Prison REIT Geo Group To Sell Assets, Commits $70M To Expand Detention Capacity
Private prison REIT The Geo Group is putting $70M toward detention centers and is reorganizing its senior leadership.
The cash is going toward increasing capacity at its detention facilities as well as transportation and electronic monitoring services to Immigration and Customs Enforcement, according to a press release Monday.
Geo will also look at selling underperforming company-owned state prisons to offset costs and reduce debt, it said in the release.
The REIT owns, leases or manages 100 facilities, processing centers and community reentry centers globally. Its portfolio includes 79,000 beds, including those in inventory and upcoming projects.
ICE's largest provider, Geo supplies 21,000 beds across 16 of its processing centers, with the capacity to grow to 32,000 beds at 23 locations.
Investing more represents a 180-degree turn from three years ago when the REIT stopped paying out dividends to "evaluate its structure."
With the onset of the pandemic and the Democrats' 2020 election sweep, the REIT's future hung in the balance. Covid-19 ran rampant in Geo's overcrowded prisons, which lacked effective virus protocols and caused it to spread, leading to a decline in population. President Joe Biden signed an executive order prohibiting the renewal of federal contracts with private prison operators in 2021, which accounted for half of Geo Group's business at the time.
Prison REITs were the worst underperformers in real estate sectors in 2021, losing 10.7% of value, Hoya Capital found.
A GOP-led federal government might turn things around for the sector. Trump's reelection and mass deportation commitment is already affecting real estate: Texas' land commissioner offered up 1,400 acres of land to build detention facilities along the U.S.-Mexico border in November.
Geo also announced its chief executive, Brian Evans, is retiring Dec. 31 and will be replaced by J. David Donahue, who is returning to the company Jan. 1.
Donahue originally joined in 2009 as eastern region vice president. In 2016, he was promoted to senior vice president and president of Geo Secure Services until his 2020 retirement. Previously, Donahue was vice president of the American Correctional Association and served as corrections commissioner with the Federal Bureau of Prisons, Kentucky and Indiana from 2005 to 2008.
"His more than 40 years of experience in corrections and detention, coupled with his experience in operational planning, facility activations, and managing and overseeing operational teams will serve as an asset to our Company as we face the new and expanding opportunities ahead," said George C. Zoley, executive chairman of GEO, in a statement.
Geo Senior Vice President of Secure Services James Black is also retiring Dec. 31 and will be replaced by Paul Laird, who joined in 2015 as eastern region director of operations. Daniel Ragsdale will come in as senior vice president of contract administration and compliance on Jan. 1. He joined Geo in 2017 as executive vice president of contract compliance after a five-year tenure as deputy director of ICE.
