DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES

12 Months Ended

Dec. 31, 2020

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES

11. DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES

Hedges of Interest Rate Risk

In order to manage financing costs and interest rate exposure related to the one-month LIBOR indexed variable rate borrowings, on August 13, 2015, we entered into ten interest rate swap agreements with multiple counterparties totaling $385.0 million of notional value. These swap agreements became effective on November 2, 2015. During the year ended December 31, 2019, we terminated our two remaining interest rate swaps with an aggregate notional value of $120.0 million, for which we received aggregate termination payments, net of fees, of $1.3 million. The fair value of our two remaining swaps at the time of termination was $1.4 million resulting in a net loss of $119,000, which was recorded as a net increase to interest expense on our consolidated statement of operations for the year ended December 31, 2019.

Each of our interest rate swap agreements initially met the criteria for cash flow hedge accounting treatment and we had designated the interest rate swap agreements as cash flow hedges of the risk of variability attributable to changes in the one-month LIBOR. Accordingly, the interest rate swaps were recorded on our consolidated balance sheets at fair value, and prior to August 1, 2018, the changes in the fair value of the swaps were recorded in OCI and reclassified to earnings as an adjustment to interest expense as interest became receivable or payable (Note 2). Beginning on August 1, 2018, changes in the fair value of the swaps were recorded in interest expense on our consolidated statements of operations. For the years ended December 31, 2019 and 2018, $1.8 million and $1.6 million, respectively, was reclassified from AOCI and decreased interest expense on our consolidated statements of operations, which, during the year ended December 31, 2019, included a write off of $1.6 million at the time our two remaining interest rate swaps were terminated. For the years ended December 31, 2019 and 2018, $209,000 and $1.7 million, respectively, was included as an increase in interest expense on our consolidated statements of operations related to the change in the fair value of our interest rate swaps.

Impact of Hedges on AOCI and Consolidated Statements of Operations

The changes in the balance of each component of AOCI related to our interest rate swaps designated as cash flow hedges are as follows:

	Year Ended December 31,
	2020		2019		2018
	(in thousands)
Accumulated other comprehensive income (loss), at beginning of period	$	—	$	1,806	$	1,631
Other comprehensive income before reclassifications	—		—		1,973
Amounts reclassified (to) from accumulated other comprehensive income (loss) (1)	—		(1,806)		(1,798)
Net current period other comprehensive income (loss)	—		(1,806)		175
Accumulated other comprehensive income, at end of period	$	—	$	—	$	1,806

(1)The amounts from AOCI were reclassified as a (decrease) increase to interest expense in our consolidated statements of operations.