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Derivative Instruments and Hedging Activities
 6 Months Ended
Jun. 30, 2019
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Instruments and Hedging Activities Derivative Instruments and Hedging Activities
Cash Flow Hedges of Interest Rate Risk
Our objective in utilizing interest rate derivatives is to add stability to our interest expense and to manage our exposure to interest rate movements. We do not enter into derivatives for speculative purposes. In connection with our $200.0 million senior unsecured term loan (the “Term Loan”), which has an interest rate of LIBOR plus 1.20% to 1.90% per annum, we entered into a three-year LIBOR Swap Agreement (the "Swap") allowing us to trade the variable interest rate on the Term Loan for a fixed interest rate. The Swap has a notional amount of $200.0 million of outstanding principal with an underlying LIBOR of 1.85% per annum and matures on November 1, 2020. Based on the leverage as of June 30, 2019, our spread over LIBOR was 1.20% resulting in an estimated all-in interest rate of 3.05% per annum.
Our derivative financial instrument is classified as Level 2 in the fair value hierarchy. The following table presents the fair value of our derivative financial instrument:
 
 
 
 
As of June 30,
 
As of December 31,
(amounts in thousands)
 
Balance Sheet Location
 
2019
 
2018
Interest Rate Swap
 
Other assets, net
 
$
—

 
$
2,299

Interest Rate Swap
 
Accounts payable and other liabilities
 
$
242

 
$
—



The following table presents the effect of our derivative financial instrument on the Consolidated Statements of Income and Comprehensive Income:
Derivatives in Cash Flow Hedging Relationship
 
Amount of (gain)/loss recognized
in OCI on derivative
for the six months ended June 30,
 
Location of (gain)/ loss reclassified from
accumulated OCI into income
 
Amount of (gain)/loss reclassified from
accumulated OCI into income
for the six months ended June 30,
(amounts in thousands)
 
2019
 
2018
 
(amounts in thousands)
 
2019
 
2018
Interest Rate Swap
 
$
1,901

 
$
(2,544
)
 
Interest Expense
 
$
(640
)
 
$
93


During the next twelve months through June 30, 2020, we estimate no material changes to interest expense. This estimate may be subject to change as the underlying LIBOR changes. We determined that no adjustment was necessary for non-performance risk on our derivative obligation. As of June 30, 2019, we did not post any collateral related to this agreement.