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REAL ESTATE AND OTHER TRANSACTIONS | 9 Months Ended
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Sep. 30, 2024
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REAL ESTATE AND OTHER TRANSACTIONS | 3. REAL ESTATE AND OTHER TRANSACTIONS Assets Held For Sale and Dispositions In July 2024, CoreCivic completed the sale of an idled 390-bed facility in Oklahoma that was reported in its CoreCivic Community segment. The sale generated net sales proceeds of $3.4 million, resulting in a gain on sale of $1.2 million reported in the third quarter of 2024. In January 2024, CoreCivic completed the sale of a facility in Colorado that was reported in its CoreCivic Community segment. The sale generated net sales proceeds of $8.0 million, resulting in a gain on sale of $0.5 million reported in the first quarter of 2024. The facility was classified as held for sale as of December 31, 2023. CoreCivic continued to operate the facility through the expiration of the related management contract in June 2024. In addition, in March 2024, CoreCivic completed the sale of an unused parcel of land in Texas. The sale generated net sales proceeds of $0.2 million, resulting in a gain on sale of $0.1 million also reported in the first quarter of 2024. During the full year 2023, CoreCivic completed the sales of three community corrections facilities leased to government agencies that were reported in CoreCivic's Properties segment and one vacant parcel of land. The sales of these four assets generated aggregate net sales proceeds of $10.8 million, resulting in an aggregate net gain on sale of $0.8 million after transaction costs. Idle Facilities As of September 30, 2024, CoreCivic had nine idle 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 design capacities, 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 |  |  | 2024 |  |  | 2023 |
Prairie Correctional Facility |  |  | 1,600 |  |  | $ | 12,595 |  |  | $ | 13,230 |
Huerfano County Correctional Center |  |  | 752 |  |  |  | 13,800 |  |  |  | 14,058 |
Diamondback Correctional Facility |  |  | 2,160 |  |  |  | 35,963 |  |  |  | 33,764 |
Marion Adjustment Center |  |  | 826 |  |  |  | 9,917 |  |  |  | 9,968 |
Kit Carson Correctional Center |  |  | 1,488 |  |  |  | 46,735 |  |  |  | 47,638 |
West Tennessee Detention Facility |  |  | 600 |  |  |  | 17,847 |  |  |  | 18,568 |
Midwest Regional Reception Center |  |  | 1,033 |  |  |  | 48,618 |  |  |  | 49,736 |
North Fork Correctional Facility |  |  | 2,400 |  |  |  | 57,951 |  |  |  | 60,044 |
California City Correctional Center |  |  | 2,560 |  |  |  | 74,207 |  |  |  | 75,430 |
|  |  | 13,419 |  |  | $ | 317,633 |  |  | $ | 322,436 |
As of September 30, 2024, CoreCivic also had one idled non-core facility in its Safety segment containing 240 beds with a net book value of $2.8 million, and an idled facility in its Community segment containing 60 beds with a net book value of $1.1 million. CoreCivic incurred aggregate operating expenses at the above idled facilities of approximately $4.0 million and $4.2 million during the period they were idle during the three months ended September 30, 2024 and 2023, respectively, and $13.2 million and $9.4 million during the period they were idle during the nine months ended September 30, 2024 and 2023, respectively. The Company estimated undiscounted cash flows for each facility with an impairment indicator. The Company's estimated undiscounted cash flows reflected 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. 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. Termination of Contract at the South Texas Family Residential Center On June 10, 2024, the Company received notification from ICE of its intent to terminate an inter-governmental service agreement ("IGSA") for services at the 2,400-bed South Texas Family Residential Center ("STFRC") effective August 9, 2024. The IGSA originated in 2014, was extended in 2016, and was extended again in 2020 from September 2021 through September 2026. ICE's termination rights, which permitted ICE to terminate the agreement for convenience or non-appropriation of funds, without penalty, by providing CoreCivic with at least a 60-day notice, were unchanged under the previous IGSA. Under the fixed monthly payment schedule of the original IGSA, ICE agreed to pay CoreCivic $70.0 million in two $35.0 million installments during the fourth quarter of 2014, and graduated fixed monthly payments over the remaining months of the contract. During the nine months ended September 30, 2024 and the twelve months ended December 31, 2023, CoreCivic recognized $100.7 million and $156.1 million, respectively, in revenue under the amended IGSA, with the unrecognized balance of the fixed monthly payments at December 31, 2023 of $7.3 million reported in deferred revenue. At December 31, 2023, the current portion of deferred revenue was reflected within accounts payable and accrued expenses while the long-term portion was reflected as deferred revenue on the accompanying consolidated balance sheets. CoreCivic recognized the $7.3 million of deferred revenue remaining at December 31, 2023 during the nine months ended September 30, 2024, with $5.7 million of the amount recognized upon termination of the IGSA in the third quarter of 2024 when no further service obligation existed. CoreCivic leased the STFRC and the site upon which it was constructed from a third-party lessor. CoreCivic's lease agreement with the third-party lessor was over a base period concurrent with the IGSA with ICE which was amended in September 2020 to extend the term of the agreement through September 2026. The extended lease agreement provided CoreCivic with the ability to terminate the lease with a notification period of at least 60 days if ICE terminated the extended IGSA. Upon being notified by ICE of its intent to terminate the IGSA at the STFRC, CoreCivic provided notice to the third-party lessor of its intent to terminate the lease agreement effective August 9, 2 024. In accordance with ASC 842, "Leases", in the second quarter of 2024, CoreCivic remeasured the lease liability and recorded a corresponding adjustment of $57.0 million to the associated right of use asset to reflect the reduction to the lease term. In addition, CoreCivic incurred an asset impairment charge of $3.1 million in the third quarter of 2024 associated with property and equipment at the STFRC.

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