Fair Value Measurements

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, 2018
Assets	Level 1		Level 2		Level 3
Marketable equity securities	$	1,078	$	—	$	—
Real estate related bonds	—		307		—
Derivative interest rate swaps	—		2,295		—
Total assets	$	1,078	$	2,602	$	—



	Fair Value Measurements at December 31, 2017
Assets	Level 1		Level 2		Level 3
Available-for-sale marketable securities	$	4,431	$	—	$	—
Real estate related bonds	—		327		—
Derivative interest rate swaps	—		1,670		—
Total assets	$	4,431	$	1,997	$	—

Level 1

At September 30, 2018 and December 31, 2017, the fair value of the marketable equity securities has been determined based upon quoted market prices.

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 that 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.

As of September 30, 2018 and December 31, 2017, the Company determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives. As a result, the Company's derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy. As of September 30, 2018 and December 31, 2017, the Company had outstanding interest rate swap agreements with an aggregate notional value of $150,000.

Level 3

At September 30, 2018 and December 31, 2017, the Company had no Level 3 recurring fair value measurements.

Nonrecurring Measurements

During the nine months ended September 30, 2018, the Company identified three retail properties that had reductions in the expected holding periods. The Company's estimated fair value was based on executed purchase contracts. The Company recorded a provision for asset impairment of $3,510 on these three retail properties. During the three months ended September 30, 2018, the Company identified two retail properties that had reductions in the expected holding periods. The Company's estimated fair value was based on executed purchase contracts. The Company recorded a provision for asset impairment of $2,713 on these two retail properties.

During the nine months ended September 30, 2017, the Company identified three retail properties that had reductions in the expected holding periods and reviewed the probability of these retail properties' dispositions. The Company's estimated fair values were based on broker opinions of value and letters of intent. The Company recorded a provision for asset impairment of $16,440 on these three retail properties. There was no provision for asset impairment recorded for the three months ended September 30, 2017.

The following table summarizes activity for the Company’s assets measured at fair value on a nonrecurring basis and the related impairment charges for the three and nine months ended September 30, 2018 and 2017:



	For the three months ended September 30,								For the nine months ended September 30,
	2018				2017				2018				2017
	Level 3		Impairment Losses		Level 3		Impairment Losses		Level 3		Impairment Losses		Level 3		Impairment Losses
Investment properties	$	33,075	$	2,713	$	—	$	—	$	64,075	$	3,510	$	36,676	$	16,440

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 condensed consolidated financial statements as of September 30, 2018 and December 31, 2017.



	September 30, 2018				December 31, 2017
	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Mortgages payable	$	240,351	$	236,433	$	370,804	$	372,962
Unsecured term loans and revolving line of credit	$	352,000	$	352,276	$	300,000	$	299,770

The Company estimated the fair value of its mortgages payable using a weighted average effective market interest rate of 4.71% and 4.20% as of September 30, 2018 and December 31, 2017, respectively. 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 4.08% and 3.48% as of September 30, 2018 and December 31, 2017, respectively, 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.