CoreCivic is selling 2 ICE detention centers in CA to the federal government

Private prison company CoreCivic has sold two of California’s largest immigration detention centers to the U.S. Department of Homeland Security in a $1.5 billion deal. the company announced on Monday.

CoreCivic said it expects the sale of the Otay Mesa Detention Center in San Diego County and the California Detention Center in Kern County to bring the company estimated net proceeds of approximately $1.1 billion.

The sale ended on July 2, according to a recent filing with the US Securities and Exchange Commissionwith the federal government paying $739.2 million for the 1994-bed Otay Mesa facility and $732.6 million for the newly opened 2,560-bed facility in California City. The two properties were sold under separate sales contracts, signed and completed on the same day.

CoreCivic said in a news release that it expects to continue managing the day-to-day operations of the two facilities under existing management contracts with U.S. Immigration and Customs Enforcement. The company acknowledged in its filing that the terms of those contracts could be renegotiated now that the federal government owns both properties outright.

There is no guarantee that CoreCivic will honor its operating covenants, the SEC filing said. The California City contract runs through August 2027 and the Otay Mesa contract runs through December 2029 with an option to extend for another five years.

California law allows state and local officials to inspect immigration detention centersand Democratic leaders have called attention to conditions at both sites since President Donald Trump began his second term. Eight ICE detention centers operate within the state, up from six since former President Joe Biden left office.

The Otay Mesa facility is at the center of an ongoing legal battle over local health inspectorates. San Diego County officials sued the federal government and CoreCivic in March after claiming health inspectors were blocked from a full inspection under a 2024 state law. A federal judge later granted county health officials access to the detention center.

California City opened last year in eastern Kern County about 100 miles north of Los Angeles at a site the company previously operated as a state prison.

The company also disclosed that it is in ongoing talks with ICE to sell additional detention centers to the federal government, although it said those discussions are in the early stages of a deal and may not be finalized.

Maryland-based CoreCivic said the proceeds from the sale, which will be about $1.1 billion after taxes and transaction costs, could go toward paying down the bank loan and retiring $238.5 billion in senior bonds due in 2027. Any remaining funds are earmarked for further debt reduction or possible share buybacks.

Patrick Swindle, president of CoreCivic, said in the news release, “We are pleased with the sales of these two critical facilities for the Company’s government partner, while reflecting our role as a long-term provider of flexible solutions to the government.”