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Fair Value Measurements and Disclosures
 3 Months Ended
Mar. 31, 2025
Fair Value Disclosures [Abstract]  
Fair Value Measurements and Disclosures

Note 5 — Fair Value Measurements and Disclosures

Recurring Fair Value Measurements

In determining the fair value of our financial instruments, we apply Accounting Standards Codification (“ASC”) 820, “Fair Value Measurement and Disclosures”. The fair value hierarchy under ASC 820 distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (Levels 1 and 2) and the reporting entity’s own assumptions about market participant data (Level 3). Fair value estimates may differ from the amounts that may ultimately be realized upon sale or disposition of the assets and liabilities.

From time to time we purchase interest rate swaps, caps, and other instruments to provide protection against increases in interest rates on our variable rate debt. These instruments are presented as Interest rate contracts in Other assets, net in our Condensed Consolidated Balance Sheets. As of March 31, 2025, we held interest rate caps with a maximum notional value of $370.3 million. These instruments were acquired for $3.8 million, and the fair value of these instruments is $0.6 million as noted in the table below.

On a recurring basis, we measure at fair value our interest rate contracts. Our interest rate contracts are classified within Level 2 of the GAAP fair value hierarchy, and we estimate their fair value using pricing models that rely on observable market information, including contractual terms, market prices, and interest rate yield curves. The fair value adjustment is included in earnings in Realized and unrealized gains (losses) on interest rate contracts in our Condensed Consolidated Statements of Operations. Changes in fair value are reflected as a non-cash transaction in adjustments to arrive at cash flows from operations, any upfront premium is reflected in Purchase of interest rate contracts, and any proceeds are reflected in Proceeds from interest rate contracts in our Condensed Consolidated Statements of Cash Flows.

As of March 31, 2025 and December 31, 2024, we had investments in stock of $1.1 million and $1.6 million, respectively, classified within Level 1 of the GAAP fair value hierarchy. In addition, as of March 31, 2025 and December 31, 2024, we have investments in property technology funds of $3.8 million and $3.5 million, respectively, in entities that develop technology related to the real estate industry. These investments are measured at net asset value (“NAV”) as a practical expedient. The period of time over which the underlying assets in these investments are expected to be liquidated is unknown. See Note 3 for further information regarding unfunded commitments related to these investments.

The following table summarizes the fair value for our interest rate contracts, investments in stock, and our investments in real estate technology funds as of March 31, 2025 and December 31, 2024 (in thousands):

 

 

As of March 31, 2025

 

 

As of December 31, 2024

 

 

Total

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Interest rate contracts

 

$

620

 

 

$

—

 

 

$

620

 

 

$

—

 

 

$

862

 

 

$

—

 

 

$

862

 

 

$

—

 

Investments in stock

 

 

1,088

 

 

 

1,088

 

 

 

—

 

 

 

—

 

 

 

1,573

 

 

 

1,573

 

 

 

—

 

 

 

—

 

Investments in real estate technology funds (1)

 

 

3,760

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

3,468

 

 

 

—

 

 

 

—

 

 

 

—

 

Total assets

 

$

5,468

 

 

$

1,088

 

 

$

620

 

 

$

—

 

 

$

5,903

 

 

$

1,573

 

 

$

862

 

 

$

—

 

(1) Investments measured at fair value using NAV as a practical expedient are not classified in the fair value hierarchy.

Fair Value Disclosures

We believe that the carrying value of the consolidated amounts of cash and cash equivalents and restricted cash approximated their fair value as of March 31, 2025, and December 31, 2024 and are categorized within Level 1 of the GAAP fair value hierarchy. We estimate the fair value of our debt using an income and market approach, including comparison of the contractual terms to observable and unobservable inputs such as market interest rate risk spreads, contractual interest rates, remaining periods to maturity, debt service coverage ratios, and loan to value ratios. We classify the fair value of our non-recourse property debt and non-recourse construction loans within Level 2 of the GAAP valuation hierarchy based on the significance of certain observable inputs used to estimate their fair value.

The following table summarizes the carrying value and fair value of our non-recourse property debt, and non-recourse construction loans as of March 31, 2025 and December 31, 2024 (in thousands):

 

 

As of March 31, 2025

 

 

As of December 31, 2024

 

 

Carrying Value

 

 

Fair Value

 

 

Carrying Value

 

 

Fair Value

 

Description:

 

 

 

 

 

 

 

 

 

 

 

 

Non-recourse property debt

 

$

689,521

 

 

$

658,475

 

 

$

689,885

 

 

$

641,563

 

Non-recourse construction loans

 

 

405,432

 

 

 

408,745

 

 

 

393,750

 

 

 

393,756

 

Total

 

$

1,094,953

 

 

$

1,067,220

 

 

$

1,083,635

 

 

$

1,035,319