Risk Management and Use of Derivative Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Derivative Instruments in Statement of Financial Position, Fair Value

The following table sets forth certain information regarding our derivative instruments (in thousands):

Derivatives Designated as Hedging Instruments	Balance Sheet Location	Asset Derivatives Fair Value at				Liability Derivatives Fair Value at
		September 30, 2014		December 31, 2013		September 30, 2014			December 31, 2013
Interest rate caps	Other assets, net	$	6	$	2	$	—		$	—
Interest rate swaps	Other assets, net	987		1,618		—			—
Foreign currency forward contracts	Other assets, net	3,629		—		—			—
Foreign currency forward contracts (a)	Accounts payable, accrued expenses and other liabilities	—		—		(451		)	(7,083		)
Interest rate swaps (a)	Accounts payable, accrued expenses and other liabilities	—		—		(5,097		)	(2,734		)
Derivatives Not Designated as Hedging Instruments
Stock warrants (b)	Other assets, net	3,753		2,160		—			—
Interest rate swaps (c)	Accounts payable, accrued expenses and other liabilities	—		—		(9,033		)	(11,995		)
Total derivatives		$	8,375	$	3,780	$	(14,581	)	$	(21,812	)

__________

(a) In connection with the CPA^®:16 Merger, we acquired interest rate swaps and a cap, which were in a net liability position, and foreign currency forward contracts, which were in a net asset position, that had fair values of $2.0 million and $1.2 million, respectively, at September 30, 2014.

(b) In connection with the CPA^®:16 Merger, we acquired warrants from CPA^®:16 – Global, which had previously been granted by Hellweg 2 to CPA^®:16 – Global, that had a fair value of $1.3 million at September 30, 2014. These warrants give us participation rights to any distributions made by Hellweg 2 and entitle us to a cash distribution that equals a certain percentage of the liquidity event price of Hellweg 2, should a liquidity event occur.

(c) These interest rate swaps do not qualify for hedge accounting; however, they do protect against fluctuations in interest rates related to the underlying variable-rate debt.

Schedule of Derivative Instruments, Effect on Other Comprehensive Income (Loss)

The following tables present the impact of our derivative instruments in the consolidated financial statements (in thousands):

	Amount of Gain (Loss) Recognized in Other Comprehensive (Loss) Income on Derivatives (Effective Portion) (a)
	Three Months Ended September 30,					Nine Months Ended September 30,
Derivatives in Cash Flow Hedging Relationships	2014		2013			2014			2013
Interest rate swaps	$	689	$	16		$	(928	)	$	3,669
Interest rate caps	14		(23		)	(7		)	(13		)
Foreign currency forward contracts	15,372		(4,058		)	12,256			(2,885		)
Total	$	16,075	$	(4,065	)	$	11,321		$	771

__________

(a) Excludes net gains recognized on unconsolidated jointly-owned investments, which are included in Net income from equity investments in real estate and the Managed REITs in the consolidated financial statements, of $0.1 million for each of the three months ended September 30, 2014 and 2013, and $0.3 million and $0.5 million for the nine months endedSeptember 30, 2014 and 2013, respectively.

		Amount of (Loss) Gain Reclassified from Other Comprehensive (Loss) Income on Derivatives (Effective Portion) (a)
Derivatives in Cash Flow Hedging Relationships	Location of Gain (Loss) Recognized in Income	Three Months Ended September 30,						Nine Months Ended September 30,
		2014			2013 (b)			2014			2013 (b)
Interest rate swaps and caps	Interest expense	$	(661	)	$	(436	)	$	(2,024	)	$	(1,311	)
Foreign currency forward contracts	Other income and (expenses)	337			(206		)	(487		)	(182		)
Total		$	(324	)	$	(642	)	$	(2,511	)	$	(1,493	)

__________

(a) Excludes net losses recognized on unconsolidated jointly-owned investments of $0.1 million and $0.1 million for the three months ended September 30, 2014 and 2013, respectively, and $0.4 million and $0.5 million for the nine months endedSeptember 30, 2014 and 2013, respectively.

(b) The amounts included in this column for the periods presented herein have been revised to reverse the signs that were incorrectly presented when originally filed. In addition, the corresponding amounts for the years ended December 31, 2013 and 2012 will be similarly revised in the Form 10-K for the year ended December 31, 2014 when filed.

Schedule of Derivative Instruments, Gain (Loss) in Statement of Financial Performance

		Amount of Gain Recognized in Income on Derivatives
Derivatives Not in Cash Flow Hedging Relationships	Location of Gain (Loss) Recognized in Income	Three Months Ended September 30,				Nine Months Ended September 30,
		2014		2013		2014		2013
Interest rate swaps	Interest expense	$	1,007	$	801	$	1,992	$	4,211
Stock warrants	Other income and (expenses)	268		80		134		360
Total		$	1,275	$	881	$	2,126	$	4,571

Schedule of Derivative Instruments

The interest rate swaps and caps that we had outstanding on our consolidated subsidiaries at September 30, 2014 are summarized as follows (currency in thousands):

	Number of Instruments	Face Amount		Fair Value at September 30, 2014 (a)
Interest Rate Derivatives
Designated as Cash Flow Hedging Instruments
Interest rate swaps	14	$	130,298	$	(2,957	)
Interest rate swaps	2	€	8,225	(1,153		)
Interest rate caps (b)	2	€	107,554	6
Not Designated as Cash Flow Hedging Instruments
Interest rate swaps (c)	3	€	108,048	(9,033		)
				$	(13,137	)

__________

(a) Fair value amounts are based on the exchange rate of the euro at September 30, 2014, as applicable.

(b) The applicable interest rates of the related debt were 1.2% and 1.1%, which were below the strike prices of the caps of 3.0% and 2.0%, respectively, at September 30, 2014.

(c) These interest rate swaps do not qualify for hedge accounting; however, they do protect against fluctuations in interest rates related to the underlying variable-rate debt.

The following table presents the foreign currency derivative contracts we had outstanding at September 30, 2014, which were designated as cash flow hedges (currency in thousands):

	Number of Instruments	Face Amount		Fair Value at September 30, 2014 (a)
Foreign Currency Derivatives
Foreign currency forward contracts	72	€	163,500	$	3,589
Foreign currency forward contracts	17	£	9,100	(411		)
				$	3,178

 __________ 

(a) Fair value amounts are based on the applicable exchange rate of the foreign currency at September 30, 2014.