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Disclosure About Fair Value of Financial Instruments | 9 Months Ended
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Sep. 30, 2015
Fair Value Disclosures [Abstract] |
Disclosure About Fair Value of Financial Instruments | Disclosure About Fair Value of Financial Instruments The following summarizes the three levels of inputs that we use to measure fair value. Level 1. Quoted prices in active markets for identical assets or liabilities. Our Level 1 asset is our investment in marketable securities that we use to pay benefits under our non-qualified deferred compensation plan. Our Level 1 liability is our non-qualified deferred compensation obligation. The Company's Level 1 noncontrolling interests in the Operating Partnership relate to the ownership of Common Units by various individuals and entities other than the Company. Level 2. Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities. Our Level 2 asset is the fair value of certain of our mortgages and notes receivable. Our Level 2 liabilities include the fair value of our mortgages and notes payable and interest rate swaps. The fair value of mortgages and notes receivable and mortgages and notes payable is estimated by the income approach utilizing contractual cash flows and market-based interest rates to approximate the price that would be paid in an orderly transaction between market participants. The fair value of interest rate swaps is determined using the market standard methodology of netting the discounted future fixed cash receipts and the discounted expected variable cash payments. The variable cash payments of interest rate swaps are based on the expectation of future LIBOR interest rates (forward curves) derived from observed market LIBOR interest rate curves. In addition, credit valuation adjustments are incorporated in the fair values to account for potential nonperformance risk, but were concluded to not be significant inputs to the calculation for the periods presented. Level 3. Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Our Level 3 assets include (1) certain of our mortgages and notes receivable, which were estimated by the income approach utilizing internal cash flow projections and market interest rates to estimate the price that would be paid in an orderly transaction between market participants, and (2) our tax increment financing bond, which is not routinely traded but whose fair value is determined by the income approach utilizing contractual cash flows and market-based interest rates to estimate the projected redemption value based on quoted bid/ask prices for similar unrated municipal bonds. Our Level 3 liability is the fair value of our financing obligation, which was estimated by the income approach to approximate the price that would be paid in an orderly transaction between market participants, utilizing: (1) contractual cash flows; (2) market-based interest rates; and (3) a number of other assumptions including demand for space, competition for customers, changes in market rental rates, costs of operation and expected ownership periods.
9. | Disclosure About Fair Value of Financial Instruments - Continued
The following table sets forth our assets and liabilities and the Company's noncontrolling interests in the Operating Partnership that are measured at fair value within the fair value hierarchy.
|  |  |  | Level 1 |  | Level 2 |  | Level 3
|  | Total |  | Quoted Prices in Active Markets for Identical Assets or Liabilities |  | Significant Observable Inputs |  | Significant Unobservable Inputs
Fair Value at September 30, 2015: |  |  |  |  |  |  |  |
Assets: |  |  |  |  |  |  |  |
Mortgages and notes receivable, at fair value (1) |  | $ | 2,132 |  |  | $ | — |  |  | $ | 2,132 |  |  | $ | — |
Marketable securities of non-qualified deferred compensation plan (in prepaid expenses and other assets) |  | 3,008 |  |  | 3,008 |  |  | — |  |  | — |
Tax increment financing bond (in prepaid expenses and other assets) |  | 12,634 |  |  | — |  |  | — |  |  | 12,634 |
Total Assets |  | $ | 17,774 |  |  | $ | 3,008 |  |  | $ | 2,132 |  |  | $ | 12,634 |
Noncontrolling Interests in the Operating Partnership |  | $ | 112,768 |  |  | $ | 112,768 |  |  | $ | — |  |  | $ | — |
Liabilities: |  |  |  |  |  |  |  |
Mortgages and notes payable, at fair value (1) |  | $ | 2,520,419 |  |  | $ | — |  |  | $ | 2,520,419 |  |  | $ | — |
