COPT Defense Properties Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Fair Value Measurements (Tables)

Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2012

Schedule of fair value assets and liabilities measured on recurring basis

The tables below set forth our financial assets and liabilities that are accounted for at fair value on a recurring basis as of December 31, 2012 and 2011 and the hierarchy level of inputs used in measuring their respective fair values under applicable accounting standards (in thousands):



Description	Quoted Prices in Active Markets for Identical Assets(Level 1)		Significant Other Observable Inputs(Level 2)		Significant Unobservable Inputs(Level 3)		Total
December 31, 2012:
Assets:
Marketable securities in deferred compensation plan (1)
Mutual funds	$	6,275	$	—	$	—	$	6,275
Common stocks	298		—		—		298
Other	203		—		—		203
Common stock (1)	809		—		—		809
Warrants to purchase common shares in KEYW (2)	—		294		—		294
Assets	$	7,585	$	294	$	—	$	7,879
Liabilities:
Deferred compensation plan liability (3)	$	6,776	$	—	$	—	$	6,776
Interest rate derivatives	—		6,185		—		6,185
Liabilities	$	6,776	$	6,185	$	—	$	12,961
Redeemable noncontrolling interest	$	—	$	—	$	10,298	$	10,298

December 31, 2011:
Assets:
Marketable securities in deferred compensation plan (1)
Mutual funds	$	5,878	$	—	$	—	$	5,878
Common stocks	909		—		—		909
Other	801		—		—		801
Common stock (1)	13,928		—		—		13,928
Interest rate derivative (2)	—		716				716
Warrants to purchase common shares in KEYW (2)	—		125		—		125
Assets	$	21,516	$	841	$	—	$	22,357
Liabilities:
Deferred compensation plan liability (3)	$	7,588	$	—	$	—	$	7,588
Interest rate derivatives	—		30,863		—		30,863
Liabilities	$	7,588	$	30,863	$	—	$	38,451
Redeemable noncontrolling interest	$	—	$	—	$	8,908	$	8,908

(1) Included in the line entitled “restricted cash and marketable securities” on our consolidated balance sheet.

(2) Included in the line entitled “prepaid expenses and other assets” on our consolidated balance sheet.

(3) Included in the line entitled “other liabilities” on our consolidated balance sheet.

Schedule of fair value hierarchy of impaired properties and other assets associated with such properties

The table below sets forth the fair value hierarchy of the valuation techniques used by us in determining such fair values for the year ended December 31, 2012 (dollars in thousands):

Quoted Prices in

Significant

Impairment

Active Markets for

Significant Other

Unobservable

Losses

Identical Assets

Observable Inputs

Inputs

Recognized in

Description

(Level 1)

(Level 2)

(Level 3)

Total

2012 (1)

Assets (2):

Properties, net

—

379,684

62,702

(1) Represents impairment losses, excluding exit costs incurred of $4.2 million in 2012.

(2) Reflects balance sheet classifications of assets at time of fair value measurement, excluding the effect of held for sale classifications.

The table below sets forth the fair value hierarchy of the valuation techniques used by us in determining such fair values for the year ended December 31, 2011 (dollars in thousands):



	Quoted Prices in				Significant				Impairment
	Active Markets for		Significant Other		Unobservable				Losses
	Identical Assets		Observable Inputs		Inputs				Recognized in
Description	(Level 1)		(Level 2)		(Level 3)		Total		2011
Assets (1):
Properties, net	$	—	$	—	$	320,894	$	320,894	$	150,093
Prepaid and other assets	—		—		163		163		928

Schedule of quantitative information about significant unobservable inputs used for Level 3 fair value measurements

The table below sets forth quantitative information about significant unobservable inputs used for the Level 3 fair value measurements reported above (dollars in thousands):



Description	Fair Value on Measurement Date		Valuation Technique	Unobservable Input	Range (Weighted Average)
Properties on which impairment losses were recognized	$	379,684	Bid for properties indicative of value	Indicative bid (1)	(1)
			Contract of sale	Contract price (1)	(1)
			Discounted cash flow	Discount rate	10.0% to 11.0% (10.4%)
				Terminal capitalization rate	8.7% to 10.0% (8.9%)
				Market rent growth rate	3.0% (2)
				Expense growth rate	3.0% (2)
			Yield Analysis	Yield	12% (2)
				Market rent rate	$8.50 per square foot (2)
				Leasing costs	$20.00 per square foot (2)

(1) These fair value measurements were developed by third party sources, subject to our corroboration for reasonableness.

(2) Only one value applied for this unobservable input.

- Definition

Tabular disclosure of assets and liabilities by class, including financial instruments measured at fair value that are classified in shareholders' equity, if any, that are measured at fair value on a nonrecurring basis in periods after initial recognition (for example, impaired assets). Disclosures may include, but are not limited to: (a) the fair value measurements recorded and the reasons for the measurements and (b) the level within the fair value hierarchy in which the fair value measurements are categorized in their entirety (levels 1, 2, 3).

+ References + Details