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DERIVATIVE INSTRUMENTS | 6 Months Ended
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Jun. 30, 2021
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
DERIVATIVE INSTRUMENTS | DERIVATIVE INSTRUMENTS Centerspace’s objective in using interest rate derivatives is to add stability to interest expense and to manage its exposure to interest rate fluctuations. To accomplish this objective, the Company primarily uses interest rate swap contracts to fix the variable interest rate on its term loans and a portion of its primary line of credit. The interest rate swap contracts qualify as cash flow hedges. Changes in the fair value of cash flow hedges are recorded in accumulated other comprehensive income (“OCI”) and subsequently reclassified into earnings in the period that the hedged transaction affects earnings. Amounts reported in accumulated other comprehensive income for the interest rate swaps will be reclassified to interest expense as interest expense is incurred on the term loans and the hedged portion of the primary line of credit. During the next twelve months, the company estimates an additional $4.4 million will be reclassified as an increase to interest expense. At June 30, 2021 and December 31, 2020, Centerspace had a $50.0 million interest rate swap to fix the interest rate on a portion of the primary line of credit. At June 30, 2021 and December 31, 2020, Centerspace had three interest rate swap contracts in effect with a notional amount of $195.0 million and one additional interest rate swap that becomes effective on January 31, 2023, with a notional amount of $70.0 million. These interest rate swaps are to fix the interest rate on the term loans. The table below presents the fair value of the Company's derivative financial instruments as well as their classification on the Condensed Consolidated Balance Sheets as of June 30, 2021 and December 31, 2020.
|  |  |  |  |  |  | (in thousands)
|  |  |  |  |  |  |  |  | June 30, 2021 |  | December 31, 2020
|  |  |  |  |  |  | Balance Sheet Location |  | Fair Value |  | Fair Value
Total derivative instruments designated as hedging instruments - interest rate swaps |  |  |  |  |  |  | Accounts Payable and Accrued Expenses |  | $ | 12,064 |  |  | $ | 15,905 |
The table below presents the effect of the Company’s derivative financial instruments on the Condensed Consolidated Statements of Operations as of June 30, 2021 and 2020.
| (in thousands)
| Gain (Loss) Recognized in OCI |  | Location of Gain (Loss) Reclassified from Accumulated OCI into Income |  | Gain (Loss) Reclassified from Accumulated OCI into Income
Three months ended June 30, | 2021 |  | 2020 |  |  |  | 2021 |  | 2020
Total derivatives in cash flow hedging relationships - Interest rate contracts | $ | (386) |  |  | $ | (1,696) |  |  | Interest expense |  | $ | (1,120) |  |  | $ | (917) |
Six months ended June 30, |  |  |  |  |  |  |  |  |
Total derivatives in cash flow hedging relationships - Interest rate contracts | $ | 1,625 |  |  | $ | (11,105) |  |  | Interest expense |  | $ | (2,216) |  |  | $ | (573) |

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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 http://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 http://asc.fasb.org/extlink&oid=123477628&loc=d3e90205-114008 + Details
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