Property, plant and equipment

The major classes of property, plant and equipment are as follows:



	2013		2012
December 31,	$’000		$’000

Land and buildings	1,013,015		1,020,570
Machinery and equipment	210,992		193,839
Fixtures, fittings and office equipment	209,050		197,862
River cruise ship and canal boats	19,082		18,255

	1,452,139		1,430,526
Less: Accumulated depreciation	(330,390	)	(292,412	)

Total property, plant and equipment	1,121,749		1,138,114

The major classes of assets under capital leases included above are as follows:



	2013		2012
December 31,	$’000		$’000

Land and buildings	—		—
Machinery and equipment	889		918
Fixtures, fittings and office equipment	108		103

	997		1,021
Less: Accumulated depreciation	(905	)	(829	)

Total assets under capital leases	92		192

The depreciation charge on property, plant and equipment of continuing operations for the year ended December 31, 2013 was $48,346,000 (2012 - $43,263,000; 2011 - $43,133,000).

In the year ended December 31, 2013, OEH identified a non-cash property, plant and equipment impairment charge of $1,029,000 in respect of Ubud Hanging Gardens. This impairment was recorded in discontinued operations, as the results of operations of this hotel have been presented as discontinued operations for the years ended December 31, 2013, 2012 and 2011. Its assets and liabilities, however, are not accounted for as held for sale at December 31, 2013 and 2012. See Note 4.

Also in the year ended December 31, 2013, OEH identified a non-cash property, plant and equipment impairment charge of $35,680,000 in respect of La Samanna, St. Martin, French West Indies, based on a strategic review of its assets. The carrying value was written down to the hotel's fair value.

Also in the year ended December 31, 2013, OEH identified a non-cash property, plant and equipment impairment charge of $750,000 in respect of Grand Hotel Europe, St Petersburg, Russia, as the carrying value of assets were written down to fair value based on management's best estimate of the net recoverable amount.

In the year ended December 31, 2012, OEH identified a non-cash property, plant and equipment and other assets impairment charge of $3,837,000 relating to the write-down to fair value of train carriages of OEH's former Great South Pacific Express train, which are held in Australia and not in service.

In the year ended December 31, 2011, OEH identified a non-cash property, plant and equipment impairment charge of $8,153,000 in respect of Casa de Sierra Nevada, San Miguel de Allende, Mexico. The carrying value was written down to the hotel’s fair value.

The impairments above, other than that of Ubud Hanging Gardens, are included in impairment of other intangible assets, other assets and property, plant and equipment in the statements of consolidated operations.

The property, plant and equipment of Charleston Center LLC, a consolidated VIE, of $187,854,000 (2012 - $183,793,000) is separately disclosed on the consolidated balance sheets. See Note 5.

For the year ended December 31, 2013, OEH capitalized interest in the amount of $1,088,000 (2012 - $4,193,000; 2011 - $863,000). All amounts capitalized were recorded in property, plant and equipment.

New York hotel project

In March 2011, OEH agreed to assign its purchase and development agreements previously made with the New York Public Library relating to the site of the Donnell branch of the Library adjacent to OEH’s ‘21’ Club restaurant to an affiliate (the “Assignee”) of Tribeca Associates, LLC and Starwood Capital Group Global LLC. The Assignee agreed to assume all the terms and obligations of the contracts and to reimburse all previous deposit payments made by OEH and a $2,000,000 contribution toward fees incurred by OEH. The transaction closed in April 2011, resulting in gross proceeds received by OEH of $25,500,000. This transaction resulted in a gain, net of costs, of $492,000 in the year ended December 31, 2011. Based on the terms under negotiations with interested parties in 2010, OEH recorded a non-cash impairment charge of $6,386,000 at December 31, 2010 on land and buildings for the capitalized pre-development expenses incurred in the period.

As part of this assignment, OEH entered into an option agreement which granted the Assignee a “call” option to acquire 45,000 square feet of the approximately 52,000 square feet of excess development rights held by ‘21’ Club at a price to the Assignee of $13,500,000 and, alternatively, a “put” option to sell to OEH the excess development rights (approximately 65,000 square feet) of the Donnell branch site at a price to OEH of $16,000,000. The option agreement expiration date was extended several times and included a further call option on approximately 4,800 additional square feet of excess development rights at a price to the Assignee of approximately $2,850,000. The Assignee exercised the call option in December 2011 for $16,350,000. Of these proceeds, $4,514,000 was used to repay a portion of the existing loan facility secured by ‘21’ Club, and the gain realized by OEH was taxable in the U.S. Cumulative gain on the sale of the purchase and development agreements as well as the exercise of the call option is $16,544,000.