The Company is exposed to various market risks, including the potential loss arising from adverse changes in interest rates and foreign exchange rates. The Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates and foreign exchange rates. The Company’s derivative financial instruments are used to manage differences in the amount of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s investments and borrowings.

Certain of the Company’s foreign operations expose the Company to fluctuations of foreign interest rates and exchange rates. These fluctuations may impact the value in the Company’s functional currency, the U.S. dollar, of the Company’s investment in foreign operations, the cash receipts and payments related to these foreign operations and payments of interest and principal under Canadian dollar denominated debt. The Company enters into derivative financial instruments to protect the value of its foreign investments and fix a portion of the interest payments for certain debt obligations. The Company does not enter into derivatives for speculative purposes.

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 these objectives, the Company primarily uses interest rate swaps and collars as part of its interest rate risk management strategy. In May 2019, the Company terminated three forward starting interest rate swaps, resulting in a payment to counterparties totaling $12.6 million. The balance of the loss in other comprehensive income will be reclassified to earnings through 2029. As of December 31, 2019, approximately $1.2 million of gains, which are included in accumulated other comprehensive income, are expected to be reclassified into earnings in the next 12 months.

The Company is exposed to fluctuations in foreign exchange rates on investments it holds in Canada. The Company uses cross currency interest rate swaps to hedge its exposure to changes in foreign exchange rates on these foreign investments.



	December 31, 2019		December 31, 2018
Derivatives designated as cash flow hedges:
Denominated in U.S. Dollars⁽¹⁾	$	1,490,000	$	1,045,000
Denominated in Canadian Dollars	$	125,000	$	125,000

Derivatives designated as net investment hedges:
Denominated in Canadian Dollars	$	54,489	$	55,401

Financial instrument designated as net investment hedge:
Denominated in Canadian Dollars	$	125,000	$	125,000

Derivatives not designated as net investment hedges:
Denominated in Canadian Dollars	$	1,811	$	899

⁽¹⁾Balance includes four forward starting interest rate swaps and one forward starting interest rate collar with an effective date of August 2020 and two forward starting interest rate swaps and one forward starting interest rate collar with an effective date of January 2021 that had been entered into as of December 31, 2019. The forward starting interest rate swaps and forward starting interest rate collars have an aggregate initial notional amount of $645.0 million accreting to $845.0 million in January 2023.

The following is a summary of the derivative and financial instruments designated as hedging instruments held by the Company at December 31, 2019 and 2018 (dollars in thousands):



		Count as of December 31, 2019	Fair Value				Maturity Dates
			December 31,
Type	Designation		2019		2018			Balance Sheet Location
Assets:
Interest rate swaps	Cash flow	10	$	4,239	$	25,184	2020 - 2023	Accounts receivable, prepaid expenses and other assets, net
Cross currency interest rate swaps	Net investment	2	3,238		4,160		2025	Accounts receivable, prepaid expenses and other assets, net
			$	7,477	$	29,344
Liabilities:
Forward starting interest rate swaps	Cash flow	6	$	494	$	4,529	2024	Accounts payable and accrued liabilities
Forward starting interest rate collars	Cash flow	2	132		—		2024	Accounts payable and accrued liabilities
CAD term loan	Net investment	1	96,025		91,700		2024	Term loans, net
			$	96,651	$	96,229

The following presents the effect of the Company’s derivative and financial instruments designated as hedging instruments on the consolidated statements of income and the consolidated statements of equity for the years ended December 31, 2019, 2018 and 2017:



	Gain (Loss) Recognized in Other Comprehensive Income								Gain (Loss) Reclassified from Accumulated Other Comprehensive Income Into Income							Income Statement Location
	For the year ended December 31,
	2019			2018		2017			2019		2018		2017
Cash Flow Hedges:
Interest rate products	$	(19,932	)	$	2,707	$	10,807		$	5,545	$	3,099	$	(2,174	)	Interest expense
Net Investment Hedges:
Foreign currency products	(772		)	3,554		(2,378		)	—		—		—			N/A
CAD term loan	(4,325		)	7,888		(6,588		)	—		—		—			N/A
	$	(25,029	)	$	14,149	$	1,841		$	5,545	$	3,099	$	(2,174	)

The gain (loss) in the table above related to interest rate products was reclassified from accumulated other comprehensive income into interest expense. Interest expense totaled $126.6 million, $147.1 million and $88.4 million for the years ended December 31, 2019, 2018 and 2017, respectively.

During the years ended December 31, 2019 and 2018, no cash flow hedges were determined to be ineffective. During the year ended December 31, 2017, the Company determined that a portion of a cash flow hedge was ineffective and recognized $22,000 of unrealized gains related to its interest rate swaps to other income on the consolidated statements of income.

As of December 31, 2019, the Company had one outstanding cross currency interest rate swap, of which a portion was not designated as a hedging instrument, in an asset position with a fair value of $105,000 and included this amount in accounts receivable, prepaid expenses and other assets, net on the consolidated balance sheets. During the years ended December 31, 2019, 2018 and 2017, the Company recorded $5,000 and $34,000 of other income and $8,000 of other expense, respectively, related to the portion of derivatives not designated as hedging instruments.

The Company enters into master netting arrangements, which reduce credit risk by permitting net settlement of transactions with the same counterparty. The table below presents a gross presentation, the effects of offsetting, and a net presentation of the Company’s derivatives as of December 31, 2019 and 2018 (in thousands):



	As of December 31, 2019
							Gross Amounts Not Offset in the Balance Sheet
	Gross Amounts of Recognized Assets / Liabilities		Gross Amounts Offset in the Balance Sheet		Net Amounts of Assets / Liabilities presented in the Balance Sheet		Financial Instruments			Cash Collateral Received		Net Amount
Offsetting Assets:
Derivatives	$	7,477	$	—	$	7,477	$	(544	)	$	—	$	6,933
Offsetting Liabilities:
Derivatives	$	626	$	—	$	626	$	(544	)	$	—	$	82



	As of December 31, 2018
							Gross Amounts Not Offset in the Balance Sheet
	Gross Amounts of Recognized Assets / Liabilities		Gross Amounts Offset in the Balance Sheet		Net Amounts of Assets / Liabilities presented in the Balance Sheet		Financial Instruments			Cash Collateral Received		Net Amount
Offsetting Assets:
Derivatives	$	29,344	$	—	$	29,344	$	(2,069	)	$	—	$	27,275
Offsetting Liabilities:
Derivatives	$	4,529	$	—	$	4,529	$	(2,069	)	$	—	$	2,460

The Company has agreements with each of its derivative counterparties that contain a provision pursuant to which the Company could be declared in default on the derivative obligation if the Company defaults on any of its indebtedness, including a default where repayment of the indebtedness has not been accelerated by the lender. As of December 31, 2019, the fair value of derivatives in a net liability position, which includes accrued interest but excludes any adjustment for nonperformance risk, related to these agreements was $0.1 million. As of December 31, 2019, the Company has not posted any collateral related to these agreements. If the Company had breached any of these provisions at December 31, 2019, it could have been required to settle its obligations under the agreements at their termination value of $0.1 million.