The GAAP fair value framework uses a three-tiered approach. Fair value measurements are classified and disclosed in one of the following three categories:

• Level 1: unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities;

• Level 2: quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-derived valuations in which significant inputs and significant value drivers are observable in active markets; and

• Level 3: prices or valuation techniques where little or no market data is available that require inputs that are both significant to the fair value measurement and unobservable.

The Company’s financial assets and liabilities measured and reported at fair value on a recurring basis include the following as of:


	September 30, 2018														December 31, 2017
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Derivative assets⁽¹⁾	$	—	$	26,988	$	—	$	26,988	$	—	$	12,586	$	—	$	12,586
Derivative liabilities⁽²⁾	$	—	$	—	$	—	$	—	$	—	$	265	$	—	$	265
Non-real estate investment⁽¹⁾⁽³⁾	$	—	$	2,713	$	—	$	2,713	$	—	$	—	$	—	$	—

1. Included in the prepaid expenses and other assets line item on the Consolidated Balance Sheets.

2. Included in the accounts payable, accrued liabilities and other line item on the Consolidated Balance Sheets.

3. Related to our investment in shares in a non-public company. Pursuant to our adoption of ASU 2016-01 during 2018, the Company marked the investment to fair value during the second quarter of 2018. The investment was not fair valued in 2017 and was accounted for under the cost method.

The carrying values of cash and cash equivalents, restricted cash, accounts receivable, accounts payable and accrued liabilities are reasonable estimates of fair value, using Level 1 inputs, because of the short-term nature of these instruments. Fair value for investment in securities are estimates based on Level 1 inputs. Fair values for debt are estimates based on rates currently prevailing for similar instruments of similar maturities using Level 2 inputs.

The table below represents the carrying value and fair value of the Company’s investment in securities and debt as of:


	September 30, 2018						December 31, 2017
	Carrying Value		Fair Value		Carrying Value		Fair Value
U.S. Government securities	$	148,315	$	148,328	$	—	$	—
Unsecured debt⁽¹⁾⁽²⁾	$	1,984,333	$	1,928,411	$	1,974,278	$	1,960,560
Secured debt⁽¹⁾	$	365,519	$	353,810	$	464,311	$	458,441
In-substance defeased debt	$	139,003	$	136,515	$	—	$	—

2. The $400.0 million registered senior notes were issued at a discount. The discount, net of amortization, was $667 thousand and $722 thousand at September 30, 2018 and December 31, 2017, respectively, and is included within unsecured debt.

The One Westside and 10850 Pico acquisition included the assumption of debt which was, in-substance, defeased through the purchase of government-backed securities. As of September 30, 2018, the Company had $42 thousand of gross unrealized gains and $28 thousand of gross unrealized losses. The following table summarizes the carrying value and fair value of our securities by the contractual maturity date:


	Carrying Value		Fair Value
Due in 1 year	$	6,107	$	6,120
Due in 1 year through 5 years	142,208		142,208
Total	$	148,315	$	148,328