Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2016

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


	At June 30, 2016					At December 31, 2015
	Carrying		Fair			Carrying		Fair
	Value		Value			Value		Value
Mortgage loans receivable	$	232,897	$	270,061	(1)	$	217,529	$	257,335	(1)
Bank borrowings		122,000		122,000	(2)		120,500		120,500	(2)
Senior unsecured notes, net of debt issue costs		484,734		507,387	(3)		451,372		451,420	(3)
Accrued incentives and earn-outs		13,717		13,717	(4)		12,722		12,722	(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 June 30, 2016 and December 31, 2015 was 9.1% and 8.9%, respectively.

(2)

Our bank borrowings bear interest at a variable interest rate. The estimated fair value of our bank borrowings approximated their carrying values at June 30, 2016 and December 31, 2015 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 June 30, 2016, the discount rate used to value our future cash outflow of our senior unsecured notes was 3.55% for those maturing before year 2026 and 3.75% for those maturing at or beyond year 2026. At December 31, 2015, the discount rate used to value our future cash outflow of our senior unsecured notes was 4.35% for those maturing before year 2026 and 4.65% for those maturing at or beyond year 2026.

(4)

Our accrued incentives and earn-outs are 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 June 30, 2016 and December 31, 2015, the discount rate used to value our accrued incentives and earn-outs was 6.1%.