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Derivative Instruments
 9 Months Ended
Sep. 30, 2021
Summary of Derivative Instruments [Abstract]  
Derivative Instruments Derivative InstrumentsAll derivatives are recognized at fair value in the consolidated balance sheets within the line items "Other assets" and "Accounts payable and accrued liabilities" as applicable. The Company has elected not to offset its derivative position for purposes of balance sheet presentation and disclosure. The Company had no derivative assets at September 30, 2021 and December 31, 2020. The Company had derivative liabilities of $4.4 million and $14.0 million at September 30, 2021 and December 31, 2020, respectively. The Company has not posted or received collateral with its derivative counterparties as of September 30, 2021 or December 31, 2020. See Note 11 for disclosures relating to the fair value of the derivative instruments.
Risk Management Objective of Using Derivatives
The Company is exposed to certain risk arising from both its business operations and economic conditions including the effect of changes in foreign currency exchange rates on foreign currency transactions and interest rates on its LIBOR-based borrowings. The Company manages this risk by following established risk management policies and procedures including the use of derivatives. The Company’s objective in using derivatives is to add stability to reported earnings and to manage its exposure to foreign exchange and interest rate movements or other identified risks. To accomplish this objective, the Company primarily uses interest rate swaps, cross-currency swaps and foreign currency forwards.

Cash Flow Hedges of Interest Rate Risk
The Company uses interest rate swaps as its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt or payment of variable-rate amounts from a counterparty which results in the Company recording net interest expense that is fixed over the life of the agreements without exchange of the underlying notional amount.

During the three months ended September 30, 2021, the Company terminated four of its interest rate swap agreements in connection with the payoff of the related unsecured term loan facility. These interest rate swaps had a combined notional amount of $400.0 million at termination and $3.2 million was reclassified into earnings as expense during the three months ended September 30, 2021, as the forecasted future transactions were no longer probable.

At September 30, 2021, the Company had one interest rate swap agreement designated as a cash flow hedge of interest rate risk related to its variable rate secured bonds totaling $25.0 million. The interest rate swap agreement outstanding as of September 30, 2021 is summarized below:
Fixed rateNotional Amount (in millions)IndexMaturity
1.3925%$25.0 USD LIBORSeptember 30, 2024

The change in the fair value of interest rate derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income (AOCI) and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings within the same income statement line item as the earnings effect of the hedged transaction.

Amounts reported in AOCI related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. As of September 30, 2021, the Company estimates that during the twelve months ending September 30, 2022, $0.3 million of losses will be reclassified from AOCI to interest expense.

Cash Flow Hedges of Foreign Exchange Risk
The Company is exposed to foreign currency exchange risk against its functional currency, USD, on CAD denominated cash flow from its four Canadian properties. The Company uses cross-currency swaps to mitigate its exposure to fluctuations in the USD-CAD exchange rate on cash inflows associated with these properties which should hedge a significant portion of the Company's expected CAD denominated cash flows.

The Company entered into three USD-CAD cross-currency swaps that were effective July 1, 2020 with a fixed original notional value of $100.0 million CAD and $76.6 million USD. The net effect of these swaps is to lock in an exchange rate of $1.31 CAD per USD on approximately $7.2 million annual CAD denominated cash flows through June 2022.

The change in the fair value of foreign currency derivatives designated and that qualify as cash flow hedges of foreign exchange risk is recorded in AOCI and reclassified into earnings in the period that the hedged forecasted transaction affects earnings within the same income statement line item as the earnings effect of the hedged
transaction. As of September 30, 2021, the Company estimates that during the twelve months ending September 30, 2022, $0.1 million of losses will be reclassified from AOCI to other expense.

Net Investment Hedges
The Company is exposed to fluctuations in the USD-CAD exchange rate on its net investments in Canada. As such, the Company uses either currency forward agreements or cross-currency swaps to manage its exposure to changes in foreign exchange rates on certain of its foreign net investments. As of September 30, 2021, the Company had the following cross-currency swaps designated as net investment hedges:
Fixed rateNotional Amount (in millions, CAD)Maturity
$1.32 CAD per USD
$100.0 July 1, 2023
$1.32 CAD per USD
100.0 July 1, 2023
Total$200.0 

The cross-currency swaps also have a monthly settlement feature locked in at an exchange rate of $1.32 CAD per USD on $4.5 million of CAD annual cash flows, the net effect of which is an excluded component from the effectiveness testing of this hedge.

For qualifying foreign currency derivatives designated as net investment hedges, the change in the fair value of the derivatives are reported in AOCI as part of the cumulative translation adjustment. Amounts are reclassified out of AOCI into earnings when the hedged net investment is either sold or substantially liquidated. Gains and losses on the derivative representing hedge components excluded from the assessment of effectiveness are recognized over the life of the hedge on a systematic and rational basis, as documented at hedge inception in accordance with the Company's accounting policy election. The earnings recognition of excluded components are presented in other income.

Below is a summary of the effect of derivative instruments on the consolidated statements of changes in equity and income for the three and nine months ended September 30, 2021 and 2020.

Effect of Derivative Instruments on the Consolidated Statements of Changes in Equity and Comprehensive Income for the Three and Nine Months Ended September 30, 2021 and 2020 (Dollars in thousands)
 Three Months Ended September 30,Nine Months Ended September 30,
Description2021202020212020
Cash Flow Hedges
Interest Rate Swaps
Amount of Gain (Loss) Recognized in AOCI on Derivative$(3,338)$123 $(3,209)$(11,550)
Amount of Expense Reclassified from AOCI into Earnings (1)(4,962)(2,037)(9,074)(4,103)
Cross-Currency Swaps
Amount of Gain (Loss) Recognized in AOCI on Derivative 143 (243)(71)424 
Amount of (Expense) Income Reclassified from AOCI into Earnings (2)(57)13 (205)455 
Net Investment Hedges
Cross-Currency Swaps
Amount of Gain (Loss) Recognized in AOCI on Derivative 4,456 (3,827)356 3,160 
Amount of Income Recognized in Earnings (2) (3)97 141 270 475 
Total
Amount of Gain (Loss) Recognized in AOCI on Derivatives $1,261 $(3,947)$(2,924)$(7,966)
Amount of Expense Reclassified from AOCI into Earnings (5,019)(2,024)(9,279)(3,648)
Amount of Income Recognized in Earnings97 141 270 475 
Interest expense, net in accompanying consolidated statements of income (loss) and comprehensive income (loss)$36,584 $41,744 $114,090 $114,837 
Other income in accompanying consolidated statements of income (loss) and comprehensive income (loss)$8,091 $182 $9,802 $8,171 
(1) Included in "Interest expense, net" in the accompanying consolidated statements of income (loss) and comprehensive income (loss) for the three and nine months ended September 30, 2021 and 2020.
(2) Included in "Other income" in the accompanying consolidated statements of income (loss) and comprehensive income (loss) for the three and nine months ended September 30, 2021 and 2020.
(3) Amounts represent derivative gains excluded from the effectiveness testing.

As of September 30, 2021, the fair value of the Company's derivatives in a liability position related to these agreements was $4.4 million. If the Company breached any of the contractual provisions of these derivative contracts, it would be required to settle its obligations under the agreements at their termination value of $4.5 million. As of September 30, 2021, the Company had not posted any collateral related to these agreements and was not in breach of any provisions in these agreements.