By M. Marin
NYSE:CXW
READ THE FULL CXW RESEARCH REPORT
Reactivating idled facilities to add capacity to meet ICE’s growing needs
CoreCivic (NYSE:CXW) has been in the process of reactivating several idled facilities, including two under Letter Contracts with ICE. Yesterday CXW announced formal contracts for these facilities, as expected. Once both facilities have ramped fully, CXW expects these contracts to produce combined annual revenue of almost $200 million. We believe this underscores ICE’s need for capacity and CXW’s longstanding role in supplying capacity and services to ICE, its largest government partner. The company has a long history of providing capacity and related services to ICE, the federal government’s highest funded law enforcement agency, according to the New York Times, and other government partners.
Earlier this year, the company had entered into a Letter Contract with ICE to reactivate the 2,560-bed California City Immigration Processing Center, effective April 1, 2025. Yesterday CXW announced a new formal contract for the California City Immigration Processing Center, with the transition from a Letter Contract to the definitive contract effective as of September 1, 2025. CXW intends to hire additional staff and ramp capacity during the activation period, which the company expects will be completed in 1Q26. Once fully ramped in 2Q26, total annual revenue is expected to be roughly $130 million. The new contract expires in August 2027.
In addition, the company entered into a Letter Contract with ICE effective March 7, 2025, to re-activate the 1,033-bed Midwest Regional Reception Center. Activities have been paused by a lawsuit the City of Leavenworth filed alleging that a Special Use Permit (SUP) is required to operate the facility. CXW and ICE entered into a definitive contract for the Leavenworth, Kansas facility beginning on September 7, 2025, for a 24 month term. However, the temporary injunction is still in effect. If/when it is resolved, the agreement provides for a fixed monthly payment plus an incremental per diem payment based on detainee populations and annual revenue once the center is fully ramped is expected to be about $60 million.
CXW is also in the process of reactivating other idled facilities. In March, the company started reactivating a facility operated previously in Dilley, Texas. Following expiration of an earlier contract, CXW entered into an amended intergovernmental services agreement (IGSA) with ICE and the City of Dilley, Texas to resume operations at the South Texas Family Residential Center in Dilley and care for up to 2,400 people. The amended contract runs through March 2030 and may be further extended. The company has also entered into a new lease agreement with Target Hospitality Corporation, which owns the facility. The agreement is expected to contribute about $180 million in annual revenue to CXW once it is completely active.
Last month CXW announced that it has been awarded a new contract under an intergovernmental services agreement (IGSA) between the City of Mason, Tennessee, and ICE (U.S. Immigration and Customs Enforcement) to resume operations at its West Tennessee Detention Facility through August 2030 with an option to extend. The 600-bed facility has been idle since September 2021. The agreement provides for a fixed monthly payment plus an incremental per diem payment based on detainee populations. Once the facility is fully activated, it is expected to produce about $30 million to $35 million total annual revenue for CXW at margins that are consistent with the CoreCivic Safety segment. Full ramp is currently expected to be complete by the end of 1Q26. With this latest contract award, CXW has reactivated four idle facilities containing an aggregate roughly 6,600 beds, and made more than 1,000 additional detention beds available to ICE. The company previously indicated that it was in discussion to re-activate other idled facilities, in addition to four announced earlier, reflecting the additional capacity required by ICE.
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