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Derivatives and Hedging Activities | 9 Months Ended
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Sep. 30, 2024
Derivatives and Hedging Activities [Abstract] |
Derivatives and Hedging Activities | 17.DERIVATIVES AND HEDGING ACTIVITIES The Company enters into interest rate swaps to hedge the future interest expense from variable rate debt and reduce the Company’s exposure to fluctuations in interest rates. As of September 30, 2024, the Company has an interest rate swap agreement on its 2024 Term Loan (as amended on October 2, 2024) which swaps $1.95 billion of notional value accruing interest at one month Term SOFR plus 175 basis points for an all-in fixed rate of 1.800% per annum through March 31, 2025. On November 3, 2023, the Company entered into a forward-starting interest rate swap agreement which will swap $1.0 billion of notional value accruing interest at one month Term SOFR plus 175 basis points for an all-in fixed rate of 5.580% per annum. On September 6, 2024, the Company, through its wholly owned subsidiary, SBA Senior Finance II, entered into an additional forward-starting interest rate swap agreement to swap $1.0 billion of notional value accruing interest at one month Term SOFR plus 175 basis points for an all-in fixed rate of 4.750% per annum (collectively the “forward-starting swaps”). The forward-starting swaps have an effective start date of March 31, 2025 (coinciding with the expiration date of the current 0.050%, $1.95 billion notional value swap) and a maturity date of April 11, 2028. The combined notional value of both forward-starting swaps of $2.0 billion will effectively fix one month term SOFR for a blended all-in fixed rate of 5.165% per annum through April 11, 2028. On September 11, 2024, the Company entered into a treasury lock agreement to fix the three-year treasury rate at 3.3985% for $620.0 million of notional value related to the 2024-2C Tower Securities issued on October 11, 2024. The treasury lock agreement was terminated and settled upon issuance of the 2024-2C Tower Securities, and the Company recognized an $8.2 million gain in other comprehensive income which is being amortized to interest expense over the life of the 2024-2C Tower Securities. After consideration of the treasury lock agreement, the all-in fixed rate on the 2024-2C Tower Securities is 4.654% per annum. As of September 30, 2024, the hedges remain highly effective; therefore, changes in fair value are recorded in Accumulated other comprehensive loss, net. The table below outlines the effects of the Company’s interest rate swaps on the Consolidated Balance Sheets as of September 30, 2024 and December 31, 2023.
|  |  |  | Fair Value as of
|  | Balance Sheet |  | September 30, |  | December 31,
|  | Location |  | 2024 |  | 2023
Derivatives Designated as Hedging Instruments |  |  |  | (in thousands)
Interest rate swap agreements in a fair value asset position |  | Other assets |  | $ | 44,934 |  | $ | 104,674
Interest rate swap agreement in a fair value liability position |  | Other long-term liabilities |  | $ | 21,975 |  | $ | 19,573
Accumulated other comprehensive loss, net includes an aggregate $9.1 million gain and a $51.5 million gain as of September 30, 2024 and December 31, 2023, respectively. The Company is exposed to counterparty credit risk to the extent that a counterparty fails to meet the terms of a contract. The Company’s exposure is limited to the current value of the contract at the time the counterparty fails to perform. The cash flows associated with these activities are reported in Net cash provided by operating activities on the Consolidated Statements of Cash Flows. The table below outlines the effects of the Company’s derivatives on the Consolidated Statements of Operations and Consolidated Statements of Shareholders’ Deficit for the three and nine months ended September 30, 2024 and 2023.
|  |  |  | For the three months |  | For the nine months
|  |  |  | ended September 30, |  | ended September 30,
|  |  |  | 2024 |  | 2023 |  | 2024 |  | 2023
Cash Flow Hedge - Interest Rate Swap Agreement |  |  |  | (in thousands)
Change in fair value recorded in Accumulated other comprehensive |  |  |  |  |  |  |  |  |  |  |  |  |  |
loss, net |  |  |  | $ | (51,613) |  | $ | (16,068) |  | $ | (62,141) |  | $ | (39,608)
Derivatives Not Designated as Hedges - Interest Rate Swap Agreements |  |  |  |  |  |  |  |  |  |  |  |  |  |
Amount reclassified from Accumulated other comprehensive |  |  |  |  |  |  |  |  |  |  |  |  |  |
loss, net into Non-cash interest expense |  |  |  | $ | 6,579 |  | $ | 6,579 |  | $ | 19,737 |  | $ | 23,047

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- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 40 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (f) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480237/815-40-50-5 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 5C -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480434/815-10-50-5C Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 815 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/815/tableOfContent + Details
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