Real Estate

Real estate consists of:



	At Year-End
	2017		2016
	(In thousands)
Entitled, developed and under development projects	$	127,442	$	263,859
Other real estate costs (principally land in entitlement in 2016)	2,938		29,144
	$	130,380	$	293,003

Our estimated reimbursements from utility and improvement districts included in real estate were $9,775,000 at year-end 2017 and $45,157,000 at year-end 2016, which included $14,749,000 related to our Cibolo Canyons project near San Antonio. In 2017, we collected $19,606,000 in reimbursements that were previously submitted to these districts. These costs are principally for water, sewer and other infrastructure assets that we have incurred and submitted or will submit to utility or improvement districts for approval and reimbursement. We expect to be reimbursed by utility and improvement districts when these districts achieve adequate tax basis or otherwise have funds available to support payment. At year-end 2017, estimated reimbursements of $27,915,000, which include $14,127,000 related to Cibolo Canyons, are classified as assets held for sale. Please read Note 22 — Subsequent Event for additional information regarding our strategic asset sale to Starwood.

In 2017, we recognized non-cash impairment charges of $3,420,000 related to the asset group sold in the strategic asset sale to Starwood and one non-core mitigation project. In 2016, we recognized non-cash impairment charges of $56,453,000 related to six non-core community development projects and two multifamily sites. These impairments were a result of our key initiative to review our entire portfolio of assets which resulted in business plan changes, inclusive of cash tax savings considerations, to market these properties for sale, which resulted in adjustment of the carrying value to fair value.

In 2017, we sold over 19,000 acres of timberland and undeveloped land in Georgia and Texas for $46,197,000 generating combined net proceeds of $45,396,000. These transactions resulted in a gain on sale of assets of $28,674,000.

In 2016, we sold the Radisson Hotel & Suites, a 413 room hotel in Austin, for $130,000,000, generating $128,764,000 in net proceeds before paying in full the associated debt of $15,400,000 and recognized a gain on sale of $95,336,000. We also sold Eleven, a wholly-owned 257-unit multifamily property in Austin, for $60,150,000, generating $59,719,000 in net proceeds before paying in full the associated debt of $23,936,000 and recognized a gain on sale of $9,116,000. In addition, we sold Dillon, a planned 379-unit multifamily property that was under construction in Charlotte, for $25,979,000, generating $25,428,000 in net proceeds and recognized a gain on sale of $1,223,000, and Music Row, a planned 230-unit multifamily property that was under construction in Nashville, for $15,025,000, generating $14,703,000 in net proceeds and recognized a gain on sale of $3,968,000. We also sold Downtown Edge, a multifamily site in Austin, for $5,000,000, generating $4,975,000 in net proceeds and recognized a loss of $3,870,000.

In 2016, we sold over 58,300 acres of timberland and undeveloped land in Georgia and Alabama for $104,172,000 generating net proceeds of $103,238,000. These transactions resulted in a gain on sale of assets of $48,891,000.

Depreciation expense related to commercial and income producing properties was $0 in 2017, $816,000 in 2016 and $6,810,000 in 2015 and is included in other operating expense.

We provided a performance bond and standby letter of credit in support of a bond issuance by CCSID. In 2014, we received $50,550,000 from CCSID principally related to its issuance of $48,900,000 Hotel Occupancy Tax (HOT) and Sales and Use Tax Revenue Bonds. These bonds are obligations solely of CCSID and are payable from HOT and sales and use taxes levied by CCSID. To facilitate the issuance of the bonds, we provided a $6,846,000 letter of credit to the bond trustee as security for certain debt service fund obligations in the event CCSID tax collections are not sufficient to support payment of the bonds in accordance with their terms. The letter of credit must be maintained until the earlier of redemption of the bonds or scheduled bond maturity in 2034. We also entered into an agreement with the owner of the Resort to assign its senior rights to us in exchange for consideration provided by us, including a surety bond to be drawn if CCSID tax collections are not sufficient to support ad valorem tax rebates payable. The surety bond decreases as CCSID makes annual ad valorem tax rebate payments, which obligation is scheduled to be retired in full by 2020. At year-end 2017, the surety bond was $5,312,000. Our rights to receive the excess HOT and sales taxes from CCSID was excluded from the strategic asset sale to Starwood.