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Derivative Instruments | 3 Months Ended
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Mar. 31, 2023
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative Instruments | DERIVATIVE INSTRUMENTS We have an interest rate swap arrangement with a notional amount of $100.0 million that had effectively fixed the remaining $100.0 million portion of the 2018 Term Loan prior to the prepayment. During the 2023 Quarter, we prepaid the 2018 Term Loan using proceeds from the $125.0 million 2023 Term Loan (see note 5). Subsequent to this transaction, the interest swap arrangement effectively fixes the interest rate on a $100.0 million portion of the 2023 Term Loan through the interest rate swap arrangement’s expiration date of July 21, 2023. In March 2023, we entered into two interest rate swap arrangements with an aggregate notional amount of $125.0 million that will effectively fix the interest of the 2023 Term Loan beginning on July 21, 2023 through the 2023 Term Loan’s maturity date of January 10, 2025. The interest rate swap arrangements are recorded at fair value in accordance with GAAP, based on discounted cash flow methodologies and observable inputs. We record the effective portion of changes in fair value of the cash flow hedges in Other comprehensive income (loss). We assess the effectiveness of a cash flow hedge both at inception and on an ongoing basis. If a cash flow hedge is no longer expected to be effective, hedge accounting is discontinued. Hedge ineffectiveness of our cash flow hedges is recorded in earnings. The fair values of the interest rate swaps as of March 31, 2023 and December 31, 2022, were as follows (in thousands):
|  |  |  | Fair Value
|  |  |  | Derivative Assets (Liabilities)
Derivative Instrument | Aggregate Notional Amount | Effective Date | Maturity Date | March 31, 2023 |  | December 31, 2022
Interest rate swap | $ | 100,000 |  | March 31, 2017 | July 21, 2023 | $ | 1,148 |  |  | $ | 1,998 |
Interest rate swap | 75,000 |  | July 21, 2023 | January 10, 2025 | 310 |  |  | — |
Interest rate swap | 50,000 |  | July 21, 2023 | January 10, 2025 | 207 |  |  | — |
|  |  |  | $ | 1,665 |  |  | $ | 1,998 |
We record interest rate swaps on our consolidated balance sheets within Prepaid expenses and other assets when in a net asset position and within Accounts payable and other liabilities when in a net liability position. The net unrealized gains or losses on the effective swaps were recognized in Other comprehensive income (loss), as follows (in thousands):
|  |  | Three Months Ended March 31,
|  |  |  |  | 2023 |  | 2022
Unrealized (loss) gain on interest rate hedges |  |  |  |  | $ | (333) |  |  | $ | 1,925 |
Amounts reported in Accumulated other comprehensive loss related to effective cash flow hedges will be reclassified to interest expense as interest payments are made on our variable-rate debt. The gains or losses reclassified from Accumulated other comprehensive loss into interest expense for the three months ended March 31, 2023 and 2022, were as follows (in thousands):
|  |  | Three Months Ended March 31,
|  |  |  |  | 2023 |  | 2022
Loss reclassified from accumulated other comprehensive loss into interest expense |  |  |  |  | $ | 510 |  |  | $ | 510 |
During the next twelve months, we estimate that an additional $1.8 million will be reclassified as a decrease to interest expense. We have agreements with each of our derivative counterparties that contain a provision whereby we could be declared in default on our derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to our default on the indebtedness. As of March 31, 2023, the fair value of derivative assets, including accrued interest, was $1.7 million and we did not have any derivatives in a liability position. As of March 31, 2023, we have not posted any collateral related to these agreements. Derivative instruments expose us to credit risk in the event of non-performance by the counterparty under the terms of the interest rate hedge agreements. We believe that we minimize our credit risk on these transactions by dealing with major, creditworthy financial institutions. We monitor the credit ratings of counterparties and our exposure to any single entity, thus minimizing our credit risk concentration.

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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 https://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 https://asc.fasb.org/extlink&oid=126731327&loc=d3e90205-114008 + Details
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