Target Hospitality Gains After Revived Deal With Corecivic On Texas Detention Center

By Adriano Marchese

Shares of Target Hospitality and CoreCivic rose after the two companies signed an agreement to resume operations using CoreCivic existing assets in Texas.

Shares of Target Hospitality were 11% higher in premarket trading at $6.16. CoreCivic shares rose by 4.8% to $19.29.

Target Hospitality, a Woodlands, Texas-based provider of vertically integrated modular accommodations and hospitality services, said Thursday that it entered into a five-year lease-and-services agreement with CoreCivic, a Brentwood, Tenn., private-prison company, to resume operations in Dilley, Texas.

The contract is expected to generate $246 million of revenue for Target over the anticipated five-year term, of which $30 million is expected to be realized this year.

The Dilley facility will be capable of supporting up to 2,400 individuals, the company said Thursday.

Under the terms of the contract, Target will provide facility and hospitality solutions to CoreCivic, which will include fixed minimum revenue regardless of occupancy.

Write to Adriano Marchese at adriano.marchese@wsj.com

By Connor Hart

CoreCivic will resume operations at its South Texas Family Residential Center in Dilley, Texas, following an agreement between the city and U.S. Immigration and Customs Enforcement.

The private prison operator's amended intergovernmental services agreement, set to expire in March 2030 unless further extended, provides for a fixed monthly payment that will gradually increase as additional sections of the facility become operational.

Once fully activated, the facility is expected to post total annual revenue of about $180 million. Pre-activiation activities began earlier this year, and the monthly award is expected to be accretive to earnings beginning in the second quarter, the Brentwood, Tenn., company said Wednesday.

The company additionally entered a new lease agreement with the facility's owner, Target Hospitality. Terms of the lease weren't disclosed, though it did say that food services at the facility will be provided by Target.

CoreCivic will care for up to 2,400 people at the facility. The company will provide residential services with both indoor and outdoor recreational activities, life skills, counseling, group interaction and access to religious and legal services, it said.

The facility was purpose-built for ICE in 2014, and CoreCivic managed the site through last August, when funding was terminated and the facility was idled, according to CoreCivic.

Shares rise 3.4%, to $19.03, in after-hours trading.

Write to Connor Hart at connor.hart@wsj.com