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Derivative Instruments and Hedging Activities (Tables)
 9 Months Ended
Sep. 30, 2020
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Summary of the notional and 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
 
September 30,
 
December 31,
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
%
8/31/2020
10/17/2022
 
1

 
—

Total fair value derivative assets
 
 
 
 
 
$
1

 
$
—

 
 
 
 
 
 
 
 
 
 
 
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) (f)
Prepaid expenses and other assets, net
354,217

2.25% - 3.25%

5/1/2020
5/1/2021
 
—

 
(2,074
)
Interest rate collar
(d) (f)
Prepaid expenses and other assets, net
381,404

2.75% - 3.50%

5/1/2021
4/30/2022
 
—

 
(4,578
)
Interest rate swap
(g)
Accounts payable and accrued expenses
615,000

2.96
%
9/21/2018
9/18/2023
 
(50,918
)
 
(31,187
)
Interest rate swap
(h)
Accounts payable and accrued expenses
1,810

4.89
%
11/1/2019
1/1/2032
 
(6,013
)
 
(2,114
)
Total fair value derivative liabilities
 
 
 
 
 
$
(56,931
)
 
$
(40,135
)
Total fair value derivatives, net
 
 
 
 
 
$
(56,930
)
 
$
(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)
In the third quarter of 2020, 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 nine months ended September 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)
As of September 30, 2020, the Company deconsolidated 110 North Wacker including the associated liabilities related to its interest rate collars. Refer to Note 3 - Real Estate and Other Affiliates for additional information.
(g)
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.
(h)
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 nine months ended September 30, 2020, and 2019:
thousands
Amount of Loss Recognized in AOCI on Derivative
Derivatives in Cash Flow Hedging Relationships
Three Months Ended September 30,
 
Nine Months Ended September 30,
2020
 
2019
 
2020
 
2019
Interest rate derivatives
$
1,802

 
$
(6,406
)
 
$
(32,999
)
 
$
(25,238
)
 
thousands
Amount of (Loss) Gain Reclassified from AOCI into Operations
Location of (Loss) Gain Reclassified from AOCI into Operations
Three Months Ended September 30,
 
Nine Months Ended September 30,
2020
 
2019
 
2020
 
2019
Interest expense
$
(4,121
)
 
$
(199
)
 
$
(8,441
)
 
$
21


 
Total Interest Expense Presented in the Results of Operations
thousands
in which the Effects of Cash Flow Hedges are Recorded
Interest Expense Presented in Results of Operations
Three Months Ended September 30,
 
Nine Months Ended September 30,
2020
 
2019
 
2020
 
2019
Interest expense
$
31,872

 
$
28,829

 
$
98,717

 
$
76,358