does not know of any matters other than those
described in this Proxy Statement that will be presented for action at the
Annual Meeting. If other matters are presented, proxies will be voted in
accordance with the best judgment of the proxy holders.

By Order of the Board of Trustees,

D. Robert Crants, III
President

March 19, 1998
Nashville, Tennessee

YOUR COOPERATION IN GIVING THESE MATTERS YOUR IMMEDIATE
ATTENTION AND IN RETURNING YOUR PROXY PROMPTLY IS APPRECIATED.

<PAGE> 28

APPENDIX A

CCA PRISON REALTY TRUST
NON-EMPLOYEE TRUSTEES' COMPENSATION PLAN

RECITALS

WHEREAS, CCA Prison Realty Trust (the "Company") pays its Non-Employee
Trustees (as hereinafter defined) an Annual Retainer (as hereinafter defined)
and Meeting Fees (as hereinafter defined) as partial compensation for their
services as trustees of the Company;

WHEREAS, the Board of Trustees of the Company has determined it is in the
Company's best interest to encourage equity ownership in the Company by
Non-Employee Trustees and to provide them with a further incentive to remain as
trustees of the Company by allowing them to elect to receive between 50 and 100
percent of each of their Annual Retainer and Meeting Fees in Common Shares (as
hereinafter defined); and

WHEREAS, the terms and conditions under which such Non-Employee Trustees
may elect to receive such Common Shares are set forth herein.

I. PLAN ADMINISTRATION AND ELIGIBILITY.

A. PURPOSE OF THE PLAN.

The purpose of this Non-Employee Trustees' Compensation Plan (the "Plan")
is to encourage equity ownership in the Company by Non-Employee Trustees whose
continued services are considered essential to the Company's continued progress
and thus to provide them with a further incentive to remain as trustees of the
Company.

B. ADMINISTRATION OF THE PLAN.

The Board of Trustees of the Company (the "Board") or any committee of the
Board (the "Committee") that will satisfy Rule 16b-3 of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and any regulations promulgated
thereunder, as from time to time may be in effect, including any successor rule
("Rule 16b-3"), shall supervise and administer the Plan. The Committee, if such
is created, shall consist solely of two or more "non-employee trustees," each of
whom shall be appointed by the Board. For purposes of determining who may serve
on the Committee only, a member of the Board shall be deemed to be a
"non-employee trustee" only if he satisfies such requirements as the Securities
and Exchange Commission may establish for "non-employee directors" under Rule
16b-3. Members of the Board or the Committee, if such is created, shall receive
no additional compensation for their services in connection with the
administration of the Plan.

The Board or the Committee, if such is created, may adopt such rules or
guidelines as they deem appropriate to implement the Plan. All questions of
interpretation of the Plan or of any shares issued under it shall be determined
by the Board or the Committee, if such is created, and such determination shall
be final

A-1

<PAGE> 29

and binding upon all persons having an interest in the Plan. Any or all
powers and discretion vested in the Board or the Committee, if such is created,
under this Plan may be exercised by any subcommittee so authorized by the Board
or the Committee, if such is created, that satisfies the requirements of Rule
16b-3.

C. PARTICIPATION IN THE PLAN.

Each member of the Board who is not an employee of the Company or
Corrections Corporation of America or any of their subsidiaries or affiliates
(each, a "Non-Employee Trustee" or collectively, the "Non-Employee Trustees"),
shall be eligible to elect to receive up to 100 percent of each of his Annual
Retainer and Meeting Fees in Common Shares, pursuant to the terms and conditions
of the Plan; provided, however, that no Non-Employee Trustee shall be allowed to
request that less than 50% of such trustee's Annual Retainer or Meeting Fees be
received in Common Shares.

D. SHARES SUBJECT TO THE PLAN.

The maximum number of shares of the Company's common shares, $0.01 par
value per share (the "Common Shares"),which may be issued under the Plan shall
be 50,000. The limitation on the number of Common Shares which may be issued
under the Plan shall be subject to adjustment as provided in Section III(C) of
the Plan.

II. TERMS OF THE PLAN.

A. EFFECTIVE DATE OF THE PLAN.

The Plan shall take effect on the date of adoption by the shareholders of
the Company and shall terminate only upon action by the Board.

