Real Estate and Operating Real Estate

Real Estate — Land, Buildings and Improvements

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, 2018			December 31, 2017
Land	$	573,054		$	567,113
Buildings and improvements	2,234,353			2,200,901
Real estate under construction ^(a)	20,009			4,597
Less: Accumulated depreciation	(376,078		)	(354,668		)
	$	2,451,338		$	2,417,943

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(a)	Amount as of March 31, 2018 includes accrued capitalized costs of $8.9 million.

During the three months ended March 31, 2018, the U.S. dollar weakened against the euro, as the end-of-period rate for the U.S. dollar in relation to the euro increased by 2.7% to $1.2321 from $1.1993. As a result, the carrying value of our real estate increased by $35.0 million from December 31, 2017 to March 31, 2018.

Depreciation expense, including the effect of foreign currency translation, on our real estate was $17.3 million and $16.2 million for the three months ended March 31, 2018 and 2017, respectively.

Real Estate Under Construction

At both March 31, 2018 and December 31, 2017, we had three build-to-suit investments that are still under construction. The aggregate unfunded commitment on our build-to-suit investments and certain other tenant improvements totaled approximately $50.2 million and $56.5 million at December 31, 2017.

Operating Real Estate — Land, Buildings and Improvements

Operating real estate, which consists of our wholly owned domestic self-storage operations and a majority ownership in one hotel, at cost, is summarized as follows (in thousands):



	March 31, 2018			December 31, 2017
Land	$	90,388		$	90,042
Buildings and improvements	252,300			250,730
Real estate under construction ^(a)	2,994			—
Less: Accumulated depreciation	(27,870		)	(26,087		)
	$	317,812		$	314,685

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(a)	Primarily represents accrued restoration costs on our hotel property, which was impacted by Hurricane Irma as noted below.

Depreciation expense on our operating real estate was $1.7 million for both the three months ended March 31, 2018 and 2017.

Hurricane Impact Update

Hurricane Irma made landfall in September 2017, which directly impacted our hotel in Miami, Florida. The hotel sustained damage and has since been operating at less than full capacity. All of the damage is expected to be covered by insurance, apart from the estimated insurance deductible of $1.8 million and certain professional fees. We currently believe that the recovery of the insurance proceeds is probable, however, we will monitor the collectability of this receivable on a periodic basis. The table below summarizes the components of our insurance receivables that are outstanding as of March 31, 2018 and December 31, 2017 (in thousands):



	March 31, 2018 ^(a)			December 31, 2017
Beginning balance	$	30,756		$	—
Estimated receivable proceeds	(2,229		)	32,583
Property damage insurance advances received	(191		)	—
Insurance deductible	—			(1,827		)
Property damage insurance receivables	$	28,336		$	30,756

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(a)	Excludes $2.6 million of amounts to be paid to our insurance adjuster, which is not covered under our insurance policy.

In addition to the table above, as of March 31, 2018, we have received estimated business interruption insurance proceeds of $1.7 million and have recorded a corresponding payable within Accounts payable, accrued expenses and other liabilities in our consolidated financial statements as of March 31, 2018 as the claims have not yet been settled. We will record revenue for covered business interruption when both the recovery is probable and contingencies have been resolved with the insurance carrier.

We are still assessing the impact of the hurricane to this hotel, and the final damages incurred could vary significantly from our estimate and additional remediation work may be performed. Any changes in estimates for property damage will be recorded in the periods in which they were determined and any additional work will be recorded in the periods in which it is performed.