Annual report pursuant to Section 13 and 15(d)

DEFERRED CHARGES AND OTHER ASSETS, NET

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DEFERRED CHARGES AND OTHER ASSETS, NET
 12 Months Ended
Dec. 31, 2023
Other Assets [Abstract]  
DEFERRED CHARGES AND OTHER ASSETS, NET DEFERRED CHARGES AND OTHER ASSETS, NET
(dollars in thousands) December 31,
2023		 December 31,
2022
Deferred leasing costs $ 8,324  $ 59,651 
Deferred financing costs - revolving credit facility (a) 771  6,684 
  9,095  66,335 
Accumulated amortization (5,063) (30,471)
Deferred charges, net 4,032  35,864 
Notes receivable (b) 32  1,309 
In-place lease values, related intangibles and other assets, net (c)(d) 10,034  12,298 
Right of use assets (e) 6,161  2,896 
Prepaid expenses and other assets, net 33,697  43,795 
Total deferred charges and other assets, net (f) $ 53,956  $ 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: 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)The Company recognizes rental revenue of acquired above and below market lease intangibles over the terms of the respective leases. The impact of amortizing the acquired above and below-market lease intangibles increased revenue by approximately $0.1 million, $0.2 million and $2.7 million for the years ended December 31, 2023, 2022 and 2021, respectively. The following table summarizes, as of December 31, 2023, the scheduled amortization of the Company’s acquired above and below-market lease intangibles for each of the five succeeding years (dollars in thousands):
Year Acquired Above-
Market Lease
Intangibles		 Acquired Below-
Market Lease
Intangibles		 Total
Amortization
2024 $ (175) $ 93  $ (82)
2025 (162) 64  (98)
2026 (143) 62  (81)
2027 (124) 26  (98)
2028 (121) 15  (106)
(d)The value of acquired in-place lease intangibles are amortized to expense over the remaining initial terms of the respective leases. The impact of the amortization of acquired in-place lease values is included in depreciation and amortization expense and amounted to approximately $2.0 million, $1.5 million and $2.1 million for the years ended December 31, 2023, 2022 and 2021, respectively. The following table summarizes, as of
December 31, 2023, the scheduled amortization of the Company’s acquired in-place lease values for each of the five succeeding years (dollars in thousands):
Year
Acquired In-place Lease Intangibles
2024 $ 310
2025 209
2026 195
2027 127
2028 105
(e)This amount has a corresponding liability of $7.4 million and $3.2 million as of December 31, 2023 and 2022, respectively, which is included in Accounts payable, accrued expense and other liabilities. See Note 12: Commitments and Contingencies – 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 caps as part of its interest rate risk management strategy. 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 is 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 $3.8 million will be reclassified as a decrease to interest expense.
As of December 31, 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 December 31, 2023 and 2022 (dollars in thousands):
  Fair Value  
Asset Derivatives designated
as hedging instruments		 December 31,
2023		 December 31,
2022		 Balance sheet location
Interest rate caps $ 5,098  $ 9,808  Deferred charges and other assets, net
The table below presents the effect of the Company’s derivative financial instruments on the Consolidated Statements of Operations for the years ended December 31, 2023, 2022 and 2021 (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
Year Ended December 31, 2023 2022 2021   2023 2022 2021 2023 2022 2021
Interest rate caps $ 1,184  $ 5,032  $ 10  Interest expense $ 3,559  $ 666  $ —  $ (89,355) $ (66,381) $ (47,505)
Credit-risk-related Contingent Features
The Company has agreements with each of its derivative counterparties that contain a provision where if the Company either defaults or is capable of being declared in default on any of its indebtedness, then the Company could also be declared in default on its derivative obligations. Specifically, the Company could be declared in default on its derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to the Company's default on the indebtedness.
As of December 31, 2023, the Company did not have any interest rate derivatives in a net liability position.