Quarterly report pursuant to Section 13 or 15(d)

DEFERRED CHARGES AND OTHER ASSETS, NET

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DEFERRED CHARGES AND OTHER ASSETS, NET
 9 Months Ended
Sep. 30, 2023
Other Assets [Abstract]  
DEFERRED CHARGES AND OTHER ASSETS, NET DEFERRED CHARGES AND OTHER ASSETS, NET
(dollars in thousands) September 30,
2023		 December 31,
2022
Deferred leasing costs $ 11,128 $ 59,651
Deferred financing costs - revolving credit facility (a) 771 6,684
11,899 66,335
Accumulated amortization (7,872) (30,471)
Deferred charges, net 4,027 35,864
Notes receivable (b) 55 1,309
In-place lease values, related intangibles and other assets, net (c) 10,165 12,298
Right of use assets (c) 6,401 2,238
Prepaid expenses and other assets, net 40,116 44,453
Total deferred charges and other assets, net $ 60,764 $ 96,162
(a)Deferred financing costs related to all other debt liabilities (other than for the revolving credit facility) are netted against those debt liabilities for all periods presented. See Note 2 to the Company's 2022 10-K: Significant Accounting Policies – Deferred Financing Costs.
(b)As of December 31, 2022, balance included an interest-free note receivable with a net present value of $0.2 million which matured in April 2023, and seller-financing of $1.0 million, net of a loan loss allowance of $26.0 thousand, to the buyers of the Metropark portfolio, which matured in May 2023.
(c)This amount has a corresponding liability of $7.5 million and $3.2 million as of September 30, 2023 and December 31, 2022, respectively, which is included in Accounts payable, accrued expense and other liabilities. See Note 12: Commitments and Contingencies – Office and Ground Lease agreements for further details.
DERIVATIVE FINANCIAL INSTRUMENTS
Cash Flow Hedges of Interest Rate Risk
The Company’s objectives in using interest rate derivatives are to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps and caps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. Interest rate caps designated as cash flow hedges involve the receipt of variable amounts from a counterparty if interest rates rise above the strike rate on the contract in exchange for an up-front premium.
The changes in the fair value of derivatives designated and that qualify as cash flow hedges are recorded in accumulated other comprehensive income and subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. Amounts reported in accumulated other comprehensive income related to derivatives will be
reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. During the next 12 months, the Company estimates $5.9 million will be reclassified as a decrease to interest expense.
As of September 30, 2023, the Company had four interest rate caps outstanding with a notional amount of $304.5 million designated as cash flow hedges of interest rate risk.
The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the consolidated balance sheets as of September 30, 2023 and December 31, 2022 (dollars in thousands):
Asset Derivatives designated
as hedging instruments
 Fair Value
Balance sheet location
September 30,
2023		 December 31,
2022
Interest rate caps $ 8,253  $ 9,808  Deferred charges and other assets
The table below presents the effect of the Company’s derivative financial instruments on the Consolidated Statements of Operations for the three and nine months ended September 30, 2023 and 2022, respectively (dollars in thousands):
Derivatives in Cash Flow Hedging Relationships Amount of Gain or (Loss) Recognized in OCI on Derivative Location of Gain or (Loss) Reclassified from Accumulated OCI into Income  Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income  Total Amount of Interest Expense presented in the consolidated statements of operations
Three months ended September 30, 2023 2022 2023 2022 2023 2022
Interest Rate Caps $ 658  $ 2,787  Interest expense $ 1,372  $ 211  $ (23,715) $ (18,819)
Nine months ended September 30,
Interest Rate Caps $ 2,356  $ 4,912  Interest expense $ 2,478  $ 213  $ (67,422) $ (45,167)
Credit-risk-related Contingent Features
As of September 30, 2023, the Company did not have any interest rate derivatives in a liability position.