Other Assets

9 Months Ended

Sep. 30, 2022

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

The following table summarizes the components of other assets:


$ in thousands	September 30, 2022		December 31, 2021
Derivative instruments	$	9,213	$	—
Capitalized tax abatement, net(1)	8,311		7,049
Deferred rent	1,585		528
Prepaid expenses	963		460
Deferred financing costs, net	462		818
Deposits	70		3,460
Other	851		243
Total	$	21,455	$	12,558

(1)We obtained tax abatements in conjunction with our purchases of the Cortona Apartments and 3101 Agler Road properties with expiration dates of December 31, 2038 and December 31, 2031, respectively. We are amortizing the tax abatements over their remaining useful life as a component of property operating expenses in the condensed consolidated statements of operations. As of September 30, 2022, accumulated amortization of the capitalized tax abatements was $0.8 million, and the estimated annual amortization is $0.6 million.

Derivative Instruments

We are exposed to certain risks arising from both our business operations and economic conditions. We principally manage our exposures to a wide variety of business and operational risks through management of our core business activities. We manage economic risks, including interest rate risk, primarily by managing the amount, sources, and duration of our investments, borrowings, and the use of derivative financial instruments. Specifically, we use derivative financial instruments to manage exposures that arise from business activities that result in the payment of future known and uncertain cash amounts, the value of which are determined by interest rates. Our derivative financial instruments are used to manage differences in the amount, timing, and duration of our known or expected cash payments principally related to our borrowings.

We have not designated any of our derivative financial instruments as hedges. Derivatives not designated as hedges are not speculative and are used to manage our exposure to increases in interest rates.

During the nine months ended September 30, 2022, we entered into three interest rate caps and one interest rate swap transaction. The following table summarizes the notional amount and other information related to these instruments as of September 30, 2022:


$ in thousands	Number of Instruments	Notional Amount(1)		Fixed Amount		Fair Value(2)		Weighted Average Strike Rate	Weighted Average Remaining Term In Years
Interest rate caps	3	$	163,500	$	2,196	$	6,925	1.7%	2.11
Interest rate swaps	1	52,500		N/A		2,288		2.7%	4.58
Total	4	$	216,000	$	2,196	$	9,213

(1)The notional amount represents the amount of the borrowings that we are hedging, but does not represent exposure to credit, interest rate or market risks.

(2)The fair value of each derivative instrument is included in other assets on our condensed consolidated balance sheets. For the three and nine months ended September 30, 2022, the changes in fair value of $4.5 million and $7.0 million, respectively, are included in unrealized gain on derivative instruments in our condensed consolidated statements of operations.