15. FAIR VALUES

Assets and Liabilities Measured at Fair Value

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


	December 31, 2017								December 31, 2016
	Level 1		Level 2		Level 3		Fair Value		Level 1		Level 2		Level 3		Fair Value
Assets
Derivatives	$	—	$	1,214	$	—	$	1,214	$	—	$	4,086	$	—	$	4,086
Liabilities
Derivatives	$	—	$	4,911	$	—	$	4,911	$	—	$	210	$	—	$	210

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):


	Year Ended December 31,
	2017		2016⁽¹⁾
January 1,	$	—	$	12,561
Proceeds from investment realizations		—		(3,609	)
Transfers out of level 3⁽²⁾		—		(20,745	)
Adjustments to fair value included in earnings
Gain on investments at fair value		—		11,793

December 31,	$	—	$	—

(1)

All assets measured at fair value on a recurring basis using Level 3 inputs were included as a component of other assets in the consolidated Balance Sheets.

(2)

During the second quarter of 2016, $20.7 million of collateralized debt obligations, or CDOs, were transferred out of Level 3 and into Level 1 as a result of a binding agreement to sell the underlying collateral assets of the CDO to an independent third-party. These investments were realized in the third quarter of 2016.

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):


	December 31, 2017						December 31, 2016
	Carrying Amount		Face Amount		Fair Value		Carrying Amount		Face Amount		Fair Value
Financial assets
Cash and cash equivalents	$	69,654	$	69,654	$	69,654	$	75,567	$	75,567	$	75,567
Restricted cash		32,864		32,864		32,864		—		—		—
Loans receivable, net		10,056,732		10,108,226		10,112,331		8,692,978		8,727,218		8,733,784

Financial liabilities
Secured debt agreements, net		5,273,855		5,290,536		5,290,536		5,716,354		5,731,626		5,731,626
Loan participations sold, net		80,415		80,706		80,706		348,077		349,633		349,633
Securitized debt obligations, net		1,282,412		1,292,120		1,292,589		—		—		—
Convertible notes, net		563,911		575,000		610,201		166,762		172,500		191,763

Estimates of fair value for cash and cash equivalents, restricted cash, and convertible notes are measured using observable, quoted market prices, or Level 1 inputs. Estimates of fair value for securitized debt obligations are measured using observable, quoted market prices, in inactive markets, or Level 2 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.