Summary of Fair Value of Financial Instruments

9 Months Ended

Sep. 30, 2024

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, 2024				December 31, 2023
	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Financial assets measured at fair value:


Investment in securities	$	41,493	$	41,493	$	—	$	—
Derivative assets	480		480		2,847		2,847
Financial liabilities measured at fair value:
Derivative liabilities	$	—	$	—	$	12	$	12
Financial assets not measured at fair value:
Cash and cash equivalents	$	168,675	$	168,675	$	85,599	$	85,599
Restricted cash	48,461		48,461		80,904		80,904
Accounts receivable, net	32,479		32,479		39,199		39,199

Note receivable	5,855		5,855		—		—



Due from third-party hotel managers	19,855		19,855		17,739		17,739
Financial liabilities not measured at fair value:
Indebtedness	$	1,221,844	$	1,185,109	$	1,171,459	$	1,124,377
Accounts payable and accrued expenses	144,868		144,868		149,867		149,867
Dividends and distributions payable	9,271		9,271		9,158		9,158

Due to Ashford Inc.	5,489		5,489		1,471		1,471
Due to related parties, net	16		16		603		603
Due to third-party hotel managers	1,509		1,509		1,608		1,608

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 to/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.

Investment in securities. See note 10 for a complete description of the methodology and assumptions utilized in determining fair values.

Note receivable. The carrying amount of note receivable approximates its fair value. We estimate the fair value of the note receivable to approximate the carrying value of $5.9 million at September 30, 2024. This is considered a Level 2 valuation technique.

Derivative assets and derivative liabilities. See notes 9 and 10 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 97.0% of the carrying value of $1.2 billion at September 30, 2024, and approximately 96.0% of the carrying value of $1.2 billion at December 31, 2023. These fair value estimates are considered a Level 2 valuation technique.