DERIVATIVES

In the normal course of business, we are exposed to financial market risks, including interest rate risk on our interest bearing liabilities. We attempt to limit these risks by following established risk management policies, procedures and strategies, including the use of financial instruments such as derivatives. We do not use financial instruments for trading or speculative purposes.

Cash Flow Hedges of Interest Rate Risk

For derivatives that have been designated and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in “Accumulated other comprehensive income” and subsequently reclassified into “Interest expense, net” in the same periods during which the hedged transaction affects earnings. As of December 31, 2018, all of our outstanding derivatives were designated as cash flow hedges. We recognize all derivatives at fair value as either assets or

liabilities in the accompanying consolidated balance sheets. Our derivative assets are recorded in “Deferred costs and other

assets” and our derivative liabilities are recorded in “Fair value of derivative instruments.”

During 2019, we estimate that $4.9 million will be reclassified as a decrease to interest expense in connection with derivatives. The recognition of these amounts could be accelerated in the event that we repay amounts outstanding on the debt instruments and do not replace them with new borrowings.

Interest Rate Swaps

As of December 31, 2018, we had interest rate swap agreements outstanding with a weighted average base interest rate of 1.55% on a notional amount of $797.3 million, maturing on various dates through May 2023, and forward starting interest rate swap agreements with a weighted average base interest rate of 2.71% on a notional amount of $250.0 million, with effective dates from January 2019 through June 2020, and maturity dates in May 2023. We entered into these interest rate swap agreements in order to hedge the interest payments associated with our issuances of variable interest rate long term debt. The interest rate swap agreements are net settled monthly.

The following table summarizes the terms and estimated fair values of our interest rate swap derivative instruments designated as cash flow hedges of interest rate risk at December 31, 2018 and December 31, 2017 based on the year they mature. The notional values provide an indication of the extent of our involvement in these instruments, but do not represent exposure to credit, interest rate or market risks.



Maturity Date	Aggregate Notional Value at December 31, 2018 (in millions of dollars)		Aggregate Fair Value at December 31, 2018 ⁽¹⁾(in millions of dollars)			Aggregate Fair Value at December 31, 2017 ⁽¹⁾(in millions of dollars)		Weighted Average Interest Rate
Interest Rate Swaps
2018	N/A		N/A			$	—	N/A
2019	$	250.0	$	—		0.8		1.44	%
2020	100.0		1.9			1.9		1.23	%
2021	397.3		8.1			7.0		1.57	%
2022	—		—			N/A		—	%
2023	50.0		(0.4		)	N/A		2.62	%
Forward Starting Swaps
2023	250.0		(2.6		)	N/A		2.71	%
Total	$	1,047.3	$	7.0		$	9.7	1.83	%

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⁽¹⁾	As of December 31, 2018 and December 31, 2017, derivative valuations in their entirety were classified in Level 2 of the fair value hierarchy and we did not have any significant recurring fair value measurements related to derivative instruments using significant unobservable inputs (Level 3).

The tables below present the effect of derivative financial instruments on accumulated other comprehensive income and on our consolidated statements of operations for the years ended December 31, 2018 and 2017:



	Year Ended December 31,
	Amount of Gain or (Loss) Recognized in Other Comprehensive Income on Derivative Instruments							Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Interest Expense
(in millions of dollars)	2018			2017		2016		2018		2017		2016
Derivatives in Cash Flow Hedging Relationships
Interest rate products	$	(0.4	)	$	4.0	$	1.5	$	2.4	$	2.3	$	5.1



	Year Ended December 31,
(in millions of dollars)	2018			2017			2016
Total interest expense presented in the consolidated statements of operations in which the effects of cash flow hedges are recorded	$	(61.4	)	$	(58.4	)	$	(70.7	)

Amount of gain (loss) reclassified from accumulated other comprehensive income into interest expense	$	2.4		$	2.3		$	5.1

In the years ended December 31, 2017 and 2016, we recorded net losses on hedge ineffectiveness of $0.1 million and $0.5 million, respectively.

In 2016, in connection with the sale of, and repayment of, the mortgage loan secured by Lycoming Mall, we recorded a net loss on hedge ineffectiveness of $0.1 million.

Credit-Risk-Related Contingent Features

We have agreements with some of our derivative counterparties that contain a provision pursuant to which, if our entity that originated such derivative instruments defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then we could also be declared to be in default on our derivative obligations. As of December 31, 2018, we were not in default on any of our derivative obligations.

We have an agreement with a derivative counterparty that incorporates the loan covenant provisions of our loan agreement with a lender affiliated with the derivative counterparty. Failure to comply with the loan covenant provisions would result in our being in default on any derivative instrument obligations covered by the agreement.

As of December 31, 2018, the fair value of derivatives in a liability position, which excludes accrued interest but includes any adjustment for nonperformance risk related to these agreements, was $3.0 million. If we had breached any of the default provisions in these agreements as of December 31, 2018, we might have been required to settle our obligations under the agreements at their termination value (including accrued interest) of $3.2 million. We had not breached any of these provisions as of December 31, 2018.