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Derivatives and Hedging
 9 Months Ended
Sep. 30, 2025
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivatives and Hedging Derivatives and Hedging
The Company uses derivatives as part of its overall strategy to manage our exposure to market risks associated with the fluctuations in variable interest rates associated with our debt. We are also required to enter into interest rate derivative instruments in compliance with certain debt agreements. We do not enter into derivative financial instruments for trading or speculative purposes.
During August 2025, the Company entered into an interest rate cap transaction for an aggregate notional amount of $122.0 million for $0.1 million to reduce exposure to interest rate fluctuations in connection with the 2025 Ally Term Loan. The interest rate cap has a 36-month term and effectively caps SOFR at 5.50%.
During April 2024, the Company entered into an interest rate cap transaction for an aggregate notional amount of $49.2 million for $1.1 million to reduce exposure to interest rate fluctuations associated with a portion of our variable mortgage notes payable to the Federal National Mortgage Association (“Fannie Mae”). The interest rate cap has 24-month term and effectively caps SOFR at 4.00%. The IRC is not designated as a cash flow hedge under ASC 815-20, Derivatives – Hedging, and therefore, all changes in the fair value of the instrument are included as a component of interest expense in our condensed consolidated statements of operations.
In connection with a loan related to the Company’s acquisition of a community located in Macedonia, Ohio in May 2024, the Company entered into a SOFR-based interest rate cap to reduce exposure to the variable interest rate fluctuations associated with the new mortgage. The total cost of the IRC was $0.2 million and has an aggregate notional amount of $9.4 million. The IRC has a 24-month term and caps SOFR at 6.00%.
The following table presents the fair values of derivative assets and liabilities in the condensed consolidated balance sheets (in thousands):
September 30, 2025
Derivative AssetDerivative Liability
Notional AmountFair ValueNotional AmountFair Value
Interest rate cap (SOFR-based)
$194,190 $146 $— $— 
Total derivatives, net$194,190 $146 $— $— 

December 31, 2024
Derivative AssetDerivative Liability
Notional AmountFair ValueNotional AmountFair Value
Interest rate cap (SOFR-based)
$185,145 $1,465 $— $— 
Total derivatives, net$185,145 $1,465 $— $— 

The following table presents the effect of the derivative instruments on the condensed consolidated statements of operations (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2025202420252024
Derivative not designated as hedge
Interest rate cap
Loss on derivatives not designated as hedges included in interest expense$(214)$(1,679)$(995)$(3,285)