4. Marketable Securities, Fair Value Measurements and Notes Payable

Marketable Securities:

The following is a summary of the Company’s available for sale securities as of the dates indicated:


	As of September 30, 2019
			Gross		Gross
			Unrealized		Unrealized
	Adjusted Cost		Gains		Losses		Fair Value
Marketable Securities:
Equity securities:
Equity Securities	$	4,012	$	576	$	(15)	$	4,573
Marco OP Units and Marco II OP Units		19,227		13,342		—		32,569
		23,239		13,918		(15)		37,142
Debt securities:
Corporate Bonds		18,287		179		(46)		18,420
Total	$	41,526	$	14,097	$	(61)	$	55,562


	As of December 31, 2018
			Gross		Gross
			Unrealized		Unrealized
	Adjusted Cost		Gains		Losses		Fair Value
Marketable Securities:
Equity securities:
Equity Securities	$	1,439	$	230	$	(18)	$	1,651
Marco OP Units and Marco II OP Units		19,227		15,924		—		35,151
		20,666		16,154		(18)		36,802
Debt securities:
Corporate Bonds		65,817		124		(2,120)		63,821
Mortgage Backed Securities ("MBS")		1,615		—		(301)		1,314
		67,432		124		(2,421)		65,135
Other Investments:
Certificate of Deposit		5,012		—		—		5,012
		5,012		—		—		5,012
Total	$	93,110	$	16,278	$	(2,439)	$	106,949

As of both September 30, 2019 and December 31, 2018, the Company held an aggregate of 209,243 Marco OP Units and Marco II OP Units, of which 89,695 were owned by PRO. The Marco OP Units and the Marco II OP Units are exchangeable for a similar number of common operating partnership units (“Simon OP Units”) of Simon Property Group, L.P., (“Simon OP”), the operating partnership of Simon Property Group, Inc. (“Simon”). Subject to the various conditions, the Company may elect to exchange the Marco OP Units and/or the Marco II OP Units to Simon OP Units which must be immediately delivered to Simon in exchange for cash or similar number of shares of Simon’s common stock (“Simon Stock”).

Prior to January 1, 2018, the Company accounted for marketable equity securities at fair value with unrealized gains and losses recognized in AOCI on the consolidated balance sheet. Realized gains and losses on marketable equity securities sold or impaired were recognized on the consolidated statements of operations.

On January 1, 2018, the Company adopted guidance issued by the FASB that required it to change the way it accounts for marketable equity securities. The Company’s marketable equity securities are measured at fair value and starting January 1, 2018 unrealized gains and losses are recognized on the consolidated statements of operations. Upon adoption, the Company reclassified $15.5 million of aggregate net unrealized gains from AOCI to opening accumulated surplus.

The Company considers the declines in market value of certain of its investments to be temporary in nature as the unrealized losses were caused primarily by changes in market interest rates or widening credit spreads. When evaluating these investments for other-than-temporary impairment, the Company reviews factors such as the length of time and extent to which fair value has been below cost basis, the financial condition of the issuer and any changes thereto, and the Company’s intent to sell, or whether it is more likely than not it will be required to sell, the investment before recovery of the investment’s amortized cost basis. During the three and nine months ended September 30, 2019 and 2018, the Company did not recognize any impairment charges. As of September 30, 2019, the Company does not consider any of its investments to be other-than-temporarily impaired.

The Company may sell certain of its investments prior to their stated maturities for strategic purposes, in anticipation of credit deterioration, or for duration management. At the time of purchase, the maturities of the Company’s MBS generally ranged from 27 years to 30 years.

Fair Value Measurements

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs.

The standard describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value:

Level 1 – Quoted prices in active markets for identical assets or liabilities.

Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Marketable securities measured at fair value on a recurring basis as of the dates indicated are as follows:


	Fair Value Measurement Using
As of September 30, 2019	Level 1		Level 2		Level 3		Total

Marketable Securities:
Equity Securities, primarily REITs	$	4,573	$	—	$	—	$	4,573
Marco OP and OP II Units		—		32,569		—		32,569
Corporate Bonds		—		18,420		—		18,420
Certificate of Deposit		—		—		—		—
Total	$	4,573	$	50,989	$	—	$	55,562


	Fair Value Measurement Using
As of December 31, 2018	Level 1		Level 2		Level 3		Total

Marketable Securities:
Equity Securities, primarily REITs	$	1,651	$	—	$	—	$	1,651
Marco OP and OP II Units		—		35,151		—		35,151
Corporate Bonds		—		63,821		—		63,821
MBS		—		1,314		—		1,314
Certificate of Deposit		—		5,012		—		5,012
Total	$	1,651	$	105,298	$	—	$	106,949

The fair values of the Company’s investments in Corporate Bonds and MBS are measured using readily available quoted prices for similar assets. Additionally, as noted and disclosed above, the Company’s Marco OP and Marco OP II Units are ultimately exchangeable for cash or similar number of shares of Simon Stock, therefore the Company uses the quoted market price of Simon Stock to measure the fair value of the Company’s Marco OP and Marco OP II Units.

The following table summarizes the estimated fair value of our investments in marketable debt securities with stated contractual maturity dates, accounted for as available-for-sale securities and classified by the contractual maturity date of the securities:


	As of September 30, 2019
Due in 1 year	$	2,016
Due in 1 year through 5 years		2,530
Due in 5 years through 10 years		4,303
Due after 10 years		9,571
Total	$	18,420

The Company did not have any other significant financial assets or liabilities, which would require revised valuations that are recognized at fair value.

Notes Payable

Margin Loan

The Company has access to a margin loan (the “Margin Loan”) from a financial institution that holds custody of certain of the Company’s marketable securities. The Margin Loan, which is due on demand, bears interest at Libor plus 0.85% (2.87% as of September 30, 2019) and is collateralized by the marketable securities in the Company’s account. The amounts available to the Company under the Margin Loan are at the discretion of the financial institution and not limited to the amount of collateral in its account. There were no amounts outstanding under this Margin Loan as of September 30, 2019 and December 31, 2018.

Line of Credit

The Company had a non-revolving credit facility (the “Line of Credit”) with a financial institution which previously permitted borrowings up to $25.0 million and was scheduled to expire on June 19, 2019. Effective June 19, 2019, the Line of Credit was extended until June 19, 2021 and the amount available for borrowings was reduced to $20.0 million. The Line of Credit bears interest at Libor plus 1.35% (3.37% as of September 30, 2019). The Line of Credit is collateralized by approximately 209,000 Marco OP Units and PRO has guaranteed the Line of Credit. No amounts were outstanding under the Line of Credit as of September 30, 2019 and December 31, 2018.