| Interest Rate Swaps |
9. Interest Rate Swaps In June 2024, the Company entered into nine forward-starting interest rate swaps with various institutions for a total notional amount of $460.0 million in order to mitigate the impact of interest rate variability over the term of the Company’s current and expected debt obligations. These swap arrangements are effective during various periods between March and December 2025 and mature in 2030. The following is a summary of the Company’s outstanding interest rate swap agreements:
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(in thousands, except interest rates) |
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September 30, 2024 |
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December 31, 2023 |
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Counterparty |
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Maturity Date |
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Fixed
Rate |
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Variable Rate Index (a) |
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Notional
Amount |
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Fair
Value |
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Notional
Amount |
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Fair
Value |
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Effective Swaps: |
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Wells Fargo Bank, N.A. |
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October 2024 |
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2.72 |
% |
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daily compounded SOFR |
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$ |
15,000 |
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$ |
— |
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$ |
15,000 |
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$ |
255 |
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Capital One, National Association |
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December 2024 |
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1.58 |
% |
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daily compounded SOFR |
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15,000 |
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85 |
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15,000 |
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445 |
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Bank of Montreal |
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January 2025 |
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1.91 |
% |
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daily compounded SOFR |
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25,000 |
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183 |
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25,000 |
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713 |
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Truist Financial Corporation |
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April 2025 |
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2.20 |
% |
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daily compounded SOFR |
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25,000 |
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274 |
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25,000 |
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734 |
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Bank of Montreal |
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July 2025 |
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2.32 |
% |
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daily compounded SOFR |
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25,000 |
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337 |
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25,000 |
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|
768 |
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Truist Financial Corporation |
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July 2025 |
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1.99 |
% |
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daily compounded SOFR |
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25,000 |
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398 |
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25,000 |
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888 |
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Truist Financial Corporation |
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December 2025 |
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2.30 |
% |
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daily compounded SOFR |
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25,000 |
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451 |
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25,000 |
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887 |
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Bank of Montreal |
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January 2026 |
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1.92 |
% |
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daily compounded SOFR |
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25,000 |
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570 |
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25,000 |
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1,071 |
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Bank of Montreal |
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January 2026 |
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2.05 |
% |
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daily compounded SOFR |
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40,000 |
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848 |
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40,000 |
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1,615 |
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Capital One, National Association |
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January 2026 |
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2.08 |
% |
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daily compounded SOFR |
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35,000 |
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730 |
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35,000 |
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1,389 |
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Truist Financial Corporation |
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January 2026 |
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1.93 |
% |
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daily compounded SOFR |
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25,000 |
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567 |
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25,000 |
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1,067 |
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Capital One, National Association |
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April 2026 |
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2.68 |
% |
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daily compounded SOFR |
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15,000 |
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217 |
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15,000 |
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439 |
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Capital One, National Association |
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July 2026 |
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1.32 |
% |
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daily compounded SOFR |
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35,000 |
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1,349 |
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35,000 |
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2,186 |
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Bank of Montreal |
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December 2026 |
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2.33 |
% |
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daily compounded SOFR |
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10,000 |
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249 |
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10,000 |
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423 |
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Bank of Montreal |
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December 2026 |
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1.99 |
% |
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daily compounded SOFR |
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25,000 |
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808 |
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25,000 |
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1,299 |
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Toronto-Dominion Bank |
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March 2027 |
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2.46 |
% |
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daily compounded CORRA |
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14,796 |
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(b) |
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202 |
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15,087 |
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(b) |
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572 |
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Wells Fargo Bank, N.A. |
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April 2027 |
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2.72 |
% |
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daily compounded SOFR |
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25,000 |
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435 |
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25,000 |
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806 |
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Bank of Montreal |
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December 2027 |
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2.37 |
% |
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daily compounded SOFR |
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25,000 |
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780 |
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25,000 |
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1,215 |
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Capital One, National Association |
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December 2027 |
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2.37 |
% |
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daily compounded SOFR |
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25,000 |
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776 |
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25,000 |
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1,197 |
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Wells Fargo Bank, N.A. |
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January 2028 |
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2.37 |
% |
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daily compounded SOFR |
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75,000 |
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2,333 |
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75,000 |
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3,632 |
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Bank of Montreal |
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May 2029 |
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2.09 |
% |
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daily compounded SOFR |
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25,000 |
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1,344 |
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25,000 |
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1,835 |
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Regions Bank |
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May 2029 |
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2.11 |
% |
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daily compounded SOFR |
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25,000 |
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1,317 |
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25,000 |
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1,801 |
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Regions Bank |
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June 2029 |
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2.03 |
% |
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daily compounded SOFR |
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25,000 |
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1,406 |
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25,000 |
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1,900 |
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U.S. Bank National Association |
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June 2029 |
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2.03 |
% |
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daily compounded SOFR |
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25,000 |
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1,407 |
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25,000 |
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1,908 |
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Regions Bank |
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August 2029 |
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2.58 |
% |
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one-month SOFR |
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100,000 |
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2,782 |
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100,000 |
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4,392 |
