Derivatives

3 Months Ended

Mar. 31, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives

Derivatives

From December 2021 through March 2022, we entered into five forward-starting interest rate swap agreements with a notional amount of $2.5 billion to hedge against changes in future cash flows resulting from changes in interest rates from the trade date through the forecasted issuance date of $2.5 billion of long-term debt. We hedged our exposure to the variability in future cash flows for a forecasted issuance of long-term debt over a maximum period ending December 2023. The forward-starting interest rate swap were designated as cash-flow hedges. In April 2022, we entered into two U.S. Treasury Rate Lock agreements with a notional amount of $500.0 million to hedge against the changes in future cash flows resulting from changes in interest rates from the trade date through the forecasted issuance date of $500.0 million of long term debt. The treasury locks were designated as cash-flow hedges. Subsequent to quarter-end, in connection with the April 2022 Notes offering we settled the outstanding forward-starting interest rate swaps for total proceeds of $202.3 million and the treasury locks for total proceeds of $4.5 million. Since the forward-starting swaps and treasury locks were hedging the interest rate risk on the April 2022 Notes, the unrealized gain in Accumulated other comprehensive income will be amortized over the term of the respective derivative instruments, which matches that of the underlying note, as a reduction in interest expense.

In April 2018 and January 2019, we entered into six interest rate swap agreements with third party financial institutions having an aggregate notional amount of $2.0 billion. The interest rate swap transactions were designated as cash flow hedges that effectively fix the LIBOR component of the interest rate on a portion of the outstanding debt under the Term Loan B Facility at 2.8297%. On September 15, 2021, in connection with the full repayment of the Term Loan B Facility, we unwound and settled all of our outstanding interest rate swap agreements resulting in a cash payment of $66.9 million, inclusive of accrued interest of $2.7 million. As the Term Loan B Facility was repaid in full with proceeds from the issuance of 65,000,000 shares of common stock on September 14, 2021 and proceeds from the settlement of the June 2020 Forward Sale Agreement with no replacement debt, the full amount held in Other comprehensive income, $64.2 million, was immediately reclassified to Interest expense.

The following table details our outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk as of March 31, 2022 and December 31, 2021:

($ In thousands)	March 31, 2022
Instrument	Number of Instruments	Fixed Rate	Notional		Index	Maturity
Forward-starting interest rate swap	1	1.3465%	$	500,000	USD SOFR- COMPOUND	May 2, 2032
Forward-starting interest rate swap	1	1.6827%	$	500,000	USD-SOFR-COMPOUND	May 2, 2032
Forward-starting interest rate swap	1	1.6390%	$	500,000	USD-SOFR-COMPOUND	May 2, 2032
Forward-starting interest rate swap	1	1.6900%	$	500,000	USD-SOFR-COMPOUND	May 2, 2027
Forward-starting interest rate swap	1	1.5850%	$	500,000	USD-SOFR-COMPOUND	May 2, 2029

($ In thousands)	December 31, 2021
Instrument	Number of Instruments	Fixed Rate	Notional		Index	Maturity
Forward-starting interest rate swap	1	1.3465%	$	500,000	USD SOFR- COMPOUND	May 2, 2032

As of March 31, 2022, the interest rate swaps were in an unrealized gain position and were recorded within Other assets. The following table presents the effect of our derivative financial instruments on our Statement of Operations:

	Three Months Ended March 31,
(In thousands)	2022		2021
Unrealized gain recorded in other comprehensive income	$	108,611	$	12,378
Interest recorded in interest expense	$	—	$	10,826