
	September 30, 2023		December 31, 2022
Land	$	2,385,620	$	2,400,002
Buildings and improvements	10,950,878		10,916,630
Real estate under construction	54,194		22,225
Less: Accumulated depreciation	(1,727,825)		(1,672,091)
	$	11,662,867	$	11,666,766

During the nine months ended September 30, 2023, the U.S. dollar strengthened against the euro, as the end-of-period rate for the U.S. dollar in relation to the euro decreased by 0.7% to $1.0594 from $1.0666. As a result of this fluctuation in foreign currency exchange rates, the carrying value of our Land, buildings and improvements — net lease and other decreased by $28.7 million from December 31, 2022 to September 30, 2023.

During the nine months ended September 30, 2023, we reclassified a portfolio of 78 properties classified as Land, buildings and improvements — net lease and other to Net investments in finance leases and loans receivable due to the tenant’s notice of intention to exercise a purchase option. As a result, the carrying value of our Land, buildings and improvements — net lease and other decreased by $288.2 million from December 31, 2022 to September 30, 2023 (Note 6).

On January 31, 2023, the master lease expired on certain hotel properties previously classified as net-lease properties, which converted to operating properties. As a result, in February 2023, we reclassified 12 consolidated hotel properties with an aggregate carrying value of $164.6 million from Land, buildings and improvements — net lease and other to Land, buildings and improvements — operating properties. Effective as of that time, we began recognizing operating property revenues and expenses from these properties, whereas previously we recognized lease revenues from these properties.

In connection with changes in lease classifications due to extensions of the underlying leases, we reclassified five properties with an aggregate carrying value of $25.4 million from Net investments in finance leases and loans receivable to Land, buildings and improvements — net lease and other during the nine months ended September 30, 2023 (Note 6).

Depreciation expense, including the effect of foreign currency translation, on our buildings and improvements subject to operating leases was $80.9 million and $76.0 million for the three months ended September 30, 2023 and 2022, respectively, and $251.9 million and $221.0 million for the nine months ended September 30, 2023 and 2022, respectively.


Property Location(s)	Number of Properties	Date of Acquisition	Property Type	Total Capitalized Costs
Various, United States	6	1/12/2023	Industrial	$	64,861
Various, Italy (5 properties) and Spain (3 properties) (a)	8	3/23/2023	Industrial	79,218
Various, Canada	11	4/1/2023	Industrial, Warehouse	467,811
Various, United States (4 properties), Canada (3 properties), and Mexico (2 properties) (b)	9	4/18/2023	Industrial	97,952
Various, United States (c)	9	5/5/2023; 5/26/2023	Retail (Car Wash)	39,713
Various, United States	4	6/15/2023	Education (Medical School)	139,092
	47			$	888,647

(c)We also entered into a purchase agreement to acquire two additional retail (car wash) facilities leased to this tenant totaling $8.7 million, which is expected to be completed during the fourth quarter of 2023.


	Total Capitalized Costs
Land	$	135,502
Buildings and improvements	604,973
Intangible assets:
In-place lease (weighted-average expected life of 21.9 years)	142,073
Right-of-use assets:
Finance lease (a)	12,981
Prepaid rent liabilities	(6,882)
	$	888,647

(a)Represents consideration paid to acquire a leasehold interest in land, buildings and improvements. The lease was determined to be a finance lease due to our intention to acquire the land, buildings and improvements upon lease expiration. These assets are included in In-place lease intangible assets and other in the consolidated balance sheets.

During the nine months ended September 30, 2023, we capitalized real estate under construction totaling $72.6 million. The number of construction projects in progress with balances included in real estate under construction was 12 and eight as of September 30, 2023 and December 31, 2022, respectively. Aggregate unfunded commitments totaled approximately $94.4 million and $61.1 million as of September 30, 2023 and December 31, 2022, respectively.

Property Location(s)

Primary Transaction Type

Number of Properties

Date of Completion

Property Type

Total Capitalized Costs

Evansville, Indiana and Lawrence, Kansas

Renovation

3/23/2023

Industrial

20,637

Pleasanton, California

Redevelopment

8/21/2023

Laboratory

13,905

34,542

Capitalized interest incurred during construction was $0.2 million and $0.3 million for the three months ended September 30, 2023 and 2022, respectively, and $0.3 million and $1.3 million for the nine months ended September 30, 2023 and 2022, respectively, which reduces Interest expense in the consolidated statements of income.

During the nine months ended September 30, 2023, we sold nine properties, which were classified as Land, buildings and improvements — net lease and other. As a result, the carrying value of our Land, buildings and improvements — net lease and other decreased by $93.4 million from December 31, 2022 to September 30, 2023 (Note 15).

