Immigration Crackdown Is An Opportunity 'Unlike Any We’ve Previously Experienced' For Private Prison Firms

President Donald Trump’s reascension to the White House for a second term has invigorated a small and often maligned corner of the real estate investment market.

The two major publicly traded prison firms, CoreCivic and The Geo Group, saw their stocks rise by more than 80% in the days after Trump’s resounding win. The firms, which are key providers of immigrant detention facilities for the U.S. government, are rushing to prepare facilities and staff to meet what they — and investors — expect will be a deluge of new contracts. 

“We believe the scale of the opportunity before our company is unlike any we've previously experienced,” Geo Group CEO David Donahue said on the firm’s Feb. 27 earnings call.

His company, whose stock rose 7% last week on strong earnings, is sitting on a market capitalization of around $3.8B.

Earlier in the month, the CEO of CoreCivic, the second-largest operator in the sector, with a market cap of $2B, sounded just as optimistic. 

“I've worked at CoreCivic for 32 years, and this is truly one of the most exciting periods in my career with the company,” CEO Damon Hininger said on the firm’s Feb. 10 earnings call. “Having just wrapped up a strong 2024, we're anticipating significant growth opportunities, perhaps the most significant growth in our company's history, over the next several years.”

The excitement stems from the Trump administration’s promise to deport as many as 20 million unauthorized immigrants. The two firms have long been key contractors in the government’s immigration enforcement efforts — the federal government accounts for roughly half of CoreCivic’s revenue — and are gearing up for an influx of demand. 

Immigrations and Customs Enforcement estimates it could need as many as 110,000 additional detention beds, 10,000 more enforcement personnel, and another 7,000 attorneys and legal support providers to meet the Trump administration’s deportation goals, according to documents obtained by NPR.

The government’s push to increase immigration enforcement could result in an additional $1B in revenue per year for Geo Group, Chief Financial Officer Mark Suchinski said. 

The postelection rally is something of a change in fortunes for the two firms, which had suspended dividends and nearly went private in 2021 as their valuations sank. In the depths of the pandemic, the firms were weighed down by early release policies and an executive order from then-President Joe Biden directing federal agencies to stop using their services. 

Trump rescinded that order with one of his own signed on inauguration night. A little more than a month later, the government made a new deal with Geo Group to operate Delaney Hall.

The Geo Group facility in Newark, New Jersey, was last used for immigration detention in 2017 before being converted into a halfway house, according to The New York Times. The 15-year contract to operate the 1,000-bed facility will bring in approximately $1B, Geo Group estimates. 

Entities associated with the two private prison firms contributed more than $1M to Trump’s reelection effort, ABC News reported in November. Executives from both companies said on their earnings calls in February that they were in daily contact with the Trump administration and that they expect more contracts will be signed after Congress settles the ongoing budget debate.

“We are engaged in active conversations with ICE and the United States Marshals Service in preparation for their increased secure bed needs,” Hininger said. “This has included the submission of multiple proposals of our capabilities, tours of existing facilities, and anticipated cost estimates.”

Geo Group Chief Operating Officer Wayne Calabrese also said the company was submitting bids to the federal government and getting close to signing contracts.

“All of that is kind of a fluid situation, which is picking up pace,” he said. “The procurement process is moving at a speed that's unprecedented. We've never seen anything like this before.”

Both firms posted declining financial performances to close 2024 compared to the prior year. CoreCivic’s fourth-quarter profits slipped to $19.3M from $26.5M a year earlier, while Geo Group's profits fell to $32M with a one-time $87M debt payment, down from $107M in Q4 2023 profits. 

Geo Group and CoreCivic had operated as REITs until 2021, when both companies changed to a corporate structure, citing increased liquidity and flexibility as the driving factor.

The stocks have both given back some of the gains from the postelection pop, with both sliding by at least 10% over the last month. Executives at the firms said earnings are being impacted by the investments to prestage facilities and staff to be able to quickly scale operations as federal contracts become available. 

The Trump administration’s immigration crackdown boosted occupancy by 1,000 beds for Geo Group in the fourth quarter, and both firms said they had reached five-year occupancy highs. 

Geo Group executives said they expected several contracts to be announced as early as this month and that the pace would likely accelerate once Congress settles on a budget and lawmakers have a clearer view of how much funding they have for the immigration fight. 

Both firms said they expect growing detainee populations would require them to reactivate mothballed facilities like Delaney Hall, but neither expected to see a significant change in revenue until the later part of this year and into 2026. 

“When we activate those facilities in the back half of the year and we start to generate revenue and fill the populations there, there's no doubt it'll be significantly accretive from a profitability standpoint,” Calabrese said. “The full potential we expect to see in 2026, and so the benefits will start to bear fruit in the back half of 2025.”

CORRECTION, MARCH 3, 8:50 A.M. ET: CoreCivic and Geo Group were REITs until 2021, when both companies reorganized.