
4.	Real Estate, Real Estate Held for Sale and Lease Intangibles

The following table summarizes the carrying amounts for the Company’s investment in real estate (at cost) as of June 30, 2016 and December 31, 2015 (amounts in thousands):



	June 30, 2016			December 31, 2015
Land	$	5,835,195		$	5,864,046
Depreciable property:
Buildings and improvements	16,735,299			16,346,829
Furniture, fixtures and equipment	1,269,413			1,207,098
In-Place lease intangibles	469,679			483,160
Projects under development:
Land	188,563			284,995
Construction-in-progress	611,384			837,381
Land held for development:
Land	98,549			120,007
Construction-in-progress	39,672			38,836
Investment in real estate	25,247,754			25,182,352
Accumulated depreciation	(5,119,342		)	(4,905,406		)
Investment in real estate, net	$	20,128,412		$	20,276,946

The following table summarizes the carrying amounts for the Company's above and below market ground and retail lease intangibles as of June 30, 2016 and December 31, 2015 (amounts in thousands):



Description	Balance Sheet Location	June 30, 2016			December 31, 2015
Assets
Ground lease intangibles – below market	Other Assets	$	178,251		$	178,251
Retail lease intangibles – above market	Other Assets	1,260			1,260
Lease intangible assets		179,511			179,511
Accumulated amortization		(15,712		)	(13,451		)
Lease intangible assets, net		$	163,799		$	166,060

Liabilities
Ground lease intangibles – above market	Other Liabilities	$	2,400		$	2,400
Retail lease intangibles – below market	Other Liabilities	5,270			5,270
Lease intangible liabilities		7,670			7,670
Accumulated amortization		(3,967		)	(3,414		)
Lease intangible liabilities, net		$	3,703		$	4,256

During the six months ended June 30, 2016 and 2015, the Company amortized approximately $2.2 million and $2.2 million, respectively, of above and below market ground lease intangibles which is included (net increase) in property and maintenance expense in the accompanying consolidated statements of operations and comprehensive income and approximately $0.5 million and $0.5 million, respectively, of above and below market retail lease intangibles which is included (net increase) in rental income in the accompanying consolidated statements of operations and comprehensive income. During the quarters ended June 30, 2016 and 2015, the Company amortized approximately $1.1 million and $1.1 million, respectively, of above and below market ground lease intangibles which is included (net increase) in property and maintenance expense in the accompanying consolidated statements of operations and comprehensive income and approximately $0.3 million and $0.3 million, respectively, of above and below market retail lease intangibles which is included (net increase) in rental income in the accompanying consolidated statements of operations and comprehensive income.

The following table provides a summary of the aggregate amortization expense for above and below market ground lease intangibles and retail lease intangibles for each of the next five years (amounts in thousands):



	Remaining
	2016			2017			2018			2019			2020			2021

Ground lease intangibles	$	2,161		$	4,321		$	4,321		$	4,321		$	4,321		$	4,321
Retail lease intangibles	(444		)	(540		)	(71		)	(71		)	(71		)	(67		)
Total	$	1,717		$	3,781		$	4,250		$	4,250		$	4,250		$	4,254

Acquisitions and Dispositions

During the six months ended June 30, 2016, the Company acquired the entire equity interest in the following from unaffiliated parties (purchase price in thousands):



	Properties	Apartment Units	Purchase Price
Rental Properties – Consolidated (1)	3	479	$	204,134
Total	3	479	$	204,134


(1)	Purchase price includes an allocation of approximately $80.9 million to land and $123.2 million to depreciable property.

During the six months ended June 30, 2016, the Company disposed of the following to unaffiliated parties (sales price in thousands):



	Properties	Apartment Units	Sales Price
Rental Properties – Consolidated (1)	83	26,890	$	6,427,403
Land Parcels – Consolidated	—	—	27,455
Total	83	26,890	$	6,454,858


(1)	Includes the Starwood Portfolio sale (see further discussion below) representing 72 operating properties consisting of 23,262 apartment units for $5.365 billion.

The Company recognized a net gain on sales of real estate properties of approximately $3.8 billion (inclusive of $3.2 billion on the Starwood Portfolio sale) and a net gain on sales of land parcels of approximately $11.7 million on the above sales.

Starwood Disposition

Following the approval by the Company's Board of Trustees, the Company executed an agreement with controlled affiliates of Starwood Capital Group ("Starwood") on October 23, 2015 to sell a portfolio of 72 operating properties consisting of 23,262 apartment units located in five markets across the United States for $5.365 billion (the "Starwood Transaction" or "Starwood Portfolio"). As of December 31, 2015, Starwood had deposited $250.0 million in cash into escrow as earnest money, which was non-refundable unless the Company defaulted on the sales agreement. On January 26 and 27, 2016, the Company closed on the sale of the entire portfolio described above. As a result, the Starwood Transaction met the held for sale criteria at December 31, 2015. In accordance with this classification, the Company ceased depreciation on all assets in the Starwood Portfolio as of November 1, 2015 and the following assets were classified as held for sale in the accompanying consolidated balance sheets at December 31, 2015 (amounts in thousands):



	December 31, 2015
Land	$	602,737
Depreciable property:
Buildings and improvements	2,386,489
Furniture, fixtures and equipment	335,565
In-Place lease intangibles	35,554
Real estate held for sale before accumulated depreciation	3,360,345
Accumulated depreciation	(1,179,210		)
Real estate held for sale	$	2,181,135

The following table provides the operating segments/locations of the properties and apartment units sold in the Starwood Transaction, which represents substantially all of the assets in the Company's South Florida and Denver markets and certain assets in the Washington D.C., Seattle and Los Angeles markets. The sale of these properties represents the continuation of the Company's long-term strategy of investing in high barrier to entry urban markets. See Note 11 for further discussion.



Markets/Metro Areas	Properties	Apartment Units
South Florida	33	10,742
Denver	18	6,635
Washington D.C.	10	3,020
Seattle	8	1,721
Los Angeles	3	1,144
Total	72	23,262

The Company used proceeds from the Starwood Transaction and other sales discussed above to pay a special dividend of $8.00 per share/unit (approximately $3.0 billion) on March 10, 2016 to shareholders and holders of OP Units of record as of March 3, 2016. The Company used the majority of the remaining proceeds to reduce aggregate indebtedness in order to make the transaction leverage neutral. See Note 8 for further discussion.