The fair value of an asset is defined as the exit price, which is the amount that would either be received when an asset is sold or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The guidance establishes a three-tier fair value hierarchy based on the inputs used in measuring fair value. These tiers are: Level 1, for which quoted market prices for identical instruments are available in active markets, such as money market funds, equity securities, and U.S. Treasury securities; Level 2, for which there are inputs other than quoted prices included within Level 1 that are observable for the instrument, such as certain derivative instruments including interest rate caps and interest rate swaps; and Level 3, for financial instruments or other assets/liabilities that do not fall into Level 1 or Level 2 and for which little or no market data exists, therefore requiring the Company to develop its own assumptions.

The methods and assumptions described below were used to estimate the fair value of each class of financial instrument. For significant Level 3 items, the Company has also provided the unobservable inputs along with their weighted-average ranges.

Money Market Funds — The Company has money market funds, which are included in Cash and cash equivalents in the consolidated financial statements, are comprised of government securities and/or U.S. Treasury bills. These funds were classified as Level 1 as we used quoted prices from active markets to determine their fair values.

Derivative Assets — The Company has derivative assets, which are included in Other assets, net in the consolidated financial statements, are comprised of interest rate swaps and caps. The derivative instruments were measured at fair value using readily observable market inputs, such as quotations on interest rates, and were classified as Level 2 as these instruments are custom, over-the-counter contracts with various bank counterparties that are not traded in an active market. See “Derivative Financial Instruments,” below.

Derivative Liabilities — The Company has derivative liabilities, which are included in Accounts payable and other liabilities in the consolidated financial statements, are comprised of interest rate swaps. These derivative instruments were measured at fair value using readily observable market inputs, such as quotations on interest rates, and were classified as Level 2 because they are custom, over-the-counter contracts with various bank counterparties that are not traded in an active market. See “Derivative Financial Instruments,” below.

The Company did not have any transfers into or out of Level 1, Level 2, and Level 3 measurements during the three months ended March 31, 2019 or 2018.

The following table presents the Company’s fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis (in thousands):

In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.

Items Measured at Fair Value on a Nonrecurring Basis (Including Impairment Charges)

The Company did not record any impairment charges during the three months ended March 31, 2019 or 2018.

The Company had the following interest rate swaps for the periods presented (dollars in thousands):

					Strike Rate								Fair Value
Derivative Instrument	Aggregate Notional Amount		Effective Date	Maturity Date	Low				High			Balance Sheet Location	March 31, 2019			December 31, 2018
Core
Interest Rate Swaps	$	286,058	Dec 2012-July 2020	Mar 2022-July 2030		2.22	%	—		3.77	%	Other Liabilities ^(a)	$	(15,104	)	$	(6,332	)
Interest Rate Swaps		245,827	Feb 2013 - Dec 2017	Nov 2019-June 2026		1.24	%	—		3.77	%	Other Assets		3,129			6,022
	$	531,885											$	(11,975	)	$	(310	)

Fund II
Interest Rate Swap	$	19,264	Oct 2014	Nov 2021		2.88	%	—		2.88	%	Other Assets	$	16		$	108
Interest Rate Cap		23,300	Mar 2019	Mar 2022		3.50	%	—		3.50	%	Other Assets		17			—
	$	42,564											$	33		$	108

Fund III
Interest Rate Cap	$	58,000	Dec 2016	Jan 2020		3.00	%	—		3.00	%	Other Assets	$	—		$	8

Fund IV
Interest Rate Swaps	$	71,602	Mar 2017 - Nov 2017	Mar 2020 - Dec 2022		1.82	%	—		2.11	%	Other Assets	$	366		$	851
Interest Rate Swap		2,246	Jan 2019	Apr 2022		2.61	%	—		2.61	%	Other Liabilities		(37	)		—
Interest Rate Caps		108,900	July 2016 - Nov 2016	Aug 2019 - Dec 2019		3.00	%	—		3.00	%	Other Assets		—			8
	$	182,748											$	329		$	859

Fund V
Interest Rate Swap	$	—											$	—		$	21
Interest Rate Swaps		156,900	Jan 2018-Mar 2019	Feb 2021-Mar 2024		2.27	%	—		2.88	%	Other Liabilities		(2,233	)		(972	)
	$	156,900											$	(2,233	)	$	(951	)

Total asset derivatives													$	3,528		$	7,018
Total liability derivatives													$	(17,374	)	$	(7,304	)

(a)

Includes two swaps with a fair value of ($6.1) million and ($2.9) million at March 31, 2019 and December 31, 2018, respectively, which were acquired during July 2018 and are not effective until July 2020.

All of the Company’s derivative instruments have been designated as cash flow hedges and hedge the future cash outflows on variable-rate debt (Note 7). It is estimated that approximately $1.1 million included in accumulated other comprehensive (loss) income related to derivatives will be reclassified to interest expense within the next twelve months. As of March 31, 2019 and December 31, 2018, no derivatives were designated as fair value hedges or hedges of net investments in foreign operations. Additionally, the Company does not use derivatives for trading or speculative purposes and currently does not have any derivatives that are not designated hedges.

The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company manages economic risks, including interest rate, liquidity and credit risk, primarily by managing the amount, sources and duration of its debt funding and, from time to time, through the use of derivative financial instruments. The Company enters into derivative financial instruments to manage exposures that result in the receipt or payment of future known and uncertain cash amounts, the values of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s investments and borrowings.

The Company is exposed to credit risk in the event of non-performance by the counterparties to the swaps if the derivative position has a positive balance. The Company believes it mitigates its credit risk by entering into swaps with major financial institutions. The Company continually monitors and actively manages interest costs on its variable-rate debt portfolio and may enter into additional interest rate swap positions or other derivative interest rate instruments based on market conditions. The Company has not entered, and does not plan to enter, into any derivative financial instruments for trading or speculative purposes.

The following table presents the location in the financial statements of the income (losses) recognized related to the Company’s cash flow hedges (in thousands):

The Company has agreements with each of its swap counterparties that contain a provision whereby if the Company defaults on certain of its unsecured indebtedness, the Company could also be declared in default on its swaps, resulting in an acceleration of payment under the swaps.

The Company’s other financial instruments had the following carrying values and fair values as of the dates shown (dollars in thousands, inclusive of amounts attributable to noncontrolling interests where applicable):

The Company’s cash and cash equivalents, restricted cash, accounts receivable, accounts payable and certain financial instruments included in other assets and other liabilities had fair values that approximated their carrying values at March 31, 2019.