Fair Value Measurements

Recurring Fair Value Measurements:

Assets and liabilities measured at fair value on a recurring basis as of September 30, 2017 and December 31, 2016, aggregated by the level in the fair value hierarchy in which those measurements fall, are as follows (in thousands):



	Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value at September 30, 2017
Assets:
Investments, mutual funds held in a grantor trust	$	30,075					$	30,075
Investments, mutual funds	8,715						8,715
Derivative instruments:
Interest rate contracts			$	835			835
Total	$	38,790	$	835	$	—	$	39,625
Liabilities:
Deferred compensation plan obligations	$	30,075					$	30,075
Total	$	30,075	$	—	$	—	$	30,075



	Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value at December 31, 2016
Assets:
Investments, mutual funds held in a grantor trust	$	26,328					$	26,328
Investments, mutual funds	7,670						7,670
Derivative instruments:
Interest rate contracts			$	126			126
Total	$	33,998	$	126	$	—	$	34,124
Liabilities:
Deferred compensation plan obligations	$	26,328					$	26,328
Total	$	26,328	$	—	$	—	$	26,328

Nonrecurring Fair Value Measurements:

Property and Property Held for Sale Impairments

Property is reviewed for impairment if events or changes in circumstances indicate that the carrying amount of the property, including any identifiable intangible assets, site costs and capitalized interest, may not be recoverable. In such an event, a comparison is made of the current and projected operating cash flows of each such property into the foreseeable future on an undiscounted basis to the carrying amount of such property. If we conclude that an impairment may have occurred, estimated fair values are determined by management utilizing cash flow models, market capitalization rates and market discount rates, or by obtaining third-party broker valuation estimates, appraisals, bona fide purchase offers or the expected sales price of an executed sales agreement in accordance with our fair value measurements accounting policy. Market capitalization rates and market discount rates are determined by reviewing current sales of similar properties and transactions, and utilizing management’s knowledge and expertise in property marketing.

No assets were measured at fair value on a nonrecurring basis at December 31, 2016. Assets measured at fair value on a nonrecurring basis at September 30, 2017 aggregated by the level in the fair value hierarchy in which those measurements fall, are as follows (in thousands):



	Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value		Total Gains (Losses) ⁽¹⁾
Property ⁽²⁾			$	12,901	$	4,184	$	17,085	$	(7,828	)
Total	$	—	$	12,901	$	4,184	$	17,085	$	(7,828	)

____________


(1)	Total gains (losses) exclude impairments on disposed assets because they are no longer held by us.

(2)

In accordance with our policy of evaluating and recording impairments on the disposal of long-lived assets, property with a carrying amount of $24.9 million was written down to a fair value of $17.1 million, resulting in a loss of $7.8 million, which was included in earnings for the first quarter of 2017. Management’s estimate of fair value of these properties was determined using a bona fide purchase offer for the Level 2 inputs. See the quantitative information about the significant unobservable inputs used for our Level 3 fair value measurements table below.

Fair Value Disclosures:

Unless otherwise described below, short-term financial instruments and receivables are carried at amounts which approximate their fair values based on their highly-liquid nature, short-term maturities and/or expected interest rates for similar instruments.

Schedule of our fair value disclosures is as follows (in thousands):



	September 30, 2017						December 31, 2016
	Carrying Value		Fair Value Using Significant Other Observable Inputs (Level 2)		Fair Value Using Significant Unobservable Inputs (Level 3)		Carrying Value		Fair Value Using Significant Other Observable Inputs (Level 2)		Fair Value Using Significant Unobservable Inputs (Level 3)
Other Assets:
Tax increment revenue bonds⁽¹⁾	$	23,910			$	23,910	$	23,910			$	23,910
Investments, held to maturity⁽²⁾	5,241		$	5,247			5,240		$	5,248
Debt:
Fixed-rate debt	2,067,772				2,128,695		2,089,769				2,132,082
Variable-rate debt	146,547				145,173		266,759				265,230

_______________


(1)	At September 30, 2017 and December 31, 2016, the credit loss balance on our tax increment revenue bonds was $31.0 million.


(2)	Investments held to maturity are recorded at cost. As of September 30, 2017 and December 31, 2016, a $6 thousand and an $8 thousand unrealized gain was recognized, respectively.

The quantitative information about the significant unobservable inputs used for our Level 3 fair value measurements as of September 30, 2017 and December 31, 2016 reported in the above tables, is as follows:



Description	Fair Value at				Valuation Technique	Unobservable Inputs	Range
	September 30, 2017		December 31, 2016				Minimum					Maximum
	(in thousands)						2017			2016		2017			2016
Property	$	4,184	$	—	Discounted cash flows	Discount rate	10.5		%			12.0		%
						Capitalization rate	8.8		%			10.0		%
						Holding period (years)	5					10
						Expected future inflation rate ⁽¹⁾						2.0		%
						Market rent growth rate ⁽¹⁾						3.0		%
						Expense growth rate ⁽¹⁾						2.0		%
						Vacancy rate ⁽¹⁾						20.0		%
						Renewal rate ⁽¹⁾						70.0		%
						Average market rent rate ⁽¹⁾	$	11.00				$	16.00
						Average leasing cost per square foot ⁽¹⁾	$	10.00				$	35.00
Tax increment revenue bonds	23,910		23,910		Discounted cash flows	Discount rate	6.5		%	6.5	%	7.5		%	7.5	%
						Expected future growth rate	1.0		%	1.0	%	2.5		%	2.0	%
						Expected future inflation rate	1.0		%	1.0	%	3.0		%	3.0	%
Fixed-rate debt	2,128,695		2,132,082		Discounted cash flows	Discount rate	3.0		%	3.0	%	5.3		%	5.2	%
Variable-rate debt	145,173		265,230		Discounted cash flows	Discount rate	2.1		%	1.6	%	2.8		%	2.4	%

_______________


(1)	Only applies to one property valuation.