FTAI Infrastructure Inc.FIP
FTAI Infrastructure Inc. Fair Value Disclosure
FAIR VALUE MEASUREMENTS
Fair value measurements and disclosures require the use of valuation techniques to measure fair value that maximize the use of observable inputs and minimize use of unobservable inputs. These inputs are prioritized as follows:
•Level 1: Observable inputs such as quoted prices in active markets for identical assets or liabilities.
•Level 2: Inputs other than quoted prices included within Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities or market corroborated inputs.
•Level 3: Unobservable inputs for which there is little or no market data and which require us to develop our own assumptions about how market participants price the asset or liability.
The valuation techniques that may be used to measure fair value are as follows:
•Market approach—Uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.
•Income approach—Uses valuation techniques to convert future amounts to a single present amount based on current market expectations about those future amounts.
•Cost approach—Based on the amount that currently would be required to replace the service capacity of an asset (replacement cost).
The following tables set forth our financial assets measured at fair value on a recurring basis by level within the fair value hierarchy. Assets measured at fair value are classified in their entirety based on the lowest level of input that is significant to their fair value measurement.
| Fair Value as of | Fair Value Measurements Using Fair Value Hierarchy as of | ||||||||||||||||||||||||||||
| December 31, 2025 | December 31, 2025 | ||||||||||||||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | Valuation Technique | |||||||||||||||||||||||||
| Assets | |||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | 57,351 | $ | 57,351 | $ | — | $ | — | Market | ||||||||||||||||||||
| Restricted cash and cash equivalents | 268,595 | 268,595 | — | — | Market | ||||||||||||||||||||||||
| Notes receivable | 13,605 | — | 13,605 | — | Market | ||||||||||||||||||||||||
| Total assets | $ | 339,551 | $ | 325,946 | $ | 13,605 | $ | — | |||||||||||||||||||||
| Liabilities | |||||||||||||||||||||||||||||
| Derivative liabilities | $ | (223,497) | $ | — | $ | (223,497) | $ | — | Income | ||||||||||||||||||||
| Warrant liabilities | (81,599) | — | — | (81,599) | Income | ||||||||||||||||||||||||
| Total liabilities | $ | (305,096) | $ | — | $ | (223,497) | $ | (81,599) | |||||||||||||||||||||
| Fair Value as of | Fair Value Measurements Using Fair Value Hierarchy as of | ||||||||||||||||||||||||||||
| December 31, 2024 | December 31, 2024 | ||||||||||||||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | Valuation Technique | |||||||||||||||||||||||||
| Assets | |||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | 27,785 | $ | 27,785 | $ | — | $ | — | Market | ||||||||||||||||||||
| Restricted cash and cash equivalents | 119,511 | 119,511 | — | — | Market | ||||||||||||||||||||||||
| Notes receivable | 11,893 | — | 11,893 | — | Market | ||||||||||||||||||||||||
| Total assets | $ | 159,189 | $ | 147,296 | $ | 11,893 | $ | — | |||||||||||||||||||||
Our notes receivable of $13.6 million and $11.9 million as of December 31, 2025 and 2024, respectively, is related to CarbonFree, a business that develops technologies to capture carbon dioxide from industrial emissions sources. We elected the fair value option for this note receivable to better align the reported results with the underlying changes in the value of this note receivable, and record the balance of the note receivable in Other assets in the Consolidated Balance Sheets. The Company records interest income, which is included in Other income in the Consolidated Statements of Operations, on this note receivable using the contractual interest rate.
The fair value of our electricity derivative liabilities are estimated by applying the income approach, which is based on discounted projected future cash flows. The valuation of our electricity derivatives is based on management’s best estimate of certain key assumptions, which include estimated power forward curves, probability of default, and the discount rate.
Our cash and cash equivalents and restricted cash and cash equivalents consist largely of demand deposit accounts with maturities of 90 days or less when purchased that are considered to be highly liquid. These instruments are valued using inputs observable in active markets for identical instruments and are therefore classified as Level 1 within the fair value hierarchy.
Except as discussed below, our financial instruments other than cash and cash equivalents and restricted cash and cash equivalents consist principally of accounts receivable, notes receivable, accounts payable and accrued liabilities, and loans payable, whose fair values approximate their carrying values based on an evaluation of pricing data, vendor quotes, and historical trading activity or due to their short maturity profiles.
The Company issued warrants in connection with the Wheeling Acquisition, in which the fair value of the warrant liabilities was estimated using a Black-Scholes valuation model, which is considered to be a Level 3 fair value measurement. The fair value of the warrants is based on the underlying shares of RR Holdings. These liabilities are presented within Warrant liabilities on the Consolidated Balance Sheets. The warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in fair value of $4.2 million for the year ended December 31, 2025 presented within Other income in the Consolidated Statements of Operations. The following table presents the key inputs applied in the valuation of the warrant liabilities as of December 31, 2025:
| Number of units | 172,500 | ||||
| Fair value at grant date ($ millions) | $85.8 | ||||
| Strike price | $761.05 | ||||
| Expected volatility | 35.00% | ||||
| Risk free interest rate | 3.60% | ||||
| Expected dividend yield | —% | ||||
| Expected term | 2.8 years | ||||
| Warrant fair value (per share) | $473.04 | ||||
Level 3 Reconciliation
The following is a reconciliation of the beginning and ending balances of recurring fair value measurements recognized in the accompanying Consolidated Balance Sheet using significant unobservable (Level 3) inputs:
| Warrants | |||||
| Beginning balance, December 31, 2024 | $ | — | |||
| Purchases and issuances | (85,832) | ||||
| Unrealized gains | 4,233 | ||||
| Ending balance, December 31, 2025 | $ | (81,599) | |||
The fair value of our bonds, notes payable and loans payable reported as Debt, net in the Consolidated Balance Sheets are presented in the table below:
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
Series 2020A Bonds (1) | $ | 115,979 | $ | 122,978 | |||||||
Series 2021A Bonds (1) | 120,448 | 121,678 | |||||||||
Series 2021B Bonds (1) | 182,630 | 179,316 | |||||||||
Series 2024A Bonds (1) | 160,802 | 167,291 | |||||||||
Series 2024B Bonds (1) | 222,949 | 222,609 | |||||||||
Series 2025 Bonds (1) | 309,285 | — | |||||||||
Senior Notes due 2027 | — | 642,036 | |||||||||
| Senior Notes due 2032 | 638,880 | — | |||||||||
| EB-5 Loan Agreement | 25,536 | 23,208 | |||||||||
| EB-5.2 Loan Agreement | 9,529 | 8,799 | |||||||||
| EB-5.3 Loan Agreement | 25,315 | 23,583 | |||||||||
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(1) Fair value is based upon market prices for similar municipal securities.
The fair value of all other items reported as Debt, net in the Consolidated Balance Sheets approximate their carrying values due to their bearing market rates of interest and are classified as Level 2 within the fair value hierarchy.
We measure the fair value of certain assets on a non-recurring basis when U.S. GAAP requires the application of fair value, including events or changes in circumstances that indicate that the carrying amounts of assets may not be recoverable. Assets subject to these measurements include goodwill, intangible assets, property, plant and equipment and leasing equipment. We record such assets at fair value when it is determined the carrying value may not be recoverable. Fair value measurements for assets subject to impairment tests are based on an income approach which uses Level 3 inputs, which include our assumptions as to future cash flows from operation of the underlying businesses. Our discount rate for our fair value measurement of assets upon the acquisition of Long Ridge was 11.5% (refer to Note 3 for additional details). Our discount rate for our fair value
measurement of assets upon the acquisition of Wheeling was 11.5% and our assumed terminal growth rate was 2.5% (refer to Note 3 for additional details).
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 16, 2026 | Showing above |
| 2024 | Mar 13, 2025 | |
| 2023 | Mar 27, 2024 | |
| 2022 | Mar 9, 2023 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.