Fair Value of Assets and Liabilities

9 Months Ended

Sep. 30, 2024

Fair Value Disclosures [Abstract]

Fair Value of Assets and Liabilities

Fair Value of Assets and Liabilities

Properties Held for Sale

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. A three-level valuation hierarchy exists for disclosures of fair value measurements based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. A financial instrument's categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. See Note 2 to the financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023 for additional information. The three levels are defined below:

•Level 1 - Quoted prices in active markets for identical assets or liabilities.

•Level 2 - Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

•Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

At September 30, 2024, we have classified 1250 H Street, NW, 206 East 9th Street and Bridgepoint Square as held for sale in accordance with ASC 360. As a result of our current estimates of market value less estimated costs to sell, it was necessary to record impairment charges of $50.2 million which includes $16.3 million of impairment related to non-real estate assets. We determined these impairments based on third-party offer prices, which are level 2 inputs according to the fair value hierarchy established in ASC 820. We reduced the aggregate carrying values of these properties from $136.9 million to their estimated fair value less estimated costs to sell of $86.7 million. We evaluated each of our properties and determined there were no additional valuation adjustments necessary at September 30, 2024.

Financial Instruments

Our financial instruments include our cash and cash equivalents.  At September 30, 2024 and December 31, 2023, the fair value of these financial instruments was not different from their carrying values.

Other financial instruments that potentially subject us to concentrations of credit risk consist principally of rents receivable. As of September 30, 2024, no single tenant of ours is responsible for more than 10% of our consolidated revenues.