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REAL ESTATE TRANSACTIONS | 9 Months Ended
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Sep. 30, 2017
REAL ESTATE TRANSACTIONS |
4. | REAL ESTATE TRANSACTIONS
Acquisitions On January 1, 2017, CoreCivic acquired the Arapahoe Community Treatment Center, a 135-bed residential reentry center in Englewood, Colorado, for $5.5 million in cash, excluding transaction-related expenses. The acquisition included a contract with Arapahoe County whereby CoreCivic will provide residential reentry services for up to 135 residents. On February 10, 2017, CoreCivic acquired the Stockton Female Community Corrections Facility, a 100-bed residential reentry center in Stockton, California, in a real estate-only transaction for $1.6 million, excluding transaction-related expenses. The 100-bed Stockton facility is leased to a third-party operator pursuant to a lease agreement that extends through April 2021 and includes one five-year lease extension option. The lessee separately contracts with the California Department of Corrections and Rehabilitation ("CDCR") to provide rehabilitative and reentry services to female residents at the leased facility. On June 1, 2017, CoreCivic acquired the real estate operated by Center Point, Inc. ("Center Point"), a California-based non-profit organization, for $5.3 million in cash, excluding transaction-related expenses and a potential earn-out of up to $1.7 million. CoreCivic consolidated a portion of Center Point's operations into the Company's preexisting residential reentry center portfolio and assumed ownership and operations of the Oklahoma City Transitional Center, a 200-bed residential reentry center in Oklahoma City, Oklahoma. On August 1, 2017, CoreCivic acquired New Beginnings Treatment Center, Inc. ("NBTC"), an Arizona-based community corrections company, along with the real estate used in the operation of NBTC's business from an affiliate of NBTC, for an aggregate purchase price of $6.4 million, excluding transaction related expenses. In connection with the acquisition, CoreCivic assumed a contract with the Federal Bureau of Prisons ("BOP") to provide reentry services to male and female adults at the 92-bed Oracle Transitional Center located in Tucson, Arizona. On September 15, 2017, CoreCivic acquired a portfolio of four properties for an aggregate purchase price of $8.7 million, excluding transaction related expenses. The acquisition included a 230-bed residential reentry center leased to the state of Georgia, a property in North Carolina and a property in Georgia, each of which is leased to the Social Security Administration, and a property in North Carolina leased to the Internal Revenue Service. In allocating the purchase price of these five acquisitions, CoreCivic recorded $24.3 million of net tangible assets, $2.3 million of identifiable intangible assets, $0.6 million of goodwill, and $0.3 million of tenant improvements associated with one of the North Carolina leased properties which was recognized as a receivable and will be recovered by payments from the lessee. CoreCivic acquired the properties as strategic investments that further expand the Company's network of residential reentry centers and further diversify the Company's cash flows through government-leased properties. Idle Facilities On April 30, 2017, the contract with the BOP at the Company's 1,422-bed Eden Detention Center expired and was not renewed. CoreCivic idled the Eden facility following the transfer of the offender population, and has begun to market the facility. The Company can provide no assurance that it will be successful in securing a replacement contract. CoreCivic performed an impairment analysis of the Eden facility, which had a net carrying value of $40.1 million as of September 30, 2017, and concluded that this asset has a recoverable value in excess of the carrying value. As of September 30, 2017, CoreCivic had eight idled correctional facilities, including the Eden facility, that are currently available and being actively marketed to potential customers. The following table summarizes each of the idled facilities and their respective carrying values, excluding equipment and other assets that could generally be transferred and used at other facilities CoreCivic owns without significant cost (dollars in thousands):
|  |  |  |  |  |  |  | Net Carrying Values |
|  | Design |  |  | Date |  | September 30, |  |  | December 31, |
Facility |  | Capacity |  |  | Idled |  | 2017 |  |  | 2016 |
Prairie Correctional Facility |  |  | 1,600 |  |  | 2010 |  | $ | 16,315 |  |  | $ | 17,071 |
Huerfano County Correctional Center |  |  | 752 |  |  | 2010 |  |  | 17,060 |  |  |  | 17,542 |
Diamondback Correctional Facility |  |  | 2,160 |  |  | 2010 |  |  | 40,571 |  |  |  | 41,539 |
Southeast Kentucky Correctional Facility |  |  | 656 |  |  | 2012 |  |  | 22,074 |  |  |  | 22,618 |
Marion Adjustment Center |  |  | 826 |  |  | 2013 |  |  | 12,161 |  |  |  | 12,135 |
Lee Adjustment Center |  |  | 816 |  |  | 2015 |  |  | 10,565 |  |  |  | 10,342 |
Kit Carson Correctional Center |  |  | 1,488 |  |  | 2016 |  |  | 57,505 |  |  |  | 58,819 |
Eden Detention Center |  |  | 1,422 |  |  | 2017 |  |  | 40,072 |  |  |  | 41,269 |
|  |  | 9,720 |  |  |  |  | $ | 216,323 |  |  | $ | 221,335 |
CoreCivic also has two idled non-core facilities containing 440 beds with an aggregate net book value of $4.1 million. CoreCivic incurred approximately $3.3 million and $2.5 million in operating expenses at the idled facilities for the three months ended September 30, 2017 and 2016, respectively. CoreCivic incurred approximately $8.6 million and $6.6 million in operating expenses at the idled facilities for the nine months ended September 30, 2017 and 2016, respectively. CoreCivic considers the cancellation of a contract as an indicator of impairment and tested each of the idled facilities for impairment when it was notified by the respective customers that they would no longer be utilizing such facility. CoreCivic updates the impairment analyses on an annual basis for each of the idled facilities and evaluates on a quarterly basis market developments for the potential utilization of each of these facilities in order to identify events that may cause CoreCivic to reconsider its most recent assumptions. As a result of CoreCivic's analyses, CoreCivic determined each of the idled facilities to have recoverable values in excess of the corresponding carrying values. As a result of declines in federal populations at the Company's 910-bed Torrance County Detention Facility and 1,129-bed Cibola County Corrections Center, during the third quarter of 2017, CoreCivic made the decision to consolidate offender populations into its Cibola facility in order to take advantage of efficiencies gained by consolidating populations into one facility. CoreCivic idled the Torrance facility in the fourth quarter of 2017 following the transfer of the offender population, and has begun to market the facility to other potential customers. The Company can provide no assurance that it will be successful in securing a replacement contract. CoreCivic performed an impairment analysis of the Torrance facility, which had a net carrying value of $37.0 million as of September 30, 2017, and concluded that this asset has a recoverable value in excess of the carrying value.

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- Definition The entire disclosure for real estate transactions including acquisitions, real estate closures and idle facilities, sales, construction of new facilities, activations, and other leasing transactions. + References No definition available. + Details
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