Fair value is based on the price that would be received to sell an asset or the exit price that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level valuation

hierarchy prioritizes observable and unobservable inputs used to measure fair value. The fair value hierarchy consists of three broad levels, which are described below:

The estimated fair values of the Company’s financial instruments either recorded or disclosed on a recurring basis as of September 30, 2022 and December 31, 2021, are summarized as follows (dollars in thousands):

Fair Value at September 30, 2022, Using

Total

Quoted

Carrying

Prices in

Amount in

Active

Statement of

Markets

Significant

Financial

Fair Value

for Identical

Other

Significant

Position at

Estimate at

Assets or

Observable

Unobservable

September 30,

Liabilities

Inputs

2022 (a)

2022

(Level 1)

(Level 2)

(Level 3)

Description:

Notes receivable, net (b)

40,128

41,275

—

41,275

Equity securities (c)

7,664

—

Derivatives - Interest rate contracts (d)

16,117

—

16,117

—

Total assets

63,909

65,056

7,664

16,117

41,275

Secured debt instruments - fixed rate: (e)

Mortgage notes payable

1,029,572

898,145

—

898,145

Secured debt instruments - variable rate: (e)

Tax-exempt secured notes payable

27,000

—

27,000

Unsecured debt instruments: (e)

Working capital credit facility

41,181

—

41,181

Commercial paper program

425,000

—

425,000

Unsecured notes

4,131,556

3,366,736

—

3,366,736

Total liabilities

5,654,309

4,758,062

—

4,758,062

Redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership (f)

920,311

—

920,311

—


					Fair Value at December 31, 2021, Using
	Total				Quoted
	Carrying				Prices in
	Amount in				Active
	Statement of				Markets		Significant
	Financial		Fair Value		for Identical		Other		Significant
	Position at		Estimate at		Assets or		Observable		Unobservable
	December 31,		December 31,		Liabilities		Inputs		Inputs
	2021 (a)		2021		(Level 1)		(Level 2)		(Level 3)
Description:
Notes receivable, net (b)	$	26,860	$	27,372	$	—	$	—	$	27,372
Equity securities (c)		3,230		3,230		—		—		3,230
Derivatives - Interest rate contracts (d)		3,279		3,279		—		3,279		—
Total assets	$	33,369	$	33,881	$	—	$	3,279	$	30,602

Secured debt instruments - fixed rate: (e)
Mortgage notes payable	$	1,033,764	$	1,032,582	$	—	$	—	$	1,032,582
Secured debt instruments - variable rate: (e)
Tax-exempt secured notes payable		27,000		27,000		—		—		27,000
Unsecured debt instruments: (e)
Working capital credit facility		29,546		29,546		—		—		29,546
Commercial paper program		220,000		220,000		—		—		220,000
Unsecured notes		4,133,083		4,199,363		—		—		4,199,363
Total liabilities	$	5,443,393	$	5,508,491	$	—	$	—	$	5,508,491

Redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership (f)	$	1,299,442	$	1,299,442	$	—	$	1,299,442	$	—

(a)	Certain balances include fair market value adjustments and exclude deferred financing costs.

(b)	See Note 2, Significant Accounting Policies.

(c)

The Company holds a direct investment in a publicly traded real estate technology company, SmartRent, that was previously subject to a lock-up restriction on selling or transferring the investment, which expired in February 2022. The investment is valued at the market price on September 30, 2022 and as of December 31, 2021, was valued at the market price on December 31, 2021 less an illiquidity discount of 15.0%. Since the lock-up restriction expired, the Company currently classifies the investment as Level 1 in the fair value hierarchy. The Company previously classified the investment as Level 3 in the fair value hierarchy based upon the lock-up restriction. During the nine months ended September 30, 2022, the Company increased its direct investment in SmartRent due to stock distributions from its unconsolidated real estate technology investments.

(d)	See Note 11, Derivatives and Hedging Activity.

(e)	See Note 7, Secured and Unsecured Debt, Net.

(f)	See Note 9, Noncontrolling Interests.

Other than described in footnote (c) above, there were no transfers into or out of any of the levels of the fair value hierarchy during the nine months ended September 30, 2022.

Financial Instruments Carried at Fair Value

The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments (or receipts) are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves. The fair values of interest rate swaps and caps are determined using the market standard methodology of discounting the future expected cash receipts that would occur if variable interest rates

rise above the strike rate of the caps. The variable interest rates used in the calculation of projected receipts on the cap are based on an expectation of future interest rates derived from observable market interest rate curves and volatilities.

The Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Company has considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees.

Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties. However, as of September 30, 2022 and December 31, 2021, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives. As a result, the Company has determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy. In conjunction with the FASB’s fair value measurement guidance, the Company made an accounting policy election to measure the credit risk of its derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio.

Redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership have a redemption feature and are marked to their redemption value. The redemption value is based on the fair value of the Company’s common stock at the redemption date, and therefore, is calculated based on the fair value of the Company’s common stock at the balance sheet date. Since the valuation is based on observable inputs such as quoted prices for similar instruments in active markets, redeemable noncontrolling interests in the Operating Partnership and DownREIT Partnership are classified as Level 2.

Financial Instruments Not Carried at Fair Value

At September 30, 2022 and December 31, 2021, the fair values of cash and cash equivalents, restricted cash, accounts receivable, prepaids, real estate taxes payable, accrued interest payable, security deposits and prepaid rent, distributions payable and accounts payable approximated their carrying values because of the short term nature of these instruments. The estimated fair values of other financial instruments, which includes notes receivable and debt instruments, are classified in Level 3 of the fair value hierarchy due to the significant unobservable inputs that are utilized in their respective valuations.