XML 27 R13.htm IDEA: XBRL DOCUMENT
v3.8.0.1

Financial Instruments and Fair Values | 12 Months Ended
--- | ---
Dec. 31, 2017
Fair Value Disclosures [Abstract] |
Financial Instruments and Fair Values | Financial Instruments and Fair Values Derivative Financial Instruments We use derivative financial instruments primarily to manage interest rate risk and such derivatives are not considered speculative. These derivative instruments are typically in the form of interest rate swap and forward agreements and the primary objective is to minimize interest rate risks associated with investing and financing activities. The counterparties of these arrangements are major financial institutions with which we may also have other financial relationships. We are exposed to credit risk in the event of non-performance by these counterparties; however, we currently do not anticipate that any of the counterparties will fail to meet their obligations. We have agreements with our derivative counterparties that contain a provision where if we either default or are capable of being declared in default on any of our indebtedness, then we could also be declared in default on our derivative obligations. As of December 31, 2017, the fair value of derivatives in a net liability position, which includes accrued interest but excludes any adjustment for nonperformance risk, related to these agreements was $0.5 million. If we had breached any of these provisions at December 31, 2017, we could have been required to settle our obligations under the agreements at their termination value of $0.5 million. As of December 31, 2017 and 2016, we had interest rate LIBOR swaps with an aggregate notional value of $265.0 million and $890.0 million, respectively. The notional value does not represent exposure to credit, interest rate or market risks. As of December 31, 2017, the fair value of this derivative instruments amounted to ($0.4 million) which is included in accounts payable and accrued expenses on the consolidated balance sheet. As of December 31, 2016, the fair value of these derivative instruments amounted to $0.6 million which is included in prepaid expenses and other assets and ($5.6 million) which is included in accounts payable and accrued expenses on the consolidated balance sheet. These interest rate swaps have been designated as cash flow hedges and hedge the future cash outflows on our mortgage debt and also on our term loan facility that is subject to a floating interest rate. As of December 31, 2017 and 2016, these cash flow hedges are deemed highly effective and a net unrealized loss of $10.5 million and $3.1 million, respectively, is reflected in the consolidated statements of comprehensive income (loss). Amounts reported in accumulated other comprehensive income (loss) related to derivatives will be reclassified to interest expense as interest payments are made on these debt. We estimate that $1.0 million of the current balance held in accumulated other comprehensive loss will be reclassified into interest expense within the next 12 months relating to the interest rate swap contract in effect as of December 31, 2017. The table below summarizes the terms of agreements and the fair values of our derivative financial instruments as of December 31, 2017 and 2016 (dollar amounts in thousands):
|  |  |  | December 31, 2017 |  | December 31, 2016
Derivative |  | Notional Amount | Receive Rate | Pay Rate | Effective Date | Expiration Date |  | Asset | Liability |  | Asset | Liability
Interest rate swap |  | $ | 265,000 |  | 1 Month LIBOR | 2.1485 | % | August 31, 2017 | August 24, 2022 |  | $ | — |  | $ | (436 | ) |  | $ | — |  | $ | (1,634 | )
Interest rate swap (1) |  | 100,000 |  | 3 Month LIBOR | 2.5050 | % | July 5, 2017 | July 5, 2027 |  | — |  | — |  |  | — |  | (684 | )
Interest rate swap (1) (2) |  | 80,000 |  | 3 Month LIBOR | 2.5050 | % | July 5, 2017 | July 5, 2027 |  | — |  | — |  |  | — |  | (685 | )
Interest rate swap (1) |  | 100,000 |  | 3 Month LIBOR | 2.4860 | % | January 5, 2018 | January 5, 2028 |  | — |  | — |  |  | 224 |  | — |
Interest rate swap (1) |  | 100,000 |  | 3 Month LIBOR | 2.4860 | % | January 5, 2018 | January 5, 2028 |  | — |  | — |  |  | 223 |  | — |
Interest rate swap (1) |  | 75,000 |  | 3 Month LIBOR | 2.4860 | % | January 5, 2018 | January 5, 2028 |  | — |  | — |  |  | 167 |  | — |
Interest rate swap (1) |  | 75,000 |  | 3 Month LIBOR | 2.7620 | % | June 1, 2018 | June 1, 2028 |  | — |  | — |  |  | — |  | (1,295 | )
Interest rate swap (1) |  | 75,000 |  | 3 Month LIBOR | 2.7620 | % | June 1, 2018 | June 1, 2028 |  | — |  | — |  |  | — |  | (1,293 | )
|  |  |  |  |  |  |  | $ | — |  | $ | (436 | ) |  | $ | 614 |  | $ | (5,591 | )
(1) | During 2017, these swaps were terminated in connection with the refinancing of several of our mortgage debt (see Note 4 Debt). As of December 31, 2017, the deferred net losses from these terminated hedges amounted to $15.1 million which is included in accumulated other comprehensive loss relating to net unrealized loss from derivative financial instruments. We will reclassify into earnings, as an increase to interest expense, approximately $1.5 million per year over the 10-year terms of the related debt due 2027, from the balance that is included in accumulated other comprehensive income on the consolidated balance sheets.
