Derivative Financial Instruments

The following table summarizes the terms and fair values of the Company's derivative financial instruments, as well as their classification on the Consolidated Balance Sheets:



								Fair Value
(in thousands)								Assets (Liabilities)⁽²⁾
Effective Date	Maturity Date	Early Termination Date ⁽¹⁾	Notional Amount		Bank Pays Variable Rate of	Regency Pays Fixed Rate of		September 30, 2016			December 31, 2015
10/16/13	10/16/20	N/A	$	28,100	1 Month LIBOR	2.196%		$	(1,373	)	(898	)
8/1/16	1/5/22	N/A	200,000		1 Month LIBOR	1.048%		423			—
8/1/16	1/5/22	N/A	65,000		1 Month LIBOR	1.070%		53			—
4/7/16	4/1/23	N/A	20,000		1 Month LIBOR	1.303%		(264		)	—
6/15/17	6/15/27	12/15/17	20,000		3 Month LIBOR	3.488%	⁽³⁾	—			(1,798	)
6/15/17	6/15/27	12/15/17	100,000		3 Month LIBOR	3.480%	⁽³⁾	—			(8,922	)
6/15/17	6/15/27	12/15/17	100,000		3 Month LIBOR	3.480%	⁽³⁾	—			(8,921	)
Total derivative financial instruments								$	(1,161	)	(20,539	)

⁽¹⁾ Represents the date specified in the agreement for either optional or mandatory early termination by the counterparty, which will result in cash settlement. The Company has the option to terminate and settle at any date prior to this.

⁽²⁾Derivatives in an asset position are included within Other assets in the accompanying Consolidated Balance Sheets, while those in a liability position are included within Accounts payable and other liabilities.

⁽³⁾ In 2014, the Company entered into $220 million of forward starting interest rate swaps to hedge the interest rate on new fixed rate ten year debt that the Company expected to issue in June 2017 for the specific purpose of repaying at maturity the $300 million notes. These interest rate swaps locked in a weighted average fixed rate of 3.48%, before the Company's credit spread. These swaps were settled during the during the third quarter of 2016, as further described below.

These derivative financial instruments are all interest rate swaps, which are designated and qualify as cash flow hedges. The Company does not use derivatives for trading or speculative purposes and, as of September 30, 2016, does not have any derivatives that are not designated as hedges. The Company has master netting agreements; however, the Company does not have multiple derivatives subject to a single master netting agreement with the same counterparties. Therefore, none are offset in the accompanying Consolidated Balance Sheets.

The effective portion of changes in the fair value of derivatives designated and qualifying as cash flow hedges is recorded in Accumulated other comprehensive income (loss) ("AOCI") and subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings within Interest expense, in the accompanying Consolidated Statements of Operations.

The following table represents the effect of the derivative financial instruments on the accompanying consolidated financial statements:



Derivatives in FASB ASC Topic 815 Cash Flow Hedging Relationships:	Amount of Gain (Loss) Recognized in OCI on Derivative (Effective Portion)					Location and Amount of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)						Location and Amount of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Missed Forecast)
	Three months ended September 30,						Three months ended September 30,						Three months ended September 30,
(in thousands)	2016			2015			2016			2015			2016			2015
Interest rate swaps	$	1,294		(15,768	)	Interest expense	$	(2,525	)	(2,155	)	Loss on derivative instruments	$	(40,586	)	—

Derivatives in FASB ASC Topic 815 Cash Flow Hedging Relationships:	Amount of Gain (Loss) Recognized in OCI on Derivative (Effective Portion)					Location and Amount of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)						Location and Amount of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Missed Forecast)
	Nine months ended September 30,						Nine months ended September 30,						Nine months ended September 30,
(in thousands)	2016			2015			2016			2015			2016			2015
Interest rate swaps	$	(25,338	)	(11,274	)	Interest expense	$	(7,477	)	(6,654	)	Loss on derivative instruments	$	(40,586	)	—

As of September 30, 2016, the Company expects $10.7 million of net deferred losses on derivative instruments accumulated in Other comprehensive income, including the Company's share from its Investments in real estate partnerships, to be reclassified into earnings during the next 12 months. Included in the reclass is $8.4 million which is related to previously settled swaps on the Company's ten year fixed rate unsecured loans.

Hedge Settlement

During the third quarter of 2016, the Company initiated and completed a $400.1 million equity offering, as further described in note 7, for the primary purpose of funding the early redemption of its $300 million notes. The Company also used $40.6 million from the net offering proceeds to settle $220 million of forward starting swaps related to new debt previously expected to be issued in 2017 to repay the notes at maturity. As a result of the equity offering, the Company believed that the issuance of new fixed rate debt within the remaining period of the forward starting swaps was probable not to occur. Accordingly, the Company ceased hedge accounting and reclassified the $40.6 million paid to settle the forward starting swaps from Accumulated other comprehensive loss to earnings during the third quarter of 2016.