Derivative and Hedging Activities
 12 Months Ended
Dec. 31, 2014
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative and Hedging Activities
Derivative and Hedging Activities
The Company uses interest rate derivative contracts to manage its exposure to changes in interest rates on its variable rate debt. These derivatives are considered cash flow hedges and are recorded on a gross basis at fair value and included in accounts payable, accrued expenses and other liabilities on the accompanying consolidated balance sheets. Assessments of hedge effectiveness are performed quarterly using regression analysis and the measurement of hedge ineffectiveness is based on the hypothetical derivative method. The effective portion of changes in fair value are recorded in accumulated other comprehensive loss (“AOCL”) and subsequently reclassified to earnings when the hedged transactions affect earnings. The ineffective portion is recorded immediately in earnings in general and administrative expenses.
The following table summarizes the notional amount and fair value of the Company’s derivative instruments (dollars in thousands):
 
 
 
 
 
 
 
 
 
 
 
 
Fair Value of Liability
Derivatives Designated as Hedging Instruments
 
Balance Sheet Location
 
Notional
Amount
 
Fixed Interest
Rate
 
Effective
Date
 
Maturity
Date
 
December 31,
2014
 
December 31,
2013
Interest Rate Swap
 
Accounts payable, accrued expenses and other liabilities
 
$
10,833

 
4.62
%
 
06/28/12
 
07/06/17
 
$
(46
)
 
$
(42
)
Interest Rate Swap
 
Accounts payable, accrued expenses and other liabilities
 
$
6,668

 
5.75
%
 
07/17/13
 
03/01/16
 
(180
)
 
(326
)
Interest Rate Swap
 
Accounts payable, accrued expenses and other liabilities
 
$
32,400

 
3.15
%
 
07/17/13
 
09/05/15
 
(93
)
 
(178
)
Interest Rate Swaps (1)
 
Accounts payable, accrued expenses and other liabilities
 
$
61,758

 
5.14
%
 
01/02/14
 
12/13/18
 
(803
)
 
(246
)
 
 
 
 
 
 
 
 
 
 
 
 
$
(1,122
)
 
$
(792
)
(1) Represents a tranche of eight individual interest rate swap agreements with notional amounts ranging from $7.6 million to $7.9 million. The swap agreements contain the same payment terms, stated interest rate, effective date, and maturity date.

As of December 31, 2014, the fixed weighted average interest rate of the Company's variable rate debt was 4.55%.
The following tables provide information about the amounts recorded in AOCL, as well as the gain or (loss) recorded in operations, when reclassified out of AOCL or recognized in earnings immediately, for the years ended December 31, 2014, 2013, and 2012, respectively (in thousands):
 
 
Amount of Loss Recognized
in AOCL on Derivative
(Effective Portion)
 
 
Years Ended December 31,
Derivatives in Cash Flow Hedging Relationships
 
2014
 
2013
 
2012
Interest rate swaps
 
$
(1,760
)
 
$
(314
)
 
$
(902
)
 
 
 
 
 
 
 
 
 
Amount of Loss Reclassified from
AOCL into Operations
(Effective Portion)
 
 
Years Ended December 31,
Location of Loss Reclassified from AOCL into Operations
 
2014
 
2013
 
2012
Interest expense
 
$
(1,315
)
 
$
(425
)
 
$
(3,646
)
General and administrative expense
 
—

 
(22
)
 
(4,037
)
 
 
 
 
 
 
 
 
 
Amount of Gain Recognized in Operations on Derivative
(Ineffective Portion)
 
 
Years Ended December 31,
Location of Gain Recognized in Operations on Derivatives
 
2014
 
2013
 
2012
General and administrative expense
 
$
—

 
$
10

 
$
—


In December 2013, the Company terminated certain interest rate swap agreements upon the repayment of four variable rate debt obligations. The Company paid $0.4 million to terminate these swaps and recognized a gain of $0.1 million, which is included in general and administrative expenses. During 2012, the Company recorded $4.0 million in losses in general and administrative expenses from the fair value measurement of the term note's share settled call option that was deemed an embedded derivative. Approximately $1.1 million of the remaining balance in AOCL is estimated to be reclassified as an increase to interest expense during the next 12 months. The Company does not enter into derivative contracts for speculative or trading purposes.
The Company is exposed to credit risk in the event of non-performance by its derivative counterparties. The Company believes it mitigates its credit risk by entering into agreements with counterparties it considers credit-worthy. As of December 31, 2014 and 2013, there were no termination events or events of default related to the interest rate swaps.