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FINANCIAL INSTRUMENTS

12 Months Ended

Dec. 31, 2019

Financial Instruments [Abstract]

FINANCIAL INSTRUMENTS

NOTE 14 - FINANCIAL INSTRUMENTS

The net carrying amount of cash and cash equivalents, restricted cash, contractual receivables, other assets and accrued expenses and other liabilities reported in the Consolidated Balance Sheets approximates fair value because of the short maturity of these instruments (Level 1).

At December 31, 2019 and 2018, the net carrying amounts and fair values of other financial instruments were as follows:


		December 31, 2019						December 31, 2018
		Carrying			Fair			Carrying			Fair
		Amount			Value			Amount			Value
		(in thousands)
Assets:
Investments in direct financing leases – net		$	11,488		$	11,488		$	132,262		$	132,262
Mortgage notes receivable – net			773,563			819,083			710,858			735,892
Other investments – net			419,228			412,934			504,626			503,907
Total		$	1,204,279		$	1,243,505		$	1,347,746		$	1,372,061
Liabilities:
Revolving line of credit		$	125,000		$	125,000		$	313,000		$	313,000
Term loan			2,275			2,275			—			—
U.S. term loan			348,878			350,000			423,065			425,000
Sterling term loan			132,059			132,480			127,394			127,990
Omega OP term loan			74,763			75,000			99,553			100,000
2015 term loan			249,038			250,000			248,713			250,000
4.375% notes due 2023 – net			695,812			749,693			694,643			700,062
4.95% notes due 2024 – net			395,702			442,327			394,691			406,386
4.50% notes due 2025 – net			396,163			430,529			395,402			392,122
5.25% notes due 2026 – net			595,732			675,078			595,027			605,700
4.50% notes due 2027 – net			689,445			759,475			687,981			671,555
4.75% notes due 2028 – net			541,891			602,967			540,883			537,508
3.625% notes due 2029 – net			488,263			500,792			—			—
HUD mortgages - net			387,405			379,866			—			—
Subordinated debt – net			13,714			15,253			20,270			22,589
Total		$	5,136,140		$	5,490,735		$	4,540,622		$	4,551,912

Fair value estimates are subjective in nature and are dependent on a number of important assumptions, including estimates of future cash flows, risks, discount rates and relevant comparable market information associated with each financial instrument (see Note 2 – Summary of Significant Accounting Policies). The use of different market assumptions and estimation methodologies may have a material effect on the reported estimated fair value amounts.

The following methods and assumptions were used in estimating fair value disclosures for financial instruments.

●

Direct financing leases: The fair value of the investments in direct financing leases, excluding those related to Orianna, are estimated using a discounted cash flow analysis, using interest rates being offered for similar leases to borrowers with similar credit ratings (Level 3). For the Orianna direct financing lease as of December 31, 2018, the Company estimated the fair value of its investment based on the expected liquidating payments from the Trust as further described in Note 4 – Direct Financing Leases (Level 3).

●

Mortgage notes receivable: The fair value of the mortgage notes receivables are estimated using a discounted cash flow analysis, using interest rates being offered for similar loans to borrowers with similar credit ratings (Level 3).

●

Other investments: Other investments are primarily comprised of notes receivable. The fair values of notes receivable are estimated using a discounted cash flow analysis, using interest rates being offered for similar loans to borrowers with similar credit ratings (Level 3).

●

Revolving line of credit, secured borrowing and term loans: The fair value of our borrowings under variable rate agreements are estimated using a present value technique based on expected cash flows discounted using the current market rates (Level 3).

●

Senior notes and subordinated debt: The fair value of our borrowings under fixed rate agreements are estimated using a present value technique based on inputs from trading activity provided by a third party (Level 2).

●

HUD mortgages: The fair value of our borrowings under HUD debt agreements are estimated using an expected present value technique based on quotes obtained by HUD debt brokers (Level 2).

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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