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Fair Value of Assets and Liabilities (Tables)
 6 Months Ended
Jun. 30, 2016
Fair Value of Assets and Liabilities  
Schedule of assets measured on a recurring and non-recurring basis at fair value, categorized by the level of inputs used in the valuation assets

The table below presents certain of our assets measured at fair value at June 30, 2016, categorized by the level of inputs, as defined in the fair value hierarchy under GAAP, used in the valuation of each asset:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

 

 

Fair Value at Reporting Date Using    

 

 

    

    

 

    

Quoted Prices in

    

    

 

    

Significant

 

 

 

Estimated

 

Active Markets for

 

Significant Other

 

Unobservable

 

 

 

Fair

 

Identical Assets

 

Observable Inputs

 

Inputs

Description

 

Value

 

(Level 1)

 

(Level 2)

 

(Level 3)

Recurring Fair Value Measurements Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

  Investment in RMR Inc. (1)

 

$
37,605

 

$

37,605

 

$

 —

 

$

 —

Non-Recurring Fair Value Measurements Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

  Property held for sale and classified as discontinued operations (2)

 

$
12,260

 

$

 —

 

$

 —

 

$
12,260

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Our 1,214,225 shares of class A common stock of The RMR Group Inc., or RMR Inc., which are included in other assets in our condensed consolidated balance sheets, are reported at fair value which is based on quoted market prices (Level 1 inputs).  Our historical cost basis for these shares is $26,888 as of June 30, 2016.  The net unrealized gain of $10,717 for these shares as of June 30, 2016 is included in cumulative other comprehensive income (loss) in our condensed consolidated balance sheets.

(2)

We estimated the fair value of this property at June 30, 2016 based upon broker estimates of value less estimated sale costs (Level 3 inputs as defined in the fair value hierarchy under GAAP).

 

Schedule of fair value and carrying value of financial instruments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of June 30, 2016

 

As of December 31, 2015

 

    

Carrying Amount (1)

    

Fair Value

 

Carrying Amount (1)

    

Fair Value

Senior unsecured notes, 3.75% interest rate, due in 2019

 

$
346,381

 

$
358,351

 

$
345,809

 

$
351,692

Senior unsecured notes, 5.875% interest rate, due in 2046

 

 
299,891

 

 
316,200

 

 

 —

 

 

 —

Mortgage note payable, 6.21% interest rate, due in 2016(2) (3)

 

 

 —

 

 

 —

 

 
23,476

 

 
24,038

Mortgage note payable, 5.55% interest rate, due in 2016(2) (4)

 

 

 —

 

 

 —

 

 
83,375

 

 
83,457

Mortgage note payable, 5.88% interest rate, due in 2021(2)

 

 
13,944

 

 
15,100

 

 
14,045

 

 
14,678

Mortgage note payable, 7.00% interest rate, due in 2019(2)

 

 
8,964

 

 
9,551

 

 
9,145

 

 
9,645

Mortgage note payable, 8.15% interest rate, due in 2021(2)

 

 
5,747

 

 
6,242

 

 
6,258

 

 
6,711

 

 

$
674,927

 

$
705,444

 

$
482,108

 

$
490,221

(1)

Carrying amount includes certain unamortized debt issuance costs and unamortized premiums and discounts.

(2)

We assumed these mortgages in connection with our acquisitions of the encumbered properties.  The stated interest rates for these mortgage debts are the contractually stated rates.  We recorded the assumed mortgages at estimated fair value on the date of acquisition and we are amortizing the fair value premiums, if any, to interest expense over the respective terms of the mortgages to reduce interest expense to the estimated market interest rates as of the date of acquisition.

(3)

This mortgage note was repaid, at par, in February 2016.

(4)

This mortgage note was repaid, at par, in March 2016.