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Financial Instruments: Derivatives and Hedging
 12 Months Ended
Dec. 31, 2023
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, including, but not limited to, 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, 2023 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 Swap150,000 2.600 %December 2021January 2024 Other Assets $11 
Interest Rate Swap200,000 4.490 %November 2022January 2024 Other Assets 5 
Interest Rate Swap200,000 4.411 %November 2022January 2024 Other Assets 5 
Interest Rate Cap370,000 3.250 %June 2023June 2024 Other Assets 3,158 
Interest Rate Cap370,000 3.250 %June 2023June 2024Other Liabilities(3,145)
Interest Rate Swap150,000 2.621 %December 2021January 2026 Other Assets 4,011 
Interest Rate Swap200,000 2.662 %December 2021January 2026 Other Assets 5,196 
Interest Rate Swap100,000 2.903 %February 2023February 2027 Other Assets 2,281 
Interest Rate Swap100,000 2.733 %February 2023February 2027 Other Assets 2,775 
Interest Rate Swap50,000 2.463 %February 2023February 2027 Other Assets 1,781 
Interest Rate Swap200,000 2.591 %February 2023February 2027Other Assets6,378 
Interest Rate Swap300,000 2.866 %July 2023May 2027Other Assets7,306 
Interest Rate Swap150,000 3.524 %January 2024May 2027 Other Assets 549 
Interest Rate Swap370,000 3.888 %November 2022June 2027 Other Liabilities (3,044)
Interest Rate Swap300,000 4.487 %November 2024November 2027 Other Liabilities (10,273)
Interest Rate Swap100,000 3.756 %January 2023January 2028 Other Liabilities (646)
$16,348 
During the year ended December 31, 2023, we recorded a loss of $10.4 million based on the changes in the fair value of an interest rate cap we sold and a forward-starting interest rate swap, which is included in Purchase price and other fair value adjustments in the consolidated statements of operations. During the year ended December 31, 2022, we recorded a loss of $1.7 million based on the changes in the fair value of an interest rate cap we sold. No interest rate caps were sold or forward-starting interest rate swaps entered into during the year ended December 31, 2021. During the years ended December 31, 2023, 2022, and 2021, we recorded losses of $0.2 million, $0.3 million, and $0.0 million, respectively, on the changes in the fair value, which is included in interest expense in the consolidated statements of operations.
Certain agreements the Company has with each of its derivative counterparties 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, 2023, 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 $17.5 million. As of December 31, 2023, 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 $18.3 million as of December 31, 2023.
Gains and losses on terminated hedges are included in accumulated other comprehensive income, and are recognized into earnings over the term of the related obligation. Over time, the realized and unrealized gains and losses held in accumulated other comprehensive income 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 ($32.5 million) of the current balance held in accumulated other comprehensive income will be reclassified into interest expense and ($7.6 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 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, 2023, 2022, and 2021, respectively (in thousands):
 Amount of Gain (Loss)
Recognized in
Other Comprehensive (Loss) Income		Location of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income Amount of Gain (Loss) Reclassified from
Accumulated Other Comprehensive Income into Income
Year Ended December 31,Year Ended December 31,
Derivative202320222021202320222021
Interest Rate Swaps/Caps$18,484 $83,162 $15,643 Interest expense$42,270 $4,989 $(17,602)
Share of unconsolidated joint ventures' derivative instruments7,399 24,783 (19,400)Equity in net loss from unconsolidated joint ventures16,050 (673)(7,582)
$25,883 $107,945 $(3,757)$58,320 $4,316 $(25,184)
The following table summarizes the notional value at inception and fair value of our joint ventures' derivative financial instruments as of December 31, 2023 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 2023February 2024Asset$318 
Interest Rate Cap484,069 0.490 %February 2022May 2024Asset8,331 
Interest Rate Cap484,069 0.490 %February 2022May 2024Asset8,330 
Interest Rate Cap505,412 3.000 %June 2023June 2024Asset4,948 
Interest Rate Cap272,000 4.000 %August 2023August 2024Asset1,675 
Interest Rate Cap477,783 3.500 %September 2023September 2024Asset5,213 
Interest Rate Cap278,161 4.000 %May 2024November 2024Asset948 
Interest Rate Cap278,161 4.000 %May 2024November 2024Asset948 
Interest Rate Swap250,000 3.608 %April 2023February 2026Asset1,819 
Interest Rate Swap250,000 3.608 %April 2023February 2026Asset1,818 
Interest Rate Swap177,000 1.555 %December 2022February 2026Asset8,686 
$43,034