XML 27 R15.htm IDEA: XBRL DOCUMENT
v3.22.4

Financial Instruments and Fair Values | 12 Months Ended
--- | ---
Dec. 31, 2022
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, 2022, we did not have any derivatives in a net liability position. In May 2022, we entered into forward interest rate swaps with an aggregate notional value of $390.0 million that became effective in August 2022 and fixed the interest rate on 100% of our term loans. This replaced the $265.0 million swap which had fixed the interest rate on a portion of our outstanding term loans balance. As of December 31, 2022 and 2021, we had interest rate LIBOR swaps and caps with an aggregate notional value of $574.8 million and $451.3 million, respectively. The notional value does not represent exposure to credit, interest rate or market risks. As of December 31, 2022 and 2021, the fair value of our derivative instruments amounted to $17.9 million, which is included in prepaid expenses and other assets and ($25.3 million), which is included in accounts payable and accrued expenses on the consolidated balance sheets. These interest rate swaps have been designated as cash flow hedges and hedge the variability in future cash flows associated with our existing variable-rate term loan facilities. Interest rate caps not designated as hedges are not speculative and are used to manage our exposure to interest rate movements, but do not meet the strict hedge accounting requirements. As of December 31, 2022 and 2021, our cash flow hedges are deemed highly effective and for the years ended December 31, 2022 and 2021, net unrealized gains of $47.3 million and $12.0 million, respectively, are reflected in the consolidated statements of comprehensive income (loss) relating to both active and terminated cash flow hedges of interest rate risk. Amounts reported in accumulated other comprehensive income (loss) related to derivatives will be reclassified to interest expense as interest payments are made on the debt. We estimate that $6.3 million net gain of the current balance held in accumulated other comprehensive loss will be reclassified into interest expense within the next 12 months. The table below summarizes the terms of agreement and the fair value of our derivative financial instruments as of December 31, 2022 and 2021 (dollar amounts in thousands):
|  |  |  | December 31, 2022 |  | December 31, 2021
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 |  | $ | — |  | $ | — |  |  | $ | — |  | $ | (3,184) |
Interest rate swap |  | 36,820 |  | 70% of 1 Month LIBOR | 2.5000 | % | December 1, 2021 | November 1, 2030 |  | 256 |  | — |  |  | — |  | (4,527) |
Interest rate swap |  | 103,790 |  | 70%of 1 Month LIBOR | 2.5000 | % | December 1, 2021 | November 1, 2033 |  | 365 |  | — |  |  | — |  | (15,945) |
Interest rate swap |  | 10,710 |  | 70% of 1 Month LIBOR | 1.7570 | % | December 1, 2021 | November 1, 2033 |  | 643 |  | — |  |  | — |  | (754) |
Interest rate swap |  | 17,544 |  | 1 Month LIBOR | 2.2540 | % | December 1, 2021 | November 1, 2030 |  | 1,070 |  | — |  |  | — |  | (898) |
Interest rate cap |  | 6,780 |  | 70% of 1 Month LIBOR | 4.5000 | % | December 1, 2021 | October 1, 2024 |  | 8 |  | — |  |  | 5 |  | — |
Interest rate cap |  | 9,188 |  | 1 Month LIBOR | 5.5000 | % | December 1, 2021 | October 1, 2024 |  | 26 |  | — |  |  | 8 |  | — |
Interest rate swap |  | 175,000 |  | SOFR Compound | 2.5620 | % | August 31, 2022 | December 31, 2026 |  | 8,040 |  | — |  |  | — |  | — |
Interest rate swap |  | 107,500 |  | SOFR Compound | 2.6260 | % | August 19, 2022 | March 19, 2025 |  | 3,766 |  | — |  |  | — |  | — |
Interest rate swap |  | 107,500 |  | SOFR OIS Compound | 2.6280 | % | August 19, 2022 | March 19, 2025 |  | 3,762 |  | — |  |  | — |  | — |
|  |  |  |  |  |  |  | $ | 17,936 |  | $ | — |  |  | $ | 13 |  | $ | (25,308) |
During the year ended December 31, 2020, we terminated a $125.0 million swap and paid a settlement fee of $20.3 million. 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, 2022, 2021 and 2020 (amounts in thousands):
Effects of Cash Flow Hedges |  | December 31, 2022 |  | December 31, 2021 |  | December 31, 2020
Amount of gain (loss) recognized in other comprehensive income (loss) |  | $ | 40,044 |  |  | $ | 348 |  |  | $ | (19,322) |
Amount of loss reclassified from accumulated other comprehensive income (loss) into interest expense |  | (7,230) |  |  | (11,653) |  |  | (8,870) |
The table below shows the effect of our derivative financial instruments designated as cash flow hedges on the consolidated statements of operations for the years ended December 31, 2022, 2021 and 2020 (amounts in thousands):
Effects of Cash Flow Hedges |  | December 31, 2022 |  | December 31, 2021 |  | December 31, 2020
Total interest expense presented on the consolidated statements of income in which the effects of cash flow hedges are recorded |  | $ | (101,206) |  |  | $ | (94,394) |  |  | $ | (89,907) |
Amount of loss reclassified from accumulated other comprehensive income (loss) into interest expense |  | (7,230) |  |  | (11,653) |  |  | (8,870) |
Fair Valuation The estimated fair values at December 31, 2022 and 2021 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, 2022 and 2021 (amounts in thousands):
|  | December 31, 2022
|  | Carrying Value |  | Estimated Fair Value
|  |  | Total |  | Level 1 |  | Level 2 |  | Level 3
Interest rate swaps included in prepaid expenses and other assets |  | 17,936 |  |  | 17,936 |  |  | — |  |  | 17,936 |  |  | — |
Mortgage notes payable |  | 883,705 |  |  | 783,648 |  |  | — |  |  | — |  |  | 783,648 |
Senior unsecured notes - Series A, B, C, D, E, F, G and H |  | 973,659 |  |  | 865,292 |  |  | — |  |  | — |  |  | 865,292 |
Unsecured term loan facilities |  | 388,773 |  |  | 390,000 |  |  | — |  |  | — |  |  | 390,000 |
|  | December 31, 2021
|  | Carrying Value |  | Estimated Fair Value
|  |  | Total |  | Level 1 |  | Level 2 |  | Level 3
Interest rate swaps included in accounts payable and accrued expenses |  | 25,308 |  |  | 25,308 |  |  | — |  |  | 25,308 |  |  | — |
Mortgage notes payable |  | 948,769 |  |  | 960,933 |  |  | — |  |  | — |  |  | 960,933 |
Senior unsecured notes - Series A, B, C, D, E and F |  | 973,373 |  |  | 994,389 |  |  | — |  |  | — |  |  | 994,389 |
Unsecured term loan facility |  | 388,223 |  |  | 390,000 |  |  | — |  |  | — |  |  | 390,000 |
Disclosure about the fair value of financial instruments is based on pertinent information available to us as of December 31, 2022 and 2021. 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/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI https://asc.fasb.org/extlink&oid=126976982&loc=d3e19207-110258 + Details
Name: | us-gaap_FairValueDisclosuresTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration