Fair Value of Assets and Liabilities

6 Months Ended

Jun. 30, 2013

Fair Value of Assets and Liabilities

Fair Value of Assets and Liabilities

Note 8.  Fair Value of Assets and Liabilities

The following table presents certain of our assets and liabilities that are measured at fair value on a recurring and non recurring basis at June 30, 2013 categorized by the level of inputs used in the valuation of each asset or liability.

			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable  Inputs		Significant Unobservable Inputs
Description	Total		(Level 1)		(Level 2)		(Level 3)
Assets held for sale(1)	$	42,551	$	—	$	42,551	$	—
Long-lived assets held and used(2)	$	653	$	—	$	653	$	—
Investments in available for sale securities(3)	$	29,538	$	29,538	$	—	$	—
Unsecured senior notes(4)	$	1,139,302	$	1,139,302	$	—	$	—
Secured debt(5)	$	773,974	$	—	$	—	$	773,974

(1) Assets held for sale consist of eighteen of our properties that we expect to sell that are reported at fair value less costs to sell.  We used offers to purchase these properties made by third parties or comparable sales transactions (Level 2 inputs) to determine the fair value of these properties.  We have recorded cumulative impairments of approximately $38,005 to these properties in order to reduce their book value to fair value.

(2) Long-lived assets held and used consist of one of our properties.  We used broker information and comparable sales transactions (Level 2 inputs) to determine the fair value of this property.  We have previously recorded impairment of assets charges of $1,304 and $3,071 for the six months ended June 30, 2013 and 2012, respectively, for this property in order to reduce its carrying value to the amount stated.

(3) Our investments in available for sale securities include our 250,000 common shares of CWH and 4,235,000 common shares of Five Star. The fair values of these shares are based on quoted prices at June 30, 2013 in active markets (Level 1 inputs).

(4) We estimate the fair values of our unsecured senior notes using an average of the bid and ask price of our then outstanding four issuances of senior notes (Level 1 inputs) on or about June 30, 2013.  The fair values of these senior note obligations exceed their aggregate book values of $1,092,695 by $46,607 because these notes were trading at a premium to their face amounts.

(5) We estimate the fair values of our secured debt by using discounted cash flow analyses and currently prevailing market terms at June 30, 2013 (Level 3 inputs).  Because Level 3 inputs are unobservable, our estimated fair value may differ materially from the actual fair value.

In addition to the assets and liabilities described in the above table, our additional financial instruments include rents receivable, cash and cash equivalents, restricted cash, unsecured debt and other liabilities. The fair values of these additional financial instruments approximate their carrying values at June 30, 2013 based upon their liquidity, short term maturity, variable rate pricing or our estimate of fair value using discounted cash flow analyses and prevailing interest rates.