CentraCore Properties Trust Announces 286-Bed Expansion of Delaney Hall
12 May 2006 - 11:52PM
PR Newswire (US)
PALM BEACH GARDENS, Fla., May 12 /PRNewswire-FirstCall/ --
CentraCore Properties Trust (NYSE:CPV), a real estate investment
trust (the "Company" or "CPT"), announced today it has closed a
transaction with Community Education Centers, Inc. ("CEC") for a
286-bed expansion of its Delaney Hall Facility in Newark, N.J.,
which is currently owned by the Company and leased to CEC. Delaney
Hall is an urban-based, secure, pre-release treatment facility
which has become a model for delivering vital education and
training to inmates prior to reentering society. The 286-bed
expansion will include administrative areas, and will add
approximately 40,000 square feet to the Facility at an expected
cost of approximately $13,000,000. Delaney Hall will continue
operations during the construction of the expansion, which is
expected to be completed during the third quarter of 2007.
Including the expansion, the Company will own the entire 1,012-bed
facility which will continue to be leased to and operated by CEC.
"Community Education Centers continues to distinguish itself in
providing housing, education and substance abuse treatment to
prepare former inmates to return to their communities, and we are
pleased to be partnering with CEC on this project," said Charles R.
Jones, president and chief executive officer of CPT. "Expanding
existing facilities is the most efficient means of increasing
correctional or training capacity, particularly given escalating
new construction costs and the difficulty of obtaining use permits
and zoning for new urban-based facilities." CPT will provide the
capital for the new 286-bed expansion and related improvements,
however, incur no direct construction risk or construction
management responsibility in connection with the expansion. The
architects, engineers and construction-related professionals have
been selected, engaged and supervised by CEC, which has extensive
experience and has demonstrated its expertise in the development
and construction of many correctional/treatment facilities. In this
transaction, CPT will also reimburse CEC for approximately $566,000
in prior improvements that CEC previously made to increase the
security level and operational efficiency of Delaney Hall. CEC is
currently paying CPT a lease rate of 11.67 percent on the original
726-bed facility. Although that rate will remain unchanged as a
result of this transaction, the reimbursement for $566,000 in
improvements and capital invested in the new 286-bed expansion will
have an initial rate of 9.9 percent. This is expected to result in
a blended rate for the 1,012-bed facility of approximately 11.41
percent with lease rate escalators at 3 percent annually, once the
expansion is completed. Rental payments related to the
reimbursement for existing improvements begin immediately. The
lease maturity date on the existing 726-bed facility between CEC
and CPT has been amended. CEC had approximately seven years
remaining on its original 10-year lease with CPT prior to this
amendment. The lease has been amended to provide a maturity date of
10 years on the entire facility, beginning the date upon which the
new 286-bed expansion is completed. CentraCore Properties Trust,
based in Palm Beach Gardens, Fla., was formed in February 1998 to
capitalize on the growing trend toward privatization in the
corrections industry. CPT has expanded its scope to include
essential purpose government real estate projects outside the
corrections sector, including mental health and higher education
facilities. CPT is dedicated to ownership of properties under
long-term, triple-net leases, which minimizes occupancy risk and
development risk. CPT currently owns 13 correctional facilities in
nine states, all of which are leased, with an aggregate completed
design capacity of 7,556 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, 2005 and subsequent periodic reports. The Company
assumes no obligation to update or supplement forward- looking
statements that become untrue because of subsequent events.
Contact: CentraCore Properties Trust Shareholder Services (561)
630-6336, or access Company information at
http://www.centracorepropertiestrust.com/ DATASOURCE: CentraCore
Properties Trust CONTACT: CentraCore Properties Trust Shareholder
Services, +1-561-630-6336 Web site:
http://www.centracorepropertiestrust.com/
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