Fair Value Of Financial Instruments

6 Months Ended

Jun. 30, 2017

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 have included marketable securities, derivative financial instruments and contingent consideration arrangements. Marketable securities have consisted 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 business combinations.

Marketable securities. We utilize quoted prices in active markets to measure equity securities; these items are classified as Level 1 in the hierarchy and include the common stock of other publicly held 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, 2017		December 31, 2016
Level 1
Common stock of other healthcare REITs	Other assets	$	—	$	11,745
Level 2
Interest rate swap liability	Accounts payable and accrued expenses	$	3,057	$	4,279

Carrying values and fair values of financial instruments that are not carried at fair value at June 30, 2017 and December 31, 2016 in the Condensed Consolidated Balance Sheets are as follows (in thousands):

	Carrying Amount				Fair Value Measurement
	2017		2016		2017		2016
Level 2
Variable rate debt	$	435,389	$	404,828	$	438,000	$	408,000
Fixed rate debt	$	709,616	$	711,153	$	710,921	$	706,332
Level 3
Mortgage and other notes receivable	$	141,107	$	133,493	$	144,448	$	133,229

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 revolving credit facility and other variable rate debt are reasonably estimated at their notional amounts at June 30, 2017 and December 31, 2016, due to the predominance of floating interest rates, which generally reflect market conditions.