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Derivatives and Hedging Activities
 6 Months Ended
Jun. 30, 2025
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 2025 and 2024, 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:
June 30, 2025December 31, 2024
DescriptionEffective DateNotional Amount (in millions)StatusNotional Amount (in millions)StatusMaturity Date
Pay-fixed swapMay 7, 2021$— Matured$435.0 ActiveMarch 31, 2025
Pay-fixed swapMay 7, 2021— Matured330.0 ActiveMarch 31, 2025
Pay-fixed swapMay 7, 2021— Matured435.0 ActiveMarch 31, 2025
Interest rate capSeptember 30, 2021— Matured143.6 ActiveMarch 31, 2025
Interest rate capSeptember 30, 2021— Matured8.2 ActiveMarch 31, 2025
Deferred premium capMarch 31, 2025395.0 Active396.0 ActiveDecember 31, 2028
Deferred premium capMarch 31, 2025197.5 Active198.0 ActiveDecember 31, 2028
Deferred premium capMarch 31, 2025395.0 Active396.0 ActiveDecember 31, 2028
Deferred premium capMarch 31, 2025197.5 Active198.0 ActiveDecember 31, 2028
Deferred premium capMarch 31, 2025197.5 Active198.0 ActiveDecember 31, 2028
$1,382.5 $2,737.8 
The Company had three interest rate swaps designated in cash flow hedging relationships, which matured on March 31, 2025. Prior to maturity, the interest rate swaps had a total notional amount of $1.2 billion and were pay-fixed, received 1-Month SOFR (subject to a minimum of 0.75%).
The Company had two interest rate caps designated in cash flow hedging relationships, which matured on March 31, 2025. Prior to maturity, the interest caps had a total notional amount of $151.8 million.
Effective March 31, 2025, the Company had five deferred premium interest rate cap agreements. The deferred premium interest rate caps are designated in cash flow hedging relationships with a total notional amount of $1.4 billion. These financial instruments are designed to limit the Company's interest rate exposure on its term loan concurrent with the positions that matured on March 31, 2025.
Prior to maturity, 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 were 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 were carried at amortized cost and the embedded at-market derivatives were recorded at fair value. The fair value was determined 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 cash flows related to the portion treated as debt are classified as financing activities in the condensed consolidated statements of cash flows while the portions that were 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 fair value of the interest rate caps is 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 $5.6 million will be reclassified as an increase to interest expense.
The following table presents the fair values of our derivatives and their location on the condensed consolidated balance sheets (in millions):
June 30, 2025December 31, 2024
AssetsLiabilitiesAssetsLiabilities
Derivatives in cash flow hedging relationships
Interest rate caps (1)
$— $— $1.1 $— 
Interest rate swaps (1)
— — 9.7 — 
Interest rate caps (2)
— 13.3 — 6.1 
Interest rate swaps (3) (4)
— — — 3.5 
Total$— $13.3 $10.8 $9.6 
(1)Amounts were included in other current assets on the condensed consolidated balance sheets as of December 31, 2024.
(2)Amounts were included in other long-term liabilities on the condensed consolidated balance sheets as of June 30, 2025 and December 31, 2024.
(3)Amounts were included in other current liabilities on the condensed consolidated balance sheets as of December 31, 2024.
(4)Amounts related to the financing component of the pay-fixed interest rate swaps.
The following table presents the pre-tax effect of the interest rate swaps and caps on the Company's accumulated OCI and condensed consolidated statements of operations (in millions):
Three Months Ended June 30,Six Months Ended June 30,
Location2025202420252024
Derivatives in cash flow hedging relationships
(Loss) gain recognized in OCI (effective portion)$(2.8)$(0.1)$(8.4)$9.1 
Loss (gain) reclassified from accumulated OCI into income (effective portion)Interest expense, net$1.3 $(14.8)$(9.7)$(29.5)