Note 6 – Property and Equipment

Operating Property, net

As of September 30, 2014 and December 31, 2013, property associated with our operating activities is summarized as follows (dollars in thousands):



		September 30,		December 31,
Operating Property		2014		2013
Land	$	64,485	$	65,578
Building and improvements		122,409		123,061
Leasehold interests		46,922		46,330
Fixtures and equipment		108,090		106,099
Total cost		341,906		341,068
Less: accumulated depreciation		(155,981)		(149,408)
Operating property, net	$	185,925	$	191,660

Depreciation expense for property and equipment was $3.7 million and $10.7 million for the three and nine months ended September 30, 2014, respectively, and $3.2 million and $10.4 million for the three and nine months ended September 30, 2013, respectively.

Land Held for Sale – Moonee Ponds

On October 15, 2013, we entered into a definitive purchase and sale agreement to sell this property for a sale price of $21.3 million (AUS$23.0 million) payable in full upon closing of that transaction on April 16, 2015. The property has a book value of $10.8 million (AUS $12.4 million), and while the transaction was treated as a current sale for tax purposes, it does not qualify as a sale under US GAAP until the close of the transaction on April 16, 2015. As the scheduled closing date is less than one year away, this asset has been listed as a current asset.

Land Held for Sale – Burwood

On May 12, 2014, we entered into a contract to sell our undeveloped 50.6 acre parcel in Burwood, Victoria, Australia, to an affiliate of Australand Holdings Limited for a purchase price of $54.6 million (AUS$65.0 million).

Reading received $5.9 million (AUS$6.5 million) on the May 23, 2014 closing. The balance of the purchase price is due on December 31, 2017. The agreement provides for mandatory pre-payments in the event that any of the land is sold by the buyer, any such prepayment being in an amount equal to the greater of (a) 90% of the net sale price or (b) the balance of the purchase price multiplied by a fraction the numerator of which is the square footage of property being sold by the buyer and the denominator of which is the original square footage of the property being sold to the buyer. The agreement does not provide for the payment of interest on the balance owed.

Our book basis in the property is $45.5 million (AUS$52.1 million) and while the transaction was treated as a current sale for tax purposes, it does not qualify as a sale under US GAAP until the receipt of the payment of the balance of the purchase price due on December 31, 2017 (or earlier depending upon whether any prepayment obligation is triggered). The asset has been listed as a long term asset.

Investment and Development Property

As of September 30, 2014 and December 31, 2013, our investment and development property is summarized as follows (dollars in thousands):



		September 30,		December 31,
Investment and Development Property		2014		2013
Land	$	22,748	$	59,550
Construction-in-progress (including capitalized interest)		3,455		14,680
Investment and development property	$	26,203	$	74,230

The decrease of $48.0 million is substantially due to the reclassification of the Burwood property costs from the Investment and Development property category to Land Held for Sale category under non-current assets on the balance sheet.