Correctional Properties Trust Announces Closing of Comprehensive Lawton, Oklahoma Transaction
May 31 2005 - 9:42AM
PR Newswire (US)
Correctional Properties Trust Announces Closing of Comprehensive
Lawton, Oklahoma Transaction PALM BEACH GARDENS, Fla., May 31
/PRNewswire-FirstCall/ -- Correctional Properties Trust (NYSE:CPV),
a real estate investment trust (the "Company" or "CPT"), announced
it has completed the acquisition of the existing 300-bed expansion
to the Lawton Correctional Facility in Lawton, Oklahoma from The
GEO Group, Inc. (NYSE:GGI). The acquisition was completed using
cash on hand, and no debt was incurred. The purchase price was $3.5
million. The Company also closed a transaction under which a
600-bed expansion, costing approximately $23 million, will be
constructed onto the existing medium- security prison. The Company
expects the new 600-bed expansion to be completed and become
operational during the second quarter of 2006. CPT will own the
entire 2,518- bed facility, comprised of the original 1,500 beds,
the original 118 administrative beds, the newly acquired 300-bed
expansion, and the 600-bed expansion to be constructed. The
facility will continue to be leased to The GEO Group, Inc. ("GEO")
to house adult, male inmates for the Oklahoma Department of
Corrections. In 1999, the Company purchased the initial 1,500-bed,
medium-security, Lawton Correctional Facility from GEO (formerly
Wackenhut Corrections Corporation). GEO then added the 300-bed
expansion later that year, which they designed, constructed and
owned. The Company has now purchased that existing 300-bed
expansion for $3.5 million. CPT will also provide the funding for
and own the new 600-bed expansion expected to cost approximately
$23 million. The 600-bed expansion is a build-to-suit project, with
GEO providing design and development expertise, and Hensel Phelps
Construction Company serving as the builder. CPT expects to incur
no construction risk or construction management responsibility in
connection with the new expansion. The architects, engineers and
construction-related professionals have been selected, engaged and
will be supervised by GEO, which has extensive experience and
expertise in prison development and construction. GEO is currently
paying the Company a lease rate of 11.08 percent on the original
1,500-bed facility, which remains unchanged as a result of this
transaction. The acquired 300-bed expansion will now be leased to
GEO at an initial rate of 9.5 percent. This will result in a
blended-lease rate for the 1,918-bed facility (which includes 118
adult segregation beds) of approximately 10.96 percent with annual
lease escalators at CPI, not to exceed 4 percent annually. The new
600-bed expansion will 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 10.50 percent
with annual lease escalators at CPI, not to exceed 4 percent
annually. The lease maturity date on the existing 1,500-bed
facility between GEO and the Company has been amended. GEO had
approximately four years remaining on its original 10-year lease
with the Company. The amended lease provides a maturity date of 10
years on the entire 2,518-bed facility and will commence when the
new 600-bed expansion is completed. Charles R. Jones, president and
chief executive officer of CPT, said, "The completion of this
transaction is a significant event for our Company for several
reasons. Previously, all of our facilities have been purchased as a
finished product and then leased back to the seller. In this case,
we are funding a large, build-to-suit addition to an owned
facility, which adds an important dimension to our Company. Also,
following the completion of the new addition, we will have an
amended, triple-net lease in place, with a new 10- year term."
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 completed design
capacity of 7,156 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, 2004 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 Web site:
http://www.correctionalpropertiestrust.com/
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