Correctional Properties Trust Reports Financing Resolution Adopted By State of North Carolina
July 07 2004 - 9:06AM
PR Newswire (US)
Correctional Properties Trust Reports Financing Resolution Adopted
By State of North Carolina PALM BEACH GARDENS, Fla., July 7
/PRNewswire-FirstCall/ -- Correctional Properties Trust (NYSE:CPV),
a real estate investment trust (REIT), has announced that at a
meeting held on July 6, 2004, elected officials of the State of
North Carolina (the "State") approved a resolution providing
preliminary approval for issuing State debt, the proceeds of which
would be used to acquire the Mountain View Correctional Facility
and the Pamlico Correctional Facility (the "Facilities"), owned by
a subsidiary of Correctional Properties Trust, and leased to the
State. These Facilities were purchased in 2001 from an unrelated
third party, subject to existing leases on each property. As
previously disclosed, each of the leases contained an option under
which the State may acquire the Facilities for a predetermined
purchase price, which declines each year. The options may be
exercised annually beginning in 2004. The options provide for the
acquisition of the Pamlico Correctional Facility beginning in
August 2004 for approximately $25.2 million, and the Mountain View
Correctional Facility beginning in December 2004, for approximately
$26.2 million. The State is required to notify the Company in
writing of its intent to exercise the option to acquire the
respective Facility. While such notice has not been received for
either Facility, the State has indicated their intent to provide
this notice. On an annualized basis, each of the Facilities
currently contributes approximately 3.5 cents in net income per
diluted share. If the State exercises both options in 2004,
depending on timing and other variables, the Company would expect
to recognize a combined gain on the sale of the Facilities of
approximately $5 million for financial reporting purposes. The net
proceeds of a sale of one or both of the Facilities are required to
be used to redeem the taxable mortgage revenue bonds (the "Bonds")
at par, which were issued in 2001 to finance the Facilities. If the
State acquires both Facilities in 2004, the Company expects to have
excess sales proceeds of approximately $2 million, following the
redemption of all the Bonds. Correctional Properties Trust, based
in Palm Beach Gardens, Florida, was formed in February 1998, to
capitalize on the growing trend toward privatization in the
corrections industry. Correctional Properties Trust is dedicated to
ownership of correctional facilities under long-term, triple-net
leases, which minimizes occupancy risk and development risk.
Correctional Properties Trust currently owns 14 correctional
facilities in ten states, all of which are leased, with an
aggregate initial design capacity of 8,008 beds. This press release
contains forward-looking statements regarding future events and
future performance of the Company that involve risks and
uncertainties that could materially affect actual results. This
information is qualified in its 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, without limitation, the Company's Form 10-K, Forms
10-Q, Registration Statements on Form S-11 and S-3, and Form 8-K.
CONTACT: Correctional Properties Trust Shareholder Services (561)
630-6336, or access Company information at
http://www.correctionalpropertiestrust.com/ DATASOURCE:
Correctional Properties Trust CONTACT: Correctional Properties
Trust Shareholder Services, +1-561-630-6336
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