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REAL ESTATE TRANSACTIONS | 9 Months Ended
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Sep. 30, 2023
REAL ESTATE TRANSACTIONS | 4. REAL ESTATE TRANSACTIONS Assets Held For Sale and Dispositions During the third quarter of 2023, CoreCivic sold a vacant parcel of land generating net sales proceeds of $0.5 million and resulting in a gain on sale of $0.4 million. The gain was reported in the third quarter of 2023. During the third quarter of 2022, CoreCivic began marketing for sale its Roth Hall Residential Reentry Center and the Walker Hall Residential Reentry Center, both located in Philadelphia, Pennsylvania and reported in CoreCivic's Properties segment. A purchase and sale agreement for these two Philadelphia properties was executed in March 2023. The properties were sold on May 2, 2023, generating net sales proceeds of $5.8 million, resulting in a loss on sale of $25,000, which was reported in the second quarter of 2023. CoreCivic is also marketing for sale an idled residential reentry center in Denver, Colorado with a current carrying value of $1.1 million, which was reported in CoreCivic's Community segment and was classified as held for sale as of December 31, 2022 and March 31, 2023. While CoreCivic is committed to finding alternative uses for the facility, which may include a future sale, the Company concluded in the second quarter of 2023 that the facility no longer meets the requirements to be considered as held for sale. 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 Federal Bureau of Prisons ("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. In addition, during the full year 2022, CoreCivic completed the sales of three residential reentry centers in Oklahoma and Colorado and reported in CoreCivic's Community segment, two community corrections facilities leased to government agencies in California and reported in CoreCivic's Properties segment, and two undeveloped parcels of land. The sales of these seven properties generated aggregate net sales proceeds of $27.3 million, resulting in an aggregate net gain on sale of $9.9 million after transaction costs. Pursuant to the agreement to sell the Oklahoma property, in the third quarter of 2022, CoreCivic recognized an impairment charge of $3.5 million associated with the facility, based on its fair value less costs to sell. Idle Facilities As of September 30, 2023, 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 |  |  | September 30, |  |  | December 31, |
Facility |  | Capacity |  |  | 2023 |  |  | 2022 |
Prairie Correctional Facility |  |  | 1,600 |  |  | $ | 13,444 |  |  | $ | 14,165 |
Huerfano County Correctional Center |  |  | 752 |  |  |  | 14,327 |  |  |  | 14,580 |
Diamondback Correctional Facility |  |  | 2,160 |  |  |  | 34,222 |  |  |  | 35,587 |
Marion Adjustment Center |  |  | 826 |  |  |  | 10,070 |  |  |  | 10,326 |
Kit Carson Correctional Center |  |  | 1,488 |  |  |  | 48,091 |  |  |  | 49,444 |
West Tennessee Detention Facility |  |  | 600 |  |  |  | 18,821 |  |  |  | 19,581 |
Midwest Regional Reception Center |  |  | 1,033 |  |  |  | 50,277 |  |  |  | 51,938 |
North Fork Correctional Facility |  |  | 2,400 |  |  |  | 60,754 |  |  |  | 62,737 |
|  |  | 10,859 |  |  | $ | 250,006 |  |  | $ | 258,358 |
As of September 30, 2023, CoreCivic also had one idled non-core facility in its Safety segment containing 240 beds with a net book value of $2.9 million, and two idled facilities in its Community segment, containing an aggregate of 450 beds with an aggregate net book value of $3.4 million. CoreCivic incurred operating expenses at these idled facilities of approximately $4.3 million and $2.8 million during the period they were idle during the three months ended September 30, 2023 and 2022, respectively, and $9.6 million and $7.4 million during the nine months ended September 30, 2023 and 2022, 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 Midwest Regional Reception Center. 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. As part of its annual budget process for the fiscal year ending June 30, 2024, the California legislature approved funding for the lease through March 31, 2024. The Company has engaged 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 March 31, 2024. The Company is also marketing the facility to other potential customers. On April 25, 2023, the Company announced that it received notice from the Oklahoma Department of Corrections ("ODC") of its intent to terminate the lease agreement for the company-owned 2,400-bed North Fork Correctional Facility, reported in the Company's CoreCivic Properties segment, upon the lease expiration on June 30, 2023. Upon expiration of the lease, the North Fork facility was idled in the third quarter of 2023. The Company is marketing the facility to potential customers. On June 14, 2023, the Company announced that it entered into a lease agreement with the ODC for the company-owned 1,670-bed Allen Gamble Correctional Center (formerly known as the Davis Correctional Facility), which, until October 1, 2023, the Company reported in its CoreCivic Safety segment and operated under a management contract with the ODC. The management contract was scheduled to expire on June 30, 2023. However, effective July 1, 2023, the Company entered into a 90-day contract extension for the management contract, after which time, operations of the Allen Gamble facility transferred from CoreCivic to the ODC in accordance with the new lease agreement. The new lease agreement includes a base term that commenced October 1, 2023, with a scheduled expiration date of June 30, 2029, and unlimited two-year renewal options. Upon commencement of the new lease agreement, the Allen Gamble facility will be reported in the Company's CoreCivic Properties segment. 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 September 30, 2023 and December 31, 2022. 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 is 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 -Topic 976 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//976/tableOfContent Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 978 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//978/tableOfContent Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 970 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//970/tableOfContent Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 972 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//972/tableOfContent Reference 5: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 974 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//974/tableOfContent + Details
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