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Fair Value Measurements (Tables)
 9 Months Ended
Sep. 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:
 September 30, 2020December 31, 2019
 Carrying ValueFair ValueCarrying ValueFair Value
Financial liabilities:    
Mortgages payable, net$92,075 $94,078 $94,155 $98,082 
Unsecured notes payable, net$1,185,479 $1,205,002 $796,247 $822,883 
Unsecured term loans, net$467,391 $458,788 $716,523 $720,000 
Unsecured revolving line of credit$— $— $18,000 $18,000 
Derivative liability$34,804 $34,804 $12,288 $12,288 
Schedule of financial instruments measured at fair value on a recurring basis
The following table presents the Company’s financial instruments, which are measured at fair value on a recurring basis, by the level in the fair value hierarchy within which those measurements fall. Methods and assumptions used to estimate the fair value of these instruments are described after the table.
Fair Value
Level 1Level 2Level 3Total
September 30, 2020    
Derivative liability$— $34,804 $— $34,804 
December 31, 2019    
Derivative liability$— $12,288 $— $12,288 
Schedule of assets measured at fair value on a nonrecurring basis
The following table presents the Company’s assets measured at fair value on a nonrecurring basis as of September 30, 2020 and December 31, 2019, aggregated by the level within the fair value hierarchy in which those measurements fall. The table includes information related to properties remeasured to fair value as a result of impairment charges recorded during the nine months ended September 30, 2020 and the year ended December 31, 2019, except for those properties sold prior to September 30, 2020 and December 31, 2019, respectively. Methods and assumptions used to estimate the fair value of these assets are described after the table.
Fair Value
Level 1Level 2Level 3TotalProvision for
Impairment
September 30, 2020    
Investment property$— $— $2,500 (a)$2,500 $2,279 
December 31, 2019
Investment properties$— $11,644 (b)$5,300 (c)$16,944 $12,298 
(a)Represents the fair value of the Company’s Streets of Yorktown investment property as of September 30, 2020, the date the asset was measured at fair value. The estimated fair value of Streets of Yorktown was based upon third-party comparable sales prices, derived from property-specific information, market transactions and other industry data and are considered significant unobservable inputs.
(b)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.
(c)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 1Level 2Level 3Total
September 30, 2020    
Mortgages payable, net$— $— $94,078 $94,078 
Unsecured notes payable, net$750,908 $— $454,094 $1,205,002 
Unsecured term loans, net$— $— $458,788 $458,788 
Unsecured revolving line of credit$— $— $— $— 
December 31, 2019    
Mortgages payable, net$— $— $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:
September 30, 2020December 31, 2019
Mortgages payable, net – range of discount rates used
3.7% to 4.2%
3.2% to 3.6%
Unsecured notes payable, net – weighted average discount rate used4.40%3.79%
Unsecured term loans, net – weighted average credit spread portion of discount rate used1.93%1.26%
Unsecured revolving line of credit – credit spread portion of discount rate used1.65%1.05%