GEO Group to Acquire San Diego Detention Facility for $60M

The GEO Group Inc. (NYSE:GEO) is one of the most promising stocks according to Wall Street analysts. On July 1, the GEO Group announced that it entered into a purchase agreement to acquire the 770-bed Western Region Detention Facility in San Diego, California, for $60 million. GEO currently leases this facility for ~$5.1 million annually, with the existing lease agreement set to expire on March 31, 2029.

The San Diego Facility generates ~$57 million in annualized revenues for GEO, through an exclusive contract with the US Marshals Service. The acquisition of the San Diego Facility is anticipated to close on July 31 this year. The purchase is expected to be funded as a like-kind real estate property exchange using proceeds from the previously announced sale of the GEO-owned Lawton Correctional Facility in Oklahoma. The sale of the Lawton Facility is projected to close on July 25.

Following the completion of both the Lawton Facility sale and the San Diego Facility purchase, GEO expects to have ~$222 million in net proceeds. These proceeds are intended to be used for paying off senior secured debt, which includes about $300 million in floating-rate debt.

The GEO Group Inc. (NYSE:GEO) owns, leases, operates, and manages secure facilities, processing centers, and community-based reentry facilities in the US, Australia, the UK, and South Africa.

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Disclosure: None. This article is originally published at Insider Monkey.