Interest Rate Swaps

12 Months Ended

Dec. 31, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Interest Rate Swaps

Interest Rate Swaps

Risk Management Objective of Using Derivatives

In addition to the operational risks which arise in the normal course of business, CatchMark Timber Trust is exposed to economic risks such as interest rate, liquidity, and credit risks. CatchMark Timber Trust has entered into interest rate swap contracts in order to mitigate interest rate risk exposure arising from its variable interest rate debts. CatchMark Timber Trust does not enter into derivative or interest rate contracts for speculative purposes; however, CatchMark Timber Trust’s derivatives may not qualify for hedge accounting treatment.

Interest Rate Swap Designated as Hedging Instrument

CatchMark Timber Trust was party to an interest rate swap agreement with Rabobank to hedge its exposure to changing interest rates on $80.0 million of its variable interest rate term loan (the “2013 Rabobank Swap”). The 2013 Rabobank Swap became effective on March 28, 2013 and matures on September 30, 2017. Under the terms of the 2013 Rabobank Swap, CatchMark Timber Trust paid interest at a fixed rate of 0.9075% per annum to Rabobank and received one-month LIBOR-based interest payments from Rabobank. The 2013 Rabobank Swap qualified for hedge accounting treatment.

On December 19, 2013, in connection with entering into the Amended CoBank Loan, CatchMark Timber Trust unwound $47.0 million of the notional amount of the 2013 Rabobank Swap and received a cash payment of approximately $0.1 million from Rabobank as settlement. This amount was reclassified from accumulated other comprehensive income and recognized as realized gain on interest rate swap in current earnings in the consolidated statements of operations.

As a result of the payoff of its indebtedness under Amended CoBank Loan (see Note 4 – Notes Payable and Line of Credit) on July 18, 2014, CatchMark Timber Trust terminated the 2013 RaboBank Swap and received a counter-party payment of approximately $0.2 million from Rabobank, which was recorded as interest income in the accompanying consolidated statements of operations.

On December 24, 2014, in connection with entering into the 2014 Amended Credit Agreement, CatchMark Timber Trust entered into an interest rate swap with Rabobank to hedge its exposure to changing interest rates on $35.0 million of the 2014 Amended Credit Agreement that is subject to a variable interest rate (the "2014 Rabobank Swap"). The 2014 Rabobank Swap became effective on December 23, 2014 and matures on December 23, 2024. Under the terms of the 2014 Rabobank Swap, CatchMark Timber Trust pays interest at a fixed rate of 2.395% per annum to Rabobank and receives one-month LIBOR-based interest payments from Rabobank. The 2014 Rabobank Swap qualifies for hedge accounting treatment.

During the year endedDecember 31, 2014, CatchMark Timber Trust recognized a change in fair value of the 2013 Rabobank Swap and the 2014 Rabobank Swap agreements (collectively, the "Swap Agreements") of approximately $1.1 million as other comprehensive loss. There was no hedge ineffectiveness on the Swap Agreements required to be recognized in current earnings. During the year endedDecember 31, 2014 and 2013, net payments of approximately $0.1 million and $0.4 million were made under the Swap Agreements by CatchMark Timber Trust and were recorded as interest expense, respectively.