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REAL ESTATE TRANSACTIONS | 9 Months Ended
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Sep. 30, 2022
REAL ESTATE TRANSACTIONS | 4. REAL ESTATE TRANSACTIONS Assets Held For Sale and Dispositions In September 2022, CoreCivic entered into a Letter of Intent with a third party for the sale of CoreCivic's Roth Hall Residential Reentry Center and the Walker Hall Residential Reentry Center, both of which are located in Philadelphia, Pennsylvania and reported in CoreCivic's Properties segment. The gross sales price for the properties is $6.3 million. The aggregate carrying value of the properties, amounting to $5.8 million, was reflected as assets held for sale on the Company's consolidated balance sheet as of September 30, 2022. As of September 30, 2022, CoreCivic also had an additional idled residential reentry center in Oklahoma City, Oklahoma with a carrying value of $0.9 million classified as assets held for sale and reported in CoreCivic's Community segment. The facility is under a Purchase and Sale Agreement for a gross sales price of $1.0 million, which is expected to close in November 2022. Pursuant to the agreement to sell the Oklahoma City property, in the third quarter of 2022, CoreCivic recognized an impairment charge of $3.5 million associated with this facility, based on its estimated net realizable value less costs to sell. On July 25, 2022, CoreCivic entered into a Purchase and Sale Agreement with the Georgia Building Authority for the sale of CoreCivic's McRae Correctional Facility located in McRae, Georgia, and reported in CoreCivic's Safety segment, for a gross sales price of $130.0 million. The sale of the McRae facility was completed on August 9, 2022. The sale generated net proceeds of $129.7 million, resulting in a gain on sale of $77.5 million after transaction costs, which was reported in the third quarter of 2022. CoreCivic currently has a management contract with the BOP at the McRae facility, which expires November 30, 2022. As previously disclosed, CoreCivic does not expect the BOP to renew the contract upon its expiration. In connection with the sale, CoreCivic and the Georgia Building Authority entered into an agreement to lease the McRae Correctional Facility to CoreCivic through November 30, 2022 to allow the Company to fulfill its obligations to the BOP. During July 2022, CoreCivic sold its Stockton Female Community Corrections Facility and its Long Beach Community Corrections Center, both located in California, and reported in CoreCivic's Properties segment. The sale of these properties to a third party generated net sales proceeds of $10.9 million, resulting in a gain on sale of $2.3 million after transaction costs, which was reported in the third quarter of 2022. During July 2022, CoreCivic also sold an additional undeveloped parcel of land. The sale of this parcel generated net sales proceeds of $4.8 million, resulting in a gain of $4.2 million after transaction costs, which was reported in the third quarter of 2022. During the second quarter of 2022, CoreCivic sold an undeveloped parcel of land in Kern, California. The sale generated net proceeds of $1.5 million, resulting in a gain on sale of $1.1 million after transaction costs. As of December 31, 2021, CoreCivic had two facilities in its CoreCivic Community segment held for sale. The aggregate carrying value of the property and equipment of these two facilities, amounting to $7.0 million, was reflected as assets held for sale on the Company's consolidated balance sheet as of December 31, 2021. The Company closed on the sale of these two facilities, one of which was idle, in the first quarter of 2022. The aggregate net sales proceeds of the two facilities was $9.3 million, resulting in a net gain on sale of $2.3 million after transaction costs. During the full year 2021, CoreCivic completed the sale of five government-leased properties in the Company's Properties segment. The sales of the five properties generated aggregate net proceeds of $125.0 million, after the repayment of mortgage debt and other transaction-related costs, resulting in an aggregate net gain on sale of $38.7 million. CoreCivic determined that its joint venture investment in Government Real Estate Solutions, LLC ("GRES"), an unrestricted subsidiary previously controlled by the Company, represented a variable interest entity ("VIE") in accordance with ASC 810, "Consolidation". CoreCivic had 100% voting control in GRES. Accordingly, CoreCivic concluded that it was the primary beneficiary of GRES and consolidated 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. During June 2021, CoreCivic provided notice to the partners of GRES of its intent to distribute the remaining assets and terminate the partnership. The Company terminated the partnership in September 2021 and cancelled the applicable Operating Partnership Units for no consideration. During the third quarter of 2021, the Company reported an increase to stockholders' equity of $17.4 million resulting from the termination of the partnership. Idle Facilities As of September 30, 2022, CoreCivic had seven 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 |  |  | September 30, |  |  | December 31, |
Facility |  | Capacity |  |  | 2022 |  |  | 2021 |
Prairie Correctional Facility |  |  | 1,600 |  |  | $ | 14,246 |  |  | $ | 14,416 |
Huerfano County Correctional Center |  |  | 752 |  |  |  | 14,744 |  |  |  | 15,230 |
Diamondback Correctional Facility |  |  | 2,160 |  |  |  | 35,835 |  |  |  | 36,917 |
Marion Adjustment Center |  |  | 826 |  |  |  | 10,430 |  |  |  | 10,743 |
Kit Carson Correctional Center |  |  | 1,488 |  |  |  | 49,611 |  |  |  | 50,950 |
West Tennessee Detention Facility |  |  | 600 |  |  |  | 19,840 |  |  |  | 20,622 |
Leavenworth Detention Center |  |  | 1,033 |  |  |  | 52,453 |  |  |  | 54,162 |
|  |  | 8,459 |  |  | $ | 197,159 |  |  | $ | 203,040 |
As of September 30, 2022, CoreCivic also had one idled non-core facility in its Safety segment containing 240 beds with a net book value of $3.0 million, and three idled facilities in its Community segment (one of which is held for sale), containing an aggregate of 650 beds with an aggregate net book value of $5.1 million. CoreCivic incurred operating expenses at these idled facilities of approximately $2.9 million and $2.0 million during the period they were idle for the three months ended September 30, 2022 and 2021, respectively. CoreCivic incurred operating expenses at these idled facilities of approximately $7.6 million and $6.0 million during the period they were idle for the nine months ended September 30, 2022 and 2021, respectively. The amount for the nine months ended September 30, 2022 excludes $3.5 million of operating expenses incurred at the West Tennessee Detention Facility and the Leavenworth Detention Center during the three months ended March 31, 2022. The West Tennessee facility was idled upon the expiration of a USMS contract on September 30, 2021, and the Leavenworth facility was idled upon the expiration of a USMS contract on December 31, 2021. Although recently idled, CoreCivic retained a certain staffing level at both facilities during the first three months of 2022 in order to quickly respond in the event the Company was able to enter into new contracts with government agencies promptly following the contract expirations. The Company also continued to incur expenses related to transportation services provided by staff at the Leavenworth facility during the first three months of 2022. The Company estimated undiscounted cash flows for each facility with an impairment indicator, including the idle facilities described above. The Company’s estimated undiscounted cash flows reflect the Company’s most recent expectations around potential utilization and/or sale of the facilities and projected cash flows based on historical cash flows, cash flows of comparable facilities, and recent contract negotiations for utilization. The Company concluded that the estimated undiscounted cash flows exceeded carrying values for each facility as of September 30, 2022 and December 31, 2021. CoreCivic evaluates on a quarterly basis market developments for the potential utilization of each of its idle properties in order to identify events that may cause CoreCivic to reconsider its assumptions with respect to the recoverability of book values as compared to undiscounted cash flows. 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 tests 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 https://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 https://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 https://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 https://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 https://asc.fasb.org/topic&trid=2134617 + Details
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