Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2014

Fair Value Measurements

Schedule of carrying value and fair value of the entity's financial instruments

The carrying value and fair value of our financial instruments as of December 31, 2014 and 2013 assuming election of fair value for our financial assets and financial liabilities were as follows (in thousands):

	At December 31, 2014					At December 31, 2013
	Carrying					Carrying
	Value		Fair Value			Value		Fair Value
Mortgage loans receivable	$	165,656	$	198,977	(1)	$	165,444	$	200,248	(1)
Bonds payable		—		—			2,035		2,035	(2)
Bank borrowings		—		—			21,000		21,000	(2)
Senior unsecured notes		281,633		283,933	(3)		255,800		262,351	(3)
Contingent liabilities		3,258		3,258	(4)		—		—	(4)

⁽¹⁾ Our investment in mortgage loans receivable is classified as Level 3. The fair value is determined using a widely accepted valuation technique, discounted cash flow analysis on the expected cash flows. The discount rate is determined using our assumption on market conditions adjusted for market and credit risk and current returns on our investments. The discount rate used to value our future cash inflows of the mortgage loans receivable at December 31, 2014 and 2013 was 8.6% and 8.4%, respectively.

⁽²⁾ Our bonds payable and bank borrowings are at a variable interest rate. The estimated fair value of our bonds payable and bank borrowings approximated their carrying values at December 31, 2014 and 2013 based upon prevailing market interest rates for similar debt arrangements.

⁽³⁾ Our obligation under our senior unsecured notes is classified as Level 3 and thus the fair value is determined using a widely accepted valuation technique, discounted cash flow analysis on the expected cash flows. The discount rate is measured based upon management’s estimates of rates currently prevailing for comparable loans available to us, and instruments of comparable maturities. At December 31, 2014, the discount rate used to value our future cash outflow of our senior unsecured notes was 3.80% for those maturing before year 2020 and 4.55% for those maturing beyond year 2020. At December 31, 2013, the discount rate used to value our future cash outflow of our senior unsecured notes was 3.95% for those maturing before year 2020 and 4.25% for those maturing beyond year 2020.

Our contingent obligation under the earn‑out liabilities is classified as Level 3. We estimated the fair value of the contingent earn‑out payments using a discounted cash flow analysis. The discount rate that we use consists of a risk‑free U.S. Treasury rate plus a company specific credit spread which we believe is acceptable by willing market participants. At December 31, 2014, the discount rate used to value our future cash outflow of the earn-out liability was 6.2%.