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Financial Instruments: Derivatives and Hedging
 12 Months Ended
Dec. 31, 2021
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Financial Instruments: Derivatives and Hedging Financial Instruments: Derivatives and Hedging
In the normal course of business, we use a variety of commonly used derivative instruments, such as interest rate swaps, caps, collars and floors, to manage, or hedge interest rate risk. We hedge our exposure to variability in future cash flows for forecasted transactions in addition to anticipated future interest payments on existing debt. We recognize all derivatives on the balance sheet at fair value. Derivatives that are not hedges are adjusted to fair value through earnings. If a derivative is a hedge, depending on the nature of the hedge, changes in the fair value of the derivative will either be offset against the change in fair value of the hedge asset, liability, or firm commitment through earnings, or recognized in other comprehensive income (loss) until the hedged item is recognized in earnings. Reported net income and equity may increase or decrease prospectively, depending on future levels of interest rates and other variables affecting the fair values of derivative instruments and hedged items, but will have no effect on cash flows. Currently, all of our designated derivative instruments are effective hedging instruments.
The following table summarizes the notional value at inception and fair value of our consolidated derivative financial instruments as of December 31, 2021 based on Level 2 information. The notional value is an indication of the extent of our involvement in these instruments at that time, but does not represent exposure to credit, interest rate or market risks (dollars in thousands).
Notional
Value		Strike
Rate		Effective
Date		Expiration
Date		Balance Sheet LocationFair
Value
Interest Rate Cap$85,000 4.000 %March 2021March 2022Other Assets$— 
Interest Rate Cap111,869 3.500 %November 2021November 2022Other Assets1 
Interest Rate Swap100,000 0.212 %January 2021January 2023Other Assets376 
Interest Rate Swap400,000 0.184 %January 2022February 2023Other Assets1,519 
Interest Rate Swap100,000 1.161 %November 2021July 2023Other Liabilities(733)
Interest Rate Swap200,000 1.131 %November 2021July 2023Other Liabilities(1,371)
Interest Rate Swap150,000 2.696 %December 2021January 2024Other Liabilities(5,625)
Interest Rate Swap150,000 2.721 %December 2021January 2026Other Liabilities(9,369)
Interest Rate Swap200,000 2.740 %December 2021January 2026Other Liabilities(12,814)
$(28,016)
During the years ended December 31, 2021, 2020, and 2019, we recorded losses of $0.0 million, $0.1 million, and $0.1 million, respectively, on the changes in the fair value, which is included in interest expense in the consolidated statements of operations.
The Company frequently has agreements with each of its derivative counterparties that contain a provision where if the Company defaults on any of its indebtedness, then the Company could also be declared in default on its derivative obligations. As of December 31, 2021, the fair value of derivatives in a net liability position, including accrued interest but excluding any adjustment for nonperformance risk related to these agreements was $31.3 million. As of December 31, 2021, the Company was not required to post any collateral related to these agreements and was not in breach of any agreement provisions. If the Company had breached any of these provisions, it could have been required to settle its obligations under the agreements at their aggregate termination value of $31.8 million as of December 31, 2021.
Gains and losses on terminated hedges are included in accumulated other comprehensive income (loss), and are recognized into earnings over the term of the related mortgage obligation. Over time, the realized and unrealized gains and losses held in accumulated other comprehensive loss will be reclassified into earnings as an adjustment to interest expense in the same periods in which the hedged interest payments affect earnings. We estimate that $11.5 million of the current balance held in accumulated other comprehensive loss will be reclassified in interest expense and $3.8 million of the portion related to our share of joint venture accumulated other comprehensive loss will be reclassified into equity in net loss from unconsolidated joint ventures within the next 12 months.
The following table presents the effect of our derivative financial instruments and our share of our joint ventures' derivative financial instruments that are designated and qualify as hedging instruments on the consolidated statements of operations for the years ended December 31, 2021, 2020, and 2019, respectively (in thousands):
 Amount of Loss
Recognized in
Other Comprehensive Loss		Location of (Loss) Gain Reclassified from Accumulated Other Comprehensive Loss into Income Amount of (Loss) Gain
Reclassified from
Accumulated Other Comprehensive Loss into Income
Year Ended
December 31,		Year Ended
December 31,
Derivative202120202019202120202019
Interest Rate Swaps/Caps$15,643 $(51,244)$(33,907)Interest expense$(17,602)$(14,569)$(261)
Share of unconsolidated joint ventures' derivative instruments(19,400)(7,977)(10,322)Equity in net (loss) income from unconsolidated joint ventures(7,582)(4,911)256 
$(3,757)$(59,221)$(44,229)$(25,184)$(19,480)$(5)
The following table summarizes the notional value at inception and fair value of our joint ventures' derivative financial instruments as of December 31, 2021 based on Level 2 information. The notional value is an indication of the extent of our involvement in these instruments at that time, but does not represent exposure to credit, interest rate or market risks (dollars in thousands).
Notional ValueStrike RateEffective DateExpiration DateClassificationFair Value
Interest Rate Cap$220,000 4.000 %February 2020February 2022$— 
Interest Rate Cap1,075,000 2.850 %September 2021September 20225 
Interest Rate Cap125,000 2.850 %September 2021September 20221 
Interest Rate Cap23,000 4.750 %January 2021January 20231 
Interest Rate Cap510,000 3.000 %December 2021June 2023155 
Interest Rate Cap1,250,000 1.250 %November 2020October 20248,657 
Interest Rate Swap177,000 1.669 %March 2016February 2026(3,560)
$5,259