Interest rate swap agreements (Notes)

12 Months Ended

Dec. 31, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Interest rate hedge agreements

Hedge accounting

From time to time, we utilize interest rate hedge agreements to manage a portion of our exposure to variable interest rates. As a result, our interest rate hedge agreements are generally designated as cash flow hedges. At inception of a hedge agreement, we are required to perform an initial quantitative assessment to determine whether a hedge is highly effective in offsetting changes in cash flows associated with the hedged item. For cash flow hedges that are highly effective at inception and continue to be highly effective, we record all changes (effective and ineffective components) in fair value of our hedges, including accrued interest and adjustments for non-performance risk, in accumulated other comprehensive income within total equity and reclassify them into earnings when the hedged item affects earnings. Refer to the “Hedge Accounting” section in Note 2 – “Summary of Significant Accounting Policies” to our consolidated financial statements for further information about our accounting policy for interest-rate hedge instruments.

Historically, our interest rate hedge agreements have primarily related to our borrowings with variable interest rates based on LIBOR. However, in connection with the LIBOR cessation projected by the end of 2021 and potential replacement of this rate in the U.S. with SOFR, we have implemented numerous proactive measures to minimize the potential impact of the transition to the Company, specifically:


•	We have proactively reduced outstanding LIBOR-based borrowings under our unsecured senior bank term loans and secured construction loans through repayments. From January 2017 to December 2018, we retired approximately $942.0 million of such debt.


•	During the year ended December 31, 2019, we further reduced our exposure to LIBOR as follows:


•	Repaid the $350.0 million balance and extinguished our unsecured senior bank term loan.


•	Fully repaid outstanding balances aggregating $193.1 million under our LIBOR-based construction loans.

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During the three months ended September 30, 2019, we established a commercial paper program, under which we have the ability to issue up to $750.0 million of commercial paper notes, bearing interest at short-term fixed rates, with a maximum maturity of 397 days from the date of issuance. Our commercial paper program is not subject to LIBOR and is used for funding short-term working capital needs. As of December 31, 2019, we had no outstanding borrowings under our commercial paper program.


•	We continue to prudently manage outstanding borrowings under our unsecured senior line of credit, which represented less than 6% of our total debt balance outstanding as of December 31, 2019. Excluding LIBOR-based debt held by our unconsolidated joint ventures, borrowings under our unsecured senior line of credit represented our only LIBOR-based debt outstanding as of December 31, 2019.

In conjunction with the $350.0 million repayment of our unsecured senior bank term loan, as discussed above, during the three months ended September 30, 2019, we also terminated all of our interest rate hedge agreements with an aggregate notional balance of $350.0 million and a weighted-average interest pay rate of 2.57%. Upon discontinuation of the hedging relationship as required by the applicable accounting standards, we evaluated the probability of our making variable interest payments on LIBOR-based borrowing by the date the hedging relationship was originally designated to mature, and determined that it was probable that variable interest payments on LIBOR-based borrowing would not occur. As a result, we reclassified the entire loss on our interest rate hedge agreements aggregating $1.7 million from accumulated other comprehensive loss into interest expense in our consolidated statements of operations. As of December 31, 2019, we had no outstanding interest rate hedge agreements.