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FAIR VALUE MEASUREMENTS | 3 Months Ended
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Jul. 31, 2016
FAIR VALUE MEASUREMENTS [Abstract] |
FAIR VALUE MEASUREMENTS | NOTE 10 • FAIR VALUE MEASUREMENTS ASC 820, Fair Value Measurement and Disclosures defines and establishes a framework for measuring fair value. The objective of fair value is to determine the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (the exit price). ASC 820 establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three levels, as follows: Level 1: Quoted prices in active markets for identical assets Level 2: Significant other observable inputs Level 3: Significant unobservable inputs Fair value estimates may be different than the amounts that may ultimately be realized upon sale or disposition of the assets and liabilities. Fair Value Measurements on a Recurring Basis We had no assets or liabilities recorded at fair value on a recurring basis at July 31, 2016 and April 30, 2016. Fair Value Measurements on a Nonrecurring Basis Non-financial assets and liabilities measured at fair value on a nonrecurring basis at July 31, 2016 consisted of real estate investments that were written-down to estimated fair value during the three months ended July 31, 2016. Non-financial assets measured at fair value on a nonrecurring basis at April 30, 2016 consisted of real estate held for sale that was written-down to estimated fair value during fiscal year 2016. See Note 2 for additional information on impairment losses recognized during fiscal years 2017 and 2016. The aggregate fair value of these assets by their levels in the fair value hierarchy is as follows:
|  | (in thousands) |
|  | Total |  | Level 1 |  | Level 2 |  | Level 3 |
July 31, 2016 |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate investments |  | $ | 35,281 |  | $ | — |  | $ | — |  | $ | 35,281 |
April 30, 2016 |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate held for sale |  | $ | 6,650 |  | $ | — |  | $ | — |  | $ | 6,650 |
We estimate the fair value of our real estate investments using an income or market approach, including appraisals, management estimates, and discounted cash flow calculations. As of July 31, 2016, we estimated fair value on one of our properties using an independent appraisal. Additionally, we used a discounted cash flow valuation technique to estimate fair value on three properties. The discounted cash flow valuation technique requires us to estimate cash flows for each investment over the anticipated holding period of 10 years. Cash flows are derived from property rental revenue less operating expenses, real estate taxes and capital and other costs, plus projected sales proceeds in the year of exit. Property rental revenue is based on leases currently in place and our estimates for future leasing activity, which are based on current market rents for similar space plus a projected growth factor. Similarly, estimated operating expenses and real estate taxes are based on amounts incurred or expected in the current fiscal year plus a projected growth factor for future periods. Anticipated sales proceeds at the end of an investment’s expected holding period are determined based on the net cash flow of the investment in the year of exit, divided by a terminal capitalization rate, less estimated selling costs. The fair value of each property is calculated by discounting the future cash flows (including the projected sales proceeds), using an appropriate discount rate to determine the fair value of the equity in each investment. Significant unobservable quantitative inputs used in determining the fair value of each investment include capitalization rates and discount rates. These rates are based on the location, type and nature of each property, and current and anticipated market conditions. Significant unobservable quantitative inputs used in determining the fair value of these real estate investments at July 31, 2016, was a discount rate of 9.0% and a terminal capitalization rate of 9.0%. As of April 30, 2016, we estimated fair value on two properties held for sale based upon receipt of individual market offers and our intent to dispose of the properties. Financial Assets and Liabilities Not Measured at Fair Value The following methods and assumptions were used to estimate the fair value of each class of financial assets and liabilities. The fair values of our financial instruments approximate their carrying amount in the consolidated financial statements except for debt. Cash and Cash Equivalents. The carrying amount approximates fair value because of the short maturity. Other Investments. The carrying amount, or cost plus accrued interest, of the certificates of deposit approximates fair value. Other Debt. For variable rate loans that re-price frequently, fair values are based on carrying values. The fair value of fixed rate loans is estimated based on the discounted cash flows of the loans using relevant treasury interest rates plus credit spreads (Level 2). Line of Credit. The carrying amount approximates fair value because the variable rate debt re-prices frequently. Mortgages Payable. For variable rate loans that re-price frequently, fair values are based on carrying values. The fair value of fixed rate loans is estimated based on the discounted cash flows of the loans using relevant treasury interest rates plus credit spreads (Level 2). The estimated fair values of our financial instruments as of July 31, 2016 and April 30, 2016, are as follows:
|  | (in thousands) |
|  | July 31, 2016 |  | April 30, 2016 |
|  | Carrying Amount |  | Fair Value |  | Carrying Amount |  | Fair Value |
FINANCIAL ASSETS |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 54,438 |  | $ | 54,438 |  | $ | 66,698 |  | $ | 66,698 |
FINANCIAL LIABILITIES |  |  |  |  |  |  |  |  |  |  |  |  |
Other debt |  |  | 78,383 |  |  | 78,383 |  |  | 82,026 |  |  | 82,026 |
Lines of credit |  |  | 17,500 |  |  | 17,500 |  |  | 17,500 |  |  | 17,500 |
Mortgages payable |  |  | 816,626 |  |  | 884,809 |  |  | 817,324 |  |  | 866,649 |
Mortgages payable related to assets held for sale |  |  | 67,794 |  |  | 79,632 |  |  | 68,824 |  |  | 78,690 |

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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://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=36462937&loc=d3e19207-110258 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 30 -URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14172-108612 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 28 -URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14064-108612 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=49121117&loc=d3e13537-108611 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 16 -URI http://asc.fasb.org/extlink&oid=49121117&loc=d3e13504-108611 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=49121117&loc=d3e13433-108611 + Details
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