Summary of Fair Value of Financial Instruments

9 Months Ended

Sep. 30, 2022

Investments, All Other Investments [Abstract]

Summary of Fair Value of Financial Instruments

Summary of Fair Value of Financial InstrumentsDetermining the estimated fair values of certain financial instruments such as indebtedness requires considerable judgment to interpret market data. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. Accordingly, the estimates presented are not necessarily indicative of the amounts at which these instruments could be purchased, sold or settled.

The carrying amounts and estimated fair values of financial instruments were as follows (in thousands):


	September 30, 2022				December 31, 2021
	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Financial assets measured at fair value:


Derivative assets	$	5,255	$	5,255	$	139	$	139
Financial liabilities measured at fair value:
Derivative liabilities	$	440	$	440	$	1,435	$	1,435
Financial assets not measured at fair value:
Cash and cash equivalents	$	358,878	$	358,878	$	215,998	$	215,998
Restricted cash	53,932		53,932		47,376		47,376
Accounts receivable, net	27,158		27,158		23,701		23,701




Due from related parties, net	1,097		1,097		1,770		1,770
Due from third-party hotel managers	22,941		22,941		27,461		27,461
Financial liabilities not measured at fair value:
Indebtedness	$	1,237,919	$1,126,573 to $1,245,156		$	1,172,312	$1,022,408 to $1,130,029
Accounts payable and accrued expenses	122,150		122,150		96,316		96,316
Dividends and distributions payable	4,353		4,353		2,173		2,173

Due to Ashford Inc.	8,891		8,891		1,474		1,474

Due to third-party hotel managers	1,514		1,514		610		610

Cash, cash equivalents and restricted cash. These financial assets have maturities of less than 90 days and most bear interest at market rates. The carrying value approximates fair value due to their short-term nature. This is considered a Level 1 valuation technique.

Accounts receivable, net, due from related parties, net, accounts payable and accrued expenses, dividends and distributions payable, due to Ashford Inc. and due to/from third-party hotel managers. The carrying values of these financial instruments approximate their fair values due to the short-term nature of these financial instruments. This is considered a Level 1 valuation technique.

Derivative assets and derivative liabilities. See notes 7 and 8 for a complete description of the methodology and assumptions utilized in determining fair values.

Indebtedness, net. Fair value of indebtedness is determined using future cash flows discounted at current replacement rates for these instruments. Cash flows are determined using a forward interest rate yield curve. The current replacement rates are determined by using the U.S. Treasury yield curve or the index to which these financial instruments are tied, and adjusted for the credit spreads. Credit spreads take into consideration general market conditions, maturity and collateral. We estimated the fair value of the total indebtedness to be approximately 91.0% to 100.6% of the carrying value of $1.2 billion at September 30, 2022, and approximately 87.2% to 96.4% of the carrying value of $1.2 billion at December 31, 2021. These fair value estimates are considered a Level 2 valuation technique.