Fair Value Measures (Tables)

9 Months Ended

Sep. 30, 2015

Schedule of Impairment Charges by Asset Class

The following table presents the impairment charges by asset class recorded during the nine months ended September 30, 2015 and 2014 (dollar amounts in thousands):



	Nine Months Ended September 30,
	2015			2014
Properties impaired	188			9

Asset classes impaired:
Investment in real estate assets, net	$	82,654		$	3,855
Investment in direct financing leases, net	3,417			—
Below-market lease liabilities, net	(730		)	—
Total impairment loss	$	85,341		$	3,855

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis

The following tables present information about the Company’s assets and liabilities measured at fair value on a recurring basis as of September 30, 2015 and December 31, 2014, aggregated by the level in the fair value hierarchy within which those instruments fall (in thousands):



	Level 1		Level 2			Level 3		Balance as of September 30, 2015
Assets:
CMBS	$	—	$	—		$	54,455	$	54,455
Total assets	$	—	$	—		$	54,455	$	54,455
Liabilities:
Interest rate swap liabilities	$	—	$	(15,350	)	$	—	$	(15,350	)

	Level 1		Level 2			Level 3		Balance as of December 31, 2014
Assets:
CMBS	$	—	$	—		$	58,646	$	58,646
Interest rate swap assets	—		5,509			—		5,509
Total assets	$	—	$	5,509		$	58,646	$	64,155
Liabilities:
Interest rate swap liabilities	$	—	$	(7,384	)	$	—	$	(7,384	)

Reconciliations of Changes in (Liabilities) with Level 3 Inputs

The following are reconciliations of the changes in assets and (liabilities) with Level 3 inputs in the fair value hierarchy for the nine months ended September 30, 2015 and 2014 (in thousands):



	CMBS
Beginning balance, December 31, 2014	$	58,646
Total gains and losses:
Unrealized loss included in other comprehensive income, net	(232		)
Purchases, issuances, settlements and amortization:
Principal payments received	(4,055		)
Amortization included in net income	96
Ending balance, September 30, 2015	$	54,455



	CMBS			Series D Preferred Stock Embedded Derivative			Contingent Consideration Arrangements			Total
Beginning balance, December 31, 2013	$	60,583		$	(16,736	)	$	—		$	43,847
Total gains and losses:
Unrealized gain included in other comprehensive income, net	9,456			—			—			9,456
Changes in fair value included in net loss	—			(13,574		)	(990		)	(14,564		)
Purchases, issuances, settlements and amortization:
Fair value at purchase/issuance	151,197			—			(3,606		)	147,591
Sale of CMBS acquired in the Cole Merger	(151,248		)	—			—			(151,248		)
Reclassification of previous unrealized gains on investment securities into net loss-CMBS	(7,417		)	—			—			(7,417		)
Return of principal received	(3,678		)	—			—			(3,678		)
Amortization included in net loss	184			—			—			184
Reclassification of contingent consideration to held for sale	—			—			4,596			4,596
Redemption of Series D	—			30,310			—			30,310
Ending balance, September 30, 2014	$	59,077		$	—		$	—		$	59,077

Reconciliations of Changes in Assets with Level 3 Inputs

The following are reconciliations of the changes in assets and (liabilities) with Level 3 inputs in the fair value hierarchy for the nine months ended September 30, 2015 and 2014 (in thousands):



	CMBS
Beginning balance, December 31, 2014	$	58,646
Total gains and losses:
Unrealized loss included in other comprehensive income, net	(232		)
Purchases, issuances, settlements and amortization:
Principal payments received	(4,055		)
Amortization included in net income	96
Ending balance, September 30, 2015	$	54,455



	CMBS			Series D Preferred Stock Embedded Derivative			Contingent Consideration Arrangements			Total
Beginning balance, December 31, 2013	$	60,583		$	(16,736	)	$	—		$	43,847
Total gains and losses:
Unrealized gain included in other comprehensive income, net	9,456			—			—			9,456
Changes in fair value included in net loss	—			(13,574		)	(990		)	(14,564		)
Purchases, issuances, settlements and amortization:
Fair value at purchase/issuance	151,197			—			(3,606		)	147,591
Sale of CMBS acquired in the Cole Merger	(151,248		)	—			—			(151,248		)
Reclassification of previous unrealized gains on investment securities into net loss-CMBS	(7,417		)	—			—			(7,417		)
Return of principal received	(3,678		)	—			—			(3,678		)
Amortization included in net loss	184			—			—			184
Reclassification of contingent consideration to held for sale	—			—			4,596			4,596
Redemption of Series D	—			30,310			—			30,310
Ending balance, September 30, 2014	$	59,077		$	—		$	—		$	59,077

Fair Value, by Balance Sheet Grouping

The fair values of the Company’s financial instruments that are not reported at fair value in the consolidated balance sheets are reported below (dollar amounts in thousands):



	Level	Carrying Amount at September 30, 2015		Fair Value at September 30, 2015		Carrying Amount at December 31, 2014		Fair Value at December 31, 2014
Assets:
Loans held for investment	3	$	40,002	$	48,330	$	42,106	$	42,645

Liabilities:
Mortgage notes payable and other debt, net ⁽¹⁾	3	$	3,210,413	$	3,476,992	$	3,805,761	$	3,931,029
Corporate bonds, net	3	2,547,059		2,588,214		2,546,499		2,709,845
Convertible debt, net	3	981,031		1,020,495		977,521		1,088,069
Credit facilities	3	2,110,000		2,114,292		3,184,000		3,145,884
Total liabilities		$	8,848,503	$	9,199,993	$	10,513,781	$	10,874,827

_______________________________________________

(1) Includes mortgage notes secured by properties held for sale as of September 30, 2015.