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Financial Instruments and Fair Value Measurements | 6 Months Ended
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Jun. 30, 2024
Fair Value Disclosures [Abstract] |
Financial Instruments and Fair Value Measurements | 8. Financial Instruments and Fair Value Measurements Items Measured at Fair Value on a Recurring Basis The methods and assumptions described below were used to estimate the fair value of each class of financial instrument. Marketable Equity Securities — The Company has an investment in marketable equity securities of Albertsons, which has a readily determinable market value (traded on an exchange) and is being accounted for as a Level 1 investment. This investment was included in Marketable securities on the Condensed Consolidated Balance Sheets as of June 30, 2024 and December 31, 2023. Derivative Financial Instruments — The Company has derivative assets, which are included in Other assets, net on the Condensed Consolidated Balance Sheets, and are comprised of interest rate swaps and caps. The Company has derivative liabilities, which are included in Accounts payable and other liabilities on the Condensed Consolidated Balance Sheets and are comprised of interest rate swaps. The derivative instruments were measured at fair value using readily observable market inputs, such as quotations on interest rates, and were classified as Level 2 as these instruments are custom, over-the-counter contracts with various bank counterparties that are not traded in an active market. See “Derivative Financial Instruments,” below. The following table presents the Company’s fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis (in thousands):
|  | June 30, 2024 |  |  | December 31, 2023 |
|  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |
Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Marketable equity securities |  | $ | 21,668 |  |  | $ | — |  |  | $ | — |  |  | $ | 33,284 |  |  | $ | — |  |  | $ | — |
Derivative financial instruments |  |  | — |  |  |  | 40,338 |  |  |  | — |  |  |  | — |  |  |  | 28,989 |  |  |  | — |
Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Derivative financial instruments |  |  | — |  |  |  | (3,760 | ) |  |  | — |  |  |  | — |  |  |  | (8,892 | ) |  |  | — |
In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. The Company did not have any transfers into or out of Level 1, Level 2, and Level 3 measurements during the six months ended June 30, 2024, and 2023. Marketable Equity Securities During the three months ended June 30, 2024, the Company sold 175,000 shares of Albertsons, generating net proceeds of $3.6 million. During the six months ended June 30, 2024, the Company sold 350,000 shares of Albertsons, generating net proceeds of $7.6 million. As of June 30, 2024, the Company held 1.1 million shares of Albertsons which had a fair value of $21.7 million. During the three months ended June 30, 2024 and 2023, the Company recognized dividend income from marketable securities of $0.2 million and $0.2 million, of which the Company's share was $0.2 million and $0.2 million, respectively. During the six months ended June 30, 2024 and 2023, the Company recognized dividend income from marketable securities of $0.3 million and $28.7 million, of which the Company's share was $0.3 million and $11.6 million, respectively. These amounts are included i n Realized and unrealized holding (losses) gains on investments and other on the Company's Condensed Consolidated Statements of Operations. The following table represents the realized and unrealized gain (loss) on marketable securities included in Realized and unrealized holding (losses) gains on investments and other on the Company's Condensed Consolidated Statements of Operations (in thousands):
| Three Months Ended June 30, |  |  | Six Months Ended June 30, |
| 2024 |  |  | 2023 |  |  | 2024 |  |  | 2023 |
Realized gain on marketable securities, net | $ | 3,586 |  |  | $ | — |  |  | $ | 7,580 |  |  | $ | — |
Less: previously recognized unrealized gains on marketable securities sold during the period |  | (3,586 | ) |  |  | — |  |  |  | (7,580 | ) |  |  | — |