B. TIME FOR ISSUING SHARES.

No payments shall be made in Common Shares pursuant to the Plan after the
date the Plan is terminated. The applicable terms of this Plan, and any terms
and conditions applicable to the Common Shares issued prior to such date, shall
survive the termination of the Plan and continue to apply to such Common Shares.

C. TERMS AND CONDITIONS OF THE PLAN.

I. COMPENSATION ALTERNATIVES.

Commencing on the date on which the Board authorizes this Plan through
December 31, 1997, a Non-Employee Trustee may make one election to receive up to
100 percent of each of his Annual Retainer and Meeting Fees, earned from the
date of the Company's formation on April 23, 1997 through the date of the
Company's 1998 Annual Meeting of Shareholders (the "1998 Annual Meeting"), in
Common Shares. Such election must be in writing and shall be delivered to the
Corporate Secretary of the Company no later than December 31, 1997. This
election shall be irrevocable and shall specify the applicable percentage of
each of the Annual Retainer and Meeting Fees that such participant wishes to
receive in Common Shares; provided however, that no Non-Employee Trustee shall
be allowed to request that less than 50% of such

A-2

<PAGE> 30

trustee's Annual Retainer or Meeting Fees be received in Common Shares. Payments
for the Annual Retainer and all Meeting Fees pursuant to this paragraph, whether
payable in cash or in Common Shares, will be made on July 1, 1998; provided,
however, that should a Non-Employee Trustee fail to make an election by December
31, 1997 as provided in this paragraph, the Annual Retainer and all Meeting Fees
payable to such trustee pursuant to this paragraph shall be paid in cash on June
30, 1998.

For all subsequent periods, a Non-Employee Trustee may make one election
(the "Annual Election") for the period from one Annual Meeting of the Company's
shareholders (an "Annual Meeting") to the next Annual Meeting (the "Election
Period") to receive up to 100 percent of each of his Annual Retainer and Meeting
Fees in Common Shares. The Annual Election must be in writing and shall be
delivered to the Corporate Secretary of the Company not later than the last day
of the calendar year prior to the year in which the applicable Election Period
begins. (Non-Employee Trustees who are initially elected as a trustee during an
Election Period shall have thirty days from the date of their election as
trustee to make their Annual Election for their initial Election Period.) The
Annual Election shall be irrevocable with respect to the Election Period for
which it pertains and shall specify the applicable percentage of each of the
Annual Retainer and Meeting Fees that such Non-Employee Trustee wishes to
receive in Common Shares; provided however, that no Non-Employee Trustee shall
be allowed to request that less than 50% of such trustee's Annual Retainer or
Meeting Fees be received in Common Shares. If a Non-Employee Trustee fails to
make a timely Annual Election for any Election Period in accordance herewith,
the Annual Retainer and all Meeting Fees payable to such trustee for such period
shall be paid in cash on the Payment Dates (as hereinafter defined).

II. PAYMENT OF SHARES.

Payment of the Annual Retainer and Meeting Fees, whether in the form of
Common Shares or in cash, pursuant to this Plan, shall be made as follows:

(a) The amount of each Non-Employee Trustee's Annual Retainer to be
paid in Common Shares, if any, and the amount to be paid in cash, if
any, shall be prorated and paid quarterly, in equal amounts, on the
Payment Dates (i.e., if the Annual Retainer for trustees is $12,000
for a given Election Period, a participating trustee will be paid
$3,000 in a combination of cash and/or Common Shares in accordance
with such trustee's Annual Election on June 30, September 30, December
31 and March 31). For any quarter in which a Non-Employee Trustee
serves less than the entire quarter, payments due hereunder shall be
prorated according to the length of time served during the quarterly
period to which such payment due corresponds.

(b) Unless otherwise specified by resolution of the Board of Trustees,
any compensation to be paid in Common Shares, if any, or in cash, if
any, for Meeting Fees (other than for reimbursement of reasonable
expenses) shall be made on or as of the Payment Date next succeeding
the date on which such Meeting Fees have been earned or are otherwise
payable or issuable.

