CNSREIT-AR-2024 Final - Flipbook - Page 125
The pricing services or broker-dealers use multiple valuation techniques to determine fair value. In instances where
sufficient market activity exists, the pricing services or broker-dealers may utilize a market-based approach through which
quotes from market makers are used to determine fair value. In instances where sufficient market activity may not exist or
is limited, the pricing services or broker-dealers also utilize proprietary valuation models that may consider market
transactions in comparable securities and the various relationships between securities in determining fair value or
characteristics such as benchmark yield curves, option-adjusted spreads, credit spreads, estimated default rates, coupon
rates, anticipated timing of principal repayments, underlying collateral and other unique security features which are then
used to calculate the fair values.
Securities or assets for which market prices are unavailable, or for which the Advisor determines that bid or ask price or a
counterparty valuation does not reflect market value, will be valued at fair value pursuant to procedures approved by the
Board. The Advisor has established a valuation committee to administer, implement and oversee the fair valuation process
according to the policies and procedures approved annually by the Board. Among other things, these policies and
procedures allow us to utilize independent pricing services, quotations from securities and financial instrument dealers and
other market sources to determine fair value. Circumstances in which market prices may be unavailable include when
trading in a security or asset is suspended, the exchange on which the security or asset is traded is subject to an
unscheduled close or disruption or material events occur after the close of the exchange on which the security or asset is
principally traded. In these circumstances, we will determine fair value in a manner that fairly reflects the market value of
the security or asset on the valuation date based on consideration of any information or factors we deem appropriate. These
may include recent transactions in comparable securities or assets, information relating to the specific security or asset and
developments in the markets.
Investments measured and reported at fair value are classified and disclosed in one of the following levels within the fair
value hierarchy:
Level 1 4 quoted prices are available in active markets for identical investments as of the measurement date. The
Company does not adjust the quoted price for these investments.
Level 2 4 quoted prices are available in markets that are not active or model inputs are based on inputs that are either
directly or indirectly observable as of the measurement date.
Level 3 4 pricing inputs are unobservable and include instances where there is minimal, if any, market activity for the
investment. These inputs require significant judgment or estimation by management or third parties when determining fair
value and generally represent anything that does not meet the criteria of Levels 1 and 2. Due to the inherent uncertainty of
these estimates, these values may differ materially from the values that would have been used had a ready market for these
investments existed.
As of December 31, 2024, the Company9s investments in common stock of publicly-listed REITs and real estate-related
preferred securities are recorded at fair value based on the closing price as reported by the applicable national securities
exchange and have been classified as Level 1.
The Company's investments classified as Level 2 were comprised of real estate-related debt securities. Fair values were
generally determined using third-party pricing services. The pricing services may utilize evaluated pricing models that vary
by asset class and incorporate available trade, bid and other market information.
The following table details the Company9s assets measured at fair value on a recurring basis ($ in thousands):
December 31, 2024
Level 1
Level 2
Level 3
Total
Assets:
Common stock of publicly-listed REITs
$
11,040 $
4 $
4 $
11,040
Real estate-related preferred securities
862
4
4
862
Real estate-related debt securities
4
10,908
4
10,908
10,908 $
4 $
22,810
Total
$
11,902 $
As of December 31, 2023, the Company had not acquired any real estate-related securities.
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