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DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING
 3 Months Ended
Mar. 31, 2024
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING
 
Information about our derivative financial instruments at March 31, 2024 and December 31, 2023 is as follows (dollars in thousands): 
Notional AmountFair Value
Contract dateEffective DateExpiration DateAverage Annual Effective Fixed RateMarch 31, 2024December 31, 2023March 31, 2024December 31, 2023
Operating Partnership:
June 11, 2018September 28, 2018September 30, 20242.86 %$75,000 $75,000 $905 $1,170 
June 11, 2018December 31, 2018December 31, 20252.92 %125,000 125,000 3,683 2,877 
July 26, 2022January 31, 2023January 31, 20272.60 %100,000 100,000 4,328 3,134 
July 26, 2022January 31, 2023January 31, 20292.56 %100,000 100,000 6,010 4,273 
Total Operating Partnership (1)
400,000 400,000 14,926 11,454 
GIC Joint Venture:
March 24, 2023July 1, 2023January 13, 20263.35 %100,000 100,000 2,048 1,250 
March 24, 2023July 1, 2023January 13, 20263.35 %100,000 100,000 2,048 1,254 
January 19, 2024October 1, 2024January 13, 20263.77 %100,000 — (2)632 — 
Total GIC Joint Venture
300,000 200,000 4,728 2,504 
Total
$700,000 $600,000 $19,654 $13,958 

(1)    In April 2024, after repayment of the outstanding $55.0 million balance of our $400 Million Revolver from the proceeds of the sale of a portfolio of two lodging properties in New Orleans, LA and a $6.0 million paydown to the GIC Joint Venture Term Loan from the proceeds of the sale of the Hilton Garden Inn - Bryan (College Station), TX, debt related to our wholly-owned properties and our pro rata share of joint venture debt has a fixed-rate debt ratio of approximately 77% of our total pro rata indebtedness when taking into consideration interest rate swaps.

(2)     At December 31, 2023, we had interest rate swaps that were in effect with a notional amount totaling $600.0 million. In January, 2024, we executed one additional interest rate swap with a notional amount totaling $100.0 million that becomes effective on October 1, 2024.


At March 31, 2024, debt related to our wholly-owned properties and our pro rata share of joint venture debt has a fixed-rate debt ratio of approximately 73% of our total pro rata indebtedness when taking into consideration interest rate swaps.

At March 31, 2024 and December 31, 2023, we had $600.0 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. 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.

In January 2024, subsidiaries of the GIC Joint Venture that are the borrowers under the GIC Joint Venture Term Loan entered into a $100.0 million interest rate swap to fix one-month term SOFR until January 2026. The interest rate swap has an effective date of October 1, 2024 and a termination date of January 13, 2026. Pursuant to the interest rate swap, we will pay a fixed rate of 3.77% 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 March 31, 2024 and December 31, 2023, 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 Accumulated other comprehensive income (loss) 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 $11.6 million will be reclassified from Accumulated other comprehensive income (loss) 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
March 31,
 20242023
Unrealized gain (loss) recognized in Accumulated other comprehensive income (loss) on derivative financial instruments $9,375 $(2,439)
Gain reclassified from Accumulated other comprehensive income (loss) to Interest expense$3,679 $1,949 
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$21,582 $20,909