(c) The number of Common Shares to be issued in payment of retainers
and fees that have been denominated in dollars shall be calculated on
the basis of the Fair Market Value (as

A-3

<PAGE> 31

hereinafter defined) on the first Business Day preceding the Payment
Date as of which such Common Shares are to be issued.

III. FORM OF ISSUANCE OF SHARES.

Common Shares issued under the Plan shall be in either book entry form or
in certificate form pursuant to the instructions given by the Non-Employee
Trustee to the Company's transfer agent.

IV. FRACTIONS OF SHARES.

The Company shall not issue fractions of Common Shares. Whenever, under the
terms of the Plan, a fractional Common Share would otherwise be required to be
issued, the Non-Employee Trustee shall be paid in cash for such fractional
Common Share based upon the same Fair Market Value which was utilized to
determine the number of Common Shares to be issued on the Payment Date.

V. BENEFIT UPON DEATH.

In the event of a Non-Employee Trustee's death, any and all unpaid Annual
Retainer and/or Meeting Fees will be paid in accordance with such Non-Employee
Trustee's then current Annual Election to his estate and such person's payments
will be transferable by will or pursuant to laws of descent and distribution
applicable to such person.

III. GENERAL PROVISIONS.

A. ASSIGNMENTS.

The rights and benefits accruing to the Company's Non-Employee
Trustees under this Plan may not be assigned by any such trustee.

B. LIMITATION OF RIGHTS.

Neither the Plan, nor the issuance of any Common Shares nor any other
action taken pursuant to the Plan, shall constitute or be evidence of any
agreement or understanding, express or implied, that the Company will retain a
trustee for any period of time, or at any particular rate of compensation.

C. SHARE ADJUSTMENT.

In the event of any merger, consolidation, reorganization,
recapitalization, share dividend, share split, or other change in the corporate
structure or capitalization affecting the Company's Common Shares, at the time
of such event the Board or the Committee, if such is created, shall make
appropriate adjustments to the number (including the aggregate numbers specified
in Section I (D) above) and kind of shares to be issued under the Plan.

A-4
<PAGE> 32

D. AMENDMENT OF THE PLAN.

The Board shall have the right to amend, modify, suspend or terminate
the Plan at any time for any purpose; provided, that following the initial
approval of the Plan by the Company's shareholders, the Company will seek
shareholder approval for any change to the extent required by applicable law,
regulation or rule or any rule or regulation of the New York Stock Exchange (or
any other applicable national stock exchange).

E. DEFINITIONS.

"Annual Retainer" shall mean the amount of cash compensation to which a
Non-Employee Trustee will be entitled to receive for serving as a trustee for
one Election Period, but shall not include reimbursement for expenses, Meeting
Fees, fees associated with service on any committee of the Board or fees with
respect to any other services to be provided to the Company.

"Business Day" shall mean, if relevant to a determination of the value
of Common Shares, a day on which shares of Common Shares are or could be traded
on the New York Stock Exchange (or other national stock exchange, or if not so
listed, could be traded over-the-counter). In all other cases, the term shall
mean a day on which the offices of the Company are open for the conduct of
business in the normal course.

"Fair Market Value" shall be the mean of the highest and lowest selling
prices for the Common Shares on the New York Stock Exchange on the date in
question, as reported in The Wall Street Journal, or if no sales of Common
Shares were made on that date, the mean of the highest and lowest prices of the
Common Shares on the first preceding day on which sales were made.

"Meeting Fees" shall mean the amount to which a Non-Employee Trustee
will be entitled to receive for attending meetings, whether annual or special,
of the Board and of any committee of the Board on which the Non-Employee Trustee
serves, or for any other fees to be paid to the members of the Board, but shall
not include reimbursement for expenses.

"Payment Date" shall mean June 30, September 30, December 31 and March
31 of any Election Period or if any such day is not a Business Day, on the first
Business Day following such day.

F. COMPLIANCE WITH SECTION 16 OF THE EXCHANGE ACT.

It is the Company's intent that the Plan comply in all respects with
Rule 16b-3. If any provision of this Plan is found not to be in compliance with
such rule (or any successor provision), the provision shall be deemed null and
void, and the remaining provisions of the Plan shall continue in full force and
effect. All transactions under this Plan shall be executed in accordance with
the requirements of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder. The Board or the Committee, if such is created, may, in
its sole discretion, modify the terms and conditions of this Plan in response to
and consistent with any changes in applicable law, rule or regulation.

