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Fair Value Measurements | 12 Months Ended
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Dec. 31, 2020
Fair Value Disclosures [Abstract] |
Fair Value Measurements |
11. | Fair Value Measurements
| (a) | Disclosure of Fair Value of Financial Instruments
All financial instruments of the Company are reflected in the accompanying Consolidated Balance Sheets at amounts which, in management's estimation, reasonably approximates their fair values, except for the following:
|  | December 31, |
|  | 2020 |  |  | 2019 |
(in thousands) |  | Carrying Amount |  |  | Fair Value |  |  | Carrying Amount |  |  | Fair Value |
Financial liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Notes payable |  | $ | 3,658,405 |  |  |  | 4,102,382 |  |  | $ | 3,435,161 |  |  |  | 3,688,604 |
Unsecured credit facilities |  | $ | 264,679 |  |  |  | 265,226 |  |  | $ | 484,383 |  |  |  | 489,496 |
The above fair values represent management's estimate of the amounts that would be received from selling those assets or that would be paid to transfer those liabilities in an orderly transaction between market participants as of December 31, 2020 and 2019, respectively. These fair value measurements maximize the use of observable inputs. However, in situations where there is little, if any, market activity for the asset or liability at the measurement date, the fair value measurement reflects the Company's own judgments about the assumptions that market participants would use in pricing the asset or liability. The Company develops its judgments based on the best information available at the measurement date, including expected cash flows, appropriately risk-adjusted discount rates, and available observable and unobservable inputs. Service providers involved in fair value measurements are evaluated for competency and qualifications on an ongoing basis. As considerable judgment is often necessary to estimate the fair value of these financial instruments, the fair values presented above are not necessarily indicative of amounts that will be realized upon disposition of the financial instruments.
| (b) | Fair Value Measurements
The following financial instruments are measured at fair value on a recurring basis: Securities The Company has investments in marketable securities that are included within Other assets on the accompanying Consolidated Balance Sheets. The fair value of the securities was determined using quoted prices in active markets, which are considered Level 1 inputs of the fair value hierarchy. Changes in the value of securities are recorded within Net investment (income) loss in the accompanying Consolidated Statements of Operations, and includes unrealized (gains) losses of ($3.0) million, ($3.8) million, and $3.3 million for the years ended December 31, 2020, 2019, and 2018, respectively. Available-for-Sale Debt Securities Available-for-sale debt securities consist of investments in certificates of deposit and corporate bonds, and are recorded at fair value using matrix pricing methods to estimate fair value, which are considered Level 2 inputs of the fair value hierarchy. Unrealized gains or losses on these debt securities are recognized through other comprehensive income. Interest Rate Derivatives The fair value of the Company's interest rate derivatives is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied 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. 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 the Company and its counterparties. 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 interest rate swaps. As a result, the Company determined that its interest rate swaps valuation in its entirety is classified in Level 2 of the fair value hierarchy. The following tables present the placement in the fair value hierarchy of assets and liabilities that are measured at fair value on a recurring basis:
|  | Fair Value Measurements as of December 31, 2020 |
(in thousands) |  | Balance |  |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  |  | Significant Other Observable Inputs (Level 2) |  |  | Significant Unobservable Inputs (Level 3) |
Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Securities |  | $ | 44,986 |  |  |  | 44,986 |  |  |  | — |  |  |  | — |
Available-for-sale debt securities |  |  | 15,706 |  |  |  | — |  |  |  | 15,706 |  |  |  | — |
Total |  | $ | 60,692 |  |  |  | 44,986 |  |  |  | 15,706 |  |  |  | — |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate derivatives |  | $ | (9,291 | ) |  |  | — |  |  |  | (9,291 | ) |  |  | — |
|  | Fair Value Measurements as of December 31, 2019 |
(in thousands) |  | Balance |  |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  |  | Significant Other Observable Inputs (Level 2) |  |  | Significant Unobservable Inputs (Level 3) |
Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Securities |  | $ | 39,599 |  |  |  | 39,599 |  |  |  | — |  |  |  | — |
Available-for-sale debt securities |  |  | 10,755 |  |  |  | — |  |  |  | 10,755 |  |  |  | — |
Interest rate derivatives |  |  | 2,987 |  |  |  | — |  |  |  | 2,987 |  |  |  | — |
Total |  | $ | 53,341 |  |  |  | 39,599 |  |  |  | 13,742 |  |  |  | — |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate derivatives |  | $ | (1,515 | ) |  |  | — |  |  |  | (1,515 | ) |  |  | — |
The following tables present the placement in the fair value hierarchy of assets and liabilities that are measured at fair value on a non-recurring basis:
|  | Fair Value Measurements as of December 31, 2020 |
(in thousands) |  | Balance |  |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  |  | Significant Other Observable Inputs (Level 2) |  |  | Significant Unobservable Inputs (Level 3) |  |  | Total Gains (Losses) |
Operating properties |  | $ | 25,000 |  |  |  | — |  |  |  | 25,000 |  |  |  | — |  |  |  | (17,532 | )
|  | Fair Value Measurements as of December 31, 2019 |
(in thousands) |  | Balance |  |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  |  | Significant Other Observable Inputs (Level 2) |  |  | Significant Unobservable Inputs (Level 3) |  |  | Total Gains (Losses) |
Operating properties |  | $ | 71,131 |  |  |  | — |  |  |  | 28,131 |  |  |  | 43,000 |  |  |  | (50,553 | )
During the years ended December 31, 2020 and 2019, the Company recorded Provision for impairment of $17.5 million and $40.3 million, respectively, on one operating property which is classified as held and used. The property, which is located in the Manhattan market of New York City, was impaired during 2019 as a result of a fair value analysis performed based on lease up expectations after its single retail tenant declared bankruptcy. As the pandemic continued to impact the leasing market, limiting visibility for replacement prospects for this property, the hold period probabilities shifted triggering further evaluation of the current fair value resulting in the additional impairment charge during the fourth quarter of 2020. The 2019 fair value was derived using a discounted cash flow model, which included assumptions around redevelopment of the asset to its highest and best use as a mixed-use project and re-leasing the space. The discount rate of 8.58% and terminal capitalization rate of 4.75% used in the discounted cash flow model are considered significant inputs and assumptions to estimating the fair value of the property, which is considered a Level 3 input per the fair value hierarchy. The 2020 fair value was based on third-party offers for the property and is reflected in the above Level 2 fair value hierarchy. During the year ended December 31, 2019, the Company also recorded a $10.2 million Provision for impairment on one operating property which was classified as held and used and resulted in a fair value of $28.1 million. That operating property is classified as held for sale at December 31, 2020. The property was remeasured to fair value based on its expected selling price and is reflected in the above Level 2 fair value hierarchy.

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- 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 Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=117815213&loc=d3e19207-110258 + Details
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