Note 6 – Property and Equipment

Acquisitions

Coachella, California Land Acquisition

On January 10, 2012, Shadow View Land and Farming, LLC, a limited liability company owned by our Company, acquired a 202-acre property, zoned for the development of up to 843 single-family residential units, located in the City of Coachella, California. The property was acquired at a foreclosure auction for $5.5 million which currently has a net carrying value of $4.0 million. The property was acquired as a long-term investment in developable land. Half of the funds used to acquire the land were provided by Mr. James J. Cotter, our Chairman, Chief Executive Officer and controlling shareholder. Upon the approval of our Conflicts Committee, these funds were converted on January 18, 2012 into a 50% interest in Shadow View Land and Farming, LLC. We are the managing member of this company.

Disposals

Indooroopilly Sale

On November 20, 2012, we sold our Indooroopilly property for $12.4 million (AUS$12.0 million). This property’s operational results are included in income (loss) from discontinued operations on our Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2012. The condensed statement of operations for Indooroopilly is as follows (dollars in thousands):



		Three Months Ended September 30,				Nine Months Ended September 30,
		2013		2012		2013		2012
Revenue	$	--	$	210	$	--	$	627
Less: operating expense		--		168		--		465
Less: impairment expense		--		283		--		283
Income (loss) from discontinued operations, net of tax	$	--	$	(241)	$	--	$	(121)

Taringa Sale

On February 21, 2012, we sold our three properties in the Taringa area of Brisbane, Australia consisting of approximately 1.1 acres for $1.9 million (AUS$1.8 million).

Property Held for Sale – Moonee Ponds

In May 2013, we announced our intent to sell and began actively marketing our 3.3-acre Moonee Pond property in Australia. The current carrying value of this property on our books is $11.6 million (AUS$12.4 million) which has been classified as land held for sale on our September 30, 2013 condensed consolidated balance sheet. The operations of this property were not material and thus not separately presented as discontinued operations. On October 15, 2013, we entered into a definitive purchase and sale agreement to sell this property for a sale price of AUS$23.0 million payable in full on April 16, 2015. See Note 18 – Subsequent Events.

Operating Property

As of September 30, 2013 and December 31, 2012, property associated with our operating activities is summarized as follows (dollars in thousands):



Operating property		September 30, 2013		December 31, 2012
Land	$	66,753	$	69,370
Building and improvements		127,088		136,225
Leasehold interests		52,033		45,391
Fixtures and equipment		105,858		108,169
Total cost		351,732		359,155
Less: accumulated depreciation		(158,435)		(156,377)
Operating property, net	$	193,297	$	202,778

Depreciation expense for property and equipment was $3.2 million and $10.4 million for the three and nine months ended September 30, 2013, respectively, and $3.6 million and $11.0 million for the three and nine months ended September 30, 2012, respectively.

Casualty Loss – Wellington, New Zealand Parking Structure

On July 21, 2013, Wellington, New Zealand experienced a strong earthquake that damaged our parking structure adjacent to our Courtenay Central shopping center. The parking structure has been closed pending repairs to the structure. We estimate the cost to repair the structure will be approximately $1.6 million (NZ$2.0 million) of which our earthquake insurance will cover approximately $944,000 (NZ$1.2 million) after our $710,000 (NZ$844,000) insurance deductable. For the three and nine months ended September 30, 2013, we recorded a casualty loss of $257,000 (NZ$315,000) based on the associated net book value of the property as an other income (expense) and a $944,000 (NZ$1.2 million) insurance receivable in our current receivables at September 30, 2013. Our reduction in operating income will also be offset somewhat by our business interruption insurance subject to the relevant deductible.

Investment and Development Property

As of September 30, 2013 and December 31, 2012, our investment and development property is summarized as follows (dollars in thousands):



Investment and Development Property		September 30, 2013		December 31, 2012
Land	$	61,983	$	77,020
Construction-in-progress (including capitalized interest)		14,715		17,902
Investment and development property	$	76,698	$	94,922

At the beginning of 2010, we curtailed the development activities of our properties under development and are not currently capitalizing interest expense. As a result, we did not capitalize any interest during the three and nine months ended September 30, 2013 or 2012.