(2) | During March 2017, $20.0 million of an original notional amount of $100.0 million was terminated. In connection with the partial termination and re-designation of the related cash flow hedges, $0.3 million is recognized as a loss from derivative financial instruments and included in Other Expenses on the consolidated statement of income for the year ended December 31, 2017. There were no losses from derivative financial instruments for the years ended December 31, 2016 and 2015.
The table below shows the effect of our derivative financial instruments designated as cash flow hedges on accumulated other comprehensive income (loss) for the years ended December 31, 2017, 2016 and 2015 (amounts in thousands):
Effects of Cash Flow Hedges |  | December 31, 2017 |  | December 31, 2016 |  |  | December 31, 2015 |
Amount of gain (loss) recognized in other comprehensive income (loss) |  | $ | (11,658 | ) |  | $ | (3,054 | ) |  | $ | (1,922 | )
Amount of gain (loss) reclassified from accumulated other comprehensive income (loss) into interest expense |  | (1,142 | ) |  | — |  |  | — |
The table below shows the effect of our derivative financial instruments designated as cash flow hedges on the consolidated statements of income for the years ended December 31, 2017, 2016 and 2015 (amounts in thousands):
Effects of Cash Flow Hedges |  | December 31, 2017 |  | December 31, 2016 |  | December 31, 2015
Total interest (expense) presented on the consolidated statements of income in which the effects of cash flow hedges are recorded |  | $ | (68,473 | ) |  | $ | (70,595 | ) |  | $ | (65,743 | )
Amount of gain (loss) reclassified from accumulated other comprehensive income (loss) into interest expense |  | (1,142 | ) |  | — |  |  | — |
Fair Valuation The estimated fair values at December 31, 2017 and 2016 were determined by management, using available market information and appropriate valuation methodologies. Considerable judgment is necessary to interpret market data and develop estimated fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts we could realize on disposition of the financial instruments. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. The following tables summarize the carrying and estimated fair values of our financial instruments as of December 31, 2017 and 2016 (amounts in thousands):
|  | December 31, 2017
|  | Carrying Value |  | Estimated Fair Value
|  |  | Total |  | Level 1 |  | Level 2 |  | Level 3
Interest rate swaps included in prepaid expenses and other assets |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Interest rate swaps included in accounts payable and accrued expenses |  | 436 |  |  | 436 |  |  | — |  |  | 436 |  |  | — |
Mortgage notes payable |  | 717,164 |  |  | 707,300 |  |  | — |  |  | — |  |  | 707,300 |
Senior unsecured notes - Exchangeable |  | 244,739 |  |  | 275,723 |  |  | — |  |  | 275,723 |  |  | — |
Senior unsecured notes - Series A, B, C, D, E and F |  | 463,156 |  |  | 460,352 |  |  | — |  |  | — |  |  | 460,352 |
Unsecured term loan facility |  | 263,662 |  |  | 265,000 |  |  | — |  |  | — |  |  | 265,000 |
|  | December 31, 2016
|  | Carrying Value |  | Estimated Fair Value
|  |  | Total |  | Level 1 |  | Level 2 |  | Level 3
Interest rate swaps included in prepaid expenses and other assets |  | $ | 614 |  |  | $ | 614 |  |  | $ | — |  |  | $ | 614 |  |  | $ | — |
Interest rate swaps included in accounts payable and accrued expenses |  | 5,591 |  |  | 5,591 |  |  | — |  |  | 5,591 |  |  | — |
Mortgage notes payable |  | 759,016 |  |  | 755,640 |  |  | — |  |  | — |  |  | 755,640 |
Senior unsecured notes - Exchangeable |  | 241,474 |  |  | 282,435 |  |  | — |  |  | 282,435 |  |  | — |
Senior unsecured notes - Series A, B, and C |  | 348,914 |  |  | 339,274 |  |  | — |  |  | — |  |  | 339,274 |
Unsecured term loan facility |  | 262,927 |  |  | 265,000 |  |  | — |  |  | — |  |  | 265,000 |
Disclosure about the fair value of financial instruments is based on pertinent information available to us as of December 31, 2017 and 2016. Although we are not aware of any factors that would significantly affect the reasonable fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since that date and current estimates of fair value may differ significantly from the amounts presented herein.

X
- References No definition available. + Details
Name: | us-gaap_FairValueDisclosuresAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -URI http://asc.fasb.org/topic&trid=2155941 + Details
Name: | us-gaap_FairValueDisclosuresTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration