Annual report pursuant to Section 13 and 15(d)

Interest Rate Derivatives

v3.8.0.1
Interest Rate Derivatives
 12 Months Ended
Dec. 31, 2017
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Interest Rate Derivatives
Interest Rate Derivatives
 
The following table sets forth the key terms and fair values of our interest rate swap derivatives, each of which was designated as a cash flow hedge (dollars in thousands):
 
 
 
 
 
 
 
 
 
 
Fair Value at
Notional
 
 
 
 
 
Effective
 
Expiration
 
December 31,
Amount
 
Fixed Rate
 
Floating Rate Index
 
Date
 
Date
 
2017
 
2016
$
100,000

 
1.7300
%
 
One-Month LIBOR
 
9/1/2015
 
8/1/2019
 
$
252

 
$
(848
)
13,217

(1)
1.3900
%
 
One-Month LIBOR
 
10/13/2015
 
10/1/2020
 
213

 
100

100,000

 
1.9013
%
 
One-Month LIBOR
 
9/1/2016
 
12/1/2022
 
1,046

 
(23
)
100,000

 
1.9050
%
 
One-Month LIBOR
 
9/1/2016
 
12/1/2022
 
1,051

 
48

50,000

 
1.9079
%
 
One-Month LIBOR
 
9/1/2016
 
12/1/2022
 
511

 
10

100,000

(2)
1.6730
%
 
One-Month LIBOR
 
9/1/2015
 
8/1/2019
 
—

 
(701
)
 

 
 

 
 
 
 
 
 
 
$
3,073

 
$
(1,414
)

(1) The notional amount of this instrument is scheduled to amortize to $12.1 million.
(2) We cash settled this derivative and interest accrued thereon for $460,000 on May 1, 2017. Since the hedged transactions associated with this derivative were still probable to occur as of the settlement date, amounts in accumulated other comprehensive loss (“AOCL”) associated with this derivative will be reclassified to interest expense through August 2019.

The table below sets forth the fair value of our interest rate derivatives as well as their classification on our consolidated balance sheets (in thousands):
 
 
 
 
Fair Value at
 
 
 
 
December 31,
Derivatives
 
Balance Sheet Location
 
2017
 
2016
Interest rate swaps designated as cash flow hedges
 
Prepaid expenses and other assets
 
$
3,073

 
$
158

Interest rate swaps designated as cash flow hedges
 
Other liabilities
 
—

 
(1,572
)

 
The table below presents the effect of our interest rate derivatives on our consolidated statements of operations and comprehensive income (in thousands):
 
For the Years Ended December 31,
 
2017
 
2016
 
2015
Unrealized gain (loss) recognized in AOCL (effective portion)
$
684

 
$
(2,915
)
 
$
(4,739
)
Loss reclassified from AOCL into interest expense (effective portion)
(3,216
)
 
(4,230
)
 
(3,599
)
Gain (loss) on derivatives recognized in interest expense (ineffective portion)
323

 
378

 
(386
)
Loss reclassified from AOCL into interest expense (ineffective portion) (1)
(88
)
 
—

 
—



(1) Represents a loss recognized on certain interest rate swaps from the accelerated reclassification of amounts in AOCL on May 1, 2017, when we concluded that hedged forecasted transactions were probable not to occur.

Over the next 12 months, we estimate that approximately $460,000 of losses will be reclassified from AOCL as an increase to interest expense.

We have agreements with each of our interest rate derivative counterparties that contain provisions under which, if we default or are capable of being declared in default on defined levels of our indebtedness, we could also be declared in default on our derivative obligations.  Failure to comply with the loan covenant provisions could result in our being declared in default on any derivative instrument obligations covered by the agreements.  We are not in default with any of these provisions.  As of December 31, 2017, we did not have any derivatives in liability positions. As of December 31, 2017, we had not posted any collateral related to these agreements.