GEO Group to Acquire San Diego Detention Facility in $60M Strategic Transaction, Funding Via Oklahoma Property Sale

The GEO Group (NYSE: GEO) has entered into a purchase agreement to acquire the Western Region Detention Facility in San Diego, California, a 770-bed federal detention center, for $60 million. The transaction is set to close on July 31, 2025, contingent on standard closing conditions.

Financial Structure and Tax Strategy

The acquisition will be structured as a like-kind real estate property exchange, funded through proceeds from GEO’s previously announced sale of its Lawton Correctional Facility in Oklahoma, expected to close on July 25, 2025. This strategic approach is designed to generate approximately $9.5 million in capital gains cash tax savings. Following both transactions, GEO anticipates net proceeds of roughly $222 million.

Revenue and Operational Profile

GEO currently operates the San Diego detention facility under a lease agreement generating approximately $57 million in annualized revenues from a contract with the U.S. Marshals Service. The existing lease, which runs until March 31, 2029, costs the company approximately $5.1 million annually. The Western Region Detention Facility has served federal detention operations in the San Diego area for roughly 25 years.

Capital Allocation and Debt Reduction

The company plans to deploy net proceeds, combined with cash reserves and available liquidity, to retire senior secured debt, including approximately $300 million in floating-rate obligations. This debt reduction is positioned to enable GEO to evaluate potential shareholder returns moving forward.

Strategic Rationale

According to George C. Zoley, Executive Chairman, the acquisition is expected to be accretive to annualized Adjusted EBITDA while delivering substantial tax efficiencies through the exchange structure. The facility’s proximity to the U.S. District Courthouse for the Southern District of California makes it strategically positioned to continue providing federal detention and transportation services.

GEO operates and supports 98 facilities worldwide with approximately 77,000 beds across the United States, Australia, South Africa, and the United Kingdom, employing up to 18,000 personnel.