FAIR VALUES OF FINANCIAL INSTRUMENTS

3 Months Ended

Mar. 31, 2025

Fair Value Disclosures [Abstract]

FAIR VALUES OF FINANCIAL INSTRUMENTS

NOTE 11—FAIR VALUES OF FINANCIAL INSTRUMENTS

Overview

Accounting guidance on fair value measurements for certain financial assets and liabilities requires that financial assets and liabilities carried at fair value be classified and disclosed in one of the following categories:

•Level 1: Fair value calculated based on unadjusted quoted prices for identical assets or liabilities in active markets that we have the ability to access.

•Level 2: Fair value calculated using inputs other than quoted prices included in level one that are directly or indirectly observable for the asset or liability. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets and other inputs for the asset or liability that are observable at commonly quoted intervals, such as interest rates, foreign exchange rates and yield curves.

•Level 3: Fair value calculated using unobservable inputs for the asset or liability, which typically are based on our own assumptions, because there is little, if any, related market activity.

The use of different market assumptions and estimation methodologies may have a material effect on the reported estimated fair value amounts. Accordingly, the estimates presented are not necessarily indicative of the amounts we would realize in a current market exchange or transaction.

Financial Instruments Measured at Fair Value

The table below summarizes the carrying amounts and fair values of our financial instruments either recorded or disclosed on a recurring basis (dollars in thousands):

	As of March 31, 2025				As of December 31, 2024
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Assets:
Cash and cash equivalents (1)	$	182,335	$	182,335	$	897,850	$	897,850
Escrow deposits and restricted cash (1)	63,628		63,628		59,383		59,383
Stock warrants (3)(4)(5)	32,652		32,652		40,192		40,192
Secured loans receivable and investments, net (3)(4)	145,184		146,113		144,872		146,229
Non-mortgage loans receivable, net (3)(4)(5)	25,642		25,276		28,129		27,640
Derivative instruments (3)(5)	8,183		8,183		12,908		12,908
Liabilities:
Senior notes payable and other debt, gross (3)(4)	$	12,793,021	$	12,799,116	$	13,618,802	$	13,411,066
Derivative instruments (3)(6)	8,205		8,205		5,887		5,887
Temporary Equity:
Redeemable OP Units (2)	$	233,608	$	233,608	$	200,420	$	200,420

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(1)The carrying amount approximates fair value due to the short maturity of these instruments.

(2)Level 1 within fair value hierarchy.

(3)Level 2 within fair value hierarchy.

(4)Level 3 within fair value hierarchy.

(5)Included in Other assets on our Consolidated Balance Sheets.

(6)Included in Accounts payable and other liabilities on our Consolidated Balance Sheets.

Items Measured at Fair Value on a Recurring Basis

Stock warrants consist of the Brookdale Warrants and the Scion Warrants. The Brookdale Warrants represent an interest in a publicly-traded entity and their fair value is based on Level 2 inputs that are obtained from public sources such as equity spot price, dividend yield, volatility and risk-free rate. The Scion Warrants represent a financial interest in a private entity whose fair value is based on Level 3 inputs that reflect significant assumptions including underlying enterprise value, market volatility, duration, dividend rate and risk-free rate. Changes in one or more of these inputs could impact the fair value determination.

During the three months ended March 31, 2025, we recognized unrealized gain of $5.7 million relating to the change in fair value of stock warrants, which is included in Other (expense) income on our Consolidated Statements of Income.

There has been no transfer into or out of Level 3 financial instruments during the periods presented.

Substantially all of our derivative instruments consist of interest rate swaps. Their fair value is based on Level 2 inputs.

Other Items Measured at Fair Value on a Nonrecurring Basis

Real estate recorded as held for sale and any associated real estate impairment recorded due to the shortening of the expected hold period due to our change in intent to hold the asset (see “Note 5 – Dispositions and Impairments”) are measured at fair value on a nonrecurring basis. We estimate the fair value of assets held for sale and any associated impairment charges based primarily on current sales price expectations, which reside within Level 2 of the fair value hierarchy.

Real estate impairment charges recorded due to our evaluation of recoverability when events or changes in circumstances indicate the carrying amount may not be recoverable are based on company-specific inputs and our assumptions about the marketability of the properties as observable inputs are not available. As such, we have determined that these fair value measurements generally reside within Level 3 of the fair value hierarchy. We estimate the fair value of real estate deemed to not be recoverable using the cost or income approach and unobservable data such as net operating income and estimated capitalization and discount rates, and giving consideration to local and national industry market data including comparable sales.