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 other 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 comprehensive income. For derivatives that qualify as cash flow hedges, the gain or loss is reported as a component of other comprehensive income (loss) and reclassified into earnings in the periods during which the hedged forecasted transaction affects earnings.

During the three months ended March 31, 2019, the Company had the following LIBOR interest rate caps ($ in thousands):



Origination Date	Expiration Date	Notional Amount		Strike Rate		Premium Paid
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
11/28/2017	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 April 23, 2018, the Company 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 2.78%, an effective date of May 1, 2018, and a maturity date of May 1, 2023. This interest rate swap has not been designated as a hedge for accounting purposes.

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% with a maturity date of August 7, 2025. The Company designated the interest rate swap as a hedge for accounting purposes.

On October 12, 2018, the Company entered into a LIBOR interest rate swap agreement that effectively fixes the variable component on the interest rate of the initial $10.5 million tranche of 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 designated the interest rate swap as a hedge for accounting purposes.

During the three months ended March 31, 2019, unrealized losses of $1.0 million were recorded to other comprehensive loss, and $0.1 million of realized losses were reclassified out of accumulated other comprehensive loss to interest expense due to payments made to the swap counterparty during the three months ended March 31, 2019. During the next 12 months, the Company anticipates reclassifying approximately $0.4 million of net hedging losses from accumulated other comprehensive loss into earnings to offset the variability of the hedged item during this period.

The Company’s derivatives were comprised of the following as of March 31, 2019 and December 31, 2018 (in thousands):



	March 31, 2019							December 31, 2018
	(Unaudited)
	Notional Amount		Fair Value					Notional Amount		Fair Value
			Asset		Liability					Asset		Liability
Derivatives not designated as accounting hedges
Interest rate swaps	$	100,000	$	175	$	(1,271	)	$	100,000	$	303	$	(749	)
Interest rate caps	300,000		977		—			350,000		1,790		—
Total derivatives not designated as accounting hedges	400,000		1,152		(1,271		)	450,000		2,093		(749		)
Derivatives designated as accounting hedges
Interest rate swaps	62,977		—		(2,656		)	63,208		—		(1,725		)
Total derivatives	$	462,977	$	1,152	$	(3,927	)	$	513,208	$	2,093	$	(2,474	)

The changes in the fair value of the Company’s derivatives during the three months ended March 31, 2019 and 2018 were comprised of the following (in thousands):



	Three Months Ended March 31,
	2019			2018
Interest rate swaps	$	(1,652	)	$	348
Interest rate caps	(814		)	621
Total change in fair value of interest rate derivatives	$	(2,466	)	$	969
Comprehensive income statement presentation:
Change in fair value of interest rate derivatives	$	(1,463	)	$	969
Unrealized cash flow hedge gains losses	(1,003		)	—
Total change in fair value of interest rate derivatives	$	(2,466	)	$	969

Subsequent to March 31, 2019

On April 4, 2019, the Company 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 2.26%, an effective date of April 1, 2019, and a maturity date of October 22, 2022.

On April 4, 2019, the Company entered into a floating-to-fixed interest rate swap attributable to one-month LIBOR indexed interest payments with an initial notional amount of $34.6 million. The interest rate swap has a fixed rate of 2.25%, an effective date of April 1, 2019, and a maturity date of August 10, 2023.