Investing.com -- Shares of Target Hospitality Corp (NASDAQ: TH ) surged 17% today following news that CoreCivic Inc. (NYSE: CXW ) will resume operations at the South Texas Family Residential Center in Dilley, Texas, under a new agreement with U.S. Immigration and Customs Enforcement (ICE). The facility, owned by Target Hospitality, will see CoreCivic manage residential services and provide onsite medical care, with food services supplied by Target.

The amended intergovernmental services agreement between the City of Dilley and ICE, along with the new lease agreement with Target Hospitality, is set to expire in March 2030, potentially extending further. This arrangement is expected to generate approximately $180 million in annual revenue for CoreCivic once the facility is fully operational. Pre-activation activities have already begun earlier this year, and the impact on earnings is anticipated to begin in the second quarter of 2025.

CoreCivic’s CEO, Damon T. Hininger, expressed gratitude for the renewed trust from their government partner and highlighted the company’s readiness to meet the expected increased demand from federal government partners. Patrick Swindle, CoreCivic’s President and COO, also noted the opportunity for staff to transfer to the Dilley Facility, many of whom are familiar with the operations from prior service, which could accelerate the activation process.

The partnership between CoreCivic and Target Hospitality dates back to 2014, with Target providing the property for the ICE facility. The resumption of operations at the Dilley Facility represents a significant development for both companies, as it not only restores a previously idled operation but also promises a substantial revenue stream over the next several years.

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