Derivative Financial Instruments

12 Months Ended

Dec. 31, 2016

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

Derivative Financial Instruments

We utilize interest rate swap agreements for risk management purposes to reduce the impact of changes in interest rates on our variable rate debt. We may also enter into forward starting swaps to set the effective interest rate on planned fixed rate financing.  On the date we enter into an interest rate swap, the derivative is designated as a hedge against the variability of cash flows that are to be paid in connection with a recognized liability.  Subsequent changes in the fair value of a derivative designated as a cash flow hedge that is determined to be highly effective are recorded in other comprehensive income (“OCI”) until earnings are affected by the variability of cash flows of the hedged transaction. The differential between fixed and variable rates to be paid or received is accrued, as interest rates change, and recognized currently as interest expense in our consolidated statements of operations.  We assess effectiveness of our cash flow hedges both at inception and on an ongoing basis.  Our cash flow hedges become ineffective if critical terms of the hedging instrument and the debt do not perfectly match such as notional amounts, settlement dates, reset dates, calculation period and LIBOR rate. At December 31, 2016, all of our hedges were highly effective.

As of December 31, 2016, we had nine interest rate swap agreements in effect for an aggregate notional amount of $210.0 million converting our floating rate corporate debt to fixed rate debt. In addition we have entered into one forward starting interest rate swap agreements for an aggregate notional amount of $60.0 million. All of our interest rate swap agreements are designated as cash flow hedges The agreements provide for swapping one-month LIBOR interest rates ranging from 1.460% to 2.150% and have expirations ranging from October 2018 to March 2023.

The following table summarizes the notional values and fair values of our derivative financial instruments as of December 31, 2016:

Underlying Debt	Hedge Type	Notional Value		Fixed Rate		Fair Value			Expiration Date
		(In thousands)				(In thousands)
Derivative Assets
Unsecured term loan facility	Cash Flow	$	50,000	1.460	%	$	185		05/2020
Unsecured term loan facility	Cash Flow	20,000		1.498	%	177			05/2021
Unsecured term loan facility	Cash Flow	15,000		1.490	%	138			05/2021
Unsecured term loan facility	Cash Flow	40,000		1.480	%	429			05/2021
		$	125,000			$	929
Derivative Assets - Forward Swaps
Unsecured term loan facility	Cash Flow	60,000		1.770	%	1,214			03/2023
Total Derivative Assets		$	185,000			$	2,143
Derivative Liabilities
Unsecured term loan facility	Cash Flow	$	30,000	2.048	%	$	(457	)	10/2018
Unsecured term loan facility	Cash Flow	25,000		1.850	%	(291		)	10/2018
Unsecured term loan facility	Cash Flow	5,000		1.840	%	(58		)	10/2018
Unsecured term loan facility	Cash Flow	15,000		2.150	%	(296		)	05/2020
Unsecured term loan facility	Cash Flow	10,000		2.150	%	(198		)	05/2020
Total Derivative Liabilities		$	85,000			$	(1,300	)

The effect of derivative financial instruments on our consolidated statements of operations for the year ended December 31, 2016 and 2015 is summarized as follows:

	Amount of Gain (Loss) Recognized in OCI on Derivative (Effective Portion)				Location of Loss Reclassified from Accumulated OCI	Amount of Loss Reclassified from Accumulated OCI into Income (Effective Portion)
Derivatives in Cash Flow Hedging Relationship	Year Ended December 31,				into Income	Year Ended December 31,
	2016		2015		(Effective Portion)	2016			2015
	(In thousands)					(In thousands)
Interest rate contracts - assets	$	3,718	$	1,008	Interest Expense	$	(2,217	)	$	(902	)
Interest rate contracts - liabilities	1,230		2,589		Interest Expense	(289		)	(2,125		)
Total	$	4,948	$	3,597	Total	$	(2,506	)	$	(3,027	)