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Derivative Instruments and Hedging Activities
 12 Months Ended
Dec. 31, 2024
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Instruments and Hedging Activities Disclosure
8. Derivative Instruments and Hedging Activities
BPLP’s agreements with derivative counterparties contain provisions whereby if BPLP defaults on the underlying indebtedness, including defaults where repayment of the indebtedness has not been accelerated by the lender, then BPLP could also be declared in default of the swap derivative obligation. As of December 31, 2024, the Company had not posted any collateral related to the agreements.
Effective Hedge Instruments
BPLP assesses the effectiveness of its derivatives both at inception and on an ongoing basis. If the hedges are deemed to be effective, the fair value is recorded in “Accumulated other comprehensive loss” in the Company’s Consolidated Balance Sheets and is subsequently reclassified into “Interest expense” in the Company’s Consolidated Statements of Operations in the period that the hedged forecasted transactions affect earnings. BPLP’s derivative financial instruments are cash flow hedges that are designated as effective hedges, and they are carried at their estimated fair value on a recurring basis (See Note 2). The Company did not incur ineffectiveness during the years ended December 31, 2024 and 2023.
BPLP’s and SMBP LLC’s derivative contracts consisted of the following at December 31, 2024 (dollars in thousands):
Derivative InstrumentAggregate Notional Amount Strike Rate RangeBalance Sheet Location
Effective Date Maturity DateLow High Fair Value
BPLP:
Interest Rate Swaps$600,000 December 15, 2023October 26, 20283.790 %—3.798 %Prepaid expenses and other assets$4,042 
Interest Rate Swaps100,000 September 27, 2024April 1, 20252.688 %—2.688 %Prepaid expenses and other assets401 
700,000 4,443 
SMBP LLC (1)
Interest Rate Swaps200,000 December 14, 2023April 1, 20252.661 %—2.688 %Prepaid expenses and other assets809 
$900,000 $5,252 
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(1)A consolidated subsidiary of the Company that is the borrower under the mortgage loan collateralized by its Santa Monica Business Park property.
The following table presents the location in the financial statements of the gains or (losses) recognized as a result of the Company’s cash flow hedges for the years ended December 31, 2024, 2023 and 2022 (in thousands):
Year ended December 31,
202420232022
Amount of gain (loss) related to the effective portion recognized in other comprehensive income (1)$9,202 $(14,405)$19,396 
Amount of gain (loss) related to the effective portion subsequently reclassified to earnings (2)$12,618 $6,703 $6,707 
Amount of gain (loss) related to the ineffective portion and amount excluded from effectiveness testing$— $— $— 
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(1)Includes the Company’s share of gain (loss) related to the effective portion of derivatives outstanding at its unconsolidated joint venture properties.
(2)Includes amounts from previous interest rate programs.
BPLP has formally documented all of its relationships between hedge instruments and hedging items, as well as its risk-management objectives and strategy for undertaking various hedge transactions. While management believes its judgments are reasonable, a change in a derivative's effectiveness as a hedge could materially affect expenses, net income (loss) and equity.
Ineffective Hedging Instruments
During the year ended December 31, 2023, to satisfy a lender requirement, the Company entered into two agreements with the same third-party to purchase and sell a $600.0 million interest rate cap. The Company did not elect hedge accounting, and as such, any change in market value will be recognized in Gain (losses) from interest rate contracts in the Consolidated Statement of Operations. For the year ended December 31, 2023, the Company recognized approximately $79,000 of loss on its Consolidated Statement of Operations from entering into these agreements. There was no ineffectiveness recognized for the year ended December 31, 2024.