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Toronto-Dominion Bank |
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August 2029 |
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2.58 |
% |
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one-month SOFR |
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45,000 |
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1,282 |
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45,000 |
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2,021 |
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U.S. Bank National Association |
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August 2029 |
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2.65 |
% |
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one-month SOFR |
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15,000 |
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379 |
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15,000 |
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618 |
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U.S. Bank National Association |
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August 2029 |
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2.58 |
% |
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one-month SOFR |
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100,000 |
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2,798 |
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100,000 |
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4,427 |
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U.S. Bank National Association |
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August 2029 |
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1.35 |
% |
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daily compounded SOFR |
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25,000 |
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2,231 |
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25,000 |
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2,828 |
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Regions Bank |
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March 2032 |
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2.69 |
% |
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daily compounded CORRA |
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14,796 |
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(b) |
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295 |
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15,087 |
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(b) |
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677 |
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U.S. Bank National Association |
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March 2032 |
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2.70 |
% |
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daily compounded CORRA |
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14,796 |
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(b) |
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291 |
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15,087 |
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(b) |
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678 |
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Bank of Montreal |
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March 2034 |
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2.81 |
% |
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daily compounded CORRA |
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29,593 |
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(c) |
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688 |
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30,174 |
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(c) |
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1,410 |
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973,981 |
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27,812 |
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975,435 |
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46,096 |
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Forward Starting Swaps: (d) |
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Bank of Montreal |
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March 2030 |
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3.80 |
% |
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daily simple SOFR |
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80,000 |
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(2,535 |
) |
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— |
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— |
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JPMorgan Chase Bank, N.A. |
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March 2030 |
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3.79 |
% |
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daily simple SOFR |
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50,000 |
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(1,545 |
) |
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— |
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— |
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U.S. Bank National Association |
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June 2030 |
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3.73 |
% |
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daily simple SOFR |
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70,000 |
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(2,021 |
) |
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— |
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— |
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Truist Financial Corporation |
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June 2030 |
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3.73 |
% |
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daily simple SOFR |
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55,000 |
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(1,598 |
) |
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— |
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— |
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Manufacturers & Traders Trust Company |
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September 2030 |
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3.71 |
% |
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daily simple SOFR |
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50,000 |
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(1,378 |
) |
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— |
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— |
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Regions Bank |
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September 2030 |
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3.69 |
% |
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daily simple SOFR |
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15,000 |
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(409 |
) |
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— |
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— |
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Truist Financial Corporation |
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September 2030 |
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3.70 |
% |
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daily simple SOFR |
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15,000 |
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(409 |
) |
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— |
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— |
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Toronto-Dominion Bank |
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December 2030 |
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3.66 |
% |
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daily simple SOFR |
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70,000 |
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(1,756 |
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— |
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— |
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Regions Bank |
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December 2030 |
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3.66 |
% |
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daily simple SOFR |
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55,000 |
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(1,399 |
) |
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— |
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— |
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460,000 |
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(13,050 |
) |
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— |
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— |
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Total Swaps |
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$ |
1,433,981 |
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$ |
14,762 |
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$ |
975,435 |
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$ |
46,096 |
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(a)Prior to the cessation of CDOR on July 1, 2024, the variable rate index for daily compounded CORRA based swaps was one-month CDOR. (b)The contractual notional amount is $20.0 million CAD. (c)The contractual notional amount is $40.0 million CAD. (d)Forward starting swaps have effective dates that are five years prior to each respective maturity date. At September 30, 2024, the weighted average interest rate on all outstanding borrowings was 3.78%, inclusive of a weighted average fixed rate on effective interest rate swaps of 2.28%. The total amounts recognized, and the location in the accompanying Condensed Consolidated Statements of Income and Comprehensive Income, from converting from variable rates to fixed rates under these agreements were as follows:
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Amount of (Loss) Gain |
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Reclassification from |
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Total Interest Expense |
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Recognized in |
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Accumulated Other |
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Presented in the Condensed |
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Accumulated Other |
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Comprehensive Income |
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Consolidated Statements of |
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(in thousands) |
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Comprehensive |
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Amount of |
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Income and Comprehensive |
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For the Three Months Ended September 30, |
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Income |
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Location |
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Gain |
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Income |
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2024 |
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$ |
(41,682 |
) |
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Interest expense |
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$ |
7,628 |
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$ |
18,178 |
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2023 |
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|
13,943 |
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Interest expense |
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7,063 |
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|
19,665 |
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Amount of (Loss) Gain |
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Reclassification from |
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Total Interest Expense |
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Recognized in |
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Accumulated Other |
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Presented in the Condensed |
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Accumulated Other |
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Comprehensive Income |
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Consolidated Statements of |
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(in thousands) |
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Comprehensive |
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Amount of |
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Income and Comprehensive |
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For the Nine Months Ended September 30, |
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Income |
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Location |
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Gain |
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Income |
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2024 |
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$ |
(31,334 |
) |
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Interest expense |
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$ |
22,795 |
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$ |
54,512 |
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2023 |
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|
15,696 |
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Interest expense |
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|
18,242 |
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61,081 |
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Amounts related to the interest rate swaps expected to be reclassified out of Accumulated other comprehensive income to Interest expense during the next twelve months are estimated to be a gain of $13.5 million.
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