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Financial Instruments - Derivatives and Hedging
 3 Months Ended
Mar. 31, 2024
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Financial Instruments - Derivatives and Hedging Financial Instruments – Derivatives and Hedging
The Company’s use of derivative instruments is intended to manage its exposure to interest rate movements and such instruments are not utilized for speculative purposes. In certain situations, the Company may enter into derivative financial instruments such as interest rate swap agreements and interest rate cap agreements that result in the receipt and/or payment of future known and uncertain cash amounts, the value of which are determined by market interest rates.

Cash Flow Hedges of Interest Rate Risk
Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchanging the underlying notional amount. The Company utilizes interest rate swaps to partially hedge the cash flows associated with variable-rate debt or future cash flows associated with forecasted fixed-rate debt issuances. During the three months ended March 31, 2024, the Company did not enter into any new interest rate swap agreements. The Company has elected to present its interest rate derivatives on its unaudited Consolidated Balance Sheets on a gross basis as interest rate swap assets and interest rate swap liabilities. The gross derivative assets are included in Other assets and the gross derivative liabilities are included in Accounts payable, accrued expenses and other liabilities on the Company’s unaudited Condensed Consolidated Balance Sheets.
Detail on the terms and fair value of the Company’s interest rate derivatives designated as cash flow hedges outstanding as of March 31, 2024 is as follows:

Fair Value
Effective DateMaturity DateSwapped Variable RateFixed RateNotional AmountAssetsLiabilities
6/1/20227/26/2024
1 Month SOFR(1)
2.5875 %$50,000 $441 $— 
6/1/20227/26/2024
1 Month SOFR(1)
2.5960 %50,000 440 — 
6/1/20227/26/2024
1 Month SOFR(1)
2.5860 %100,000 883 — 
6/1/20227/26/2024
1 Month SOFR(1)
2.5850 %100,000 883 — 
5/1/20237/26/20271 Month SOFR3.5890 %100,000 1,650 — 
5/1/20237/26/20271 Month SOFR3.5950 %75,000 1,228 — 
5/1/20237/26/20271 Month SOFR3.5930 %25,000 409 — 
7/26/20247/26/20271 Month SOFR4.0767 %100,000 — (226)
7/26/20247/26/20271 Month SOFR4.0770 %100,000 — (227)
7/26/20247/26/20271 Month SOFR4.0767 %50,000 — (116)
7/26/20247/26/20271 Month SOFR4.0770 %50,000 — (116)
6/14/20246/14/2034Compound SOFR3.4400 %100,000 2,929 — 
6/14/20246/14/2034Compound SOFR3.4370 %25,000 739 — 
6/14/20246/14/2034Compound SOFR3.4400 %25,000 733 — 
$950,000 $10,335 $(685)

(1)Swapped variable rate includes a secured overnight financing rate ("SOFR") adjustment of 10 basis points.

Detail on the terms and fair value of the Company’s interest rate derivatives designated as cash flow hedges outstanding as of December 31, 2023 is as follows:

Fair Value
Effective DateMaturity DateSwapped Variable RateFixed RateNotional AmountAssetsLiabilities
6/1/20227/26/2024
1 Month SOFR(1)
2.5875 %$50,000 $710 $— 
6/1/20227/26/2024
1 Month SOFR(1)
2.5960 %50,000 707 — 
6/1/20227/26/2024
1 Month SOFR(1)
2.5860 %100,000 1,421 — 
6/1/20227/26/2024
1 Month SOFR(1)
2.5850 %100,000 1,421 — 
5/1/20237/26/2027
1 Month SOFR(2)
3.5890 %100,000 59 — 
5/1/20237/26/2027
1 Month SOFR(2)
3.5950 %75,000 34 — 
5/1/20237/26/2027
1 Month SOFR(2)
3.5930 %25,000 12 — 
7/26/20247/26/2027
1 Month SOFR(3)
4.0767 %100,000 — (2,073)
7/26/20247/26/2027
1 Month SOFR(3)
4.0770 %100,000 — (2,077)
7/26/20247/26/2027
1 Month SOFR(3)
4.0767 %50,000 — (1,038)
7/26/20247/26/2027
1 Month SOFR(3)
4.0770 %50,000 — (1,039)
6/14/20246/14/2034
Compound SOFR(4)
3.4400 %100,000 — (437)
6/14/20246/14/2034
Compound SOFR(4)
3.4370 %25,000 — (104)
6/14/20246/14/2034
Compound SOFR(4)
3.4400 %25,000 — (109)
$950,000 $4,364 $(6,877)

