Land, Buildings and Improvements and Assets Held for Sale

Land, Buildings and Improvements — Operating Leases

Land and buildings leased to others, which are subject to operating leases, and real estate under construction, are summarized as follows (in thousands):



	March 31, 2018			December 31, 2017
Land	$	1,136,834		$	1,125,539
Buildings and improvements	4,309,490			4,208,907
Real estate under construction	36,725			39,772
Less: Accumulated depreciation	(651,762		)	(613,543		)
	$	4,831,287		$	4,760,675

During the three months ended March 31, 2018, the U.S. dollar weakened against the euro, as the end-of-period rate for the U.S. dollar in relation to the euro increased by 2.7% to $1.2321 from $1.1993. As a result of this fluctuation in foreign exchange rates, the carrying value of our Land, buildings and improvements subject to operating leases increased by $41.9 million from December 31, 2017 to March 31, 2018.

Depreciation expense, including the effect of foreign currency translation, on our buildings and improvements subject to operating leases was $37.2 million and $35.4 million for the three months ended March 31, 2018 and 2017, respectively. Accumulated depreciation of buildings and improvements subject to operating leases is included in Accumulated depreciation and amortization in the consolidated financial statements.

Acquisitions of Real Estate

During the three months ended March 31, 2018, we entered into the following investments, which were deemed to be real estate asset acquisitions, at a total cost of $85.2 million, including land of $6.5 million, buildings of $65.1 million (including acquisition-related costs of $0.2 million in the aggregate, which were capitalized), and net lease intangibles of $13.6 million:


•	an investment of $6.1 million for a warehouse facility in Sellersburg, Indiana, on February 21, 2018; and


•	an investment of $79.1 million for one warehouse facility in Waukesha, Wisconsin, and two retail facilities in Appleton and Madison, Wisconsin, on March 15, 2018.

The acquired net lease intangibles are comprised of in-place lease intangible assets totaling $13.1 million, which have a weighted-average expected life of 24.4 years, and an above-market rent intangible asset of $0.5 million, which has an expected life of 14.3 years.

Real Estate Under Construction

During the three months ended March 31, 2018, we capitalized real estate under construction totaling $16.8 million. As of March 31, 2018, we had four construction projects in progress, and as of December 31, 2017, we had five construction projects in progress. Aggregate unfunded commitments totaled approximately $130.7 million and $147.9 million as of March 31, 2018 and December 31, 2017, respectively.

During the three months ended March 31, 2018, we completed an expansion project at an education facility in Houston, Texas, in January 2018 at a cost totaling $21.1 million, including capitalized interest, of which $18.3 million was capitalized during 2017.

Dispositions of Properties

During the three months ended March 31, 2018, we sold four properties classified as Land, buildings and improvements subject to operating leases. As a result, the carrying value of our Land, buildings and improvements subject to operating leases decreased by $19.4 million from December 31, 2017 to March 31, 2018.

Future Dispositions of Real Estate

As of March 31, 2018, one tenant exercised its option to repurchase the property it is leasing from us pursuant to the terms of its lease agreement for $8.0 million, but there can be no assurance that such repurchase will be completed. At March 31, 2018, this property had an aggregate asset carrying value of $6.3 million.

Land, Buildings and Improvements — Operating Properties

At March 31, 2018 and December 31, 2017, Land, buildings and improvements attributable to operating properties consisted of our investments in one hotel and two hotels, respectively. During the first quarter of 2018, we reclassified one hotel to Assets held for sale (Note 16). Below is a summary of our Land, buildings and improvements attributable to operating properties (in thousands):



	March 31, 2018			December 31, 2017
Land	$	3,874		$	6,041
Buildings and improvements	36,286			77,006
Less: Accumulated depreciation	(7,069		)	(16,419		)
	$	33,091		$	66,628

Depreciation expense on our buildings and improvements attributable to operating properties was $1.1 million for both the three months ended March 31, 2018 and 2017. Accumulated depreciation of buildings and improvements attributable to operating properties is included in Accumulated depreciation and amortization in the consolidated financial statements.

Assets Held for Sale

Below is a summary of our properties held for sale (in thousands):



	March 31, 2018		December 31, 2017
Land, buildings and improvements, net	$	33,182	$	—
Assets held for sale	$	33,182	$	—

At March 31, 2018, we had one property classified as Assets held for sale with a carrying value of $33.2 million. This property was sold in April 2018 (Note 16).