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Derivative Financial Instruments
 12 Months Ended
Dec. 31, 2017
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Financial Instruments
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 at December 31,
(in thousands)
 
 
 
 
 
 
 
Assets (Liabilities) (1)
Effective Date
 
Maturity Date
 
Notional Amount
 
Bank Pays Variable Rate of
 
Regency Pays Fixed Rate of
 
2017
 
2016
4/3/17
 
12/2/20
 
$
300,000

 
1 Month LIBOR with Floor
 
1.824%
 
$
1,804

 
—

8/1/16
 
1/5/22
 
265,000

 
1 Month LIBOR with Floor
 
1.053%
 
10,744

 
9,889

4/7/16
 
4/1/23
 
20,000

 
1 Month LIBOR
 
1.303%
 
801

 
720

12/1/16
 
11/1/23
 
33,000

 
1 Month LIBOR
 
1.490%
 
1,166

 
1,013

6/2/17
 
6/2/27
 
37,500

 
1 Month LIBOR with Floor
 
2.366%
 
(177
)
 
(580
)
Total derivative financial instruments
 
$
14,338

 
11,042

 
 
 
 
 
 
 
 
 
 
 
 
 
(1) 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.

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 currently 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:
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)
 
Year ended December 31,
 
 
 
Year ended December 31,
 
 
 
Year ended December 31,
(in thousands)
2017
 
2016
 
2015
 
 
 
2017
 
2016
 
2015
 
 
 
2017
 
2016
 
2015
Interest rate swaps
$
1,151

 
(10,332
)
 
(10,089
)
 
Interest expense
 
$
(11,103
)
 
(51,139
)
 
(9,152
)
 
Loss on derivative instruments
 
$
—

 
(40,586
)
 
—


As of December 31, 2017, the Company expects $6.9 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 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.
Subsequent Event
On February 9, 2018, the Company executed a ten year treasury rate lock on $285.0 million notional amount at a fixed interest rate of 2.899%, intended to designate as a cash flow hedge against changes in interest rates on anticipated future fixed-rate unsecured borrowings.