
	June 30, 2021		December 31, 2020
Land	$	2,127,388	$	2,012,688
Buildings and improvements	9,314,308		8,724,064
Real estate under construction	95,953		119,391
Less: Accumulated depreciation	(1,329,907)		(1,206,912)
	$	10,207,742	$	9,649,231

During the six months ended June 30, 2021, the U.S. dollar strengthened against the euro, as the end-of-period rate for the U.S. dollar in relation to the euro decreased by 3.2% to $1.1884 from $1.2271. As a result of this fluctuation in foreign currency exchange rates, the carrying value of our Land, buildings and improvements subject to operating leases decreased by $86.7 million from December 31, 2020 to June 30, 2021.

In connection with a change in lease classification due to a modification of the underlying lease, we reclassified one property with an aggregate carrying value of $13.8 million from Net investments in direct financing leases to Land, buildings and improvements during the six months ended June 30, 2021 (Note 5).

Depreciation expense, including the effect of foreign currency translation, on our buildings and improvements subject to operating leases was $69.4 million and $62.1 million for the three months ended June 30, 2021 and 2020, respectively, and $136.4 million and $128.0 million for the six months ended June 30, 2021 and 2020, respectively.

During the six months ended June 30, 2021, we determined that the tenant/seller in the January 2020 acquisition of an industrial facility in Aurora, Oregon, would not be able to secure an easement on the property. As a result, the tenant/seller forfeited $5.0 million of the initial purchase price that we held back at the time of acquisition, the release of which was contingent on securing the easement. Since we previously accounted for this as a contingent liability and included the $5.0 million holdback within our capitalized real estate, we reduced the carrying value of Land, buildings and improvements subject to operating leases by this amount during the six months ended June 30, 2021 and removed the corresponding liability from Accounts payable, accrued expenses and other liabilities on our consolidated balance sheets.


Property Location(s)	Number of Properties	Date of Acquisition	Property Type	Total Capitalized Costs
Grove City, Ohio, and Anderson, South Carolina	2	2/2/2021	Warehouse	$	19,129
Various, New Jersey and Pennsylvania (a)	10	2/11/2021	Retail; Office	55,115
Central Valley, California (b)	4	2/11/2021	Warehouse; Land	75,008
Various, France (c) (d)	3	4/1/2021	Retail	119,341
Searcy, Arkansas	1	4/14/2021	Industrial	14,038
Detroit, Michigan	1	4/27/2021	Warehouse	52,810
Solihull, United Kingdom (c) (d)	1	5/4/2021	Warehouse	194,954
New Rochelle, New York	1	5/5/2021	Student Housing (Net Lease)	26,109
Groveport, Ohio	1	5/5/2021	Industrial	27,133
Dakota, Illinois	1	5/12/2021	Industrial	65,043
San Jose, California	1	5/13/2021	Industrial	51,949
Opelika, Alabama	1	6/7/2021	Warehouse	48,897
Niles and Elk Grove Village, IL; and Guelph, Canada	3	6/9/2021	Warehouse	42,829
Rome, NY	1	6/10/2021	Warehouse	44,781
	31			$	837,136

(c)We also recorded estimated deferred tax liabilities of (i) $8.8 million on the France investment and (ii) $3.6 million on the United Kingdom investment, with corresponding increases to the asset values, due to tax and GAAP temporary differences established in connection with the acquisitions.


	Total Capitalized Costs
Land	$	124,865
Buildings and improvements	608,242
Intangibles:
In-place lease (weighted-average expected life of 22.3 years)	133,624
Below-market rent (weighted-average expected life of 11.1 years)	(9,995)
Land lease right-of-use assets	1,824
Prepaid rent liabilities	(15,445)
Operating lease liabilities	(5,979)
	$	837,136

As of June 30, 2021, we committed to purchase a food production facility in Lawrence, Kansas, for approximately $27.3 million upon completion of construction of the property, which is expected to take place during the fourth quarter of 2021.

