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Fair Value of Assets and Liabilities (Tables)
 3 Months Ended
Mar. 31, 2016
Fair Value of Assets and Liabilities  
Assets and liabilities recurring and nonrecurring measured at fair value

The table below presents certain of our assets measured at fair value at March 31, 2016, categorized by the level of inputs as defined in the fair value hierarchy under GAAP, used in the valuation of each asset:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

 

    

 

 

    

 

 

    

Significant

 

 

 

 

 

 

Quoted Prices in Active

 

Significant Other

 

Unobservable

 

 

 

 

 

 

Markets for Identical

 

Observable Inputs

 

Inputs

 

Description

 

Total

 

Assets (Level 1)

 

(Level 2)

 

(Level 3)

 

Recurring Fair Value Measurements

 

 

 

 

 

 

 

 

 

 

 

 

 

    Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

        Investments in available for sale securities(1)

 

$
75,660

 

$
75,660

 

$

—

 

$

—

 

Non-Recurring Fair Value Measurements

 

 

 

 

 

 

 

 

 

 

 

 

 

    Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

        Assets held for sale(2)

 

$
2,421

 

$

—

 

$

 —

 

$
2,421

 

(1)

Our investments in available for sale securities include our 4,235,000 common shares of Five Star and our 2,637,408 shares of RMR Inc. class A common stock. The fair values of these shares are based upon quoted prices at March 31, 2016 in active markets (Level 1 inputs). Our historical cost basis for our Five Star and RMR Inc. shares is $14,230 and $69,826, respectively, as of March 31, 2016. The unrealized losses of $4,532 for our Five Star shares and $3,864 for our RMR Inc. shares as of March 31, 2016 are included in cumulative other comprehensive income (loss) in our condensed consolidated balance sheets. We evaluated the decline in the fair value of the Five Star and RMR Inc. shares and determined that based on the severity and duration of the decline, and our ability and intent to hold these investments for a reasonable period of time sufficient for a forecasted recovery of fair value, we do not consider these investments to be other-than-temporarily impaired at March 31, 2016.

(2)

Assets held for sale consist of one MOB held for sale as of March 31, 2016. The MOB is recorded at its estimated fair value less costs to sell. We used an accepted offer from a third party to purchase this property to determine its fair value as of March 31, 2016.

 

Schedule of carrying value and fair value of the financial instruments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of March 31, 2016

 

As of December 31, 2015

Description

 

Carrying Amount (1)

 

Estimated Fair Value

 

Carrying Amount (1)

 

Estimated Fair Value

Senior unsecured notes

 

$
1,720,714

 

$
1,771,365

 

$
1,478,536

 

$
1,548,613

Secured mortgage debt and capital leases (2)

 

 
669,314

 

 
715,740

 

 
679,295

 

 
724,615

 

 

$
2,390,028

 

$
2,487,105

 

$
2,157,831

 

$
2,273,228

(1)

Includes unamortized debt issuance costs, premiums and discounts.

(2)

We assumed certain of these secured mortgage debts in connection with our acquisitions of certain properties. We recorded the assumed mortgages 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 mortgages to reduce interest expense to the estimated market interest rates as of the date of acquisition.