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REAL ESTATE TRANSACTIONS | 12 Months Ended
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Dec. 31, 2022
REAL ESTATE TRANSACTIONS | 6. REAL ESTATE TRANSACTIONS Assets Held For Sale, Acquisitions, and Dispositions During th e third quarter of 2022, CoreCivic began marketing for sale its 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. Several third parties have expressed an interest in purchasing the properties, and CoreCivic believes it will be able to sell these properties within the next twelve months and, therefore, has classified them as held for sale as of December 31, 2022. The net book value of these properties is $5.8 million. As of December 31, 2022, CoreCivic had a residential reentry center in Denver, Colorado with a carrying value of $1.2 million also classified as assets held for sale and reported in CoreCivic's Community segment. The Company's Columbine Facility is under a Purchase and Sale Agreement for a gross sales price of $1.3 million, which is expected to close in the second quarter of 2023. Pursuant to the agreement to sell the Columbine facility, in the fourth quarter of 2022, CoreCivic recognized an impairment charge of $0.7 million associated with this facility, based on its fair value less costs to sell. In December 2022, CoreCivic sold an idled residential reentry center in Oklahoma City, Oklahoma and reported in CoreCivic's Community segment. The sale of this facility to a third party generated net sales proceeds of $0.9 million. 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 fair 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 had a management contract with the BOP at the McRae facility, which expired on November 30, 2022 and was not renewed. 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 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 additional 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. 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 ("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 were 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 14 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 then 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 recognizing the tax protection payments in connection with this sale, the Company reported a net loss on sale of $17.9 million during the twelve months ended December 31, 2021. See Note 7 for further discussion regarding the termination of the GRES partnership in September 2021. Financing Leasing Transactions On January 24, 2018, CoreCivic entered into a 20-year lease agreement with the KDOC for a 2,432-bed correctional facility to be constructed by the Company in Lansing, Kansas. The new facility replaced the Lansing Correctional Facility, Kansas' 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 of Kansas. Construction of the facility commenced in the first quarter of 2018, and construction was completed in January 2020, at which time the lease commenced. CoreCivic accounts for the lease with the KDOC partially as a financing receivable under ASU 2016-02, "Leases (Topic 842)", with the remaining portion of the lease payments attributable to maintenance services and capital expenditures as revenue streams under ASC 606, "Revenue from Contracts with Customers". As of December 31, 2022 and 2021, the financing receivable was $142.2 million an d $145.0 million, respectively, recognized in Other Assets on the consolidated balance sheet. During 2022 and 2021, the Lansing Correctional Facility generate d $2.5 million a nd $4.5 million, respectively, of revenue associated with the non-lease services components of the arrangement, and $8.7 million and $8.8 million of interest income, respectively. Idle Facilities As of December 31, 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 at December 31, |
Facility |  | 2022 |  |  | 2021 |
Prairie Correctional Facility |  | $ | 14,165 |  |  | $ | 14,416 |
Huerfano County Correctional Center |  |  | 14,580 |  |  |  | 15,230 |
Diamondback Correctional Facility |  |  | 35,587 |  |  |  | 36,917 |
Marion Adjustment Center |  |  | 10,326 |  |  |  | 10,743 |
Kit Carson Correctional Center |  |  | 49,444 |  |  |  | 50,950 |
West Tennessee Detention Facility |  |  | 19,581 |  |  |  | 20,622 |
Midwest Regional Reception Center |  |  | 51,938 |  |  |  | 54,162 |
|  | $ | 195,621 |  |  | $ | 203,040 |
As of December 31, 2022, CoreCivic also had one idled non-core facility in its Safety segment containing 240 beds with an aggregate net book value of $3.0 million, and two idled facilities in its Community segment, containing an aggregate of 450 beds with an aggregate net book value of $3.5 million, one of which is a community facility located in Denver, Colorado, classified as held for sale, as previously described herein. CoreCivic incurred operating expenses at these idled facilities of approximately $9.7 million, $7.6 million, and $7.3 million during the period they were idle for the years ended December 31, 2022, 2021, and 2020, respectively. The amount for 2021 excludes $2.2 million of operating expenses incurred at the West Tennessee Detention Facility during the fourth quarter of 2021. The amount for 2022 excludes $3.5 million of operating expenses incurred at the West Tennessee Detention Facility and the Midwest Regional Reception Center (formerly known as 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 Midwest Regional Reception Center was idled upon the expiration of a USMS contract on December 31, 2021. CoreCivic retained a certain staffing level at both facilities through 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 Midwest Regional Reception Center during the first three months of 2022. On December 6, 2022, the Company received notice from the California Department of Corrections and Rehabilitation ("CDCR") of its intent to terminate the lease agreement for the Company's California City Correctional Center by March 31, 2024, due to the state's declining inmate population. The lease agreement is fully funded through the state of California's current fiscal year ending June 30, 2023. Funding for the lease of the facility for the 2024 fiscal year, beginning July 1, 2023, will be determined in the California legislature in the first half of 2023 as part of the annual budget process. As part of this process, the Company plans to engage with the state of California regarding the continued utilization of the California City facility by the CDCR. However, the Company can provide no assurance that it will be successful in reaching an agreement for the utilization of the facility beyond June 30, 2023. 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, as applicable. The Company concluded that the estimated undiscounted cash flows exceeded carrying values for each facility as of December 31, 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 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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