The Industrial Owners Selling to ICE

There’s a big spender buying up warehouses across the country: The Department of Homeland Security.

The agency plans to spend $38.3 billion on a new detention model, one that includes buying up warehouses and other industrial buildings to use as detention centers, according to documents published by New Hampshire’s governor. As part of its immigration crackdown, U.S. Immigration and Customs Enforcement is planning to increase its detention capacity to 92,600 beds, an increase of more than 20,000 from current capacity.

Some industrial landlords are ready to play ball. The list of property owners who have sold to ICE runs the gamut from foreign investment firms, to big box retail giants, to local industrial groups.

Other property owners have scrapped deals with ICE, although they’ve, for the most part, declined to say why.

Sales and leases to ICE have drawn protests and attention, but some industrial landlords seem undeterred. The names on either side provide a map to how companies are thinking about their status in this politically charged moment.
The deals total nearly $700 million, according to a TRD analysis of news reports and PropertyShark data.

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Some of that pushback is already in motion. In Social Circle, Georgia, ICE purchased a warehouse for $129 million earlier this month. Residents have been opposed to the facility, saying they’re worried about straining utilities and losing tax revenue. Nearly three-quarters of residents voted for Donald Trump, according to the Guardian.

DHS plans to make the Social Circle facility one of its eight “mega-centers,” housing up to 10,000 people at a time, according to town officials. That would double the existing population of Social Circle.

The seller behind the Georgia facility is a subsidiary of industrial developer, PNK Group, which was founded in Russia.

In a statement, the company said it will no longer have any role in operational decisions after the deal is closed. “Because this is a sales transaction, any future use of the property will be determined solely by the purchaser and will be subject to the required local review and approval processes,” PNK Group said in a statement.

The other owners who have been reported to have sold buildings to ICE through subsidiaries or affiliates are: Crestlight Capital, Oakmont Industrial Group, Rockefeller Group, PCCP, Fundrise, Flint Development, and retailer Big Lots. Those companies did not respond to requests for comment.

In addition to the eight mega-centers, the federal government plans to invest in 16 processing centers. These smaller centers will house up to 1,500 detainees for stays of under one week, according to federal documents made public by the state of New Hampshire. The processing sites will transfer detainees to the mega-centers, where they will stay “for periods averaging less than 60 days.” The mega-centers will also be the main site for deportations.

The warehouse sales and greater detention push have also drawn criticism related to human rights. In December, the American Civil Liberties Union published a report based on accounts from 45 ICE detainees in Texas who detailed physical abuse, medical neglect and intimidation.

ICE reputation’s has suffered as accounts have proliferated of wrongful deportations and aggressive tactics. As part of the agency’s crackdown in Minneapolis, two observers were shot and killed by federal agents in separate events, drawing nationwide protests.

That controversy may be too much for some property owners to deal with. Some have scrapped deals with ICE, although they have not attributed those decisions to politics.

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Those who have floated deals with ICE and then not proceeded include: Platform Ventures, Majestic Realty, Opus Development Company, Stotan Industrial, and Jim Pattison Developments. Flint Development, which has already sold one property to ICE, has had another sale fail to proceed.

In response to requests for comment, Opus confirmed that it is not under contract nor in negotiations with any federal agency. Jim Pattison Developments confirmed the transaction to sell its property in Ashland, Virginia will not be proceeding. The other companies did not respond to requests for comment.

Whether the largest property owners will cooperate with ICE if approached remains to be seen. Prologis, a publicly-traded REIT that owns more than 1 billion square feet globally, confirmed to TRD that it is not currently exploring selling industrial assets to ICE and there are no deals that have closed or are in the works.

Blackstone Real Estate, the largest owner of commercial real estate globally, did not immediately respond to a request for comment.

The picture looks different for private prison companies, for whom ICE is the largest and fastest growing customer. CoreCivic and GEO Group have both grown their partnerships with the agency, according to earnings statements, with the former doubling its revenue from ICE. The two operate detention facilities they own under contracts with the agency.

GEO Group is looking to go further. The company is exploring ways to partner with ICE on its warehouse buying spree, George Zoley, the group’s CEO said on an earnings call this month. The federal government will need private sector partners to renovate and operate the former industrial sites, he said.

“We are looking at some sites predominantly in the Sunbelt states,” he said on the call. “Predominantly in red states, to be very frank about it.”