Fair Value of Assets and Liabilities

9 Months Ended

Sep. 30, 2013

Fair Value of Assets and Liabilities

Note 12. Fair Value of Assets and Liabilities

The table below presents certain of our assets carried at fair value at September 30, 2013, 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 Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
Description	Total		(Level 1)		(Level 2)		(Level 3)

Investment securities (1)	$	19,939	$	19,939	$	—	$	—
Property held for sale (2)	$	4,074	$	—	$	—	$	4,074

(1) Our investment securities, consisting of our 2,540,000 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 securities is $9,267. The unrealized gain for these securities as of September 30, 2013 is included in cumulative other comprehensive income in our condensed consolidated balance sheets.

(2) Our property held for sale consists of one Sonesta ES Suites hotel in Myrtle Beach, SC we were marketing for sale at September 30, 2013. We estimated the fair value less costs to sell of this hotel using standard industry valuation techniques and estimates of value developed by hotel brokerage firms (Level 3 inputs). We recorded a $2,171, or $0.02 per share, loss on asset impairment during the three months ended June 30, 2013 to reduce the carrying value of this hotel to its estimated fair value, less cost to sell.

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, unsecured term loan, senior notes and security deposits. At September 30, 2013 and December 31, 2012, the fair values of these additional financial instruments were not materially different from their carrying values, except as follows:

	September 30, 2013					December 31, 2012
	Carrying			Fair		Carrying			Fair
	Amount			Value		Amount			Value

Senior Notes, due 2014 at 7.875%	$	300,000		$	316,789	$	300,000		$	333,360
Senior Notes, due 2015 at 5.125%	280,000			291,145		280,000			298,926
Senior Notes, due 2016 at 6.3%	275,000			303,484		275,000			306,078
Senior Notes, due 2017 at 5.625%	300,000			323,728		300,000			335,173
Senior Notes, due 2018 at 6.7%	350,000			397,921		350,000			417,293
Senior Notes, due 2022 at 5%	500,000			498,013		500,000			531,343
Senior Notes, due 2023 at 4.5%	300,000			294,923		—			—
Convertible Senior Notes, due 2027 at 3.8%	8,478			8,858		8,478			9,092
Unamortized discounts	(9,973		)	—		(11,120		)	—
Total financial liabilities	$	2,303,505		$	2,434,861	$	2,002,358		$	2,231,265

We estimate the fair value of our indebtedness using discounted cash flow analysis and currently prevailing market interest rates (Level 3 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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