Note 5 – Property and Equipment

Operating Property, net

As of September 30, 2019 and December 31, 2018, property associated with our operating activities is summarized as follows:



	September 30,		December 31,
(Dollars in thousands)	2019		2018
Land	$	73,675	$	75,689
Building and improvements		143,408		149,734
Leasehold improvements		55,867		55,299
Fixtures and equipment		172,687		167,943
Construction-in-progress		7,032		3,478
Total cost		452,669		452,143
Less: accumulated depreciation		(204,569)		(194,476)
Operating property, net	$	248,100	$	257,667

Depreciation expense for operating property was $5.5 million and $16.3 million for the quarter and nine months ended September 30, 2019 and $5.4 million and $15.6 million for the quarter and nine months ended September 30, 2018, respectively.

Investment and Development Property, net

As of September 30, 2019 and December 31, 2018, our investment and development property is summarized below:



	September 30,		December 31,
(Dollars in thousands)	2019		2018
Land	$	23,392	$	24,371
Building		1,900		1,900
Construction-in-progress (including capitalized interest)		82,000		60,533
Investment and development property	$	107,292	$	86,804

Construction-in-Progress – Operating and Investing Properties

Construction-in-Progress balances are included in both our operating and development properties. The balances of our major projects along with the movements for the nine months ended September 30, 2019 are shown below:



(Dollars in thousands)	Balance, December 31, 2018		Additions during the period(1)		Completed during the period		Foreign currency translation		Balance, September 30, 2019
Union Square development	$	55,634	$	21,098	$	—	$	—	$	76,732
Courtenay Central development		5,571		611		(40)		(411)		5,731
Cinema developments and improvements		1,664		13,470		(9,931)		(75)		5,128
Other real estate projects		1,142		717		(338)		(80)		1,441
Total	$	64,011	$	35,896	$	(10,309)	$	(566)	$	89,032

(1)

Includes capitalized interest of $2.2 million and $4.9 million for the quarter and nine months ended September 30, 2019.

Real Estate Transactions

Purchase of Income Producing Property at Auburn/Redyard, Australia – On June 29, 2018, we added 20,870 square feet of land, improved with a 16,830 square foot office building, to our Auburn/Redyard entertainment-themed center (“ETC”). The property was acquired at auction for $3.5 million (AU$4.5 million) and is bordered by our existing ETC on three sides. The property is leased to Telstra through July 2022. This lease will allow us time to plan for the efficient integration of the property into our ETC. With this acquisition, Auburn/Redyard now represents approximately 519,992 square feet (48,309 square meters) of land, with approximately 1,620 feet (498 meters) of uninterrupted frontage to Parramatta Road, a major Sydney arterial motorway.

Purchase of Land at Cannon Park in Townsville, Australia – On June 13, 2018, we acquired a 163,000 square foot (15,150 square meter) parcel of land at our Cannon Park ETC, in connection with the restructuring of our relationship with the adjacent land owner. Prior to the restructuring, this parcel was commonly owned by us and the adjoining land owner. In the restructuring, the adjoining land owner conveyed to us its interest in the parcel for AU$1. We granted the adjoining land owner certain access rights with respect to that parcel.

Exercise of Option to Acquire Ground Lessee’s interest in Ground Lease and Improvements Constituting the Village East Cinema – On August 28, 2019, we exercised our option to acquire the ground lessee’s interest in the 13 year ground lease underlying and the real property assets constituting our Village East Cinema in Manhattan. The purchase price under the option is $5.9 million. It is anticipated that the transaction will close on or about May 31, 2020.