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DERIVATIVE INSTRUMENTS | 3 Months Ended
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Mar. 31, 2025
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
DERIVATIVE INSTRUMENTS | DERIVATIVE INSTRUMENTS During the first quarter of 2023, we entered into two interest rate swap arrangements with an aggregate notional amount of $125.0 million that effectively fixed the interest at 4.73% for the 2023 Term Loan beginning on July 21, 2023 through the 2023 Term Loan’s initial maturity date of January 10, 2025. During the second quarter of 2024, we entered into two forward interest rate swap arrangements with an aggregate notional amount of $150.0 million beginning on January 10, 2025 through January 10, 2026. These forward interest rate swap arrangements effectively fix (i) a portion of our variable rate debt based on an adjusted daily SOFR at 4.72% (subject to applicable interest rate margins) and (ii) the 2023 Term Loan’s interest rate at 5.77% beginning on January 10, 2025 through the extended loan maturity date of January 10, 2026. The interest rate swap arrangements are recorded at fair value in accordance with GAAP, based on discounted cash flow methodologies and observable inputs. We record the effective portion of changes in fair value of the cash flow hedges in Other comprehensive income (loss). We assess the effectiveness of a cash flow hedge both at inception and on an ongoing basis. If a cash flow hedge is no longer expected to be effective, hedge accounting is discontinued. Hedge ineffectiveness of our cash flow hedges is recorded in earnings. The fair values of the interest rate swaps as of March 31, 2025 and December 31, 2024, were as follows (in thousands):
|  |  |  | Fair Value
|  |  |  | Derivative Assets (Liabilities)
Derivative Instrument | Aggregate Notional Amount | Effective Date | Maturity Date | March 31, 2025 |  | December 31, 2024
Interest rate swap | $ | 75,000 |  | July 21, 2023 | January 10, 2025 | $ | — |  |  | $ | 14 |
Interest rate swap | 50,000 |  | July 21, 2023 | January 10, 2025 | — |  |  | 9 |
Interest rate swap | 100,000 |  | January 10, 2025 | January 10, 2026 | (549) |  |  | (624) |
Interest rate swap | 50,000 |  | January 10, 2025 | January 10, 2026 | (275) |  |  | (312) |
|  |  |  | $ | (824) |  |  | $ | (913) |
We record interest rate swaps on our consolidated balance sheets within Prepaid expenses and other assets when in a net asset position and within Accounts payable and other liabilities when in a net liability position. The net unrealized gains on the effective swaps were recognized in Other comprehensive income (loss), as follows (in thousands):
| Three Months Ended March 31, |  |
| 2025 |  | 2024 |  |  |  |
Unrealized gain on interest rate hedges | $ | 89 |  |  | $ | 83 |  |  |  |  |
Amounts reported in Accumulated other comprehensive loss related to effective cash flow hedges will be reclassified to interest expense as interest payments are made on our variable-rate debt. During the next twelve months, we estimate that an additional $0.8 million related to our outstanding interest rate swap arrangements will be reclassified as a net increase to interest expense. The losses reclassified from Accumulated other comprehensive loss into interest expense for the three months ended March 31, 2025 and 2024, were as follows (in thousands):
| Three Months Ended March 31, |  |
| 2025 |  | 2024 |  |  |  |
Loss reclassified from accumulated other comprehensive loss into interest expense | $ | 510 |  |  | $ | 510 |  |  |  |  |
During the next twelve months, we estimate that an additional $2.0 million related to the previously settled interest rate swap arrangements will be reclassified as an increase to interest expense. We have agreements with each of our derivative counterparties that contain a provision whereby we could be declared in default on our derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to our default on the indebtedness. As of March 31, 2025, the fair value of derivative liabilities was $0.8 million. As of March 31, 2025, we have not posted any collateral related to these agreements. Derivative instruments expose us to credit risk in the event of non-performance by the counterparty under the terms of the interest rate hedge agreements. We believe that we minimize our credit risk on these transactions by dealing with major, creditworthy financial institutions. We monitor the credit ratings of counterparties and our exposure to any single entity, thus minimizing our credit risk concentration.

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- 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
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