##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-K
 FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO
SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 (Mark One)
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
   o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 
 CENTRACORE PROPERTIES TRUST
  MARYLAND
(State or Other Jurisdiction
of Incorporation or Organization)
    
    65-0823232
(I.R.S. Employer
Identification No.)11376 JOG ROAD, SUITE 101
PALM BEACH GARDENS, FLORIDA
(Address of Principal Executive Offices)
    
    33418
(Zip Code)
 (561) 630-6336
  Title of each class
    
    Name of each exchange on which registeredCommon Shares of Beneficial Interest, $.001 par value per share
    
    New York Stock Exchange
   
  o x
 o x
 x o
  ̈
  Large accelerated filer o
    
    Accelerated filerx
    
    Non-accelerated filero
 o x
   DOCUMENTS INCORPORATED BY REFERENCE




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##### Table of Contents



CentraCore Properties Trust
Annual Report on Form 10-K
 Index
 PageNumberPART IItem 1.
    
    Business
    
    
    2Item 1A.
    
    Risk Factors
    
    
    24Item 1B.
    
    Unresolved Staff Comments
    
    
    30Item 2.
    
    Properties
    
    
    30Item 3.
    
    Legal Proceedings
    
    
    30Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    31PART IIItem 5.
    
    Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    31Item 6.
    
    Selected Financial Data
    
    
    32Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    33Item 7A.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    41Item 8.
    
    Financial Statements and Supplementary Data
    
    
    41Item 9.
    
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    41Item 9A.
    
    Controls and Procedures
    
    
    42Item 9B.
    
    Other Information
    
    
    42PART IIIItem 10.
    
    Directors and Executive Officers of the Registrant
    
    
    62Item 11.
    
    Executive Compensation
    
    
    62Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    62Item 13.
    
    Certain Relationships and Related Transactions
    
    
    62Item 14.
    
    Principal Accounting Fees and Services
    
    
    62PART IVItem 15.
    
    Exhibits and Financial Statement Schedule
    
    
    62SubsidiariesConsent of Ernst & Young LLPSection 302 CEO CertificationSection 302 CFO CertificationSection 906 CEO CertificationSection 906 CFO Certification




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PART I
 FORWARD-LOOKING STATEMENTS
   
    
    our reliance on a single lessee for a substantial majority of our revenue;
    
    non-renewal of existing leases;
    
    the limited alternative use and special purpose aspects of our properties;
    
    changes in interest rates;
    
    our continued ability to obtain financing;
    
    our ability to obtain rental rates sufficient to make acquisitions feasible;
    
    our continued ability to pay a dividend;
    
    changes in governmental and public policy;
    
    our failure to manage effectively our growth and expansion into new markets or to
integrate acquisitions successfully;
    
    general industry and market conditions;
    
    our potential failure to qualify as a real estate investment trust under the
Internal Revenue Code of 1986, as amended; and
    
    the other risk factors identified in this Form 10-K, including those described under
the caption Risk Factors.
  
 Item 1. Business .
 General
  2




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Immigration and Customs Enforcement
    
    Oklahoma Department of CorrectionsKarnes County, Texas
    
    Essex County, New JerseyLea County, New Mexico
    
    Union County, New JerseyCalifornia Department of Corrections and
Rehabilitation
    
    New Jersey Department of
Corrections
     Recent Events and 2005 Overview
 Name Change www.CentraCorePropertiesTrust.com
 Mesa Verde Acquisition
  3




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Extension of the McFarland Facility Lease.
  Lawton Facility Expansion
  Business and Growth Strategies
 Operating and Investment Philosophy.
 
    
    pursuing investment opportunities with private prison owners and operators and
government entities for the financing, development, acquisition and lease back of
correctional and detention facilities and other essential purpose government facilities
including mental health and higher education facilities;
    
    working with tenants to identify opportunities to expand existing and newly acquired facilities; and
    
    structuring facility leases to include rent escalation provisions which provide for annual increases in rent.
 Acquisition Opportunities.
  4




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##### Table of Contents



Expansion Opportunities.
 Rent Escalations.
 
    
    GEO. The base rent for the first year of each facility leased to GEO before January
1, 2000 was equal to 9.5% of the facility purchase price. After the first year, minimum
rent escalates by the greater of 3.0% or the increase in the Consumer Price Index, or
CPI, with a maximum increase of 4.0% for the first two annual anniversaries of the
effective date of each lease and, for each successive annual anniversary for the
remaining term of each lease, by an amount equal to increases, if any, in the CPI,
subject to a maximum increase of 4.0% per annum throughout the term of the leases. The
base rent for the first year of the Jena Juvenile Justice Center in Jena, Louisiana
leased to GEO was equal to 11.0% of the facility purchase price with a fixed 4.0%
annual escalator. The base rent for the first year of the 300-bed expansion to the
Lawton Correctional Facility leased to GEO was equal to 9.5% of the purchase price for
the expansion. After the first year, minimum rent escalates by an amount equal to
increases, if any, in the CPI, subject to a maximum increase of 4.0% per annum
throughout the term of the lease. Pursuant to the terms of the amended lease on the
McFarland Facility, effective January 1, 2006, the annual base rent is fixed at
$950,000 with no annual lease escalator. The average remaining life on the eleven
leases with GEO as of March 9, 2006, is approximately 2.7 years (or 4.8 years assuming
the new 10-year lease term on the entire Lawton Facility to the year 2016 were already
effective).
    
    CEC.On May 29, 2003, we acquired Delaney Hall. The initial base rent rate was $2.31
million per annum or 11.0% of the facility purchase price. Following the first year and
continuing during the term of the lease, base rent increases by 3.0% annually on each
anniversary.
    
    Cornell Companies, Inc.On January 5, 2006, we acquired Mesa Verde Correctional
Facility. The initial annual base rent rate was $1,708,200 (or approximately 10.48% of
the facility purchase price of $16.3 million) with no annual lease escalator. After
four and one-half years, annual base rent increases to $1,963,116 (or 12.04% of the
facility purchase price of $16.3 million) for the following five years of the lease
term with no annual lease
 5




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The Operating Partnership
 The Operating Partnership.
  Structure of the Company
   (1)
    
    Following the consummation of our initial public offering, WCC RE Holdings, Inc., a
wholly-owned subsidiary of The GEO Group, was merged with and into WCC RE Holdings LLC, or
WCCRE LLC, which was formed as a wholly-owned subsidiary of The GEO Group, with WCCRE LLC
being the surviving entity.
 6




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(2)
    
    The operating partnership leases the following facilities to The GEO Group: the Queens
Facility, the Aurora Facility, the Hobbs Facility, the Karnes Facility, the Lawton Facility,
the McFarland Facility and the Jena Facility, and leases the Delaney Hall Facility to CEC and
the Mesa Verde Facility to CRN. See The Facilities.
 (3)
    
    The operating partnership leases the following facilities to WCCRE LLC, each of which was in
turn subleased to The GEO Group: the Broward Facility, the Central Valley Facility, the Golden
State Facility and the Desert View Facility. See The Facilities.
 (4)
    
    The provisions of some existing facility operating agreements between The GEO Group and the
respective contracting government entities afford the governmental entity the right to assume
a lease of the respective facility (or designate another facility operator to assume the lease
of the respective facility) at a fixed rental rate in the event of the early termination of
the facility operating agreement if specified events occur. In these instances, The GEO Group
has entered into a sublease for the subject facility with WCCRE LLC, with WCCRE LLC as the
sublessor and The GEO Group as the sublessee. The contracting governmental entity has the
right to assume the rights of The GEO Group under this sublease on early termination of the
operating agreement for the relevant facility. However, even if a government entity elects to
exercise its right to assume a sublease relating to a facility, The GEO Group is nevertheless
liable to us under the master lease relating to the facility. See Subleases.
 (5)
    
    Correctional Properties Prison Finance LLC (formerly known as Correctional Properties North
Carolina Prison Finance LLC), or CPPF LLC, is a wholly owned subsidiary of ours. CPPF LLC is
a Delaware limited liability company formed to acquire and own the previously owned Mountain
View and Pamlico Facilities and issue the Bonds which were used to pay for those acquisitions.
On November 4, 2004, we sold the Mountain View and Pamlico Facilities to the State of North
Carolina.
 (6)
    
    Public Properties Development & Leasing LLC is a Delaware limited liability company, and it
is a wholly owned subsidiary of ours.
 Relationship With The GEO Group
     7




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
    
    in the case of a newly developed facility, four years from the receipt of a
certificate of occupancy for the facility or (b) in the case of an already operating
facility, four years from the date the facility is acquired by GEO or the party from
which GEO has the right to acquire the facility; or
    
    six months after the facility attains an occupancy level of 75% of the number of
beds authorized under the certificate of occupancy for the facility, subject to certain
limited exceptions.
   8




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##### Table of Contents



Our Facilities
  Date
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Design
    
    
    
    
    
    ExpirationFacility was
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Capacity
    
    
    
    
    
    of
    
    OperatingAcquired by
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    and
    
    Facility
    
    Underlying
    
    AgreementFacility and
    
    the
    
    Lease
    
    Type of
    
    Contracting
    
    Security
    
    Occupancy
    
    Opening
    
    Operating
    
    RenewalLocation
    
    Company
    
    Expiration
    
    Facility
    
    Entity
    
    Level (1)
    
    Rate (2)
    
    Date
    
    Agreement (3)
    
    OptionsTHE GEO GROUP
FACILITIES:Aurora
    
    April 1998
    
    April 2008
    
    BICE
    
    BICE (4)
    
    Minimum/
    
    
    300/91
    %
    
    May
    
    March
    
    
    Processing Center,
    
    
    
