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Derivative Financial Instruments | 9 Months Ended
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Sep. 30, 2024
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative Financial Instruments | Derivative Financial Instruments The Company enters into interest rate derivative contracts to manage exposure to interest rate risks. The Company does not use derivative financial instruments for trading or speculative purposes. Derivative financial instruments are recognized at fair value and presented within other assets and other liabilities in the condensed consolidated balance sheets. Gains and losses resulting from changes in the fair value of derivatives that are neither designated nor qualify as hedging instruments are recognized within the change in fair value of derivatives and other in the condensed consolidated statements of comprehensive income. For derivatives that qualify as cash flow hedges, the gain or loss is reported as a component of other comprehensive income (loss) and reclassified into earnings in the periods during which the hedged forecasted transaction affects earnings. As of September 30, 2024, the Company held the following floating-to-fixed interest rate swaps ($ in thousands):
Related Debt |  | Notional Amount |  | Index | Swap Fixed Rate |  | Debt Effective Rate |  | Effective Date |  | Expiration Date
Harbor Point Parcel 3 senior construction loan |  | $ | 90,000 |  | (a) | 1-month SOFR | 2.75 | % |  | 4.82 | % |  | 10/2/2023 |  | 10/1/2025
Floating rate pool of loans |  | 330,000 |  | (b) | 1-month SOFR | 2.75 | % |  | 4.33 | % |  | 10/1/2023 |  | 10/1/2025
Harbor Point Parcel 4 senior construction loan |  | 100,000 |  | (c) | 1-month SOFR | 2.75 | % |  | 5.12 | % |  | 11/1/2023 |  | 11/1/2025
Floating rate pool of loans |  | 300,000 |  | (d) | 1-month SOFR | 2.75 | % |  | 4.33 | % |  | 12/1/2023 |  | 12/1/2025
Revolving credit facility and TD unsecured term loan |  | 100,000 |  | (e) | Daily SOFR | 3.20 | % |  | 4.84 | % |  | 5/19/2023 |  | 5/19/2026
Thames Street Wharf loan |  | 66,819 |  | (f) | Daily SOFR | 0.93 | % |  | 2.33 | % |  | 9/30/2021 |  | 9/30/2026
M&T unsecured term loan |  | 100,000 |  | (f) | 1-month SOFR | 3.50 | % |  | 5.05 | % |  | 12/6/2022 |  | 12/6/2027
Liberty Retail & Apartments loan |  | 21,000 |  | (g) | 1-month SOFR | 3.43 | % |  | 4.93 | % |  | 12/13/2022 |  | 1/21/2028
Senior unsecured term loan |  | 79,000 |  | (g) | 1-month SOFR | 3.43 | % |  | 4.98 | % |  | 12/13/2022 |  | 1/21/2028
Total |  | $ | 1,186,819 |  |  |  |  |  |  |  |  |  |
________________________________________ (a) This interest rate swap agreement reduces the Company's interest rate exposure on the $180.4 million senior construction loan secured by the Company's Harbor Point Parcel 3 equity method investment as described in Note 6. As such, the loan is not reflected on the Company's consolidated balance sheets. The Company also paid $3.6 million to reduce the swap fixed rate in the period in which it was purchased. (b) The Company paid $13.3 million to reduce the swap fixed rate in the period in which it was purchased. (c) This interest rate swap agreement reduces the Company's interest rate exposure on the $109.7 million senior construction loan secured by the Company's Harbor Point Parcel 4 equity method investment as described in Note 6. As such, the loan is not reflected on the Company's consolidated balance sheets. The Company also paid $3.9 million to reduce the swap fixed rate in the period in which it was purchased. (d) The Company paid $10.5 million to reduce the swap fixed rate in the period in which it was purchased. (e) Subject to cancellation by the counterparty beginning on May 1, 2025 and the first day of each month thereafter. (f) Designated as a cash flow hedge. (g) The Company novated an existing 3.43% fixed rate swap with a $100.0 million notional and assigned (A) $11.1 million notional to the loan secured by Market at Mill Creek, effective April 17, 2024 and (B) $21.0 million to the loan secured by Liberty Retail & Apartments, effective February 1, 2024. Once the Market at Mill Creek loan was repaid, the $67.9 million swap on the senior unsecured loan increased to $79.0 million. For the interest rate swaps and caps designated as cash flow hedges, realized gains and losses are reclassified out of accumulated other comprehensive income to interest expense in the condensed consolidated statements of comprehensive income due to payments received from and paid to the counterparty. During the next 12 months, the Company anticipates recognizing approximately $2.1 million of net hedging gains as reductions to interest expense. These amounts will be reclassified from accumulated other comprehensive income into earnings to offset the variability of the hedged items during this period. The Company’s derivatives were comprised of the following as of September 30, 2024 and December 31, 2023 (in thousands):
|  | September 30, 2024 |  | December 31, 2023
|  | Notional Amount |  | Fair Value |  | Notional Amount |  | Fair Value
|  |  |  | Asset |  | Liability |  |  |  | Asset |  | Liability
Derivatives not designated as accounting hedges |  |  |  |  |  |  |  |  |  |
Interest rate swaps |  | $ | 1,020,000 |  |  | $ | 9,157 |  |  | $ | (505) |  |  | $ | 1,020,000 |  |  | $ | 20,761 |  |  | $ | — |
Total derivatives not designated as accounting hedges |  | 1,020,000 |  |  | 9,157 |  |  | (505) |  |  | 1,020,000 |  |  | 20,761 |  |  | — |
Derivatives designated as accounting hedges |  |  |  |  |  |  |  |  |  |
Interest rate swaps |  | 166,819 |  |  | 3,091 |  |  | (621) |  |  | 667,894 |  |  | 7,141 |  |  | — |
Interest rate caps |  | — |  |  | — |  |  | — |  |  | 98,269 |  |  | 960 |  |  | — |
Total derivatives |  | $ | 1,186,819 |  |  | $ | 12,248 |  |  | $ | (1,126) |  |  | $ | 1,786,163 |  |  | $ | 28,862 |  |  | $ | — |
The unrealized changes in the fair value of the Company’s derivatives during the three and nine months ended September 30, 2024 and 2023 were comprised of the following (in thousands):
|  | Three Months Ended September 30, |  | Nine Months Ended September 30,
|  | 2024 |  | 2023 |  | 2024 |  | 2023
Interest rate swaps |  | $ | (20,018) |  |  | $ | 4,952 |  |  | $ | (10,943) |  |  | $ | 12,188 |
Interest rate caps |  | (1) |  |  | 20 |  |  | 22 |  |  | (346) |
Total unrealized change in fair value of interest rate derivatives |  | $ | (20,019) |  |  | $ | 4,972 |  |  | $ | (10,921) |  |  | $ | 11,842 |
Comprehensive income statement presentation: |  |  |  |  |  |  |  |
Change in fair value of derivatives and other |  | $ | (16,669) |  |  | $ | 1,484 |  |  | $ | (12,109) |  |  | $ | 1,974 |
Unrealized cash flow hedge gains |  | (3,350) |  |  | 3,488 |  |  | 1,188 |  |  | 9,868 |
Total unrealized change in fair value of interest rate derivatives |  | $ | (20,019) |  |  | $ | 4,972 |  |  | $ | (10,921) |  |  | $ | 11,842 |

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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://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 40 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (f) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480237/815-40-50-5 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 5C -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480434/815-10-50-5C Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 815 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/815/tableOfContent + Details
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