Fair Value of Financial Instruments

9 Months Ended

Jun. 30, 2011

Fair Value of Financial Instruments

Fair Value of Financial Instruments

Note 12 — Fair Value of Financial Instruments

Financial Instruments Not Measured at Fair Value

The following methods and assumptions were used to estimate the fair value of each class of financial instruments that are not recorded at fair value on the consolidated balance sheets:

Cash and cash equivalents, accounts receivable (included in other assets), accounts payable and accrued liabilities:  The carrying amounts reported in the consolidated balance sheets for these instruments approximate their fair value due to the short term nature of these accounts.

Real estate loans:  The earning mortgage loans of the Trust which have variable rate provisions, based upon a margin over prime rate, have an estimated fair value which is equal to their carrying value assuming market rate of interest between 12% and 13%.  The earning mortgage loans of the Trust which have fixed rate provisions have an estimated fair value of $232,000 greater than their carrying value assuming market rates of interest between 8% and 11% which we believe reflect institutional lender yield requirements.  For the mortgage loan which is impaired, the Trust has valued such loan based upon the estimated fair value of the underlying collateral.

At June 30, 2011, the estimated fair value of the Trust’s junior subordinated notes is equal to the carrying value based on the retirement of identical notes on March 15, 2011.

At June 30, 2011, the estimated fair value of the Trust’s mortgages payable is greater than their carrying value by approximately $235,000 assuming market interest rates between 5.5% and 17%.  Market rates were determined using current financing transactions provided by third party institutions.

Considerable judgment is necessary to interpret market data and develop estimated fair value.  The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value assumptions.

Financial Instruments Measured at Fair Value

The Trust’s fair value measurements are based on the assumptions that market participants would use in pricing the asset or liability.  As a basis for considering market participant assumptions in fair value measurements, there is a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity and the reporting entity’s own assumptions about market participant assumptions.  Level 1 assets/liabilities are valued based on quoted prices for identical instruments in active markets, Level 2 assets/liabilities are valued based on quoted prices in active markets for similar instruments, on quoted prices in less active or inactive markets, or on other “observable” market inputs and Level 3 assets/liabilities are valued based significantly on “unobservable” market inputs.  The Trust does not currently own any financial instruments, measured at fair value, that are classified as Level 2 or Level 3.

At June 30, 2011 information regarding the Trust’s financial assets measured at fair value are as follows (dollars in thousands):

	Carrying and		Maturity	Fair Value Measurements Using Fair Value Hierarchy
	Fair Value		Date	Level 1		Level 2
Available-for-sale securities:
Corporate equity securities	$	3,600	—	$	3,600	—