GEO Group To Terminate REIT Election And Become Taxable C Corp.; Slashes Q4, FY21 Outlook

GEO Group (GEO) announced Thursday that its Board of Directors has unanimously approved a plan to terminate its Real Estate Investment Trust election and become a taxable C corporation, effective for the fiscal year ending December 31, 2021.

The decision stems from the Board's evaluation of GEO's corporate tax structure and REIT status, which was announced on April 7, 2021.

The Board also voted unanimously to discontinue GEO's quarterly dividend. The change in corporate status from a REIT to a taxable C Corporation is expected to give GEO additional flexibility to allocate free cash flow towards reducing net recourse debt.

Excluding one-time, non-cash deferred tax charge and the portion of additional income tax expense associated only with the first three quarters of 2021, GEO expects fourth quarter 2021 adjusted net income between $0.29 and $0.31 per share and AFFO between $0.58 and $0.60 per share, which reflects the higher quarterly corporate tax rate GEO expects to pay as a taxable C corporation.

Similarly, GEO expects full-year 2021 adjusted net income in a range of $1.14 to $1.16 per share and AFFO in a range of $2.30 to $2.32 per share, which reflects the higher annual corporate tax rate GEO expects to pay as a taxable C corporation.

On average, analysts polled by Thomson Reuters expect the company to report earnings of $0.28 per share for the quarter and $1.44 per share for the year. Analysts' estimates typically exclude special items.

Previously, the company expected adjusted earnings of $0.37 to $0.39 per share and AFFO of $0.65 to $0.67 per share for the fourth quarter and adjusted earnings of $1.41 to $1.43 per share and AFFO of $2.57 to $2.59 per share for the year.

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