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Financial Instruments: Derivatives and Hedging
 12 Months Ended
Dec. 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 December 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 Swap$100,000 0.212 %January 2021January 2023 Other Assets $333 
Interest Rate Swap400,000 0.184 %January 2022February 2023 Other Assets 1,453 
Interest Rate Swap50,000 0.633 %February 2022February 2023 Other Assets 158 
Interest Rate Cap370,000 3.250 %December 2022June 2023 Other Assets 2,471 
Interest Rate Cap370,000 3.250 %December 2022June 2023 Other Liabilities (2,465)
Interest Rate Swap100,000 1.163 %November 2021July 2023 Other Assets 2,133 
Interest Rate Swap200,000 1.133 %November 2021July 2023 Other Assets 4,300 
Interest Rate Cap600,000 4.080 %September 2022September 2023 Other Liabilities (3,341)
Interest Rate Cap50,000 3.500 %October 2022September 2023 Other Assets 505 
Interest Rate Swap200,000 4.739 %November 2022November 2023 Other Assets 104 
Interest Rate Cap196,717 3.500 %November 2022November 2023 Other Assets 2,232 
Interest Rate Cap196,717 3.500 %November 2022November 2023 Other Liabilities (2,225)
Interest Rate Swap150,000 2.700 %December 2021January 2024 Other Assets 3,249 
Interest Rate Swap200,000 4.590 %November 2022January 2024 Other Assets 593 
Interest Rate Swap200,000 4.511 %November 2022January 2024 Other Assets 750 
Interest Rate Swap150,000 2.721 %December 2021January 2026 Other Assets 5,848 
Interest Rate Swap200,000 2.762 %December 2021January 2026 Other Assets 7,601 
Interest Rate Swap100,000 3.003 %February 2023February 2027 Other Assets 3,264 
Interest Rate Swap100,000 2.833 %February 2023February 2027 Other Assets 3,888 
Interest Rate Swap50,000 2.563 %February 2023February 2027 Other Assets 2,441 
Interest Rate Swap200,000 2.691 %February 2023February 2027 Other Assets 8,823 
Interest Rate Swap300,000 2.966 %July 2023May 2027 Other Assets 7,514 
Interest Rate Swap370,000 3.888 %November 2022June 2027 Other Liabilities (1,900)
Interest Rate Swap100,000 3.756 %January 2023January 2028 Other Liabilities (211)
$47,518 
During the year ended December 31, 2022, we recorded a loss of $1.7 million based on the changes in the fair value of interest rate caps we sold, which is included in Purchase price and other fair value adjustments in the consolidated statements of operations. No interest rate caps were sold during the years ended December 31, 2021 and 2020. During the years ended December 31, 2022, 2021, and 2020, we recorded losses of $0.3 million, $0.0 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, 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 $10.5 million. As of December 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 $10.9 million as of December 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 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 ($35.9 million) of the current balance held in accumulated other comprehensive income (loss) will be reclassified in interest expense and ($11.6 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 years ended December 31, 2022, 2021, and 2020, respectively (in thousands):
 Amount of Gain (Loss)
Recognized in
Other Comprehensive Income (Loss)		Location of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income Amount of Gain (Loss) Reclassified from
Accumulated Other Comprehensive Income (Loss) into Income
Year Ended
December 31,		Year Ended
December 31,
Derivative202220212020202220212020
Interest Rate Swaps/Caps$83,162 $15,643 $(51,244)Interest expense$4,989 $(17,602)$(14,569)
Share of unconsolidated joint ventures' derivative instruments24,783 (19,400)(7,977)Equity in net loss from unconsolidated joint ventures(673)(7,582)(4,911)
$107,945 $(3,757)$(59,221)$4,316 $(25,184)$(19,480)
The following table summarizes the notional value at inception and fair value of our joint ventures' derivative financial instruments as of December 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 ValueStrike RateEffective DateExpiration DateClassificationFair Value
Interest Rate Cap$23,000 4.750 %January 2021January 2023$— 
Interest Rate Cap220,000 4.000 %February 2022February 202393 
Interest Rate Cap510,000 3.000 %December 2021June 20234,220 
Interest Rate Cap267,000 4.000 %July 2022August 20231,289 
Interest Rate Cap400,000 3.500 %September 2022September 20233,839 
Interest Rate Cap1,075,000 4.080 %September 2022September 20236,004 
Interest Rate Cap125,000 4.080 %September 2022September 2023698 
Interest Rate Cap118,670 0.490 %February 2022May 202422,669 
Interest Rate Cap118,670 0.490 %February 2022May 202422,652 
Interest Rate Swap177,000 1.669 %December 2022February 202612,576 
$74,040