Investment in Real Estate, Net

12 Months Ended

Dec. 31, 2022

Investment in Real Estate, Net

Investment in Real Estate, Net

3. Investment in Real Estate, Net

Investment in real estate, net, excluding unconsolidated JVs, by property type and segment includes the following:

	December 31,		December 31,
	2022		2021
Development property:
Residential	$	171,504	$	122,404
Hospitality		200,209		137,089
Commercial		131,133		85,931
Other		3,618		3,232
Total development property		506,464		348,656
Operating property:
Residential		7,854		7,854
Hospitality		221,542		124,449
Commercial		356,242		296,193
Other		127		127
Total operating property		585,765		428,623
Less: Accumulated depreciation		95,968		87,166
Total operating property, net		489,797		341,457
Investment in real estate, net	$	996,261	$	690,113

Investment in real estate, net is carried at cost, net of depreciation and timber depletion, unless circumstances indicate that the carrying value of the assets may not be recoverable.

Development property consists of land the Company is developing or intends to develop for sale, lease or future operations and includes direct costs associated with the land, as well as development, construction and indirect costs. Residential development property includes existing and planned residential homesites and related infrastructure. Hospitality development property consists of land, improvements and construction and development costs primarily related to uncompleted hotels, resorts and club amenities. Commercial development property primarily consists of land and construction and development costs for planned commercial, multi-family and industrial uses. Development property in the hospitality and commercial segments will be reclassified as operating property as it is placed into service.

Operating property includes the following components:

		December 31,		December 31,
		2022		2021
Land and land improvements	$	146,257	$	111,698
Buildings and building improvements		425,347		303,335
Timber		14,161		13,590
		585,765		428,623
Less: Accumulated depreciation		95,968		87,166
Total operating property, net	$	489,797	$	341,457

Operating property includes property that the Company uses for operations and activities. Residential operating property consists primarily of residential utility assets and certain rental properties. Hospitality operating property primarily consists of existing hotels, resorts, clubs, vacation rental homes, marinas and other operations. Commercial operating property includes property used for retail, office, self-storage, light industrial, multi-family, senior living, commercial rental, vacation rental and timber purposes. Operating property may be sold in the future as part of the Company’s principal real estate business. As of December 31, 2022 and 2021, operating property, net related to operating leases was $285.1 million and $230.0 million, respectively.

In December 2022, the Company acquired The Pearl Hotel property for a purchase price of $52.0 million. The Pearl Hotel acquisition was accounted for as an asset acquisition in accordance with ASC Topic 805 Business Combinations. The Company allocated the purchase price based on the relative fair value of each acquired component. Costs related to the acquisition were capitalized and included in the cost basis of the asset. The allocation of the purchase price and costs primarily consisted of $49.3 million for the building and land included within operating property, net and $3.0 million included within property and equipment, net. There were no in-place leases at the acquisition date. See Note 10. Debt, Net for additional information regarding financing related to the asset acquisition.

Depreciation expense related to real estate investments was $13.9 million, $11.7 million and $8.3 million in 2022, 2021 and 2020, respectively. Depletion and amortization expense related to the Company’s timber operations was $0.4 million, $0.3 million and $0.4 million in 2022, 2021 and 2020, respectively.