Fair Value of Assets and Liabilities

3 Months Ended

Mar. 31, 2019

Note 13. Fair Value of Assets and Liabilities

The table below presents certain of our assets carried at fair value at March 31, 2019, 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 Reporting Date Using
			Quoted Prices in
			Active Markets for		Significant Other		Significant
	Carrying Value at		Identical Assets		Observable Inputs		Unobservable Inputs
Description	March 31, 2019		(Level 1)		(Level 2)		(Level 3)
Recurring Fair Value Measurement Assets:
Investment in TA ⁽¹⁾	$	14,056	$	14,056	$	—	$	—
Investment in RMR Inc.⁽²⁾	$	152,680	$	152,680	$	—	$	—

(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 March 31, 2019. During the three months ended March 31, 2019, we recorded unrealized gains of $1,197 to adjust the carrying value of our investment in TA shares to their fair value as of March 31, 2019.

(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 March 31, 2019. During the three months ended March 31, 2019, we recorded unrealized gains of $19,780 to adjust the carrying value of our investment in RMR Inc. shares to their fair value as of March 31, 2019.

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 March 31, 2019 and December 31, 2018, 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 floating interest rates, except as follows:



	March 31, 2019				December 31, 2018
	Carrying		Fair		Carrying		Fair
	Value ⁽¹⁾		Value		Value ⁽¹⁾		Value
Senior Unsecured Notes, due 2021 at 4.25%	$	397,299	$	402,648	$	396,938	$	404,582
Senior Unsecured Notes, due 2022 at 5.00%	495,912		517,915		495,609		510,658
Senior Unsecured Notes, due 2023 at 4.50%	499,309		511,155		499,268		503,295
Senior Unsecured Notes, due 2024 at 4.65%	347,991		357,231		347,890		349,741
Senior Unsecured Notes, due 2025 at 4.50%	345,915		354,552		345,743		341,114
Senior Unsecured Notes, due 2026 at 5.25%	342,237		358,311		341,955		354,060
Senior Unsecured Notes, due 2027 at 4.95%	394,082		399,208		393,893		391,660
Senior Unsecured Notes, due 2028 at 3.95%	389,897		368,594		389,610		361,232
Senior Unsecured Notes, due 2030 at 4.375%	387,672		370,522		387,389		367,110
Total financial liabilities	$	3,600,314	$	3,640,136	$	3,598,295	$	3,583,452


(1)	Carrying value includes unamortized discounts and premiums and issuance costs.

At March 31, 2019 and December 31, 2018, 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).

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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