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Derivative Instruments and Hedging Activities (Tables)
 9 Months Ended
Sep. 30, 2022
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. The Company reports derivative assets in Prepaid expenses and other assets, net and derivative liabilities in Accounts payable and accrued expenses.
     Fair Value Asset (Liability)
thousands Notional AmountFixed Interest Rate (a)Effective DateMaturity DateSeptember 30, 2022December 31, 2021
Derivative instruments not designated as hedging instruments: (b)
Interest rate cap(c)$285,000 2.00 %3/12/20219/15/2023$6,268 $300 
Interest rate cap(c)83,200 2.00 %3/12/20219/15/20231,830 87 
Interest rate cap75,000 5.00 %8/31/202010/17/2022— — 
Interest rate cap(d)75,000 2.50 %10/12/20219/29/20253,881 485 
Interest rate cap(e)59,500 2.50 %10/12/20219/29/20253,079 385 
Derivative instruments designated as hedging instruments:
Interest rate swap(f)$615,000 2.96 %9/21/20189/18/2023$8,008 $(23,477)
Interest rate swap(g)40,800 1.68 %3/1/20222/18/20273,489 — 
Interest rate swap(h)35,404 4.89 %11/1/20191/1/20323,157 (2,975)
Total fair value derivative assets$29,712 $1,257 
Total fair value derivative liabilities— (26,452)
Total fair value derivative asset (liability), net $29,712 $(25,195)
(a)These rates represent the swap rate and cap strike rate on HHC’s interest swaps and caps.
(b)Interest income related to these contracts was $5.6 million for the three months ended September 30, 2022, $13.8 million for the nine months ended September 30, 2022, and was not material in 2021.
(c)Concurrent with the closing of the $368.2 million construction loan for Victoria Place in 2021, the Company entered into two new LIBOR interest rate caps.
(d)Concurrent with the closing of the $75.0 million construction loan for 1700 Pavilion in 2021, the Company entered into this interest rate cap.
(e)Concurrent with the closing of the $59.5 million construction loan for Tanager Echo in 2021, the Company entered into this interest rate cap.
(f)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. This swap covers the outstanding balance on the Term Loan in addition to other LIBOR-based debt held by the Company.
(g)Concurrent with the closing of the $40.8 million financing of Two Summerlin in the first quarter of 2022, 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 in 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, 2022 and 2021:
Amount of Gain (Loss) Recognized in AOCI on Derivatives
Derivatives in Cash Flow Hedging RelationshipsThree Months Ended September 30,Nine Months Ended September 30,
thousands2022202120222021
Interest rate derivatives$6,794 $(201)$24,355 $2,046 
 
Location of Gain (Loss) Reclassified from AOCI into OperationsAmount of Gain (Loss) Reclassified from AOCI into Operations
Three Months Ended September 30,Nine Months Ended September 30,
thousands2022202120222021
Interest expense$(728)$(3,172)$(6,709)$(9,186)