Note 18 - Fair Value Disclosure of Financial Instruments

12 Months Ended

Dec. 31, 2022

Notes to Financial Statements

Fair Value Disclosures [Text Block]

18. Fair Value Disclosure of Financial Instruments:

All financial instruments of the Company are reflected in the accompanying 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 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.

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 are financial instruments for which the Company’s estimate of fair value differs from the carrying amounts (in thousands):

	December 31,
	2022				2021
	Carrying Amounts		Estimated Fair Value		Carrying Amounts		Estimated Fair Value
Notes payable, net (1)	$	6,780,969	$	5,837,401	$	7,027,050	$	7,330,723
Mortgages payable, net (2)	$	376,917	$	311,659	$	448,652	$	449,758

(1) The Company determined that the valuation of its senior unsecured notes were classified within Level 2 of the fair value hierarchy. The estimated fair value amounts classified as Level 2 as of December 31, 2022 and 2021, were $5.8 billion and $7.3 billion, respectively.

(2) The Company determined that its valuation of these mortgages payable was classified within Level 3 of the fair value hierarchy. 

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 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 December 31, 2022 and 2021, aggregated by the level of the fair value hierarchy within which those measurements fall (in thousands):

	Balance at December 31, 2022		Level 1		Level 2		Level 3
Assets:
Marketable equity securities	$	597,732	$	597,732	$	-	$	-
Liabilities:
Embedded derivative liability	$	56,000	$	-	$	-	$	56,000

	Balance at December 31, 2021		Level 1		Level 2		Level 3
Assets:
Marketable equity securities	$	1,211,739	$	1,211,739	$	-	$	-

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 as of December 31, 2022, is the discount rate of 8.00%.

Assets measured at fair value on a non-recurring basis at December 31, 2021 are as follows (in thousands):

	Balance at December 31, 2021		Level 1		Level 2		Level 3
Other investments	$	9,834	$	-	$	-	$	9,834