3. Investment in Real Estate

Real estate by property type and segment includes the following:


	December 31,		December 31,
	2019		2018
Development property:
Residential real estate	$	115,384	$	105,323
Hospitality		12,229		3,726
Commercial leasing and sales		101,446		73,128
Forestry		1,880		2,144
Corporate		2,631		2,497
Total development property		233,570		186,818

Operating property:
Residential real estate		11,985		11,985
Hospitality		94,838		88,405
Commercial leasing and sales		143,400		111,471
Forestry		21,189		19,765
Other		50		50
Total operating property		271,462		231,676
Less: Accumulated depreciation		74,256		67,500
Total operating property, net		197,206		164,176
Investment in real estate, net	$	430,776	$	350,994

Development property consists of land the Company is developing or intends to develop for sale or future operations and includes direct costs associated with the land, development and construction costs and indirect costs. Residential real estate includes residential communities such as Watersound Origins, SouthWood, WindMark Beach, as well as other communities. Hospitality development property consists of land, construction costs, development costs and improvements primarily related to the Camp Creek Lifestyle Village amenity center, a new hotel in Pier Park and a new hotel near the Northwest Florida Beaches International Airport, as well as other properties. Commercial leasing and sales development property primarily consists of land, construction costs and development costs for commercial, multi-family, assisted living and industrial uses, including the Watercrest JV, Watersound Origins Crossings JV, Pier Park Crossings JV, Pier Park Crossings Phase II JV, Beckrich Office Park, land holdings near the Northwest Florida Beaches International Airport and Port of Port St. Joe as well as other properties. Development property in the hospitality and commercial leasing and sales segments will be reclassified as operating property as it is placed into service.

Operating property includes the following components:


		December 31,		December 31,
		2019		2018
Land and land improvements	$	83,995	$	75,663
Buildings and building improvements		174,712		144,730
Timber		12,755		11,283
		271,462		231,676
Less: Accumulated depreciation		74,256		67,500
Total operating property, net	$	197,206	$	164,176

Operating property includes property that the Company uses for operations and activities. Residential real estate operating property consists primarily of residential utility assets and certain rental properties. The hospitality operating property includes the WaterColor Inn, WaterSound Inn, golf courses, a beach club, marinas and certain vacation rental properties. Commercial leasing and sales operating property includes property developed or purchased by the Company and used for retail, multi-family and commercial rental purposes, including property in the Pier Park North JV, VentureCrossings, Pier Park Crossings JV and Beckrich Office Park as well as other properties. Forestry operating property includes the Company’s timberlands. Operating property may be sold in the future as part of the Company’s principal real estate business.

Depreciation expense related to real estate investments was $6.8 million, $6.0 million and $6.2 million in 2019, 2018 and 2017, respectively. Depletion and amortization expense related to the Company’s timber operations was $0.3 million in 2019 and $0.5 million in each 2018 and 2017.