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Fair Value of Assets and Liabilities | 9 Months Ended
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Sep. 30, 2019
Fair Value Disclosures [Abstract] |
Fair Value of Assets and Liabilities | Fair Value of Assets and Liabilities The following table presents certain of our assets and liabilities that are measured at fair value at September 30, 2019, categorized by the level of inputs as defined in the fair value hierarchy under GAAP, used in the valuation of each asset or liability.
|  |  |  | Fair Value at Reporting Date Using
|  |  |  | Quoted Prices in Active Markets for Identical Assets |  | Significant Other Observable Inputs |  | Significant Unobservable Inputs
Description |  | Total |  | (Level 1) |  | (Level 2) |  | (Level 3)
Recurring Fair Value Measurements Assets: |  |  |  |  |  |  |  |
Investment in Five Star (1) |  | $ | 1,993 |  |  | $ | 1,993 |  |  | $ | — |  |  | $ | — |
Non-Recurring Fair Value Measurements Assets: |  |  |  |  |  |  |  |
Real estate properties held for sale (2) |  | $ | 63,458 |  |  | $ | — |  |  | $ | 63,458 |  |  | $ | — |
Real estate properties at fair value (3) |  | $ | 1,098 |  |  | $ | — |  |  | $ | — |  |  | $ | 1,098 |
(1) | Our 423,500 shares of Five Star common stock are included in other assets, net in our condensed consolidated balance sheets, and are reported at fair value, which is based upon quoted market prices (Level 1 inputs). Our adjusted cost basis for these shares is $6,353 as of September 30, 2019. During the three and nine months ended September 30, 2019, we recorded an unrealized gain of $40 and an unrealized loss of $40, respectively, which are included in gains and losses on equity securities, net in our condensed consolidated statements of comprehensive income (loss), to adjust the carrying value of our investment in Five Star common shares to their fair value. See Note 12 for further information about our investment in Five Star.
(2) | We have assets in our condensed consolidated balance sheets that are measured at fair value on a nonrecurring basis. During the nine months ended September 30, 2019, we recorded impairment charges of $26,037 to reduce the carrying value of three MOBs that are classified as held for sale to their estimated sales price, based on a purchase and sale agreement that we have entered into with third party buyers for these MOBs, less estimated costs to sell, of $63,458. See Note 3 for further information about impairment charges and these and other properties we have classified as held for sale.
(3) | We recorded impairment charges of $6,344 to reduce the carrying value of one senior living community to its estimated fair value of $1,098 based on a third party offer. The valuation techniques and significant unobservable inputs used in the valuation of this property are considered Level 3 inputs as defined in the fair value hierarchy under GAAP.
In addition to the assets and liabilities described in the tables above, our financial instruments at September 30, 2019 and December 31, 2018 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, 2019 |  | As of December 31, 2018
Description |  | Carrying Amount (1) |  | Estimated Fair Value |  | Carrying Amount (1) |  | Estimated Fair Value
Senior unsecured notes |  | $ | 1,819,802 |  |  | $ | 1,885,545 |  |  | $ | 2,216,945 |  |  | $ | 2,138,202 |
Secured debts(2) |  | 698,695 |  |  | 708,513 |  |  | 744,186 |  |  | 723,003 |
|  | $ | 2,518,497 |  |  | $ | 2,594,058 |  |  | $ | 2,961,131 |  |  | $ | 2,861,205 |
(1) | Includes unamortized debt issuance costs, premiums and discounts.
(2) | We assumed certain of these secured debts in connection with our acquisition of certain properties. We recorded the assumed mortgage notes at estimated fair value on the date of acquisition and we are amortizing the fair value adjustments, if any, to interest expense over the respective terms of the mortgage notes to adjust interest expense to the estimated market interest rates as of the date of acquisition.
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, 2019. We estimated the fair values of our four issuances of senior unsecured notes due 2020, 2021, 2024 and 2028 using an average of the bid and ask price on Nasdaq on or about September 30, 2019 (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 values may differ materially from the actual fair values. Realized and unrealized gains and losses for our equity securities for the three and nine months ended September 30, 2019 and 2018 were as follows:
|  | Three Months Ended September 30, |  | Nine Months Ended September 30,
|  | 2019 |  | 2018 |  | 2019 |  | 2018
Realized gains and losses on equity securities sold (1) |  | $ | — |  |  | $ | — |  |  | $ | (41,436 | ) |  | $ | — |
Unrealized gains and losses on equity securities held |  | 40 |  |  | 35,137 |  |  | (40 | ) |  | 85,643 |
Gains and losses on equity securities, net |  | $ | 40 |  |  | $ | 35,137 |  |  | $ | (41,476 | ) |  | $ | 85,643 |
(1) See Note 12 for further information about our former investment in The RMR Group Inc., or RMR Inc.

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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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