COPT Defense Properties Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Properties, Net

Properties, Net

6 Months Ended

Jun. 30, 2019

Operating properties, net consisted of the following (in thousands):



	June 30, 2019			December 31, 2018
Land	$	460,138		$	503,274
Buildings and improvements	3,208,558			3,241,894
Less: Accumulated depreciation	(949,111		)	(897,903		)
Operating properties, net	$	2,719,585		$	2,847,265

Properties we had in development or held for future development consisted of the following (in thousands):



	June 30, 2019		December 31, 2018
Land	$	296,809	$	207,760
Development in progress, excluding land	177,978		195,601
Projects in development or held for future development	$	474,787	$	403,361

As of June 30, 2019, we were under contract to sell controlling interests in two data center shell properties in Virginia; we expect this sale to occur in the fourth quarter of 2019. The table below sets forth the components of assets held for sale on our consolidated balance sheet as of June 30, 2019 for these properties (in thousands):



Properties, net	$	53,386
Deferred rent receivable	1,028
Deferred leasing costs, net	34
Assets held for sale, net	$	54,448

2019 Dispositions

On June 20, 2019, through a series of transactions, we sold a 90% interest in seven data center shell properties in Virginia based on an aggregate property value of $265.0 million and retained a 10% interest in the properties through BREIT COPT DC JV LLC (“BREIT-COPT”), a newly-formed joint venture. Our partner in the joint venture acquired the 90% interest from us for $238.5 million. We account for our interest in the joint venture using the equity method of accounting as described further in Note 6. We recognized a gain on sale of $84.5 million.

2019 Construction Activities

During the six months ended June 30, 2019, we placed into service 777,000 square feet in seven newly-constructed properties (including two partially-operational properties) and 10,000 in one partially-operational property under redevelopment. As of June 30, 2019, we had 13 properties under construction (including two partially-operational properties), or which we were contractually committed to construct, that we estimate will total 2.1 million square feet upon completion and one partially-operational property under redevelopment that we estimate will total 106,000 square feet upon completion.