BOCA RATON, Fla. — The GEO Group has signed a merger agreement to acquire CentraCore Properties Trust, a correctional real estate investment trust.
CPT owns 13 correctional facilities with 8,071 beds. At the time of the deal, GEO was already leasing 11 facilities with 6,945 beds under sale-lease back agreements. The two CentraCore facilities that GEO was not leasing are the 400-bed Mesa Verde facility leased by Cornell companies and the 726-bed Delaney Hall, which was leased to Community Education Centers.
Under terms of the agreement, shareholders of CentraCore will receive $32 per common share, totaling about $356.1 million, and GEO will refinance the company’s debt, which is estimated to cost $40 million. GEO plans to finance the acquisition with $57 million in cash and $360 million in debt to be arranged by BNP Paribas.
The acquisition is expected to close in late 2006 or early 2007. If it is completed successfully, GEO will operate about 75 facilities in the United States, Australia, South Africa and Canada with a total of 60,000 beds.
In other News:
• GEO will build and operate a 625-bed detention facility that will house medium-security state inmates under an agreement forged between the company, the town of Clayton and the New Mexico Corrections Department.
The deal was made possible through an intergovernmental agreement signed by the town and the NMCD. The facility will be operated by GEO for five years, according to the contract with the company. After the first term is completed, the contract could be renewed annually for another five years.
Project revenue bonds, underwritten by Citigroup and sponsored by Clayton, are expected to finance the project.
The project is expected to reach completion in March 2008. Once completed, it is expected to generate approximately $11 million in yearly operating revenues.
• GEO opened a 600-bed expansion at the Lawton Correctional facility in Oklahoma. The facility is expected to be at full capacity in November and it is expected to generate $9 million in annual revenues.