Derivative and Hedging Activities (Tables)

6 Months Ended

Jun. 30, 2020

Derivative Instruments, Gain (Loss) [Line Items]

Interest rate derivatives designated as cash flow hedges

As of June 30, 2020, we had the following outstanding derivatives that were designated and are expected to be effective as cash flow hedges of the interest payments and/or the currency exchange rate on the associated debt.



Instrument Type	Ownership	Notional Amount	Swap Rate	Credit Spread on Loan				Total Swapped Rate on Loan				Maturity Date
Consolidated Subsidiaries:
Receive variable (LIBOR) /pay-fixed swap ⁽¹⁾	100%	100,000	2.14%	1.55%			⁽¹⁾	3.69%			⁽¹⁾	February 2022
Receive variable (LIBOR) /pay-fixed swap ⁽¹⁾	100%	100,000	2.14%	1.55%			⁽¹⁾	3.69%			⁽¹⁾	February 2022
Receive variable (LIBOR) /pay-fixed swap ⁽¹⁾	100%	50,000	2.14%	1.55%			⁽¹⁾	3.69%			⁽¹⁾	February 2022
Receive variable (LIBOR) /pay-fixed swap ⁽¹⁾	100%	50,000	2.14%	1.55%	/	1.38%	⁽¹⁾	3.69%	/	3.51%	⁽¹⁾	February 2022
Receive variable (LIBOR) /pay-fixed swap ⁽²⁾	100%	125,000	3.02%	1.60%			⁽²⁾	4.62%			⁽²⁾	March 2023
Receive variable (LIBOR) /pay-fixed swap ⁽²⁾	100%	75,000	3.02%	1.60%			⁽²⁾	4.62%			⁽²⁾	March 2023
Receive variable (LIBOR) /pay-fixed swap ⁽²⁾	100%	50,000	3.02%	1.60%			⁽²⁾	4.62%			⁽²⁾	March 2023
Receive variable (LIBOR) /pay-fixed swap ⁽³⁾	100%	12,000	2.09%	1.40%				3.49%				March 2024
UJVs:
Receive variable (LIBOR) /pay-fixed swap⁽⁴⁾	50.1%	156,734	1.83%	1.75%				3.58%				December 2021
Receive variable (LIBOR) USD/pay-fixed Korean Won (KRW) cross-currency interest rate swap ⁽⁵⁾	17.15%	52,065 USD / 60,500,000 KRW	1.52%	1.60%				3.12%				September 2020

(1)

The hedged forecasted transaction for each of these swaps is the first previously unhedged one-month LIBOR-indexed interest payment accrued and made each month on a debt principal amount equal to the swap notional amount, regardless of the specific debt agreement from which they may flow. We are currently using these swaps to manage interest rate risk on the $275 million unsecured term loan and $25 million on the $1.1 billion primary unsecured revolving line of credit. The credit spread on these loans can vary within a range of 1.15% to 1.80% on the $275 million unsecured term loan and 1.05% to 1.60% on the $1.1 billion unsecured revolving line of credit, depending on our total leverage ratio at the measurement date, resulting in an effective rate in the range of 3.29% to 3.94% on the $275 million unsecured term loan and 3.19% to 3.74% on $25 million of the $1.1 billion primary unsecured revolving line of credit during the remaining swap period.

(2)

The hedged forecasted transaction for each of these swaps is the first previously unhedged one-month LIBOR-indexed interest payment accrued and made each month on a debt principal amount equal to the swap notional amount, regardless of the specific debt agreement from which they may flow beginning with the March 2019 effective date of these swaps. We are currently using these swaps to manage interest rate risk on the $250 million unsecured term loan. The credit spread on this loan can vary within a range of 1.25% to 1.90%, depending on our total leverage ratio at the measurement date, resulting in an effective rate in the range of 4.27% to 4.92% during the swap period.


(3)	The notional amount on this swap is equal to the outstanding principal balance of the floating rate loan on the U.S. headquarters building.


