PALM BEACH GARDENS, Fla., Jan. 5 /PRNewswire-FirstCall/ -- CentraCore Properties Trust , formerly Correctional Properties Trust, a real estate investment trust, announced it acquired the Mesa Verde Correctional Facility (the "Facility") for $16,300,000, plus transaction costs, on January 5, 2006. The Facility is a 400-bed, minimum-security correctional facility located in Bakersfield, Calif., and was acquired from Correctional Institution, LLC, an unrelated party. CentraCore Properties Trust ("CPT") drew $16,300,000 from its existing credit facility to complete the acquisition.
Simultaneous with the acquisition, CPT leased the Facility to Cornell Companies, Inc. Cornell Companies, Inc., ("Cornell") and CPT executed a triple-net lease expiring July 31, 2015, with a straight-line lease rate of approximately 10.48 percent during the initial four and one-half years of the lease, and a straight-line lease rate of approximately 12.04 percent for the following five years of the lease term. The lease includes a provision under which the lease payment will be increased by up to $50,000 annually during the initial term of the lease if the population housed in the Facility is increased.
Cornell will operate the Facility on behalf of the California Department of Corrections and Rehabilitation ("CDCR") housing adult, male inmates. Cornell has the one-time right to terminate the lease effective July 31, 2010, without cost, if CDCR elects not to renew the operating contract beyond the initial period.
Charles R. Jones, president and chief executive officer of CPT, said, "This is a significant event for our Company for several reasons. In this three- party transaction, we acquired the existing Facility and simultaneously leased it to Cornell, with each of the three parties involved being unrelated. We are very pleased to now own the Mesa Verde Correctional Facility, which is in an excellent location. Most importantly, we have now initiated a new business relationship with Cornell, with the desire to complete additional transactions."
CPT, 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 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, 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: CentraCore Properties Trust Shareholder Services (561) 630-6336, or access Company information at http://www.centracorepropertiestrust.com/
