Fair Value of Assets and Liabilities |
Fair Value of Assets and Liabilities The table below presents certain of our assets carried at fair value at June 30, 2017, categorized by the level of inputs, as defined in the fair value hierarchy under GAAP, used in the valuation of each asset. | | | | | | | | | | | | | | | | | | | | |
| | Fair Value at June 30, 2017 Using | | | | | Quoted Prices in | | | | | | | | | Active Markets for | | Significant Other | | Significant | | | Carrying Value at | | Identical Assets | | Observable Inputs | | Unobservable Inputs | Description | | June 30, 2017 | | (Level 1) | | (Level 2) | | (Level 3) | Recurring Fair Value Measurement Assets: | | | | | | | Investment in TA (1) | | $ | 14,022 |
| | $ | 14,022 |
| | $ | — |
| | $ | — |
| Investment in RMR Inc.(2) | | $ | 121,809 |
| | $ | 121,809 |
| | $ | — |
| | $ | — |
|
| | (1) | Our 3,420,000 common shares of TA, which are included in other assets in our condensed consolidated balance sheets, are reported at fair value which is based on quoted market prices (Level 1 inputs). Our historical cost basis for these shares is $17,407 as of June 30, 2017. The unrealized loss of ($3,385) for these shares as of June 30, 2017 is included in cumulative other comprehensive income in our condensed consolidated balance sheets. We evaluated the decline in the fair value of the TA shares and determined that based on the severity and duration of the decline, and our ability and intent to hold the investment for a reasonable period of time sufficient for a recovery of fair value, we do not consider this investment to be other-than-temporarily impaired at June 30, 2017. |
| | (2) | Our 2,503,777 shares of class A common stock of RMR Inc., which are included in other assets in our condensed consolidated balance sheets, are reported at fair value which is based on quoted market prices (Level 1 inputs). Our historical cost basis for these shares is $66,374 as of June 30, 2017. The unrealized gain of $55,435 for these shares as of June 30, 2017 is included in cumulative other comprehensive income in our condensed consolidated balance sheets. |
In addition to the investment securities included in the table above, our financial instruments include our cash and cash equivalents, restricted cash, rents receivable, revolving credit facility, term loan, senior notes and security deposits. At June 30, 2017 and December 31, 2016, the fair values of these additional financial instruments approximated their carrying values in our condensed consolidated balance sheets due to their short term nature or variable interest rates, except as follows: | | | | | | | | | | | | | | | | | | | | June 30, 2017 | | December 31, 2016 | | | Carrying | | Fair | | Carrying | | Fair | | | Value (1) | | Value | | Value (1) | | Value | Senior Unsecured Notes, due 2018 at 6.70% | | $ | 349,670 |
| | $ | 351,188 |
| | $ | 349,387 |
| | $ | 358,740 |
| Senior Unsecured Notes, due 2021 at 4.25% | | 394,777 |
| | 417,138 |
| | 394,056 |
| | 413,790 |
| Senior Unsecured Notes, due 2022 at 5.00% | | 493,792 |
| | 536,393 |
| | 493,187 |
| | 527,945 |
| Senior Unsecured Notes, due 2023 at 4.50% | | 499,022 |
| | 524,490 |
| | 298,134 |
| | 298,845 |
| Senior Unsecured Notes, due 2024 at 4.65% | | 347,282 |
| | 366,123 |
| | 347,079 |
| | 348,523 |
| Senior Unsecured Notes, due 2025 at 4.50% | | 344,711 |
| | 360,169 |
| | 344,368 |
| | 341,439 |
| Senior Unsecured Notes, due 2026 at 5.25% | | 340,262 |
| | 372,754 |
| | 339,697 |
| | 354,772 |
| Senior Unsecured Notes, due 2027 at 4.95% | | 392,759 |
| | 417,712 |
| | — |
| | — |
| Convertible Unsecured Senior Notes, due 2027 at 3.8% | | — |
| | — |
| | 8,478 |
| | 8,599 |
| Total financial liabilities | | $ | 3,162,275 |
| | $ | 3,345,967 |
| | $ | 2,574,386 |
| | $ | 2,652,653 |
|
| | (1) | Carrying value includes unamortized discounts and premiums and certain issuance costs. |
At June 30, 2017 and December 31, 2016, we estimated the fair values of our senior notes using an average of the bid and ask price of our then outstanding issuances of senior notes (Level 2 inputs). We estimated the fair value of our convertible senior notes at December 31, 2016 using discounted cash flow analyses and currently prevailing market interest rates (Level 3 inputs) because no market quotes or other observable inputs for these notes were available at December 31, 2016.
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