XML 24 R13.htm IDEA: XBRL DOCUMENT
v3.24.1.u1

Derivatives and Hedging Activities | 3 Months Ended
--- | ---
Mar. 31, 2024
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivatives and Hedging Activities | Derivatives and Hedging Activities The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps and interest rate caps as part of its interest rate risk management strategy. During 2024 and 2023, such derivatives have been used to hedge the variable cash flows associated with existing variable-rate debt. The key terms of interest rate swaps and interest rate caps outstanding are presented below:
|  |  |  | March 31, 2024 |  | December 31, 2023 |  |
Description |  | Effective Date |  | Notional Amount (in millions) |  | Status |  | Notional Amount (in millions) |  | Status |  | Maturity Date
Pay-fixed swap |  | May 7, 2021 |  | $ | 435.0 |  |  | Active |  | $ | 435.0 |  |  | Active |  | March 31, 2025
Pay-fixed swap |  | May 7, 2021 |  | 330.0 |  |  | Active |  | 330.0 |  |  | Active |  | March 31, 2025
Pay-fixed swap |  | May 7, 2021 |  | 435.0 |  |  | Active |  | 435.0 |  |  | Active |  | March 31, 2025
Interest rate cap |  | September 30, 2021 |  | 149.4 |  |  | Active |  | 151.4 |  |  | Active |  | March 31, 2025
Interest rate cap |  | September 30, 2021 |  | 8.5 |  |  | Active |  | 8.7 |  |  | Active |  | March 31, 2025
|  |  |  | $ | 1,357.9 |  |  |  |  | $ | 1,360.1 |  |  |  |  |
As of March 31, 2024, the Company had three interest rate swaps with a total net notional amount of $1.2 billion. The interest rate swaps are pay-fixed, receive 1-Month Secured Overnight Financing Rate ("SOFR") (subject to a minimum of 0.75%) designated in cash flow hedging relationships and have a termination date of March 31, 2025. As of March 31, 2024, the Company had two interest rate caps designated in cash flow hedging relationships with a total notional amount of $157.9 million. The interest rate caps each have a termination date of March 31, 2025. During the three months ended March 31, 2023, the Company partially terminated a previously undesignated portion of one of its interest rate caps. In connection with the termination, the Company received $8.6 million, which is included as a component of operating activities in the condensed consolidated statements of cash flows for the three months ended March 31, 2023. The pay-fixed, receive floating interest rate swaps did not meet the requirements to be considered derivatives in their entirety as a result of the financing component. Accordingly, the swaps are considered hybrid instruments, consisting of a financing element treated as a debt instrument and an embedded at-market derivative that was designated as a cash flow hedge. Within the Company’s condensed consolidated balance sheets, the financing elements treated as debt instruments described above are carried at amortized cost and the embedded at-market derivatives are recorded at fair value. The cash flows related to the portion treated as debt are classified as financing activities in the condensed consolidated statements of cash flows while the portion treated as an at-market derivative are classified as operating activities. Within the Company’s condensed consolidated balance sheets, the interest rate caps are recorded at fair value. The cash flows related to the interest rate caps are classified as operating activities in the condensed consolidated statements of cash flows. The Company's interest rate swap agreements, excluding the portion treated as debt, are recognized at fair value in the condensed consolidated balance sheets and are valued using pricing models that rely on market observable inputs such as yield curve data, which are classified as Level 2 inputs within the fair value hierarchy. The fair value of the interest rate caps are determined using the market standard methodology of discounting the future expected cash receipts that would occur if variable interest rates rise above the strike rate of the caps. The variable interest rates used in the calculation of projected receipts on the caps are based on an expectation of future interest rates derived from observable market interest rate curves and volatilities. The interest rate caps are classified using Level 2 inputs within the fair value hierarchy. For derivatives designated and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in accumulated other comprehensive income ("OCI") and subsequently reclassified into interest expense in the same period(s) during which the hedged transaction affects earnings, as documented at hedge inception in accordance with the Company’s accounting policy election. Amounts reported in accumulated OCI related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. Over the next 12 months, the Company estimates that an additional $52.2 million will be reclassified as a decrease to interest expense. The following table presents the fair values of our derivatives and their location on the condensed consolidated balance sheets (in millions):
|  |  |  | March 31, 2024 |  | December 31, 2023
|  | Location |  | Assets |  | Liabilities |  | Assets |  | Liabilities
Derivatives in cash flow hedging relationships |  |  |  |  |  |  |  |  |  |
Interest rate caps |  | Other long-term assets |  | $ | 5.4 |  |  | $ | — |  |  | $ | 6.0 |  |  | $ | — |
Interest rate swaps |  | Other long-term assets |  | 46.4 |  |  | — |  |  | 51.4 |  |  | — |
Interest rate swaps |  | Other long-term liabilities (1) |  | — |  |  | 14.3 |  |  | — |  |  | 17.8 |
Total |  |  |  | $ | 51.8 |  |  | $ | 14.3 |  |  | $ | 57.4 |  |  | $ | 17.8 |
(1)The balance is related to the financing component of the pay-fixed interest rate swaps. The following table presents the pre-tax effect of the interest rate swaps and caps on the Company's accumulated OCI and condensed consolidated statements of operations (in millions):
|  |  | Three Months Ended March 31,
| Location |  | 2024 |  | 2023 |  |
Derivatives not designated as hedging instruments |  |  |  |  |  |  |
Loss recognized in income | Other income, net |  | $ | — |  |  | $ | 0.6 |  |  |
Derivatives in cash flow hedging relationships |  |  |  |  |  |  |
Gain (loss) recognized in OCI (effective portion) |  |  | $ | 9.2 |  |  | $ | (5.2) |  |  |
Gain reclassified from accumulated OCI into income (effective portion) (1) | Interest expense, net |  | $ | (14.7) |  |  | $ | (6.1) |  |  |
(1)Includes amortization of accumulated OCI related to de-designated and terminated interest rate swaps of $5.4 million for the three months ended March 31, 2023. There was no corresponding amount for the three months ended March 31, 2024. See Note 10. "Subsequent Events" for additional information related to the Company's cash flow hedging relationships.

X
- References No definition available. + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration