Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2020

Fair Value Disclosures [Abstract]

Schedule of carrying value and estimated fair value of financial instruments

The following table presents the carrying value and estimated fair value of the Company’s financial instruments:

	June 30, 2020				December 31, 2019
	Carrying Value		Fair Value		Carrying Value		Fair Value
Financial liabilities:
Mortgages payable, net	$	92,967	$	94,982	$	94,155	$	98,082
Unsecured notes payable, net	$	796,568	$	786,719	$	796,247	$	822,883
Unsecured term loans, net	$	716,992	$	704,148	$	716,523	$	720,000
Unsecured revolving line of credit	$	135,000	$	133,299	$	18,000	$	18,000
Derivative liability	$	39,176	$	39,176	$	12,288	$	12,288

Schedule of financial instruments measured at fair value on a recurring basis

The following table presents the Company’s financial instruments, which are measured at fair value on a recurring basis, by the level in the fair value hierarchy within which those measurements fall. Methods and assumptions used to estimate the fair value of these instruments are described after the table.

	Fair Value
	Level 1		Level 2		Level 3		Total
June 30, 2020
Derivative liability	$	—	$	39,176	$	—	$	39,176
December 31, 2019
Derivative liability	$	—	$	12,288	$	—	$	12,288

Schedule of assets measured at fair value on a nonrecurring basis

The Company did not remeasure any assets to fair value on a nonrecurring basis as of June 30, 2020. The following table presents the Company’s assets measured at fair value on a nonrecurring basis as of December 31, 2019, aggregated by the level within the fair value hierarchy in which those measurements fall. The table includes information related to properties remeasured to fair value as a result of impairment charges recorded during the year ended December 31, 2019, except for those properties sold prior to December 31, 2019. Methods and assumptions used to estimate the fair value of these assets as of December 31, 2019 are described after the table.

	Fair Value
	Level 1		Level 2			Level 3			Total		Provision for Impairment
December 31, 2019
Investment properties	$	—	$	11,644	(a)	$	5,300	(b)	$	16,944	$	12,298

(a) Represents the fair value of the Company’s King Philip’s Crossing investment property as of December 31, 2019, the date the asset was measured at fair value. The estimated fair value of King Philip’s Crossing was based upon the expected sales price from an executed sales contract and determined to be a Level 2 input.

(b)

Represents the fair value of the Company’s Streets of Yorktown investment property as of September 30, 2019, the date the asset was measured at fair value. The estimated fair value of Streets of Yorktown was determined using the income approach. The income approach involves discounting the estimated income stream and reversion (presumed sale) value of a property over an estimated holding period to a present value at a risk-adjusted rate. The discount rates and third-party comparable sales prices used in this approach are derived from property-specific information, market transactions and other industry data and are considered significant inputs to this valuation. The reversion value of the property was based upon third-party comparable sales prices, which contain unobservable inputs used by these third parties. A weighted average discount rate of 6.89% was used to (i) present value the estimated income stream over the estimated holding period and (ii) present value the reversion value.

Schedule of financial liabilities measured at fair value for disclosure purposes

The following table presents the Company’s financial liabilities, which are measured at fair value for disclosure purposes, by the level in the fair value hierarchy within which those measurements fall.

	Fair Value
	Level 1		Level 2		Level 3		Total
June 30, 2020
Mortgages payable, net	$	—	$	—	$	94,982	$	94,982
Unsecured notes payable, net	$	243,380	$	—	$	543,339	$	786,719
Unsecured term loans, net	$	—	$	—	$	704,148	$	704,148
Unsecured revolving line of credit	$	—	$	—	$	133,299	$	133,299
December 31, 2019
Mortgages payable, net	$	—	$	—	$	98,082	$	98,082
Unsecured notes payable, net	$	255,965	$	—	$	566,918	$	822,883
Unsecured term loans, net	$	—	$	—	$	720,000	$	720,000
Unsecured revolving line of credit	$	—	$	—	$	18,000	$	18,000

The Company estimates the fair value of its Level 3 financial liabilities using a discounted cash flow model that incorporates future contractual principal and interest payments. The Company estimates the fair value of its mortgages payable, net and Level 3 unsecured notes payable, net by discounting the anticipated future cash flows of each instrument at rates currently offered to the Company by its lenders for similar debt instruments of comparable maturities. The Company estimates the fair value of its unsecured term loans, net and unsecured revolving line of credit by discounting the anticipated future cash flows at a reference rate, currently one-month LIBOR, plus an applicable credit spread currently offered to the Company by its lenders for similar instruments of comparable maturities. The following rates were used in the discounted cash flow model to calculate the fair value of the Company’s Level 3 financial liabilities:

	June 30, 2020	December 31, 2019
Mortgages payable, net – range of discount rates used	3.6% to 4.2%	3.2% to 3.6%
Unsecured notes payable, net – weighted average discount rate used	4.69%	3.79%
Unsecured term loans, net – weighted average credit spread portion of discount rate used	1.95%	1.26%
Unsecured revolving line of credit – credit spread portion of discount rate used	1.75%	1.05%