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Fair Value Measures (Tables)
 12 Months Ended
Dec. 31, 2018
Fair Value Disclosures [Abstract]  
Schedule of assets and liabilities measured at fair value on a recurring basis
The following tables present information about the Company’s assets and liabilities measured at fair value on a recurring basis as of December 31, 2018 and 2017, 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 December 31, 2018
Assets:








Derivative assets

$
—

 
$
544

 
$
—


$
544

Investment in Cole REITs
 
—

 
—

 
7,844

 
7,844

Total assets
 
$
—

 
$
544

 
$
7,844

 
$
8,388




Level 1

Level 2

Level 3

Balance as of December 31, 2017
Assets:
 
 
 
 
 
 
 
 
CMBS
 
$
—

 
$
—

 
$
40,974

 
$
40,974

Derivative assets
 
—

 
627

 
—

 
627

Total assets
 
$
—

 
$
627

 
$
40,974

 
$
41,601
Reconciliations of the 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 year ended December 31, 2018 (in thousands):
 
 
CMBS
 
Investment in Cole REITs (1)
Beginning balance, January 1, 2018
 
$
40,974

 
$
3,264

Total gains and losses
 
 
 
 
Unrealized loss included in other comprehensive income, net
 
(205
)
 
—

Realized loss included in other income, net
 
(34
)
 
—

Unrealized gain included in other income, net
 
—

 
5,102

Purchases, issuance, settlements
 
 
 
 
Return of principal received
 
(4,864
)
 
—

Amortization included in net income, net
 
157

 
—

Sale of investments
 
(36,028
)
 
(522
)
Ending Balance, December 31, 2018
 
$
—

 
$
7,844

____________________________________
(1)
As discussed in Note 2 – Summary of Significant Accounting Policies, as of December 31, 2017, the Company accounted for its investment in Cole REITs using the equity method of accounting. Subsequent to the sale of Cole Capital, the Company retained interests in CCIT II, CCIT III and CCPT V, which were carried at fair value as of December 31, 2018.
The following are reconciliations of the changes in assets and liabilities with Level 3 inputs in the fair value hierarchy for the year ended December 31, 2017 (in thousands):
 
 
CMBS
Beginning balance, January 1, 2017
 
$
47,215

Total gains and losses
 
 
Unrealized loss included in other comprehensive income, net
 
(951
)
Purchases, issuance, settlements
 
 
Return of principal received
 
(4,388
)
Amortization included in net income, net
 
(902
)
Ending Balance, December 31, 2017
 
$
40,974
Reconciliations of the 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 year ended December 31, 2018 (in thousands):
 
 
CMBS
 
Investment in Cole REITs (1)
Beginning balance, January 1, 2018
 
$
40,974

 
$
3,264

Total gains and losses
 
 
 
 
Unrealized loss included in other comprehensive income, net
 
(205
)
 
—

Realized loss included in other income, net
 
(34
)
 
—

Unrealized gain included in other income, net
 
—

 
5,102

Purchases, issuance, settlements
 
 
 
 
Return of principal received
 
(4,864
)
 
—

Amortization included in net income, net
 
157

 
—

Sale of investments
 
(36,028
)
 
(522
)
Ending Balance, December 31, 2018
 
$
—

 
$
7,844

____________________________________
(1)
As discussed in Note 2 – Summary of Significant Accounting Policies, as of December 31, 2017, the Company accounted for its investment in Cole REITs using the equity method of accounting. Subsequent to the sale of Cole Capital, the Company retained interests in CCIT II, CCIT III and CCPT V, which were carried at fair value as of December 31, 2018.
The following are reconciliations of the changes in assets and liabilities with Level 3 inputs in the fair value hierarchy for the year ended December 31, 2017 (in thousands):
 
 
CMBS
Beginning balance, January 1, 2017
 
$
47,215

Total gains and losses
 
 
Unrealized loss included in other comprehensive income, net
 
(951
)
Purchases, issuance, settlements
 
 
Return of principal received
 
(4,388
)
Amortization included in net income, net
 
(902
)
Ending Balance, December 31, 2017
 
$
40,974
Summary of impairment charges by asset class
The following table presents the impairment charges by asset class recorded during the years ended December 31, 2018, 2017 and 2016 (dollar amounts in thousands):
 
 
Year Ended December 31,
 
 
2018
 
2017
 
2016
Properties impaired
 
70

 
69

 
153

 
 
 
 
 
 
 
Asset classes impaired:
 
 
 
 
 
 
Investment in real estate assets, net
 
$
53,562

 
$
50,087

 
$
183,240

Investment in direct financing leases, net
 
1,381

 
553

 
—

Below-market lease liabilities, net
 
(296
)
 
(92
)
 
(421
)
Total impairment loss
 
$
54,647

 
$
50,548

 
$
182,819
Fair value, by balance sheet grouping
The fair values of the Company’s financial instruments are reported below (dollar amounts in thousands):
 
 
Level
 
Carrying Amount at December 31, 2018
 
Fair Value at December 31, 2018
 
Carrying Amount at December 31, 2017
 
Fair Value at December 31, 2017
Assets:
 
 
 
 
 
 
 
 
 
 
Mortgage notes receivable, net
 
1, 3
 
$
10,164

 
$
10,164

 
$
20,294

 
$
28,272

 
 
 
 
 
 
 
 
 
 
 
Liabilities (1):
 
 
 
 
 
 
 
 
 
 
Mortgage notes payable and other debt, net
 
2
 
$
1,933,209

 
$
1,961,496

 
$
2,095,690

 
$
2,144,522

Corporate bonds, net
 
2
 
3,395,885

 
3,368,928

 
2,848,768

 
2,922,027

Convertible debt, net
 
2
 
398,591

 
396,905

 
992,218

 
1,012,349

Credit facility
 
2
 
403,000

 
403,000

 
185,000

 
185,000

Total liabilities
 
 
 
$
6,130,685

 
$
6,130,329

 
$
6,121,676

 
$
6,263,898


_______________________________________________
(1)
Current and prior period liabilities’ carrying and fair values exclude net deferred financing costs.