Derivative Instruments and Hedging Activities (Tables)

3 Months Ended

Mar. 31, 2021

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:

								Fair Value Asset (Liability)
thousands		Balance Sheet Location	Notional Amount	Fixed Interest Rate (a)		Effective Date	Maturity Date	March 31, 2021		December 31, 2020
Derivative instruments not designated as hedging instruments:
Interest rate cap	(b)	Prepaid expenses and other assets, net	285,000	2.00	%	3/12/2021	9/15/2023	$	157	$	—
Interest rate cap	(b)	Prepaid expenses and other assets, net	83,200	2.00	%	3/12/2021	9/15/2023	46		—
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								204		—
Derivative instruments designated as hedging instruments:
Interest rate swap	(d)	Accounts payable and accrued expenses	615,000	2.96	%	9/21/2018	9/18/2023	(40,432)		(46,613)
Interest rate swap	(e)	Accounts payable and accrued expenses	35,487	4.89	%	11/1/2019	1/1/2032	(2,583)		(5,307)
Total fair value derivative liabilities								(43,015)		(51,920)
Total fair value derivatives, net								$	(42,811)	$	(51,920)

(a)These rates represent the strike rate on HHC’s interest swaps and caps.

(b)In March 2021, the Company entered into two new interest rate caps, which are not designated as hedging instruments. Interest income included in the Condensed Consolidated Statements of Operations for the three months ended March 31, 2021, related to these contracts was not material.

(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 three months ended March 31, 2021, and the year ended December 31, 2020, related to this contract was not material.

(d)Concurrent with the funding of the $615.0 million term loan in September 2018, the Company entered into this interest rate swap which is designated as a cash flow hedge.

(e)Concurrent with the closing of the $35.5 million construction loan for 8770 New Trails in June 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 months ended March 31, 2021, and 2020:

	Amount of Gain (Loss) Recognized in AOCI on Derivatives
Derivatives in Cash Flow Hedging Relationships		Three Months Ended March 31,
thousands		2021		2020
Interest rate derivatives		$	3,383	$	(32,051)

	Amount of Gain (Loss) Reclassified from AOCI into Operations
Location of Gain (Loss) Reclassified from AOCI into Operations		Three Months Ended March 31,
thousands		2021		2020
Interest expense		$	(2,973)	$	(1,150)

	Total Interest Expense Presented in the Results of Operations in which the Effects of Cash Flow Hedges are Recorded
Interest Expense Presented in Results of Operations		Three Months Ended March 31,
thousands		2021		2020
Interest expense		$	34,210	$	34,448