INVESTMENT IN AFFILIATE

12 Months Ended

Dec. 31, 2020

Agecroft Prison Management Ltd

INVESTMENT IN AFFILIATE

8. INVESTMENT IN AFFILIATE

CoreCivic has a 50% ownership interest in APM, an entity holding the management contract for a correctional facility, HM Prison Forest Bank, under a 25-year prison management contract with an agency of the United Kingdom government.  CoreCivic has determined that its joint venture investment in APM represents a variable interest entity ("VIE") in accordance with ASC 810, "Consolidation" of which CoreCivic is not the primary beneficiary.  The Forest Bank facility, located in Salford, England, was previously constructed and owned by a wholly-owned subsidiary of CoreCivic, which was sold in April 2001.  All gains and losses under the joint venture are accounted for using the equity method of accounting.  During 2000, CoreCivic extended a working capital loan to APM, which has an outstanding balance of $3.1 million as of December 31, 2020.

For the years ended December 31, 2020, 2019, and 2018, equity in losses of the joint venture was $192,000, $128,000, and $100,000, respectively.  The equity in losses of the joint venture is included in other (income) expense in the consolidated statements of operations.  As of December 31, 2020, the equity in the net deficit of APM was $0.2 million and is applied as a reduction in the carrying value of the outstanding working capital loan of $3.1 million, which is reported in other assets on the accompanying consolidated balance sheets.  The outstanding working capital loan of $3.1 million, net of the $0.2 million equity in the net deficit of APM, represents CoreCivic's maximum exposure to loss in connection with APM.

CoreCivic has determined that its joint venture investment in GRES also represents a VIE.  CoreCivic has 100% voting control in GRES. Accordingly, CoreCivic concluded that it is the primary beneficiary of GRES and consolidates 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.