Feds Pay $1.5B for Two Immigration Detention Centers in California

The federal government has spent nearly $1.5 billion to acquire two California detention centers from prison operator CoreCivic, marking one of the largest real estate deals tied to the Trump administration’s expansion of immigration enforcement.

The U.S. Department of Homeland Security (DHS) purchased the 1,994-bed Otay Mesa Detention Center in Greater San Diego for $739.2 million, and the 2,560-bed California City Detention Facility in Kern County north of Los Angeles for $732.6 million, CoreCivic announced. The deals closed July 2.

CoreCivic anticipates it will continue to manage both detention centers under contracts with U.S. Immigration and Customs Enforcement (ICE), although those agreements can be terminated by the agency. The California City management contract runs through August 2027, while the Otay Mesa agreement extends through December 2029.

The deals are a slight shift in strategy for DHS. Earlier this year, DHS paid more than $1 billion to acquire about 7.6 million square feet of warehouse space to convert into detention facilities across eight states, according to CoStar News, as opposed to buying existing detention facilities.

The first industrial deals drew increased scrutiny: DHS’s Office of Inspector General launched an audit in May to evaluate if the acquisitions were a cost-effective use of taxpayer funds, and The New York Times reported last month that ICE is looking to sell some of the warehouse properties.

CoreCivic also indicated there could be more sales after the deals in California. The company said it is in discussions with ICE regarding the potential sale of additional detention facilities from its national portfolio, which includes 45 correctional facilities and management contracts for nine others. 

But CoreCivic also said it is not guaranteed any more deals will close.

Gregory Cornfield can be reached at gcornfield@commercialobserver.com.