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Fair Value Of Financial Instruments
6 Months Ended
Jun. 30, 2014
Fair Value Of Financial Instruments [Abstract]  
Fair Value Disclosures [Text Block]
FAIR VALUE OF FINANCIAL INSTRUMENTS

Our financial assets and liabilities measured at fair value (based on the hierarchy of the three levels of inputs described in Note 1 to the consolidated financial statements contained in our most recent Annual Report on Form 10-K) on a recurring basis include marketable securities, derivative financial instruments and contingent consideration arrangements. Marketable securities consist of common stock of other healthcare REITs. Derivative financial instruments include our interest rate swap agreements. Contingent consideration arrangements relate to certain provisions of recent real estate purchase agreements involving both business combinations.

Marketable securities. We utilize quoted prices in active markets to measure debt and equity securities; these items are classified as Level 1 in the hierarchy and include the common and preferred stock of other healthcare REITs.

Derivative financial instruments. Derivative financial instruments are valued in the market using discounted cash flow techniques. These techniques incorporate Level 1 and Level 2 inputs. The market inputs are utilized in the discounted cash flow calculation considering the instrument's term, notional amount, discount rate and credit risk. Significant inputs to the derivative valuation model for interest rate swaps are observable in active markets and are classified as Level 2 in the hierarchy.
Contingent consideration. Contingent consideration arrangements are classified as Level 3 and are valued using unobservable inputs about the nature of the contingent arrangement and the counter-party to the arrangement, as well as our assumptions about the probability of full settlement of the contingency.

Assets and liabilities measured at fair value on a recurring basis are as follows (in thousands):
 
 
 
Fair Value Measurement
 
Balance Sheet Classification
 
June 30,
2014
 
December 31,
2013
Level 1
 
 
 
 
 
Common stock of other healthcare REITs
Marketable securities
 
$
13,991

 
$
12,650

 
 
 
 
 
 
Level 2
 
 
 
 
 
Interest rate swap asset
Other assets
 
$

 
$
975

Interest rate swap liability
Accrued expenses
 
$
3,880

 
$

 
 
 
 
 
 
Level 3
 
 
 
 
 
Contingent consideration
Real estate purchase liabilities
 
$
4,000

 
$
2,600



The following table presents a reconciliation of Level 3 liabilities measured at fair value on a recurring basis for the six months ended June 30, 2014 and 2013 (in thousands):
 
Fair Value Beginning of Period

 
Transfers Into Level 3

 
Realized Gains and (Losses)

 
Purchases, Issuances and Settlements, net

 
Fair Value at End of Period

 
Total Period Losses Included in Earnings Attributable to the Change in Unrealized Losses Relating to Assets Held at End of Year

2014
 
 
 
 
 
 
 
 
 
 
 
Contingent consideration
$
2,600

 
$

 
$

 
$
1,400

 
$
4,000

 
$

 
 
 
 
 
 
 
 
 
 
 
 
2013
 
 
 
 
 
 
 
 
 
 
 
Contingent consideration
$
4,256

 
$
1,600

 
$

 
$

 
$
5,856

 
$



Carrying values and fair values of financial instruments that are not carried at fair value at June 30, 2014 and December 31, 2013 in the Consolidated Balance Sheets are as follows (in thousands):
 
Carrying Amount
 
Fair Value Measurement
 
2014
 
2013
 
2014
 
2013
Level 2
 
 
 
 
 
 
 
Variable rate debt
$
366,000

 
$
537,000

 
$
366,000

 
$
537,000

Fixed rate debt
$
272,019

 
$
80,080

 
$
274,817

 
$
79,365

 
 
 
 
 
 
 
 
Level 3
 
 
 
 
 
 
 
Mortgage and other notes receivable
$
60,854

 
$
60,639

 
$
69,025

 
$
67,201



The fair value of mortgage and other notes receivable is based on credit risk and discount rates that are not observable in the marketplace and therefore represents a Level 3 measurement.

Fixed rate debt. Fixed rate debt is classified as Level 2 and its value is based on quoted prices for similar instruments or calculated utilizing model derived valuations in which significant inputs are observable in active markets.

Carrying amounts of cash and cash equivalents, accounts receivable and accounts payable approximate fair value due to their short-term nature. The fair value of our borrowings under our credit facility are reasonably estimated at their carrying value at June 30, 2014 and December 31, 2013, due to the predominance of floating interest rates, which generally reflect market conditions.