Note 5: Property and Equipment

Property and equipment were:

	December 31,
	2017⁽¹⁾			2016
	(in millions)
Land	$	3,364		$	3,397
Buildings and leasehold improvements		5,911			6,015
Furniture and equipment		966			922
Construction-in-progress		117			79
		10,358			10,413
Accumulated depreciation and amortization		(2,047	)		(1,872	)
	$	8,311		$	8,541

⁽¹⁾	Excludes $31 million of property and equipment, net classified as held for sale as of December 31, 2017.

Depreciation of property and equipment, including capital lease assets, was $283 million, $295 million and $283 million during the years ended December 31, 2017, 2016 and 2015, respectively.

As of December 31, 2017 and 2016, property and equipment included approximately $20 million and $19 million, respectively, of capital lease assets primarily consisting of buildings and leasehold improvements, net of $10 million and $8 million, respectively, of accumulated depreciation.

Transactions with Wholly Owned Subsidiary of Hilton

In 2014, we completed the sale of certain floors at the New York Hilton Midtown to HGV, a wholly-owned subsidiary of Parent prior to its spin-off from Hilton in 2017, for $22 million in connection with a timeshare project. At closing, legal title of these floors was transferred to HGV. The net book value of these floors was approximately $66 million. The difference between the proceeds received and net book value of the floors was recognized as a non-cash equity distribution to Hilton, $30 million of which was recognized for the year ended December 31, 2014. Additionally, in October 2016, we completed the sale of an additional 25 rooms at the New York Hilton Midtown to HGV in connection with timeshare projects. The net book value of these assets was approximately $33 million. Due to our continuing involvement, both of these transactions were not recognized as sales and were accounted for as sales-leaseback liabilities under the financing method. Pursuant to an arrangement representing a lease, we reserved exclusive rights to occupy and operate these rooms beginning on the date of transfer and continuing until the end of the lease term. In December 2017, the remaining rooms were released to HGV; accordingly, we derecognized $32 million of property and equipment, net, and the related $33 million liability due to HGV.

In October 2016, we completed the sale of 600 rooms at the Hilton Waikoloa Village to HGV in connection with timeshare projects. The net book value of these assets was approximately $177 million. Due to our continuing involvement, this transaction was not recognized as a sale and was accounted for as a sales-leaseback liability under the financing method. The assets will be derecognized at the end of lease term. Pursuant to an arrangement representing a lease, we reserved exclusive rights to occupy and operate these rooms beginning on the date of transfer and continuing until the end of the lease term. The lease term expires December 2019, but may be extended if mutually agreed to by all parties. During 2017, 134 of the 600 rooms at the Hilton Waikoloa Village previously transferred to HGV and leased back by us were released to HGV; accordingly, we derecognized $38 million of property and equipment, net, and the related $39 million liability due to HGV.

Due to HGV on the consolidated balance sheets represents the remaining sale-leaseback liabilities of $138 million as of December 31, 2017 related to the Hilton Waikoloa Village and $210 million as of December 31, 2016 related to the Hilton Waikoloa Village and the New York Hilton Midtown.

In June 2016, we transferred assets, including legal title, related to certain floors at the Embassy Suites Washington, D.C. to HGV in connection with a timeshare project. The net book value of these assets was approximately $40 million. No cash consideration was received for this transfer; therefore, the net book value of the assets was recognized as a $33 million non-cash equity distribution to Parent for the year ended December 31, 2016.

Hurricanes Irma and Maria

In September 2017, Hurricanes Irma and Maria caused damage and disruption at certain of our hotels in Florida and the Caribe Hilton. We have incurred $20 million of expenses and recognized a loss of $54 million for property and equipment that was damaged during the hurricanes during the year ended December 31, 2017, both which are included in Casualty and impairment loss, net in our consolidated statement of comprehensive income.

Our insurance coverage provides us with reimbursement for the replacement cost for the damage to these hotels, which includes certain clean-up and repair costs, exceeding the applicable deductibles. During the year ended December 31, 2017, we received $2 million of insurance proceeds and recognized an insurance receivable of $56 million, both of which are included as a reduction to the Casualty and impairment loss, net in our consolidated statements of comprehensive income. The insurance receivable is included within Other assets in our consolidated balance sheet as of December 31, 2017. As of December 31, 2017, no amounts have been recognized related to business interruption insurance. Refer to Note 17: “Commitments and Contingencies” for additional information.