Derivatives

6 Months Ended

Jun. 30, 2020

Derivative Instruments and Hedging Activities Disclosure [Abstract]

The Company enters into derivatives in order to hedge interest rate risk. The Company had four interest rate swaps with aggregate notional amounts of $539.5 million as of June 30, 2020 and December 31, 2019. These derivatives were designated as effective cash flow hedges for accounting purposes.

The Company has agreements with its derivative counterparties that contain a provision where the Company could be declared in default on its derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to the Company’s default on the indebtedness.

The Company’s derivatives are classified as Level 2 and their fair values are derived from estimated values obtained from observable market data for similar instruments.

The fair market value of derivatives is presented on a gross basis on the Consolidated Balance Sheets. The following table summarizes the Company’s derivative instruments as of June 30, 2020 and December 31, 2019:


						Interest Rate Range⁽¹⁾				Fair Value (Liabilities) Assets
Underlying Debt Instrument	Number of Hedges	Notional Amount		Effective Date	Maturity Date	Low	High	June 30, 2020		December 31, 2019
Met Park North	1	$	64,500	August 2013	August 2020	3.71%	3.71%	$	(118)	$	(195)
Term loan B	2	350,000		April 2015	April 2022	2.96%	3.46%	(9,867)		(1,596)
Term loan D	1	125,000		June 2016	November 2022	2.63%	3.13%	(3,725)		479
TOTAL	4	$	539,500					$	(13,710)	$	(1,312)

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1.The rate is based on the fixed rate from the interest rate swap and the spread based on the operating partnership’s leverage ratio.

The Company reclassifies into earnings in the same period during which the hedged forecasted transaction affects earnings. As of June 30, 2020, the Company expects $7.3 million of unrealized loss included in accumulated other comprehensive income will be reclassified as an increase to interest expense in the next 12 months.