Investment in Real Estate

Real estate by property type and segment includes the following:



	December 31, 2014		December 31, 2013
Development property:
Residential real estate	102,411		130,616
Commercial real estate	59,405		58,659
Resorts, leisure and leasing operations ⁽¹⁾	3,207		28,737
Forestry	3,278		8,976
Corporate	2,491		2,366
Total development property	170,792		229,354

Operating property:
Residential real estate	$	1,544	$	2,071
Resorts, leisure and leasing operations ⁽²⁾	188,721		146,624
Forestry	18,839		58,170
Other	48		45
Total operating property	209,152		206,910
Less: Accumulated depreciation	58,132		53,496
Net operating property	151,020		153,414

Investment in unconsolidated affiliates	—		2,241
Investment in real estate, net	$	321,812	$	385,009



(1	)	Includes $3.1 million and $28.4 million for the Pier Park North joint venture as of December 31, 2014 and 2013, respectively.
(2	)	Includes $41.6 million for the Pier Park North joint venture as of December 31, 2014.

Development property consists of land the Company is developing or intends to develop for sale or future operations. Residential real estate includes mixed-use resort, primary and seasonal residential communities and includes costs directly associated with the land, development and construction of these communities, including common development costs such as roads, sewers, and amenities and indirect costs such as development overhead, capitalized interest, marketing and project administration. Commercial real estate includes land for commercial and industrial uses, including land holdings near the Northwest Florida Beaches International Airport, and includes costs directly associated with the land and development costs, which also include common development costs such as roads and sewers. Resorts, leisure and leasing development property primarily includes the land and construction under development for the consolidated joint venture at Pier Park North. As the remainder of the operations commence at Pier Park North, substantially all of the Pier Park North property included in development property as of December 31, 2014 will be reclassified as operating property.

Operating property includes the following components:



	December 31, 2014		December 31, 2013		Estimated Useful Life (in years)
Land and land improvements	$	72,284	$	74,070	5 - 20
Buildings and building improvements	127,577		99,417		20 - 40
Timber	9,291		33,423		N/A
	209,152		206,910
Less: Accumulated depreciation	58,132		53,496
Total operating property, net	151,020		153,414

Operating property includes property that the Company uses for daily operations and activities. The resorts, leisure and leasing operating property includes the WaterColor Inn, golf courses and marinas. Also included in resorts, leisure and leasing operating property is property developed by the Company and used for retail and commercial rental purposes, including property in our consolidated joint venture at Pier Park North. The increase in resorts, leisure and leasing operating property, and corresponding decrease in resorts, leisure and leasing development property as compared to December 31, 2013, is primarily attributable to the completion of development of a portion of the property owned by the Company’s Pier Park North joint venture. Operating property may be sold in the future as part of the Company’s principal real estate business. Forestry operating property includes the Company’s timberlands.

Investment in unconsolidated affiliates reflects the Company’s investment in the East San Marco L.L.C. (“ESM”) real estate joint venture. The Company sold all its ownership interest in ESM to its joint venture partner in 2014 in exchange for a $3.0 million promissory note that was due and paid before December 31, 2014. See Note 9, Real Estate Joint Ventures.

Depreciation expense related to real estate investments was $5.7 million, $5.3 million, and $5.9 million in 2014, 2013 and 2012, respectively. Depletion expense related to our timber operations was $0.5 million, $1.2 million, and $1.6 million in 2014, 2013 and 2012, respectively.