Derivative Financial Instruments

3 Months Ended

Mar. 31, 2012

Derivative Financial Instruments [Abstract]

Derivative Financial Instruments

10. Derivative Financial Instruments

The Trust has exposure to fluctuations in market interest rates. The Trust seeks to limit its risk to interest rate fluctuations through match financing on its assets as well as through hedging transactions.

The Trust’s objective in using interest rate derivatives is to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Trust primarily uses interest rate caps and interest rate swaps as part of its interest rate risk management strategy relating to certain of its variable rate debt instruments.

The effective portion of changes in fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. The ineffective portion of the change, if any, in fair value of the derivatives is recognized directly in earnings. During the three months ended March 31, 2012, the interest rate cap was used to hedge the variable cash flows associated with existing variable-rate debt. The Trust also assesses, both at its inception and on an ongoing basis, whether the hedging instrument is highly effective in achieving offsetting changes in the cash flows attributable to the hedged item. The Trust has recorded changes in fair value related to the effective portion of its interest rate hedges designated and qualifying as a cash flow hedges totaling $32,000 and $63,000 for the three months ended March 31, 2012 and 2011, respectively.

The table below presents information about the Trust’s interest rate cap that was designated as a cash flow hedge of interest rate risk at March 31, 2012 (in thousands):

Maturity	Strike Rate			Notional Amount of Hedge		Cost of Hedge		Estimated Fair Value of Cap in Other Comprehensive Income			Unrealized Gain on Settled Cap in Other Comprehensive Income		Change in Cap Valuations Included in Other Comprehensive Income for the Three Months Ended March 31, 2012
Oct. 2014		1.00	%	$	21,000	$	174	$	(124	)	$	—	$	(32	)

The table below presents information about the Trust’s interest rate caps that were not designated as cash flow hedges (in thousands):

Maturity	Strike Rate			Notional Amount of Hedge		Cost of Hedge		Estimate Fair Value
May 2012		0.75	%	$	51,982	$	17	$	—
May 2013		1.25	%	$	51,982	$	196	$	—
May 2014		1.75	%	$	51,982	$	434	$	21