3. Real estate facilities

The activity in real estate facilities for the six months ended June 30, 2015 is as follows (in thousands):



			Buildings and		Accumulated
	Land		Improvements		Depreciation		Total
Balances at December 31, 2014	$	793,569	$	2,182,993	$	(991,497)	$	1,985,065
Capital expenditures, net		—		25,685		—		25,685
Disposals		—		(8,254)		8,254		—
Depreciation and amortization		—		—		(53,258)		(53,258)
Transfer to properties held for disposition		—		(330)		478		148
Balances at June 30, 2015	$	793,569	$	2,200,094	$	(1,036,023)	$	1,957,640

The purchase price of acquired properties is recorded to land, buildings and improvements (including tenant improvements, unamortized lease commissions, acquired in-place lease values, and tenant relationships, if any) and intangible assets and liabilities associated with the value of above-market and below-market leases based on their respective estimated fair values. Acquisition-related costs are expensed as incurred.

In determining the fair value of the tangible assets of the acquired properties, management considers the value of the properties as if vacant as of the acquisition date. Management must make significant assumptions in determining the value of assets acquired and liabilities assumed. Using different assumptions in the recording of the purchase cost of the acquired properties would affect the timing of recognition of the related revenue and expenses. Amounts recorded to land are derived from comparable sales of land within the same region. Amounts recorded to buildings and improvements, tenant improvements and unamortized lease commissions are based on current market replacement costs and other market information. The amount recorded to acquired in-place leases is determined based on management’s assessment of current market conditions and the estimated lease-up periods for the respective spaces.

On February 27, 2015, as part of an eminent domain process with the Central Puget Sound Regional Transit Authority, the Company sold five buildings, aggregating 82,000 square feet, at the Company’s Overlake Business Park located in Redmond, Washington, for $13.9 million, which resulted in a net gain of $4.8 million.

On February 13, 2015, the Company completed the sale of Milwaukie Business Park located in Milwaukie, Oregon, for net proceeds of $10.6 million, which resulted in a net gain of $7.6 million. The park consists of six multi-tenant flex buildings aggregating 102,000 square feet.

The five buildings at the Company’s Overlake Business Park, Milwaukie Business Park, as well as a 23,000 square foot building in Tempe, Arizona, and two business parks aggregating 367,000 square feet in Sacramento, California, have been classified as properties held for disposition as of December 31, 2014, while the 23,000 square foot building in Tempe, Arizona and the two business parks aggregating 367,000 square feet in Sacramento, California, continued to be classified as property held for disposition as of June 30, 2015.

Subsequent to June 30, 2015, the Company completed the sale of the two business parks located in Sacramento, California, noted above, for net proceeds of $29.3 million.

The Company has a 125,000 square foot building located in Northern Virginia classified as land and building held for development. The Company has entered into a joint venture, in which it will maintain a 95.0% economic interest, with a real estate development company to pursue a ground-up multi-family development on the site. Prior to the property being contributed, all costs related to the pre-development are split evenly between the Company and its joint venture partner. As of June 30, 2015, the Company has received all required entitlements, allowing it to develop a multi-family building up to 450,000 square feet on the property. The property will be contributed to the joint venture upon commencement of construction, which is anticipated to occur in late 2015 or early 2016. The land and capitalized development costs were $20.2 million and $18.4 million at June 30, 2015 and December 31, 2014, respectively. For the six months ended June 30, 2015, the Company capitalized costs of $1.8 million related to this development, of which $531,000 were capitalized interest costs.