2023 — For the three and nine months ended September 30, 2023, other lease-related income on our consolidated statements of income included: (i) other lease-related settlements totaling $1.7 million and $7.3 million, respectively and (ii) lease termination income totaling $11.4 million for the nine months ended September 30, 2023, received from two tenants in connection with the sales of the properties they occupied.

2022 — For the three and nine months ended September 30, 2022, other lease-related income on our consolidated statements of income included: (i) lease termination income of $4.2 million received from a tenant during the third quarter of

2022; (ii) other lease-related settlements totaling $3.8 million and $10.0 million, respectively; (iii) income from a parking garage attached to one of our net-leased properties totaling $0.2 million and $1.5 million, respectively; and (iv) lease termination income of $8.2 million received from a tenant during the nine months ended September 30, 2022.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Lease income — fixed	$	325,481	$	295,433	$	958,015	$	852,843
Lease income — variable (a)	43,678		36,469		132,604		101,138
Total operating lease income	$	369,159	$	331,902	$	1,090,619	$	953,981

(a)Includes (i) rent increases based on changes in the U.S. Consumer Price Index (“CPI”) and other comparable indices and (ii) reimbursements for property taxes, insurance, and common area maintenance services.

At September 30, 2023, Land, buildings and improvements — operating properties consisted of our investments in 77 consolidated self-storage properties, five consolidated hotels, and two consolidated student housing properties. At December 31, 2022, Land, buildings and improvements — operating properties consisted of our investments in 75 consolidated self-storage properties, two consolidated student housing properties, and one consolidated hotel. Below is a summary of our Land, buildings and improvements — operating properties (in thousands):


	September 30, 2023		December 31, 2022
Land	$	141,942	$	122,317
Buildings and improvements	1,080,058		955,009
Real estate under construction	62		18,566
Less: Accumulated depreciation	(72,781)		(28,295)
	$	1,149,281	$	1,067,597

As described above under Land, Buildings and Improvements — Net Lease and Other, on January 31, 2023, the master lease expired on certain hotel properties previously classified as net-lease properties, which converted to operating properties. As a result, in February 2023, we reclassified 12 consolidated hotel properties with an aggregate carrying value of $164.6 million from Land, buildings and improvements — net lease and other to Land, buildings and improvements — operating properties. We sold three of these hotel properties during the third quarter of 2023. As a result, the carrying value of our Land, buildings and improvements — operating properties decreased by $38.7 million from December 31, 2022 to September 30, 2023 (Note 15). In addition, we reclassified five of these hotel properties to Assets held for sale, net, as of September 30, 2023. As a result, the carrying value of our Land, buildings and improvements — operating properties decreased by $50.8 million from December 31, 2022 to September 30, 2023.

During the nine months ended September 30, 2023, the U.S. dollar weakened against the British pound sterling, resulting in an increase of $1.5 million in the carrying value of our Land, buildings and improvements — operating properties from December 31, 2022 to September 30, 2023

During the nine months ended September 30, 2023, we completed a student housing development project and reclassified $24.6 million from real estate under construction to buildings and improvements attributable to operating properties.


Property Location(s)	Number of Properties	Date of Acquisition	Property Type	Total Capitalized Costs
Little Rock, Arkansas (a)	1	6/22/2023	Self-Storage	$	6,166
Houston, Texas	1	8/25/2023	Self-Storage	13,120
	2			$	19,286

Depreciation expense on our buildings and improvements attributable to operating properties was $7.8 million and $4.1 million for the three months ended September 30, 2023 and 2022, respectively, and $22.7 million and $5.4 million for the nine months ended September 30, 2023 and 2022.


	September 30, 2023		December 31, 2022
Land, buildings and improvements — net lease and other	$	39,372	$	47,134
Land, buildings and improvements — operating properties	71,719		—
In-place lease intangible assets and other	12,910		10,854
Above-market rent intangible assets	5,625		3,210
Accumulated depreciation and amortization	(27,611)		(3,254)
Assets held for sale, net	$	102,015	$	57,944

At September 30, 2023, we had eight properties classified as Assets held for sale, net, with a carrying value of $102.0 million. Six of these properties were sold in the fourth quarter of 2023 (Note 17). The estimated purchase price for one of these properties was lowered during the third quarter of 2023. As a result, we recognized a loss on sale of real estate of $11.7 million during the three and nine months ended September 30, 2023, reflecting the updated estimated purchase price, in accordance with ASC 360, Property, Plant, and Equipment. This property was sold in the fourth quarter of 2023 (Note 17).

At December 31, 2022 we had three properties classified as Assets held for sale, net, with an aggregate carrying value of $57.9 million. Two of these properties were sold in the first quarter of 2023 and one was sold in the fourth quarter of 2023 (Note 17).