Interest rate swaps (in accounts payable, accrued expenses and other liabilities) |  | 5,535 |  |  | — |  |  | 5,535 |  |  | — |
Non-qualified deferred compensation obligation (in accounts payable, accrued expenses and other liabilities) |  | 3,008 |  |  | 3,008 |  |  | — |  |  | — |
Financing obligation, at fair value (1) |  | 7,283 |  |  | — |  |  | — |  |  | 7,283 |
Total Liabilities |  | $ | 2,536,245 |  |  | $ | 3,008 |  |  | $ | 2,525,954 |  |  | $ | 7,283 |
Fair Value at December 31, 2014: |  |  |  |  |  |  |  |
Assets: |  |  |  |  |  |  |  |
Mortgages and notes receivable, at fair value (1) |  | $ | 13,142 |  |  | $ | — |  |  | $ | 2,247 |  |  | $ | 10,895 |
Marketable securities of non-qualified deferred compensation plan (in prepaid expenses and other assets) |  | 3,635 |  |  | 3,635 |  |  | — |  |  | — |
Tax increment financing bond (in prepaid expenses and other assets) |  | 12,447 |  |  | — |  |  | — |  |  | 12,447 |
Total Assets |  | $ | 29,224 |  |  | $ | 3,635 |  |  | $ | 2,247 |  |  | $ | 23,342 |
Noncontrolling Interests in the Operating Partnership |  | $ | 130,048 |  |  | $ | 130,048 |  |  | $ | — |  |  | $ | — |
Liabilities: |  |  |  |  |  |  |  |
Mortgages and notes payable, at fair value (1) |  | $ | 2,141,334 |  |  | $ | — |  |  | $ | 2,141,334 |  |  | $ | — |
Interest rate swaps (in accounts payable, accrued expenses and other liabilities) |  | 2,412 |  |  | — |  |  | 2,412 |  |  | — |
Non-qualified deferred compensation obligation (in accounts payable, accrued expenses and other liabilities) |  | 3,635 |  |  | 3,635 |  |  | — |  |  | — |
Financing obligation, at fair value (as revised) (1) |  | 8,623 |  |  | — |  |  | — |  |  | 8,623 |
Total Liabilities (as revised) |  | $ | 2,156,004 |  |  | $ | 3,635 |  |  | $ | 2,143,746 |  |  | $ | 8,623 |
__________ (1) Amounts recorded at historical cost on our Consolidated Balance Sheets at September 30, 2015 and December 31, 2014.
9. | Disclosure About Fair Value of Financial Instruments - Continued
The following table sets forth the changes in our Level 3 asset, which is recorded at fair value on our Consolidated Balance Sheets:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2015 |  | 2014 |  | 2015 |  | 2014
Asset: |  |  |  |  |  |  |
Tax Increment Financing Bond: |  |  |  |  |  |  |
Beginning balance | $ | 12,641 |  |  | $ | 13,673 |  |  | $ | 12,447 |  |  | $ | 13,403 |
Unrealized gains/(losses) (in AOCL) | (7 | ) |  | 23 |  |  | 187 |  |  | 293 |
Ending balance | $ | 12,634 |  |  | $ | 13,696 |  |  | $ | 12,634 |  |  | $ | 13,696 |
During 2007, we acquired a tax increment financing bond associated with a parking garage developed by us. This bond amortizes to maturity in 2020. The estimated fair value at September 30, 2015 was $0.3 million below the outstanding principal due on the bond. If the discount rate used to fair value this bond was 100 basis points higher or lower, the fair value of the bond would have been $0.3 million lower or $0.3 million higher, respectively, as of September 30, 2015. Payment of the principal and interest for the bond is guaranteed by us. We have recorded no credit losses related to the bond during the three and nine months ended September 30, 2015 and 2014. There is no legal right of offset with the liability, which we report as a financing obligation, related to this tax increment financing bond. The following table sets forth quantitative information about the unobservable input of our Level 3 asset, which is recorded at fair value on our Consolidated Balance Sheets:
| Valuation Technique |  | Unobservable Input |  | Rate as of
|  |  | September 30, 2015 |  | December 31, 2014
Asset: |  |  |  |  |  |  |
Tax increment financing bond | Income approach |  | Discount rate |  | 7.7% |  | 8.4%

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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/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=36462937&loc=d3e19207-110258 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 30 -URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14172-108612 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 28 -URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14064-108612 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=49121117&loc=d3e13537-108611 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 16 -URI http://asc.fasb.org/extlink&oid=49121117&loc=d3e13504-108611 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=49121117&loc=d3e13433-108611 + Details
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