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DERIVATIVE FINANCIAL INSTRUMENTS
 12 Months Ended
Dec. 31, 2012
DERIVATIVE FINANCIAL INSTRUMENTS  
DERIVATIVE FINANCIAL INSTRUMENTS

NOTE 8—DERIVATIVE FINANCIAL INSTRUMENTS

        As of December 31, 2012, the Company had the following outstanding interest rate derivatives, all of which were designated as cash flow hedges of interest rate risk (amounts in thousands):

Interest Rate Derivative
  Notional Amount   Fixed
Interest
Rate		   Maturity Date

Interest Rate Swap

   $ 8,988     6.50 % December 2014

Interest Rate Swap

     4,324     5.75 % November 2020

Interest Rate Swap

     3,887     4.75 % August 2016

Interest Rate Swap

     5,757     4.63 % February 2019

Interest Rate Swap

     2,156     4.50 % April 2016

Interest Rate Swap

     3,893     4.50 % March 2017

Interest Rate Swap

     5,100     4.68 % January 2023

        The following table presents the fair value of the Company's derivatives designated as hedging instruments for the periods presented (amounts in thousands):

 
   Liability Derivatives As of December 31,    
 
   2012   2011    
 
   Balance Sheet
Location		   Fair
Value		   Balance Sheet
Location		   Fair
Value		    

 

   Other Liabilities   $ 1,470   Other Liabilities   $ 923    

        The Company did not have any asset derivatives as of December 31, 2012 and December 31, 2011.

        The following table presents the effect of the Company's derivative financial instruments on the consolidated statement of income for the periods presented (amounts in thousands):

 
   Years Ended December 31,  
 
   2012   2011   2010  

Amount of (loss) recognized on derivative in Other Comprehensive (Loss)

   $ (1,051 ) $ (1,098 ) $ (523 )

Amount of (loss) reclassified from Accumulated Other Comprehensive (Loss) into Interest Expense

   $ (504 ) $ (351 ) $ (236 )

        No gain or loss was recognized with respect to hedge ineffectiveness or to amounts excluded from effectiveness testing on the Company's cash flow hedges for the three years ended December 31, 2012. During the twelve months ending December 31, 2013, the Company estimates an additional $603,000 will be reclassified from other comprehensive income as an increase to interest expense.

        The derivative agreements in effect at December 31, 2012 provide that if the wholly owned subsidiary of the Company which is a party to the agreement defaults or is capable of being declared in default on any of its indebtedness, then a default can be declared on such subsidiary's derivative obligation. In addition, the Company is a party to one of the derivative agreements and if the subsidiary defaults on the loan subject to such agreement and if there are swap breakage losses on account of the derivative being terminated early, the Company could be held liable for interest rate swap breakage losses, if any.

        As of December 31, 2012, the fair value of the derivatives including accrued interest but excluding any adjustments for nonperformance risk was approximately $1,549,000. If the Company breaches any of the contractual provisions of the derivative contracts, it would be required to settle its obligations thereunder at their termination liability value of $1,549,000.

        Two of the Company's unconsolidated joint ventures, in which a wholly owned subsidiary of the Company is a 50% partner, had a $3,877,000 interest rate derivative outstanding at December 31, 2012. The interest rate derivative, which was entered into in March 2011, has an interest rate of 5.81% and matures in April 2018. The following table presents the Company's 50% share of such derivative financial instrument (amounts in thousands):

 
   Years Ended December 31,  
 
   2012   2011  

Amount of (loss) recognized on derivative in Other Comprehensive (Loss)

   $ (79 ) $ (225 )

Amount of (loss) reclassification from Accumulated Other Comprehensive (Loss) into Interest Expense

     (56 )   (43 )