Predatory behavior in dogs can be very hard to correct, as it is a natural instinct. Often dogs who hunt are not aggressive in any other way.  I suspect that your dog has a strong “hunting instinct,” and enjoys the chase and the kill.  Often, the dog will continue to do this even if you attempt behavior modification or training.  Sometimes giving the dog other activities will prevent their desire to hunt. 

The best option in your situation is avoidance. Keep him away from the out buildings, even if that means putting up a fence or keeping him indoors . Walking him on a leash when he is in this area will prevent him from seeking out the cats.   All the cats and kittens should be trapped and spayed and neutered as soon as possible to prevent more litters. As long as there are kittens to hunt, he will be drawn back there again and again. Older cats are often able to evade and escape a dog on the hunt, while little kittens are easy prey.   Spaying and neutering of stray or feral cats may be done inexpensively if there is a feral cat help group in your area. Some animal shelters also offer low-cost “fix and release” programs which sterilize feral cats and then return them to their barns.

Please click here for more information on “spay neuter and release” programs for feral cats in the United States.