Fair value measurements (Notes)

12 Months Ended

Dec. 31, 2019

We provide fair value information about all financial instruments for which it is practicable to estimate fair value. We measure and disclose the estimated fair value of financial assets and liabilities by utilizing a fair value hierarchy that distinguishes between data obtained from sources independent of the reporting entity and the reporting entity’s own assumptions about market participant assumptions. This hierarchy consists of three broad levels, as follows: (i) quoted prices in active markets for identical assets or liabilities (Level 1), (ii) significant other observable inputs (Level 2), and (iii) significant unobservable inputs (Level 3). Significant other observable inputs can include quoted prices for similar assets or liabilities in active markets, as well as inputs that are observable for the asset or liability, such as interest rates, foreign exchange rates, and yield curves. Significant unobservable inputs are typically based on an entity’s own assumptions, since there is little, if any, related market activity. In instances in which the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level of input that is significant to the fair value measurement in its entirety. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. There were no transfers between the levels in the fair value hierarchy during the years ended December 31, 2019 and 2018.

The following tables set forth the assets and liabilities that we measure at fair value on a recurring basis by level within the fair value hierarchy as of December 31, 2019 and 2018 (in thousands):



			December 31, 2019
Description	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Investments in publicly traded companies	$	318,637	$	318,637	$	—	$	—



			December 31, 2018
Description	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Investments in publicly traded companies	$	184,005	$	184,005	$	—	$	—
Interest rate hedge agreements	$	2,606	$	—	$	2,606	$	—
Liabilities:
Interest rate hedge agreements	$	768	$	—	$	768	$	—

Our investments in publicly traded companies represent investments with readily determinable fair values, and are carried at fair value, with changes in fair value classified in net income. We also hold investments in privately held entities, which consist of (i) investments that report NAV, and (ii) investments that do not report NAV, further described below.

Our investments in privately held entities that report NAV, such as our privately held investments in limited partnerships, are carried at fair value using NAV as a practical expedient, with changes in fair value classified in net income. As of December 31, 2019 and 2018, the carrying values of investments in privately held entities that report NAV aggregated $433.9 million and $317.8 million, respectively. These investments are excluded from the fair value hierarchy above as required by the fair value standards. We estimate the fair value of each of our investments in limited partnerships based on the most recent NAV reported by each limited partnership. As a result, the determination of fair values of our investments in privately held entities that report NAV generally does not involve significant estimates, assumptions, or judgments.

Our investments in privately held entities that do not report NAV are measured at cost, adjusted for observable price changes and impairments, with changes recognized in net income. As of December 31, 2019 and 2018, the carrying values of investments in privately held entities that do not report NAV aggregated $388.1 million and $390.5 million, respectively. These investments are evaluated on a nonrecurring basis based on the observable price changes in orderly transactions for the identical or similar investment of the same issuer. Further adjustments are not made until another observable transaction occurs. Therefore, the determination of fair values of our investments in privately held entities that do not report NAV does not involve significant estimates and assumptions or subjective and complex judgments.

We also subject our investments in privately held entities that do not report NAV to a qualitative assessment for indicators of impairment. If indicators of impairment are present, we are required to estimate the investment’s fair value and immediately recognize an impairment loss in an amount equal to the investment’s carrying value in excess of its estimated fair value. For further details about our investments in privately held entities that do not report NAV and related impairment monitoring criteria refer to the “Investments” section in Note 2 – “Summary of Significant Accounting Policies” and Note 7 – “Investments” to our consolidated financial statements.

Effective on January 1, 2020, in accordance with the new accounting standard described within “Recognition and Measurement of Financial Instruments” subsection of “Recent Accounting Pronouncements” section within Note 2 – “Summary of Significant Accounting Policies,” for all investments in privately held entities that do not report NAV that are adjusted during the period under the measurement alternative elected for equity securities without readily determinable fair values, we will provide fair value disclosures, including disclosures about the level in the fair value hierarchy.

During the year ended December 31, 2019, in conjunction with the full repayment of our $350.0 million unsecured senior bank term loan described in Note 10 – “Secured and Unsecured Senior Debt” to our consolidated financial statements, we also terminated all of our interest rate hedge agreements aggregating $350.0 million with a weighted-average interest pay rate of 2.57%. Refer to Note 11 – “Interest Rate Hedge Agreements” to our consolidated financial statements for further details.

The carrying values of cash and cash equivalents, restricted cash, tenant receivables, other assets, accounts payable, accrued expenses, and other liabilities approximate their fair value.

The fair values of our secured notes payable, unsecured senior notes payable, unsecured senior line of credit, and unsecured senior bank term loans were estimated using widely accepted valuation techniques, including discounted cash flow analyses using significant other observable inputs such as available market information on discount and borrowing rates with similar terms, maturities, and credit ratings. Because the valuations of our financial instruments are based on these types of estimates, the actual fair value of our financial instruments may differ materially if our estimates do not prove to be accurate. Additionally, the use of different market assumptions or estimation methods may have a material effect on the estimated fair value amounts.

As of December 31, 2019 and 2018, the book and estimated fair values of our secured notes payable, unsecured senior notes payable, unsecured senior line of credit and unsecured senior bank term loan were as follows (in thousands):



	December 31,
	2019				2018
	Book Value		Fair Value		Book Value		Fair Value
Liabilities:
Secured notes payable	$	349,352	$	363,344	$	630,547	$	638,860
Unsecured senior notes payable	$	6,044,127	$	6,571,668	$	4,292,293	$	4,288,335
Unsecured senior line of credit	$	384,000	$	383,928	$	208,000	$	208,106
Unsecured senior bank term loan	$	—	$	—	$	347,415	$	350,240

Nonrecurring fair value measurements

Refer to “Sales of Partial Interests and Formation of Consolidated Joint Ventures in 2019” in Note 4 – “Consolidated and Unconsolidated Real Estate Joint Ventures,” Note 7 – “Investments,” and Note 19 – “Assets Classified as Held for Sale” to our consolidated financial statements for further discussion.

- 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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