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Fair Value of Assets and Liabilities | 9 Months Ended
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Sep. 30, 2018
Fair Value Disclosures [Abstract] |
Fair Value of Assets and Liabilities | Fair Value of Assets and Liabilities The table below presents certain of our assets measured at fair value at September 30, 2018, categorized by the level of inputs as defined in the fair value hierarchy under GAAP, used in the valuation of each asset:
|  |  |  | Fair Value at Reporting Date Using
|  |  |  | Quoted Prices in |  |  |  | Significant
|  |  |  | Active Markets for |  | Significant Other |  | Unobservable
|  |  |  | Identical Assets |  | Observable Inputs |  | Inputs
Description |  | Total |  | (Level 1) |  | (Level 2) |  | (Level 3)
Recurring Fair Value Measurements |  |  |  |  |  |  |  |
Assets: |  |  |  |  |  |  |  |
Investment in RMR Inc. (1) |  | $ | 244,751 |  |  | $ | 244,751 |  |  | $ | — |  |  | $ | — |
Investment in Five Star (2) |  | $ | 3,643 |  |  | $ | 3,643 |  |  | $ | — |  |  | $ | — |
(1) | Our 2,637,408 shares of class A common stock of The RMR Group Inc., or RMR Inc., which are included in other assets in our condensed consolidated balance sheets, are reported at fair value which is based on quoted market prices (Level 1 inputs). Our historical cost basis for these shares is $69,826 as of September 30, 2018. During the three and nine months ended September 30, 2018, we recorded an unrealized gain of $37,847 and $88,353, respectively, to adjust the carrying value of our investment in RMR Inc. class A common shares to their fair value.
(2) | Our 4,235,000 common shares of Five Star, which are included in other assets in our condensed consolidated balance sheets, are reported at fair value which is based on quoted market prices (Level 1 inputs). Our adjusted cost basis for these shares is $6,353 as of September 30, 2018. During each of the three and nine months ended September 30, 2018, we recorded an unrealized loss of $2,710, to adjust the carrying value of our investment in Five Star common shares to their fair value. During the nine months ended September 30, 2017, we recorded a loss on impairment of $5,082 to reduce the carrying value of our Five Star investment to its estimated fair value in accordance with applicable GAAP standards at that time.
In addition to the assets described in the table above, our financial instruments at September 30, 2018 and December 31, 2017 included cash and cash equivalents, restricted cash, other assets, our revolving credit facility, term loans, senior unsecured notes, secured debt and capital leases and other unsecured obligations and liabilities. The fair values of these financial instruments approximated their carrying values in our condensed consolidated financial statements as of such dates, except as follows:
|  | As of September 30, 2018 |  | As of December 31, 2017
Description |  | Carrying Amount (1) |  | Estimated Fair Value |  | Carrying Amount (1) |  | Estimated Fair Value
Senior unsecured notes |  | $ | 2,215,900 |  |  | $ | 2,256,958 |  |  | $ | 1,725,662 |  |  | $ | 1,810,882 |
Secured debts(2) |  | 745,269 |  |  | 692,075 |  |  | 805,404 |  |  | 794,047 |
|  | $ | 2,961,169 |  |  | $ | 2,949,033 |  |  | $ | 2,531,066 |  |  | $ | 2,604,929 |
(1) | Includes unamortized debt issuance costs, premiums and discounts.
(2) | We assumed certain of these secured debts in connection with our acquisitions of certain properties. We recorded the assumed secured debts at estimated fair value on the date of assumption and we are amortizing the fair value adjustments, if any, to interest expense over their respective terms to adjust interest expense to the estimated market interest rates as of the date of assumption.
We estimated the fair value of our two issuances of senior unsecured notes due 2042 and 2046 based on the closing price on The Nasdaq Stock Market LLC, or Nasdaq, (a Level 1 input) as of September 30, 2018. We estimated the fair values of our five issuances of senior unsecured notes due 2019, 2020, 2021, 2024 and 2028 using an average of the bid and ask price on or about September 30, 2018 (Level 2 inputs as defined in the fair value hierarchy under GAAP). We estimated the fair values of our secured debts by using discounted cash flows analyses and currently prevailing market terms as of the measurement date (Level 3 inputs as defined in the fair value hierarchy under GAAP). Because Level 3 inputs are unobservable, our estimated fair value may differ materially from the actual fair value.

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -URI http://asc.fasb.org/topic&trid=2155941 + Details
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