Fair Value Disclosures

3 Months Ended

Mar. 31, 2022

There have been no significant changes in the Company’s policies and valuation techniques utilized to determine fair value from what was disclosed in the Annual Report on Form 10-K for the year ended December 31, 2021.

Financial Instruments Carried at Fair Value

The following table presents information about the Company’s financial instruments measured at fair value on a recurring basis as of March 31, 2022 and December 31, 2021, and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value. There were no Level 1 measurements for the periods presented, and the Company had no transfers between Levels 1, 2, or 3 during the periods presented.


	Fair Value Measurements as of
	March 31, 2022								December 31, 2021
		Level 2			Level 3		Total		Level 2			Level 3		Total
Assets
Derivative financial instruments		$	1,466	(1)	$	—	$	1,466	$	464	(1)	$	—	$	464
Liabilities
Derivative financial instruments		$	880	(1)	$	—	$	880	$	4,169	(1)	$	—	$	4,169
Mezzanine
Redeemable noncontrolling interests		$	28,193	(2)	$	3,000	$	31,193	$	28,858	(2)	$	3,000	$	31,858

(1)Valued using discounted cash flow analyses with observable market-based inputs of interest rate curves and option volatility, as well as credit valuation adjustments to reflect nonperformance risk.

(2)Represents the OP Unit component of redeemable noncontrolling interests which is reported at the greater of the fair value of the Company’s common stock or historical cost at the balance sheet date. Represents a quoted price for a similar asset in an active market. Refer to Note 7.

Financial Instruments Not Carried at Fair Value

As of March 31, 2022 and December 31, 2021, the carrying values for the following instruments represent fair values due to the short maturity of the instruments: Cash and cash equivalents, Restricted cash, Student contracts receivable, certain items in Other assets (including receivables, deposits, and prepaid expenses), Accounts payable, Accrued expenses, and Other liabilities.

As of March 31, 2022 and December 31, 2021, the carrying value for the Company’s one variable rate mortgage loan payable represented fair value due the variable interest rate feature of the instrument.

The table below contains the estimated fair value and related carrying amounts for the Company’s other financial instruments as of March 31, 2022 and December 31, 2021. There were no Level 1 or Level 3 measurements for the periods presented.


	March 31, 2022					December 31, 2021
	Carrying Amount		Estimated Fair Value			Carrying Amount			Estimated Fair Value
			Level 2						Level 2


Liabilities (1)
Unsecured notes	$	2,774,979	$	2,728,846	(2)		$	2,773,855		$	2,917,121	(2)
Mortgage loans payable (fixed rate) (3)	$	519,502	$	511,325	(4)		$	520,316		$	535,401	(4)
Bonds payable	$	14,607	$	15,126	(5)		$	14,597		$	15,703	(5)
Unsecured term loan (fixed rate)	$	199,912	$	200,357	(6)		$	199,824		$	201,042	(6)

(1)Carrying amounts disclosed include any applicable net unamortized OID, net unamortized deferred financing costs, and net unamortized debt premiums and discounts (see Note 5).

(2)Valued using interest rate and spread assumptions that reflect current creditworthiness and market conditions available for the issuance of unsecured notes with similar terms and remaining maturities.

(3)Does not include one variable rate mortgage loan with a principal balance of $0.6 million and $0.9 million as of March 31, 2022 and December 31, 2021, respectively.

(4)Valued using the present value of the cash flows at current market interest rates through maturity that primarily fall within the Level 2 category.

(5)Valued using quoted prices in markets that are not active due to the unique characteristics of these financial instruments.

(6)The Company is party to two interest rate swap contracts to hedge the variable rate cash flows associated with the LIBOR-based interest payments on the Term Loan (see Note 5). Valued using the present value of the cash flows at interpolated 1-month LIBOR swap rates through maturity that primarily fall within the Level 2 category.

- 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 + Details

AMERICAN CAMPUS COMMUNITIES INC 10-Q