Fair Value Measurements

3 Months Ended

Mar. 31, 2020

Note 11—Fair Value Measurements

The carrying amounts of restricted cash, certain components of other assets, accounts payable and accrued expenses, resident security deposits, and certain components of other liabilities approximate fair value due to the short maturity of these amounts. Our interest rate swap agreements and interest rate cap agreements are the only financial instruments recorded at fair value on a recurring basis within our condensed consolidated financial statements. The fair values of our interest rate caps and swaps, which are classified as Level 2 in the fair value hierarchy, are estimated using market values of instruments with similar attributes and maturities. See Note 7 for the details of the condensed balance sheet classification and the fair values for the interest rate caps and swaps.

The following table displays the carrying values and fair values of financial instruments as of March 31, 2020 and December 31, 2019:



		March 31, 2020				December 31, 2019
		Carrying Value		Fair Value		Carrying Value		Fair Value
Assets carried at historical cost on the condensed consolidated balance sheets:
Investments in debt securities⁽¹⁾	Level 2	$	311,540	$	292,611	$	316,991	$	318,299

Liabilities carried at historical cost on the condensed consolidated balance sheets:
Mortgage loans⁽²⁾	Level 2	$	6,159,108	$	5,787,279	$	6,266,407	$	6,292,261
Secured Term Loan⁽³⁾	Level 3	403,464		398,456		403,464		411,213
Term Loan Facility⁽⁴⁾	Level 3	1,500,000		1,471,179		1,500,000		1,500,444
Revolving Facility	Level 3	270,000		264,805		—		—
Convertible Senior Notes⁽⁵⁾	Level 3	335,559		347,569		334,299		346,489


(1)	The carrying values of investments in debt securities are shown net of discount.


(2)	The carrying values of the mortgage loans are shown net of discount and exclude $21,364 and $27,946 of deferred financing costs as of March 31, 2020 and December 31, 2019, respectively.


(3)	The carrying value of the Secured Term Loan excludes $2,431 and $2,486 of deferred financing costs as of March 31, 2020 and December 31, 2019, respectively.


(4)	The carrying value of the Term Loan Facility excludes $5,531 and $6,253 of deferred financing costs as of March 31, 2020 and December 31, 2019, respectively.


(5)	The carrying values of the Convertible Senior Notes include unamortized discounts of $9,441 and $10,701 as of March 31, 2020 and December 31, 2019, respectively.

The fair values of our investment in debt securities and mortgage loans, which are classified as Level 2 in the fair value hierarchy, are estimated based on market bid prices of comparable instruments at the end of the period. The following table displays the significant unobserverable inputs used to develop our Level 3 fair value measurements as of March 31, 2020:



	Quantitative Information about Level 3 Fair Value Measurement⁽¹⁾
	Fair Value		Valuation Technique	Unobservable Input	Rate
Secured Term Loan	$	398,456	Discounted Cash Flow	Effective Rate	3.72%
Term Loan Facility	1,471,179		Discounted Cash Flow	Effective Rate	3.01	%	—	3.83%
Revolving Facility	264,805		Discounted Cash Flow	Effective Rate	3.06	%	—	3.82%
Convertible Senior Notes	347,569		Discounted Cash Flow	Effective Rate	3.07%


(1)	Our Level 3 fair value instruments require interest only monthly payments.

Our assets measured at fair value on a nonrecurring basis are those assets for which we have recorded impairments. The assets for which we have recorded impairments, measured at fair value on a nonrecurring basis, are summarized below:



	For the Three Months Ended March 31,
	2020		2019
Investments in single-family residential properties, net held for use (Level 3):
Pre-impairment amount	$	—	$	240
Total impairments	—		(30		)
Fair value	$	—	$	210



	For the Three Months Ended March 31,
	2020			2019
Investments in single-family residential properties, net held for sale (Level 3):
Pre-impairment amount	$	10,800		$	19,024
Total impairments	(2,471		)	(3,223		)
Fair value	$	8,329		$	15,801

For additional information related to our single-family residential properties as of March 31, 2020 and December 31, 2019, refer to Note 3.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details