Jones Lang LaSalle

Treatment Facility Aims for Expansion
By Eric Peterson

NEWARK-CentraCore Properties Trust has closed a transaction with Community Education Centers Inc for a $13-million, 286-bed expansion of its Delaney Hall facility here. Delaney Hall is a treatment facility for educating and training inmates prior to their re-entering society

The facility is owned by CPT, a Palm Beach Gardens, FL-based REIT, and leased to and operated by CEC. Under the terms of the transaction, that relationship will continue.

"Expanding existing facilities is the most efficient means of increasing correctional or training capacity," says Charles R. Jones, president and CEO of CPT. "That's particularly true given escalating new construction costs and the difficulty of obtaining use permits and zoning for new urban-based facilities."

The expansion, which will boost Delaney Hall's capacity to 1,012 beds, will include administrative areas and add approximately 40,000 sf to the existing facility. It will continue to operate during the expansion, which is expected to be completed during Q3 of 2007.

According to details released by CPT, the REIT will provide capital for the expansion, but won't incur direct construction risk or construction management responsibility. The project's architects, engineers and construction-related professionals are all being hired by and will be supervised by CEC. CPT will also reimburse CEC for $566,000 in prior improvements.

The lease between CPT and CEC has also been amended, including rate escalators of 3% annually once the expansion is completed. The lease maturity date on the existing 726-bed facility has been amended as well. CEC had some seven years to go on its original 10-year lease, but the lease will now have a maturity date of 10 years on the entire facility starting on the date the expansion is finished.

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