Derivative Instruments and Hedging Activity |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Derivatives Instrument and Hedging Activity | DERIVATIVE INSTRUMENT AND HEDGING ACTIVITY On July 11, 2019, the Company entered into an interest rate swap contract to mitigate its exposure to changes in market interest rates as part of its overall strategy to manage its Real Estate Note to achieve an overall desired position of notional debt amounts subject to fixed and floating interest rates. The interest rate swap contract is entered into for periods consistent with the related underlying exposure and does not constitute a position independent of this exposure. The Company's interest rate swap contract is designated as a cash flow hedge at the inception date, and is reflected at its fair value in the condensed consolidated balance sheet. Refer to "Note 17—Fair Value Measurements of Financial Instruments" for further information on the fair value and classification of the interest rate swap contract.
Details of the outstanding swap contract as of September 30, 2019, which is a pay fixed and receive floating contract, is as follows:
The Company performed an initial qualitative assessment of hedge effectiveness using the hypothetical derivative method in the period in which the hedging transaction was entered, as the critical terms of the hypothetical derivative and the hedging instrument are the same. In future reporting periods, the Company will perform a qualitative analysis for quarterly prospective and retrospective assessments of hedge effectiveness. The Company also monitors the risk of counterparty default on an ongoing basis and noted that the counterparty is a reputable financial institution. The unrealized loss on the derivative instrument was initially reported within other comprehensive loss in the condensed consolidated statement of operations and comprehensive (loss) for the three months ended September 30, 2019, and will be subsequently reclassified to earnings in interest expense, net in the consolidated statements of operations when the hedged transaction affects earnings. There were no reclassifications from other comprehensive loss into interest expense for the three months September 30, 2019.
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