Derivative Instruments and Hedging Activities (Notes)

3 Months Ended

Mar. 31, 2015

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activities [Text Block]

5. Derivative Instruments and Hedging Activities

On February 19, 2015, the Company commenced a planned interest rate hedging program in contemplation of a financing with a target commencement date in September 2016 and maturity in September 2026. The Company entered into five forward-starting interest rate swap contracts during the three months ended March 31, 2015, which fix the ten-year swap rate at a weighted-average rate of approximately 2.492% per annum on notional amounts aggregating $250.0 million (See Note 12). The Company's interest rate swap contracts consisted of the following at March 31, 2015:

Derivative Instrument	Notional Amount		Effective Date	Maturity Date	Strike Rate		Balance Sheet Location	Fair Value
	(in thousands)							(in thousands)
Interest Rate Swap	$	50,000	September 1, 2016	September 1, 2026	2.571	%	Other Liabilities	$	(1,062	)
Interest Rate Swap	75,000		September 1, 2016	September 1, 2026	2.476	%	Other Liabilities	(946		)
Interest Rate Swap	50,000		September 1, 2016	September 1, 2026	2.523	%	Other Liabilities	(844		)
Interest Rate Swap	50,000		September 1, 2016	September 1, 2026	2.480	%	Other Liabilities	(654		)
Interest Rate Swap	25,000		September 1, 2016	September 1, 2026	2.348	%	Other Liabilities	(27		)
	$	250,000						$	(3,533	)

The Company entered into the interest rate swap contracts designated and qualifying as a cash flow hedges to reduce its exposure to the variability in future cash flows attributable to changes in the 10-year swap rate in contemplation of obtaining 10-year fixed-rate financing in September 2016. The Company has formally documented all of its relationships between hedging instruments and hedged items, as well as its risk-management objective and strategy for undertaking various hedge transactions. The Company also assesses and documents, both at the hedging instrument’s inception and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in cash flows associated with the hedged items. All components of the forward-starting interest rate swap contracts were included in the assessment of hedge effectiveness. The Company has agreements with each of its derivative counterparties that contain a provision where the Company could be declared in default on its derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to the Company's default on the indebtedness. As of March 31, 2015, the fair value of derivatives in a net liability position, which excludes any adjustment for nonperformance risk, related to these agreements was approximately $3.5 million. As of March 31, 2015, the Company has not posted any collateral related to these agreements. If the Company had breached any of these provisions at March 31, 2015, it could have been required to settle its obligations under the agreements at their termination value of approximately $3.5 million. The Company accounts for the effective portion of changes in the fair value of a derivative in accumulated other comprehensive income (loss) and subsequently reclassifies the effective portion to earnings over the term that the hedged transaction affects earnings. The Company accounts for the ineffective portion of changes in the fair value of a derivative directly in earnings. During the three months ended March 31, 2015, the Company has recorded the changes in fair value of the swap contracts related to the effective portion of the interest rate contracts aggregating approximately $3.5 million in Other Liabilities and Accumulated Other Comprehensive Loss within the Company’s Consolidated Balance Sheets. During the three months ended March 31, 2015, the Company did not record any hedge ineffectiveness. The Company does not expect to reclassify into earnings any amounts recorded within Accumulated Other Comprehensive Loss relating to the forward-starting interest rate swap contracts within the next twelve months.

The following table presents the location in the financial statements of the gains or losses recognized related to the Company's cash flow hedges for the three months ended March 31, 2015 and 2014:

	Three Months Ended March 31,
	2015			2014
	(in thousands)
Amount of gain (loss) related to the effective portion recognized in other comprehensive income (loss)	$	(3,533	)	$	—
Amount of gain (loss) related to the effective portion subsequently reclassified to earnings (1)	$	(627	)	$	(629	)
Amount of gain (loss) related to the ineffective portion and amount excluded from effectiveness testing	$	—		$	—

___________

(1) Consists of amounts from previous interest rate hedging programs.

The following table reflects the changes in accumulated other comprehensive loss for the three months ended March 31, 2015 and 2014 (in thousands):

Balance at January 1, 2015	$	(9,304	)
Effective portion of interest rate contracts	(3,533		)
Amortization of interest rate contracts (1)	627
Other comprehensive income (loss) attributable to noncontrolling interests	303
Balance at March 31, 2015	$	(11,907	)
Balance at January 1, 2014	$	(11,556	)
Amortization of interest rate contracts (1)	629
Other comprehensive income (loss) attributable to noncontrolling interests	(62		)
Balance at March 31, 2014	$	(10,989	)

__________

(1) Consists of amounts from previous interest rate hedging programs.