Financial Instruments and Fair Value Measurements

3 Months Ended

Mar. 31, 2026

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Financial Instruments and Fair Value Measurements

NOTE 9. FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

Derivative Financial Instruments

In the normal course of business, our operations are exposed to market risks, including the effect of changes in foreign currency exchange rates and interest rates. We may enter into derivative financial instruments to offset these underlying market risks. There have been no significant changes in our policy and strategy from what was disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025.

The following table presents the fair value of our derivative financial instruments recognized within Other Assets and Other Liabilities in the Consolidated Balance Sheets (in thousands):


	March 31, 2026				December 31, 2025
	Asset		Liability		Asset		Liability
Undesignated derivatives
Foreign currency contracts
Forwards
Brazilian real	$	-	$	648	$	-	$	394
British pound sterling		5,720		4,477		164		11,688
Canadian dollar		7,758		-		5,680		214
Euro		3,952		7,978		1,660		17,571
Japanese yen		53,713		-		54,147		22
Swedish krona		303		3,680		198		5,352
Options
Mexican peso		3,120		-		14,733		-

Designated derivatives
Foreign currency contracts
Net investment hedges
British pound sterling		7,936		462		841		4,279
Canadian dollar		4,299		-		1,866		968

Interest rate contracts
Cash flow hedges
Canadian dollar (1)		-		-		-		-
Euro		3,339		-		-		-
Japanese yen		809		-		-		-
U.S. dollar		5,918		-		1,480		-
Total fair value of derivatives	$	96,867	$	17,245	$	80,769	$	40,488

(1)

On March 31, 2026, we entered into a Canadian dollar interest rate contract to hedge a future Canadian debt issuance. At that time, there was no asset or liability value.

Undesignated Derivative Financial Instruments

Foreign Currency Contracts

The following table summarizes the activity of our undesignated foreign currency contracts for the three months ended March 31 (in millions, except for weighted average forward rates and number of active contracts):


	2026																	2025
	CAD			EUR			GBP			JPY			Other			Total		CAD			EUR			GBP			JPY			Other			Total
Notional amounts at January 1 ($)		296			587			385			335			(202	)		1,401		254			526			386			312			(27	)		1,451
New contracts ($)		-			21			106			12			31			170		-			85			10			46			18			159
Matured, expired or settled contracts ($)		(18	)		(32	)		(25	)		(21	)		141			45		(20	)		(29	)		(18	)		(17	)		(4	)		(88	)
Notional amounts at March 31 ($)		278			576			466			326			(30	)		1,616		234			582			378			341			(13	)		1,522

Weighted average forward rate at March 31		1.33			1.18			1.31			126.32								1.31			1.15			1.28			121.88
Active contracts at March 31		106			130			118			102								93			109			83			93

The following table summarizes the undesignated derivative financial instruments exercised and associated realized and unrealized gains (losses), respectively, in Foreign Currency, Derivative and Other Gains (Losses) and Other Income (Expense), Net in the Consolidated Statements of Income (in millions, except for number of exercised contracts):


	Three Months Ended March 31,
	2026		2025
Exercised contracts		29		26
Realized gains (losses) on the matured, expired or settled contracts	$	15	$	9
Unrealized gains (losses) on the change in fair value of outstanding contracts	$	19	$	(40	)

Designated Derivative Financial Instruments

Changes in the fair value of derivatives that are designated as net investment hedges ("NIHs") of our foreign operations and cash flow hedges ("CFHs") are recorded in Accumulated Other Comprehensive Income (Loss) (“AOCI/L”) in the Consolidated Balance Sheets and reflected within the AOCI/L table below.

Foreign Currency Contracts

The following table summarizes the activity of our foreign currency contracts designated as NIHs for the three months ended March 31 (in millions, except for weighted average forward rates and number of active contracts):


	2026								2025
	CAD		GBP			Total			CAD			GBP		Total
Notional amounts at January 1 ($)		200		683			883			163			432		595
New contracts ($)		-		125			125			-			-		-
Matured, expired or settled contracts ($)		-		(125	)		(125	)		(163	)		-		(163	)
Notional amounts at March 31 ($)		200		683			883			-			432		432

Weighted average forward rate at March 31		1.36		1.34						-			1.26
Active contracts at March 31		2		6						-			4

Interest Rate Contracts

The following table summarizes the activity of our interest rate contracts designated as CFHs for the three months ended March 31 (in millions):


	2026												2025
	CAD		EUR		JPY		USD			Total			CAD			USD			Total
Notional amounts at January 1 ($)		-		-		-		425			425			-			280			280
New contracts ($)		72		272		190		425			959			139			325			464
Matured, expired or settled contracts ($)		-		-		-		(425	)		(425	)		(139	)		(180	)		(319	)
Notional amounts at March 31 ($)		72		272		190		425			959			-			425			425

