Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2020

Fair Value Inputs, Liabilities, Quantitative Information

The following is a summary of borrowings as of June 30, 2020 and December 31, 2019 (in thousands):



	June 30, 2020				December 31, 2019
	Recorded Principal Balance⁽¹⁾		Fair Value		Recorded Principal Balance⁽¹⁾		Fair Value
Term loans	$	1,608,378	$	1,595,050	$	1,636,470	$	1,656,765
Secured portfolio loan facilities	390,890		391,157		390,780		399,054
Mortgages⁽²⁾	321,451		328,611		326,849		337,614
Total	$	2,320,719	$	2,314,818	$	2,354,099	$	2,393,433

⁽¹⁾

Recorded principal balances include net deferred financing expenses of $15.4 million and $17.2 million as of June 30, 2020 and December 31, 2019, respectively. Recorded principal balances also include assumed market debt adjustments of $1.4 million and $1.2 million as of June 30, 2020 and December 31, 2019, respectively. There are deferred financing expenses related to our revolving credit facility that are in an asset position and thus are not included in these balances.


⁽²⁾	Our finance lease liability is included in the mortgages line item, as presented.

Fair Value, Liabilities Measured on Recurring Basis

air value measurements that occurred as of and during the six months ended June 30, 2020 and the year ended December 31, 2019, were as follows (in thousands):



	June 30, 2020								December 31, 2019
	Level 1		Level 2			Level 3			Level 1		Level 2			Level 3
Recurring
Derivative assets⁽¹⁾	$	—	$	—		$	—		$	—	$	2,728		$	—
Derivative liabilities⁽¹⁾	—		(65,376		)	—			—		(20,974		)	—
Earn-out liability	—		—			(22,000		)	—		—			(32,000		)
Nonrecurring
Impaired real estate assets, net⁽²⁾	—		—			—			—		280,593			—
Impaired corporate intangible asset, net⁽³⁾	—		—			—			—		—			4,401


⁽¹⁾	We record derivative assets in Other Assets, Net and derivative liabilities in Derivative Liabilities on our consolidated balance sheets.


⁽²⁾	The carrying value of impaired real estate assets may have subsequently increased or decreased after the measurement date due to capital improvements, depreciation, or sale.


⁽³⁾	The carrying value of our impaired corporate intangible asset, net, which consists of in-place management contracts, subsequently decreased after the measurement date due to amortization as well as through derecognition as part of the merger with REIT III.

Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation

The following table presents a reconciliation of the change in the earn-out liability measured at fair value on a recurring basis using Level 3 inputs and recognized as Other (Expense) Income, Net in the consolidated statements of operations (in thousands):



	Earn-Out Liability
Balance at December 31, 2019	$	32,000
Change in fair value recognized in Other (Expense) Income, Net	(10,000		)
Balance at June 30, 2020	$	22,000

Fair Value Measurements, Nonrecurring

We recorded the following expense upon impairment of real estate assets (in thousands):



	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Impairment of real estate assets	$	—	$	25,199	$	—	$	38,916