Fair Value of Financial Instruments

9 Months Ended

Sep. 30, 2012

Fair Value Disclosures [Abstract]

Fair Value Disclosures [Text Block]

Note 8 – Fair Value of Financial Instruments

Fair value is defined as the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The GAAP fair value framework uses a three-tiered approach. Fair value measurements are classified and disclosed in one of the following three categories:

· Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities;

· Level 2 – Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which significant inputs and significant value drivers are observable in active markets; and

· Level 3 – Prices or valuation techniques where little or no market data is available that requires inputs that are significant to the fair value measurement and unobservable.

 If the inputs used to measure the fair value of a financial instrument fall within different levels of the hierarchy, the financial instrument is categorized based upon the lowest level input that is significant to the fair value measurement. Whenever possible, the Company uses quoted market prices to determine fair value. In the absence of quoted market prices, the Company uses independent sources and data to determine fair value.

As of September 30, 2012, the Company believes the carrying values of cash and cash equivalents, restricted cash, accounts receivable, prepaids and other assets, payables to affiliates, accounts payable, accrued liabilities and distributions payable approximate their fair values based on their highly-liquid nature. As of September 30, 2012, the carrying value and approximate fair value of the mortgage payables, as presented on the balance sheet, were $41.2 million and $42.4 million, respectively. The fair value of mortgage payables is estimated based on the Company’s current interest rates (Level 3 inputs) for similar types of borrowing arrangements. The only nonrecurring fair value measurements during the nine months ended September 30, 2012 were in connection with the consolidation of previously unconsolidated properties, as discussed in Note 3, “Business Combinations.”