Fair Value of Financial Instruments
The carrying amounts of cash and cash equivalents, restricted cash, straight-line rents receivable, accounts receivable, accounts payable, other liabilities. dividends payable and deferred income on our consolidated balance sheets as of December 31, 2025 and 2024 approximate their fair values due to the short-term nature of these financial instruments.
The following table includes the carrying amounts and fair values of certain of our financial instruments ($ in thousands):
| | | | | | | | | | | | | | | | | | | | | | | |
| Carrying Amount | | Fair Value |
| December 31, | | December 31, |
| 2025 | | 2024 | | 2025 | | 2024 |
| Level 2: | | | | | | | |
| Fixed rate debt | $ | 838,764 | | | $ | 620,864 | | | $ | 794,233 | | | $ | 548,339 | |
| Variable rate debt | 325,050 | | | 525,177 | | | 329,000 | | | 531,200 | |
| Level 3: | | | | | | | |
| Mortgage and other notes receivable, net | 203,296 | | | 268,926 | | | 201,490 | | | 261,708 | |
We classify fixed rate debt as a Level 2 measurement. We determine the fair values of these debt instruments based on quoted prices for similar instruments or calculations utilizing model derived valuations in which significant inputs are observable in active markets.
We classify variable rate debt as a Level 2 measurement. We estimate the fair values of our borrowings under our Credit Facility and Bank Term Loan at their notional amounts due to the predominance of floating interest rates, which generally reflect market conditions.
We classify mortgage and other notes receivable, net, as Level 3 measurements. We estimate the fair values of these financial instruments using projected payoff valuations based on the expected future cash flows and credit risk of the borrower. If the repayment of a loan is expected to be provided solely from the collateral, we estimate the projected payoff of the loan based on the estimated fair value of the collateral, net of selling cost.
Our real estate properties and intangible assets are remeasured at fair value on a non-recurring basis. We classify these assets as Level 3 measurements. When indicators of potential impairment exists, we estimate the fair value of the identified asset or group of assets using the income approach and unobservable data, such as expected future cash flows, estimated capitalization and discounts rates. We also consider national, regional and local industry market data, including comparable sales information, and may engage an external third-party appraiser to assist us in our estimations of fair value. We estimate the fair value of assets held for sale based on our current sales price expectation, net of selling cost.
We did not remeasure the fair values of our real estate properties and intangible assets December 31, 2025 and 2024, except for the property reclassified to assets held for sale as of December 31, 2025, which was remeasured using the Level 3 measurements described above.