13. FAIR VALUES

Assets and Liabilities Recorded at Fair Value

The following table summarizes our assets and liabilities measured at fair value on a recurring basis ($ in thousands):


	June 30, 2015								December 31, 2014
	Level 1		Level 2		Level 3		Fair Value		Level 1		Level 2		Level 3		Fair Value
Assets
Derivatives	$	—	$	2,591	$	—	$	2,591	$	—	$	1,138	$	—	$	1,138
Other assets, at fair value⁽¹⁾	$	—	$	1,251	$	12,696	$	13,947	$	—	$	1,510	$	47,507	$	49,017
Liabilities
Derivatives	$	—	$	2,506	$	—	$	2,506	$	—	$	—	$	—	$	—

(1)	Other assets include loans, securities, equity investments, and other receivables carried at fair value.

The following table reconciles the beginning and ending balances of assets measured at fair value on a recurring basis using Level 3 inputs ($ in thousands):


	Six Months Ended June 30,
	2015			2014
January 1,	$	47,507		$	54,461
Proceeds from investments		(57,039	)		(326	)
Adjustments to fair value included in earnings
Unrealized gain on investments at fair value		22,228			5,829

June 30,	$	12,696		$	59,964

Our other assets include loans, securities, equity investments, and other receivables that are carried at fair value. The following describes the key assumptions used in arriving at the fair value of each of these assets as of June 30, 2015 and December 31, 2014.

Securities: As of June 30, 2015, our securities, which had a book value of $11.0 million, were valued by obtaining assessments from third-party dealers.

Loans: As of June 30, 2015, we had no loans carried at fair value. As of December 31, 2014, we had one hotel loan and one office loan with an aggregate fair value of $19.0 million. The discount rate used to value the hotel loan that was outstanding as of December 31, 2014, was 7% and a 100 bp discount rate increase would have resulted in a decrease in fair value of 0.3%. The discount rate used to value the office loan that was outstanding as of December 31, 2014, was 15% and a 100 bp discount rate increase would have resulted in a decrease in fair value of 1.1%.

Equity investments and other receivables: As of June 30, 2015, equity investments and other receivables, which had an aggregate book value of $2.9 million, were generally valued by discounting expected cash flows.

Refer to Note 2 for further discussion regarding fair value measurement.

Fair Value of Financial Instruments

As discussed in Note 2, GAAP requires disclosure of fair value information about financial instruments, whether or not recognized in the statement of financial position, for which it is practicable to estimate that value. The following table details the carrying amount, face amount, and fair value of the financial instruments described in Note 2 ($ in thousands):


	June 30, 2015						December 31, 2014
	Carrying Amount		Face Amount		Fair Value		Carrying Amount		Face Amount		Fair Value
Financial assets
Cash and cash equivalents	$	104,252	$	104,252	$	104,252	$	51,810	$	51,810	$	51,810
Restricted cash		7,025		7,025		7,025		11,591		11,591		11,591
Loans receivable, net		10,131,323		10,169,609		10,154,374		4,428,500		4,462,897		4,462,897

Financial liabilities
Secured debt agreements		7,088,738		7,088,738		7,088,738		2,040,783		2,040,783		2,040,783
Loan participations sold		635,581		635,581		635,581		499,433		499,433		499,433
Convertible notes, net		163,073		172,500		185,006		161,853		172,500		181,341

Estimates of fair value for cash, cash equivalents and convertible notes are measured using observable, quoted market prices, or Level 1 inputs. All other fair value significant estimates are measured using unobservable inputs, or Level 3 inputs. See Note 2 for further discussion regarding fair value measurement of certain of our assets and liabilities.