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Derivative Financial Instruments
 9 Months Ended
Sep. 30, 2017
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Financial Instruments
Derivative Financial Instruments

We utilize interest rate swap agreements for risk management purposes to reduce the impact of changes in interest rates on our variable rate debt.  We may also enter into forward starting swaps to set the effective interest rate on planned variable rate financing. On the date we enter into an interest rate swap, the derivative is designated as a hedge against the variability of cash flows that are to be paid in connection with a recognized liability.  Subsequent changes in the fair value of a derivative designated as a cash flow hedge that is determined to be effective are recorded in other comprehensive income (“OCI”) until earnings are affected by the variability of cash flows of the hedged transaction.  The differential between fixed and variable rates to be paid or received is accrued, as interest rates change, and recognized currently as interest expense in the condensed consolidated statements of operations.  We assess effectiveness of our cash flow hedges both at inception and on an ongoing basis.   Our cash flow hedges become ineffective, for example, if critical terms of the hedging instrument and the debt do not perfectly match such as notional amounts, settlement dates, reset dates and calculation period and LIBOR rate. Changes in the fair values are immediately included in other income and expenses. At September 30, 2017, all of our hedges were effective.

The following table summarizes the notional values and fair values of our derivative financial instruments as of September 30, 2017:
 
 
Hedge
 
Notional
 
Fixed
 
Fair
 
Expiration
Underlying Debt
 
Type
 
Value
 
Rate
 
Value
 
Date
 
 
 
 
(In thousands)
 
 
 
(In thousands)
 
 
Derivative Assets
 
 
 
 
 
 
 
 
 
 
Unsecured term loan
 
Cash Flow
 
$
50,000

 
1.460
%
 
$
297

 
05/2020
Unsecured term loan
 
Cash Flow
 
20,000

 
1.498
%
 
205

 
05/2021
Unsecured term loan
 
Cash Flow
 
15,000

 
1.490
%
 
159

 
05/2021
Unsecured term loan
 
Cash Flow
 
40,000

 
1.480
%
 
436

 
05/2021
 
 
 
 
$
125,000

 
 
 
$
1,097

 
 
Derivative Assets - Forward Swaps
 
 
 
 
 
 
 
 
 
 
Unsecured term loan
 
Cash Flow
 
60,000

 
1.770
%
 
628

 
03/2023
Total Derivative Assets
 
 
 
$
185,000

 
 
 
$
1,725

 
 
 
 
 
 
 
 
 
 
 
 
 
Derivative Liabilities
 
 
 
 
 
 
 
 
 
 
Unsecured term loan
 
Cash Flow
 
$
30,000

 
2.048
%
 
$
(178
)
 
10/2018
Unsecured term loan
 
Cash Flow
 
25,000

 
1.850
%
 
(98
)
 
10/2018
Unsecured term loan
 
Cash Flow
 
5,000

 
1.840
%
 
(19
)
 
10/2018
Unsecured term loan
 
Cash Flow
 
15,000

 
2.150
%
 
(180
)
 
05/2020
Unsecured term loan
 
Cash Flow
 
10,000

 
2.150
%
 
(120
)
 
05/2020
Total Derivative Liabilities
 
 
 
$
85,000

 
 
 
$
(595
)
 
 
 
 
 
 
 
 
 
 
 
 
 

 
The effect of derivative financial instruments on our condensed consolidated statements of operations for the three months ended September 30, 2017 and 2016 is summarized as follows:

 
 
Amount of Gain (Loss)
Recognized in OCI on Derivative
(Effective Portion)
 
Location of Gain
(Loss)
Reclassified from
Accumulated OCI
into Income
(Effective Portion)
 
Amount of Loss
Reclassified from
Accumulated OCI into
Income (Effective Portion)
Derivatives in Cash Flow Hedging Relationship
 
Three Months Ended September 30,
 
 
Three Months Ended September 30,
 
2017
 
2016
 
 
2017
 
2016
 
 
(In thousands)
 
 
 
(In thousands)
 
 
 
 
 
 
 
 
 
 
 
Interest rate contracts - assets
 
$
(44
)
 
$
—

 
Interest Expense
 
$
62

 
$
—

Interest rate contracts - liabilities
 
360

 
1,093

 
Interest Expense
 
(182
)
 
652

Total
 
$
316

 
$
1,093

 
Total
 
$
(120
)
 
$
652

 
 
 
 
 
 
 
 
 
 
 


The effect of derivative financial instruments on our condensed consolidated statements of operations for the nine months ended September 30, 2017 and 2016 is summarized as follows:
 
 
Amount of Gain (Loss)
Recognized in OCI on Derivative
(Effective Portion)
 
Location of Gain
(Loss)
Reclassified from
Accumulated OCI
into Income
(Effective Portion)
 
Amount of Loss
Reclassified from
Accumulated OCI into
Income (Effective Portion)
Derivatives in Cash Flow Hedging Relationship
 
Nine Months Ended September 30,
 
 
Nine Months Ended September 30,
 
2017
 
2016
 
 
2017
 
2016
 
 
(In thousands)
 
 
 
(In thousands)
 
 
 
 
 
 
 
 
 
 
 
Interest rate contracts - assets
 
$
(98
)
 
$
(716
)
 
Interest Expense
 
$
(319
)
 
$
74

Interest rate contracts - liabilities
 
1,437

 
(6,436
)
 
Interest Expense
 
(733
)
 
1,826

Total
 
$
1,339

 
$
(7,152
)
 
Total
 
$
(1,052
)
 
$
1,900