Unrealized (losses) gains on marketable securities still held as of the end of the period and through the disposition date on marketable securities sold during the period |  | (2,020 | ) |  |  | 1,713 |  |  |  | (4,035 | ) |  |  | (346 | )
(Loss) gain on marketable securities, net | $ | (2,020 | ) |  | $ | 1,713 |  |  | $ | (4,035 | ) |  | $ | (346 | )
Items Measured at Fair Value on a Nonrecurring Basis Impairment Charges The Company did not recognize any impairments of consolidated assets during the six months ended June 30, 2024, and 2023. Redeemable Noncontrolling Interests The Company has redeemable noncontrolling interests related to certain properties. The Company is required to periodically review these redeemable noncontrolling interests in order to compare the redemption value to the carrying value. See Note 10 for further discussion regarding these interests. Derivative Financial Instruments The Company had the following interest rate swaps and caps for the periods presented (information is as of June 30, 2024, unless otherwise noted, and dollars in thousands):
|  |  |  |  |  |  |  |  | Strike Rate |  |  |  | Fair Value |
Derivative Instrument |  | Aggregate Notional Amount |  |  | Effective Date |  | Maturity Date |  | Low |  |  | High |  | Balance Sheet Location |  | June 30, 2024 |  |  | December 31, 2023 |
Core |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest Rate Swaps |  | $ | 175,000 |  |  | Oct 2023 |  | Jul 2027 - Jul 2029 |  | 4.59% |  | — |  | 4.69% |  | Accounts payable and other liabilities |  | $ | (3,760 | ) |  | $ | (8,807 | )
Interest Rate Swaps |  |  | 681,000 |  |  | May 2022 - May 2023 |  | Mar 2025 - Jul 2030 |  | 1.98% |  | — |  | 3.61% |  | Other Assets |  |  | 34,303 |  |  |  | 22,675 |
|  | $ | 856,000 |  |  |  |  |  |  |  |  |  |  |  |  |  | $ | 30,543 |  |  | $ | 13,868 |
Fund II |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest Rate Swap |  | $ | 50,000 |  |  | Jan 2023 |  | Dec 2029 |  | 3.23% |  | — |  | 3.23% |  | Other Assets |  | $ | 1,814 |  |  | $ | 634 |
Fund III |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest Rate Cap |  | $ | 33,000 |  |  | Sep 2023 |  | Oct 2025 |  | 5.50% |  | — |  | 5.50% |  | Other Assets |  | $ | 14 |  |  | $ | 26 |
Fund IV |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest Rate Cap |  | $ | 54,500 |  |  | Dec 2023 |  | Dec 2025 |  | 6.00% |  | — |  | 6.00% |  | Other Assets |  | $ | 14 |  |  | $ | 29 |
Fund V |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest Rate Swaps |  | $ | 341,944 |  |  | Apr 2022 - Mar 2024 |  | Sep 2024- Dec 2027 |  | 1.14% |  | — |  | 4.49% |  | Other Assets |  | $ | 3,981 |  |  | $ | 5,523 |
Interest Rate Caps |  |  | 72,164 |  |  | Aug 2023 - Feb 2024 |  | Jan 2025 - Sep 2025 |  | 4.50% |  | — |  | 5.00% |  | Other Assets |  |  | 212 |  |  |  | 102 |
Interest Rate Swaps |  |  | — |  |  |  |  |  |  |  |  |  |  |  | Accounts payable and other liabilities |  |  | — |  |  |  | (85 | )
|  | $ | 414,108 |  |  |  |  |  |  |  |  |  |  |  |  |  | $ | 4,193 |  |  | $ | 5,540 |
Total asset derivatives |  |  |  |  |  |  |  |  |  |  |  |  |  | $ | 40,338 |  |  | $ | 28,989 |
Total liability derivatives |  |  |  |  |  |  |  |  |  |  |  |  |  | $ | (3,760 | ) |  | $ | (8,892 | )
All of the Company’s derivative instruments have been designated as cash flow hedges and hedge the future cash outflows on variable-rate debt (Note 7). It is estimated that approximately $22.9 million included in Accumulated other comprehensive income related to derivatives will be reclassified as a reduction to interest expense within the next twelve months. As of June 30, 2024 and December 31, 2023, no derivatives were designated as fair value hedges or hedges of net investments in foreign operations. Additionally, the Company does not use derivatives for trading or speculative purposes and currently does not have any derivatives that are not designated hedges. Risk Management Objective of Using Derivatives The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company manages economic risks, including interest rate, liquidity and credit risk, primarily by managing the amount, sources and duration of its debt funding and, from time to time, through