Derivative Instruments and Hedging Activities

9 Months Ended

Sep. 30, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activities Disclosure

7. Derivative Instruments and Hedging Activities

On May 2, 2023, BPLP entered into four interest rate swap contracts with notional amounts aggregating $1.2 billion. BPLP entered into these interest rate swap contracts to reduce its exposure to the variability in future cash flows attributable to changes in the 2023 Unsecured Term Loan interest rate. These interest rate swaps were entered into to fix Term SOFR, the reference rate for BPLP’s 2023 Unsecured Term Loan, at a weighted-average rate of 4.6420% for the period commencing on May 4, 2023 and ending on May 16, 2024 (see Note 6). For the three months ended September 30, 2023 and the period from May 4, 2023 through September 30, 2023, the Company recognized approximately $(1.9) million and $(2.8) million, respectively, of interest expense related to its interest rate swap contracts.

BPLP assesses the effectiveness of its hedges both at inception and on an ongoing basis. If the hedges are deemed to be effective, the fair value is recorded in “Accumulated other comprehensive income (loss)” in the Company’s Consolidated Balance Sheets and is subsequently reclassified into “Interest expense” in the Company’s Consolidated Statements of Operations in the period that the hedged forecasted transactions affect earnings. BPLP’s derivative financial instruments are cash flow hedges that are designated as effective hedges, and are carried at their estimated fair value on a recurring basis (See Note 2). The Company did not incur any ineffectiveness during the three and nine months ended September 30, 2023.

BPLP’s interest rate swap contracts consisted of the following at September 30, 2023 (dollars in thousands):

Derivative Instrument	Aggregate Notional Amount				Strike Rate Range					Balance Sheet Location
			Effective Date	Maturity Date	Low			High			Fair Value
Interest Rate Swaps	$	1,200,000	May 4, 2023	May 16, 2024	4.638	%	—	4.646	%	Prepaid expenses and other assets	$	5,457

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 and nine months ended September 30, 2023 and 2022 (dollars in thousands):

	Three months ended September 30,				Nine months ended September 30,
	2023		2022		2023		2022
Amount of gain (loss) related to the effective portion recognized in other comprehensive income (1)	$	5,459	$	10,800	$	13,886	$	18,400
Amount of gain (loss) related to the effective portion subsequently reclassified to earnings (2)	$	1,677	$	1,677	$	5,026	$	5,030
Amount of gain (loss) relate do the ineffective portion and amount excluded from effectiveness testing	$	—	$	—	$	—	$	—

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(1)Includes the Company’s share of gain (loss) related to the effective portion of derivatives outstanding at its unconsolidated joint venture properties.

(2)Consists of amounts from previous interest rate programs.

BPLP has formally documented all of its relationships between hedge instruments and hedging items, as well as its risk-management objectives and strategy for undertaking various hedge transactions. While management believes its judgments are reasonable, a change in a derivative's effectiveness as a hedge could materially affect expenses, net income (loss) and equity.

BPLP’s agreements with the swap derivative counterparties contain provisions whereby if BPLP defaults on the underlying indebtedness, including defaults where repayment of the indebtedness has not been accelerated by the lender, then BPLP could also be declared in default of the swap derivative obligation. As of September 30, 2023, the Company had not posted any collateral related to the agreements.