Derivative Instruments and Hedging Activities

12 Months Ended

Dec. 31, 2016

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activities

10. Derivative Instruments and Hedging Activities

We manage our market risk on variable rate debt by entering into interest rate swaps to fix the rate on all or a portion of the debt for varying periods through maturity. These interest rate swaps are accounted for as derivative instruments and, pursuant to ASC Topic 815, are recorded on our consolidated balance sheets at fair value. Changes in the fair value of interest rate swaps are accounted for based on the hedging relationship and their designation and qualification. 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 either post collateral up to the fair value of our derivative obligations or settle the obligations for cash.  As of December 31, 2016, the fair value of the derivative obligations with such provisions aggregated $22,255,000.

Interest Rate Swaps – Non-designated Hedges

As of December 31, 2016, we had interest rate swaps with an aggregate notional amount of $840,000,000 that were not designated as hedges. Changes in the fair value of interest rate swaps that are not designated as hedges are recognized in earnings. For the years ended December 31, 2016 and 2015 and the period from November 24, 2014 to December 31, 2014, we recognized unrealized gains of $39,814,000, $75,760,000 and $15,084,000, respectively, from the changes in the fair value of these interest rate swaps.  The table below provides additional details on our interest rate swaps that are not designated as hedges.

								The Company
	Notional				Strike			Fair Value as of December 31,
Property	Amount		Effective Date	Maturity Date	Rate			2016		2015
(Amounts in thousands)
One Market Plaza (1)	$	840,000	Aug-2007 to Aug-2012	Aug-2017		5.02	%	$	21,227	$	55,404
31 W 52nd Street (2)		-	n/a	n/a	n/a				-		17,661
900 Third Avenue (3)		-	n/a	n/a	n/a				-		11,630
Total interest rate swap liabilities related to non-designated hedges								$	21,227	$	84,695

⁽¹⁾ Terminated in connection with the refinancing of One Market Plaza in January 2017. See Note 27, Subsequent Events.

⁽²⁾ Terminated in connection with the refinancing of 31 West 52nd Street. See Note 9, Debt.

⁽³⁾ Terminated in connection with the repayment of this loan. See Note 9, Debt.

Interest Rate Swaps – Designated as Cash Flow Hedges

As of December 31, 2016, we had interest rate swaps with an aggregate notional amount of $1.0 billion that were designated as cash flow hedges. We also have entered into forward starting interest rate swaps with an aggregate notional amount of $400,000,000 to extend the maturity of certain swaps for an additional year.  Changes in the fair value of interest rate swaps that are designated as cash flow hedges are recognized in “other comprehensive income (loss)” (outside of earnings). We recognized other comprehensive income of $8,161,000 and losses of $9,241,000 for the years ended December 31, 2016 and 2015, respectively, from the changes in the fair value of these interest rate swaps.  During the next twelve months, we estimate that $8,227,000 of the amounts recognized in accumulated other comprehensive income (loss) will be reclassified as an increase to interest expense. The table below provides additional details on our interest rate swaps that are designated as cash flow hedges.

								The Company
	Notional				Strike			Fair Value as of December 31,
Property	Amount		Effective Date	Maturity Date	Rate			2016		2015
(Amounts in thousands)
1633 Broadway	$	400,000	Dec-2020	Dec-2021		2.35	%	$	139	$	-
Total interest rate swap assets designated as cash flow hedges								$	139	$	-
1633 Broadway	$	1,000,000	Dec-2015	Dec-2020 to Dec-2022		1.79	%	$	1,219	$	9,204
1633 Broadway		400,000	Dec-2020	Dec-2021		2.35	%		-		37
Total interest rate swap liabilities designated as cash flow hedges								$	1,219	$	9,241