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REAL ESTATE TRANSACTIONS | 3 Months Ended
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Mar. 31, 2021
REAL ESTATE TRANSACTIONS |
4. | REAL ESTATE TRANSACTIONS
Acquisitions and Dispositions On January 2, 2020, CoreCivic completed the acquisition of a portfolio of 28 properties, 24 of which the counter-party contributed to Government Real Estate Solutions, LLC ("GRES"), an unrestricted subsidiary controlled by the Company, for total consideration of $83.2 million, excluding transaction-related expenses. All of the properties were leased to the federal government through the General Services Administration ("GSA"), an independent agency of the United States Government. CoreCivic financed the acquisition with $7.7 million of cash, assumed debt of $52.2 million, and the balance with the issuance of 1.3 million shares of Class A Common Interests in GRES that are convertible into cash or, at the Company's option, shares of the Company's common stock following a two-year holding period on a one-for-one basis (the "Operating Partnership Units"), using a partnership structure. In allocating the purchase price of the acquisition, CoreCivic recorded $77.4 million of net tangible assets, $7.5 million of identifiable intangible assets, and $4.9 million of tenant improvements. On December 23, 2020, CoreCivic completed the sale of 42 government-leased properties, including the portfolio of 28 properties acquired in 2020 and the remaining properties acquired in 2017 and 2018, in a single transaction to a third party for an aggregate price of $106.5 million, generating net proceeds of $27.8 million after the repayment of the debt related to GRES, and other transaction-related costs. Net cash proceeds were used to pay-down a portion of the amounts outstanding under the Company's revolving credit facility. In accordance with a Tax Protection Agreement, the Company agreed to provide certain tax protection payments to the contributing partners of GRES, limited to the cash and certain other resources held by GRES. After considering the tax protection payments in connection with this sale, the Company reported a net loss on sale of $17.9 million. CoreCivic has determined that its joint venture investment in GRES represents a variable interest entity ("VIE") in accordance with ASC 810, "Consolidation". CoreCivic has 100% voting control in GRES. Accordingly, CoreCivic concluded that it is the primary beneficiary of GRES and consolidates the VIE. The primary beneficiary is the entity that has (i) the power to direct the activities that most significantly impact the entity's economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could be significant to the VIE. Our consolidated balance sheet as of March 31, 2021 includes property and equipment, net of accumulated depreciation, of $6.4 million related to GRES. Assets Held for Sale The Company intends to pursue the sale of certain assets in the Properties segment, utilizing any net proceeds, after the repayment of non-recourse mortgage notes associated with such properties, in furtherance of the Company’s revised capital allocation strategy. As of March 31, 2021, CoreCivic had four real estate assets classified as held for sale, including an additional asset that was not classified as held for sale at December 31, 2020. The aggregate net book value of the property and equipment of these four properties amounting to $243.6 million, and the other assets associated with the properties, consisting of deferred leasing costs and other assets amounting to $37.9 million, are reflected as assets held for sale on the Company's consolidated balance sheet as of March 31, 2021. Although the Company can provide no assurance, based on interest expressed to date, CoreCivic expects to close on the sale of these assets during 2021. Idle Facilities As of March 31, 2021, CoreCivic had five idled CoreCivic Safety 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 |  |  | March 31, |  |  | December 31, |
Facility |  | Capacity |  |  | 2021 |  |  | 2020 |
Prairie Correctional Facility |  |  | 1,600 |  |  | $ | 14,439 |  |  | $ | 14,646 |
Huerfano County Correctional Center |  |  | 752 |  |  |  | 15,731 |  |  |  | 15,895 |
Diamondback Correctional Facility |  |  | 2,160 |  |  |  | 37,928 |  |  |  | 38,346 |
Marion Adjustment Center |  |  | 826 |  |  |  | 10,943 |  |  |  | 11,047 |
Kit Carson Correctional Center |  |  | 1,488 |  |  |  | 52,311 |  |  |  | 52,757 |
|  |  | 6,826 |  |  | $ | 131,352 |  |  | $ | 132,691 |
As of March 31, 2021, CoreCivic also had one idled non-core facility in its Safety segment containing 240 beds with a total net book value of $3.0 million; three facilities in its Community segment, containing an aggregate of 650 beds with an aggregate net book value of $9.1 million; and two previously leased properties in its Properties segment containing 49,000 square feet with an aggregate net book value of $7.1 million. CoreCivic also had an additional idled non-core facility in the Properties segment that was reclassified as held for sale during the first quarter of 2021. CoreCivic recognized an impairment charge of $1.3 million associated with this facility, based on its estimated net realizable value less costs to sell, pursuant to an agreement to sell this property, which is expected to be consummated during the second quarter of 2021. CoreCivic incurred approximately $2.1 million and $1.9 million in operating expenses at all of these idled facilities for the period they were idle during the three months ended March 31, 2021 and 2020, respectively. Two of the three idled facilities in the CoreCivic Community segment are located in Oklahoma. As a result of the lower resident populations from the state of Oklahoma because of COVID-19, CoreCivic transferred the remaining resident populations at its 390-bed Tulsa Transitional Center to Oklahoma's system, idling the Tulsa facility during the third quarter of 2020. Closure of the Tulsa facility followed the closure of the 200-bed Oklahoma City Transitional Center during the second quarter of 2020, and the 289-bed Turley Residential Center in Oklahoma in 2019. CoreCivic reactivated the Turley Residential Center during the first quarter of 2021 pursuant to a new contract awarded from the United States Federal Bureau of Prisons ("BOP") during the fourth quarter of 2020 for residential reentry and home confinement services to be provided in the state of Oklahoma, and provides the BOP additional reentry services at its owned and operated Oklahoma Reentry Opportunity Center, which supplements the existing utilization by the state of Oklahoma, pursuant to this new contract. During April 2021, as a result of lower resident populations from Denver County because of COVID-19, CoreCivic transferred the resident populations at its 90-bed Ulster Facility in Colorado to its Dahlia Facility in Colorado, idling the Ulster Facility. CoreCivic evaluates on a quarterly basis market developments for the potential utilization of each of these properties in order to identify events that may cause CoreCivic to reconsider its most recent assumptions, such as the agreement to sell a property at less than its carrying value. CoreCivic considers the cancellation of a contract in its Safety or Community segment or an expiration and non-renewal of a lease agreement in its CoreCivic Properties segment as indicators of impairment, and tested each of the idled properties for impairment when it was notified by the respective customers or tenants that they would no longer be utilizing such property.

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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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