DERIVATIVE FINANCIAL INSTRUMENTS

12 Months Ended

Dec. 31, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Cash Flow Hedges of Interest Rate Risk

The Company's objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.

The changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in Accumulated Other Comprehensive Income and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings.

As of December 31, 2019, the Company had the following outstanding interest rate derivative that was designated as cash flow hedges of interest rate risk (dollars in thousands):


Interest Rate Derivative	Notional Amount		Rate		Maturity
Interest Rate Swap	$	1,170	5.25	%	April 1, 2022

Non-designated Derivatives

Derivatives not designated as hedges are not speculative and are used to manage the Company's exposure to interest rate movements and other identified risks but do not meet the hedge accounting requirements. Changes in the fair value of derivatives not designated in hedging relationships are recorded directly in earnings. At December 31, 2019, the Company did not have any outstanding derivatives that were not designated as hedges in qualifying hedging relationships.

The table below presents the fair value of the Company's derivative financial instruments as well as its classification on the consolidated balance sheets as of the dates indicated (dollars in thousands):


Derivatives as of:
December 31, 2019				December 31, 2018
Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Other Assets	$	—	Other assets	$	11
Accounts payable and accrued liabilities	$	12	Accounts payable and accrued liabilities	$	—

NOTE 14—DERIVATIVE FINANCIAL INSTRUMENTS (Continued)

The following table presents the effect of the Company's derivative financial instrument on the consolidated statements of comprehensive income (loss) for the years ended December 31, 2019 and 2018 and (dollars in thousands):


	Year Ended December 31,
	2019		2018
Amount of gain (loss) recognized on derivative in Other Comprehensive Income	$	(22)	$	(11)
Amount of gain (loss) reclassified from Accumulated Other Comprehensive (loss) income into Interest Expense	$	2	$	(2)
Total amount of Interest expense presented in the Consolidated Statement of Operations	$	7,796	$	6,439

No gain or loss was recognized related to hedge ineffectiveness or to amounts excluded from effectiveness testing on the Trust's cash flow hedges during the years ended December 31, 2019 or 2018. During the twelve months ending December 31,

2020, the Company estimates an additional $14,000 will be reclassified from other comprehensive loss as a decrease to interest expense.

Credit-risk-related Contingent Features

The agreement between the Company and its derivatives counterparty provides that if the Company defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, the Company could be declared in default on its derivative obligation.

As of December 31, 2019, 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 $13,000. As of December 31, 2019, the Company had not posted 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 $13,000 at December 31, 2019.