v3.25.2
Derivative Instruments and Hedging Activities
 6 Months Ended
Jun. 30, 2025
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Instruments and Hedging Activities Disclosure
7. Derivative Instruments and Hedging Activities
BPLP’s agreements with derivative counterparties contain provisions whereby if BPLP defaults on the underlying indebtedness, including defaults where repayment of the indebtedness has not been accelerated by the lender, then BPLP could also be declared in default of the swap derivative obligation. As of June 30, 2025, the Company had not posted any collateral related to the agreements.
Effective Hedge Instruments
On April 8, 2025, BPLP entered into an interest rate swap contract with a notional amount of $300.0 million to replace $300.0 million of interest rate swap contracts that expired on April 1, 2025 thus continuing to reduce its exposure to the variability in future cash flows attributable to changes in the interest rates associated with its $100.0 million unsecured term loan facility (the “2024 Unsecured Term Loan”) and the $200.0 million mortgage secured by the Company’s Santa Monica Business Park properties, located in Santa Monica, California. The interest rate swap was entered into to fix Daily Simple SOFR, the reference rate for the 2024 Unsecured Term Loan and mortgage, at a fixed interest rate of 3.6775% per annum for the period commencing on April 7, 2025, the effective date, and ending on April 6, 2026. For the period from April 7, 2025 through June 30, 2025, the Company recognized approximately $(0.5) million of interest expense related to this interest rate swap contract.
BPLP assesses the effectiveness of its derivatives both at inception and on an ongoing basis. If the hedges are deemed to be effective, the fair value is recorded in “Accumulated other comprehensive loss” in the Company’s Consolidated Balance Sheets and is subsequently reclassified into “Interest expense” in the Company’s Consolidated Statements of Operations in the period that the hedged forecasted transactions affect earnings. BPLP’s derivative financial instruments are cash flow hedges that are designated as effective hedges, and they are carried at their estimated fair value on a recurring basis (See Note 2). The Company did not have any undesignated hedges during the three and six months ended June 30, 2025.
BPLP’s derivative contracts consisted of the following at June 30, 2025 (dollars in thousands):
Derivative InstrumentAggregate Notional Amount Strike Rate RangeBalance Sheet Location
Effective Date Maturity DateLow High Fair Value
Interest Rate Swaps$600,000 December 15, 2023October 26, 20283.790%—3.798%Other liabilities$(8,411)
Interest Rate Swaps300,000 April 7, 2025April 6, 20263.678%—3.678%Prepaid expenses and other assets629 
$900,000 $(7,782)
The following table presents the location in the financial statements of the gains or (losses) recognized as a result of the Company’s cash flow hedges for the three and six months ended June 30, 2025 and 2024 (in thousands):
Three months ended June 30,Six months ended June 30,
2025202420252024
Amount of gain (loss) related to the effective portion recognized in other comprehensive income (loss) (1)$(5,636)$936 $(18,912)$17,287 
Amount of gain (loss) related to the effective portion subsequently reclassified to earnings (2)$1,692 $3,081 $4,773 $6,441 
Amount of gain (loss) related to the ineffective portion and amount excluded from effectiveness testing$— $— $— $— 
_______________
(1)Includes the Company’s share of gain (loss) related to the effective portion of derivatives outstanding at its unconsolidated joint venture properties.
(2)Includes amounts from previous interest rate programs.
BPLP has formally documented all of its relationships between hedge instruments and hedging items, as well as its risk-management objectives and strategy for undertaking various hedge transactions. While management believes its judgments are reasonable, a change in a derivative's effectiveness as a hedge could materially affect expenses, net income (loss) and equity.