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DHS deal boosts CoreCivic and Geo Group cash from prison reactivations
DHS is paying CoreCivic and Geo Group $240M a year to reactivate defunct facilities as ICE detention counts rose from 60,311 to 65,765 between April and July.
Bisnow reports the Department of Homeland Security has shifted away from a plan to buy industrial warehouses for detention use, and instead has moved to keep and reactivate private prison capacity. DHS acquired the California City Correctional Center, paying CoreCivic $2.2B for four facilities in California, Minnesota and Kansas, with the expectation the company will operate them as ICE detention centers.
The reporting says DHS also agreed to pay CoreCivic and Geo Group $240M a year to reactivate defunct facilities, aligning with a renewed push to detain and deport unauthorized immigrants. The deals come as immigration enforcement accelerates, with ICE arrests exceeding 238,000 in the first seven months of the year, including more than 43,000 in July.
Bisnow adds that Trac Immigration data show the number of immigrants in detention increased from 60,311 between April and July to 65,765, although the pace of detainee growth is described as slower than originally anticipated.
The article also notes that Noble Capital Markets expects the new ICE contracts for additional beds and reactivated facilities to provide a significant earnings boost for CoreCivic, while describing continued opportunities to supply additional beds and services. It further states the companies saw their stocks fall after the earlier warehouse purchase approach, with CoreCivic shares dropping from about $20 in January to $16 by mid-February.