XML 26 R15.htm IDEA: XBRL DOCUMENT

FAIR VALUE MEASUREMENTS

3 Months Ended

Mar. 31, 2021

Cash and cash equivalents, restricted cash, accounts payable, accrued expenses, and other liabilities are carried at amounts that reasonably approximate their fair value due to their short-term nature. For variable rate line of credit debt that re-prices frequently, fair values are based on carrying values.

In determining the fair value of other financial instruments, we apply FASB ASC 820, “Fair Value Measurement and Disclosures.” 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 assumptions (Level 3). Fair value estimates may differ from the amounts that may ultimately be realized upon sale or disposition of the assets and liabilities.

Fair Value Measurements on a Recurring Basis


	(in thousands)
	Total		Level 1		Level 2	Level 3
March 31, 2021
Assets
Mortgages and notes receivable	$	36,443	—		—	$	36,443
Liabilities
Derivative instruments - interest rate swaps	$	12,798	—		—	$	12,798

December 31, 2020
Assets
Mortgages and notes receivable	30,994		—		—	30,994
Liabilities
Derivative instruments - interest rate swaps	$	15,905	$	—	—	$	15,905

The fair value of our interest rate swaps is determined using the market standard methodology of netting discounted expected variable cash payments and receipts. The variable cash payments and receipts are based on an expectation of future interest rates (a forward curve) derived from observable market interest rate curves. We also consider both our own nonperformance risk and the counterparty’s nonperformance risk in the fair value measurement (Level 3).

We utilize an income approach with level 3 inputs based on expected future cash flows to value these instruments. The inputs include market transactions for similar instruments, management estimates of comparable interest rates (range of 3.75% to 10.75%), and instrument specific credit risk (range of 0.5% to 1.0%). Changes in the fair value of these receivables from period to period are reported in interest and other income on our condensed consolidated statements of operations.


	(in thousands)
	Fair Value Measurement at March 31,		Other Gains (Losses)		Interest Income		Total Changes in Fair Value Included in Current-Period Earnings
Three months ended March 31, 2021
Mortgage loans and notes receivable	$	36,443	$	4	$	407	$	411
Three months ended March 31, 2020
Mortgage loans and notes receivable	$	26,697	$	1	$	527	$	528

Fair Value Measurements on a Nonrecurring Basis

There were no non-financial assets or liabilities measured at fair value on a nonrecurring basis at March 31, 2021 and December 31, 2020.

Financial Assets and Liabilities Not Measured at Fair Value

The fair value of mortgages payable are estimated based on the discounted cash flows of the loans using market research and management estimates of comparable interest rates (Level 3).

The estimated fair values of our financial instruments as of March 31, 2021 and December 31, 2020, respectively, are as follows:


	(in thousands)
	March 31, 2021				December 31, 2020
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
FINANCIAL ASSETS
Cash and cash equivalents	$	10,816	$	10,816	$	392	$	392
Restricted cash	$	1,610	$	1,610	$	6,918	$	6,918

FINANCIAL LIABILITIES
Revolving lines of credit(1)	$	181,544	$	181,544	$	152,871	$	152,871
Term loans(1)	$	145,000	$	145,000	$	145,000	$	145,000
Unsecured senior notes	$	175,000	$	179,630	$	125,000	$	133,181
Mortgages payable	$	295,001	$	301,538	$	298,445	$	308,855

(1)Excluding the effect of interest rate swap agreements. Refer to Note 6 for discussion on the fair value of the interest rate swap agreements.

- 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 + Details