    
    
    
    
    
    
    Detention
    
    
    
    
    
    Medium
    
    
    
    
    
    
    1987
    
    
    
    2006or the Aurora
    
    
    
    
    
    
    
    
    
    FacilityFacility,
Aurora, COMcFarland Community
    
    April 1998
    
    March 2016 (7)
    
    Pre-Release
    
    CDOCR (6)
    
    Minimum/
    
    
    224/93
    %
    
    February
    
    June
    
    TwoCorrectional
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Medium
    
    
    
    
    
    
    1988
    
    
    
    2010
    (7)
    
    Five-YearFacility,
or the McFarland
Center Facility,
McFarland, CAQueens Private
    
    April 1998
    
    April 2008
    
    USMS
    
    USMS (5)
    
    Minimum/
    
    
    200/98
    %
    
    March
    
    June
    
    OneCorrectional
    
    
    
    
    
    
    
    
    
    Detention
    
    
    
    
    
    Medium
    
    
    
    
    
    
    1997
    
    
    
    2006
    (5)
    
    One-YearFacility,
    
    
    
    
    
    
    
    
    
    Facilityor the Queens
Facility,
New York, NYCentral Valley
    
    April 1998
    
    April 2008
    
    Adult
    
    CDOCR
    
    Minimum/
    
    
    550/98
    %
    
    December
    
    December
    
    
    Community
    
    
    
    
    
    
    
    
    
    Correctional
    
    
    
    
    
    Medium
    
    
    
    
    
    
    1997
    
    
    
    2007Correctional
    
    
    
    
    
    
    
    
    
    FacilityFacility,
or the Central
Valley Facility,
McFarland, CAGolden State
    
    April 1998
    
    April 2008
    
    Adult
    
    CDOCR
    
    Minimum/
    
    
    550/97
    %
    
    December
    
    December
    
    
    Community
    
    
    
    
    
    
    
    
    
    Correctional
    
    
    
    
    
    Medium
    
    
    
    
    
    
    1997
    
    
    
    2007Correctional
    
    
    
    
    
    
    
    
    
    FacilityFacility,
or the Golden State
Facility,
McFarland, CADesert View
    
    April 1998
    
    April 2008
    
    Adult
    
    CDOCR
    
    Minimum/
    
    
    550/98
    %
    
    December
    
    December
    
    
    Community
    
    
    
    
    
    
    
    
    
    Correctional
    
    
    
    
    
    Medium
    
    
    
    
    
    
    1997
    
    
    
    2007Correctional
    
    
    
    
    
    
    
    
    
    FacilityFacility,
or the Desert View
Facility,
Adelanto, CABroward Transition
    
    April 1998
    
    April 2008
    
    BICE
    
    BICE (8)
    
    Non-
    
    
    300/128%
    (8)
    
    February
    
    September
    
    TwoCenter,
    
    
    
    
    
    
    
    
    
    Detention
    
    
    
    
    
    Secured
    
    
    
    
    
    
    1998
    
    
    
    2006
    
    
    One-Yearor the Broward
    
    
    
    
    
    
    
    
    
    FacilityCounty
Facility,
Broward County, FLKarnes County
    
    April 1998
    
    April 2008
    
    Adult
    
    Karnes
    
    Multi-
    
    
    480/108
    %
    
    January
    
    
    2026
    
    
    
    Correctional Center,
    
    
    
    
    
    
    
    
    
    Correctional
    
    County
    
    Security
    
    
    
    
    
    
    1996or the Karnes
    
    
    
    
    
    
    
    
    
    FacilityFacility,
Karnes City, TX
 9




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Date
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Design
    
    
    
    
    
    ExpirationFacility was
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Capacity
    
    
    
    
    
    of
    
    OperatingAcquired by
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    and
    
    Facility
    
    Underlying
    
    AgreementFacility and
    
    the
    
    Lease
    
    Type of
    
    Contracting
    
    Security
    
    Occupancy
    
    Opening
    
    Operating
    
    RenewalLocation
    
    Company
    
    Expiration
    
    Facility
    
    Entity
    
    Level (1)
    
    Rate (2)
    
    Date
    
    Agreement (3)
    
    OptionsLawton
    
    January 1999
    
    January 2009
    
    Adult
    
    ODOC(10)
    
    Medium
    
    
    1,800/99
    %
    
    December
    
    June
    
    TwoCorrectional
    
    
    
    
    
    
    (9
    )
    
    Correctional
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1998
    
    
    
    2006
    
    
    One-Facility,
    
    
    
    
    
    
    
    
    
    Facility
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Yearor the Lawton
Facility,
Lawton, OKLea County
    
    October 1998
    
    January 2009
    
    Adult
    
    Lea
    
    Multi-
    
    
    1,200/102
    %
    
    May
    
    June
    
    AnnualCorrectional
    
    
    (11
    )
    
    
    
    
    
    Correctional
    
    County
    
    Security
    
    
    
    
    
    
    1998
    
    
    
    2006Facility,
    
    
    
    
    
    
    
    
    
    Facilityor the Hobbs
Facility,
Hobbs, NMJena Juvenile
    
    January 2000
    
    January 2010
    
    Juvenile
    
    None
    
    Multi-
    
    
    276/0%
    (12)
    
    June
    
    None (12)
    
    NoneJustice Center,
    
    
    
    
    
    
    
    
    
    Correctional
    
    
    
    
    
    Security
    
    
    
    
    
    
    1999or the Jena
    
    
    
    
    
    
    
    
    
    FacilityFacility,
Jena, LAFACILITY LEASED
TO CEC:Delaney Hall
    
    May 2003
    
    May 2013
    
    Adult
    
    
    (13
    )
    
    Minimum
    
    
    726/99
    %
    
    March
    
    
    (13
    )
    
    
    (13
    )or the Delaney
    
    
    
    
    
    
    
    
    
    Correctional
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2000Hall Facility,
    
    
    
    
    
    
    
    
    
    FacilityNewark, NJFACILITY LEASED
TO CORNELL
COMPANIES, INC.:Mesa Verde
    
    January 2006
    
    July 2015
    
    Adult
    
    CDOCR
    
    Minimum
    
    
    400/(14
    )
    
    
    1988
    
    
    June
    
    TwoCorrectional
    
    
    
    
    
    
    (14
    )
    
    Correctional
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2010
    
    
    Five-YearFacility
    
    
    
    
    
    
    
    
    
    Facilityor the Mesa Verde
Facility,
Bakersfield, CATotal Facilities
    
    
    13
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,556/94
    %
 (1)
    
    Each facility is identified according to the level of security maintained as follows:
non-secured facilities are facilities which are access controlled residential facilities;
minimum security facilities are facilities having open-housing within an appropriate
designated and patrolled institutional perimeter; medium security facilities are facilities
having either cells, rooms or dormitories, a secure perimeter, and some form of external
patrol; maximum security facilities are facilities having single occupancy cells, a secure
perimeter and external patrol or devices; and multi-security facilities are facilities with
various components of the previously described security levels.
 (2)
    
    Design capacity measures the number of beds, and, accordingly, the number of inmates each
facility is designed to accommodate. Occupancy rate measures the percentage of the number of
beds which a facility is designed to accommodate which are occupied at any given time or for
which payment has been guaranteed by the contracting governmental entity. The facility
operating agreement with respect to any facility may provide for occupancy less than the
facility design capacity. While the design capacity of each of the Central Valley Community
Correctional Facility, the Golden State Community Correctional Facility and the Desert View
Community Correctional Facility is 550, the facility operating agreement for each such
facility provides for the use and occupancy of only 500 beds per facility. The occupancy rates
presented are as of January 31, 2006. We believe design capacity and occupancy rate are
appropriate measures for evaluating prison operations because the revenues generated by each
facility are generally based on a per diem or monthly rate per inmate housed at the facility
paid by the corresponding contracting government entities. The ability of GEO, CEC, CRN or
another private prison operator to satisfy its financial obligations under its leases with us
is based in part on the revenues generated by their operation of these facilities, which in
turn depends on the design capacity and occupancy rate of each facility.
 10




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##### Table of Contents



(3)
    
    We are not a party to the underlying operating agreement on each facility. The GEO Group, CEC
and CRN or their affiliates are the parties to the operating agreements with the contracting
government entities on GEO, CEC and CRN facilities, respectively. The expiration or
termination of any operating agreement between a governmental entity and GEO, CEC or CRN does
not terminate or cause the expiration of the lease agreement.
 (4)
    
    The Homeland Security Act of 2002 moved the functions of the Immigration and Naturalization
Service, or INS, to the Department of Homeland Security, or DHS. The Bureau of Immigration and
Customs Enforcement, or BICE, or ICE, is a division of the DHS.
 (5)
    
    On June 30, 2005, The GEO Groups operating agreement with BICE on the Queens Facility was
transferred to the Office of the Federal Detention Trustee (OFDT) effective June 30, 2005.
GEO is managing and operating the Queens Facility on behalf of the United States Marshals
Service (USMS) under a contract option period which began on July 1, 2005 and ends on June
30, 2006.
 (6)
    
    State of California Department of Corrections and Rehabilitation.
 (7)
    
