The federal government bought two California detention centers from a private operator for a total of $1.5 billion, marking its latest real estate spending tied to immigration enforcement.
Brentwood, Tennessee-based facilities operator CoreCivic said it sold the 1,994-bed Otay Mesa Detention Center in San Diego and the 2,560-bed California City Detention Facility in Kern County to the U.S. Department of Homeland Security.
The Otay Mesa facility sold for $739.2 million and the Kern County property was priced at $732.6 million, according to a CoreCivic statement and a company filing this week with the Securities and Exchange Commission. The properties were sold in separate deals that closed on July 2.
The statement said CoreCivic expects to continue managing the two facilities under existing management contracts with the Immigration and Customs Enforcement division of DHS, though the company said there is no assurance that it will continue to do so.
“As has always been the case, ICE has the ability to terminate the management contracts for non-appropriation of funds or for convenience,” the CoreCivic statement said. The management contracts currently run through August 2027 for the California City facility and December 2029 for the Otay Mesa facility.
CoreCivic said it has been in discussions with ICE about the potential acquisition of additional detention facilities from the company, which owns 45 correctional facilities and manages nine nationwide. Discussions are in various stages and CoreCivic “can provide no assurance that any additional sales will occur.”
DHS officials did not respond to a request from CoStar News to comment. The purchase of existing detention centers comes as the federal government has recently been backing off from plans to purchase numerous general-use warehouses for eventual conversion into immigration detention centers housing large numbers of people.
In May, the inspector general’s office at DHS launched an audit to determine whether a series of large warehouse purchases were done in a cost-effective manner. Over the past few months, DHS closed 11 deals for 7.6 million square feet of industrial space in eight states for more than $1 billion from private sellers, according to CoStar’s analysis.
The warehouse purchases were part of the government’s larger $38 billion plan to grow its national network of detention centers and expand capacity. ICE is now looking to sell some of the purchased warehouses, according to a report in June by The New York Times.