Real Estate

3 Months Ended

Mar. 31, 2020

Construction In Progress

Construction in progress includes land, preconstruction and development costs of active projects. Preconstruction costs include legal, zoning and permitting costs and other project carrying costs incurred prior to the commencement of construction. Development costs include direct construction costs and indirect costs incurred subsequent to the start of construction such as architectural, engineering, construction management and carrying costs consisting of interest, real estate taxes and insurance. Construction in progress as of March 31, 2020 and December 31, 2019, is composed of the following:



(in thousands)	March 31, 2020		December 31, 2019
The Waycroft	$	267,563	$	255,443
7316 Wisconsin Avenue	46,946		44,638
Ashbrook Marketplace	19,796		19,128
Other	11,575		16,435
Total	$	345,880	$	335,644

Deferred Leasing Costs

Deferred leasing costs consist of commissions paid to third-party and internal leasing agents, internal costs such as payroll-related fringe benefits which are direct and incremental to successful commercial leases, amounts attributed to in-place leases associated with acquired properties and lease inducement costs. Effective with the adoption of ASU 2016-02 on January 1, 2019, all costs incurred prior to the execution of a lease are charged to expense and not capitalized. Unamortized deferred leasing costs are charged to expense if the applicable lease is terminated prior to expiration of the initial lease term. Deferred leasing costs are amortized over the term of the lease or remaining term of acquired leases. Collectively, deferred leasing costs totaled $27.5 million and $24.1 million, net of accumulated amortization of $42.5 million and $41.6 million, as of March 31, 2020 and December 31, 2019, respectively. Amortization expense, included in depreciation and amortization of deferred leasing costs in the Consolidated Statements of Operations, totaled $1.3 million and $1.6 million for the three months ended March 31, 2020 and 2019, respectively.

Real Estate Investment Properties

Depreciation is calculated using the straight-line method and estimated useful lives of generally between 35 and 50 years for base buildings, or a shorter period if management determines that the building has a shorter useful life, and up to 20 years for certain other improvements that extend the useful lives. Leasehold improvement expenditures are capitalized when certain criteria are met, including when the Company supervises construction and will own the improvements. Tenant improvements are amortized, over the shorter of the lives of the related leases or the useful life of the improvements, using the straight-line method. Depreciation expense in the Consolidated Statements of Operations totaled $10.0 million and $10.0 million for the three months ended March 31, 2020 and 2019, respectively. Repairs and maintenance expense totaled $2.8 million and $3.7 million for the three months ended March 31, 2020 and 2019, respectively, and is included in property operating expenses in the Consolidated Statements of Operations.