Sila Realty Trust, Inc.SILA
Sila Realty Trust, Inc. Fair Value Disclosure
Fair Value
Cash and cash equivalents, restricted cash, tenant receivables, prepaid and other assets, accounts payable and other liabilities—The Company considers the carrying values of these financial instruments, assets and liabilities, to approximate fair value because of the short period of time between origination of the instruments and their expected realization.
Real estate related notes receivable—The carrying value of the real estate related notes receivable was $17,106,000, which approximated fair value as of December 31, 2025. The fair value of the Company’s real estate related notes receivable is estimated using significant unobservable inputs not based on observable market activity, but rather through particular valuation techniques (Level 3). The fair value was measured using a discounted cash flow methodology, taking into consideration various factors including discount rates, credit worthiness of borrowers, availability and cost of financing and other factors.
Credit facility—The outstanding principal of the credit facility was $676,000,000 and $525,000,000 as of December 31, 2025 and December 31, 2024, respectively, which approximated its fair value due to the variable nature of the terms.
The fair value of the Company’s credit facility is estimated based on the interest rates currently offered to the Company by its financial institutions.
Derivative instruments—The Company’s derivative instruments consist of interest rate swaps. These swaps are carried at fair value to comply with the provisions of ASC 820. The fair value of these instruments is determined using interest rate market pricing models. The Company incorporated credit valuation adjustments to appropriately reflect the Company’s nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. The Company determined that the inputs used to value its interest rate swaps, with the exception of the credit valuation adjustment, fall within Level 2 of the fair value hierarchy. The credit valuation adjustments associated with these instruments utilize Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by the Company and the respective counterparty. However, as of December 31, 2025, the Company assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and determined that the credit valuation adjustments are not significant to the overall valuation of its interest rate swaps. As a result, the Company determined that its interest rate swaps valuation in its entirety is classified in Level 2 of the fair value hierarchy.
Considerable judgment is necessary to develop estimated fair values of financial assets and liabilities. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize or be liable for on disposition of the financial assets and liabilities.
The following tables show the fair value of the Company’s financial assets and liabilities that are required to be measured at fair value on a recurring basis as of December 31, 2025 and December 31, 2024 (amounts in thousands):
| December 31, 2025 | |||||||||||||||||||||||
| Fair Value Hierarchy | |||||||||||||||||||||||
| Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total Fair Value | ||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| Derivative assets - interest rate swaps | $ | — | $ | 2,915 | $ | — | $ | 2,915 | |||||||||||||||
| Total assets at fair value | $ | — | $ | 2,915 | $ | — | $ | 2,915 | |||||||||||||||
| Liabilities: | |||||||||||||||||||||||
| Derivative liabilities - interest rate swaps | $ | — | $ | 3,929 | $ | — | $ | 3,929 | |||||||||||||||
| Total liabilities at fair value | $ | — | $ | 3,929 | $ | — | $ | 3,929 | |||||||||||||||
| December 31, 2024 | |||||||||||||||||||||||
| Fair Value Hierarchy | |||||||||||||||||||||||
| Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total Fair Value | ||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| Derivative assets - interest rate swaps | $ | — | $ | 11,356 | $ | — | $ | 11,356 | |||||||||||||||
| Total assets at fair value | $ | — | $ | 11,356 | $ | — | $ | 11,356 | |||||||||||||||
Derivative assets and liabilities are reported in the consolidated balance sheets as other assets and , respectively.
Real Estate Assets—As of December 31, 2025, one real estate asset was measured at fair value, on a non-recurring basis, of $1,550,000 and resulted in the recognition of an impairment loss of $3,159,000 for the year ended December 31, 2025. The fair value was measured based on inputs that are derived principally from observable market data related to the marketing for sale of the asset, which resides within Level 2 of the fair value hierarchy.
As of June 30, 2025, there was one real estate asset measured at fair value, on a non-recurring basis, of $2,300,000 and resulted in the recognition of an impairment loss of $3,261,000 for the year ended December 31, 2025. The fair value was measured based on a discounted cash flow model, which includes significant unobservable inputs that reside within Level 3 of the fair value hierarchy. This cash flow model consisted of unobservable inputs such as forecasted revenues and expenses and estimated net disposition proceeds at the end of the hold period, based on market conditions and expected growth rates. The significant unobservable inputs and assumptions used in the discounted cash flow model to estimate the fair value include a discount rate of 8.06%, which is considered a Level 3 input per the fair value hierarchy.
As of March 31, 2025, one real estate asset was measured at fair value, on a non-recurring basis, of $7,000,000 and resulted in the recognition of an impairment loss of $3,531,000 for the year ended December 31, 2025. The fair value was measured based on inputs that are derived principally from observable market data related to the marketing for sale of the asset, which resides within Level 2 of the fair value hierarchy.
As of December 31, 2024, there were no real estate assets measured at fair value on a non-recurring basis.
As of June 30, 2024, two real estate assets were measured at an aggregate fair value of $15,500,000 and resulted in the recognition of an impairment loss of $418,000 for the year ended December 31, 2024. The fair value was measured based on a third-party purchase offer for the assets, which resides within Level 2 of the fair value hierarchy. The two real estate assets were sold in 2024 and resulted in aggregate impairment and disposition losses of $1,210,000.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 25, 2026 | Showing above |
| 2024 | Mar 3, 2025 | |
| 2023 | Mar 6, 2024 | |
| 2022 | Mar 16, 2023 | |
| 2021 | Mar 29, 2022 | |
| 2020 | Mar 24, 2021 | |
| 2019 | Mar 27, 2020 | |
| 2018 | Mar 22, 2019 | |
| 2017 | Mar 21, 2018 | |
| 2016 | Mar 16, 2017 | |
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.