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Fair Value of Assets and Liabilities
 6 Months Ended
Jun. 30, 2014
Fair Value of Assets and Liabilities  
Fair Value of Assets and Liabilities

Note 7.  Fair Value of Assets and Liabilities

 

The following table presents certain of our assets and liabilities that are measured at fair value on a recurring and non recurring basis at June 30, 2014 categorized by the level of inputs used in the valuation of each asset or liability.

 

 

 

 

 

Quoted Prices in
Active Markets for
Identical Assets

 

Significant
Other
Observable
Inputs

 

Significant
Unobservable
Inputs

 

Description

 

Total

 

(Level 1)

 

(Level 2)

 

(Level 3)

 

 

 

 

 

 

 

 

 

 

 

Assets held for sale(1)

 

$

13,249

 

$

—

 

$

13,249

 

$

—

 

Investments in available for sale securities(2)

 

$

27,797

 

$

27,797

 

$

—

 

$

—

 

Unsecured senior notes(3)

 

$

1,827,753

 

$

1,827,753

 

$

—

 

$

—

 

Secured debt(4)

 

$

735,341

 

$

—

 

$

—

 

$

735,341

 

 

(1)       Assets held for sale consist of nine of our properties that we expect to sell that are reported at fair value less costs to sell.  We used offers to purchase these properties made by third parties or comparable sales transactions (Level 2 inputs) to determine the fair value of these properties.  We have recorded cumulative impairments of approximately $22,545 to these properties in order to reduce their book value to fair value.

(2)       Our investments in available for sale securities include our 250,000 common shares of EQC and 4,235,000 common shares of Five Star. The fair values of these shares are based on quoted prices at June 30, 2014 in active markets (Level 1 inputs).

(3)       We estimate the fair values of our unsecured senior notes using an average of the bid and ask price of our outstanding six issuances of senior notes (Level 1 inputs) on or about June 30, 2014.  The fair values of these senior note obligations exceed their aggregate book values of $1,742,893 by $84,860 because these notes were trading at premiums to their face amounts.

(4)       We estimate the fair values of our secured debt by using discounted cash flow analyses and currently prevailing market terms at June 30, 2014 (Level 3 inputs).  Because Level 3 inputs are unobservable, our estimated fair value may differ materially from the actual fair value.

 

In addition to the assets and liabilities described in the above table, our additional financial instruments include rents receivable, cash and cash equivalents, restricted cash, other unsecured debt and other liabilities. The fair values of these additional financial instruments approximate their carrying values at June 30, 2014 based upon their liquidity, short term maturity, variable rate pricing or our estimate of fair value using discounted cash flow analyses and prevailing interest rates.