    The GEO Group entered into a new operating contract with the California Department of
Corrections and Rehabilitation, or the CDOCR, on the 224-bed McFarland Community Correctional
Facility, or the McFarland Facility, for an initial term of five years beginning on January 1,
2006. The GEO Groups previous contract with the CDOCR on the McFarland Facility had expired
on December 31, 2005. As a result of the new operating contract, the original lease expiration
date on the McFarland Facility of April 28, 2008, was extended to accommodate the term of the
new operating contract. Per the terms of the original lease agreement, the annual cash rent on
the McFarland Community Correctional Facility prior to amending the lease was $803,497 with an
annual lease escalator at CPI, not to exceed 4 percent annually. Pursuant to the terms of the
amended lease, effective January 1, 2006, the annual, cash-rent payments are fixed at $950,000
with no annual lease escalator. The amended lease expiration date is March 31, 2016. However,
GEO has a one-time right to terminate the lease agreement effective 90 days following the
expiration of the initial term of the new operating contract, at no cost, if the CDOCR elects
not to exercise its option to extend the new operating contract beyond the expiration date of
the initial term.
 (8)
    
    BICE has executed an operating agreement with The GEO Group under which BICE will utilize 200
beds in the Broward Facility, with an option to expand by an additional 50 beds at the request
of BICE. The agreement has two remaining one-year renewal options. The operating agreement
between the Broward County Sheriffs Office, or the BSO, and The GEO Group, was terminated in
January 2006.
 (9)
    
    We are currently in the process of funding the construction of a 600-bed expansion onto the
facility. Upon the completion of the new 600-bed expansion, which is currently expected to be
in the second half of 2006 but no later than the outside date of December 4, 2006 as per the
terms of the amended lease, it will be leased to GEO at an initial annual rate of 9.5 percent
of our total costs, and a new lease term of 10 years will commence on the entire facility.
Under the amended lease, rent escalates on an annual basis by an amount equal to increases, if
any, in the CPI, subject to a maximum increase of 4.0% per annum.
 (10)
    
    State of Oklahoma Department of Corrections.
 (11)
    
    In October 1998, we acquired the 600-bed Hobbs Facility. Subsequently, we acquired the
600-bed expansion of the Hobbs Facility in January 1999, and an industries building in July
1999.
 (12)
    
    The Jena Facility was operated by The GEO Group under an operating agreement with the State
of Louisiana, which was terminated in July 2000. The GEO Group does not presently have an
operating contract with a client for the Jena Facility, and as a result, the facility has been
vacant since the termination of the operating agreement in July 2000. GEO had recently
allowed the State of Louisiana to use the Jena Facility on a temporary emergency basis to
house approximately 500 inmates as a result of the emergency situation created by Hurricane
Katrina. However, the State of Louisiana is no longer utilizing the facility, and the Jena
Facility is currently vacant. The GEO Group is obligated under the terms of the lease to
continue to make rental payments to us regardless of the occupancy status of the Jena
Facility.
 (13)
    
    CEC operates Delaney Hall under three separate operating agreements with: (1) the New Jersey
Department of Corrections, which expires on June 30, 2006; (2) Union County, New Jersey, which
expires on December 31, 2006; and (3) Essex County, New Jersey, which expires on September 30,
2006.
 11




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##### Table of Contents



(14)
    
    CRN has begun accepting inmates and operating the Mesa Verde Facility on behalf of the California
Department of Corrections and Rehabilitation housing adult, male inmates. CRN
has the one-time right to terminate the lease effective July 31, 2010, without cost, if
California Department of Corrections and Rehabilitation elects not to renew the current
operating contract beyond the initial period.
 Adult Correctional Facilities.
       Pre-Release Center.
 12




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##### Table of Contents



Detention Facilities.
    Juvenile Correctional Facilities.
  13




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##### Table of Contents



Leases and Subleases with The GEO Group
  Leases
  Use of the Facilities.
  Maintenance, Modification and Capital Additions.
   14




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##### Table of Contents



Insurance.
 Right of First Refusal
 Environmental Matters.
 Indemnification Generally.
 Events of Default.
  15




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##### Table of Contents



Assignment and Subletting.
  Subleases
   The California Facilities Subleases.
 16




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##### Table of Contents



Lease with Community Education Centers, Inc.
 Leases
  Use of the Facilities.
 Maintenance, Modification and Capital Additions.
   Insurance.
 Right of First Refusal
 Environmental Matters.
 17




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##### Table of Contents



Assignment and Subletting.
  Indemnification Generally.
 Events of Default.
 Lease with Cornell Companies, Inc.
 Leases
  Use of the Facilities.
 18




---



##### Table of Contents



Maintenance, Modification and Capital Additions.
   Insurance.
 Right of First Refusal
 Environmental Matters.
 Assignment and Subletting.
  Indemnification Generally.
 19




---



##### Table of Contents



Events of Default.
 Competition
   Non-U.S. Operations
  Government Regulation
 Corrections Industry Regulations.
 Environmental Matters.
 20




---



##### Table of Contents



Americans With Disabilities Act.
 Tax Considerations and Tax Status
  Policies and Objectives With Respect to Certain Activities
  Investment Policies.
  
    
    the essentiality of the facility to the governmental user;
    
    the reputation and creditworthiness of the current owner, manager or developer of the facility;
    
    the proposed terms for purchasing the facility;
    
    the proposed terms for leasing the facility, including rental payments and lease term;
 21




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##### Table of Contents




    
    the quality of construction of the facility;
    
    the quality of operations at an existing facility or the quality of other operations
of a prison manager for a new facility;
    
    the relationship between the prison manager and the contracting government entity;
and
    
    the status of existing facilities as facilities accredited by the American
Correctional Association, or the ACA.
     Disposition Policies; GEOs, CECs and CRNs Right of First Refusal.
 Financing Policies.
    22




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##### Table of Contents



Working Capital Reserve Policies.
 Conflicts of Interest Policies.
 Other Policies.
   Website and Other Information
  23




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##### Table of Contents



Item 1A. Risk Factors
 Set forth below are the risks that we believe are material to our investors. These risks are
not the only risks we face. Additional risks and uncertainties not currently known to us or those
we currently deem to be immaterial may also materially and adversely affect our business, financial
condition, or results of operations. This section contains forward-looking statements. You should
refer to the explanation of the qualifications and limitations on forward-looking statements on
page 2.
 Risks Related to Our Business
 We rely on three lessees for 100% of our revenue
   We rely on GEO, as the lessee of the majority of our facilities, for approximately 86% of our total
revenue
    We are subject to lease payment collection risks because our lease agreements are longer than
facility management services or operating agreements held by our lessees
  24




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##### Table of Contents



A reduction in the pledge pool borrowing base would reduce our ability to borrow under our bank
credit facility
  We depend on the services of our President and Chief Executive Officer, Charles Jones, to operate
our company and the loss of his services could have a material adverse effect on us
  We are subject to acquisition and expansion risks
    25




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##### Table of Contents



We may be subject to uninsured losses
  We are subject to financing risks and debt financing increases shareholders risk of loss
  Provisions of our Declaration of Trust may have a potential anti-takeover effect
  Risks Related to Our Relationship with GEO
 Our relationship with GEO may limit acquisition opportunities from other sources
  We may be subject to future conflicts with GEO
  26




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##### Table of Contents



Risks Related to Our Industry
 We may be subject to correctional and detention industry risks regarding general demand for
facilities and, in many cases, for privatized facilities
  The correctional and detention industry is subject to governmental regulation, oversight, audits
and investigations
  Fluctuations in prison occupancy levels may adversely impact a facility operators ability to make
payments to us
  We are subject to risks associated with the limited acceptance of private prison operation
  27




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##### Table of Contents



We are subject to potential legal proceedings
  We are subject to risks inherent in owning real estate
  
    
    changes in demand for correctional and detention facilities in a locale;
    
    changes in general economic or local conditions;
    
    changes in supply of or demand for similar or competing facilities in an area;
    
    the impact of environmental protection laws;
    
    changes in interest rates and availability of financing which may render the sale,
financing or refinancing of a property difficult or unattractive;
    
    changes in real estate and zoning laws, including special use permits required to
operate a correctional facility; and
    
    changes in tax laws and other laws affecting REITs and correctional and detention
facilities.
 We may incur significant environmental costs and liabilities
   We are subject to valuation and liquidity risks and our properties are special use facilities
  28




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##### Table of Contents



Risks Related to Our Qualification as a REIT
 We would incur adverse tax consequences if we fail to qualify as a REIT
   
    
    we would be subject to federal income tax at regular corporate rates on all of our ordinary income;
    
    we would not be allowed a deduction for dividends paid to shareholders in computing our taxable income;
    
    we also could be subject to the federal alternative minimum tax and possibly increased state and local taxes;
    
    unless we are entitled to relief under statutory provisions, we could not elect to
be subject to tax as a REIT for four taxable years following the year during which we
were disqualified; and
    
    all dividends will be subject to tax as ordinary income to the extent of our current
and accumulated earnings and profits.
  We may be forced to borrow funds during unfavorable market conditions in order to maintain our REIT status
  Limits on changes in control may discourage takeover attempts beneficial to our shareholders
    
    
    delay, deter or prevent a change of control over us or a tender offer, even if such
action might be beneficial to our shareholders;
 29




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##### Table of Contents




    
    limit our shareholders opportunity to receive a potential premium for their shares
of common stock over then-prevailing market price; and
    
    adversely affect the market price of our common shares.
 We lack control over day-to-day operations of our facilities
  We cannot predict what effect, if any, the enactment of new tax provisions may have on the value of
our common shares, either in terms of price or relative to other investments
  
 Item 1B. Unresolved Staff Comments
  
 Item 2. Properties.
  
 Item 3. Legal Proceedings.
   30




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##### Table of Contents



Item 4. Submission of Matters to a Vote of Security Holders.
  
