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DERIVATIVE INSTRUMENTS, HEDGING ACTIVITIES AND OTHER COMPREHENSIVE INCOME | 12 Months Ended
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Dec. 31, 2021
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
DERIVATIVE INSTRUMENTS, HEDGING ACTIVITIES AND OTHER COMPREHENSIVE INCOME | DERIVATIVE INSTRUMENTS, HEDGING ACTIVITIES AND OTHER COMPREHENSIVE INCOME In order to manage potential future variable interest rate risk, we enter into interest rate derivative agreements from time to time. We do not use interest rate derivative agreements for trading or speculative purposes. The agreements with each of our derivative counterparties provide that, in the event of default on any of our indebtedness, we could also be declared in default on our derivative obligations. As of December 31, 2021, we were party to various cash flow derivative agreements with notional amounts totaling $720.0 million, which includes $470.0 million of interest rate swaps assumed in connection with the Merger. These derivative agreements effectively fix the interest rate underlying certain variable rate debt instruments over expiration dates through 2026. Using a weighted average interest rate spread over LIBOR on all variable rate debt resulted in fixing the weighted average interest rate at 3.72%. In April 2021, we entered into two fair value derivative agreements with notional amounts totaling $155.0 million that swap a blended fixed rate of 4.52% for a blended floating rate of LIBOR plus 3.70% with an expiration date of September 10, 2025. In December 2021, we entered into two forward-starting interest rate swap contracts with notional amounts totaling $150.0 million that swap a floating rate of compound Secured Overnight Financing Rate (“SOFR”) for a fixed rate of 1.356% with an effective date of June 1, 2022 and an expiration date of June 1, 2032. As of December 31, 2021, the estimated fair value of the forward-starting swaps represented an asset of $0.3 million and is reflected within “Prepaid and other assets” in the accompanying consolidated balance sheets. These interest rate derivative agreements are the only assets or liabilities that we record at fair value on a recurring basis. The valuation of these assets and liabilities is determined using widely accepted techniques including discounted cash flow analysis. These techniques consider the contractual terms of the derivatives (including the period to maturity) and use observable market-based inputs such as interest rate curves and implied volatilities. We also incorporate credit valuation adjustments into the fair value measurements to reflect nonperformance risk on both our part and that of the respective counterparties. We determined that the majority of the inputs used to value our derivatives fall within Level 2 of the fair value hierarchy, although the credit valuation adjustments associated with our derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by us and our counterparties. As of December 31, 2021 and 2020, we assessed the significance of the impact of the credit valuation adjustments on the overall valuation of our derivative positions and determined the credit valuation adjustments were not significant to the overall valuation of our derivatives. As a result, we determined our derivative valuations were classified within Level 2 of the fair value hierarchy. As of December 31, 2021 and 2020, the estimated fair value of our interest rate derivatives represented a liability of $35.7 million and $32.1 million, respectively, including accrued interest of $1.0 million and $0.4 million, respectively. These balances are reflected within “Accounts payable and accrued expenses” on the accompanying consolidated balance sheets. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to earnings over time as the hedged items are recognized in earnings. Approximately $7.7 million and $4.0 million was reclassified as a reduction to earnings during the years ended December 31, 2021 and 2020, respectively. Approximately $0.6 million was reclassified as an increase to earnings during the year ended December 31, 2019. As interest payments on our derivatives are made over the next 12 months, we estimate the increase to interest expense to be $8.3 million, assuming the current LIBOR curve. Unrealized gains and losses on our interest rate derivative agreements are the only components of the change in accumulated other comprehensive loss.

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI http://asc.fasb.org/topic&trid=2229140 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 40 -Section 50 -Paragraph 5 -Subparagraph (f) -URI http://asc.fasb.org/extlink&oid=123477628&loc=d3e90205-114008 + Details
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