(4)	The notional amount on this swap is equal to the outstanding principal balance of the floating rate loan on International Plaza.

(5)

The notional amount on this swap is equal to the outstanding principal balance of the U.S. dollar construction loan for Starfield Hanam. There is a cross-currency interest rate swap to fix the interest rate on the loan and swap the related principal and interest payments from U.S. dollars to KRW in order to reduce the impact of fluctuations in interest rates and exchange rates on the cash flows of the joint venture. The currency swap exchange rate is 1,162.0.

Effect of derivative instruments on the Consolidated Statement of Operations and Comprehensive Income

The following tables present the effect of derivative instruments on our Consolidated Statement of Operations and Comprehensive Income (Loss) for the three and six months ended June 30, 2020 and 2019. The tables include the amount of gains or losses on outstanding derivative instruments recognized in OCI in cash flow hedging relationships and the location and amount of gains or losses reclassified from AOCI into income resulting from outstanding derivative instruments.



	Amount of Gain or (Loss) Recognized in OCI on Derivative					Location of Gain or (Loss) Reclassified from AOCI into Income	Amount of Gain or (Loss) Reclassified from AOCI into Income
	Three Months Ended June 30						Three Months Ended June 30
	2020		2019				2020			2019
Derivatives in cash flow hedging relationships:
Interest rate contracts – consolidated subsidiaries	$	922	$	(8,808	)	Interest Expense	$	(2,869	)	$	(72	)
Interest rate contracts – UJVs	124		(1,075		)	Equity in Income (Loss) of UJVs	(263		)	132
Cross-currency interest rate contract – UJV	48		(73		)	Equity in Income (Loss) of UJVs	(154		)	363
Total derivatives in cash flow hedging relationships	$	1,094	$	(9,956	)		$	(3,286	)	$	423



	Amount of Gain or (Loss) Recognized in OCI on Derivative						Location of Gain or (Loss) Reclassified from AOCI into Income	Amount of Gain or (Loss) Reclassified from AOCI into Income
	Six Months Ended June 30							Six Months Ended June 30
	2020			2019				2020			2019
Derivatives in cash flow hedging relationships:
Interest rate contracts – consolidated subsidiaries	$	(14,623	)	$	(14,524	)	Interest Expense	$	(4,080	)	$	766
Interest rate contracts – UJVs	(1,440		)	(1,700		)	Equity in Income (Loss) of UJVs	(294		)	269
Cross-currency interest rate contract – UJV	6			(43		)	Equity in Income (Loss) of UJVs	320			811
Total derivatives in cash flow hedging relationships	$	(16,057	)	$	(16,267	)		$	(4,054	)	$	1,846

Location and fair value of derivative instruments as reported in the Consolidated Balance Sheet

The following table presents the location and fair value of our derivative financial instruments as reported on our Consolidated Balance Sheet as of June 30, 2020 and December 31, 2019.



		Fair Value
	Consolidated Balance Sheet Location	June 30, 2020			December 31, 2019
Derivatives designated as hedging instruments:
Asset derivatives:
Cross-currency interest rate contract - UJV	Investment in UJVs	$	258
Total assets designated as hedging instruments		$	258		$	—

Liability derivatives:
Interest rate contracts – consolidated subsidiaries	Accounts Payable and Accrued Liabilities	$	(30,043	)	$	(15,419	)
Interest rate contract – UJV	Investment in UJVs	(1,852		)	(412		)
Cross-currency interest rate contract – UJV	Investment in UJVs				(91		)
Total liabilities designated as hedging instruments		$	(31,895	)	$	(15,922	)

- Definition

Tabular disclosure of pertinent information about a derivative or group of derivatives on a disaggregated basis, such as for individual instruments, or small groups of similar instruments. May include a combination of the type of instrument, risks being hedged, notional amount, hedge designation, related hedged item, inception date, maturity date, or other relevant item.

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