Fair Value of Assets and Liabilities (Tables)

9 Months Ended

Sep. 30, 2016

Assets and liabilities recurring and nonrecurring measured at fair value

The table below presents certain of our assets measured at fair value at September 30, 2016, categorized by the level of inputs as defined in the fair value hierarchy under GAAP, used in the valuation of each asset:



							Significant
	Total as of		Quoted Prices in Active		Significant Other		Unobservable
	September 30,		Markets for Identical		Observable Inputs		Inputs
Description	2016		Assets (Level 1)		(Level 2)		(Level 3)
Recurring Fair Value Measurements
Assets:
Investments in available for sale securities ⁽¹⁾	$	108,152	$	108,152	$	—	$	—
Non-Recurring Fair Value Measurements
Assets:
Assets held for sale ⁽²⁾	$	3,627	$	—	$	—	$	3,627

(1)

Our investments in available for sale securities include our 4,235,000 common shares of Five Star and our 2,637,408 shares of RMR Inc. class A common stock. The fair values of these shares are based upon quoted prices at September 30, 2016 in active markets (Level 1 inputs). Our historical cost basis for our Five Star and RMR Inc. shares is $14,230 and $69,826, respectively, as of September 30, 2016. The unrealized loss of $6,141 for our Five Star shares and the unrealized gain of $30,237 for our RMR Inc. shares as of September 30, 2016 are included in cumulative other comprehensive income (loss) in our condensed consolidated balance sheets. We evaluated the decline in the fair value of the Five Star shares and determined that based on the severity and duration of the decline, and our ability and intent to hold these investments for a reasonable period of time sufficient for a recovery of fair value, we do not consider these investments to be other-than-temporarily impaired at September 30, 2016.


(2)	Assets held for sale consist of two properties held for sale as of September 30, 2016. These properties are recorded at their estimated fair values less costs to sell. We used offers from third parties to purchase these properties and our knowledge of local real estate markets to determine their fair values as of September 30, 2016. See Note 3 for further information regarding these properties.

Schedule of carrying value and fair value of the financial instruments

The fair values of these financial instruments approximated their carrying values in our condensed consolidated financial statements as of such dates, except as follows:



	As of September 30, 2016				As of December 31, 2015
Description	Carrying Amount ⁽¹⁾		Estimated Fair Value		Carrying Amount ⁽¹⁾		Estimated Fair Value
Senior unsecured notes	$	1,722,032	$	1,830,935	$	1,478,536	$	1,548,613
Secured debt and capital leases ⁽²⁾	1,168,827		1,195,240		679,295		724,615
	$	2,890,859	$	3,026,175	$	2,157,831	$	2,273,228


(1)	Includes unamortized debt issuance costs, premiums and discounts.

(2)

We assumed certain of these secured debts in connection with our acquisitions of certain properties. We recorded the assumed mortgage debts at estimated fair value on the date of acquisition and we are amortizing the fair value adjustments, if any, to interest expense over the respective terms of the mortgage debts to reduce interest expense to the estimated market interest rates as of the date of acquisition.

- Definition

Tabular disclosure of financial instruments measured at fair value, including those classified in shareholders' equity measured on a recurring or nonrecurring basis. Disclosures include, but are not limited to, fair value measurements recorded and the reasons for the measurements, level within the fair value hierarchy in which the fair value measurements are categorized and transfers between levels 1 and 2. Nonrecurring fair value measurements are those that are required or permitted in the statement of financial position in particular circumstances.

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