Summary of Fair Value of Financial Instruments

9 Months Ended

Sep. 30, 2021

Investments, All Other Investments [Abstract]

Summary of Fair Value of Financial Instruments

Determining the estimated fair values of certain financial instruments such as indebtedness requires considerable judgment to interpret market data. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. Accordingly, the estimates presented are not necessarily indicative of the amounts at which these instruments could be purchased, sold or settled.

The carrying amounts and estimated fair values of financial instruments were as follows (in thousands):


	September 30, 2021				December 31, 2020
	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Financial assets and liabilities measured at fair value:


Derivative assets	$	74	$	74	$	—	$	—
Derivative liabilities	1,338		1,338		—		—
Financial assets not measured at fair value:
Cash and cash equivalents	$	195,517	$	195,517	$	78,606	$	78,606
Restricted cash	44,753		44,753		34,544		34,544
Accounts receivable, net	17,317		17,317		13,557		13,557




Due from related parties, net	1,910		1,910		991		991
Due from third-party hotel managers	20,390		20,390		12,271		12,271
Financial liabilities not measured at fair value:
Indebtedness	$	1,172,359	$968,075 to $1,069,978		$	1,128,724	$884,325 to $977,411
Accounts payable and accrued expenses	89,265		89,265		61,758		61,758
Dividends and distributions payable	2,112		2,112		2,736		2,736

Due to Ashford Inc.	820		820		2,772		2,772

Due to third-party hotel managers	1,665		1,665		1,393		1,393

Cash, cash equivalents and restricted cash. These financial assets have maturities of less than 90 days and most bear interest at market rates. The carrying value approximates fair value due to their short-term nature. This is considered a Level 1 valuation technique.

Accounts receivable, net, due from related parties, net, accounts payable and accrued expenses, dividends and distributions payable, due to Ashford Inc. and due to/from third-party hotel managers. The carrying values of these financial instruments approximate their fair values due to the short-term nature of these financial instruments. This is considered a Level 1 valuation technique.

Derivative assets and derivative liabilities. See notes 7 and 8 for a complete description of the methodology and assumptions utilized in determining fair values.

Indebtedness, net. Fair value of indebtedness is determined using future cash flows discounted at current replacement rates for these instruments. Cash flows are determined using a forward interest rate yield curve. The current replacement rates are determined by using the U.S. Treasury yield curve or the index to which these financial instruments are tied, and adjusted for the credit spreads. Credit spreads take into consideration general market conditions, maturity and collateral. We estimated the fair value of the total indebtedness to be approximately 82.6% to 91.3% of the carrying value of $1.2 billion at September 30, 2021, and approximately 78.3% to 86.6% of the carrying value of $1.1 billion at December 31, 2020. These fair value estimates are considered a Level 2 valuation technique.