PALM BEACH GARDENS, FL-There are more changes in the works for what was once Correctional Properties Trust now that it calls itself CentraCore Properties Trust. The REIT is moving on its expanded focus, as revealed was unveiled during a fourth-quarter 2005 conference call. Without disclosing the identity of the state government, Charles Jones, CPT’s president and CEO, said the REIT has submitted an unsolicited bid for a $65-million build-to-suit for a state’s mental health facility.

“We are one of three finalists, and bid selection is due in April,” Jones said. While this is a competitive bid, and there is no assurance CPT’s RFP will be selected, he said it represents an example of the company’s new direct-lease business model and illustrates “that we’re not just involved in inmate housing. We’re also seeking to establish sale-leaseback agreements with government agencies for mental health and higher educational facilities.” Like prisons, these types of facilities are becoming privatized on an increasing basis.

On projects such as the state mental facility, Jones said CPT would work with a construction partner. Under such agreements, the firm would deliver the project, then sell it to the government entity, which would become the lessee on a long-term basis.

CPT’s revenues for the quarter were $7.1 million, up from $6.8 million for the fourth quarter of 2004. The increase is attributed primarily to rent increases at its 13 correctional facilities in nine states. All are leased with an aggregate completed design capacity of 7,556 beds.

Looking forward, CPT officials anticipate completion of a $23-million, 600-bed expansion of Lawton Correctional Facility in Lawton, OK next quarter. A year ago, it acquired an earlier 300-bed expansion at the same facility for $3.9 million. As with the 300-bed expansion, CPT will lease the newest addition back to the Boca Raton-based Geo Group, which operates the facility.

This January, CPT initiated a similar sale-leaseback agreement with its $16.3-million acquisition of the Mesa Verde Correctional Facility in Bakersfield, CA from Houston-based Cornell Cos. Cornell operates the facility on behalf of the California Department of Corrections and Rehabilitation, and its lease with CPT runs through July 31, 2015. During yesterday’s conference call, Jones said he anticipates additional opportunities for sale-leaseback agreements with both Cornell and Geo.

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