Derivative Financial Instruments

12 Months Ended

Dec. 31, 2015

Derivative Financial Instruments

Derivative Financial Instruments

9.Derivative Financial Instruments

On February 20, 2015, the Operating Partnership entered into a $50.0 million floating-to-fixed interest rate swap attributable to one-month LIBOR indexed interest payments. The $50.0 million interest rate swap has a fixed rate of 2.00%, an effective date of March 1, 2016 and a maturity date of February 20, 2020. The Operating Partnership entered into this interest rate swap agreement in connection with the new $50.0 million senior unsecured term loan facility that bears interest at LIBOR plus 1.35% to 1.95%, depending on the Operating Partnership’s total leverage. The Company designated this interest rate swap as a cash flow hedge of variable interest payments based on one-month LIBOR.

On July 13, 2015, the Operating Partnership entered into a $6.5 million floating-to-fixed interest rate swap attributable to one-month LIBOR indexed interest payments. The $6.5 million interest rate swap has a fixed rate of 3.05%, an effective date of July 13, 2015 and a maturity date of April 5, 2018. The Company designated this interest rate swap as a cash flow hedge of variable interest payments based on one-month LIBOR.

On October 26, 2015, the Operating Partnership entered into a LIBOR interest rate cap agreement on a notional amount of $75.0 million at a strike rate of 1.25% for a premium of $0.1 million. The interest rate cap agreement expires on October 15, 2017.

On March 14, 2014, the Operating Partnership entered into a LIBOR interest rate cap agreement on a notional amount of $50.0 million at a strike rate of 1.25% for a premium of $0.4 million. The interest rate cap agreement expires on March 1, 2017.

The Company has not designated any of its interest rate caps as hedging instruments under GAAP.

The Company’s derivatives comprised the following as of December 31, 2015 and 2014 (in thousands):

	December 31,
	2015						2014
	Notional		Fair Value				Notional		Fair Value
	Amount		Asset		Liability		Amount		Asset		Liability
Interest rate swaps	$	57,093	$	—	$	(1,082)	$	685	$	—	$	(11)
Interest rate caps		246,546		164		—		180,434		260		—
Total	$	303,639	$	164	$	(1,082)	$	181,119	$	260	$	(11)

The changes in the fair value of the Company’s derivatives during each of the three years ended December 31, 2015 was as follows (in thousands):

	Years Ended December 31,
	2015		2014		2013
Interest rate swaps	$	(1,071)	$	5	$	152
Interest rate caps		(233)		(238)		(164)
Total	$	(1,304)	$	(233)	$	(12)
Comprehensive income statement presentation:
Other income (loss)	$	(229)	$	(233)	$	(12)
Unrealized gain (loss) on cash flow hedge		(1,075)		—		—
Total	$	(1,304)	$	(233)	$	(12)

Subsequent to December 31, 2015

On February 25, 2016, the Operating Partnership entered into a LIBOR interest rate cap agreement on a notional amount of $75.0 million at a strike rate of 1.50% for a premium of less than $0.1 million. The interest rate cap agreement expires on March 1, 2018.