Private Prisons: An Exceptionally Niche Asset Class Meets Its Moment

It’s certainly a niche asset class. But one that’s rapidly expanding.

The ongoing, record-breaking expansion of the nation’s immigrant detention capacity — due to an expedited mass deportation push that’s been the subject of significant protests, legal rulings and due process complaints — has made private prisons a burgeoning business during the start of the second Trump administration. 

Industry stalwarts GEO Group and CoreCivic, which have substantial experience in prison operations and a nationwide portfolio of carceral real estate, have seen the coming flood of  federal Immigration and Customs Enforcement (ICE) funding as part of a series of “unprecedented growth opportunities,” said GEO Group Chairman George C. Zoley during the firm’s latest earnings call in August. Roughly $45 billion has been earmarked for detention through September 2029 via the recently passed One Big Beautiful Bill. 

ICE plans to double its detention capacity to nearly 110,000 by the end of this year, which, at full capacity, would make the agency’s wards the 20th largest incarcerated populations in the world. For the private prison industry, this opportunity is one they claim they’re singularly suited to meet.

“Our decades-long history of constructing facilities for government use has given us a marketable portfolio of existing, ready-to-activate, high-quality capacity that we view as ideally suited to meet ICE’s immediate needs,” said Ryan Gustin, CoreCivic’s senior director of public affairs, in a statement sent to Commercial Observer. 

GEO Group declined to respond to repeated requests for comment. 

This moment highlights just how these two firms have continuously evolved their operations. 

The methods by which these companies finance and construct facilities have changed over time, as shifting funding streams and priorities of different administrations — as well as advocacy campaigns and waves of public pushback — have changed the reality on the ground. 

Generally speaking, the contracts that GEO Group or CoreCivic would get from the federal government have been for operations and management. It’s the recurring revenue fee for running private prison sites. Construction funding comes from a number of sources, which have changed for these firms over time. 

Bob Libal, a criminal legal reform and immigrant rights advocate in Austin, Texas, had more experience with these companies during their initial wave of expansion in the early 2000s under the George W. Bush administration. During that period, especially in Texas, there was a lot of public financing around private prisons that utilized municipal revenue bonds. 

During the twilight of the Obama administration, the federal government decided to end federal contracts with private prisons, sending a memo to the Bureau of Prisons instructing the federal agency to decline to renew contracts. During Joe Biden’s administration, the government was instructed to phase out funding to private prisons, but continued to use them for a growing population of detained immigrants.

“I think the liability they’ve experienced is that at different times in their corporate history, if the demand for private prisons decreases, then they have empty facilities sitting there, right?” said Shar Habibi, research and policy director of In the Public Interest, a nonprofit that has advocated against private prisons. “That’s not good.”

During the first Trump administration, a number of advocacy groups challenged the larger financial institutions — including Bank of America, Wells Fargo and SunTrust (now part of Truist) — that backed these private prison firms in a sustained campaign between 2016 and 2019. Called Families Belong Together, in response to policies that separated detained families, the coalition sought financial pressure points. 

At the time, the companies were structured as REITs, and needed to distribute most of their taxable income to investors annually, making them dependent on financing, term loans and revolving credit facilities for new construction, said Dov Baum, director of American Friends Service Committee’s Action Center for Corporate Accountability. The allied groups then identified and successfully pressured banks and financial groups to stop funding private prisons. 

Since then, GEO Group and CoreCivic have dropped their REIT status, which means they aren’t as reliant on external loans, and don’t have to be as transparent about financial records. By and large, the current funding GEO Group and CoreCivic utilizes is administered by Alter Domus, a private lender whose funding sources are much more opaque. 

Both companies have in-house planning and design capacity as well as in-house construction experience. CoreCivic boasts it can achieve 25 percent cost savings and finish a new facility in 18 months or less. 

But the recent wave of funding for immigrant detention facilities has been overly focused on speed, which has altered the way vendors have competed for federal dollars, and the facilities they are building or, in most cases, reopening. The Trump administration’s rush to accommodate higher immigrant detention figures has meant a focus on reactivating closed facilities or constructing temporary tent structures on federal land, particularly on Army bases. 

A number of new contractors, such as disaster-relief providers and other firms like GothamsLLC and Deployed Resources, which sometimes lack direct prison management experience, have been contracted to rapidly erect tents on federal sites. 

Governors in Indiana, Florida, Louisiana and Nebraska have offered up shuttered state prisons or state-run detention camps, according to data gathered by the nonprofit Detention Watch network. A number of military bases — such as Indiana’s Camp Atterbury, Fort Bliss in Texas, Guantanamo Bay in Cuba and Joint Base McGuire-Dix-Lakehurst in New Jersey — are being used to expand capacity. 

The haste has led to wasted efforts. The “Alligator Alcatraz” project in the Florida Everglades, funded in part by Federal Management Emergency Agency funds meant for asylum seekers and migrants, was recently ordered closed by a federal judge because the rapidly assembled project skipped over a federal environmental review process, among other issues. (As of press time, the facility remained open following an appeals court ruling staying the judge’s decision.)

But the big contractors are still seeing significant revenue opportunities. In many cases, older, underutilized or closed facilities owned by CoreCivic or GEO Group are being reactivated, turning empty and idle facilities into new profit centers. Roughly 20 such facilities existed between both companies at the start of Trump’s second term, due in part to sentencing reforms that shrunk prison populations.

Meanwhile, some big names are taking stakes — albeit, for many of them, minor ones — in owner-operators like GEO Group. BlackRock, for instance, has a significant stake in GEO Group. But that’s via its investments in index funds tied to the stock market, not to any particular effort by the firm to single out the private prison company. BlackRock, Vanguard, Goldman Sachs, State Street Global Advisers and Guggenheim Partners didn’t respond to requests to gain more insight into their own holdings of GEO Group or CoreCivic stock.

Geo Group’s Zoley specifically called out the “intrinsic value of our owned real estate assets,” and expects all the firm’s shuttered prisons to be reactivated by the end of the year. CoreCivic purchased the Farmville Detention Center in Virginia for $67 million, which is already accepting detainees, and made substantial progress reactivating three facilities in the spring of this year, with the activation team preparing for additional contracting activity.

These reopenings can attract significant protest and pushback from local and state governments, as well as prisoner and immigrant rights groups, over complaints about poor food and lax oversight that in some cases has left prisoners seriously injured. The California City detention center outside of Los Angeles, which CoreCivic reopened in June, raised the ire of local activists and leaders; the state had tried to ban private prisons until the action was judged unconstitutional in 2023. The move to reopen the infamous Leavenworth prison in Kansas via an expedited process known as a letter contract, angered local officials, who filed a lawsuit in opposition.

The potential, however, has already shifted the financial performance of these firms. GEO Group’s net income during the first half of 2025 was $48.6 million, a stark turnaround from the first half of 2024, where the firm lost $9.8 million. CoreCivic saw net income jump 103.4 percent in the second quarter versus the same period last year, hitting $38.5 million. 

These reopened facilities are predicted to make an immediate financial impact. For instance, GEO Group resumed services at the 1,000-bed Delaney Hall in Newark, N.J., starting this year — despite active efforts to sue by the city, which alleged improper permits — and it’s projected to generate $60 million in annualized revenue when it hits full capacity.

“There are some people who say that private prisons are better than public prisons because they’re easily closed, because there isn’t pressure from public sector unions,” said Libal, the immigrant rights advocate in Texas. “But my argument is, they’re always trying to reopen, right?”