Derivatives and Hedging Activities (Tables)

3 Months Ended

Mar. 31, 2019

Derivatives and Hedging Activities

Schedule of derivative instruments

Notional Amount											Fair Value (Level 2) (1)
March 31,		December 31,		Type of	Strike Rate		Effective		Expiration		March 31,		December 31,
2019		2018		Derivative	as of 3/31/19		Date		Date		2019		2018
$	—	$	50,000	Swap	—	%	2/28/2014		1/31/2019	(2)	$	—	$	43
	75,000		75,000	Swap	2.83		5/5/2015		5/5/2020			773		1,099
	75,000		75,000	Swap	4.12		5/5/2018		5/5/2023			(1,661)		(897)
	175,000		175,000	Swap	2.91	(3)	6/3/2019	(3)	6/3/2026	(3)		(6,718)		(3,183)
$	325,000	$	375,000								$	(7,606)	$	(2,938)

(1) Derivatives are recorded at fair value in our condensed consolidated balance sheets in other assets and unearned revenue, prepaid rent and other liabilities. We do not net our derivative position by counterparty for purposes of balance sheet presentation and disclosure. We had  $8.4 million and $4.1 million in derivative liabilities recognized in unearned revenue, prepaid rent and other liabilities in our consolidated balance sheets as of March 31, 2019, and December 31, 2018, respectively. We also had $0.8 million and $1.1 million derivative assets recognized in other assets in our consolidated balance sheets as of March 31, 2019, and December 31, 2018, respectively. 

(2) On January 31, 2019, the remaining $50 million of a five-year interest rate swap agreement, which reduced our variability in cash flows relating to interest payments based on one-month LIBOR variable rate debt, expired.

(3) On December 6, 2018, we entered into forward-starting seven-year interest rate swap agreement to protect against adverse fluctuations in interest rates. The swap effectively fixed the interest rate at approximately 2.91% per annum plus the applicable spread. On April 3, 2019, we settled the $175 million forward-starting seven-year interest rate swap, in connection with the anticipated subsequent debt issuance of $200 million of the Series A Notes, at a loss of $5.7 million. The loss will be included in accumulated other comprehensive income and will be amortized to interest expense over the term of the new seven-year Senior A Notes. See Note 7 – Debt for additional discussion of the subsequent debt financing.