Fair Value Measurements

Recurring Fair Value Measurements:

Assets and liabilities measured at fair value on a recurring basis as of September 30, 2018 and 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 at September 30, 2018
Assets:
Cash equivalents, primarily money market funds ⁽¹⁾	$	16,842					$	16,842
Restricted cash, primarily commercial paper and mutual funds ⁽¹⁾	6,939						6,939
Investments, mutual funds held in a grantor trust ⁽¹⁾	33,191						33,191
Investments, mutual funds ⁽¹⁾	7,783						7,783
Total	$	64,755	$	—	$	—	$	64,755
Liabilities:
Deferred compensation plan obligations	$	33,191					$	33,191
Total	$	33,191	$	—	$	—	$	33,191

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(1) For the three and nine months ended September 30, 2018, a gain of $1.2 million and $3.9 million, respectively, was included in Interest and Other Income/Expense, of which $.8 million and $.4 million represented an unrealized gain, respectively.



	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
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

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.

Assets measured at fair value on a nonrecurring basis at September 30, 2018 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)
Property ⁽¹⁾			$	9,292			$	9,292	$	(1,950	)
Property held for sale ⁽²⁾			39,193				39,193		(448		)
Total	$	—	$	48,485	$	—	$	48,485	$	(2,398	)

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(1)

In accordance with our policy of evaluating and recording impairments on the disposal of long-lived assets, property with a carrying amount of $11.3 million was written down to a fair value of $9.3 million, resulting in a loss of $2.0 million, which was included in earnings for the period. Management’s estimate of fair value of this property was determined using a bona fide purchase offer for the Level 2 inputs.


(2)	Property held for sale with a carrying amount of $39.6 million was written down to a fair value of $39.2 million, net of costs to sell, resulting in a loss of $.4 million, which was included in earnings for the period. Management's estimate of the fair value of this property was determined using a bona fide purchase offer for the Level 2 inputs.

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 described 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):



	September 30, 2018						December 31, 2017
	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	$	22,097			$	25,000
Investments, held to maturity⁽²⁾	3,000		$	2,984			4,489		$	4,479
Debt:
Fixed-rate debt	1,775,381				1,760,863		2,063,263				2,109,658
Variable-rate debt	17,747				18,303		17,889				16,393

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(1)	At September 30, 2018 and December 31, 2017, 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 September 30, 2018 and December 31, 2017, these investments had unrealized losses of $16 thousand and $10 thousand, respectively.

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



Description	Fair Value at		Valuation Technique	Unobservable Inputs	Range
	December 31, 2017				Minimum			Maximum
	(in thousands)				2017			2017
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

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(1)	Only applies to one property valuation.