A-5

<PAGE> 33

G. NOTICE.

Any written notice to the Company required by any of the provisions of
this Plan shall be addressed to the Corporate Secretary of the Company and shall
become effective when it is received by the Corporate Secretary.

H. GOVERNING LAW.

This Plan and all determinations made and actions taken pursuant hereto
shall be governed by the law of the State of Maryland and construed accordingly.

A-6

<PAGE> 34
Appendix B

PROXY

CCA PRISON REALTY TRUST

ANNUAL MEETING OF SHAREHOLDERS

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES

The undersigned shareholder(s) of CCA Prison Realty Trust (the
"Company") hereby acknowledge(s) receipt of the Notice of Annual Meeting of
Shareholders and Proxy Statement, dated March 19, 1998, and hereby appoint(s) D.
Robert Crants, III and Vida H. Carroll, and each of them, proxies of the
undersigned, each with full power of substitution and revocation, and
authorize(s) them, or either of them, to vote the number of shares which the
undersigned would be entitled to cast if personally present at the Annual
Meeting of Shareholders of the Company to be held on Wednesday, May 6, 1998, at
10:00 a.m., Central Daylight Time, at the Loews Vanderbilt Plaza Hotel, 2100
West End Avenue, Nashville, Tennessee, and any adjournments or postponements
thereof.

The Board of Trustees recommends a vote "FOR" the election of each of
the four nominees for Class I Trustee listed below and "FOR" each of the
following proposals:

1. ELECTION OF CLASS I TRUSTEES.

[ ] FOR ALL NOMINEES NAMED

[ ] WITHHOLD AUTHORITY TO VOTE FOR ALL NOMINEES

Nominees: Michael W. Devlin, C. Ray Bell, Monroe J. Carell, Jr.
Charles W. Thomas, Ph.D.

[ ]
--------------------------------------
For all nominees except as noted above

2. APPROVAL OF THE NON-EMPLOYEE TRUSTEES' COMPENSATION PLAN.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

<PAGE> 35

3. RATIFICATION OF THE ACTION OF THE BOARD OF TRUSTEES IN SELECTING THE
FIRM OF ARTHUR ANDERSEN LLP TO BE THE INDEPENDENT AUDITORS OF THE
COMPANY FOR THE FISCAL YEAR ENDING DECEMBER 31, 1998.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

4. IN THEIR DISCRETION ON ANY OTHER BUSINESS AS MAY COME BEFORE THE
MEETING OF ANY ADJOURNMENTS AND POSTPONEMENTS THEREOF.

MARK HERE IF YOU PLAN TO ATTEND THE MEETING [ ]

MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW [ ]

PLEASE FULLY COMPLETE, DATE, PROPERLY SIGN, AND RETURN THIS PROXY
PROMPTLY.

This Proxy, when properly executed, will be voted in accordance with
the directions given by the undersigned shareholder(s). If no direction is made,
this proxy will be voted FOR the election of each nominee and FOR each of the
proposals.

Signature: Date: Signature: Date:
-------------- -------- ------------- --------

NOTE: PLEASE DATE AND SIGN EXACTLY AS YOUR NAME APPEARS ON YOUR
SHARE CERTIFICATE. IF SHARES ARE HELD BY MORE THAN ONE OWNER OR JOINT
TENANCY, EACH MUST SIGN PERSONALLY. WHEN SIGNING AS ATTORNEY,
EXECUTOR, ADMINISTRATOR, TRUSTEE, GUARDIAN, ETC., GIVE FULL TITLE AS
SUCH. IF A CORPORATION IS A SHAREHOLDER, PLEASE SIGN FULL CORPORATE
NAME BY AUTHORIZED OFFICER. IF A PARTNERSHIP OR LIMITED LIABILITY
COMPANY IS A SHAREHOLDER, PLEASE SIGN IN SUCH ORGANIZATION'S NAME BY
AN AUTHORIZED PERSON. THE PROXY SHALL BE DEEMED A GRANT OF AUTHORITY
TO VOTE.