the use of derivative financial instruments. The Company enters into derivative financial instruments to manage exposures that result in the receipt or payment of future known and uncertain cash amounts, the values of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s investments and borrowings. The Company is exposed to credit risk in the event of non-performance by the counterparties to the swaps if the derivative position has a positive balance. The Company believes it mitigates its credit risk by entering into swaps with major financial institutions. The Company continually monitors and actively manages interest costs on its variable-rate debt portfolio and may enter into additional interest rate swap positions or other derivative interest rate instruments based on market conditions. Credit Risk-Related Contingent Features The Company has agreements with each of its swap counterparties that contain a provision whereby if the Company defaults on certain of its unsecured indebtedness, the Company could also be declared in default on its swaps, resulting in an acceleration of payment under the swaps. Other Financial Instruments The Company’s other financial instruments had the following carrying values and fair values as of the dates shown (dollars in thousands, inclusive of amounts attributable to noncontrolling interests where applicable):
|  |  |  |  | June 30, 2024 |  |  | December 31, 2023 |
|  | Level |  |  | Carrying Amount |  |  | Estimated Fair Value |  |  | Carrying Amount |  |  | Estimated Fair Value |
Notes Receivable (a) |  |  | 3 |  |  | $ | 126,653 |  |  | $ | 126,647 |  |  | $ | 124,949 |  |  | $ | 124,789 |
City Point Loan (a) |  |  | 3 |  |  |  | 66,741 |  |  |  | 66,674 |  |  |  | 66,741 |  |  |  | 66,017 |
Mortgage and Other Notes Payable (a) |  |  | 3 |  |  |  | 961,212 |  |  |  | 947,938 |  |  |  | 937,200 |  |  |  | 921,563 |
Investment in non-traded equity securities (b) |  |  | 3 |  |  |  | 4,141 |  |  |  | 4,141 |  |  |  | 4,398 |  |  |  | 4,702 |
Unsecured notes payable and Unsecured line of credit (c) |  |  | 2 |  |  |  | 746,446 |  |  |  | 746,873 |  |  |  | 943,887 |  |  |  | 937,153 |
(a) The Company determined the estimated fair value of these financial instruments using a discounted cash flow model with rates that take into account the credit of the borrower or tenant, where applicable, and changes in interest rates. The Company also considered the value of the underlying collateral, taking into account the quality of the collateral, the credit quality of the borrower, the time until maturity and the current market interest rate environment. Amounts exclude discounts and loan costs. The estimated market rates are between 5.00% to 14.00% for the Company's notes receivable and City Point Loan, and 5.52% to 8.37% for the Company's mortgage and other notes payable, depending on the attributes of the specific loans. (b) Includes the Operating Partnership’s cost-method investment in Fifth Wall (Note 4). (c) The Company determined the estimated fair value of the unsecured notes payable and unsecured line of credit using quoted market prices in an open market with limited trading volume where available. In cases where there was no trading volume, the Company determined the estimated fair value using a discounted cash flow model using a rate that reflects the average yield of similar market participants. The Company’s cash and cash equivalents, restricted cash, rents receivable, accounts payable and certain financial instruments (classified as Level 1) included in other assets and other liabilities had fair values that approximated their carrying values due to their short maturity profiles as of June 30, 2024 and December 31, 2023.

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- Definition The entire disclosure for derivatives and fair value of assets and liabilities. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 815 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/815/tableOfContent Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 820 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/820/tableOfContent + Details
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