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REAL ESTATE TRANSACTIONS | 9 Months Ended
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Sep. 30, 2018
REAL ESTATE TRANSACTIONS |
4. | REAL ESTATE TRANSACTIONS
Acquisitions On January 19, 2018, CoreCivic acquired the 261,000 square-foot Capital Commerce Center, located in Tallahassee, Florida for a purchase price of $44.7 million, excluding transaction-related costs and certain closing credits. Capital Commerce Center is 98% leased, including 87% leased to the state of Florida on behalf of the Florida Department of Business and Professional Regulation. In allocating the purchase price of this transaction, CoreCivic recorded $40.6 million of net tangible assets and $3.2 million of identifiable intangible assets. On July 17, 2018, CoreCivic acquired a portfolio of twelve properties for $12.0 million, excluding transaction-related costs, 100% leased to the U.S. Federal Government through the General Services Administration ("GSA") on behalf of the Social Security Administration ("SSA"), the Department of Homeland Security, and U.S. Immigration and Customs Enforcement. Since this was a portfolio acquisition, the Company may elect to market up to three of the properties for sale. In allocating the purchase price of this transaction, CoreCivic recorded $11.1 million of net tangible assets and $1.7 million of identifiable intangible assets. On August 23, 2018, CoreCivic acquired a 541,000 square-foot SSA office building in Baltimore, Maryland ("SSA-Baltimore") for a total purchase price of $242.0 million, excluding transaction-related costs and certain closing credits. The office building was purpose built to SSA specifications in 2014 under a 20-year firm term lease expiring in January 2034, and is backed by the full faith and credit of the U.S. Federal Government through the GSA. In connection with the acquisition and as further described in Note 6, CoreCivic assumed $157.3 million of in-place financing that was used to fund the initial construction of the property in 2014. In allocating the purchase price of this transaction, CoreCivic recorded $207.4 million of net tangible assets and $38.9 million of identifiable intangible assets. On September 21, 2018, CoreCivic acquired a 217,000 square-foot, steel frame warehouse in Dayton, Ohio for $6.9 million, excluding transaction-related costs and certain closing credits, that was built-to-suit for the National Archives and Records Administration ("NARA") in 2002. The building is 100% leased to the GSA on behalf of NARA through January 2023 and includes two additional 10-year renewal options. The building provides 1.2 million cubic feet of storage space, approximately 90% of which is dedicated to archives of the U.S. Internal Revenue Service. In allocating the purchase price of this transaction, CoreCivic recorded $6.9 million of net tangible assets and $0.7 million of identifiable intangible assets. CoreCivic acquired these 15 properties in 2018 as strategic investments that further diversify the Company's cash flows through government-leased properties and broaden the solutions it provides to its government partners. Leasing Transactions On January 24, 2018, CoreCivic entered into a 20-year lease agreement with the Kansas Department of Corrections ("KDOC") for a 2,432-bed correctional facility the Company is constructing in Lansing, Kansas. The new facility will replace the Lansing Correctional Facility, the State's largest correctional complex for adult male inmates, originally constructed in 1863. CoreCivic will be responsible for facility maintenance throughout the 20-year term of the lease, at which time ownership will revert to the State. Construction of the new facility commenced in the first quarter of 2018 with a timeline for completion of approximately 24 months. CoreCivic expects to account for the lease with the KDOC as a multiple element lease with a portion of the lease payments attributable to the capital lease. In addition, portions of the lease payments will be attributable to maintenance services and capital maintenance, representing two separately valued non-lease components. As of September 30, 2018, CoreCivic has capitalized $31.8 million associated with the construction of the project. Idle Facilities As of September 30, 2018, CoreCivic had eight idled correctional facilities that are currently available and being actively marketed as solutions to meet the needs of 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 |  | 2018 |  |  | 2017 |
Prairie Correctional Facility |  |  | 1,600 |  |  | 2010 |  | $ | 15,330 |  |  | $ | 16,118 |
Huerfano County Correctional Center |  |  | 752 |  |  | 2010 |  |  | 16,803 |  |  |  | 16,980 |
Diamondback Correctional Facility |  |  | 2,160 |  |  | 2010 |  |  | 40,702 |  |  |  | 41,370 |
Southeast Kentucky Correctional Facility |  |  | 656 |  |  | 2012 |  |  | 21,233 |  |  |  | 21,864 |
Marion Adjustment Center |  |  | 826 |  |  | 2013 |  |  | 11,878 |  |  |  | 12,058 |
Kit Carson Correctional Center |  |  | 1,488 |  |  | 2016 |  |  | 55,952 |  |  |  | 57,095 |
Eden Detention Center |  |  | 1,422 |  |  | 2017 |  |  | 38,741 |  |  |  | 39,707 |
Torrance County Detention Facility |  |  | 910 |  |  | 2017 |  |  | 35,752 |  |  |  | 36,882 |
|  |  | 9,814 |  |  |  |  | $ | 236,391 |  |  | $ | 242,074 |
As of September 30, 2018, CoreCivic also had two idled non-core facilities containing 440 beds with an aggregate net book value of $3.9 million. CoreCivic incurred approximately $3.0 million in operating expenses at the idled facilities for both the three months ended September 30, 2018 and 2017. CoreCivic incurred approximately $9.7 million and $8.0 million in operating expenses at the idled facilities for the nine months ended September 30, 2018 and 2017, 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. Asset Dispositions In the second quarter of 2018, CoreCivic entered into an agreement to sell its corporate headquarters for $12.6 million. In connection with the agreement, the Company wrote-down the value of the property to its net realizable value, recognizing an asset impairment charge of $1.6 million in the second quarter of 2018. CoreCivic closed on the sale during the third quarter of 2018 and used the net proceeds from the sale to pay-down a portion of the amounts outstanding under the Company's revolving credit facility.

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- Definition The entire disclosure for certain real estate investment financial statements, real estate investment trust operating support agreements, real estate owned, retail land sales, time share transactions, as well as other real estate related disclosures. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 970 -URI http://asc.fasb.org/topic&trid=2156125 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 978 -URI http://asc.fasb.org/topic&trid=2134977 Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 976 -URI http://asc.fasb.org/topic&trid=2134846 Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 974 -URI http://asc.fasb.org/topic&trid=2156429 Reference 5: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 972 -URI http://asc.fasb.org/topic&trid=2134617 + Details
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