Derivative Financial Instruments

During the three years ended December 31, 2018, the Company had the following LIBOR interest rate caps ($ in thousands):



Origination Date	Expiration Date	Notional Amount		Strike Rate		Premium Paid
10/26/2015	10/15/2017	$	75,000	1.25	%	$	137
2/25/2016	3/1/2018	75,000		1.50	%	57
6/17/2016	6/17/2018	70,000		1.00	%	150
2/7/2017	3/1/2019	50,000		1.50	%	187
6/23/2017	7/1/2019	50,000		1.50	%	154
9/18/2017	10/1/2019	50,000		1.50	%	199
7/28/2017	12/1/2019	50,000		1.50	%	359
3/7/2018	4/1/2020	50,000		2.25	%	310
7/16/2018	8/1/2020	50,000		2.50	%	319
12/11/2018	1/1/2021	50,000		2.75	%	210

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 a $50.0 million term loan under the 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 had 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 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.

On July 27, 2018, the Company entered into a LIBOR interest rate swap agreement that effectively fixes the interest rate of the new Johns Hopkins Village note payable at 4.19% per annum with a maturity date of August 7, 2025. The Company has designated the interest rate swap as a cash flow hedge for accounting purposes.

On October 12, 2018, the Company entered into a LIBOR interest rate swap agreement that effectively fixes the interest rate of the initial $10.5 million tranche of the new Lightfoot Marketplace note payable at 4.77% per annum until stabilization and 4.62% per annum thereafter. The swap matures on October 12, 2023. The Company has designated the interest rate swap as a cash flow hedge for accounting purposes.

During the year ended December 31, 2018, unrealized losses of $1.9 million were recorded to other comprehensive loss, and $0.2 million of realized losses were reclassified out of accumulated other comprehensive loss to interest expense due to payments made to swap counterparties during the year ended December 31, 2018 for interest rate swaps designated as cash flow hedges. During the next 12 months, the Company anticipates reclassifying approximately $0.3 million of net hedging losses from accumulated other comprehensive loss into earnings to offset the variability of the hedged items during this period.

The Company’s derivatives comprised the following as of December 31, 2018 and 2017 (in thousands):



	December 31,
	2018							2017
			Fair Value							Fair Value
Derivatives not designated as accounting hedges	Notional Amount		Asset		Liability			Notional Amount		Asset		Liability
Interest rate swaps	$	100,000	$	303	$	(749	)	$	56,079	$	10	$	(69	)
Interest rate caps	350,000		1,790		—			345,000		1,515		—
Total derivatives not designated as accounting hedges	450,000		2,093		(749		)	401,079		1,525		(69		)
Interest rate swaps designated as accounting hedge	63,208		—		(1,725		)	—		—		—
Total derivatives	$	513,208	$	2,093	$	(2,474	)	$	401,079	$	1,525	$	(69	)

The changes in the fair value of the Company’s derivatives during the years ended December 31, 2018, 2017, and 2016 was as follows (in thousands):



	Years Ended December 31,
	2018			2017		2016
Interest rate swaps	$	(2,281	)	$	770	$	(795	)
Interest rate caps	(564		)	357		(146		)
Total change in fair value of interest rate derivatives	$	(2,845	)	$	1,127	$	(941	)
Comprehensive income statement presentation:
Change in fair value of interest rate derivatives	$	(951	)	$	1,127	$	(941	)
Unrealized cash flow hedge losses	(1,894		)	—		—
Total	$	(2,845	)	$	1,127	$	(941	)

Effective March 31, 2016, the Company determined that the short-cut method of hedge accounting was not appropriate for two of its interest-rate swaps and, for accounting purposes, the hedge relationship was terminated. The swaps were entered into in February and July 2015. Accordingly, changes in fair value of the swap should have been recorded in income rather than other comprehensive income. The Company determined that the errors were immaterial to all previously issued financial statements. The Company recognized $0.7 million of accumulated other comprehensive income and $0.4 million, which was previously allocated to noncontrolling interest as of December 31, 2015, in earnings during the first quarter of 2016. Subsequent changes in the value of the interest rate swap for the period from January 1, 2016 to December 31, 2018 were also recognized in earnings during the years ended December 31, 2018 and 2017.

The Company has not designated any of its interest rate caps as hedging instruments for accounting purposes.