 PART II
 
 Item 5. Market for Registrants Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities.
  2005
    
    
    2004High
    
    
    Low
    
    
    High
    
    
    LowFirst Quarter
    
    $
    28.95
    
    
    $
    24.95
    
    
    $
    32.41
    
    
    $
    27.35Second Quarter
    
    
    28.81
    
    
    
    22.80
    
    
    
    31.17
    
    
    
    24.55Third Quarter
    
    
    31.30
    
    
    
    27.37
    
    
    
    29.60
    
    
    
    25.75Fourth Quarter
    
    
    29.75
    
    
    
    26.60
    
    
    
    29.70
    
    
    
    26.28
  Recent Sales of Unregistered Securities
  Distributions
    31




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##### Table of Contents



Securities Authorized For Issuance Under Equity Compensation Plans
  Number of SecuritiesRemaining AvailableNumber of Securities
    
    
    
    
    
    For Issuance UnderTo Be Issued
    
    Weighted Average
    
    Equity CompensationUpon The Exercise
    
    Price of
    
    Plans (ExcludingOf Outstanding Options
    
    Outstanding Options
    
    Securities Reflectedand Deferred Shares
    
    and Deferred Shares
    
    In Column (a)PLAN CATEGORY
    
    (a)
    
    (b)
    
    (c)Equity Compensation Plans Approved by Security Holders
    
    
    284,000
    
    
    $
    17.98
    
    
    
    141,750
    (1)Equity Compensation Plans Not Approved by Security Holders
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    284,000
    
    
    $
    17.98
    
    
    
    141,750
  Purchases of Equity Securities by the Issuer and Affiliated Purchasers
  
 Item 6. Selected Financial Data.
   Year
    
    
    Year
    
    
    Year
    
    
    Year
    
    
    YearEnded
    
    
    Ended
    
    
    Ended
    
    
    Ended
    
    
    Ended(In thousands, except per share amounts)
    
    12/31/05
    
    
    12/31/04
    
    
    12/31/03
    
    
    12/31/02
    
    
    12/31/01OPERATING RESULTSRevenue
    
    $
    28,053
    
    
    $
    27,104
    
    
    $
    25,705
    
    
    $
    23,440
    
    
    $
    23,004Income from continuing operations
    
    
    18,063
    
    
    
    17,495
    
    
    
    13,021
    
    
    
    9,375
    
    
    
    8,388Income from discontinued operations
    
    
    
    
    
    
    6,175
    
    
    
    718
    
    
    
    753
    
    
    
    562Net income
    
    
    18,063
    
    
    
    23,670
    
    
    
    13,739
    
    
    
    10,128
    
    
    
    8,950Income from continuing operations per share, basic
    
    
    1.64
    
    
    
    1.60
    
    
    
    1.44
    
    
    
    1.30
    
    
    
    1.17Income from continuing operations per share, diluted
    
    
    1.63
    
    
    
    1.58
    
    
    
    1.42
    
    
    
    1.29
    
    
    
    1.17Net income per share, basic
    
    
    1.64
    
    
    
    2.16
    
    
    
    1.52
    
    
    
    1.41
    
    
    
    1.25Net income per share, diluted
    
    
    1.63
    
    
    
    2.14
    
    
    
    1.50
    
    
    
    1.40
    
    
    
    1.25Weighted average shares outstanding, basic
    
    
    10,991
    
    
    
    10,980
    
    
    
    9,048
    
    
    
    7,188
    
    
    
    7,140Weighted average shares outstanding, diluted
    
    
    11,092
    
    
    
    11,084
    
    
    
    9,144
    
    
    
    7,259
    
    
    
    7,164DIVIDENDSCash distributions declared per share
    
    $
    1.80
    
    
    $
    1.98
    
    
    $
    1.72
    
    
    $
    1.60
    
    
    $
    1.47
 32




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##### Table of Contents



As of December 31,2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001BALANCE SHEET DATAReal estate properties, net
    
    $
    217,438
    
    
    $
    209,526
    
    
    $
    215,321
    
    
    $
    199,626
    
    
    $
    204,975Assets held for sale
    
    
    
    
    
    
    
    
    
    
    54,355
    
    
    
    55,826
    
    
    
    57,070Total assets
    
    
    222,419
    
    
    
    218,316
    
    
    
    274,628
    
    
    
    262,589
    
    
    
    266,847Revolving line of credit
    
    
    4,500
    
    
    
    
    
    
    
    3,800
    
    
    
    74,000
    
    
    
    80,000Liabilities associated with assets held for sale
(including Bonds Payable)
    
    
    
    
    
    
    
    
    
    
    56,819
    
    
    
    57,755
    
    
    
    58,462Total liabilities
    
    
    9,023
    
    
    
    3,243
    
    
    
    61,880
    
    
    
    135,133
    
    
    
    142,978Total shareholders equity
    
    
    213,396
    
    
    
    215,073
    
    
    
    212,748
    
    
    
    127,456
    
    
    
    123,869
 
 Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations.
 The following discussion should be read in conjunction with the Companys consolidated
financial statements and notes thereto, which are included elsewhere in this annual report.
 Overview
     
    
    The GEO Group Leases. The base rent for the first year of each facility leased to
The GEO Group before January 1, 2000 was equal to 9.5% of the facility purchase price.
After the first year, minimum rent escalates by the greater of 3% or the increase in
the Consumer Price Index, or CPI, with a maximum increase of 4% for the first two
annual
 33




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##### Table of Contents




    
    Community Education Centers Lease. On May 29, 2003, we acquired Delaney Hall. The
initial base rent was $2,310,000 per annum or 11.0% of the facility purchase price.
Following the first year and continuing during the term of the lease, base rent will
increase by 3.0% annually on each anniversary.
    
    Cornell Companies, Inc. Lease. On January 5, 2006, we acquired Mesa Verde
Correctional Facility. The initial annual base rent rate was $1,708,200 (or
approximately 10.48% of the facility purchase price of $16.3 million) with no annual
lease escalator. After four and one-half years, annual base rent increases to
$1,963,116 (or 12.04% of the facility purchase price of $16.3 million) for the
following five years of the lease term with no annual lease escalator. CRN has a
one-time right to terminate the lease effective July 31, 2010, without cost, if
California Department of Corrections and Rehabilitation elects not to renew the current
operating contract beyond the initial period.
     
    
    We are subject to lease payment collection risks because our lease agreements are
for longer terms than those of the facility management services or operating agreements
held by and which generate revenue for The GEO Group, CEC and CRN. Only a governmental
agency that has contracted with The GEO Group, CEC and CRN may exercise a renewal
option of an existing management services or operating agreement or enter into a new
management services or operating agreement. A governmental agency may choose to
terminate or not renew an operating agreement or management services agreement. For
example, the operating agreement for the Jena Facility
 34




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##### Table of Contents




    
    The GEO Group and its subsidiary and CEC were the only parties with whom we have
lease agreements on our facilities as of December 31, 2005. In January 2006, we entered
into a lease agreement with CRN. Accordingly, these three parties now account for 100%
of our lease agreement revenue. The failure of any of them to meet their respective
obligations to us may have a material adverse effect upon our operations.
    
    The GEO Group is either the lessee or sub-lessee of 11 of the 12 facilities we owned
as of December 31, 2005. For the year ended December 31, 2005, approximately 91% of our
rental revenue was generated from The GEO Group, and our ability to make distributions
to our shareholders, will depend substantially upon The GEO Group making rent payments
and satisfying its obligations to us. Any failure or delay by The GEO Group in making
rent payments or otherwise complying with its obligations under these leases may
adversely affect our cash flows from operating activities and income from operating
activities and our ability to make anticipated distributions. Seven of our leases with
The GEO Group expire during April 2008. To the extent these leases are not renewed by
The GEO Group or re-leased to other suitable tenants on acceptable terms, our total
revenue and ability to make distributions to our shareholders will be adversely
affected.
  Critical Accounting Policies and Estimates
  Revenue Recognition
  Depreciation of Real Estate
  35




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Impairment of Long-lived Assets
  Interest Rate Swaps
  Stock Options
  FINANCIAL CONDITION
 Results of Operations
   36




---



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2005 Compared with 2004
      2004 Compared with 2003
      37




---



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Liquidity and Capital Resources
     38




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39




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Contractual Obligations and Contingent Liabilities and Commitments
  Payments due by periodLess than
    
    
    1-3
    
    
    4-5
    
    
    More than(In thousands)
    
    Total
    
    
    1 year
    
    
    years
    
    
    years
    
    
    5 yearsDebt
    
    $
    4,500
    
    
    $
    4,500
    
    
    $
    
    
    
    $
    
    
    
    $
    
  Funds from Operations
   40




---



##### Table of Contents



(Amounts in thousands)
    
    2005
    
    
    2004
    
    
    2003Net income
    
    $
    18,063
    
    
    $
    23,670
    
    
    $
    13,739Real estate depreciation (a)
    
    
    5,857
    
    
    
    5,795
    
    
    
    5,612Real estate depreciation included in discontinued operations
    
    
    
    
    
    
    964
    
    
    
    1,784Gain on sale of facilities
    
    
    
    
    
    
    (4,969
    )
    
    
    Funds from operations
    
    $
    23,920
    
    
    $
    25,460
    
    
    $
    21,135
 
 
 Item 7A. Quantitative and Qualitative Disclosures about Market Risk.
   
 Item 8. Financial Statements and Supplementary Data.
  
