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Fair Value Measurements | 9 Months Ended
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Sep. 30, 2017
Fair Value Disclosures [Abstract] |
Fair Value Measurements | Fair Value Measurements In accordance with ASC 820, Fair Value Measurement and Disclosures, the Company defines fair value based on the price that would be received upon sale of 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. The Company uses a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value. The fair value hierarchy consists of three broad levels, which are described below:
• | Level 1 – Quoted prices in active markets for identical assets or liabilities that the entity has the ability to access.
• | Level 2 – Observable inputs, other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
• | Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.
The Company has estimated the fair value of its financial and non-financial instruments using available market information and valuation methodologies the Company believes to be appropriate for these purposes. Considerable judgment and a high degree of subjectivity are involved in developing these estimates and, accordingly, they are not necessarily indicative of amounts that would be realized upon disposition. Recurring Measurements For assets and liabilities measured at fair value on a recurring basis, quantitative disclosure of the fair value for each major category of assets and liabilities is presented below:
|  | Fair Value Measurements at September 30, 2017
Assets |  | Level 1 |  | Level 2 |  | Level 3
Available-for-sale marketable securities |  | $ | 35,224 |  |  | $ | — |  |  | $ | — |
Real estate related bonds |  | — |  |  | 323 |  |  | — |
Derivative interest rate swaps |  | — |  |  | 913 |  |  | — |
Total assets |  | $ | 35,224 |  |  | $ | 1,236 |  |  | $ | — |
|  | Fair Value Measurements at December 31, 2016
Assets |  | Level 1 |  | Level 2 |  | Level 3
Available-for-sale marketable securities |  | $ | 182,569 |  |  | $ | — |  |  | $ | — |
Real estate related bonds |  | — |  |  | 1,314 |  |  | — |
Derivative interest rate swaps |  | — |  |  | 487 |  |  | — |
Total assets |  | $ | 182,569 |  |  | $ | 1,801 |  |  | $ | — |
Level 1 At September 30, 2017 and December 31, 2016, the fair value of the available-for-sale marketable equity securities have been estimated based upon quoted market prices. Unrealized gains or losses on investment are reflected in unrealized gain (loss) on investment securities in comprehensive income on the consolidated statements of operations and comprehensive income. Level 2 To calculate the fair value of the real estate related bonds and the derivative interest rate instruments, the Company primarily uses quoted prices for similar securities and contracts. For the real estate related bonds, the Company reviews price histories for similar market transactions. For the derivative interest rate instruments, the Company uses inputs based on data that is observed in the forward yield curve which is widely observable in the marketplace. The Company also incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements which utilizes Level 3 inputs, such as estimates of current credit spreads. However, as of September 30, 2017 and December 31, 2016, the Company determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives. As a result, the Company determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy. As of September 30, 2017 and December 31, 2016, the Company had outstanding interest rate swap agreements with an aggregate notional value of $150,000. Level 3 At September 30, 2017 and December 31, 2016, the Company had no Level 3 recurring fair value measurements. Nonrecurring Measurements The following table summarizes activity for the Company’s assets measured at fair value on a nonrecurring basis. The Company recognized certain impairment charges to reflect the investments at their fair values for the three and nine months ended September 30, 2017 and 2016. The asset groups that were reflected at fair value through this evaluation are:
| For the three months ended September 30,
| 2017 |  | 2016
| Level 3 |  | Impairment Losses |  | Level 3 |  | Impairment Losses
Investment properties, continuing operations | $ | — |  |  | $ | — |  |  | $ | 27,173 |  |  | $ | 2,818 |
Investment properties, discontinued operations | — |  |  | — |  |  | — |  |  | — |
Total |  |  | $ | — |  |  |  |  | $ | 2,818 |
| For the nine months ended September 30,
| 2017 |  | 2016
| Level 3 |  | Impairment Losses |  | Level 3 |  | Impairment Losses
Investment properties, continuing operations | $ | 36,676 |  |  | $ | 16,440 |  |  | $ | 66,323 |  |  | $ | 11,208 |
Investment properties, discontinued operations | — |  |  | — |  |  | 584,358 |  |  | 106,514 |
Total |  |  | $ | 16,440 |  |  |  |  | $ | 117,722 |
