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Derivatives
 9 Months Ended
Sep. 30, 2025
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivatives

Note 10 – Derivatives

We use forward currency contracts to economically hedge interest and principal payments due under our loans denominated in currencies other than USD.

We have entered into a series of forward contracts to sell an amount of foreign currency (GBP, EUR and SEK) for an agreed upon amount of USD at various dates through August 2029. These forward contracts were executed to economically fix the USD amounts of foreign denominated cash flows expected to be received by us related to foreign denominated loan investments.

The agreements with our derivative counterparties require that we post collateral to secure net liability positions. As of September 30, 2025, we were in a net liability position with our derivative counterparties and posted collateral of $30.0 million included within other assets on our condensed consolidated balance sheet. As of December 31, 2024, we were in a net asset position with all of our derivative counterparties and did not have any collateral posted under these derivative contracts.

The following table summarizes our non-designated Fx forwards and interest rate caps as of September 30, 2025:

 

 

September 30, 2025

 

Type of Derivatives

 

Number of
Contracts

 

 

Aggregate
Notional Amount
(in thousands)

 

 

Notional
Currency

 

Maturity

 

Weighted-Average
Years to Maturity

 

Fx contracts - GBP

 

 

144

 

 

 

596,183

 

 

GBP

 

October 2025 - August 2029

 

 

1.40

 

Fx contracts - EUR

 

 

26

 

 

 

256,709

 

 

EUR

 

November 2025 - August 2028

 

 

0.80

 

Fx contracts - SEK

 

 

11

 

 

 

587,718

 

 

SEK

 

November 2025 - May 2026

 

 

0.64

 

Interest rate caps

 

 

2

 

 

 

238,535

 

 

USD

 

October 2025 - September 2026

 

 

0.29

 

 

The following table summarizes our non-designated Fx forwards and interest rate caps as of December 31, 2024:

 

 

December 31, 2024

 

Type of Derivatives

 

Number of
Contracts

 

 

Aggregate
Notional Amount
(in thousands)

 

 

Notional
Currency

 

Maturity

 

Weighted-Average
Years to Maturity

 

Fx contracts - GBP

 

 

80

 

 

 

632,702

 

 

GBP

 

January 2025 - August 2027

 

 

1.39

 

Fx contracts - EUR

 

 

48

 

 

 

355,218

 

 

EUR

 

January 2025 - August 2026

 

 

1.18

 

Fx contracts - SEK

 

 

14

 

 

 

633,231

 

 

SEK

 

February 2025 - May 2026

 

 

1.32

 

Interest rate caps

 

 

2

 

 

 

238,535

 

 

USD

 

July 2025 - October 2025

 

 

0.67

 

 

We have not designated any of our derivative instruments as hedges as defined in ASC Topic 815, "Derivatives and Hedging" and, therefore, changes in the fair value of our derivative instruments are recorded directly in earnings. The following table summarizes the amounts recognized on our condensed consolidated statements of operations related to our forward currency contracts for the three and nine months ended September 30, 2025 and 2024 ($ in thousands):

 

 

 

 

Amount of gain (loss)
 recognized in income

 

 

Amount of gain (loss)
 recognized in income

 

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

Location of Gain (Loss) Recognized in Income

 

2025

 

 

2024

 

 

2025

 

 

2024

 

Forward currency contracts

 

Unrealized gain (loss) on derivative instruments

 

$

26,788

 

 

$

(57,621

)

 

$

(88,723

)

 

$

(38,657

)

Forward currency contracts

 

Realized gain (loss) on derivative instruments

 

 

(2,541

)

 

 

(1,914

)

 

 

(8,141

)

 

 

8,897

 

Total

 

 

 

$

24,247

 

 

$

(59,535

)

 

$

(96,864

)

 

$

(29,760

)

 

The following table summarizes the amounts recognized on our condensed consolidated statements of operations related to our interest rate caps for the three and nine months ended September 30, 2025 and 2024 ($ in thousands):

 

 

 

 

Amount of gain (loss)
 recognized in income

 

 

Amount of gain (loss)
 recognized in income

 

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

Location of Gain (Loss) recognized in Income

 

2025

 

 

2024

 

 

2025

 

 

2024

 

Interest rate caps

 

Unrealized gain (loss) on interest rate hedging instruments

 

$

(133

)

 

$

(562

)

 

$

(379

)

 

$

(1,213

)

Interest rate caps

 

Realized gain on interest rate hedging instruments

 

 

133

 

 

 

548

 

 

 

402

 

 

 

1,649

 

Total

 

 

 

$

—

 

 

$

(14

)

 

$

23

 

 

$

436

 

 

In September 2023, we entered into an interest rate cap with an original maturity of October 1, 2024 and a notional amount of $164.8 million. During September 2024, we extended our interest rate cap to October 2025. We use our interest rate cap to hedge our exposure to variable cash flows on our construction financing. The interest rate cap effectively limits SOFR from exceeding 4.00% which results in the maximum all-in coupon on our construction financing of 6.55%. During both the three and nine months ended September 30, 2025 and 2024, SOFR exceeded the cap rate of 4.00%. We realized a gain from the interest rate cap in the amount of $0.1 million and $0.4 million during the three and nine months ended September 30, 2025, respectively, and $0.5 million and $1.6 million during the three and nine months ended September 30, 2024, respectively, which is included in gain (loss) on interest rate hedging instruments in our condensed consolidated statement of operations.

In June 2024, we entered into an interest rate cap with an original maturity of July 1, 2025 and a notional amount of $73.7 million. During August 2025, we extended our interest rate cap to September 1, 2026. We use our interest rate cap to hedge our exposure to variable cash flows on our floating rate mortgage related to the D.C. Hotel. The interest rate cap effectively limits

SOFR from exceeding 6.00% which results in the maximum all-in coupon on mortgage of 9.00%. During the three and nine months ended September 30, 2025 and 2024, SOFR did not exceed the cap rate of 6.00%, and accordingly, no realized gain was recorded.

 

The following tables summarize the gross asset and liability amounts related to our derivatives at September 30, 2025 and December 31, 2024 ($ in thousands):

 

 

 

September 30, 2025

 

 

December 31, 2024

 

 

Gross
Amount of
Recognized
Assets

 

 

Gross
Amounts
Offset in our Condensed
Consolidated
Balance Sheet

 

 

Net Amounts
of Assets
Presented in our Condensed
Consolidated
Balance Sheet

 

 

Gross
Amount of
Recognized
Assets

 

 

Gross
Amounts
Offset in our
 Consolidated
Balance Sheet

 

 

Net Amounts
of Assets
Presented in our
Consolidated
Balance Sheet

 

Forward currency contracts

 

$

8,139

 

 

$

(39,109

)

 

$

(30,970

)

 

$

59,261

 

 

$

(1,508

)

 

$

57,753

 

Interest rate caps

 

 

37

 

 

 

—

 

 

 

37

 

 

 

416

 

 

 

—

 

 

 

416

 

Total derivative assets (liabilities)

 

$

8,176

 

 

$

(39,109

)

 

$

(30,933

)

 

$

59,677

 

 

$

(1,508

)

 

$

58,169