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Fair Value Disclosures

12 Months Ended

Dec. 31, 2019

Financial Instruments Carried at Fair Value

The Company follows the authoritative guidance for financial assets and liabilities, which establishes a framework for measuring fair value and requires enhanced disclosures about fair value measurements. The authoritative guidance requires disclosure about how fair value is determined for assets and liabilities and establishes a hierarchy by which these assets and liabilities must be categorized, based on the significance of inputs.

In general, fair values determined by Level 1 inputs utilize unadjusted, quoted prices in active markets for identical assets or liabilities the Company has the ability to access. Fair values determined by Level 2 inputs utilize inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active markets and inputs other than quoted prices observable for the asset or liability, such as interest rates and yield curves observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for the asset or liability and include situations where there is little, if any, market activity for the asset or liability.

In instances in which the inputs used to measure fair value may fall into different levels of the fair value hierarchy, the level in the fair value hierarchy within which the fair value measurement in its entirety has been determined is based on the lowest level input significant to the fair value measurement in its entirety. The Company’s 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.

The following table presents information about the Company’s financial instruments measured at fair value on a recurring basis as of December 31, 2019 and 2018 and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value. There were no Level 1 measurements for the periods presented, and the Company had no transfers between Levels 1, 2, or 3 during the periods presented. Refer to Note 8 for a discussion of the Level 3 activity during the period related to the redeemable noncontrolling interests in partially owned properties.



	Fair Value Measurements as of
	December 31, 2019								December 31, 2018
	Level 2			Level 3			Total			Level 2			Level 3			Total
Assets
Derivative financial instruments	$	743	⁽¹⁾	$	—		$	743		$	101	⁽¹⁾	$	—		$	101
Liabilities
Derivative financial instruments	$	3,436	⁽¹⁾	$	—		$	3,436		$	2,287	⁽¹⁾	$	—		$	2,287
Mezzanine
Redeemable noncontrolling interests (Company)/Redeemable limited partners (Operating Partnership)	$	23,690	⁽²⁾	$	80,691	⁽³⁾	$	104,381		$	27,828	⁽²⁾	$	156,618	⁽³⁾	$	184,446


⁽¹⁾	Valued using discounted cash flow analyses with observable market-based inputs of interest rate curves and option volatility, as well as credit valuation adjustments to reflect nonperformance risk.


⁽²⁾	Represents the OP Unit component of redeemable noncontrolling interests which is based on the greater of fair value of the Company’s common stock at the balance sheet date or the initial basis. Represents a quoted price for a similar asset in an active market. Refer to Note 8.


⁽³⁾	Represents noncontrolling partners' equity in the Core Joint Ventures which is valued using primarily unobservable inputs, including the Company’s analysis of comparable properties in the Company’s portfolio, estimations of net operating results of the properties, capitalization rates, discount rates, and other market data. Refer to Note 8.

Financial Instruments Not Carried at Fair Value

As of December 31, 2019 and December 31, 2018, the carrying values for the following instruments represent fair values due to the short maturity of the instruments: Cash and Cash Equivalents, Restricted Cash, Student Contracts Receivable, certain items in Other Assets (including receivables, deposits, and prepaid expenses), Accounts Payable, Accrued Expenses, and Other Liabilities.

As of December 31, 2019 and December 31, 2018, the carrying values for the following instruments represent fair values due to the variable interest rate feature of the instruments: Construction Loans Payable, Unsecured Revolving Credit Facility and Mortgage Loans Payable (variable rate).

The table below contains the estimated fair value and related carrying amounts for the Company’s financial instruments as of December 31, 2019 and 2018. There were no Level 1 measurements for the periods presented.



	December 31, 2019									December 31, 2018
	Carrying Amount			Estimated Fair Value						Carrying Amount			Estimated Fair Value
	Carrying Amount			Level 2			Level 3			Carrying Amount			Level 2			Level 3
Assets
Loans receivable	$	50,553		$	—		$	48,307	⁽¹⁾	$	54,611		$	—		$	50,993	⁽¹⁾
Liabilities⁽²⁾
Unsecured notes	$	1,985,603		$	2,069,817	⁽³⁾	$	—		$	1,588,446		$	1,566,900	⁽³⁾	$	—
Mortgage loans payable (fixed rate)	$	761,296	⁽⁴⁾	$	766,821	⁽⁵⁾	$	—		$	693,384	⁽⁶⁾	$	668,911	⁽⁵⁾	$	—
Bonds payable	$	23,001		$	25,110	⁽⁷⁾	$	—		$	26,741		$	28,805	⁽⁷⁾	$	—
Unsecured Term loan (fixed rate)	$	199,121		$	198,687	⁽⁸⁾	$	—		$	—		$	—		$	—


⁽¹⁾	Valued using a discounted cash flow analysis with inputs of scheduled cash flows and discount rates that a willing buyer and seller might use.


⁽²⁾	Carrying amounts disclosed include any applicable net unamortized OID, net unamortized deferred financing costs, and net unamortized debt premiums and discounts (see Note 9).


⁽³⁾	Valued using interest rate and spread assumptions that reflect current creditworthiness and market conditions available for the issuance of unsecured notes with similar terms and remaining maturities.


⁽⁴⁾	Does not include one variable rate mortgage loan with a principal balance of $3.1 million as of December 31, 2019.


⁽⁵⁾	Valued using the present value of the cash flows at current market interest rates through maturity that primarily fall within the Level 2 category.


⁽⁶⁾	Does not include two variable rate mortgage loans with a combined principal balance of $111.4 million as of December 31, 2018.


⁽⁷⁾	Valued using quoted prices in markets that are not active due to the unique characteristics of these financial instruments.

⁽⁸⁾

In November and December 2019, the Company entered into two interest rate swap contracts to hedge the variable rate cash flows associated with the LIBOR-based interest payments on the Term Loan Facility (see Note 9). Valued using the present value of the cash flows at interpolated 1-month LIBOR swap rates through maturity that primarily fall within the Level 2 category.

- 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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