Investment properties, continuing operations During the three and nine months ended September 30, 2017, the Company identified certain assets which may have a reduction in the expected holding period and reviewed the probability of these assets' disposition. The Company's estimated fair value relating to the investment assets' impairment analyses was based on broker opinions of value and letters of intent and 10-year discounted cash flow models, which include estimated inflows and outflows over a specific holding period and estimated net disposition proceeds at the end of the 10-year period. The cash flows consist of observable inputs such as contractual revenues and unobservable inputs such as forecasted revenues and expenses and estimated net disposition proceeds at the end of the 10-year period. These unobservable inputs are based on market conditions and the Company’s expected growth rates. As a result, during the nine months ended September 30, 2017, the Company recorded a provision for asset impairment of $16,440 in continuing operations on three multi-tenant retail assets based on broker opinions of value and letters of intent. There was no provision for asset impairment recorded for the three months ended September 30, 2017. During the three and nine months ended September 30, 2016, the Company identified certain assets which may have a reduction in the expected holding period and reviewed the probability of these assets' disposition. The Company's estimated fair value relating to the investment assets' impairment analyses was based on purchase contracts. As a result, during the three and nine months ended September 30, 2016, the Company recorded a provision for asset impairment of $2,818 and $11,208, respectively, in continuing operations on three multi-tenant retail assets. Investment properties, discontinued operations In connection with the Highlands spin-off during the nine months ended September 30, 2016, as disclosed in the Company's Annual Report, the Company evaluated Highlands as a disposal group for impairment. The Company's estimated fair value relating to the disposal group's impairment analysis was based on 10-year discounted cash flow models, which include estimated inflows and outflows over a specific holding period and estimated net disposition proceeds at the end of the 10-year period. The cash flows consist of observable inputs such as contractual revenues and unobservable inputs such as forecasted revenues and expenses and estimated net disposition proceeds at the end of the 10-year period. These unobservable inputs are based on market conditions and the Company’s expected growth rates. As of the spin date, capitalization rates ranging from 6.75% to 10.00% and discount rates ranging from 7.75% to 15.25% were utilized in the model and were based upon observable rates that the Company believed to be within a reasonable range of current market rates. As a result of this analysis, the Company recorded a provision for asset impairment related to the Highlands spin-off of $76,583 for the nine months ended September 30, 2016. During the nine months ended September 30, 2016, the Company identified one non-core office asset which may have a reduction in the expected holding period and reviewed the probability of this asset's disposition. The Company's estimated fair value relating to this asset's impairment analysis was based on a ten-year undiscounted cash flow model. Capitalization rates ranging from 6.75% to 7.00% and discount rates ranging from 7.00% to 8.00% were utilized in the model and were based upon observable rates that the Company believed to be within a reasonable range of market rates. As a result of this analysis, the Company recorded a provision for asset impairment of $29,931 on this asset, for a total provision for asset impairment of $106,514 in discontinued operations for the nine months ended September 30, 2016. There was no provision for asset impairment recorded as part of discontinued operations for the three months ended September 30, 2016. Financial Instruments Not Measured at Fair Value The table below represents the fair value of financial instruments presented at carrying values in the Company's consolidated financial statements as of September 30, 2017 and December 31, 2016.
| September 30, 2017 |  | December 31, 2016
| Carrying Value | Estimated Fair Value |  | Carrying Value | Estimated Fair Value
Mortgages payable | $ | 370,029 |  | $ | 372,418 |  |  | $ | 434,746 |  | $ | 435,513 |
Line of credit and term loan | $ | 300,000 |  | $ | 299,760 |  |  | $ | 300,000 |  | $ | 299,741 |
The Company estimated the fair value of its mortgages payable using a weighted average effective market interest rate of 4.19% as of September 30, 2017 compared to 5.07% as of December 31, 2016. The fair value estimate of the line of credit and term loan approximates the carrying value due to limited market volatility in pricing. The assumptions reflect the terms currently available on similar borrowing terms to borrowers with credit profiles similar to the Company's. As a result, the Company used a weighted average interest rate of 3.21% as of September 30, 2017 compared to 3.15% as of December 31, 2016 to estimate the fair value of its line of credit and term loan. The Company has determined that its debt instrument valuations are classified in Level 2 of the 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/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -URI http://asc.fasb.org/topic&trid=2155941 + Details
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