Boca’s GEO Group sells ICE its own Adelanto detention complex for $950 million, and keeps running it

The GEO Group of Boca Raton sold the federal government the immigration detention complex it owns in Adelanto, Calif., for $950,000,000 on Friday, Oct. 2, and will keep running it for ICE. The buyer is “United States of America and its assigns, by and through the Department of Homeland Security”; the sale covers the 1,280-bed Adelanto West and 660-bed Adelanto East ICE Processing Centers and the 704-bed Desert View Annex, 2,644 beds, and closed the day it was signed (GEO Group 8-K; purchase agreement; our sum). GEO announced it Monday, Oct. 5, and two trade outlets independently reported the price, the beds and the continued operation (Commercial Observer; Bisnow).

George C. Zoley, GEO’s chairman, chief executive and founder, said: “We are pleased with the completion of these important asset sales to the U.S. federal government, and we look forward to continuing to provide high-quality secure support services under our existing long-term contracts with ICE,” and “We remain focused on allocating capital to enhance long-term value for shareholders, including through share repurchases” (GEO Group press release).

Your stake: if you own GEO shares or bonds, most of the sale money is going to bondholders. GEO expects about $705 million after federal and state taxes, fees and expenses (GEO Group 8-K), and on Oct. 5 it gave notice to redeem all $650 million of its 8.625% senior secured notes due 2029 on Oct. 15 for about $678 million plus accrued interest, “using the net proceeds from the Company’s recently announced asset sales” (GEO Group 8-K, filed Oct. 8; GEO press release, Oct. 6). That is a debt payment, not a gain: about $678 million of about $705 million (our arithmetic). On Monday, Oct. 19, GEO said it completed the redemption on Oct. 15 at $1,043.13 per $1,000 of principal, about $678 million plus accrued interest, that the indenture governing the notes has been discharged, and that its gross debt now totals $625 million, not counting about $36 million of mortgage debt on its headquarters building (GEO press release, Oct. 19, via Business Wire; Investing.com). GEO also announced Oct. 5 that its board had approved raising the buyback authorization by $750 million to $1.25 billion through 2029, and its new credit agreement allows unlimited share repurchases while its pro forma leverage stays at or under 2.25 to 1 (GEO Group 8-Ks). If you pay federal taxes, Washington now owns three detention buildings and still pays GEO to run them; in January 2024 GEO said its Adelanto contract brought in about $85 million a year (GEO Group 8-K, Jan. 2024). And if you live in Broward, GEO’s 10-K lists one Florida site it owns for ICE, the 700-bed Broward Transitional Center in Deerfield Beach; GEO has not named the other facilities it wants to sell, and under this deal the federal buyer pays no state or local real estate tax (GEO 10-K; purchase agreement). We do not know whether Broward Transitional Center is among them, and we put no dollar figure on the tax roll.

The money

The price and the net are different numbers. The purchase agreement sets the price at “Nine Hundred and Fifty Million and 00/100 Dollars ($950,000,000.00)” (purchase agreement, Section 2). GEO expects about $705 million in net proceeds; the rough $245 million difference is federal and state taxes, transaction fees and expenses (GEO Group press release; our arithmetic). Neither figure is GEO’s profit: the company has not disclosed its gain on the sale or the complex’s book value.

The contract that pays GEO to run the buildings stays in place. GEO expects to keep providing support services at all three sites under its existing ICE contract, whose current term ends Dec. 19, 2029, with a five-year option running to Dec. 19, 2034 (GEO Group 8-K). In earlier filings GEO put the 1,940-bed Adelanto ICE Processing Center, West and East together, at about $85 million a year in revenue (January 2024), and said full occupancy could add up to about $31 million a year more (August 2025); those are company revenue figures, not federal obligations, and they do not mention Desert View (GEO Group 8-Ks; our arithmetic on the beds).

The cash has a destination. GEO said in its Oct. 6 release that the redemption of its $650,000,000 of 8.625% senior secured notes due 2029 “will occur on October 15, 2026,” for approximately $678 million plus accrued and unpaid interest, from the net proceeds of its recent asset sales; it said it would deposit the funds with the trustee by Oct. 14 (GEO press release; GEO Group 8-K). The same day it entered an amended and restated credit agreement with Bank OZK as administrative agent: revolving commitments stay at $550.0 million, the revolver now matures July 14, 2031, the incremental amount rises to $750.0 million, and GEO may make unlimited restricted payments, including share repurchases, when its pro forma total leverage ratio is 2.25 to 1.00 or less and no default exists (GEO Group 8-K, filed Oct. 8).

The signatures are in the filing. Richard Kent Long signed for The GEO Group, Inc. as senior vice president, project development, and for its subsidiary CPT Operating Partnership, L.P. as vice president, project development; Tamim Chowdhury, a real estate contracting officer, signed for the buyer (purchase agreement).

