Derivative Financial Instruments

The following table summarizes the terms and fair values of the Company's derivative financial instruments, as well as their classification on the Consolidated Balance Sheets, as of September 30, 2013 and December 31, 2012 (in thousands):



										Fair Value
	Effective Date	Maturity Date	Early Termination Date ⁽¹⁾	Counterparty		Notional Amount	Bank Pays Variable Rate of	Regency Pays Fixed Rate of		2013		2012
Assets:
	4/15/14	4/15/24	10/15/14	JPMorgan Chase Bank, N.A.	$	75,000	3 Month LIBOR	2.087%	$	6,138		1,022
	4/15/14	4/15/24	10/15/14	Bank of America, N.A.		50,000	3 Month LIBOR	2.088%		4,085		672
	8/1/15	8/1/25	2/1/16	US Bank National Association		75,000	3 Month LIBOR	2.479%		7,001		1,131
	8/1/15	8/1/25	2/1/16	Royal Bank of Canada		50,000	3 Month LIBOR	2.479%		4,662		729
	8/1/15	8/1/25	2/1/16	PNC Bank, N.A.		50,000	3 Month LIBOR	2.479%		4,654		753
Other Assets									$	26,540		4,307
Liabilities:
	10/1/11	9/1/14	N/A	PNC Bank, N.A.	$	9,000	1 Month LIBOR	0.760%	$	(45	)	(76	)
Accounts payable and other liabilities									$	(45	)	(76	)

⁽¹⁾ Represents the date specified in the agreement for either optional or mandatory early termination which will result in cash settlement.

These derivative financial instruments are all interest rate swaps, which are designated and qualify as cash flow hedges. The Company does not use derivatives for trading or speculative purposes and currently does not have any derivatives that are not designated as hedges. The Company has master netting agreements, however the Company does not have multiple derivatives subject to a single master netting agreement with the same counterparties. Therefore, none are offset in the accompanying Consolidated Balance Sheet.

The Company has $150.0 million of unsecured long-term debt that matures in 2014 and $350.0 million of unsecured long-term debt that matures in 2015. In order to mitigate the risk of interest rates rising before new unsecured borrowings are obtained, the Company entered into five forward-starting interest rate swaps during December 2012, for the same ten year periods expected for the future borrowings. These swaps total $300.0 million of notional value, as shown above. The Company will settle these swaps upon the early termination date, which is expected to coincide with the date new unsecured borrowings are obtained, and will begin amortizing the gain or loss realized from the swap settlement over the ten year period expected for the new borrowings; resulting in a modified effective interest rate on those borrowings. In October 2013, the Company entered into two additional forward-starting interest rate swaps for $95.0 million of notional value at a combined fixed rate of 2.867% for a ten year period effective April 15, 2014, to hedge potential changes in the ten-year LIBOR rate covering the expected borrowing term between now and the expected date that new unsecured borrowings are obtained in 2014.

The effective portion of changes in the fair value of derivatives designated and qualifying as cash flow hedges is recorded in accumulated other comprehensive income (loss) and subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings within interest expense.

The following tables represents the effect of the derivative financial instruments on the accompanying consolidated financial statements for the three and nine months ended September 30, 2013 and 2012 (in thousands):



Derivatives in FASB ASC Topic 815 Cash Flow Hedging Relationships:	Amount of Gain (Loss) Recognized in OCI on Derivative (Effective Portion)				Location of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)	Amount of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)					Location of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)	Amount of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)
	Three months ended September 30,					Three months ended September 30,						Three months ended September 30,
	2013		2012			2013			2012			2013		2012
Interest rate swaps	$	521	(25	)	Interest expense	$	(2,366	)	(2,366	)	Other expenses	$	—	—



Derivatives in FASB ASC Topic 815 Cash Flow Hedging Relationships:	Amount of Gain (Loss) Recognized in OCI on Derivative (Effective Portion)				Location of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)	Amount of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)					Location of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)	Amount of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)
	Nine months ended September 30,					Nine months ended September 30,						Nine months ended September 30,
	2013		2012			2013			2012			2013		2012
Interest rate swaps	$	22,225	(85	)	Interest expense	$	(7,098	)	(7,095	)	Other expenses	$	—	(3	)

As of September 30, 2013, the Company expects $9.6 million of deferred losses (gains) on derivative instruments accumulated in other comprehensive income to be reclassified into earnings during the next 12 months, of which $9.2 million is related to previously settled swaps.