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Financial Instruments: Derivatives and Hedging
 9 Months Ended
Sep. 30, 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 September 30, 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$8 
Interest Rate Swap100,000 0.212 %January 2021January 2023Other Assets1,173 
Interest Rate Swap400,000 0.184 %January 2022February 2023Other Assets4,892 
Interest Rate Swap50,000 0.633 %February 2022February 2023Other Assets518 
Interest Rate Swap100,000 1.163 %November 2021July 2023Other Assets2,514 
Interest Rate Swap200,000 1.133 %November 2021July 2023Other Assets5,076 
Interest Rate Cap600,000 4.080 %September 2022September 2023Other Liabilities(2,822)
Interest Rate Swap150,000 2.700 %December 2021January 2024Other Assets2,949 
Interest Rate Swap200,000 4.590 %November 2022January 2024Other Liabilities(476)
Interest Rate Swap200,000 4.511 %November 2022January 2024Other Liabilities(294)
Interest Rate Swap150,000 2.721 %December 2021January 2026Other Assets6,104 
Interest Rate Swap200,000 2.762 %December 2021January 2026Other Assets7,963 
Interest Rate Swap100,000 3.003 %February 2023February 2027Other Assets3,451 
Interest Rate Swap100,000 2.833 %February 2023February 2027Other Assets4,069 
Interest Rate Swap50,000 2.563 %February 2023February 2027Other Assets2,527 
Interest Rate Swap200,000 2.691 %February 2023February 2027Other Assets9,175 
Interest Rate Swap300,000 2.966 %July 2023May 2027Other Assets8,814 
Interest Rate Swap100,000 3.756 %January 2023January 2028Other Assets52 
$55,693 
During both the three and nine months ended September 30, 2022, we recorded a loss of $1.3 million based on the changes in the fair value of an interest rate swap we sold, which is included in Purchase price and other fair value adjustments in the consolidated statements of operations. 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 and nine months ended September 30, 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 September 30, 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 $3.6 million. As of September 30, 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 $3.6 million as of September 30, 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 income (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 $(37.6) million of the current balance held in accumulated other comprehensive income (loss) will be reclassified into interest expense and $(8.2) million of the portion related to our share of joint venture accumulated other comprehensive income (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 September 30, 2022 and 2021, respectively (in thousands):
 Amount of Gain (Loss)
Recognized in
Other Comprehensive
Income		Location of Loss Reclassified from Accumulated Other Comprehensive Income (Loss) into IncomeAmount of Loss Reclassified from
Accumulated Other
Comprehensive Income (Loss) into Income
Three Months Ended September 30,Three Months Ended September 30,
Derivative2022202120222021
Interest Rate Swaps/Caps$44,057 $(450)Interest expense$3,061 $(4,416)
Share of unconsolidated joint ventures' derivative instruments9,354 (143)Equity in net loss from unconsolidated joint ventures(138)(2,792)
$53,411 $(593)$2,923 $(7,208)
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 nine months ended September 30, 2022 and 2021, respectively (in thousands):
 Amount of Gain (Loss) Recognized in
Other Comprehensive
Income		Location of Loss Reclassified from Accumulated Other Comprehensive Income (Loss) into IncomeAmount of Loss Reclassified from
Accumulated Other
Comprehensive Income (Loss) into Income
Nine Months Ended September 30,Nine Months Ended September 30,
Derivative2022202120222021
Interest Rate Swaps/Caps$83,768 $7,305 Interest expense$(2,673)$(13,359)
Share of unconsolidated joint ventures' derivative instruments22,951 (20,641)Equity in net loss from unconsolidated joint ventures(1,986)(6,542)
$106,719 $(13,336)$(4,659)$(19,901)
The following table summarizes the notional value at inception and fair value of our joint ventures' derivative financial instruments as of September 30, 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$23,000 4.750 %January 2021January 2023Asset$— 
Interest Rate Cap220,000 4.000 %February 2022February 2023Asset188 
Interest Rate Cap510,000 3.000 %December 2021June 2023Asset4,589 
Interest Rate Cap272,000 4.000 %July 2022August 2023Asset979 
Interest Rate Cap400,000 3.500 %September 2022September 2023Asset3,073 
Interest Rate Cap1,075,000 4.080 %September 2022September 2023Asset5,070 
Interest Rate Cap125,000 4.080 %September 2022September 2023Asset590 
Interest Rate Cap246,155 0.550 %February 2022May 2024Asset23,192 
Interest Rate Cap246,155 0.550 %February 2022May 2024Asset23,161 
Interest Rate Swap177,000 1.669 %March 2016February 2026Asset13,348 
$74,190