During the six months ended June 30, 2021, we capitalized real estate under construction totaling $39.0 million. The number of construction projects in progress with balances included in real estate under construction was three and five as of June 30, 2021 and December 31, 2020, respectively. Aggregate unfunded commitments totaled approximately $61.3 million and $81.8 million as of June 30, 2021 and December 31, 2020, respectively.

Property Location(s)

Primary Transaction Type

Number of Properties

Date of Completion

Property Type

Total Capitalized Costs (a)

Mason, Ohio

Expansion

1/15/2021

Office

2,428

Langen, Germany (a)

Build-to-suit

2/4/2021

Industrial

52,719

San Donato Milanese, Italy (a)

Renovation

6/30/2021

Retail; Office

7,244

62,391

As of June 30, 2021, we committed to fund a build-to-suit project for a research center in Wageningen, the Netherlands, for an aggregate amount of $29.9 million (based on the exchange rate of the euro at June 30, 2021). We currently expect to complete the project in the first quarter of 2022.

During the six months ended June 30, 2021, we sold four properties, which were 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 $10.4 million from December 31, 2020 to June 30, 2021.

2021 — For the three and six months ended June 30, 2021, lease termination income and other on our consolidated statements of income included: (i) lease-related settlements totaling $4.4 million and $5.3 million, respectively; (ii) interest income of $1.2 million and $1.8 million, respectively, from our loans receivable (Note 5); and (iii) income from a parking garage attached to one of our net-leased properties totaling $0.4 million and $0.9 million, respectively.

2020 — For the three and six months ended June 30, 2020, lease termination income and other on our consolidated statements of income included: (i) income of $1.0 million and $4.2 million, respectively, related to a lease restructuring in May 2019 that led to the recognition of rent receipts during the first and second quarters of 2020 on claims that were previously deemed uncollectible; (ii) income from a parking garage attached to one of our net-leased properties totaling $0.3 million and $1.3 million, respectively; (iii) interest income from our loans receivable totaling $1.0 million during the six months ended June 30, 2020 (we did not recognize income from our loans receivable during the three months ended June 30, 2020, since such income was deemed uncollectible as a result of the COVID-19 pandemic) (Note 5); and (iv) lease termination income of $0.6 million recognized during the six months ended June 30, 2020.


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Lease income — fixed	$	261,704	$	236,997	$	519,031	$	475,965
Lease income — variable (a)	27,360		24,472		54,698		47,552
Total operating lease income (b)	$	289,064	$	261,469	$	573,729	$	523,517

(a)Includes (i) rent increases based on changes in the U.S. Consumer Price Index (“CPI”) and other comparable indices and (ii) reimbursements for property taxes, insurance, and common area maintenance services.

(b)Excludes $16.2 million and $18.8 million for the three months ended June 30, 2021 and 2020, respectively, and $33.3 million and $38.9 million for six months ended June 30, 2021 and 2020, respectively, of interest income from direct financing leases that is included in Lease revenues in the consolidated statements of income.

At both June 30, 2021, and December 31, 2020, Land, buildings and improvements attributable to operating properties consisted of our investments in ten consolidated self-storage properties and one consolidated hotel. Below is a summary of our Land, buildings and improvements attributable to operating properties (in thousands):

Depreciation expense on our buildings and improvements attributable to operating properties was $0.7 million for both the three months ended June 30, 2021 and 2020, and $1.4 million for both the six months ended June 30, 2021 and 2020.


	June 30, 2021		December 31, 2020
Land, buildings and improvements	$	8,334	$	14,051
In-place lease intangible assets and other, net	—		12,754
Above-market rent intangible assets	—		518
Accumulated depreciation and amortization	(2,652)		(8,733)
Assets held for sale, net	$	5,682	$	18,590

At June 30, 2021, we had one property classified as Assets held for sale, net, with an aggregate carrying value of $5.7 million. This property was sold in July 2021 (Note 16). At December 31, 2020, we had four properties classified as Assets held for sale, net, with an aggregate carrying value of $18.6 million. All of these properties were sold in 2021.