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DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING
 6 Months Ended
Jun. 30, 2023
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING
 
Information about our derivative financial instruments at June 30, 2023 and December 31, 2022 is as follows (dollars in thousands): 
Notional AmountFair Value
Contract dateEffective DateExpiration DateAverage Annual Effective Fixed RateJune 30, 2023December 31, 2022June 30, 2023December 31, 2022
October 2, 2017January 29, 2018January 31, 20231.96 %$— $100,000 $— $208 
October 2, 2017January 29, 2018January 31, 20231.98 %— 100,000 — 210 
June 11, 2018September 28, 2018September 30, 20242.86 %75,000 75,000 2,163 2,219 
June 11, 2018December 31, 2018December 31, 20252.92 %125,000 125,000 4,907 4,211 
July 26, 2022January 31, 2023January 31, 20272.60 %100,000 100,000 (1)4,999 4,366 
July 26, 2022January 31, 2023January 31, 20292.56 %100,000 100,000 (1)6,066 5,627 
March 24, 2023July 1, 2023(2)January 13, 20263.35 %100,000 — 2,654 — 
March 24, 2023July 1, 2023(2)January 13, 20263.35 %100,000 — 2,637 — 
$600,000 $600,000 $23,426 $16,841 


(1) At December 31, 2022, we had interest rate swaps that were in effect with a notional amount totaling $400 million. On July 26, 2022, we executed two additional interest rate swaps with a notional amount totaling $200 million that become effective on January 31, 2023 upon the expiration of two interest rate swaps entered into on October 2, 2017 with a notional amount totaling $200 million.

(2)    At July 21, 2023, debt related to our wholly-owned properties and our pro rata share of joint venture debt has a fixed-rate debt ratio of approximately 74% of our total pro rata indebtedness when taking into consideration interest rate swaps, including those which became effective on July 1, 2023.

At June 30, 2023 and December 31, 2022, we had $400.0 million of debt with variable interest rates that had been converted to fixed interest rates through derivative financial instruments which are carried at fair value. We have $200.0 million in interest rate swaps that became effective on July 1, 2023 increasing the current total notional amount of interest rate swaps to $600.0 million. Differences between carrying value and fair value of our fixed-rate debt are primarily due to changes in interest rates. Inherently, fixed-rate debt is subject to fluctuations in fair value as a result of changes in the current market rate of interest on the valuation date.

On March 24, 2023, subsidiaries of the GIC Joint Venture that are the borrowers under the GIC Joint Venture Term Loan entered into two $100.0 million interest rate swaps to fix one-month term SOFR until January 2026. The interest rate swaps became effective on July 1, 2023 and have a termination date of January 13, 2026. Pursuant to the interest rate swaps, we will pay a fixed rate of 3.354% and receive the one-month term SOFR floating rate index.
Our interest rate swaps have been designated as cash flow hedges and are valued using a market approach, which is a Level 2 valuation technique. At June 30, 2023 and December 31, 2022, our interest rate swaps were in an asset position. Derivative assets related to our interest rate swaps are recorded in Other assets in our Condensed Consolidated Balance Sheets. We are not required to post any collateral related to these agreements and are not in breach of any financial provisions of the agreements.

Changes in the fair value of the hedging instruments are deferred in Other comprehensive income and are reclassified as Interest expense in our Condensed Consolidated Statements of Operations in the period in which the hedged item affects earnings. In the next twelve months, we estimate that $13.7 million will be reclassified from Other comprehensive income and recorded as a decrease to interest expense.
 
We characterize the realized and unrealized gain or loss related to derivative financial instruments designated as cash flow hedges as follows (in thousands):
 
 Three Months Ended
June 30,		Six Months Ended
June 30,
 2023202220232022
Gain recognized in Accumulated other comprehensive loss on derivative financial instruments $13,286 $3,211 $10,846 $13,024 
Gain (loss) reclassified from Accumulated other comprehensive loss to Interest expense$2,313 $(1,685)$4,261 $(3,985)
Total interest expense and other finance expense presented in the Condensed Consolidated Statements of Operations in which the effects of cash flow hedges are recorded$22,248 $15,118 $43,157 $28,557