(1)Swapped variable rate includes a SOFR adjustment of 10 basis points.
(2)In April 2023, the Company entered into three interest rate swap agreements with an aggregate notional amount of $200.0 million. The interest rate swap agreements were designated as cash flow hedges that effectively fix the SOFR component of the interest rate on a portion of the outstanding debt under the Term Loan Facility (defined hereafter) at 3.59%.
(3)In November 2023, the Company entered into four forward-starting interest rate swap agreements with an aggregate notional amount of $300.0 million. The forward-starting interest rate swap agreements were designated as cash flow hedges that effectively fix the SOFR component of the interest rate on a portion of the outstanding debt under the Term Loan Facility (defined hereafter) at 4.08% beginning on the effective date.
(4)In December 2023, the Company entered into three forward-starting interest rate swap agreements with an aggregate notional amount of $150.0 million to hedge against changes in future cash flows resulting from changes in interest rates from the trade date through the forecasted issuance date of $150.0 million of long-term debt. The Company hedged its exposure to the variability in future cash flows for a forecasted issuance of long-term debt over a maximum period ending June 2026. The forward-starting interest rate swaps were designated as cash flow hedges.

All of the Company's outstanding interest rate swap agreements for the periods presented were designated as cash flow hedges of interest rate risk. The fair value of the Company’s interest rate derivatives is determined using
market standard valuation techniques, including discounted cash flow analyses, on the expected cash flows of each derivative. These analyses reflect the contractual terms of the derivative, including the period to maturity, and use observable market-based inputs, including interest rate curves and implied volatility. These inputs are classified as Level 2 of the fair value hierarchy. The effective portion of changes in the fair value of derivatives designated as cash flow hedges is recognized in other comprehensive income (loss) and is reclassified into earnings as interest expense in the period that the hedged transaction affects earnings.

The effective portion of the Company’s interest rate swaps that was recognized on the Company’s unaudited Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2024 and 2023 is as follows:

Derivatives in Cash Flow Hedging Relationships
(Interest Rate Swaps)		Three Months Ended March 31,
20242023
Change in unrealized gain (loss) on interest rate swaps$15,204 $(2,467)
Amortization (accretion) of interest rate swaps to interest expense(3,075)(1,521)
Change in unrealized gain (loss) on interest rate swaps, net$12,129 $(3,988)

The Company estimates that $8.3 million will be reclassified from accumulated other comprehensive income (loss) as a decrease to interest expense over the next twelve months. No gain or loss was recognized related to hedge ineffectiveness or to amounts excluded from effectiveness testing on the Company’s cash flow hedges during the three months ended March 31, 2024 and 2023.

Non-Designated (Mark-to-Market) Hedges of Interest Rate Risk
The Company does not use derivatives for trading or speculative purposes. As of March 31, 2024 and December 31, 2023, the Company did not have any non-designated hedges.

Credit-risk-related Contingent Features
The Company has agreements with its derivative counterparties that contain provisions whereby if the Company defaults on certain of its indebtedness and the indebtedness has been accelerated by the lender, then the Company could also be declared in default on its derivative obligations. If the Company were to be declared in default on its derivative contracts, it would be required to settle its obligations under such agreements at their termination value, including accrued interest.