XML 48 R34.htm IDEA: XBRL DOCUMENT v3.22.1
Financial Instruments: Derivatives and Hedging
 3 Months Ended
Mar. 31, 2022
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 March 31, 2022 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$111,869 3.500 %November 2021November 2022Other Assets$9 
Interest Rate Swap100,000 0.212 %January 2021January 2023Other Assets1,223 
Interest Rate Swap400,000 0.184 %January 2022February 2023Other Assets4,838 
Interest Rate Swap50,000 0.633 %February 2022February 2023Other Assets373 
Interest Rate Swap100,000 1.163 %November 2021July 2023Other Assets1,177 
Interest Rate Swap200,000 1.133 %November 2021July 2023Other Assets2,432 
Interest Rate Swap150,000 2.700 %December 2021January 2024Other Liabilities(1,153)
Interest Rate Swap150,000 2.721 %December 2021January 2026Other Liabilities(1,865)
Interest Rate Swap200,000 2.762 %December 2021January 2026Other Liabilities(2,777)
$4,257 
No gains or losses on the changes in the fair values were included in interest expense in the consolidated statements of operations during the three months ended March 31, 2022 or 2021.
The Company 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 March 31, 2022, 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 $6.8 million. As of March 31, 2022, 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 $7.0 million as of March 31, 2022.
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 $(3.7) million of the current balance held in accumulated other comprehensive loss will be reclassified into interest expense and $1.3 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 three months ended March 31, 2022 and 2021, respectively (in thousands):
 Amount of Gain
Recognized in
Other Comprehensive
Loss		Location of Loss Reclassified from Accumulated Other Comprehensive Loss into IncomeAmount of Loss Reclassified from
Accumulated Other
Comprehensive Loss into Income
Three Months Ended March 31,Three Months Ended March 31,
Derivative2022202120222021
Interest Rate Swaps/Caps$28,378 $10,220 Interest expense$(3,866)$(4,388)
Share of unconsolidated joint ventures' derivative instruments10,308 34,955 Equity in net loss from unconsolidated joint ventures(1,015)(1,700)
$38,686 $45,175 $(4,881)$(6,088)

The following table summarizes the notional value at inception and fair value of our joint ventures' derivative financial instruments as of March 31, 2022 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		ClassificationFair
Value
Interest Rate Cap$1,075,000 2.850 %September 2021September 2022Asset$21 
Interest Rate Cap125,000 2.850 %September 2021September 2022Asset2 
Interest Rate Cap23,000 4.750 %January 2021January 2023Asset2 
Interest Rate Cap220,000 4.000 %February 2022February 2023Asset68 
Interest Rate Cap510,000 3.000 %December 2021June 2023Asset1,297 
Interest Rate Cap237,340 0.550 %February 2022May 2024Asset14,994 
Interest Rate Cap118,670 0.550 %February 2022May 2024Asset14,977 
Interest Rate Swap177,000 1.669 %March 2016February 2026Asset5,014 
$36,375