COPT Defense Properties Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Fair Value Measurements (Tables)

Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2014

Schedule of fair value assets and liabilities measured on recurring basis

The table below sets forth financial assets and liabilities of COPT and its subsidiaries that are accounted for at fair value on a recurring basis as of September 30, 2014 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
Assets:
Marketable securities in deferred compensation plan (1)
Mutual funds	$	7,187	$	—	$	—	$	7,187
Common stocks	110		—		—		110
Other	203		—		—		203
Interest rate derivatives (2)	—		2,907		—		2,907
Warrants to purchase common stock (2)	—		192		—		192
Total Assets	$	7,500	$	3,099	$	—	$	10,599
Liabilities:
Deferred compensation plan liability (3)	$	—	$	7,500	$	—	$	7,500
Interest rate derivatives	—		2,236		—		2,236
Total Liabilities	$	—	$	9,736	$	—	$	9,736
Redeemable noncontrolling interest	$	—	$	—	$	18,436	$	18,436

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

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

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

The table below sets forth financial assets and liabilities of COPLP and its subsidiaries that are accounted for at fair value on a recurring basis as of September 30, 2014 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
Assets:
Interest rate derivatives (1)	$	—	$	2,907	$	—	$	2,907
Warrants to purchase common stock (1)	—		192		—		192
Total Assets	$	—	$	3,099	$	—	$	3,099
Liabilities:
Interest rate derivatives	$	—	$	2,236	$	—	$	2,236
Redeemable noncontrolling interest	$	—	$	—	$	18,436	$	18,436

(1) Included in the line entitled “prepaid expenses and other assets” on COPLP’s 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 technique used by us in determining the fair values of the properties (dollars in thousands):

Fair Value of Properties Held as of September 30, 2013

Quoted Prices in

Significant

Impairment Losses Recognized (1)

Active Markets for

Significant Other

Unobservable

Three Months

Nine Months

Identical Assets

Observable Inputs

Inputs

Ended

Description

(Level 1)

(Level 2)

(Level 3)

Total

September 30, 2013

Assets (2):

Properties, net

—

142,702

21,888

30,940

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 as of September 30, 2013 (dollars in thousands):



Valuation Technique	Fair Value on Measurement Date		Unobservable Input	Range (Weighted Average)
Contract of sale	$	110,499	Contract price (1)	(1)
Discounted cash flow	$	32,203	Discount rate	10.0% to 11.0% (10.9%)
			Terminal capitalization rate	9.5% to 10.0% (9.7%)
			Market rent growth rate	3.0% (2)
			Expense growth rate	3.0% (2)

(1) These fair value measurements were developed as a result of negotiations between us and potential, or actual, purchasers of the properties.

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