Designated Nonderivative Financial Instruments

The following table summarizes our debt and accrued interest, designated as a hedge of our net investment in international subsidiaries at the quarter ended (in millions):


	March 31, 2026		December 31, 2025
British pound sterling	$	1,883	$	1,837
Canadian dollar	$	1,822	$	1,793
Chinese renminbi	$	98	$	-

The following table summarizes the unrealized gains (losses) in Foreign Currency, Derivative and Other Gains (Losses) and Other Income (Expense), Net in the Consolidated Statements of Income on the remeasurement of the unhedged portion of our foreign denominated debt and accrued interest (in millions):


	Three Months Ended March 31,
	2026			2025
Unrealized gains (losses) on the unhedged portion	$	(5	)	$	(22	)

Accumulated Other Comprehensive Income (Loss) ("AOCI/L")

The change in AOCI/L in the Consolidated Statements of Equity during the periods presented was due to the following: (i) the currency translation adjustments ("CTA") that we recognize due to the translation of the financial statements of our consolidated subsidiaries, whose functional currency is not the U.S. dollar, into U.S. dollars; and (ii) the change in the fair value of the effective portion of our derivative financial instruments that have been designated as NIHs and CFHs and the translation of the hedged portion of our debt.

The following tables present these changes in AOCI/L (in thousands):


	Unrealized gains (losses) on CFHs (1)			Our share of derivatives from unconsolidated entities		Derivative NIHs		Debt designated as nonderivative NIHs (2)		CTA			Total AOCI/L
Balance at January 1, 2026	$	(9,332	)	$	18,532	$	310,320	$	106,834	$	(1,102,630	)	$	(676,276	)
Other comprehensive income (loss), net		8,255			2,371		14,623		68,474		103,056			196,779
Balance at March 31, 2026	$	(1,077	)	$	20,903	$	324,943	$	175,308	$	(999,574	)	$	(479,497	)


	Unrealized gains (losses) on CFHs			Our share of derivatives from unconsolidated entities		Derivative NIHs			Debt designated as nonderivative NIHs (2)			CTA			Total AOCI/L
Balance at January 1, 2025	$	(11,659	)	$	12,652	$	341,852		$	327,897		$	(790,957	)	$	(120,215	)
Other comprehensive income (loss), net		(5,752	)		2,874		(14,788	)		(61,215	)		(150,492	)		(229,373	)
Balance at March 31, 2025	$	(17,411	)	$	15,526	$	327,064		$	266,682		$	(941,449	)	$	(349,588	)

(1)

We estimate an additional expense of $1.1 million will be reclassified to Interest Expense in the Consolidated Statements of Income over the next 12 months from March 31, 2026, due to the amortization of settled derivatives designated as cash flow hedges.

(2)

Reclassification of amounts out of AOCI/L due to the remeasurement of the unhedged portion of our euro-denominated and Chinese renminbi-denominated debt and accrued interest is included within other comprehensive income (loss), net.

Fair Value Measurements

There have been no significant changes in our policy from what was disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025.

Fair Value Measurements on a Recurring Basis

At March 31, 2026 and December 31, 2025, other than the derivatives discussed previously, we had no significant financial assets or financial liabilities that were measured at fair value on a recurring basis in the Consolidated Financial Statements. All of our derivatives held at March 31, 2026 and December 31, 2025, were classified as Level 2 of the fair value hierarchy.

Fair Value Measurements on Nonrecurring Basis

Acquired properties, assets we expect to sell or contribute and assets subject to impairment charges are significant nonfinancial assets that met the criteria to be measured at fair value on a nonrecurring basis. At March 31, 2026 and December 31, 2025, we estimated the fair value of our properties using Level 2 or Level 3 inputs from the fair value hierarchy. See more information on our acquired properties in Note 2 and assets held for sale or contribution in Note 4.

Fair Value of Financial Instruments

At March 31, 2026 and December 31, 2025, the carrying amounts of certain financial instruments, including cash and cash equivalents, accounts and notes receivable, accounts payable and accrued expenses were representative of their fair values.

The differences in the fair value of our debt from the carrying value in the table below were the result of differences in interest rates or borrowing spreads that were available to us at March 31, 2026 and December 31, 2025, as compared with those in effect when the debt was issued or assumed, including lower borrowing spreads due to our credit ratings. See Note 5 for more information on our debt activity.

The following table reflects the carrying amounts and estimated fair values of our debt (in thousands):


	March 31, 2026				December 31, 2025
	Carrying Value		Fair Value		Carrying Value		Fair Value
Credit facilities and commercial paper	$	553,865	$	553,865	$	44,679	$	44,679
Senior notes		31,987,819		29,569,104		32,887,971		30,950,062
Term loans and unsecured other		1,913,648		1,862,863		1,908,723		1,862,065
Secured mortgage		214,260		204,017		195,700		185,965
Total	$	34,669,592	$	32,189,849	$	35,037,073	$	33,042,771