3. Real estate facilities

The activity in real estate facilities for the years ended December 31, 2015, 2014 and 2013 is as follows (in thousands):



			Buildings and		Accumulated
	Land		Improvements		Depreciation		Total
Balances at December 31, 2012	$	738,421	$	2,005,943	$	(811,045)	$	1,933,319
Acquisition of real estate facilities		39,667		76,943		—		116,610
Capital expenditures		—		60,228		—		60,228
Disposals		—		(15,391)		15,391		—
Depreciation and amortization		—		—		(108,917)		(108,917)
Transfer to properties sold		—		(1,466)		7,604		6,138
Transfer to land and building held for development		(5,927)		(10,270)		778		(15,419)
Balances at December 31, 2013		772,161		2,115,987		(896,189)		1,991,959
Acquisition of real estate facilities		21,408		24,890		—		46,298
Capital expenditures		—		54,462		—		54,462
Disposals		—		(10,587)		10,587		—
Depreciation and amortization		—		—		(110,357)		(110,357)
Transfer to properties sold		—		(1,759)		4,462		2,703
Balances at December 31, 2014		793,569		2,182,993		(991,497)		1,985,065
Capital expenditures		—		46,777		—		46,777
Disposals		—		(13,990)		13,990		—
Depreciation and amortization		—		—		(105,394)		(105,394)
Transfer to properties sold		—		(265)		298		33
Balances at December 31, 2015	$	793,569	$	2,215,515	$	(1,082,603)	$	1,926,481

The unaudited basis of real estate facilities for federal income tax purposes was approximately $1.9 billion at December 31, 2015. The Company had approximately 21.7% of its properties, in terms of net book value, encumbered by mortgage debt at December 31, 2015.

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 December 30, 2014, the Company acquired Charcot Business Park II, an eight-building, 119,000 square foot multi-tenant flex park in San Jose, California, for $16.0 million. The park is contiguous to the Company’s existing 164,000 square foot Charcot Business Park. On November 3, 2014, the Company acquired a 246,000 square foot multi-tenant industrial building in Austin, Texas, for a purchase price of $10.6 million. On August 21, 2014, the Company acquired a 145,000 square foot multi-tenant flex park consisting of six single-story buildings located in Dallas, Texas, for a purchase price of $5.1 million. On July 28, 2014, the Company acquired a 19,000 square foot building in Dallas, Texas, for $1.1 million. The flex building is located in the Company’s 389,000 square foot Arapaho Business Park. On July 24, 2014, the Company acquired a 149,000 square foot building in Miami, Florida, for $12.7 million. The building is located within the Company’s 3.3 million square foot Miami Industrial Commerce Center. The Company incurred and expensed acquisition transaction costs of $350,000 for the year ended December 31, 2014.

On December 20, 2013, the Company acquired Bayshore Corporate Center, an eight-building, 340,000 square foot, office park in San Mateo, California, for $60.5 million. On November 8, 2013, the Company acquired nine multi-tenant flex buildings in the Valwood submarket of Dallas, Texas, aggregating 245,000 square feet for $12.4 million. On October 15, 2013, the Company acquired four multi-tenant flex parks along with a four-acre parcel of land aggregating 559,000 square feet of single-story flex buildings located in Dallas, Texas, for a purchase price of $27.9 million. On July 26, 2013, the Company acquired a 389,000 square foot multi-tenant flex park consisting of 18 single-story buildings located in Dallas, Texas, for a purchase price of $14.8 million. The Company incurred and expensed acquisition transaction costs of $854,000 for the year ended December 31, 2013.

The Company did not acquire any assets or assume any liabilities during the year ended December 31, 2015.

The following table summarizes the assets acquired and liabilities assumed for the years ended December 31, (in thousands):



	2014		2013
Land	$	21,408	$	39,667
Land held for development		—		990
Buildings and improvements		24,890		76,943
Above-market in-place lease value		—		403
Below-market in-place lease value		(666)		(2,428)
Total purchase price		45,632		115,575
Net operating assets acquired and liabilities assumed		(611)		(1,630)
Total cash paid	$	45,021	$	113,945

On September 28, 2015, the Company completed the sale of McKellips Business Park located in Tempe, Arizona, aggregating 23,000 square feet, for net proceeds of $1.3 million, which resulted in a gain of $759,000. In July, 2015, the Company completed the sale of two business parks located in Sacramento, California, for net proceeds of $29.3 million, which resulted in a gain of $15.0 million. On July 24, 2015, the Company disposed of North Pointe Business Park, which consists of five multi-tenant flex buildings aggregating 213,000 square feet. On July 31, 2015, the Company disposed of Northgate Business Park, which consists of 12 multi-tenant flex buildings comprising 154,000 square feet. 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 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 gain of $7.6 million. The park consists of six multi-tenant flex buildings aggregating 102,000 square feet.

The assets sold in 2015, aggregating 574,000 square feet, have been classified as properties held for disposition as of December 31, 2014.

On November 21, 2014, the Company completed the sale of three business parks, consisting of 42 buildings aggregating 656,000 square feet, located in Phoenix, Arizona, for net proceeds of $52.2 million, resulting in a gain of $29.6 million. On October 1, 2014, the Company completed the sale of two business parks, Cornell Oaks Corporate Center and Creekside Corporate Park along with 11.5 acres of adjacent land, located in Beaverton, Oregon, for net proceeds of $159.9 million, resulting in a gain of $62.8 million. The parks consist of 18 buildings aggregating 1.2 million square feet.