Fair Value of Assets and Liabilities

12 Months Ended

Dec. 31, 2021

Fair Value of Assets and LiabilitiesThe following table presents certain of our assets that are measured at fair value at December 31, 2021 and 2020, categorized by the level of inputs as defined in the fair value hierarchy under GAAP, used in the valuation of each asset.


	As of December 31, 2021				As of December 31, 2020
Description	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Recurring Fair Value Measurement Assets:
Investment in AlerisLife (Level 1) (1)	$	31,540	$	31,540	$	73,772	$	73,772
Investment in unconsolidated joint venture (Level 3) (2)	$	215,127	$	215,127	$	—	$	—

(1)Our 10,691,658 shares of common stock of AlerisLife are included in investments in equity securities in our consolidated balance sheets, and are reported at fair value, which is based upon quoted market prices on Nasdaq (Level 1 inputs). During the years ended December 31, 2021 and 2020, we recorded an unrealized loss of $42,232 and an unrealized gain of $34,106, respectively, which are included in gains and losses on equity securities, net in our consolidated statements of comprehensive income (loss), to adjust the carrying value of our investment in AlerisLife common shares to their fair value. See Notes 2 and 8 for further information about our investment in AlerisLife.

(2)We own a 20% equity interest in a joint venture that owns a life science property located in Boston, Massachusetts and is included in investment in unconsolidated joint venture in our consolidated balance sheet, and is reported at fair value, which is based on significant unobservable inputs (Level 3 inputs). The significant unobservable inputs used in the fair value are a discount rate of 5.58%, an exit capitalization rate of 5.25% and a holding period of approximately 10 years and market rents. The assumptions are based on the location, type and nature of the property, and current and anticipated market conditions, which are derived from appraisers, industry publications and our experience. See Note 3 for further information regarding this joint venture.

In addition to the assets described in the table above, our financial instruments at December 31, 2021 and December 31, 2020 included cash and cash equivalents, restricted cash, other assets, our revolving credit facility, our previously existing $200,000 term loan, senior unsecured notes, secured debt and finance leases and other unsecured obligations and liabilities. The fair values of these financial instruments approximated their carrying values in our consolidated financial statements as of such dates, except as follows:


	As of December 31, 2021				As of December 31, 2020
Description	Carrying Amount (1)		Estimated Fair Value		Carrying Amount (1)		Estimated Fair Value
Senior unsecured notes, 6.750% coupon rate, due 2021	$	—	$	—	$	299,273	$	303,891
Senior unsecured notes, 4.750% coupon rate, due 2024	249,348		257,695		249,068		256,258
Senior unsecured notes, 9.750% coupon rate, due 2025	987,903		1,081,990		984,359		1,135,800
Senior unsecured notes, 4.750% coupon rate, due 2028	492,199		491,480		490,925		502,648
Senior unsecured notes, 4.375% coupon rate, due 2031	492,127		480,763		—		—
Senior unsecured notes, 5.625% coupon rate, due 2042	342,183		309,260		341,802		330,120
Senior unsecured notes, 6.250% coupon rate, due 2046	243,051		226,500		242,762		245,000
Secured debts (2)	69,713		71,963		691,573		716,185
	$	2,876,524	$	2,919,651	$	3,299,762	$	3,489,902

(1)Includes unamortized net debt issuance costs, premiums and discounts.

(2)We assumed certain of these secured debts in connection with our acquisition of certain properties. We recorded the assumed mortgage notes at estimated fair value on the date of acquisition and we are amortizing the fair value adjustments, if any, to interest expense over the respective terms of the mortgage notes to adjust interest expense to the estimated market interest rates as of the date of acquisition.

We estimated the fair value of our two issuances of senior unsecured notes due 2042 and 2046 based on the closing price on Nasdaq (Level 1 input) as of December 31, 2021. We estimated the fair values of our four issuances of senior unsecured notes due 2024, 2025, 2028 and 2031 using an average of the bid and ask price on Nasdaq on or about December 31, 2021 (Level 2 inputs as defined in the fair value hierarchy under GAAP). We estimated the fair values of our secured debts by using discounted cash flows analyses and currently prevailing market terms as of the measurement date (Level 3 inputs as defined in the fair value hierarchy under GAAP). Because Level 3 inputs are unobservable, our estimated fair values may differ materially from the actual fair values.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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