ASC 820, Fair Value Measurement and Disclosures defines fair value and establishes a framework for measuring fair value. The objective of fair value is to determine the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (the exit price). ASC 820 establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three levels: Level 1 – quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities; Level 2 – observable prices that are based on inputs not quoted in active markets, but corroborated by market data; and Level 3 – unobservable inputs that are used when little or no market data is available. The fair value hierarchy gives the highest priority to Level 1 inputs and the lowest priority to Level 3 inputs. In determining fair value, we utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible, as well as consider counterparty credit risk in our assessment of fair value. Considerable judgment is necessary to interpret Level 2 and 3 inputs in determining the fair value of our financial and non-financial assets and liabilities. Accordingly, our fair value estimates, which are made at the end of each reporting period, may be different than the amounts that may ultimately be realized upon sale or disposition of these assets.

Financial assets and liabilities that are measured at fair value on our consolidated balance sheets consist of (i) marketable securities, (ii) Real Estate Fund investments, (iii) the assets in our deferred compensation plan (for which there is a corresponding liability on our consolidated balance sheet), (iv) interest rate swaps and (v) mandatorily redeemable instruments (Series G-1 through G-4 convertible preferred units and Series D-13 cumulative redeemable preferred units). The tables below aggregate the fair values of these financial assets and liabilities by their levels in the fair value hierarchy at December 31, 2014 and 2013, respectively.

			As of December 31, 2014
(Amounts in thousands)			Total		Level 1		Level 2		Level 3
	Marketable securities		$	206,323	$	206,323	$	-	$	-
	Real Estate Fund investments (75% of which is attributable to
		noncontrolling interests)		513,973		-		-		513,973
	Deferred compensation plan assets (included in other assets)			117,284		53,969		-		63,315
		Total assets	$	837,580	$	260,292	$	-	$	577,288

	Mandatorily redeemable instruments (included in other liabilities)		$	55,097	$	55,097	$	-	$	-
	Interest rate swap (included in other liabilities)			25,797		-		25,797		-
		Total liabilities	$	80,894	$	55,097	$	25,797	$	-


			As of December 31, 2013
(Amounts in thousands)			Total		Level 1		Level 2		Level 3
	Marketable securities		$	191,917	$	191,917	$	-	$	-
	Real Estate Fund investments (75% of which is attributable to
		noncontrolling interests)		667,710		-		-		667,710
	Deferred compensation plan assets (included in other assets)			116,515		47,733		-		68,782
		Total assets	$	976,142	$	239,650	$	-	$	736,492

	Mandatorily redeemable instruments (included in other liabilities)		$	55,097	$	55,097	$	-	$	-
	Interest rate swap (included in other liabilities)			31,882		-		31,882		-
		Total liabilities	$	86,979	$	55,097	$	31,882	$	-

Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis - continued

At December 31, 2014, our Real Estate Fund had seven investments with an aggregate fair value of $513,973,000, or $176,899,000 in excess of cost. These investments are classified as Level 3. We use a discounted cash flow valuation technique to estimate the fair value of each of these investments, which is updated quarterly by personnel responsible for the management of each investment and reviewed by senior management at each reporting period. The discounted cash flow valuation technique requires us to estimate cash flows for each investment over the anticipated holding period, which currently ranges from 0.8 to 6.0 years. Cash flows are derived from property rental revenue (base rents plus reimbursements) less operating expenses, real estate taxes and capital and other costs, plus projected sales proceeds in the year of exit. Property rental revenue is based on leases currently in place and our estimates for future leasing activity, which are based on current market rents for similar space plus a projected growth factor. Similarly, estimated operating expenses and real estate taxes are based on amounts incurred in the current period plus a projected growth factor for future periods. Anticipated sales proceeds at the end of an investment's expected holding period are determined based on the net cash flow of the investment in the year of exit, divided by a terminal capitalization rate, less estimated selling costs.

The fair value of each property is calculated by discounting the future cash flows (including the projected sales proceeds), using an appropriate discount rate and then reduced by the property's outstanding debt, if any, to determine the fair value of the equity in each investment. Significant unobservable quantitative inputs used in determining the fair value of each investment include capitalization rates and discount rates. These rates are based on the location, type and nature of each property, and current and anticipated market conditions, which are derived from original underwriting assumptions, industry publications and from the experience of our Acquisitions and Capital Markets departments. Significant unobservable quantitative inputs in the table below were utilized in determining the fair value of these Fund investments at December 31, 2014.

The above inputs are subject to change based on changes in economic and market conditions and/or changes in use or timing of exit. Changes in discount rates and terminal capitalization rates result in increases or decreases in the fair values of these investments. The discount rates encompass, among other things, uncertainties in the valuation models with respect to terminal capitalization rates and the amount and timing of cash flows. Therefore, a change in the fair value of these investments resulting from a change in the terminal capitalization rate, may be partially offset by a change in the discount rate. It is not possible for us to predict the effect of future economic or market conditions on our estimated fair values.

The table below summarizes the changes in the fair value of Fund investments that are classified as Level 3, for the years ended December 31, 2014 and 2013.

