Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2019

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 March 31, 2019 and December 31, 2018 assuming election of fair value for our financial assets and financial liabilities were as follows (in thousands):


	At March 31, 2019					At December 31, 2018
	Carrying		Fair			Carrying		Fair
	Value		Value			Value		Value
Mortgage loans receivable	$	244,314	$	297,355	(1)	$	242,939	$	295,492	(1)
Bank borrowings		146,900		146,900	(2)		112,000		112,000	(2)
Senior unsecured notes, net of debt issue costs		528,900		520,343	(3)		533,029		508,613	(3)

(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 both March 31, 2019 and December 31, 2018 was 9.0%.

(2)

Our bank borrowings bear interest at a variable interest rate. The estimated fair value of our bank borrowings approximated their carrying values at March 31, 2019 and December 31, 2018 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 March 31, 2019, the discount rate used to value our future cash outflow of our senior unsecured notes was 4.60% for those maturing before year 2026 and 4.80% for those maturing at or beyond year 2026. At December 31, 2018, the discount rate used to value our future cash outflow of our senior unsecured notes was 5.15% for those maturing before year 2026 and 5.40% for those maturing at or beyond year 2026.