Note 5 – Property and Equipment

Operating Property, net

As of March 31, 2017 and December 31, 2016, property associated with our operating activities is summarized as follows:


	March 31,		December 31,
(Dollars in thousands)	2017		2016
Land	$	75,577	$	73,803
Building and improvements		127,273		122,863
Leasehold improvements		48,171		46,902
Fixtures and equipment		122,963		118,180
Construction-in-progress		11,805		11,517
Total cost		385,789		373,265
Less: accumulated depreciation		(169,431)		(161,379)
Operating property, net	$	216,358	$	211,886

Depreciation expense for operating property was both $3.5 million for the quarter ended March 31, 2017 and March 31, 2016.

Investment and Development Property

As of March 31, 2017 and December 31, 2016, our investment and development property is summarized below:


	March 31,		December 31,
(Dollars in thousands)	2017		2016
Land	$	24,791	$	24,616
Building		1,900		1,900
Construction-in-progress (including capitalized interest)		23,540		17,171
Investment and development property	$	50,231	$	43,687

Construction-in-Progress – Operating and Investing Properties

Construction-in-Progress balances are included in both our operating and development properties. The balances of our major projects along with the movements for the quarter ended March 31, 2017 are shown below:


(Dollars in thousands)	Balance, December 31, 2016	Additions during the quarter(1)	Completed during the quarter	Foreign currency movements	Balance, March 31, 2017
Union Square development	$11,412	$4,259	$	--	$15,671
Newmarket Property development	2,106	1,714	--	131	$3,951
Courtenay Central development	3,510	232	--	20	$3,762
Cinema developments and improvements	7,796	87	(959)	20	$6,944
Other real estate projects	3,864	1,461	(383)	75	$5,017
Total	$28,688	$7,753	$ (1,342)	$246	$35,345

(1) Includes capitalized interest of $155,000 for the quarter ended March 31, 2017.

Real Estate Transactions

New Corporate Headquarters in Los Angeles

On April 11, 2016, we purchased a 24,000 square foot office building with 72 parking spaces located at 5995 Sepulveda Boulevard in Culver City, California for $11.2 million. The terms and circumstances of this acquisition were not considered to meet the definition of a business combination in accordance with U.S. GAAP. We currently use approximately 50% of the leasable area for our headquarters offices and intend to lease, over time, the remainder to unaffiliated third parties.

Sale of Landholding in Burwood, Australia

On May 12, 2014, we entered into a contract to sell our undeveloped 50.6 acre parcel in Burwood, Victoria, Australia, to Australand Holdings Limited (now known as Frasers Property Australia) for a purchase price of $50.6 million (AU$65.0 million). We received $5.9 million (AU$6.5 million) on May 23, 2014. The remaining purchase price of $44.7 million (AU$58.5 million) is due on December 31, 2017.

The agreement provides for mandatory pre-payments in the event that any of the land is sold by the buyer, any such prepayment being in an amount equal to the greater of (a) 90% of the net sales price or (b) the balance of the purchase price multiplied by a fraction the numerator of which is the square footage of property being sold by the buyer and the denominator of which is the original square footage of the property being sold to the buyer. The agreement does not provide for the payment of interest on the balance owed.

Our book value in the property is $39.8 million (AU$52.1 million) and $37.7 million (AU$52.1 million) as of March 31, 2017 and December 31, 2016, respectively (the difference being attributable solely to currency fluctuations). While the transaction was treated as a sale for tax purposes in 2014, it does not qualify as a sale under US GAAP until the receipt of the payment of the balance of the purchase price due on December 31, 2017 (or earlier depending upon whether any prepayment obligation is triggered). The asset is classified as land held for sale (current) on our consolidated balance sheets both as of March 31, 2017 and December 31, 2016.

Sale of Properties in Taupo, New Zealand

On April 1, 2015, we entered into two definitive purchase and sale agreements to sell our properties at Taupo, New Zealand for a combined sales price of $2.4 million (NZ$3.4 million). The first agreement related to a property with a sales price of $1.6 million (NZ$2.2 million) and a book value of $1.3 million (NZ$1.8 million), which closed on April 30, 2015 when we received the sales price in full. The other agreement related to a property with a sales price of $831,000 (NZ$1.2 million) and a book value of $426,000 (NZ$615,000) which was completed and for which we received cash settlement representing the full sales price on March 31, 2016. The first transaction qualified as a sale under both U.S. GAAP and tax purposes during the year-ended December 31, 2015. The second transaction was recorded as a sale during the quarter ended March 31, 2016.