Interest Rate Derivatives

12 Months Ended

Dec. 31, 2024

Derivative Instruments and Hedging Activities Disclosure [Abstract]

The Company has entered into various derivative agreements with financial institutions to hedge interest rate risk related to its outstanding debt. The Company had the following interest rate derivatives recorded within accrued expenses and other liabilities as of December 31, 2024 and 2023 in the Consolidated Statements of Financial Condition.


Derivative	Notional Amount		Fair Value as of December 31, 2024		Fair Value as of December 31, 2023		Fixed Rate Paid		Floating Rate Received	Effective Date(3)	Maturity Date
Interest rate swap	$	300,000	$	(2,291)	$	(7,469)	4.37	%	1 month Term SOFR(1)(2)	November 2022	February 2028
Interest rate swap	$	28,500	$	(397)	$	—	4.47	%	1 month Term SOFR(1)	May 2024	February 2028
Interest rate swap	$	317,000	$	(844)	$	—	4.17	%	1 month Term SOFR(1)	February 2028	February 2030

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(1)Floating rate received subject to a 0.50% Floor.

(2)Refer to Note 13 regarding the interest rate on the 2028 Term Loans for the July 1, 2023 Benchmark Transition Event. The floating rate received under the interest rate swap also defaulted to Term SOFR plus a Benchmark Replacement Adjustment concurrent with the Benchmark Transition Event.

(3)Represents the date at which the derivative is in effect and the Company is contractually required to begin payment of interest under the terms of the agreement.

A rollforward of the amounts in accumulated other comprehensive income (loss) (“AOCI”) related to interest rate derivatives designated as cash flow hedges is as follows:


	Year Ended December 31,
	2024		2023		2022
Derivative gain (loss) at beginning of period	$	21,806	$	29,130	$	(3,622)
Amount recognized in other comprehensive income(1)	7,025		1,536		27,285
Amount reclassified from accumulated other comprehensive income (loss) to interest expense	(10,489)		(8,860)		5,467
Derivative gain at end of period	18,342		21,806		29,130
Less: gain attributable to noncontrolling interests in GCMH	15,496		18,267		24,204
Derivative gain at end of period, net	$	2,846	$	3,539	$	4,926

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(1)Net of tax provision (benefit) of $(0.2) million, $(0.4) million, and $2.6 million for the years ended December 31, 2024, 2023, and 2022 respectively.

In February 2021, the Company terminated a derivative instrument which was entered into in 2017, and matured in 2023. In October 2022, the Company terminated two derivative instruments that had notional balances of $232 million and $68 million, effective dates that started in 2021, and maturity dates in 2028. The Company received $40.3 million of cash for the fair market value of the interest rate swaps at termination in October 2022. The terminated derivative instrument were determined to be effective cash flow hedges at inception. The amounts previously recorded as a hedge in AOCI related to previously terminated derivative instruments will remain in AOCI and will be recorded in interest expense within the Consolidated Statements of Comprehensive Income (Loss) over the original life of the swaps.

Effective on November 1, 2022, the Company entered into a swap agreement to hedge interest rate risk related to payments made for the 2028 Term Loans that has a notional amount of $300.0 million and a fixed rate of 4.37%. The swap agreement and the 2028 Term Loans had a 0.50% LIBOR floor through June 30, 2023 and defaulted to Term SOFR plus a Benchmark Replacement Adjustment on July 1, 2023 at the Benchmark Transition Event as discussed in Note 13. The swap was determined to be an effective cash flow hedge at inception based on a comparison of critical terms and remained an effective cash flow hedge at and following the Benchmark Transition Event.

Effective on May 31, 2024, the Company entered into a swap agreement to hedge interest rate risk related to payments made for the increase in aggregate principal amount of the 2030 Term Loans that has a notional amount of $28.5 million, and a fixed rate of 4.47%. The swap agreement and 2030 Term Loans have a 0.50% Term SOFR floor. The swap was determined to be an effective cash flow hedge at inception based on a comparison of critical terms.

On May 23, 2024, the Company entered into a forward-starting swap agreement to hedge interest rate risk related to payments made during the extended maturity of the 2030 Term Loans that has an effective date of February 2028, a notional amount of $317.0 million and a fixed rate of 4.17%. The forward-starting swap agreement and 2030 Term Loans have a 0.50% Term SOFR floor. The swap was determined to be an effective cash flow hedge at inception based on a comparison of critical terms.

The Company reclassified $7.6 million, $6.7 million and $4.2 million for the years ended December 31, 2024, 2023 and 2022, respectively, from AOCI to interest expense relating to the derivative instruments terminated that initially qualified for hedge accounting. The net impact of these reclassifications decreased interest expense for each of the years ended December 31, 2024 and 2023, and increased interest expense for year ended December 31, 2022.

The fair values of the interest rate swaps are based on observable market inputs and represent the net amount required to terminate the positions, taking into consideration market rates and non-performance risk. Refer to Note 5 for additional information.

During the next twelve months, the Company expects to reclassify approximately $7.0 million from AOCI to interest expense (which will decrease interest expense), including the ongoing impact of the swap terminations.