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Note 9 - Fair Value
 9 Months Ended
Sep. 30, 2024
Notes to Financial Statements  
Fair Value Disclosures [Text Block]

NOTE 9.     FAIR VALUE

 

The fair value hierarchy prioritizes inputs to valuation techniques used to measure fair value into three broad levels:

 

Level 1 — Observable inputs such as unadjusted quoted prices in active markets for identical assets or liabilities.  

 

Level 2 — Inputs other than quoted prices in active markets that are observable either directly or indirectly, including: quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active or other inputs that are observable or can be corroborated by observable market data.

 

Level 3 — Unobservable inputs that are supported by little or no market data and require the reporting entity to develop its own assumptions.

 

At September 30, 2024 and December 31, 2023, our financial instruments included cash, cash equivalents, receivables, marketable securities, investments, accounts payable, and long-term debt. The carrying value of cash, cash equivalents, receivables, and accounts payable approximates fair value due to the short-term nature of the instruments. The carrying value of borrowings, if any, under our revolving line of credit facility approximates fair value because of the variable market interest rate charged to us for these borrowings. The fair value of borrowings under our term loan facility is estimated using quoted prices for similar debt (level 2 in the fair value hierarchy). At  September 30, 2024, the estimated fair value of our term loan borrowings included within long-term debt was $24,589,800, which is less than the carrying amount of $26,731,376. 

 

Warrants

 

Our Private Placement warrants related to Sky Harbour are considered level 2 and measured at fair value using observable inputs for similar assets in an active market. Our re-measurement of the Private Placement warrants from January 1, 2024 to  September 30, 2024 and  January 1, 2023 to September 30, 2023, resulted in gains of approximately $11,800,000 and $12,000, respectively, which are included within "Other investment income" within our Consolidated Statements of Operations.

 

Fund I, Fund II and BFR Special Purpose Entities

 

We report fund investments on our Consolidated Balance Sheets at their estimated fair value, with gains (losses) resulting from changes in fair value reflected within "Other investment income" in the accompanying Consolidated Statements of Operations. Each of the 24th Street Funds’ and BFR's investments in special purpose entities invested in real estate are categorized in Level 3 of the fair value hierarchy. The primary asset held by each special purpose entity is real estate property, for which third-party appraisals were obtained.  Appraisals on the investments in special purpose entities used an income capitalization and/or comparable sales approach to value the underlying real estate property. The income capitalization approach used capitalization rates ranging from 6.50% to 6.75%. The comparable sales approach used observable market transactions to value the underlying real estate property.

 

As of September 30, 2024, the aggregate fair value of the 24th Street Funds’ and BFR's investments in special purpose entities was approximately $41,700,000.

 

Marketable Equity Securities

 

On an investment life-to-date basis, we have realized net gains on the sale of equity securities within the marketable equity portfolio held at Boston Omaha of approximately $84,000,000.  These amounts exclude any realized gains on equity securities held within the marketable equity portfolio managed by UCS.

 

Sky Harbour Group Corporation Class A common stock

 

We account for our 18.6% equity interest in Sky Harbour, comprised of 12,440,642 shares of Class A common stock, under the equity method. If our investment in Sky Harbour’s Class A common stock was accounted for at fair value based on its quoted market price as of  September 30, 2024, it would be valued at approximately $137,300,000.

 

 

Marketable Equity Securities and U.S. Treasury Trading Securities

 

Marketable equity securities and U.S. Treasury trading securities are reported at fair values. Substantially all of the fair value is determined using observed prices of publicly traded securities, level 1 in the fair value hierarchy.

 

  

Total Carrying Amount in Consolidated Balance Sheet

  

Quoted Prices in Active Markets for Identical Assets

  

Realized Gains and (Losses) Included in Current Period Earnings (Loss)

  

Total Changes in Fair Values Included in Current Period Earnings (Loss)

 
                 

Marketable equity securities and U.S. Treasury trading securities at September 30, 2024

 $17,794,897  $17,794,897  $226,548  $250,850 
                 

Marketable equity securities and U.S. Treasury trading securities at December 31, 2023

 $49,322,696  $49,322,696  $740,892  $4,411,489