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Derivative Financial Instruments
 6 Months Ended
Jun. 30, 2018
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Financial Instruments
Derivative Financial Instruments
 
The Company may enter into interest rate derivative contracts to manage exposure to interest rate risks. The Company does not use derivative financial instruments for trading or speculative purposes. Derivative financial instruments are recognized at fair value and presented within other assets and liabilities in the condensed consolidated balance sheets. Gains and losses resulting from changes in the fair value of derivatives that are neither designated nor qualify as hedging instruments are recognized within the change in fair value of interest rate derivatives in the condensed consolidated statements of income. For derivatives that qualify as cash flow hedges, the effective portion of the gain or loss is reported as a component of other comprehensive loss and reclassified into earnings in the periods during which the hedged forecasted transaction affects earnings.

On March 7, 2018, the Operating Partnership entered into a LIBOR interest rate cap agreement on a notional amount of $50.0 million at a strike rate of 2.25% for a premium of $0.3 million. The interest rate cap expires on April 1, 2020.

On April 23, 2018, the Operating Partnership entered into a floating-to-fixed interest rate swap attributable to one-month LIBOR indexed interest payments with a notional amount of $50.0 million. The interest rate swap has a fixed rate of 2.783%, an effective date of May 1, 2018, and a maturity date of May 1, 2023.
 
The Company’s derivatives were comprised of the following as of June 30, 2018 and December 31, 2017 (in thousands): 
 
 
June 30, 2018
 
December 31, 2017
 
 
(Unaudited)
 
 
 
 
 
 
 
 
Notional
Amount
 
Fair Value
 
Notional
Amount
 
Fair Value
 
 
 
 
Asset
 
Liability
 
 
 
Asset
 
Liability
Interest rate swaps
 
$
100,000

 
$
431

 
$
(136
)
 
$
56,079

 
$
10

 
$
(69
)
Interest rate caps
 
250,000

 
2,429

 
—

 
345,000

 
1,515

 
—

Total
 
$
350,000

 
$
2,860

 
$
(136
)
 
$
401,079

 
$
1,525

 
$
(69
)


The changes in the fair value of the Company’s derivatives during the three and six months ended June 30, 2018 and 2017 were comprised of the following (in thousands): 
 
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
 
2018
 
2017
 
2018
 
2017
Interest rate swaps
 
$
5

 
$
7

 
$
353

 
$
268

Interest rate caps
 
(16
)
 
(88
)
 
605

 
(55
)
Total change in fair value of interest rate derivatives
 
$
(11
)
 
$
(81
)
 
$
958

 
$
213



The Company has not designated any of its derivatives as hedging instruments under GAAP as of June 30, 2018.

Subsequent to June 30, 2018

On July 16, 2018, the Operating Partnership entered into a LIBOR interest rate cap agreement on a notional amount of $50.0 million at a strike rate of 2.50% for a premium of $0.3 million. The interest rate cap expires on August 1, 2020.

On July 27, 2018, the Company entered into an interest rate swap agreement that effectively fixes the interest rate of the new Johns Hopkins Village note payable at 4.19%.