Geo Group to acquire 770-bed detention facility in San Diego for $60M

Geo Group (GEO) has entered into a purchase agreement with SDCC Middle Block, an affiliate of Holland Partners Group, to acquire the 770-bed Western Region Detention Facility located in San Diego, California, for $60M. Geo currently leases the San Diego Facility for approximately $5.1M annually under a lease agreement that expires on March 31, 2029. Geo has a contract with the U.S. Marshals Service for the exclusive use of the San Diego Facility, which generates approximately $57M in annualized revenues. The purchase of the San Diego Facility is expected to close on July 31, subject to the satisfaction of customary closing conditions, and is expected to be funded as a like kind real estate property exchange with proceeds from the previously announced sale of the Geo-owned Lawton Correctional Facility in Oklahoma, expected to close on July 25, resulting in an estimated capital gains cash tax savings of approximately $9.5M. Following the closing of the sale of the Lawton Facility and the purchase of the San Diego Facility, Geo expects to have approximately $222M in net proceeds. Geo expects to use the net proceeds, along with cash on hand and available liquidity, to pay off senior secured debt, including approximately $300M in floating rate debt.