v3.25.2
Fair Value Measurements
 6 Months Ended
Jun. 30, 2025
Fair Value Disclosures [Abstract]  
Fair Value Measurements

8.

Fair Value Measurements

 

(a) Disclosure of Fair Value of Financial Instruments

All financial instruments of the Company are reflected in the accompanying Consolidated Balance Sheets at amounts which, in management's estimation, reasonably approximate their fair values, except those instruments listed below:

 

 

 

June 30, 2025

 

 

December 31, 2024

 

(in thousands)

 

Carrying
Amount

 

 

Fair Value

 

 

Carrying
Amount

 

 

Fair Value

 

Financial assets:

 

 

 

 

 

 

 

 

 

 

 

 

Notes receivable

 

$

31,650

 

 

 

31,723

 

 

$

31,790

 

 

 

31,755

 

Financial liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Notes payable, net

 

$

4,769,182

 

 

 

4,658,270

 

 

$

4,343,700

 

 

 

4,141,096

 

Unsecured credit facilities (1)

 

$

30,000

 

 

 

30,000

 

 

$

65,000

 

 

 

65,000

 
(1)
The carrying amounts approximated its fair values due to the variable nature of the terms.

The above fair values represent management's estimate of the amounts that would be received from selling those assets or that would be paid to transfer those liabilities in an orderly transaction between market participants as of June 30, 2025, and December 31, 2024, respectively. These fair value measurements maximize the use of observable inputs which are classified within Level 2 of the fair value hierarchy. However, in situations where there is little, if any, market activity for the asset or liability at the measurement date, the fair value measurement reflects the Company's own judgments about the assumptions that market participants would use in pricing the asset or liability.

The Company develops its judgments based on the best information available at the measurement date, including expected cash flows, appropriate risk-adjusted discount rates, and available observable and unobservable inputs. Service providers involved in fair value measurements are evaluated for competency and qualifications on an ongoing basis. As considerable judgment is often necessary to estimate the fair value of these financial instruments, the fair values presented above are not necessarily indicative of amounts that will be realized upon disposition of the financial instruments.

(b) Fair Value Measurements

The following financial instruments are measured at fair value on a recurring basis:

Securities

The Company has investments in marketable securities and commercial time deposits that are included within Other assets on the accompanying Consolidated Balance Sheets. The marketable securities, which include mutual funds and exchange-traded funds, are measured at fair value using quoted prices in active markets and are classified as Level 1 inputs of the fair value hierarchy. During the three months ended June 30, 2025, the Company invested $90 million in commercial time deposits, consisting of two tranches with original maturities of five months and four months, respectively. These deposits are classified as Level 2 within the fair value hierarchy.

Changes in the value of securities are recorded within Net investment income in the accompanying Consolidated Statements of Operations, and include the following:

 

(in thousands)

 

Three months ended June 30,

 

 

Six months ended June 30,

 

 

 

2025

 

 

2024

 

 

2025

 

 

2024

 

Unrealized Gain (Loss)

 

 

62

 

 

 

703

 

 

 

(2,385

)

 

 

3,134

 

Available-for-Sale Debt Securities

Available-for-sale debt securities consist of investments in corporate bonds and agency mortgage-backed securities. These securities are recorded at fair value, which is determined using either recent trade prices for the identical debt instrument or comparable instruments by issuers of similar industry sector, issuer credit rating, duration and security type. The fair value measurements for these are considered Level 2 inputs of the fair value hierarchy. Unrealized gains and losses on these available-for-sale debt securities are recognized through Other comprehensive income.

Interest Rate Derivatives

The fair value of the Company's interest rate derivatives is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. The Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty's nonperformance risk in the fair value measurements.

Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by the Company and its counterparties. The Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its interest rate swaps. As a result, the Company determined that its interest rate swaps valuation in its entirety is classified in Level 2 of the fair value hierarchy.

The following tables present the placement in the fair value hierarchy of assets and liabilities that are measured at fair value on a recurring basis:

 

 

Fair Value Measurements as of June 30, 2025

 

 

 

 

 

Quoted Prices in Active Markets for Identical Assets

 

 

Significant Other Observable Inputs

 

 

Significant Unobservable Inputs

 

(in thousands)

Balance

 

 

(Level 1)

 

 

(Level 2)

 

 

(Level 3)

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

Securities

$

126,217

 

 

 

36,217

 

 

 

90,000

 

 

 

—

 

Available-for-sale debt securities

 

11,870

 

 

 

—

 

 

 

11,870

 

 

 

—

 

Interest rate derivatives

 

8,402

 

 

 

—

 

 

 

8,402

 

 

 

—

 

Total

$

146,489

 

 

 

36,217

 

 

 

110,272

 

 

 

—

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

Interest rate derivatives

$

(1,735

)

 

 

—

 

 

 

(1,735

)

 

 

—

 

 

 

Fair Value Measurements as of December 31, 2024

 

 

 

 

 

Quoted Prices in Active Markets for Identical Assets

 

 

Significant Other Observable Inputs

 

 

Significant Unobservable Inputs

 

(in thousands)

Balance

 

 

(Level 1)

 

 

(Level 2)

 

 

(Level 3)

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

Securities

$

39,419

 

 

 

39,419

 

 

 

—

 

 

 

—

 

Available-for-sale debt securities

 

12,401

 

 

 

—

 

 

 

12,401

 

 

 

—

 

Interest rate derivatives

 

12,781

 

 

 

—

 

 

 

12,781

 

 

 

—

 

Total

$

64,601

 

 

 

39,419

 

 

 

25,182

 

 

 

—

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

Interest rate derivatives

$

(423

)

 

 

—

 

 

 

(423

)

 

 

—