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Interest Rate Contracts
 6 Months Ended
Jun. 30, 2024
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Interest Rate Contracts Interest Rate Contracts
Risk Management Objective of Using Derivatives
The Company is exposed to certain risks arising from both business operations and economic conditions. The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of debt funding and the use of derivative financial instruments. Specifically, the Company enters into interest rate hedging instruments (collectively, “Interest Rate Swaps”) to provide greater predictability in interest expense by protecting against potential increases in floating interest rates and allow for more precise budgeting, financial planning and forecasting. Interest Rate Swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. The Company does not use derivatives for trading or speculative purposes.
Derivative Instruments
As of June 30, 2024, the Company has Interest Rate Swaps in place to hedge the variable cash flows associated with its variable-rate debt (which, as of June 30, 2024, consists of the KeyBank Loans). The Interest Rate Swaps are cross-defaulted to other indebtedness of the Operating Partnership, if that indebtedness exceeds certain thresholds. The change in the fair value of the Interest Rate Swaps designated and qualifying as cash flow hedges is initially recorded in accumulated other comprehensive income (“AOCI”) and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. Amounts reported in AOCI related to Interest Rate Swaps will be reclassified to interest expense as interest payments are made on the Company's variable-rate debt.
The following table sets forth a summary of the Interest Rate Swaps at June 30, 2024 and December 31, 2023:
Fair Value (1)
Current Notional Amounts
Derivative InstrumentEffective DateMaturity DateInterest Strike RateJune 30, 2024December 31, 2023June 30, 2024December 31, 2023
Assets
Interest Rate Swap3/10/20207/1/20250.83%$6,220 $7,891 $150,000 $150,000 
Interest Rate Swap3/10/20207/1/20250.84%4,137 5,250 100,000 100,000 
Interest Rate Swap3/10/20207/1/20250.86%3,089 3,915 75,000 75,000 
Interest Rate Swap7/1/20207/1/20252.82%2,736 2,924 125,000 125,000 
Interest Rate Swap7/1/20207/1/20252.82%2,184 2,331 100,000 100,000 
Interest Rate Swap7/1/20207/1/20252.83%2,181 2,327 100,000 100,000 
Interest Rate Swap7/1/20207/1/20252.84%2,163 2,304 100,000 100,000 
Total$22,710 $26,942 $750,000 $750,000 
(1)The Company records all derivative instruments on a gross basis in the consolidated balance sheets, and accordingly there are no offsetting amounts that net assets against liabilities. As of June 30, 2024, derivatives in an asset or liability position are included in the line item “Other assets” or “Interest rate swap liability”, respectively, in the consolidated balance sheets at fair value.
The following table sets forth the impact of the Interest Rate Swaps on the consolidated statements of operations for the periods presented:
Six Months Ended June 30,
20242023
Interest Rate Swaps in Cash Flow Hedging Relationship:
Amount of gain (loss) recognized in AOCI on derivatives$(8,954)$(10,238)
Amount reclassified from AOCI into earnings under “Interest expense”$13,123 $10,531 
Total interest expense presented in the consolidated statement of operations in which the effects of cash flow hedges are recorded$31,994 $33,082 
During the twelve months subsequent to June 30, 2024, the Company estimates that an additional $22.7 million of its income will be recognized from AOCI into earnings.
As of June 30, 2024 and December 31, 2023, there were no Interest Rate Swaps in a liability position. As of June 30, 2024 and December 31, 2023, the Company is not required to post collateral related to these agreements.
As of July 25, 2024, in connection with the Eighth Amendment to the Second Amended and Restated Credit Agreement, the Company has entered into certain Interest Rate Swaps, in the form of forward, floating to fixed rate interest swaps. Refer to Note 16. Subsequent Events for further details.