Quarterly report pursuant to Section 13 or 15(d)

FAIR VALUE DISCLOSURES

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FAIR VALUE DISCLOSURES
9 Months Ended
Sep. 30, 2016
Fair Value Disclosures [Abstract]  
Fair Value Disclosures [Text Block]
NOTE 6. FAIR VALUE DISCLOSURES
 
The fair value for certain financial instruments is derived using valuation techniques that involve significant management judgment. The price transparency of financial instruments is a key determinant of the degree of judgment involved in determining the fair value of the Company’s financial instruments. Financial instruments for which actively quoted prices or pricing parameters are available and for which markets contain orderly transactions will generally have a higher degree of price transparency than financial instruments for which markets are inactive or consist of non-orderly trades. The Company evaluates several factors when determining if a market is inactive or when market transactions are not orderly. The following is a summary of the methods and assumptions used by management in estimating the fair value of each class of financial instrument for which it is practicable to estimate the fair value:
 
Cash and cash equivalents, restricted cash, and accounts payable and accrued liabilities:  These balances approximate their fair values due to the short maturities of these items.
 
Unsecured credit facility: The fair value of the Company’s unsecured credit facility approximates its carrying value as the interest rates are variable and the balances approximate their fair values due to the short maturities of this facility.
 
Mortgage note payable:  The fair value of the Company’s mortgage note payable is estimated using a discounted cash flow analysis based on management’s estimates of current market interest rates for instruments with similar characteristics, including remaining loan term, loan-to-value ratio, type of collateral and other credit enhancements. Additionally, when determining the fair value of liabilities in circumstances in which a quoted price in an active market for an identical liability is not available, the Company measures fair value using (i) a valuation technique that uses the quoted price of the identical liability when traded as an asset or quoted prices for similar liabilities or similar liabilities when traded as assets or (ii) another valuation technique that is consistent with the principles of fair value measurement, such as the income approach or the market approach. The Company classifies these inputs as Level 3 inputs.
 
The following were the face value, carrying amount and fair value of the Company’s mortgage note payable as of September 30, 2016:
 
Face value
 
Carrying value
 
Fair value
 
$
7,298,384
 
$
7,134,713
 
$
7,134,713
 
 
Disclosures of the fair values of financial instruments is based on pertinent information available to the Company as of the period end and requires a significant amount of judgment. The actual value could be materially different from the Company’s estimate of value.