ASC 820, Fair Value Measurement and Disclosures defines fair value and establishes a framework for measuring fair value. The objective of fair value is to determine the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (the exit price). ASC 820 establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three levels: Level 1 – quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities; Level 2 – observable prices that are based on inputs not quoted in active markets, but corroborated by market data; and Level 3 – unobservable inputs that are used when little or no market data is available. The fair value hierarchy gives the highest priority to Level 1 inputs and the lowest priority to Level 3 inputs. In determining fair value, we utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as consider counterparty credit risk in our assessment of fair value. Considerable judgment is necessary to interpret Level 2 and 3 inputs in determining the fair value of our financial and non-financial assets and liabilities. Accordingly, our fair value estimates, which are made at the end of each reporting period, may be different than the amounts that may ultimately be realized upon sale or disposition of these assets.

Financial assets and liabilities that are measured at fair value on a recurring basis in our consolidated financial statements consist of (i) marketable securities, (ii) derivative positions in marketable equity securities, (iii) the assets of our deferred compensation plan, which are primarily marketable equity securities and equity investments in limited partnerships, (iv) Real Estate Fund investments, and (v) mandatorily redeemable instruments (Series G-1 through G-4 convertible preferred units and Series D-13 cumulative redeemable preferred units). The tables below aggregate the fair values of these financial assets and liabilities by their levels in the fair value hierarchy at December 31, 2011 and 2010, respectively.

			As of December 31, 2011
(Amounts in thousands)			Total		Level 1		Level 2		Level 3
	Marketable securities		$	741,321	$	741,321	$	-	$	-
	Real Estate Fund investments (75% of which is attributable to
		noncontrolling interests)		346,650		-		-		346,650
	Deferred compensation plan assets (included in other assets)			95,457		39,236		-		56,221
	Derivative positions in marketable equity securities
		(included in other assets)		30,600		-		30,600		-
		Total assets	$	1,214,028	$	780,557	$	30,600	$	402,871

	Mandatorily redeemable instruments (included in other liabilities)		$	54,865	$	54,865	$	-	$	-

			As of December 31, 2010
(Amounts in thousands)			Total		Level 1		Level 2		Level 3
	Marketable securities		$	766,116	$	766,116	$	-	$	-
	Real Estate Fund investments (75% of which is attributable to
		noncontrolling interests)		144,423		-		-		144,423
	Deferred compensation plan assets (included in other assets)			91,549		43,699		-		47,850
	Derivative positions in marketable equity securities
		(included in other assets)		17,616		-		17,616		-
		Total assets	$	1,019,704	$	809,815	$	17,616	$	192,273

	Mandatorily redeemable instruments (included in other liabilities)		$	55,097	$	55,097	$	-	$	-

The table below summarizes the changes in the fair value of the Level 3 assets above for the years ended December 31, 2011 and 2010.

	Real Estate Fund Investments				Deferred Compensation Plan Assets
	For The Year Ended December 31,				For The Year Ended December 31,
(Amounts in thousands)	2011		2010		2011		2010
Beginning balance	$	144,423	$	-	$	47,850	$	39,589
Purchases		248,803		144,423		25,692		17,006
Sales		(48,355)		-		(18,801)		(12,320)
Realized and unrealized gains		17,386		-		1,232		3,527
Other, net		(15,607)		-		248		48
Ending balance	$	346,650	$	144,423	$	56,221	$	47,850

Non-financial assets measured at fair value on a nonrecurring basis in our consolidated financial statements consist of real estate assets and investments in partially owned entities that have been written-down to estimated fair value during 2011 and 2010. See Note 2 – Basis of Presentation and Significant Accounting Policies for details of impairment losses recognized during 2011 and 2010. The fair values of these assets are determined using widely accepted valuation techniques, including (i) discounted cash flow analysis, which considers, among other things, leasing assumptions, growth rates, discount rates and terminal capitalization rates, (ii) income capitalization approach, which considers prevailing market capitalization rates, and (iii) comparable sales activity. Generally, we consider multiple valuation techniques when measuring fair values but in certain circumstances, a single valuation technique may be appropriate. The tables below aggregate the fair values of these assets by their levels in the fair value hierarchy.

		As of December 31, 2011
(Amounts in thousands)		Total		Level 1		Level 2		Level 3
	Real estate assets	$	62,033	$	-	$	-	$	62,033


		As of December 31, 2010
(Amounts in thousands)		Total		Level 1		Level 2		Level 3
	Real estate assets	$	381,889	$	-	$	-	$	381,889
	Investments in partially owned entities		11,413		-		-		11,413

Financial assets and liabilities that are not measured at fair value in our consolidated financial statements include mezzanine loans receivable and debt. Estimates of the fair values of these instruments are based on our assessments of available market information and valuation methodologies, including discounted cash flow analyses. The table below summarizes the carrying amounts and fair values of these financial instruments as of December 31, 2011 and 2010.

			As of December 31, 2011				As of December 31, 2010
			Carrying		Fair		Carrying		Fair
(Amounts in thousands)			Amount		Value		Amount		Value
	Mezzanine loans receivable		$	133,948	$	128,581	$	202,412	$	197,581
	Debt:
		Notes and mortgages payable	$	8,558,275	$	8,685,619	$	8,255,101	$	8,446,791
		Senior unsecured notes		1,357,661		1,426,406		1,082,928		1,119,512
		Exchangeable senior debentures		497,898		509,982		491,000		554,355
		Convertible senior debentures		10,168		10,220		186,413		191,510
		Revolving credit facility debt		138,000		138,000		874,000		874,000
			$	10,562,002	$	10,770,227	$	10,889,442	$	11,186,168

- Definition

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.

+ References

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