Derivatives

12 Months Ended

Dec. 31, 2021

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Interest Rate Swaps

The Company uses interest rate swaps to hedge variable interest payments due on certain of its term loans and aggregation facility. These swaps allow the Company to incur fixed interest rates on these loans and receive payments based on variable interest rates with the swap counterparty based on the one or three month LIBOR on the notional amounts over the life of the swaps.

The interest rate swaps have been designated as cash flow hedges. The credit risk adjustment associated with these swaps is the risk of non-performance by the counterparties to the contracts. In the year ended December 31, 2021, the hedge relationships on the Company’s interest rate swaps have been assessed as highly effective as the quarterly assessment performed determined changes in cash flows of the derivative instruments have been highly effective in offsetting the changes in the cash flows of the hedged items, are expected to be highly effective in the future and the critical terms of the interest rate swaps match the critical terms of the underlying forecasted hedged transactions. Accordingly, changes in the fair value of these derivatives are recorded as a component of accumulated other comprehensive income, net of income taxes. Changes in the fair value of these derivatives are subsequently reclassified into earnings, and are included in interest expense, net in the Company’s statements of operations, in the period that the hedged forecasted transactions affect earnings. To the extent that the hedge relationships are not effective, changes in the fair value of these derivatives are recorded in other expenses, net in the Company's statements of operations on a prospective basis.

The Company’s master netting and other similar arrangements allow net settlements under certain conditions. When those conditions are met, the Company presents derivatives at net fair value. As of December 31, 2021, the information related to these offsetting arrangements were as follows (in thousands):


Instrument Description	Gross Amounts of Recognized Assets / Liabilities		Gross Amounts Offset in the Consolidated Balance Sheet		Net Amounts of Assets / Liabilities Included in the Consolidated Balance Sheet		Notional Amount (1)
Assets:
Derivatives designated as hedging instruments	$	17,475	$	(1,815)	$	15,660	$	421,281
Derivatives not designated as hedging instruments	9,198		—		9,198		345,258
Total derivative assets	26,673		(1,815)		24,858		766,539

Liabilities:
Derivatives designated as hedging instruments	(54,017)		1,815		(52,202)		1,110,729
Derivatives not designated as hedging instruments	(29,856)		—		(29,856)		621,884
Total derivative liabilities	(83,873)		1,815		(82,058)		1,732,613
Total derivative assets & liabilities	$	(57,200)	$	—	$	(57,200)	$	2,499,152

(1)Comprised of 61 interest rate swaps which effectively fix the LIBOR portion of interest rates on outstanding balances of certain loans under the senior and securitized sections of the debt footnote table (see Note 11, Indebtedness) at 0.57% to 3.18% per annum. These swaps mature from August 31, 2022 to January 31, 2043.

As of December 31, 2020, the information related to these offsetting arrangements were as follows (in thousands):


Instrument Description	Gross Amounts of Recognized Assets / Liabilities		Gross Amounts Offset in the Consolidated Balance Sheet		Net Amounts of Assets / Liabilities Included in the Consolidated Balance Sheet		Notional Amount
Assets:
Derivatives designated as hedging instruments	$	4,293	$	(6)	$	4,287	$	191,737
Derivatives not designated as hedging instruments	925		(13)		912		166,138
Total derivative assets	5,218		(19)		5,199		357,875

Liabilities:
Derivatives designated as hedging instruments	(165,996)		6		(165,990)		1,796,596
Derivatives not designated as hedging instruments	(9,448)		13		(9,435)		190,530
Total derivative liabilities	(175,444)		19		(175,425)		1,987,126
Total derivative assets & liabilities	$	(170,226)	$	—	$	(170,226)	$	2,345,001

The losses (gains) on derivatives designated as cash flow hedges recognized into OCI, before tax effect, consisted of the following (in thousands):


	Year Ended December 31,
	2021		2020		2019
Derivatives designated as cash flow hedges:
Interest rate swaps	$	(25,117)	$	86,367	$	65,809

The losses (gains) on derivatives financial instruments recognized into the consolidated statements of operations, before tax effect, consisted of the following (in thousands):


	Year Ended December 31,
	2021				2020				2019
	Interest expense, net		Other expense, net		Interest expense, net		Other expense, net		Interest expense, net		Other expense, net
Derivatives designated as cash flow hedges:
Interest rate swaps
Losses (gains) reclassified from AOCI into income	$	21,517	$	—	$	12,971	$	—	$	(785)	$	—
Derivatives not designated as cash flow hedges:
Interest rate swaps
Gains recognized into income	—		(21,387)		—		(2,911)		—		—
Total losses (gains)	$	21,517	$	(21,387)	$	12,971	$	(2,911)	$	(785)	$	—

All amounts in Accumulated other comprehensive income (loss) ("AOCI") in the consolidated statements of redeemable noncontrolling interests and equity relate to derivatives, refer to the consolidated statements of comprehensive loss. The net (losses) gains on derivatives includes the tax effect of $12.9 million, $19.4 million and $17.7 million for the twelve months ended December 31, 2021, 2020 and 2019, respectively.

During the next 12 months, the Company expects to reclassify $18.6 million of net losses on derivative instruments from accumulated other comprehensive income to earnings. There were twelve undesignated derivative instruments recorded by the Company as of December 31, 2021.