 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
  41




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##### Table of Contents



Item 9A. Controls and Procedures.
 Disclosure Controls and Procedures.
 Managements Report on Internal Control over Financial Reporting.
 Internal
Control Integrated Framework.
 Changes in Internal Controls
 
 Item 9B. Other Information
  42




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Report of Independent Registered Public Accounting Firm
 
       /s/ ERNST & YOUNG LLPCertified Public Accountants 
 43




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
     /s/ ERNST & YOUNG LLPCertified Public Accountants 
 44




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##### Table of Contents



CENTRACORE PROPERTIES TRUST (f/k/a CORRECTIONAL PROPERTIES TRUST)
 CONSOLIDATED BALANCE SHEETS
December 31, 2005 and December 31, 2004
 (Amounts in thousands, except share and per share amounts)
    
    2005
    
    
    2004AssetsReal estate properties, at cost:Correctional and detention facilities
    
    $
    257,516
    
    
    $
    243,747Lessaccumulated depreciation
    
    
    (40,078
    )
    
    
    (34,221
    )Net real estate properties
    
    
    217,438
    
    
    
    209,526Cash and cash equivalents
    
    
    414
    
    
    
    5,004Deferred financing costs, net
    
    
    644
    
    
    
    1,345Corporate office, net
    
    
    1,388
    
    
    
    Other assets
    
    
    2,535
    
    
    
    2,441Total assets
    
    $
    222,419
    
    
    $
    218,316Liabilities and shareholders equityLiabilitiesAccounts payable and accrued expenses
    
    $
    4,523
    
    
    $
    3,243Revolving line of credit
    
    
    4,500
    
    
    
    Total liabilities
    
    
    9,023
    
    
    
    3,243Commitments and contingenciesShareholders equityPreferred shares, $.001 par value; 50,000,000 shares authorized;
none outstanding
    
    
    
    
    
    
    Common shares, $.001 par value; 150,000,000 shares
authorized; 10,997,250 and 10,992,750 shares issued and
outstanding, respectively
    
    
    11
    
    
    
    11Capital in excess of par value
    
    
    220,835
    
    
    
    220,709Distributions in excess of accumulated earnings
    
    
    (7,370
    )
    
    
    (5,625
    )Unearned compensation
    
    
    (80
    )
    
    
    (22
    )Total shareholders equity
    
    
    213,396
    
    
    
    215,073Total liabilities and shareholders equity
    
    $
    222,419
    
    
    $
    218,316
  45




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CENTRACORE PROPERTIES TRUST (f/k/a CORRECTIONAL PROPERTIES TRUST)
 CONSOLIDATED STATEMENTS OF INCOME  Years ended December 31, 2005, 2004 and 2003
 (Amounts in thousands, except share and per share amounts)
    
    2005
    
    
    2004
    
    
    2003RevenueRental
    
    $
    27,945
    
    
    $
    27,076
    
    
    $
    25,658Interest
    
    
    108
    
    
    
    28
    
    
    
    4728,053
    
    
    
    27,104
    
    
    
    25,705ExpensesDepreciation
    
    
    5,859
    
    
    
    5,795
    
    
    
    5,612General and administrative
    
    
    3,025
    
    
    
    2,684
    
    
    
    1,969Interest
    
    
    1,106
    
    
    
    1,130
    
    
    
    5,1039,990
    
    
    
    9,609
    
    
    
    12,684Income from continuing operations
    
    
    18,063
    
    
    
    17,495
    
    
    
    13,021Discontinued operationsIncome from operations of discontinued facilities (including
net gain on sale of $4,969 in 2004)
    
    
    
    
    
    
    6,175
    
    
    
    718Net income
    
    $
    18,063
    
    
    $
    23,670
    
    
    $
    13,739Basic net income per common share:Continuing operations
    
    $
    1.64
    
    
    $
    1.60
    
    
    $
    1.44Discontinued operations
    
    
    
    
    
    
    .56
    
    
    
    .08Total
    
    $
    1.64
    
    
    $
    2.16
    
    
    $
    1.52Diluted net income per common share:Continuing operations
    
    $
    1.63
    
    
    $
    1.58
    
    
    $
    1.42Discontinued operations
    
    
    
    
    
    
    .56
    
    
    
    .08Total
    
    $
    1.63
    
    
    $
    2.14
    
    
    $
    1.50Weighted average number of common shares and common share
equivalents outstanding:Basic
    
    
    10,991
    
    
    
    10,980
    
    
    
    9,048Diluted
    
    
    11,092
    
    
    
    11,084
    
    
    
    9,144Distributions declared per common share outstanding
    
    $
    1.80
    
    
    $
    1.98
    
    
    $
    1.72
  46




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CENTRACORE PROPERTIES TRUST (f/k/a CORRECTIONAL PROPERTIES TRUST)
 CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY  Years ended December 31, 2005, 2004 and 2003
 (Amounts in thousands, except per share amounts)
 Common sharesDistributions
    
    
    AccumulatedPar
    
    
    Capital inexcess of
    
    
    in excess ofaccumulated
    
    
    othercomprehensive
    
    
    UnearnedShares
    
    
    Amount
    
    
    par value
    
    
    earnings
    
    
    loss
    
    
    Compensation
    
    
    TotalBalance, December 31, 2002
    
    
    7,350
    
    
    $
    7
    
    
    $
    135,302
    
    
    $
    (5,234
    )
    
    $
    (2,619
    )
    
    
    
    
    
    
    127,456Exercise of stock options
    
    
    368
    
    
    
    1
    
    
    
    6,862
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,863Issuance of common shares in a secondary
offering, net of $4,984 of offering costs
    
    
    3,250
    
    
    
    3
    
    
    
    77,888
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    77,891Granting of deferred shares
    
    
    
    
    
    
    
    
    
    
    216
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    216Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,739
    
    
    
    
    
    
    
    
    
    
    
    13,739Unrealized gain on derivative instruments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    48
    
    
    
    
    
    
    
    48Losses reclassified into earnings from other
comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,571
    
    
    
    
    
    
    
    2,571Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,358Distributions to shareholders ($1.72 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (16,036
    )
    
    
    
    
    
    
    
    
    
    
    (16,036
    )Balance, December 31, 2003
    
    
    10,968
    
    
    
    11
    
    
    
    220,268
    
    
    
    (7,531
    )
    
    
    
    
    
    
    
    
    
    
    212,748Exercise of stock options
    
    
    23
    
    
    
    
    
    
    
    366
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    366Issuance of restricted stock
    
    
    2
    
    
    
    
    
    
    
    75
    
    
    
    
    
    
    
    
    
    
    
    (75
    )
    
    
    Recognition of unearned compensation expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    53
    
    
    
    53Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23,670
    
    
    
    
    
    
    
    
    
    
    
    23,670Distributions to shareholders ($1.98 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (21,764
    )
    
    
    
    
    
    
    
    
    
    
    (21,764
    )Balance, December 31, 2004
    
    
    10,993
    
    
    
    11
    
    
    
    220,709
    
    
    
    (5,625
    )
    
    
    
    
    
    
    (22
    )
    
    
    215,073Issuance of restricted stock
    
    
    4
    
    
    
    
    
    
    
    113
    
    
    
    
    
    
    
    
    
    
    
    (113
    )
    
    
    Granting of deferred shares
    
    
    
    
    
    
    
    
    
    
    13
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13Recognition of unearned compensation expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    55
    
    
    
    55Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18,063
    
    
    
    
    
    
    
    
    
    
    
    18,063Distributions to shareholders ($1.80 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19,808
    )
    
    
    
    
    
    
    
    
    
    
    (19,808
    )Balance, December 31, 2005
    
    
    10,997
    
    
    $
    11
    
    
    $
    220,835
    
    
    $
    (7,370
    )
    
    $
    
    
    
    $
    (80
    )
    
    $
    213,396
  47




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CENTRACORE PROPERTIES TRUST (f/k/a CORRECTIONAL PROPERTIES TRUST)
 CONSOLIDATED STATEMENTS OF CASH FLOWS  Years ended December 31, 2005, 2004 and 2003
 (Amounts in thousands)
    
    2005
    
    
    2004
    
    
    2003Cash flows from operating activitiesIncome from continuing operations
    
    $
    18,063
    
    
    $
    17,495
    
    
    $
    13,021Adjustments to reconcile income from continuing operations to net
cash provided by operating activities of continuing operations:Depreciation of real estate properties
    
    
    5,859
    
    
    
    5,795
    
    
    
    5,612Amortization of deferred financing costs
    
    
    708
    
    
    
    709
    
    
    
    774Stock based compensation
    
    
    68
    
    
    
    53
    
    
    
    216Changes in operating assets and liabilities net of effect of
discontinued operations in 2004 and 2003:Other assets
    
    
    (94
    )
    
    
    (202
    )
    
    
    (20
    )Accounts payable and accrued expenses
    
    
    353
    
    
    
    1
    
    
    
    502Net cash provided by operating activities of continuing
operations
    
    
    24,957
    
    
    
    23,851
    
    
    
    20,105Income from discontinued operations
    
    
    
    
    
    
    6,175
    
    
    
    718Adjustments to reconcile income from discontinued operations to net
cash provided by discontinued operations:Depreciation of real estate properties
    
    
    
    
    
    
    964
    
    
    
    1,784Amortization of deferred financing costs
    
    
    
    
    
    
    59
    
    
    
    70Gain on sale of real estate properties
    
    
    
    
    
    
    (4,969
    )
    
    
    Changes in net assets held for sale
    
    
    
    
    
    
    (125
    )
    
    
    (371
    )Changes in liabilities associated with assets held for sale
    
    
    
    
    
    
    (964
    )
    
    
    (11
    )Net cash provided by operating activities of
discontinued operations
    
    
    
    
    
    
    1,140
    
    
    
    2,190Net cash provided by operating activities
    
    
    24,957
    
    
    
    24,991
    
    
    
    22,295Cash flows from investing activitiesNet proceeds from the sale of real estate properties included in
discontinued operations
    
    
    
    
    
    
    51,261
    
    
    
