Fair Value of Financial Instruments

12 Months Ended

Dec. 31, 2021

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


	December 31, 2021								December 31, 2020
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Interest rate cap derivative asset(1)	$	—	$	368	$	—	$	368	$	—	$	5	$	—	$	5
Interest rate swap derivative liabilities(2)	$	—	$	(2,535)	$	—	$	(2,535)	$	—	$	(10,106)	$	—	$	(10,106)
Non-real estate investments measured at fair value(1)	$	1,915	$	1,568	$	—	$	3,483	$	—	$	750	$	—	$	750
Stock purchase warrant(1)	$	—	$	1,664	$	—	$	1,664	$	—	$	—	$	—	$	—
Earnout liability(2)(3)	$	—	$	—	$	11,383	$	11,383	$	—	$	—	$	—	$	—
Non-real estate investments measured at NAV(1)(4)	$	—	$	—	$	—	$	27,964	$	—	$	—	$	—	$	3,338

_____________

1.Included in prepaid expenses and other assets, net on the Consolidated Balance Sheets.

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

3.Related to the acquisition of Zio. Refer to Note 3 for additional details.

4.According to the relevant accounting standards, certain investments that are measured at fair value using the NAV practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in the table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the Consolidated Balance Sheets.

Level 1 item includes an investment in common stock of a publicly traded company which is valued on a quarterly basis using the closing stock price. Level 2 items include interest rate cap and swap which are valued on a quarterly basis using a linear regression model, as well as investments in preferred stock and warrants of a publicly traded company value which are valued on a quarterly basis using the closing stock price and the Black-Scholes model, respectively. Level 3 item includes the earnout liability which is valued on a quarterly basis using a probability-weighted discounted cash flow model. Inputs to the model include the discount rate and probability-weighted earnout payments based on a Monte Carlo simulation with one million trials. Fair value measurement using unobservable inputs is inherently uncertain, and a change in significant inputs could result in different fair values.

Other Financial Instruments

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. The fair value of the investment in U.S. Government securities is an estimate based on Level 1 inputs. The fair values of 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:


	December 31, 2021				December 31, 2020
	Carrying Value		Fair Value		Carrying Value		Fair Value
Assets
U.S. Government securities	$	129,321	$	130,910	$	135,115	$	140,270
Liabilities
Unsecured debt(1)	$	2,050,000	$	2,154,908	$	1,925,000	$	2,072,833
Secured debt(1)	$	1,714,874	$	1,713,726	$	1,507,276	$	1,503,960
In-substance defeased debt	$	128,212	$	128,361	$	131,707	$	131,633
Joint venture partner debt	$	66,136	$	69,116	$	66,136	$	68,346

_____________

1.Amounts represent debt excluding net deferred financing costs.