(RTTNews) – CoreCivic, Inc. (CXW) has completed the sale of its 2,560-bed California City Detention Facility in California and its 1,994-bed Otay Mesa Detention Center in San Diego to the U.S. Department of Homeland Security for a combined gross purchase price of $1.5 billion.
The transaction, completed on July 2, includes $732.6 million for the California City facility and $739.2 million for the Otay Mesa facility. After approximately $0.4 billion in federal and state taxes and transaction expenses, the company expects net proceeds of about $1.1 billion.
CoreCivic said it will use part of the proceeds to repay outstanding debt, including $270.0 million under its revolving credit facility, $107.8 million of its initial term loan, $100.0 million of its incremental term loan, and the remaining $238.5 million of its 4.75 percent senior notes due in October 2027.
The balance of the proceeds will be used for general corporate purposes, which may include additional debt repayment, share repurchases and strategic acquisitions, while maintaining financial flexibility for future growth opportunities.
The company expects to continue managing both detention facilities under existing contracts with U.S. Immigration and Customs Enforcement, although contract terms could be revised following the ownership change.
CoreCivic also disclosed it is in discussions with ICE regarding the possible sale of additional detention facilities. President and CEO Patrick Swindle said the transaction highlights the value of the company’s real estate portfolio while strengthening its balance sheet and supporting future growth and shareholder returns.