    Acquisition of corporate office condominium
    
    
    (1,225
    )
    
    
    
    
    
    
    Construction in-progress
    
    
    (7,519
    )
    
    
    
    
    
    
    Acquisition of real estate properties
    
    
    (3,508
    )
    
    
    
    
    
    
    (21,308
    )Net cash (used in) provided by investing activities
    
    
    (12,252
    )
    
    
    51,261
    
    
    
    (21,308
    )Cash flows from financing activitiesDistributions to shareholders
    
    
    (21,788
    )
    
    
    (19,784
    )
    
    
    (16,036
    )Proceeds from exercise of stock options
    
    
    
    
    
    
    366
    
    
    
    6,863Proceeds from common stock offering (net of $4,984 of offering costs)
    
    
    
    
    
    
    
    
    
    
    77,891Net draws (repayments) under revolving line of credit
    
    
    4,500
    
    
    
    (3,800
    )
    
    
    (70,200
    )Repayments on bonds included in discontinued operations
    
    
    
    
    
    
    (55,855
    )
    
    
    (925
    )Restricted cash included in discontinued operations
    
    
    
    
    
    
    7,166
    
    
    
    (12
    )Deferred financing costs
    
    
    (7
    )
    
    
    (9
    )
    
    
    (2,233
    )Net cash used in financing activities
    
    
    (17,295
    )
    
    
    (71,916
    )
    
    
    (4,652
    )Net (decrease) increase in cash and cash equivalents
    
    
    (4,590
    )
    
    
    4,336
    
    
    
    (3,665
    )Cash and cash equivalents, beginning of year
    
    
    5,004
    
    
    
    668
    
    
    
    4,333Cash and cash equivalents, end of year
    
    $
    414
    
    
    $
    5,004
    
    
    $
    668Supplemental disclosure:Cash paid for interest (net of amount capitalized)
    
    $
    253
    
    
    $
    4,673
    
    
    $
    8,525
  48




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CENTRACORE PROPERTIES TRUST (f/k/a CORRRECTIONAL PROPERTIES TRUST)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2005
 1. ORGANIZATION AND OPERATIONS
   (i)
    
    Aurora INS Processing Center (Aurora, Colorado);(ii)
    
    McFarland Community Correctional Facility (McFarland, California);(iii)
    
    Queens Private Correctional Facility (New York, New York);(iv)
    
    Central Valley Community Correctional Facility (McFarland, California);(v)
    
    Golden State Community Correctional Facility (McFarland, California);(vi)
    
    Desert View Community Correctional Facility (Adelanto, California);(vii)
    
    Broward County Work Release Center (Broward County, Florida); and(viii)
    
    Karnes County Correctional Center (Karnes County, Texas).
      49




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50




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2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  Cash and Cash Equivalents
  Deferred Financing Costs
  Real Estate Properties
  51




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##### Table of Contents



2005
    
    
    2004Land
    
    $
    11,942
    
    
    $
    11,942Buildings and improvements
    
    
    235,313
    
    
    
    231,805Construction in-progress
    
    
    10,261
    
    
    
    $
    257,516
    
    
    $
    243,747
 Long-Lived Assets
  Leases and Rental Income
  Fiscal
year
    
    Annual Rent2006
    
    $
    28,4342007
    
    
    28,5942008
    
    
    20,0262009
    
    
    5,5302010
    
    
    2,846Thereafter
    
    
    7,101$
    92,531
  Federal Income Taxes
   52




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For the years ended December 31,2005
    
    
    2004
    
    
    2003Net income
    
    $
    18,063
    
    
    $
    23,670
    
    
    $
    13,739Straight-line rent adjustments
    
    
    (23
    )
    
    
    (335
    )
    
    
    (511
    )Net tax gain on sale of real estate in excess of
GAAP gain on sale
    
    
    
    
    
    
    2,224
    
    
    
    Excess of Tax depreciation over GAAP depreciation
    
    
    (1,070
    )
    
    
    (1,436
    )
    
    
    (1,739
    )Tax stock option compensation expense in excess of GAAP
    
    
    
    
    
    
    (138
    )
    
    
    (851
    )Other adjustments
    
    
    40
    
    
    
    (72
    )
    
    
    152Taxable income
    
    
    17,010
    
    
    
    23,913
    
    
    
    10,790Less capital gains
    
    
    
    
    
    
    (8,044
    )
    
    
    Adjusted taxable income subject
to 90% dividend requirement
    
    $
    17,010
    
    
    $
    15,869
    
    
    $
    10,790
  For the years ended December 31,2005
    
    
    2004
    
    
    2003Cash dividends paid
    
    $
    21,788
    
    
    $
    19,784
    
    
    $
    16,036Less: Dividends on deferred shares and non-vested
restricted stock
    
    
    (25
    )
    
    
    (17
    )
    
    
    Less: Dividends treated as return of capital
    
    
    (607
    )
    
    
    
    
    
    
    (5,246
    )Less: Dividends designated to prior year
    
    
    (4,146
    )
    
    
    
    
    
    
    Plus: Dividends paid in subsequent year treated
as paid in current year
    
    
    
    
    
    
    1,978
    
    
    
    Plus: Dividends designated from following year
    
    
    
    
    
    
    2,168
    
    
    
    Dividends paid deduction
    
    $
    17,010
    
    
    $
    23,913
    
    
    $
    10,790
  For the years ended December 31,2005
    
    
    2004
    
    
    2003$
    
    
    %
    
    
    $
    
    
    %
    
    
    $
    
    
    %Ordinary income
    
    $
    1.7406
    
    
    
    96.7
    %
    
    $
    1.2474
    
    
    
    63.0
    %
    
    $
    1.12144
    
    
    
    65.2
    %Capital gains
    
    
    
    
    
    
    
    %
    
    
    .7326
    
    
    
    37.0
    %
    
    
    
    
    
    
    0.00
    %Return of capital
    
    
    .0594
    
    
    
    3.3
    %
    
    
    
    
    
    
    0.00
    %
    
    
    .59856
    
    
    
    34.8
    %Total dividend distributions per share
    
    $
    1.80
    
    
    
    100
    %
    
    $
    1.98
    
    
    
    100
    %
    
    $
    1.72
    
    
    
    100
    %
 Fair Value of Financial Instruments
  Interest Rate Swaps
  53




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Concentration of Credit Risk
  Use of Estimates in the Preparation of Financial Statements
  Employee Stock-Based Compensation Plans
   For the years ended December 31,2005
    
    
    2004
    
    
    2003Net income, as reported
    
    $
    18,063
    
    
    $
    23,670
    
    
    $
    13,739Add: stock-based compensation expense included in net income
as reported
    
    
    68
    
    
    
    53
    
    
    
    216Deduct: stock-based compensation expense determined under the
fair value based method for all awards
    
    
    (100
    )
    
    
    (109
    )
    
    
    (341
    )Pro forma net income
    
    $
    18,031
    
    
    $
    23,614
    
    
    $
    13,614Net income per common shareBasic, as reported
    
    $
    1.64
    
    
    $
    2.16
    
    
    $
    1.52Basic, pro forma
    
    $
    1.64
    
    
    $
    2.15
    
    
    $
    1.50Diluted, as reported
    
    $
    1.63
    
    
    $
    2.14
    
    
    $
    1.50Diluted, pro forma
    
    $
    1.63
    
    
    $
    2.13
    
    
    $
    1.49
 54




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2003Weighted average fair value of options granted
    
    $
    2.81Risk-free interest rate
    
    
    4.00
    %Expected life (years)
    
    
    8Expected volatility
    
    
    32.2
    %Quarterly dividend rate
    
    
    7.6
    %
 Comprehensive Income
  For the years ended December 31,2005
    
    
    2004
    
    
    2003Net income
    
    $
    18,063
    
    
    $
    23,670
    
    
    $
    13,739Unrealized gain on derivative instruments
    
    
    
    
    
    
    
    
    
    
    48Losses reclassified into earnings from other comprehensive loss
    
    
    
    
    
    
    
    
    
    
    2,571Comprehensive income
    
    $
    18,063
    
    
    $
    23,670
    
    
    $
    16,358
 Recent Accounting Pronouncements
 Share-Based Payment Accounting for Stock-Based Compensation Accounting for Stock Issued to Employees Statement of Cash Flows
 Share-Based Payment,
 3. AMENDED BANK CREDIT FACILITY
  55




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56




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4. DISCONTINUED OPERATIONS
     5. SHARE OPTION AND INCENTIVE PLANS
   2005
    
    
    
    
    
    2004
    
    
    
    
    
    2003Weighted-
    
    
    
    
    
    Weighted-
    
    
    
    
    
    Weighted-Average
    
    
    
    
    
    Average
    
    
    
    
    
    AverageExercise
    
    
    
    
    
    Exercise
    
    
    
    
    
    ExerciseShares
    
    Price
    
    Shares
    
    Price
    
    Shares
    
    PriceOutstanding at beginning of year
    
    
    276,000
    
    
    $
    18.50
    
    
    
    298,500
    
    
    $
    18.33
    
    
    
    623,100
    
    
    $
    18.32Options granted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    56,000
    
    
    $
    20.93Options exercised
    
    
    
    
    
    
    
    
    
    
    (22,500
    )
    
    $
    16.20
    
    
    
    (368,100
    )
    
    $
    18.65Options forfeited
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,500
    )
    
    $
    20.00Outstanding at end of year
    
    
    276,000
    
    
    $
    18.50
    
    
    
    276,000
    
    
    $
    18.50
    
    
    
    298,500
    
    
    $
    18.33Exercisable at end of year
    
    
    265,500
    
    
    $
    18.41
    
    
    
