Disclosure About Fair Value of Financial Instruments

6 Months Ended

Jun. 30, 2017

Fair Value Disclosures [Abstract]

Disclosure About Fair Value of Financial Instruments

Disclosure About Fair Value of Financial Instruments

The following summarizes the three levels of inputs that we use to measure fair value.

Level 1.  Quoted prices in active markets for identical assets or liabilities.

Our Level 1 asset is our investment in marketable securities that we use to pay benefits under our non-qualified deferred compensation plan. Our Level 1 liability is our non-qualified deferred compensation obligation. The Company's Level 1 noncontrolling interests in the Operating Partnership relate to the ownership of Common Units by various individuals and entities other than the Company.

Level 2. Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities.

Our Level 2 assets include the fair value of our mortgages and notes receivable and certain interest rate swaps. Our Level 2 liabilities include the fair value of our mortgages and notes payable and remaining interest rate swaps.

The fair value of mortgages and notes receivable and mortgages and notes payable is estimated by the income approach utilizing contractual cash flows and market-based interest rates to approximate the price that would be paid in an orderly transaction between market participants. The fair value of interest rate swaps is determined using the market standard methodology of netting the discounted future fixed cash receipts and the discounted expected variable cash payments. The variable cash payments of interest rate swaps are based on the expectation of future interest rates (forward curves) derived from observed market interest rate curves. In addition, credit valuation adjustments are considered in the fair values to account for potential nonperformance risk, but were concluded to not be significant inputs to the calculation for the periods presented.

Level 3. Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Our Level 3 asset consisted of our tax increment financing bond, which was not routinely traded but whose fair value was determined by the income approach utilizing contractual cash flows and market-based interest rates to estimate the projected redemption value based on quoted bid/ask prices for similar unrated municipal bonds. Our tax increment financing bond was assigned in conjunction with a sale during the first quarter of 2016. The estimated fair value at the date of sale of $11.2 million was equal to the outstanding principal amount due on the bond.

8. Disclosure About Fair Value of Financial Instruments - Continued

The following table sets forth our assets and liabilities and the Company's noncontrolling interests in the Operating Partnership that are measured or disclosed at fair value within the fair value hierarchy.

			Level 1		Level 2
	Total		Quoted Prices in Active Markets for Identical Assets or Liabilities		Significant Observable Inputs
Fair Value at June 30, 2017:
Assets:
Mortgages and notes receivable, at fair value (1)	$	6,750	$	—	$	6,750
Interest rate swaps (in prepaid expenses and other assets)	275		—		275
Marketable securities of non-qualified deferred compensation plan (in prepaid expenses and other assets)	2,478		2,478		—
Total Assets	$	9,503	$	2,478	$	7,025
Noncontrolling Interests in the Operating Partnership	$	143,646	$	143,646	$	—
Liabilities:
Mortgages and notes payable, net, at fair value (1)	$	2,016,420	$	—	$	2,016,420
Interest rate swaps (in accounts payable, accrued expenses and other liabilities)	1,003		—		1,003
Non-qualified deferred compensation obligation (in accounts payable, accrued expenses and other liabilities)	2,478		2,478		—
Total Liabilities	$	2,019,901	$	2,478	$	2,017,423

Fair Value at December 31, 2016:
Assets:
Mortgages and notes receivable, at fair value (1)	$	8,833	$	—	$	8,833
Interest rate swaps (in prepaid expenses and other assets)	7,619		—		7,619
Marketable securities of non-qualified deferred compensation plan (in prepaid expenses and other assets)	2,451		2,451		—
Total Assets	$	18,903	$	2,451	$	16,452
Noncontrolling Interests in the Operating Partnership	$	144,802	$	144,802	$	—
Liabilities:
Mortgages and notes payable, net, at fair value (1)	$	1,965,611	$	—	$	1,965,611
Interest rate swaps (in accounts payable, accrued expenses and other liabilities)	1,870		—		1,870
Non-qualified deferred compensation obligation (in accounts payable, accrued expenses and other liabilities)	2,451		2,451		—
Total Liabilities	$	1,969,932	$	2,451	$	1,967,481

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(1)    Amounts recorded at historical cost on our Consolidated Balance Sheets at June 30, 2017 and December 31, 2016.