|
12. Financial Instruments: Derivatives and Hedging
The Company employs interest rate swaps and caps to hedge against interest rate fluctuations. Unrealized gains and losses are reported in other comprehensive loss with no effect recognized in earnings as long as the characteristics of the swap and the hedged item are closely matched. The ineffective portion of all hedges is recognized in earnings in the current period. As of both June 30, 2011 and December 31, 2010, approximately 21.9% of the Company’s borrowings were subject to variable rates, after taking into consideration the effect of interest rate swaps and caps.
As of June 30, 2011 and December 31, 2010, the Company has entered into the following interest rate swaps and caps (in thousands):
|
|
|
Notional value at |
|
Hedge |
|
|
|
Fair value at |
|
|
Hedge type |
|
June 30, 2011 |
|
December 31, 2010 |
|
interest rate |
|
Maturity |
|
June 30, 2011 |
|
December 31, 2010 |
|
|
Swap-cash flow |
|
$ |
— |
|
$ |
28,269 |
|
3.09 |
% |
1/22/2011 |
|
$ |
— |
|
$ |
(120 |
) |
|
Swap-cash flow |
|
— |
|
8,732 |
|
3.45 |
% |
4/30/2011 |
|
— |
|
(114 |
) |
|
Interest rate cap |
|
— |
|
73,168 |
|
5.00 |
% |
6/9/2011 |
|
— |
|
— |
|
|
Interest rate cap |
|
— |
(1) |
60,000 |
|
5.00 |
% |
7/15/2011 |
|
— |
|
— |
|
|
Interest rate cap |
|
16,000 |
|
16,000 |
|
5.00 |
% |
7/15/2011 |
|
— |
|
— |
|
|
Interest rate cap |
|
16,000 |
|
16,000 |
|
5.00 |
% |
7/15/2011 |
|
— |
|
— |
|
|
Swap-cash flow |
|
— |
(1) |
11,418 |
|
3.33 |
% |
9/22/2011 |
|
— |
|
(266 |
) |
|
Swap-cash flow |
|
85,000 |
|
85,000 |
|
3.33 |
% |
9/22/2011 |
|
(835 |
) |
(2,095 |
) |
|
Interest rate cap |
|
48,000 |
|
48,000 |
|
6.00 |
% |
4/9/2012 |
|
— |
|
— |
|
|
Interest rate cap |
|
37,000 |
|
37,000 |
|
6.00 |
% |
4/9/2012 |
|
— |
|
— |
|
|
Interest rate cap |
|
60,000 |
|
60,000 |
|
5.00 |
% |
6/29/2012 |
|
2 |
|
18 |
|
|
Interest rate cap |
|
50,000 |
|
50,000 |
|
3.50 |
% |
12/23/2012 |
|
10 |
|
71 |
|
|
Swap-cash flow |
|
150,000 |
|
150,000 |
|
1.15 |
% |
12/23/2012 |
|
(1,701 |
) |
(1,384 |
) |
|
Swap-cash flow |
|
40,000 |
|
40,000 |
|
1.00 |
% |
10/6/2013 |
|
(273 |
) |
39 |
|
|
Swap-cash flow |
|
31,000 |
|
31,000 |
|
1.00 |
% |
10/6/2013 |
|
(211 |
) |
31 |
|
|
|
|
$ |
533,000 |
|
$ |
714,587 |
|
|
|
|
|
$ |
(3,008 |
) |
$ |
(3,820 |
) |
(1) Interest rate swap was terminated in conjunction with the IPO on May 16, 2011.
As of June 30, 2011 and December 31, 2010, there was approximately $3.0 million and $3.8 million, respectively, in unrealized losses included in accumulated other comprehensive loss, a component of shareholders’ equity, related to interest rate hedges that are effective in offsetting the variable cash flows. For the three and six months ended June 30, 2010 approximately $20,000 and $42,000, respectively, in unrealized gains were recognized in earnings related to hedges that were ineffective in offsetting variable cash flows. There were no ineffective hedges during the three and six months ended June 30, 2011. |