    242,500
    
    
    $
    18.31
    
    
    
    233,250
    
    
    $
    18.27
 57




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Exercise Price/
    
    
    
    
    
    Exercise Price/Weighted Average
    
    
    
    
    
    Weighted Average
    
    Remaining LifeGrant Date
    
    Outstanding
    
    Exercise Price
    
    Exercisable
    
    Exercise Price
    
    Outstanding4/28/98
1/21/99
4/25/00
1/17/01
5/29/01
1/23/02
1/23/03
    
    
    95,000
36,000
12,000
12,000
5,000
62,000
54,000
    
    
    $
$
$
$
$
$
$
    20.00
17.31
11.19
11.00
12.62
18.13
20.93
    
    
    
    95,000
36,000
12,000
12,000
5,000
62,000
43,500
    
    
    $
$
$
$
$
$
$
    20.00
17.31
11.19
11.00
12.62
18.13
20.93
    
    
    2.3 years
3.1 years
4.3 years
5.0 years
5.4 years
6.1 years
7.1 years276,000
    
    
    $
    18.50
    
    
    
    265,500
    
    
    $
    18.41
    6. EARNINGS PER SHARE
  For the years ended December 31,2005
    
    
    2004
    
    
    2003Income from continuing operations
    
    $
    18,063
    
    
    $
    17,495
    
    
    $
    13,021Weighted average sharesbasic
    
    
    10,991
    
    
    
    10,980
    
    
    
    9,048Per sharebasic
    
    $
    1.64
    
    
    $
    1.60
    
    
    $
    1.44Effect of dilutive stock options
    
    
    101
    
    
    
    104
    
    
    
    96Weighted average sharesdiluted
    
    
    11,092
    
    
    
    11,084
    
    
    
    9,144Per sharediluted
    
    $
    1.63
    
    
    $
    1.58
    
    
    $
    1.42
 58




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For the years ended December 31,2005
    
    
    2004
    
    
    2003Income from operations of discontinued facilities
    
    $
    
    
    
    $
    6,175
    
    
    $
    718Weighted average sharesbasic
    
    
    10,991
    
    
    
    10,980
    
    
    
    9,048Per sharebasic
    
    $
    
    
    
    $
    .56
    
    
    $
    .08Effect of dilutive stock options
    
    
    101
    
    
    
    104
    
    
    
    96Weighted average sharesdiluted
    
    
    11,092
    
    
    
    11,084
    
    
    
    9,144Per sharediluted
    
    $
    
    
    
    $
    .56
    
    
    $
    .08Net income
    
    $
    18,063
    
    
    $
    23,670
    
    
    $
    13,739Weighted average sharesbasic
    
    
    10,991
    
    
    
    10,980
    
    
    
    9,048Per sharebasic
    
    $
    1.64
    
    
    $
    2.16
    
    
    $
    1.52Effect of dilutive stock options
    
    
    101
    
    
    
    104
    
    
    
    96Weighted average sharesdiluted
    
    
    11,092
    
    
    
    11,084
    
    
    
    9,144Per sharediluted
    
    $
    1.63
    
    
    $
    2.14
    
    
    $
    1.50
  7. COMMITMENTS AND CONTINGENCIES
 Employment Agreements
  Legal Proceedings
  8. SAVINGS AND RETIREMENT PLANS
   59




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9. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) (In thousands, except per share data)
 As of or for the period ended:1st
    
    
    2nd
    
    
    3rd
    
    
    4thQuarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter2005Net real estate properties
    
    $
    208,077
    
    
    $
    211,453
    
    
    $
    213,539
    
    
    $
    217,438Total assets
    
    
    217,840
    
    
    
    218,751
    
    
    
    220,909
    
    
    
    222,419Revenue
    
    
    6,898
    
    
    
    7,001
    
    
    
    7,080
    
    
    
    7,074Net income
    
    
    4,452
    
    
    
    4,516
    
    
    
    4,561
    
    
    
    4,534Net income per share, basic
    
    
    0.41
    
    
    
    0.41
    
    
    
    0.42
    
    
    
    0.41Net income per share, diluted
    
    
    0.40
    
    
    
    0.41
    
    
    
    0.41
    
    
    
    0.41Cash distribution per share
    
    
    0.45
    
    
    
    0.45
    
    
    
    0.45
    
    
    
    0.452004Net real estate properties
    
    $
    213,873
    
    
    $
    212,424
    
    
    $
    210,975
    
    
    $
    209,526Total assets
    
    
    272,435
    
    
    
    271,509
    
    
    
    271,436
    
    
    
    218,316Revenue
    
    
    6,695
    
    
    
    6,768
    
    
    
    6,804
    
    
    
    6,837Net income
    
    
    4,511
    
    
    
    4,585
    
    
    
    5,050
    
    
    
    9,524Net income per share, basic
    
    
    0.41
    
    
    
    0.42
    
    
    
    0.46
    
    
    
    0.87Net income per share, diluted
    
    
    0.41
    
    
    
    0.41
    
    
    
    0.46
    
    
    
    0.86Cash distribution per share
    
    
    0.45
    
    
    
    0.45
    
    
    
    0.45
    
    
    
    0.63
 10. SUBSEQUENT EVENTS
   60




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PART III
 
  
 PART IV
 
 Item 15. Exhibits and Financial Statement Schedules.
 (a)(1) The following consolidated financial statements are filed as part of this Form 10-K:
        (2)
    
    The following financial statement schedules are filed as part of this Form 10-K:
  (3)
    
    See Exhibit Index included elsewhere herein.
 62




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##### Table of Contents



SIGNATURES
  Date: March 10, 2006
    CENTRACORE PROPERTIES TRUST
(Registrant)By:
    /s/ Charles R. JonesCharles R. JonesChief Executive Officer and
President   Signature
    
    Title
    
    Date/s/ Robert R. Veach, Jr.

Robert R. Veach, Jr.
    
    Chairman of the Board
    
    March 10, 2006/s/ Charles R. Jones

Charles R. Jones
    
    Trustee, Chief Executive Officer
and President (Principal Executive Officer)
    
    March 10, 2006/s/ Richard R. Wackenhut

Richard R. Wackenhut
    
    Vice-Chairman of the Board
    
    March 10, 2006/s/ Anthony P. Travisono

Anthony P. Travisono
    
    Trustee
    
    March 10, 2006/s/ Clarence E. Anthony

Clarence E. Anthony
    
    Trustee
    
    March 10, 2006/s/ James D. Motta

James D. Motta
    
    Trustee
    
    March 10, 2006/s/ Donna Arduin

Donna Arduin
    
    Trustee
    
    March 10, 2006/s/ Kevin J. Foley

Kevin J. Foley
    
    Trustee
    
    March 10, 2006/s/ David J. Obernesser

David J. Obernesser
    
    Senior Vice President, Chief Financial Officer,
Secretary and  Treasurer (Principal Financial Officer
and Accounting Officer)
    
    March 10, 2006
 63




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##### Table of Contents



INDEX TO EXHIBITS
 Number
    
    Description of Exhibits3.1
    
    Articles of Amendment and Restatement of Declaration of Trust of CentraCore Properties Trust (1)3.2
    
    Amended and Restated Bylaws of CentraCore Properties Trust (2)3.3
    
    Specimen of certificate representing the Common Shares (3)3.4
    
    Articles of Amendment to Declaration of Trust effective December 20, 2005 to change the name
of the Company (4)4.1
    
    Provisions defining the rights of shareholders are found in the Articles of Amendment and
Restatement of the Declaration of Trust and the Amended and Restated Bylaws, respectively, of
CentraCore Properties Trust(included as Exhibits 3.1 and 3.2 hereof)10.1
    
    Agreement of Limited Partnership of CPT Operating Partnership L.P. (3)10.2
    
    Master Agreement to Lease between CPT Operating Partnership L.P. and Wackenhut Corrections
Corporation (3)10.3
    
    Form of Lease Agreement between CPT Operating Partnership L.P. and Wackenhut Corrections
Corporation (3)10.4
    
    Form of Right to Purchase Agreement between Wackenhut Corrections Corporation and CPT
Operating Partnership L.P. (3)10.5
    
    Form of Option Agreement between Wackenhut Corrections Corporation and CPT Operating
Partnership L.P. (3)10.6
    
    Form of Trustee and Officer Indemnification Agreement between CentraCore Properties Trust and
its trustees and officers (3)10.7
    
    CentraCore Properties Trust 1998 Employee Share Incentive Plan (5)+10.8
    
    1998 Non-Employee Trustees Share Option Plan (5)+10.9
    
    CentraCore Properties Trust 2000 Stock Option Plan (6)+10.10
    
    CentraCore Properties Trust 2002 Stock Option Plan (7)+10.11
    
    Agreement of Sale and Purchase dated October 30, 1998 between Wackenhut Corrections
Corporation and CPT Operating Partnership L.P. (3)10.12
    
    Amended and Restated Credit Agreement dated as of November 25, 2003 by and among CPT
Operating Partnership L.P., Correctional Properties Trust, Bank of America, N.A., as
Administrative Agent (8)10.13
    
    Agreement of Sale and Purchase dated January 15, 1999 between Wackenhut Corrections
Corporation and CPT Operating Partnership LP (9)10.14
    
    Agreement of Sale and Purchase dated January 7, 2000 between Wackenhut Corrections
Corporation and CPT Operating Partnership LP (9)




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##### Table of Contents



Number
    
    Description of Exhibits10.17
    
    Lease Between CPT Operating Partnership L. P. as Landlord and Community Education
Centers, Inc. as tenant dated May 29, 2003 (10)10.18
    
