Fair Value Measurements

3 Months Ended

Mar. 31, 2025

Fair Value Disclosures [Abstract]

Fair Value Measurements

15. Fair Value Measurements

All financial instruments of the Company are reflected in the accompanying Condensed Consolidated Balance Sheets at amounts which, in management’s estimation, based upon an interpretation of available market information and valuation methodologies, reasonably approximate their fair values except those listed below, for which fair values are disclosed. The valuation method used to estimate fair value for fixed-rate and variable-rate debt and mortgage and other finance receivables is based on discounted cash flow analyses, with assumptions that include credit spreads, market yield curves, trading activity, loan amounts and debt maturities. The fair values for marketable securities are based on published values, securities dealers’ estimated market values or comparable market sales. The fair value for embedded derivative liability is based on using the “with-and-without” method. Such fair value estimates are not necessarily indicative of the amounts that would be realized upon disposition. Interest rate swaps are measured at fair value using the market standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments (or receipts) are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves. The Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty's nonperformance risk in the fair value measurements for interest rate swaps.

As a basis for considering market participant assumptions in fair value measurements, the FASB’s Fair Value Measurements and Disclosures guidance establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy).

The following table presents the carrying amount and estimated fair value of Company's financial instruments not measured at fair value as of March 31, 2025 and December 31, 2024 (in thousands):

		March 31, 2025				December 31, 2024
	Fair Value Hierarchy	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Assets:
Mortgage and other financing receivables (1)	Level 3	$	421,849	$	424,573	$	444,966	$	443,234
Liabilities:
Notes payable, net (2)
Senior unsecured notes	Level 2	$	6,605,944	$	6,092,201	$	7,106,835	$	6,538,784
Unsecured term loans	Level 3	$	858,355	$	861,073	$	857,903	$	861,296
Credit facility	Level 3	$	115,684	$	120,474	$	-	$	-
Mortgages payable, net (3)	Level 3	$	444,148	$	425,129	$	496,438	$	469,734

(1)The carrying value includes and the fair value excludes allowance for credit losses of $6.8 million as of both March 31, 2025 and December 31, 2024.

(2)The carrying value includes and the fair value excludes deferred financing costs of $66.9 million and $65.0 million as of March 31, 2025 and December 31, 2024, respectively.

(3)The carrying value includes and the fair value excludes deferred financing costs of $1.1 million as of both March 31, 2025 and December 31, 2024.

The Company has certain financial instruments that must be measured under the FASB’s Fair Value Measurements and Disclosures guidance, including available for sale securities, interest rate swap derivative assets/liabilities and embedded derivative liabilities. The Company currently does not have non-financial assets and non-financial liabilities that are required to be measured at fair value on a recurring basis.

In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level of the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.

The tables below present the Company’s financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2025 and December 31, 2024, aggregated by the level of the fair value hierarchy within which those measurements fall (in thousands):

	Balance at March 31, 2025		Level 1		Level 2		Level 3
Assets:
Interest rate swaps derivative assets	$	384	$	-	$	384	$	-
Liabilities:
Interest rate swaps derivative liabilities	$	3,414	$	-	$	3,414	$	-
Embedded derivative liability	$	19,810	$	-	$	-	$	19,810

	Balance at  December 31, 2024		Level 1		Level 2		Level 3
Assets:
Marketable equity securities	$	2,290	$	2,290	$	-	$	-
Interest rate swaps derivative assets	$	7,239	$	-	$	7,239	$	-
Liabilities:
Embedded derivative liability	$	19,864	$	-	$	-	$	19,864

The significant unobservable input (Level 3 inputs) used in measuring the Company’s embedded derivative liability, which is categorized with Level 3 of the fair value hierarchy, is the discount rate of 6.30% and 6.40% as of March 31, 2025 and December 31, 2024, respectively.

The table below summarizes the change in the fair value of the embedded derivative liability measured using Level 3 inputs for the three months ended March 31, 2025 and 2024 (in thousands):

	Three Months Ended March 31,
	2025			2024
Balance as of January 1,	$	19,864		$	30,914
Settlements		(370	)		(547	)
Change in fair value (included in Other income, net)		316			1,842
Balance as of March 31,	$	19,810		$	32,209