Fair Value Measurements

9 Months Ended

Sep. 30, 2018

Note 11—Fair Value Measurements

The carrying amounts of restricted cash, certain components of other assets, accounts payable and accrued expenses, resident security deposits, and other liabilities approximate fair value due to the short maturity of these amounts. Our interest rate swap agreements and interest rate cap agreements are the only financial instruments recorded at fair value on a recurring basis within our condensed consolidated financial statements. The fair values of our interest rate caps and swaps, which are classified as Level 2 in the fair value hierarchy, are estimated using market values of instruments with similar attributes and maturities. See Note 7 for the details of the balance sheet classification and the fair values for the interest rate caps and swaps.

The following table displays the carrying values and fair values of financial instruments as of September 30, 2018 and December 31, 2017:



		September 30, 2018				December 31, 2017
		Carrying Value		Fair Value		Carrying Value		Fair Value
Assets carried at historical cost on the condensed consolidated balance sheets:
Investments in debt securities⁽¹⁾	Level 2	$	392,860	$	390,163	$	378,545	$	379,500

Liabilities carried at historical cost on the condensed consolidated balance sheets:
Mortgage loans⁽²⁾	Level 2	$	7,466,382	$	7,418,180	$	7,608,228	$	7,627,423
Term loan facility⁽³⁾	Level 3	1,500,000		1,500,033		1,500,000		1,494,494
Revolving facility	Level 3	—		—		35,000		35,007
Convertible senior notes⁽⁴⁾	Level 3	555,081		548,305		548,536		557,179


(1)	The carrying values of debt securities are shown net of discounts.


(2)	The carrying values of the mortgage loans are shown net of discount and exclude $56,682 and $28,075 of deferred financing costs as of September 30, 2018 and December 31, 2017, respectively.


(3)	The carrying value of the Term Loan Facility excludes $9,862 and $12,027 of deferred financing costs as of September 30, 2018 and December 31, 2017, respectively.


(4)	The carrying values of the Convertible Senior Notes include unamortized discounts of $19,912 and $26,464 as of September 30, 2018 and December 31, 2017, respectively.

The fair values of our investment in debt securities and mortgage loans, which are classified as Level 2 in the fair value hierarchy, are estimated based on market bid prices of comparable instruments at the end of the period. The fair values of our Term Loan Facility and Revolving Facility, which are classified as Level 3 in the fair value hierarchy, are estimated using a discounted cash flow methodology based on market interest rate data and other market factors available at the end of the period. Fair value of convertible notes are estimated by discounting contractual cash flows at the interest rate we estimate the notes would bear if sold in the current market.

Our assets measured at fair value on a nonrecurring basis are those assets for which we have recorded impairments. The assets for which we have recorded impairments, measured at fair value on a nonrecurring basis, are summarized below:



	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
Investments in single-family residential properties, net held for use (Level 3):
Pre-impairment amount	$	894		$	1,827		$	1,658		$	2,323
Total impairments	(186		)	(360		)	(362		)	(627		)
Fair value	$	708		$	1,467		$	1,296		$	1,696



	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
Investments in single-family residential properties, net held for sale (Level 3):
Pre-impairment amount	$	7,318		$	988		$	19,726		$	9,115
Total impairments	(1,110		)	(64		)	(3,208		)	(929		)
Fair value	$	6,208		$	924		$	16,518		$	8,186

For additional information related to our single-family residential properties during the three and nine months ended September 30, 2018 and 2017, refer to Note 3.

- 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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