Net Investments in Properties and Real Estate Under Construction

Real Estate

Real estate, which consists of land and buildings leased to others, at cost, and which are subject to operating leases, is summarized as follows (in thousands):



	March 31, 2016			December 31, 2015
Land	$	574,324		$	560,257
Buildings	2,155,704			2,098,620
Less: Accumulated depreciation	(245,314		)	(225,867		)
	$	2,484,714		$	2,433,010

The carrying value of our Real estate increased $43.0 million from December 31, 2015 to March 31, 2016, due to the weakening of the U.S. dollar relative to foreign currencies, particularly the euro, during the same period.

Acquisitions of Real Estate During 2016

During the three months ended March 31, 2016, we acquired the following investments, which were deemed to be business combinations because we assumed the existing leases on the properties, at a total cost of $21.5 million, including land of $3.1 million, buildings $17.1 million, and net lease intangibles of $1.3 million (Note 7).


•	$17.3 million for a student housing accommodation in Jacksonville, Florida on January 8, 2016; and


•	$4.2 million for an industrial facility in Houston, Texas on February 10, 2016.

In connection with these investments, we expensed acquisition-related costs and fees of $1.1 million, which are included in Acquisition expenses in the consolidated financial statements.

During the three months ended March 31, 2016, we capitalized $0.5 million of building improvements with existing tenants.

Operating Real Estate

Operating real estate, which consists of our domestic self-storage operations, at cost, is summarized as follows (in thousands):



	March 31, 2016			December 31, 2015
Land	$	57,510		$	66,066
Buildings	179,081			209,455
Less: Accumulated depreciation	(27,515		)	(30,308		)
	$	209,076		$	245,213

During the three months ended March 31, 2016, we sold three self-storage properties. As a result, the carrying value of our Operating real estate decreased by $21.0 million from December 31, 2015 to March 31, 2016 (Note 13).

During the three months ended March 31, 2016, we capitalized $0.2 million of building improvements with existing tenants.

Partial Sale

On December 1, 2011, we entered into a contract with I Shops LLC, a real estate developer, to finance the renovation of a hotel and construction of a shopping center in Orlando, Florida. As a result of the terms of that agreement, we consolidated the hotel and the shopping center. Additionally, as a condition to providing the construction loan, we entered into a contract with the developer that granted us the option to acquire a 15% equity interest in the parent company that owns I Shops LLC. However, we did not exercise the option and it expired on January 31, 2015.

On April 24, 2014, upon the substantial repayment of the construction loan by the developer, we deconsolidated our investment in the hotel as it no longer met the criteria for consolidation, which was accounted for as a partial sale due to our purchase option. The related gain on sale of real estate was $14.6 million, of which $12.4 million, or 85%, we recognized during the three months ended June 30, 2014 and $2.2 million, or 15%, we deferred until the purchase option expired, in accordance with Accounting Standards Codification 360-20-40-3, Criteria for Recognizing Profit on Sales of Real Estate Under Full Accrual Method. We recognized the $2.2 million gain on sale of real estate during the three months ended March 31, 2015, after the option expired without being exercised on January 31, 2015.

Real Estate Under Construction

The following table provides the activity of our Real estate under construction (in thousands):



	Three Months Ended
	March 31, 2016
Beginning balance	$	1,068
Capitalized funds	1,471
Placed into service	(484		)
Foreign currency translation adjustments, building improvements, and other	(36		)
Ending balance	$	2,019

Capitalized Funds — During the three months ended March 31, 2016, total capitalized funds were primarily comprised of $0.5 million in construction draws related to one existing build-to-suit project, which was substantially completed as of March 31, 2016, and construction draws of $1.0 million for tenant allowance for an operating property.

Placed into Service — During the three months ended March 31, 2016, we placed into service one build-to-suit project totaling $0.5 million, which was substantially completed as of March 31, 2016.

Ending Balance — At March 31, 2016 and December 31, 2015, we had construction draws for a tenant allowance for an operating property.

The aggregate unfunded commitment on the remaining build-to-suit projects projects totaled approximately $1.8 million and $2.8 million at March 31, 2016 and December 31, 2015, respectively.

Assets Held for Sale

Below is a summary of our properties held for sale (in thousands):



	March 31, 2016		December 31, 2015
Operating real estate, net	$	13,771	$	—
Assets held for sale	$	13,771	$	—

At March 31, 2016, we had five self-storage properties classified as Assets held for sale. On April 12, 2016, these properties were sold (Note 15). At December 31, 2015, we did not have any properties classified as Assets held for sale.