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REAL ESTATE TRANSACTIONS | 3 Months Ended
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Mar. 31, 2025
REAL ESTATE TRANSACTIONS | 3. REAL ESTATE TRANSACTIONS Dispositions During the full year 2024, CoreCivic completed the sales of two facilities reported in CoreCivic's Community segment and two vacant parcels of land. The sales of these four assets generated aggregate net sales proceeds of $13.3 million, resulting in an aggregate net gain on sale of $3.3 million after transaction costs. Idle Facilities As of March 31, 2025, CoreCivic had nine idle correctional facilities that are operated with a core staffing complement to remain currently available and, unless noted below as under letter agreement, being actively marketed as solutions to meet the correctional or detention needs of potential customers. The following table summarizes each of the idled facilities and their respective design capacities, net 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 |  |  | 2025 |  |  | 2024 |
Prairie Correctional Facility |  |  | 1,600 |  |  | $ | 12,194 |  |  | $ | 12,390 |
Huerfano County Correctional Center |  |  | 752 |  |  |  | 13,593 |  |  |  | 13,625 |
Diamondback Correctional Facility |  |  | 2,160 |  |  |  | 40,729 |  |  |  | 36,644 |
Marion Adjustment Center |  |  | 826 |  |  |  | 9,707 |  |  |  | 9,811 |
Kit Carson Correctional Center |  |  | 1,488 |  |  |  | 45,832 |  |  |  | 46,279 |
West Tennessee Detention Facility |  |  | 600 |  |  |  | 17,412 |  |  |  | 17,632 |
Midwest Regional Reception Center |  |  | 1,033 |  |  |  | 47,996 |  |  |  | 48,115 |
North Fork Correctional Facility |  |  | 2,400 |  |  |  | 58,558 |  |  |  | 57,444 |
California City Immigration Processing Center |  |  | 2,560 |  |  |  | 73,493 |  |  |  | 73,232 |
|  |  | 13,419 |  |  | $ | 319,514 |  |  | $ | 315,172 |
As of March 31, 2025, CoreCivic also had one idled non-core facility in its Safety segment containing 240 beds with a net book value of $2.7 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 these idled facilities of approximately $5.2 million and $3.4 million during the period they were idle for the three months ended March 31, 2025 and 2024, respectively. Effective March 7, 2025, CoreCivic entered into a letter agreement with U.S. Immigration and Customs Enforcement ("ICE") to begin activation efforts at the Company's 1,033-bed Midwest Regional Reception Center in Leavenworth, Kansas. The letter agreement authorizes initial funding up to $5.0 million with maximum funding up to $22.6 million for a six-month period while the parties work to negotiate and execute a long-term contract. The City of Leavenworth has filed a lawsuit alleging that a Special Use Permit ("SUP") is required to activate the facility. See Note 7 for further discussion. Effective April 1, 2025, CoreCivic entered into a letter agreement with ICE to begin activation efforts at the Company's 2,560-bed California City Immigration Processing Center, formerly known as the California City Correctional Center. The letter agreement authorizes initial funding up to $10.0 million with maximum funding up to $31.2 million for a six-month period while the parties work to negotiate and execute a long-term contract. The Company can provide no assurance that it will ultimately enter into a long-term contract with ICE for the utilization of either the Midwest Regional Reception Center or the California City Immigration Processing Center. During the three months ended March 31, 2025, the Company did not identify any impairment indicators. As of December 31, 2024, the Company estimated undiscounted cash flows for each facility with an impairment indicator and concluded no impairments had occurred. 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 facilities 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 facilities for impairment when it is notified by the respective customers or tenants that they would no longer be utilizing such facility. Resumption of Operations at the Dilley Immigration Processing Center On June 10, 2024, the Company received notification from ICE of its intent to terminate funding of an inter-governmental service agreement ("IGSA") for services at the 2,400-bed Dilley Immigration Processing Center in Dilley, Texas ("the Dilley Facility"), formerly known as the South Texas Family Residential Center, effective August 9, 2024, after nearly ten years of operation. CoreCivic leased the Dilley Facility 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 and provided CoreCivic with the ability to terminate the lease with a notification period of at least 60 days if ICE terminated the IGSA. Upon being notified by ICE of its intent to terminate funding of the IGSA at the Dilley Facility, CoreCivic provided notice to the third-party lessor of its intent to terminate the lease agreement effective August 9, 2024. In accordance with ASC 842, "Leases" ("ASC 842"), 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, which was based on a cash flow method for determining fair value, in the third quarter of 2024 associated with property and equipment at the Dilley Facility. On March 5, 2025, CoreCivic announced that it had agreed under an amendment to the IGSA discussed above to resume operations and care for up to 2,400 individuals at the Dilley Facility. The amended IGSA expires in March 2030 and may be further extended through bilateral modification. The agreement provides for a fixed monthly payment in accordance with a graduated schedule during the first six months, subject to acceleration, to correlate with the activation of the five neighborhoods within the facility, each designed to accommodate up to 480 individuals. ICE's termination rights permit ICE to terminate the amended IGSA for convenience or non-appropriation of funds without penalty by providing CoreCivic with at least a 60-day prior notice. Simultaneously, the Company entered into a new operating lease agreement with the same third-party lessor over a period co-terminus with the term of the IGSA. The new lease also contains a graduated lease rate over the first six months consistent with the IGSA to correlate with the activation of the five neighborhoods within the facility. As a result, in the first quarter of 2025, CoreCivic recorded the establishment of a right of use liability and asset in accordance with ASC 842 amounting to $116.9 million to reflect the new lease associated with the Dilley Facility. The new lease agreement provides CoreCivic with the ability to terminate the lease if ICE terminates the amended IGSA associated with the Dilley Facility upon at least a 60-day prior notice.

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