Derivative Instruments and Hedging Activities
 6 Months Ended
Jun. 30, 2012
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
In the normal course of business, the Company uses certain types of derivative instruments for the purpose of managing or hedging its interest rate risks. The following table summarizes the notional amount and fair value of the Company’s derivative instruments (in thousands):
   
 
 
 
 
 
 
 
 
 
 
 
 
Fair Value of Liability
Derivatives designated as
 
Balance Sheet
 
Notional
 
Interest
 
Effective
 
Maturity
 
June 30, 2012
 
December 31, 2011
hedging instruments        
 
Location
 
Amount
 
Rate
 
Date
 
Date
 
 
Interest Rate Swap
 
Deferred rental income, derivative and other liabilities
 
$
31,781

 
6.2%
 
11/04/2008
 
10/31/2012
 
$
(359
)
 
$
(869
)
Interest Rate Swap
 
Deferred rental income, derivative and other liabilities
 
14,847

 
6.2%
 
06/12/2009
 
06/11/2012
 
—

 
(172
)
Interest Rate Swap
 
Deferred rental income, derivative and other liabilities
 
7,037

 
5.8%
 
02/20/2009
 
03/01/2016
 
(512
)
 
(497
)
Interest Rate Swap
 
Deferred rental income, derivative and other liabilities
 
30,000

 
6.0%
 
11/24/2009
 
10/16/2012
 
(124
)
 
(310
)
Interest Rate Swap
 
Deferred rental income, derivative and other liabilities
 
111,111

 
4.9%
 
02/28/2011
 
11/30/2013
 
(1,460
)
 
(1,558
)
Interest Rate Swap
 
Deferred rental income, derivative and other liabilities
 
38,250

 
3.5%
 
09/26/2011
 
09/26/2014
 
(315
)
 
(152
)
 
 
 
 
$
233,026

 
 
 
 
 
 
 
$
(2,770
)
 
$
(3,558
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Additional disclosures related to the fair value of the Company’s derivative instruments are included in Note 3 to these condensed consolidated unaudited financial statements. The notional amount under the agreements is an indication of the extent of the Company’s involvement in each instrument, but does not represent exposure to credit, interest rate or market risks.
Accounting for changes in the fair value of a derivative instrument depends on the intended use and designation of the derivative instrument. The Company designated the interest rate swaps as cash flow hedges, to hedge the variability of the anticipated cash flows on its variable rate notes payable. The change in fair value of the effective portion of the derivative instruments that are designated as hedges is recorded in other comprehensive income or loss.
The following table summarizes the unrealized gains and losses on the Company’s derivative instruments and hedging activities (in thousands):
 
  
 
Amount of Gain (Loss) Recognized in Other
Comprehensive Income
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
Derivatives in Cash Flow Hedging Relationships
 
2012
 
2011
 
2012
 
2011
Interest Rate Swaps (1)
 
$
573

 
$
(956
)
 
$
788

 
$
(697
)
 
 
 
 
 
 
 
 
 
(1)
There were no portions of the change in the fair value of the interest rate swap agreements that were considered ineffective during the six months ended June 30, 2012 or 2011. No previously effective portions of losses that were recorded in accumulated other comprehensive loss during the term of the hedging relationship were reclassified into earnings during the six months ended June 30, 2012 or 2011.
The Company has agreements with each of its derivative counterparties that contain a provision whereby, if the Company defaults on certain of its unsecured indebtedness, then the Company could also be declared in default on its derivative obligations resulting in an acceleration of payment. In addition, 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 credit-worthy counterparties. The Company records credit risk valuation adjustments on its interest rate swaps based on the respective credit quality of the Company and the counterparty. As of both June 30, 2012 and 2011, there were no termination events or events of default related to the interest rate swaps.