The GEO Group Enters Into New Lease Agreement With the State of New Mexico at the Guadalupe County Correctional Facility

Rhea-AI Summary

The GEO Group (NYSE: GEO) has announced a new two-year lease agreement with the State of New Mexico for the 600-bed Guadalupe County Correctional Facility, effective from November 1, 2021. The lease includes options for successive two-year renewals until October 31, 2041. The average annual rent for the first two years is $4 million. In the first half of 2021, the facility generated approximately $4 million in operating revenue. GEO will maintain the facility during the lease term, transitioning operations to the New Mexico Corrections Department.

Positive

• Secured a two-year lease with renewal options until October 31, 2041.
• Generated approximately $4 million in operating revenue in the first half of 2021 from the facility.
• Average annual rent of $4 million for the facility ensures steady cash flow.

Negative

• Transition of operations to New Mexico Corrections Department may affect future revenue streams.

 

BOCA RATON, Fla.--(BUSINESS WIRE)--

The GEO Group (NYSE: GEO) (“GEO”) announced today that it has entered into a new two-year lease agreement, with successive two-year renewal option periods through October 31, 2041, with the State of New Mexico at the company-owned, 600-bed Guadalupe County Correctional Facility. GEO has operated the Guadalupe County Correctional Facility under a management contract with New Mexico and will transition facility operations to the New Mexico Corrections Department when the new lease agreement commences on November 1, 2021. GEO will retain responsibility for facility maintenance throughout the term of the lease.

The average annual rent for the initial two-year lease term is $4 million, with escalators thereafter. For the first six months ended June 30, 2021, the Guadalupe County Correctional Facility generated operating revenue of approximately $4 million.

About The GEO Group

The GEO Group (NYSE: GEO) is a fully integrated equity real estate investment trust specializing in the design, financing, development, and operation of secure facilities, processing centers, and community reentry centers in the United States, Australia, South Africa, and the United Kingdom. GEO is a leading provider of enhanced in-custody rehabilitation, post-release support, electronic monitoring, and community-based programs. GEO’s worldwide operations include the ownership and/or management of 114 facilities totaling approximately 90,000 beds, including idle facilities and projects under development, with a workforce of up to approximately 20,000 professionals.

Safe-Harbor Statement

This press release contains forward-looking statements regarding future events and future performance of GEO that involve risks and uncertainties that could materially affect actual results, including statements regarding GEO’s new two-year lease agreement, with successive two-year renewal options through October 31, 2041, with the State of New Mexico at the 600-bed Guadalupe County Correctional Facility. Risks and uncertainties that could cause actual results to vary from current expectations and forward-looking statements contained in this press release include, but are not limited to: (1) GEO’s ability to meet its financial guidance for 2021 given the various risks to which its business is exposed; (2) GEO’s ability to deleverage and repay, refinance or otherwise address its debt maturities in an amount or on the timeline it expects, or at all; (3) changes in federal and state government policy, orders, directives, legislation and regulations that affect public-private partnerships with respect to secure correctional and detention facilities, processing centers, and reentry centers, including the timing and scope of implementation of the January 2021 Presidential Executive Order to not renew U.S. Department of Justice contracts with privately-operated criminal detention facilities; (4) changes in federal immigration policy; (5) public and political opposition to the use of public-private partnerships with respect to secure correctional and detention facilities, processing centers and reentry centers; (6) the magnitude, severity, and duration of the current COVID-19 global pandemic, its impact on GEO, GEO's ability to mitigate the risks associated with COVID-19, and the efficacy and distribution of COVID-19 vaccines; (7) GEO’s ability to sustain or improve company-wide occupancy rates at its facilities in light of the COVID-19 global pandemic and policy and contract announcements impacting GEO’s federal facilities in the United States; (8) fluctuations in our operating results, including as a result of contract terminations, contract renegotiations, changes in occupancy levels and increases in our operating costs; (9) general economic and market conditions, including changes to governmental budgets and its impact on new contract terms, contract renewals, renegotiations, per diem rates, fixed payment provisions, and occupancy levels; (10) GEO’s ability to timely open facilities as planned, profitably manage such facilities and successfully integrate such facilities into GEO’s operations without substantial costs; (11) GEO’s ability to win management contracts for which it has submitted proposals and to retain existing management contracts; (12) risks associated with GEO’s ability to control operating costs associated with contract start-ups; (13) GEO’s ability to successfully pursue growth and continue to create shareholder value; (14) GEO’s ability to obtain financing or access the capital markets in the future on acceptable terms or at all; (15) other factors contained in GEO’s Securities and Exchange Commission periodic filings, including its Form 10-K, 10-Q and 8-K reports.

View source version on businesswire.com: https://www.businesswire.com/news/home/20211021005162/en/

Pablo E. Paez (866) 301 4436

Executive Vice President, Corporate Relations

Source: The GEO Group, Inc.

FAQ

What is the new lease agreement for GEO with New Mexico?

The GEO Group has entered a two-year lease agreement for the Guadalupe County Correctional Facility with the State of New Mexico, starting from November 1, 2021.

How much rent will GEO receive from the New Mexico lease?

The average annual rent for the initial two-year lease term is $4 million.

What is the operating revenue generated by GEO's Guadalupe County facility?

For the first six months of 2021, the Guadalupe County Correctional Facility generated approximately $4 million in operating revenue.

When does GEO's lease with New Mexico expire?

The lease agreement has options for renewal and could last until October 31, 2041.

What are the implications of GEO’s lease agreement with New Mexico?

While the lease secures revenue, operations are transitioning to the New Mexico Corrections Department, which may impact future revenue.