Derivatives

The Company's use of derivative financial instruments has historically been limited to the utilization of interest rate swaps, interest rate caps and foreign exchange contracts. The principal objective of such financial instruments is to minimize the risks and/or costs associated with the Company's operating and financial structure and to manage its exposure to interest rates and foreign exchange rates. The Company may have derivatives that are not designated as hedges because they do not meet the strict hedge accounting requirements. Although not designated as hedges, such derivatives are entered into to manage the Company's exposure to interest rate movements, foreign exchange rate movements and other identified risks.

The table below presents the fair value of the Company's derivative financial instruments as well as their classification on the consolidated balance sheets as of September 30, 2018 ($ in thousands)⁽¹⁾:



	Derivative Assets			Derivative Liabilities
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Derivatives Designated in Hedging Relationships
Interest rate swaps	Other assets	$	10,303	Other liabilities	$	—
Total		$	10,303		$	—

_________________________________________________________

(1)

The Company did not directly own any derivative financial instruments as of December 31, 2017. On June 30, 2018, the Company consolidated the Net Lease Venture (refer to Note 7), including all derivative financial instruments of the venture. Over the next 12 months, the Company expects that $0.4 million related to cash flow hedges will be reclassified from "Accumulated other comprehensive income (loss)" as a reduction to interest expense. As of September 30, 2018, the Company would not have been required to post any additional collateral to settle these contracts had the Company been declared in default on its derivative obligations.

The tables below present the effect of the Company's derivative financial instruments, including the Company's share of derivative financial instruments at certain of its equity method investments, in the consolidated statements of operations and the consolidated statements of comprehensive income (loss) ($ in thousands):



Derivatives Designated in Hedging Relationships	Location of Gain (Loss) Recognized in Income	Amount of Gain (Loss) Recognized in Accumulated Other Comprehensive Income			Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Earnings
For the Three Months Ended September 30, 2018
Interest rate swaps	Earnings from equity method investments	$	1,197		$	44
Interest rate swaps	Interest expense	2,702			(144		)

For the Three Months Ended September 30, 2017
Interest rate swaps	Interest Expense	15			(16		)
Interest rate cap	Earnings from equity method investments	(2		)	(2		)
Interest rate swap	Earnings from equity method investments	(69		)	(38		)
Foreign exchange contracts	Earnings from equity method investments	(1		)	—

For the Nine Months Ended September 30, 2018
Interest rate swaps	Earnings from equity method investments	4,705			(47		)
Interest rate swaps	Interest expense	1,552			(144		)

For the Nine Months Ended September 30, 2017
Interest rate swaps	Interest Expense	439			339
Interest rate cap	Earnings from equity method investments	(16		)	(16		)
Interest rate swap	Earnings from equity method investments	(85		)	(188		)
Foreign exchange contracts	Earnings from equity method investments	(371		)	—



	Location of Gain (Loss) Recognized in Income	Amount of Gain (Loss) Recognized in Income
Derivatives not Designated in Hedging Relationships		For the Three Months Ended September 30,					For the Nine Months Ended September 30,
Derivatives not Designated in Hedging Relationships		2018		2017			2018		2017
Interest rate cap	Other Expense	$	—	$	—		$	—	$	6
Foreign exchange contracts	Other Expense	—		(199		)	—		(970		)

During the nine months ended September 30, 2017, the Company entered into and settled a rate lock swap in connection with the 2017 Secured Financing and a simultaneous rate lock swap with SAFE. As a result of the settlements, the Company initially recorded a $0.4 million unrealized gain in “Accumulated other comprehensive income” on the Company’s consolidated balance sheets and subsequently derecognized the gain when third parties acquired a controlling interest in the Company's Ground Lease business (refer to Note 4).