    Master Agreement to Lease Between CPT Operating Partnership L. P. as Landlord and Community
Education Centers, Inc. as tenant dated May 29, 2003 (10)10.19
    
    Senior Executive Retirement Plan Termination Agreement (2)+10.20
    
    Deferred Share Long-Term Loyalty Bonus Agreement (2)+10.21
    
    Employment Agreement dated October 28, 2004 by and between CentraCore Properties Trust and
Charles R. Jones (11)+10.22
    
    Employment Agreement dated October 28, 2004 by and between CentraCore Properties Trust and
David J. Obernesser (11)+10.23
    
    CentraCore Properties Trust Amended and Restated 2002 Stock Plan (12)+10.24
    
    First Amendment to Lease Agreement on the Lawton Oklahoma Correction and Detention Facility
dated May 27, 2005 between CPT Operating Partnership L.P. and The GEO Group Inc. (13)10.25
    
    Form of Restricted Shares Award Agreement (13)+21.1
    
    List of Subsidiaries of CentraCore Properties Trust (14)23.1
    
    Consent of Ernst & Young LLP (14)31.1
    
    Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (14)31.2
    
    Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (14)32.1
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 (14)32.2
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 (14)
 
 +
    
    Management contract or compensatory plan or arrangement.(1)
    
    Incorporated by reference to exhibit 3.2 to Amendment No. 1 to the Registrants Form S-11
(File No. 333-46681) filed with the Commission on March 20, 1998.(2)
    
    Incorporated by reference to the Annual Report on Form 10-K for the fiscal year ended
December 31, 2003 filed on March 15, 2004.(3)
    
    Incorporated by reference to Amendment No. 1 to the Registrants Form S-11 (File No.
333-46681) filed with the Commission on March 20, 1998.(4)
    
    Incorporated by reference to Registrants Form 8-K filed with the Commission on December 21,
2005.




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##### Table of Contents



(5)
    
    Incorporated by reference to Amendment No. 2 to the Registrants Form S-11 (File No.
333-46681) filed with the Commission on April 8, 1998.(6)
    
    Incorporated by reference to Appendix A to Registrants Definitive Proxy Statement filed with
the Commission on March 30, 2000.(7)
    
    Incorporated by reference to Appendix 2 to Registrants Definitive Proxy Statement filed with
the Commission on March 14, 2002.(8)
    
    Incorporated by reference to Registrants Form 8-K filed with the Commission on December 5,
2003.(9)
    
    Incorporated by reference to Registrants Form 10-K for the year ended December 31, 1999
filed with the Commission on March 31, 2000.(10)
    
    Incorporated by reference to Registrants Form 10-Q for the quarter ended June 30, 2003 filed
with the Commission on July 15, 2003.(11)
    
    Incorporated by reference to Registrants Form 8-K filed with the Commission on November 2,
2004.(12)
    
    Incorporated by reference to Appendix B to Registrants Definitive Proxy Statement filed with
the Commission on March 31, 2005.(13)
    
    Incorporated by reference to the Registrants Form 10-Q for the quarter ended June 30, 2005
filed with the Commission on August 9, 2005.(14)
    
    Filed here with this Annual Report on Form 10-K for the fiscal year ended December 31, 2005.




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##### Table of Contents



CentraCore Properties Trust
 Schedule III
 Real Estate and Accumulated Deprecation as of
December 31, 2005
(dollars in thousands)
 CostsCapitalizedSubsequent
    
    Gross Amount Carried atInitial
Cost to Company
    

to
Acquisition
    

Close
of Period 12/31/2005(2)
    
    Date ofEncumbrances
    
    
    
    
    
    Building and
    
    
    
    
    
    Building and
    
    
    
    
    
    Building and
    
    (2)
    
    Accumulated
    
    Construction/
    
    Date
    
    DepreciableDescription
    
    Location
    
    at 12/31/2005
    
    Land
    
    Improvements
    
    Land
    
    Improvements
    
    Land
    
    Improvements
    
    Total
    
    Depreciation
    
    Renovation
    
    Acquired
    
    Lives1
    
    Aurora Facility
    
    Aurora, CO
    
    
    (1
    )
    
    $
    669
    
    
    $
    7,160
    
    
    $
    
    
    
    $
    
    
    
    $
    669
    
    
    $
    7,160
    
    
    $
    7,829
    
    
    $
    (1,377
    )
    
    
    1987
    
    
    
    4/28/1998
    
    
    
    402
    
    McFarland Facility
    
    McFarland, CA
    
    
    (1
    )
    
    
    333
    
    
    
    6,687
    
    
    
    
    
    
    
    
    
    
    
    333
    
    
    
    6,687
    
    
    
    7,020
    
    
    
    (1,283
    )
    
    
    1988
    
    
    
    4/28/1998
    
    
    
    403
    
    Queens Facility
    
    New York, NY
    
    
    
    
    
    
    1,436
    
    
    
    13,296
    
    
    
    
    
    
    
    
    
    
    
    1,436
    
    
    
    13,296
    
    
    
    14,732
    
    
    
    (2,551
    )
    
    
    1997
    
    
    
    4/28/1998
    
    
    
    404
    
    Central Valley Facility
    
    McFarland, CA
    
    
    (1
    )
    
    
    525
    
    
    
    17,066
    
    
    
    
    
    
    
    
    
    
    
    525
    
    
    
    17,066
    
    
    
    17,591
    
    
    
    (3,275
    )
    
    
    1997
    
    
    
    4/28/1998
    
    
    
    405
    
    Golden State Facility
    
    McFarland, CA
    
    
    (1
    )
    
    
    956
    
    
    
    16,599
    
    
    
    
    
    
    
    
    
    
    
    956
    
    
    
    16,599
    
    
    
    17,555
    
    
    
    (3,185
    )
    
    
    1997
    
    
    
    4/28/1998
    
    
    
    406
    
    Desert View Facility
    
    Adelanto, CA
    
    
    (1
    )
    
    
    451
    
    
    
    16,413
    
    
    
    
    
    
    
    
    
    
    
    451
    
    
    
    16,413
    
    
    
    16,864
    
    
    
    (3,149
    )
    
    
    1997
    
    
    
    4/28/1998
    
    
    
    407
    
    Broward County Facility
    
    Broward County, FL
    
    
    (1
    )
    
    
    3,193
    
    
    
    11,935
    
    
    
    
    
    
    
    
    
    
    
    3,193
    
    
    
    11,935
    
    
    
    15,128
    
    
    
    (2,290
    )
    
    
    1998
    
    
    
    4/28/1998
    
    
    
    408
    
    Karnes Facility
    
    Karnes County, TX
    
    
    (1
    )
    
    
    500
    
    
    
    15,820
    
    
    
    
    
    
    
    
    
    
    
    500
    
    
    
    15,820
    
    
    
    16,320
    
    
    
    (3,035
    )
    
    
    1996
    
    
    
    4/28/1998
    
    
    
    409
    
    Lawton Facility
    
    Lawton, OK
    
    
    (1
    )
    
    
    371
    
    
    
    45,389
    
    
    
    
    
    
    
    13,769
    
    
    
    371
    
    
    
    59,158
    
    
    
    59,529
    
    
    
    (7,962
    )
    
    
    1999
    
    
    
    (3)
    
    
    
    4010
    
    Hobbs Facility
    
    Hobbs, NM
    
    
    (1
    )
    
    
    
    
    
    
    48,389
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    48,389
    
    
    
    48,389
    
    
    
    (8,541
    )
    
    
    1998
    
    
    
    (4)
    
    
    
    4011
    
    Jena Facility
    
    Jena, LA
    
    
    (1
    )
    
    
    55
    
    
    
    15,196
    
    
    
    
    
    
    
    
    
    
    
    55
    
    
    
    15,196
    
    
    
    15,251
    
    
    
    (2,273
    )
    
    
    1999
    
    
    
    1/7/2000
    
    
    
    4012
    
    Delaney Hall Facility
    
    Newark, NJ
    
    
    (1
    )
    
    
    3,453
    
    
    
    17,855
    
    
    
    
    
    
    
    
    
    
    
    3,453
    
    
    
    17,855
    
    
    
    21,308
    
    
    
    (1,157
    )
    
    
    2000
    
    
    
    5/29/2003
    
    
    
    40$
    11,942
    
    
    $
    231,805
    
    
    $
    
    
    
    $
    13,769
    
    
    $
    11,942
    
    
    $
    245,574
    
    
    $
    257,516
    
    
    $
    (40,078
    )




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##### Table of Contents



For the years ended December 31,Real Estate
    
    2005
    
    
    2004
    
    
    2003Balance at beginning of period
    
    $
    243,747
    
    
    $
    293,298
    
    
    $
    271,990Additions during period:Acquisitions
    
    
    3,508
    
    
    
    
    
    
    
    21,308Improvements
    
    
    10,261
    
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    Deductions during the period:Cost of real estate sold
    
    
    
    
    
    
    (49,551
    )
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    Balance at close of period
    
    $
    257,516
    
    
    $
    243,747
    
    
    $
    293,298
 For the years ended December 31,Accumulated Depreciation
    
    2005
    
    
    2004
    
    
    2003Balance at beginning of period
    
    $
    (34,221
    )
    
    $
    (33,157
    )
    
    $
    (25,761
    )Additions during period:Depreciation
    
    
    (5,857
    )
    
    
    (6,759
    )
    
    
    (7,396
    )Other
    
    
    
    
    
    
    
    
    
    
    Deductions during the period:Real estate sold
    
    
    
    
    
    
    5,695
    
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    Balance at close of period
    
    $
    (40,078
    )
    
    $
    (34,221
    )
    
    $
    (33,157
    )