How it works

This is a sell-and-keep-operating deal. The government buys the building, and the company keeps the contract to run it. The tax line moves with the deed: “The Buyer is an entity of the federal government and is exempt from all state and local taxes, including real estate taxes. Once in possession, real estate taxes will no longer be assessed on the property and neither party will be responsible for them going forward” (purchase agreement, Section 4.1). It has a recent precedent: in July, Homeland Security bought two California detention centers from CoreCivic for $1.5 billion, the 2,560-bed California City Detention Facility for $732.6 million and the 1,994-bed Otay Mesa Detention Center for $739.2 million, and CoreCivic kept managing them under its existing ICE contract (Bisnow). In August ICE bought two more CoreCivic facilities, in Kansas and Minnesota, for a combined $734 million, and ICE separately pays CoreCivic to keep operating them (CBS News; Los Angeles Times). The Los Angeles Times puts federal spending on detention facilities at nearly $3.2 billion, most of it in California, in sales made possible by a $45 billion infusion for immigration detention in the One Big Beautiful Bill Act; the July, August and Adelanto prices add up to about $3.15 billion (Los Angeles Times; our arithmetic). Homeland Security told the Times that California’s new laws, which “increase oversight of immigration facilities,” make federal ownership “critical to ensure it retains the detention capacity needed on the West Coast” (Los Angeles Times). GEO’s own 10-K warns the trade-off: “our operation of the facility pursuant to a management agreement may be less profitable than our ownership of the facility” (GEO 10-K).

What could still stop it

The operating contract is not guaranteed. GEO’s 8-K says ICE can end it for lack of appropriations or for convenience, so GEO “can provide no assurance that it will continue to manage those facilities in the future” (GEO Group 8-K). GEO says it “remains engaged in an active process for the sale of multiple other company-owned facilities to ICE,” subject to agreement on price and to GEO keeping the management contracts, with no definitive agreement or timeline, and it names none of them (GEO Group press release). Federal auditors have questioned how ICE spends on detention: the GAO found on Sept. 24 that ICE pursued its expansion without a comprehensive strategic plan, bought 11 warehouses at a reported cost of about $1.07 billion and now intends to sell 7 of them, and warned of “the potential for continued waste of taxpayer dollars” (GAO). That report is about the warehouses, not this sale. The 10-K lists Desert View at 750 beds; the October filings say 704, which we use (GEO 10-K; GEO Group 8-K).

The site GEO still runs has a conditions record. On July 16, U.S. District Judge Sunshine Sykes ordered federal immigration officials to provide people at Adelanto clean drinking water and adequate medical care and called for two independent monitors (CalMatters). The first monitor report, filed Oct. 2, described mold and larvae in the showers, and on Oct. 7 detainees’ lawyers asked the judge to hold the government in contempt (KESQ); the San Bernardino Sun, as Hoodline reports it, says the monitor found Adelanto out of compliance in 10 of the 19 areas the judge ordered improved (Hoodline, one source chain). On Friday, Oct. 16, Rep. Robert Garcia, the top Democrat on the House Oversight Committee, led an unannounced visit with Reps. Norma Torres, Dave Min, Judy Chu and Luz Rivas; officials kept them waiting in the lobby about half an hour, they could not speak with detainees, and they described unsanitary showers and kitchens (LAist; KESQ). “We should have been allowed to visit immediately,” Garcia said (LAist). Rivas said the contractor leading the tour told the group he was surprised to learn of the sale (KESQ). The government’s side: according to the members, ICE officials said they were conducting a point-in-time count with people confined to their cells (LAist), and ICE said in a statement that “Any claim that there are subprime conditions at Adelanto ICE Processing Center are FALSE” (Hoodline, citing the San Bernardino Sun; KESQ). Neither visit report carries a GEO statement. Torres told the Los Angeles Times earlier, “Taxpayers shouldn’t have to foot the bill twice for a broken, for-profit detention system” (Los Angeles Times).

Why it matters across Florida

GEO is a Boca Raton company that owns buildings ICE uses, and its next sale could be a Florida building. Its 10-K lists the 700-bed Broward Transitional Center in Deerfield Beach as company-owned, with ICE as the primary customer (GEO 10-K). If a Florida site were sold the way Adelanto was, the federal owner would pay no county property tax under the same clause (purchase agreement, Section 4.1). We found no source that names a Florida facility in GEO’s further sale talks. GEO is also a large Florida political donor: it wrote Friends of Byron Donalds PAC a $1,000,000 check dated Oct. 8, six days after the sale; no record ties any check to the sale (Division of Elections; see the story on that check).

What to watch

GEO’s third-quarter results, Thursday, Nov. 5, before the market opens, with a 1 p.m. ET call, which may show the gain or loss on the sale (Business Wire; GEO Group 8-K). Any announcement of the other facilities GEO is negotiating to sell ICE, and whether a Florida site is one. The pace of the stock buyback. The judge’s answer to the contempt motion at Adelanto (KESQ). ICE’s funding: Homeland Security runs on a continuing resolution that expires Dec. 11, while the FY2026 reconciliation law gave ICE multi-year money (Congressional Research Service). Any move to end a contract for convenience.