	Real Estate Fund Investments
	For The Year Ended December 31,
(Amounts in thousands)	2014		2013
Beginning balance	$	667,710	$	600,786
Purchases		3,392		43,816
Dispositions / Distributions		(307,268)		(70,848)
Net unrealized gains		73,802		85,771
Net realized gains		76,337		8,184
Other, net		-		1
Ending balance	$	513,973	$	667,710

Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis - continued

Deferred compensation plan assets that are classified as Level 3 consist of investments in limited partnerships and investment funds, which are managed by third parties. We receive quarterly financial reports from a third-party administrator, which are compiled from the quarterly reports provided to them from each limited partnership and investment fund. The quarterly reports provide net asset values on a fair value basis which are audited by independent public accounting firms on an annual basis. The third-party administrator does not adjust these values in determining our share of the net assets and we do not adjust these values when reported in our consolidated financial statements.

The table below summarizes the changes in the fair value of Deferred Compensation Plan Assets that are classified as Level 3, for the years ended December 31, 2014 and 2013.

	Deferred Compensation Plan Assets
	For The Year Ended December 31,
(Amounts in thousands)	2014		2013
Beginning balance	$	68,782	$	62,631
Purchases		14,162		5,018
Sales		(24,951)		(7,306)
Realized and unrealized gains		3,415		7,189
Other, net		1,907		1,250
Ending balance	$	63,315	$	68,782

Assets measured at fair value on a nonrecurring basis on our consolidated balance sheets consist primarily of real estate assets and our investment in Toys that were written-down to estimated fair value during 2014 or 2013. See Note 2 – Basis of Presentation and Significant Accounting Policies for details of impairment losses recognized during 2014 and 2013. See Note 6 – Investments in Partially Owned Entities for details of impairment losses related to Toys recognized during 2014 and 2013. The fair value of our real estate assets was determined using widely accepted valuation techniques, including (i) discounted cash flow analysis, which considers, among other things, leasing assumptions, growth rates, discount rates and terminal capitalization rates, (ii) income capitalization approach, which considers prevailing market capitalization rates, and (iii) comparable sales activity. In determining the fair value of our investment in Toys, we considered, among other inputs, a December 31, 2013 third-party valuation of Toys and Toys' historical results, financial forecasts and business outlook. Our determination of the fair value of our investment in Toys included consideration of the following widely-used valuation methodologies: (i) market multiple methodology, that considered comparable publicly traded retail companies and a range of EBITDA multiples from 5.75x to 6.5x, (ii) comparable sales transactions methodology, that considered sales of retailers ranging in size from $150 million to $3 billion, (iii) a discounted cash flow methodology, that utilized five-year financial projections and assumed a terminal EBITDA multiple of 5.75x, a 10% discount rate and a 38% tax rate, and (iv) a Black-Scholes valuation analysis, that assumed one, two and three year time-to-expiration periods and 24% to 29% volatility factors. Generally, we consider multiple valuation techniques when measuring fair values but in certain circumstances, a single valuation technique may be appropriate. The tables below aggregate the fair values of these assets by their levels in the fair value hierarchy.

			As of December 31, 2014
(Amounts in thousands)			Total		Level 1		Level 2		Level 3
	Real estate assets		$	4,848	$	-	$	-	$	4,848

			As of December 31, 2013
(Amounts in thousands)			Total		Level 1		Level 2		Level 3
	Real estate assets		$	354,341	$	-	$	-	$	354,341
	Investment in Toys			83,224		-		-		83,224
		Total assets	$	437,565	$	-	$	-	$	437,565

Financial assets and liabilities that are not measured at fair value on our consolidated balance sheets include cash equivalents (primarily money market funds, which invest in obligations of the United States government), mortgage and mezzanine loans receivable (included in “other assets” in our consolidated balance sheets) and our secured and unsecured debt. Estimates of the fair value of these instruments are determined by the standard practice of modeling the contractual cash flows required under the instrument and discounting them back to their present value at the appropriate current risk adjusted interest rate, which is provided by a third-party specialist. For floating rate debt, we use forward rates derived from observable market yield curves to project the expected cash flows we would be required to make under the instrument. The fair value of cash equivalents is classified as Level 1 and the fair value of our mortgage and mezzanine loans receivable is classified as Level 3. The fair value of our secured and unsecured debt is classified as Level 2. The table below summarizes the carrying amounts and fair value of these financial instruments as of December 31, 2014 and 2013.

				As of December 31, 2014				As of December 31, 2013
				Carrying		Fair		Carrying		Fair
(Amounts in thousands)				Amount		Value		Amount		Value
		Cash equivalents		$	749,418	$	749,000	$	295,000	$	295,000
		Mortgage and mezzanine loans receivable
			(included in other assets)		16,748		17,000		170,972		171,000
				$	766,166	$	766,000	$	465,972	$	466,000
	Debt:
		Mortgages payable		$	8,263,165	$	8,224,000	$	7,131,231	$	6,903,000
		Senior unsecured notes			1,347,159		1,385,000		1,350,855		1,402,000
		Revolving credit facility debt			-		-		295,870		296,000
				$	9,610,324	$	9,609,000	$	8,777,956	$	8,601,000