Fair Value Measurements

Recurring Fair Value Measurements:

Assets and liabilities measured at fair value on a recurring basis as of December 31, 2017 and 2016, aggregated by the level in the fair value hierarchy in which those measurements fall, are as follows (in thousands):



	Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value at December 31, 2017
			Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value at December 31, 2017
Assets:
Investments, mutual funds held in a grantor trust	$	31,497					$	31,497
Investments, mutual funds	7,206						7,206
Derivative instruments:
Interest rate contracts			$	2,035			2,035
Total	$	38,703	$	2,035	$	—	$	40,738
Liabilities:
Deferred compensation plan obligations	$	31,497					$	31,497
Total	$	31,497	$	—	$	—	$	31,497



	Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value at December 31, 2016
			Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value at December 31, 2016
Assets:
Investments, mutual funds held in a grantor trust	$	26,328					$	26,328
Investments, mutual funds	7,670						7,670
Derivative instruments:
Interest rate contracts			$	126			126
Total	$	33,998	$	126	$	—	$	34,124
Liabilities:
Deferred compensation plan obligations	$	26,328					$	26,328
Total	$	26,328	$	—	$	—	$	26,328

Nonrecurring Fair Value Measurements:

Property and Property Held for Sale Impairments

Property is reviewed for impairment if events or changes in circumstances indicate that the carrying amount of the property, including any identifiable intangible assets, site costs and capitalized interest, may not be recoverable. In such an event, a comparison is made of the current and projected operating cash flows of each such property into the foreseeable future on an undiscounted basis to the carrying amount of such property. If we conclude that an impairment may have occurred, estimated fair values are determined by management utilizing cash flow models, market capitalization rates and market discount rates, or by obtaining third-party broker valuation estimates, appraisals, bona fide purchase offers or the expected sales price of an executed sales agreement in accordance with our fair value measurements accounting policy. Market capitalization rates and market discount rates are determined by reviewing current sales of similar properties and transactions, and utilizing management’s knowledge and expertise in property marketing.

No assets were measured at fair value on a nonrecurring basis at December 31, 2016. Assets measured at fair value on a nonrecurring basis at December 31, 2017 aggregated by the level in the fair value hierarchy in which those measurements fall, are as follows (in thousands):



	Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value		Total Gains (Losses) ⁽¹⁾
Property ⁽²⁾			$	12,901	$	4,184	$	17,085	$	(7,828	)
Total	$	—	$	12,901	$	4,184	$	17,085	$	(7,828	)

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(1)	Total gains (losses) exclude impairments on disposed assets because they are no longer held by us.

(2)

In accordance with our policy of evaluating and recording impairments on the disposal of long-lived assets, property with a carrying amount of $24.9 million was written down to a fair value of $17.1 million, resulting in a loss of $7.8 million, which was included in earnings for the first quarter of 2017. Management’s estimate of fair value of these properties was determined using a bona fide purchase offer for the Level 2 inputs. See the quantitative information about the significant unobservable inputs used for our Level 3 fair value measurements table below.

Fair Value Disclosures:

Unless otherwise listed below, short-term financial instruments and receivables are carried at amounts which approximate their fair values based on their highly-liquid nature, short-term maturities and/or expected interest rates for similar instruments.

Schedule of our fair value disclosures is as follows (in thousands):



	December 31,
	2017						2016
	Carrying Value		Fair Value Using Significant Other Observable Inputs (Level 2)		Fair Value Using Significant Unobservable Inputs (Level 3)		Carrying Value		Fair Value Using Significant Other Observable Inputs (Level 2)		Fair Value Using Significant Unobservable Inputs (Level 3)
Other Assets:
Tax increment revenue bonds ⁽¹⁾	$	22,097			$	25,000	$	23,910			$	23,910
Investments, held to maturity ⁽²⁾	4,489		$	4,479			5,240		$	5,248
Debt:
Fixed-rate debt	2,063,263				2,109,658		2,089,769				2,132,082
Variable-rate debt	17,889				16,393		266,759				265,230

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(1)	At December 31, 2017 and 2016, the credit loss balance on our tax increment revenue bonds was $31.0 million.


(2)	Investments held to maturity are recorded at cost. As of December 31, 2017 and 2016, a $10 thousand unrealized loss and an $8 thousand unrealized gain was recognized, respectively.

The quantitative information about the significant unobservable inputs used for our Level 3 fair value measurements as of December 31, 2017 and 2016 reported in the above tables, is as follows:



	Fair Value at December 31,						Range
	2017		2016				Minimum					Maximum
Description	(in thousands)				Valuation Technique	Unobservable Inputs	2017			2016		2017			2016
Property	$	4,184	$	—	Discounted cash flows	Discount rate	10.5		%			12.0		%
						Capitalization rate	8.8		%			10.0		%
						Holding period (years)	5					10
						Expected future inflation rate ⁽¹⁾						2.0		%
						Market rent growth rate ⁽¹⁾						3.0		%
						Expense growth rate ⁽¹⁾						2.0		%
						Vacancy rate ⁽¹⁾						20.0		%
						Renewal rate ⁽¹⁾						70.0		%
						Average market rent rate ⁽¹⁾	$	11.00				$	16.00
						Average leasing cost per square foot ⁽¹⁾	$	10.00				$	35.00
Tax increment revenue bonds	25,000		23,910		Discounted cash flows	Discount rate	6.5		%	6.5	%	7.5		%	7.5	%
						Expected future growth rate	1.0		%	1.0	%	2.3		%	2.0	%
						Expected future inflation rate	1.0		%	1.0	%	3.0		%	3.0	%
Fixed-rate debt	2,109,658		2,132,082		Discounted cash flows	Discount rate	3.0		%	3.0	%	5.3		%	5.2	%
Variable-rate debt	16,393		265,230		Discounted cash flows	Discount rate	2.4		%	1.6	%	3.2		%	2.4	%

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(1)	Only applies to one property valuation.