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Derivative Instruments
 9 Months Ended
Sep. 30, 2025
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Instruments

6.

Derivative Instruments

The Company may use derivative financial instruments, including interest swaps, caps, options, floors, and other interest rate derivative contracts, to hedge all or a portion of the interest rate risk associated with its borrowings. The Company does not intend to utilize derivative instruments for speculative transactions or purposes other than mitigation of interest rate risk. The use of derivative financial instruments carries certain risks, including the risk that the counterparties to these contractual arrangements are not able to perform under the agreements. To mitigate this risk, the Company only enters into derivative financial instruments with counterparties that have high credit ratings. The Company does not anticipate that any of the counterparties will fail to meet their obligations.

Detail on the Company's interest rate derivatives outstanding as of September 30, 2025 and December 31, 2024 is as follows:

(in thousands, except number of instruments data)

 

 

 

 

 

 

Interest Rate Swaps

 

September 30, 2025

 

 

December 31, 2024

 

Notional amount

 

$

300,642

 

 

 

301,444

 

Number of instruments

 

 

15

 

 

 

14

 

Detail on the fair value of the Company's interest rate derivatives as of September 30, 2025 and December 31, 2024 is as follows:

(in thousands)

 

 

 

 

 

 

Interest rate swaps classified as:

 

September 30, 2025

 

 

December 31, 2024

 

Derivative assets

 

$

7,435

 

 

 

12,781

 

Derivative liabilities

 

 

(1,735

)

 

 

(423

)

Derivatives in an asset position are included within Other assets in the accompanying Consolidated Balance Sheets, while those in a liability position are included within Accounts payable and other liabilities.

These derivative financial instruments are all interest rate swaps, which are designated and qualify as cash flow hedges. The Company does not enter into derivative instruments for trading or speculative purposes. As of September 30, 2025, all of the Company's derivatives are designated as cash flow hedges.

The changes in the fair value of derivatives designated and qualifying as cash flow hedges are recorded in Accumulated other comprehensive income ("AOCI") and subsequently reclassified into earnings in the period that the hedged interest payments affects earnings.

The following table represents the effect of the derivative financial instruments on the accompanying Consolidated Financial Statements:

Location and Amount of (Loss) Gain Recognized in OCI on Derivative

 

 

Location and Amount of Gain Reclassified from AOCI into Net Income

 

 

Total amounts presented in the Consolidated Statements of Operations in which the effects of cash flow hedges are recorded

 

 

 

Three months ended September 30,

 

 

 

 

Three months ended September 30,

 

 

 

 

Three months ended September 30,

 

(in thousands)

 

2025

 

 

2024

 

 

 

 

2025

 

 

2024

 

 

 

 

2025

 

 

2024

 

Interest rate swaps

 

$

369

 

 

 

(9,305

)

 

Interest expense, net

 

$

(1,063

)

 

 

(2,306

)

 

Interest expense, net

 

$

51,323

 

 

 

47,022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine months ended September 30,

 

 

 

 

Nine months ended September 30,

 

 

 

 

Nine months ended September 30,

 

(in thousands)

 

2025

 

 

2024

 

 

 

 

2025

 

 

2024

 

 

 

 

2025

 

 

2024

 

Interest rate swaps

 

$

(3,574

)

 

 

2,412

 

 

Interest expense, net

 

$

(3,823

)

 

 

(7,113

)

 

Interest expense, net

 

$

149,608

 

 

 

133,068

 

As of September 30, 2025, the Company expects approximately $0.6 million of accumulated comprehensive income on derivative instruments, including the Company's share from its Investments in real estate partnerships, to be reclassified into earnings during the next 12 months.