Derivative Instruments and Hedging Activities

6 Months Ended

Jun. 30, 2024

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activities

8.Derivative Instruments and Hedging Activities

We entered into interest rate swap agreements with an aggregate notional amount of $500,000,000 to fix LIBOR (subsequently replaced with SOFR, effective July 7, 2023) at 0.46% through August 2024. We also entered into interest rate cap agreements with an aggregate notional amount of $360,000,000 to cap LIBOR at 2.00% which expired in August 2023. Upon expiration of these agreements, we entered into new interest rate cap agreements for the same notional amount to cap SOFR at 4.50% through August 2024. These interest rate swaps and interest rate caps are designated as cash flow hedges and therefore changes in their fair values are recognized in other comprehensive income or loss (outside of earnings). We recognized losses of $5,968,000 and $3,135,000 for the three months ended June 30, 2024 and 2023, respectively, and $10,655,000 and $11,525,000 for the six months ended June 30, 2024 and 2023, respectively, from the changes in the fair value of these derivative financial instruments, which are recorded as a component of other comprehensive loss in our consolidated financial statements. See Note 10, Accumulated Other Comprehensive Income. During the next twelve months, we estimate that $2,598,000 of the amounts to be recognized in accumulated other comprehensive income will be reclassified as a decrease to interest expense.

The tables below provide additional details on our interest rate swaps and interest rate caps that are designated as cash flow hedges.

Notional

Effective

Maturity

Benchmark

Strike

Fair Value as of

Property

Amount

Date

Date

Rate

Rate

June 30, 2024

December 31, 2023

(Amounts in thousands)

1301 Avenue of the Americas

$

500,000

Jul-2021

Aug-2024

SOFR

0.49

%

$

2,533

$

13,726

Total interest rate swap assets designated as cash flow hedges (included in "other assets")

$

2,533

$

13,726

Notional

Effective

Maturity

Benchmark

Strike

Fair Value as of

Property

Amount

Date

Date

Rate

Rate

June 30, 2024

December 31, 2023

(Amounts in thousands)

1301 Avenue of the Americas

$

360,000

Aug-2023

Aug-2024

SOFR

4.50

%

$

306

$

1,263

Total interest rate cap assets designated as cash flow hedges (included in "other assets")

$

306

$

1,263

We have agreements with various derivative counterparties that contain provisions wherein a default on our indebtedness could be deemed a default on our derivative obligations, which would require us to settle our derivative obligations for cash. As of June 30, 2024, we did not have any obligations relating to our interest rate swaps or interest rate caps that contained such provisions.