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Correctional Properties Trust Announces Letter of Intent to
Expand Lawton Correctional Facility; Acquisition, Expansion Will Add 900 Beds
to Company's Portfolio
PALM BEACH GARDENS, Fla., March 4 /PRNewswire-FirstCall/ -- Correctional
Properties Trust (NYSE:CPV), a real estate investment trust (the "Company or
"CPT), announced it has signed a non-binding letter of intent to purchase The
GEO Group's (NYSE:GGI) existing 300-bed expansion to the Lawton Correctional
Facility in Lawton, Okla., and to finance a new 600-bed expansion at that
facility, which will also be owned by the Company and leased to GEO.
Both parties expect the new 600-bed expansion to be completed and become
operational during the second quarter of 2006. Including the expansion,
Correctional Properties Trust will own the entire 2,518-bed facility (which
includes 118 adult segregation beds) that will continue to be leased to GEO to
house adult male, medium-security inmates for the Oklahoma Department of
Corrections.
"Prior to this transaction, all of our facilities have been purchased as a
finished product and then leased back," said Charles R. Jones, president and
chief executive officer of Correctional Properties Trust. "With the
design/build-to-suit model, we have added an important dimension to our tenant
services."
In 1999, Correctional Properties Trust purchased the initial 1,500-bed,
medium-security, Lawton Correctional Facility from GEO (formerly Wackenhut
Corrections Corporation). GEO then added a 300-bed addition later that year,
which they designed, constructed and owned. With this new agreement,
Correctional Properties Trust expects to purchase that existing 300-bed
expansion for $3.9 million during the second quarter of 2005. Correctional
Properties Trust expects to also finance the new 600-bed expansion for
approximately $23 million. The Company expects to incur no construction risk or
construction management responsibility in connection with the new expansion.
The architects, engineers and construction related professionals will be
selected, engaged and supervised by GEO, which has extensive experience and
expertise in prison development and construction.
GEO is currently paying Correctional Properties Trust a lease rate of 10.75
percent on the original 1,500-bed facility. Although that rate will remain
unchanged as a result of this transaction, the existing 300-bed expansion is
expected to be leased to GEO at an initial rate of 9.5 percent. This is
expected to result in a blended rate for the 1,918-bed facility (which includes
118 adult segregation beds) of approximately 10.65 percent with annual lease
escalators at CPI, but not to exceed 4 percent annually. The new 600-bed
expansion is expected to also be leased to GEO at an initial rate of 9.5
percent when it is completed. Following the completion of the new 600-bed
expansion, the initial blended lease rate on the entire 2,518-bed facility is
expected to be approximately 10.29 percent with annual lease escalators at CPI,
but not to exceed 4 percent annually.
The lease maturity date on the existing 1,500-bed facility between GEO and
Correctional Properties Trust is expected to also be amended. GEO has
approximately four years remaining on its original 10-year lease with
Correctional Properties Trust for the facility. The lease is expected to be
amended to provide a maturity date of 10 years on the entire facility,
beginning the date upon which the new 600-bed expansion is completed.
"We are pleased to have this opportunity to work with GEO to expand this
essential service to the State of Oklahoma," Mr. Jones added.
The completion of the proposed transactions is subject to final documentation,
due diligence and normal closing conditions.
As a reminder, the Company has previously announced it will be conducting a
conference call at 1:30 P.M. (ET) today to discuss 2004 financial results and
other important matters, including earning guidance for 2005.
To listen to the call live, please go to the following website at least 15
minutes prior to the call to register, download and install any necessary audio
software. For those of you unable to listen to the live broadcast, a web cast
replay will be available following the call for four weeks at:
http://phx.corporate-ir.net/playerlink.zhtml?c=93191&s=wm&e=1006041
Those who would like to participate in the teleconference may do so by calling
the following telephone number at 1:15 P.M. (ET) today:
Dial-In Number: 866 - 238 - 1640
Conference ID Number: 638535
Those who wish to listen to a telephone replay of this teleconference may do so
by calling:
Replay Number: 888 - 266 - 2086
Conference ID Number: 638535
The telephone replay of the teleconference will be available 24 hours a day,
starting at 5:00 P.M., on March 4, 2005, through March 11, 2005.
Additionally, information on this transaction and a general overview of
Correctional Properties Trust will occur when Charles Jones participates in a
question and answer session at the Smith Barney Citigroup 2005 REIT CEO
Conference at 8 a.m. EST on Wednesday, March 9, 2005. A live conference call of
the presentation can be accessed in a listen-only mode by dialing (210)
839-8982, at least five minutes before the scheduled presentation time. The
pass code will be "REIT 1". Shareholders are invited to listen to this
presentation.
Correctional Properties Trust, based in Palm Beach Gardens, Florida, was formed
in February 1998, to capitalize on the growing trend toward privatization in
the corrections industry. Correctional Properties Trust is dedicated to
ownership of correctional facilities under long-term, triple-net leases, which
minimizes occupancy risk and development risk. Correctional Properties Trust
currently owns 12 correctional facilities in nine states, all of which are
leased, with an aggregate initial design capacity of 6,856 beds.
This press release contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995 regarding future events
and future performance of the Company that involve risks and uncertainties that
could materially affect actual results. Such forward- looking statements are
made pursuant to the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995 and are qualified in their entirety by cautionary
statements and risk factors disclosure contained in certain of the Company's
Securities and Exchange Commission filings. For a description of certain
factors that could cause actual results to vary from current expectations and
forward-looking statements contained in this press release, refer to documents
that the Company files from time to time with the Securities and Exchange
Commission. Such filings include, the Company's Form 10-K for the fiscal year
ended December 31, 2003 and subsequent periodic reports. The Company assumes no
obligation to update or supplement forward- looking statements that become
untrue because of subsequent events.
Contact: Correctional Properties Trust Shareholder Services
(561) 630-6336, or access Company information at
http://www.correctionalpropertiestrust.com/
DATASOURCE: Correctional Properties Trust
CONTACT: Correctional Properties Trust Shareholder Services,
+1-561-630-6336, or access Company information at
http://www.correctionalpropertiestrust.com/
Web site: http://www.correctionalpropertiestrust.com/
http://phx.corporate-ir.net/playerlink.zhtml?c=93191&s=wm&e=1006041