Highlands REIT to Collect Nearly $1M a Month on Colorado Property Leased to GEO Group
By Staff
Highlands REIT Inc. has leased a long-vacant Colorado property to a subsidiary of The GEO Group for use as an immigration detention facility in a deal that will lift the company’s rent on the asset nearly fourfold within six months.
The nontraded real estate investment trust’s subsidiary, IVT PPD Hudson Associates L.L.C., signed an 88-month lease last week with GEO Secure Services LLC for a property at 3001 Juniper Street in Hudson, Colo. The lease begins Aug. 1.
Base rent starts at $250,000 a month for the first four months, then rises to $958,333.33 a month – beginning at either the six-month anniversary of the lease’s start or whenever the property becomes occupied, whichever comes first. Rent then increases 3% annually. GEO will also cover the property’s taxes under the lease, structured as a triple-net arrangement.
The escalation clause carries a contingency: if a separate agreement between GEO and an unrelated third party is terminated during the lease term, rent falls back to $250,000 a year for the remainder of the term, according to the company. Highlands REIT does not name the third party or the agreement, but GEO’s presence in Hudson traces to a federal contract – U.S. Immigration and Customs Enforcement awarded GEO a contract for “comprehensive detention services” at the site in December, according to public records obtained by the ACLU of Colorado. That leaves the bulk of Highlands’ new rental income tied to the durability of GEO’s federal detention work at the property.
The property is a roughly 1,200-bed former state prison that has sat empty since 2014. GEO is reopening it as the Big Horn Correctional Facility, and has said the site will generate $85 million in annual revenue for the company in its first full year of operation, according to CPR News.
Highlands REIT was spun off from InvenTrust Properties Corp. (then Inland American Real Estate Trust) in 2016 to hold InvenTrust’s non-core legacy assets, and it has operated since as a self-managed, nontraded vehicle without a stated timeline for a liquidity event.
The company has spent recent months fending off an unsolicited mini-tender. MacKenzie Realty Capital offered to buy Highlands shares at an 86% discount to the REIT’s estimated net asset value, an offer Highlands’ board rejected and urged shareholders to reject as well, citing the discount.
Working with an independent real estate advisory firm, Highland REIT’s board determined a company NAV of $0.29 per share as of March 31, 2026, citing unfavorable market conditions affecting its Denver multifamily portfolio, significant leasing risk in certain assets, and the fund’s difficulty finding buyers for its non-core holdings.
A near-quadrupling of rental income on a single previously idle asset strengthens the earnings case for the property and gives the board another data point to cite the next time a discounted tender offer lands on shareholders’ desks – though the benefit is capped by the lease’s contingency on GEO’s federal contract remaining intact.
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