Note 5 – Property and Equipment

Operating Property, net

As of September 30, 2018 and December 31, 2017, property associated with our operating activities is summarized as follows:



	September 30,		December 31,
(Dollars in thousands)	2018		2017
Land	$	76,472	$	76,457
Building and improvements		152,054		153,232
Leasehold improvements		55,277		48,481
Fixtures and equipment		163,433		145,033
Construction-in-progress		5,351		26,000
Total cost		452,587		449,203
Less: accumulated depreciation		(191,448)		(184,479)
Operating property, net	$	261,139	$	264,724

Depreciation expense for operating property was $5.4 million and $15.6 million for the quarter and nine months ended September 30, 2018 and $4.0 million and $11.8 million for the quarter and nine months ended September 30, 2017, respectively.

Investment and Development Property, net

As of September 30, 2018 and December 31, 2017, our investment and development property is summarized below:



	September 30,		December 31,
(Dollars in thousands)	2018		2017
Land	$	23,961	$	25,025
Building		1,900		1,900
Construction-in-progress (including capitalized interest)		54,225		34,329
Investment and development property	$	80,086	$	61,254

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 nine months ended September 30, 2018 are shown below:



(Dollars in thousands)	Balance, December 31, 2017		Additions during the period(1)		Completed during the period		Foreign currency translation		Balance, September 30, 2018
Union Square development	$	29,223	$	20,268	$	—	$	—	$	49,491
Newmarket Property development		370		561		(636)		(51)		244
Courtenay Central development		4,676		101		—		(309)		4,468
Cinema developments and improvements		19,015		11,441		(26,705)		(95)		3,656
Other real estate projects		7,045		3,564		(8,508)		(384)		1,717
Total	$	60,329	$	35,935	$	(35,849)	$	(839)	$	59,576

(1)

Includes capitalized interest of $720,000 and $2.1 million for the quarter and nine months ended September 30, 2018, respectively.

Real Estate Transactions

Sale of Land in Burwood, Australia

On December 14, 2017, we received $28.1 million (AU$36.6 million) representing the final payment with respect to the $50.6 million (AU$65.0 million) sale price of our property in Burwood, Victoria, Australia. Previously, partial payments of $16.6 million (AU$21.8 million) and $5.9 million (AU$6.5 million) were received on June 19, 2017 and May 23, 2014.

Purchase of Land in Townsville, Australia

On June 13, 2018, we acquired a 163,000 square foot (15,150 square meter) parcel of land at our Cannon Park ETC, in connection with the restructuring of our relationship with the adjacent land owner. Prior to the restructuring, this parcel was commonly owned by us and the adjoining land owner. In the restructuring, the adjoining land owner conveyed to us its interest in the parcel for AU$1. We granted the adjoining land owner certain access rights with respect to that parcel.

Purchase of Property in Auburn, Australia

On June 29, 2018, we purchased a property for $3.5 million (AU$ 4.5 million) in Auburn (Sydney area), Australia. Final settlement was made on October 11, 2018. The property which borders our Redyard ETC in Auburn on three sides to the east, west and south and consists of an approximately 16,830 square foot building located on an estimated 20,870 square foot lot, is subject to a lease to Telstra Corporation through September 2022. This will allow us time to plan for the efficient integration into our ETC. Including this acquisition, our Redyard ETC represents approximately 519,992 square feet (48,309 square meters) of land, with approximately 1,620 feet (498 meters) of uninterrupted frontage to Parramatta Road, a major Sydney arterial motorway.