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Derivative Financial Instruments | 9 Months Ended
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Sep. 30, 2023
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative Financial Instruments |
6. | Derivative Financial Instruments
The Company may use derivative financial instruments, including interest rate swaps, caps, options, floors, and other interest rate derivative contracts, to hedge all or a portion of the interest rate risk associated with its borrowings. The principal objective of such arrangements is to minimize the risks and/or costs associated with the Company's operating and financial structure as well as to hedge specific anticipated transactions. The Company does not intend to utilize derivatives for speculative transactions or purposes other than mitigation of interest rate risk. The use of derivative financial instruments carries certain risks, including the risk that the counterparties to these contractual arrangements are not able to perform under the agreements. To mitigate this risk, the Company only enters into derivative financial instruments with counterparties with quality credit ratings. The Company does not anticipate that any of the counterparties will fail to meet their obligations. The Company's objectives in using interest rate derivatives are to attempt to stabilize interest expense where possible and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. The following table summarizes the terms and fair values of the Company's derivative financial instruments, as well as their classification on the Consolidated Balance Sheets:
|  |  |  |  |  |  |  |  |  |  | Fair Value |
(in thousands) |  |  |  |  |  |  |  |  |  |  | Assets (Liabilities) (1) |
Effective Date |  | Maturity Date |  | Notional Amount |  |  | Bank Pays Variable Rate of |  | Regency Pays Fixed Rate of |  | September 30, 2023 |  |  | December 31, 2022 |
12/1/22 |  | 3/17/25 |  |  | 24,000 |  |  | SOFR |  | 1.443% |  |  | 1,250 |  |  |  | 1,443 |
12/16/22 |  | 6/2/27 |  |  | 35,016 |  |  | SOFR |  | 2.261% |  |  | 2,485 |  |  |  | 2,158 |
1/17/23(2) |  | 8/15/24 |  |  | 13,134 |  |  | SOFR |  | 3.995% |  |  | 316 |  |  |  | - |
7/17/17(2) |  | 7/1/27 |  |  | 43,446 |  |  | SOFR |  | 1.498% |  |  | 4,341 |  |  |  | - |
9/21/16(2) |  | 10/1/26 |  |  | 8,856 |  |  | SOFR |  | 1.475% |  |  | 752 |  |  |  | - |
8/16/18(2) |  | 8/15/28 |  |  | 8,830 |  |  | SOFR |  | 4.830% |  |  | 505 |  |  |  | - |
3/18/19(2) |  | 4/1/29 |  |  | 23,193 |  |  | SOFR |  | 3.165% |  |  | 1,325 |  |  |  | - |
2/1/22(2) |  | 2/1/32 |  |  | 33,854 |  |  | SOFR |  | 3.053% |  |  | 6,508 |  |  |  | - |
1/3/23(2) |  | 7/1/29 |  |  | 11,008 |  |  | SOFR |  | 3.633% |  |  | 1,289 |  |  |  | - |
1/3/23(2) |  | 11/1/24 |  |  | 5,000 |  |  | SOFR |  | 3.705% |  |  | 163 |  |  |  | - |
2/24/23 |  | 12/31/26 |  |  | 15,390 |  |  | SOFR |  | 4.229% |  |  | 131 |  |  |  | 152 |
2/21/23 |  | 12/21/26 |  |  | 24,365 |  |  | SOFR |  | 1.684% |  |  | 2,061 |  |  |  | 1,939 |
9/19/23 |  | 9/19/28 |  |  | 31,000 |  |  | SOFR |  | 4.314% |  |  | 15 |  |  |  | 883 |
10/31/17(2) |  | 10/1/24 |  |  | 6,025 |  |  | SOFR |  | 2.334% |  |  | 187 |  |  |  | - |
|  |  |  |  |  |  |  |  |  |  | $ | 21,328 |  |  |  | 6,575 |
(1) Derivatives in an asset position are included within Other assets in the accompanying Consolidated Balance Sheets, while those in a liability position are included within Accounts payable and other liabilities. (2) Derivative instruments assumed as part of the UBP acquisitions. These derivative financial instruments are all interest rate swaps, which are designated and qualify as cash flow hedges. The Company does not use derivatives for trading or speculative purposes and, as of September 30, 2023, does not have any derivatives that are not designated as hedges. The changes in the fair value of derivatives designated and qualifying as cash flow hedges are recorded in Accumulated other comprehensive income ("AOCI") and subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. The following table represents the effect of the derivative financial instruments on the accompanying Consolidated Financial Statements:
Location and Amount of Gain (Loss) Recognized in OCI on Derivative |  |  | Location and Amount of Gain (Loss) Reclassified from AOCI into Income |  |  | Total amounts presented in the Consolidated Statements of Operations in which the effects of cash flow hedges are recorded |
|  | Three months ended September 30, |  |  |  |  | Three months ended September 30, |  |  |  |  | Three months ended September 30, |
(in thousands) |  | 2023 |  |  | 2022 |  |  |  |  | 2023 |  |  | 2022 |  |  |  |  | 2023 |  |  | 2022 |
Interest rate swaps |  | $ | 4,606 |  |  |  | 7,069 |  |  | Interest expense |  | $ | (2,161 | ) |  |  | 72 |  |  | Interest expense, net |  | $ | 38,807 |  |  |  | 36,361 |
|  | Nine months ended September 30, |  |  |  |  | Nine months ended September 30, |  |  |  |  | Nine months ended September 30, |
(in thousands) |  | 2023 |  |  | 2022 |  |  |  |  | 2023 |  |  | 2022 |  |  |  |  | 2023 |  |  | 2022 |
Interest rate swaps |  | $ | 7,327 |  |  |  | 20,473 |  |  | Interest expense |  | $ | (5,302 | ) |  |  | 1,563 |  |  | Interest expense, net |  | $ | 112,156 |  |  |  | 109,798 |
As of September 30, 2023, the Company expects approximately $7.8 million of accumulated comprehensive income on derivative instruments in AOCI, including the Company's share from its Investments in real estate partnerships, to be reclassified into earnings during the next 12 months.

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- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 40 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (f) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480237/815-40-50-5 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 5C -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480434/815-10-50-5C Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 815 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//815/tableOfContent + Details
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