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Derivative Instruments and Hedging Activities
 3 Months Ended
Mar. 31, 2024
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Instruments and Hedging Activities Disclosure
7. Derivative Instruments and Hedging Activities
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 March 31, 2024, the Company had not posted any collateral related to the agreements.
Effective Hedge Instruments
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 months ended March 31, 2024.
BPLP’s and SMBP LLC’s interest rate swap contracts consisted of the following at March 31, 2024 (dollars in thousands):
Derivative InstrumentAggregate Notional Amount Strike Rate RangeBalance Sheet Location
Effective Date Maturity DateLow High Fair Value
BPLP:
Interest Rate Swaps $1,200,000 May 4, 2023May 16, 20244.638 %—4.646 %Prepaid expenses and other assets$1,006 
Interest Rate Swaps600,000 December 15, 2023October 26, 20283.790 %—3.798 %Prepaid expenses and other assets4,646 
1,800,000 5,652 
SMBP LLC (1)
Interest Rate Swaps300,000 December 14, 2023April 1, 20252.661 %—2.688 %Prepaid expenses and other assets6,646 
$2,100,000 $12,298 
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(1)A subsidiary of the Company that is the borrower under the mortgage loan collateralized by its Santa Monica Business Park property.
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, 2024 and 2023 (in thousands):
Three months ended March 31,
20242023
Amount of gain (loss) related to the effective portion recognized in other comprehensive income (1)$16,351 $(6,538)
Amount of gain (loss) related to the effective portion subsequently reclassified to earnings (2)$3,360 $1,675 
Amount of gain (loss) relate do the ineffective portion and amount excluded from effectiveness testing$— $— 
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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)Includes 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.
Ineffective Hedging Instruments
During the year ended December 31, 2023, to satisfy a lender requirement, the Company entered into two agreements with the same third-party to purchase and sell a $600.0 million interest rate cap. The Company did not elect hedge accounting, and as such, any change in market value will be recognized in Gain (losses) from interest rate contracts in the Consolidated Statement of Operations. For the three months ended March 31, 2024 and 2023, the Company recognized no impact to its Consolidated Statement of Operations from entering into these agreements.