XML 46 R36.htm IDEA: XBRL DOCUMENT v3.20.2
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Tables)
 6 Months Ended
Jun. 30, 2020
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Summary of fair value of derivative financial instruments
The following table summarizes certain terms of the Company’s derivative contracts:
 
 
 
 
 
 
 
Fixed
 
 
 
 
 
Fair Value Asset (Liability)
 
 
 
 
 
Notional
 
Interest
 
Effective
 
Maturity
 
June 30,
 
December 31,
(In thousands)
 
 
Balance Sheet Location
 
Amount
 
Rate (a)
 
Date
 
Date
 
2020
 
2019
Derivative instruments not designated as hedging instruments:
 
 
 
 
 
 
 
 
 
 
 
 
Interest rate cap
(b)
 
Prepaid expenses and other assets, net
 
$
230,000

 
2.50
%
 
12/22/2016
 
12/23/2019
 
$
—

 
$
—

Interest rate cap
(c)
 
Prepaid expenses and other assets, net
 
75,000

 
5.00
%
 
8/31/2019
 
8/31/2020
 
—

 
—

Derivative instruments designated as hedging instruments:
 
 
 
 
 
 
 
 
 
 
 
 
Interest rate collar
(d) (e)
 
Accounts payable and accrued expenses
 
193,967

 
2.00% - 3.00%

 
5/1/2019
 
5/1/2020
 
—

 
(182
)
Interest rate collar
(d)
 
Accounts payable and accrued expenses
 
354,217

 
2.25% - 3.25%

 
5/1/2020
 
5/1/2021
 
(5,370
)
 
(2,074
)
Interest rate collar
(d)
 
Accounts payable and accrued expenses
 
381,404

 
2.75% - 3.50%

 
5/1/2021
 
4/30/2022
 
(9,782
)
 
(4,578
)
Interest rate swap
(f)
 
Accounts payable and accrued expenses
 
615,000

 
2.96
%
 
9/21/2018
 
9/18/2023
 
(55,977
)
 
(31,187
)
Interest rate swap
(g)
 
Accounts payable and accrued expenses
 
1,810

 
4.89
%
 
11/1/2019
 
1/1/2032
 
(6,608
)
 
(2,114
)
Total fair value derivative liabilities
 
 
 
 
 
 
 
 
 
$
(77,737
)
 
$
(40,135
)
 
(a)
These rates represent the strike rate on HHC’s interest swaps, caps and collars.
(b)
The Company settled this Interest rate cap on February 1, 2019. Interest income of $0.2 million is included in the Condensed Consolidated Statements of Operations for the year ended December 31, 2019, related to this contract.
(c)
On August 30, 2019, the Company executed an agreement to extend the maturing position of this cap. Interest income included in the Condensed Consolidated Statements of Operations for the six months ended June 30, 2020, and the year ended December 31, 2019, related to this contract was not meaningful.
(d)
On May 17, 2018, and May 18, 2018, the Company entered into these interest rate collars which are designated as cash flow hedges.
(e)
On May 1, 2020, the $194.0 million interest rate collar matured as scheduled.
(f)
Concurrent with the funding of the $615.0 million term loan on September 21, 2018, the Company entered into this interest rate swap which is designated as a cash flow hedge.
(g)
Concurrent with the closing of the $35.5 million construction loan for 8770 New Trails on June 27, 2019, the Company entered into this interest rate swap which is designated as a cash flow hedge.

Summary of effect of derivative financial instruments on the Condensed Consolidated Statements of Operations

The tables below present the effect of the Company’s derivative financial instruments on the Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2020, and 2019 (in thousands):
 
 
Amount of Loss Recognized
 
Amount of Loss Recognized
 
 
in AOCI on Derivative
 
in AOCI on Derivative
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
Derivatives in Cash Flow Hedging Relationships
 
2020
 
2019
 
2020
 
2019
Interest rate derivatives
   
$
(3,461
)
 
$
(13,016
)
 
$
(34,801
)
 
$
(18,832
)
 
 
 
Amount of (Loss) Gain Reclassified
 
Amount of (Loss) Gain Reclassified
 
 
from AOCI into Operations
 
from AOCI into Operations
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
Location of (Loss) Gain Reclassified from AOCI into Operations
 
2020
 
2019
 
2020
 
2019
Interest expense
   
$
(3,227
)
 
$
92

 
$
(4,320
)
 
$
220


 
 
Total Interest Expense Presented
 
Total Interest Expense Presented
 
 
in the Results of Operations in which the
 
in the Results of Operations in which the
 
 
Effects of Cash Flow Hedges are Recorded
 
Effects of Cash Flow Hedges are Recorded
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
Interest Expense Presented in Results of Operations
 
2020
 
2019
 
2020
 
2019
Interest expense
 
$
32,397

 
$
24,203

 
$
66,845

 
$
47,529