Financial Instruments and Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2018

Schedule of fair value, assets and liabilities measured on recurring basis

The following table presents the Company’s fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis (in thousands):



	June 30, 2018						December 31, 2017
	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Assets
Money Market Funds	$	105	$	—	$	—	$	3	$	—	$	—
Derivative financial instruments	—		12,246		—		—		4,402		—
Liabilities
Derivative financial instruments	—		794		—		—		1,467		—

Schedule of derivative financial instruments

The Company had the following interest rate swaps for the periods presented (dollars in thousands):



	Aggregate Notional Amount				Strike Rate			Balance Sheet Location	Fair Value
Derivative Instrument	Aggregate Notional Amount		Effective Date	Maturity Date	Low		High	Balance Sheet Location	June 30, 2018			December 31, 2017
Core
Interest Rate Swaps	$	19,776	October 2011 - December 2012	July 2018 - December 2022	2.9%	—	3.77%	Other Liabilities	$	(457	)	$	(1,438	)
Interest Rate Swaps	386,580		February 2013 - March 2018	November 2018 - March 2028	1.24%	—	3.77%	Other Assets	10,237			4,076
	$	406,356							$	9,780		$	2,638

Fund II
Interest Rate Swap	$	19,445	October 2014	November 2021	2.88%	—	2.88%	Other Assets	$	237		$	—
Interest Rate Swaps	—		October 2014	November 2021	2.88%	—	2.88%	Other Liabilities	—			(29		)
	$	19,445							$	237		$	(29	)

Fund III
Interest Rate Cap	$	58,000	December 2016	January 2020	3.00%	—	3.00%	Other Assets	$	36		$	14

Fund IV
Interest Rate Swaps	$	86,188	May 2014 - November 2017	May 2019 - December 2022	1.78%	—	2.11%	Other Assets	$	1,591		$	295
Interest Rate Caps	108,900		July 2016 - November 2016	August 2019 - December 2019	3.00%	—	3.00%	Other Assets	41			17
	$	195,088							$	1,632		$	312

Fund V
Interest Rate Swap	$	16,900	January 2018	February 2021	2.41%	—	2.41%	Other Assets	$	104		$	—
Interest Rate Swaps	69,670		June 2018	June 2021 - June 2023	2.78%	—	2.88%	Other Liabilities	(337		)	—
	$	86,570							$	(233	)	$	—

Total asset derivatives									$	12,246		$	4,402
Total liability derivatives									$	(794	)	$	(1,467	)

Gain (loss) on derivative instruments within the statement of income

The following table presents the location in the financial statements of the income (losses) recognized related to the Company’s cash flow hedges (in thousands):



	Six Months Ended June 30,
	2018		2017
Amount of income (loss) recognized in other comprehensive income	$	8,603	$	(2,008	)
Amount of loss subsequently reclassified to earnings	—		—

Fair value, by balance sheet grouping

The Company’s other financial instruments had the following carrying values and fair values as of the dates shown (dollars in thousands, inclusive of amounts attributable to noncontrolling interests where applicable):



		June 30, 2018				December 31, 2017
	Level	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Notes Receivable^(a)	3	$	109,209	$	106,564	$	153,829	$	151,712
Mortgage and Other Notes Payable^(a)	3	992,741		981,994		921,261		921,891
Investment in non-traded equity securities ^(b)	3	—		22,824		—		22,824
Unsecured notes payable and Unsecured line of credit^(c)	2	480,125		480,345		517,125		515,330

__________

(a)

The Company determined the estimated fair value of these financial instruments using a discounted cash flow model with rates that take into account the credit of the borrower or tenant, where applicable, and interest rate risk. The Company also considered the value of the underlying collateral, taking into account the quality of the collateral, the credit quality of the borrower, the time until maturity and the current market interest rate environment.


(b)	Represents Fund II’s cost-method investment in Albertson’s supermarkets (Note 4).

(c)

The Company determined the estimated fair value of the unsecured notes payable and unsecured line of credit using quoted market prices in an open market with limited trading volume where available. In cases where there was no trading volume, the Company determined the estimated fair value using a discounted cash flow model using a rate that reflects the average yield of similar market participants.