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Risk Management and Use of Derivative Financial Instruments
 6 Months Ended
Jun. 30, 2025
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Risk Management and Use of Derivative Financial Instruments Risk Management and Use of Derivative Financial Instruments
Risk Management

In the normal course of our ongoing business operations, we encounter economic risk. There are four main components of economic risk that impact us: interest rate risk, credit risk, market risk, and foreign currency risk. We are primarily subject to interest rate risk on our interest-bearing liabilities, including our unhedged variable-rate non-recourse mortgage loans. Credit risk is the risk of default on our operations and our tenants’ inability or unwillingness to make contractually required payments. Market risk includes changes in the value of our properties and related loans, due to changes in interest rates or other market factors. We own investments in the United States and Europe and are subject to risks associated with fluctuating foreign currency exchange rates.
Derivative Financial Instruments

There have been no significant changes in our derivative financial instrument policies from what was disclosed in the 2024 Annual Report. At both June 30, 2025 and December 31, 2024, no cash collateral had been posted nor received for any of our derivative positions.

The following table sets forth certain information regarding our derivative instruments (in thousands):
Asset Derivatives Fair Value at
Derivatives Not Designated as Hedging InstrumentsBalance Sheet LocationJune 30, 2025December 31, 2024
Interest rate capOther assets, net$— $10 
Total derivatives$— $10 

The following tables present the impact of our derivative instruments in the consolidated financial statements (in thousands):
Amount of Gain (Loss) Recognized on Derivatives in
Other Comprehensive Income (Loss)
Three Months Ended June 30,Six Months Ended June 30,
Derivatives in Cash Flow Hedging Relationships 2025202420252024
Interest rate cap$— $572 $— $784 
Total$— $572 $— $784 
Amount of Gain (Loss) on Derivatives Reclassified from
Other Comprehensive Income (Loss)
Derivatives in Cash Flow Hedging RelationshipsLocation of Gain (Loss) Recognized in IncomeThree Months Ended June 30,Six Months Ended June 30,
2025202420252024
Interest rate capOther gains and (losses)$— $(539)$— $(539)
Interest rate capInterest expense— (166)— (381)
Total$— $(705)$— $(920)

Amounts reported in Other comprehensive (loss) income related to interest rate derivative contracts were reclassified to Interest expense as interest was incurred on our variable-rate debt.
Amount of Gain (Loss) on Derivatives Recognized in Income
Derivatives in Cash Flow Hedging RelationshipsLocation of Gain (Loss) Recognized in IncomeThree Months Ended June 30,Six Months Ended June 30,
2025202420252024
Interest rate capInterest expense$— $(15)$— $(17)
Derivatives Not in Cash Flow Hedging Relationships
Interest rate capOther gains and (losses)— — (10)— 
Total$— $(15)$(10)$(17)

See below for information on our purposes for entering into derivative instruments.

Interest Rate Caps

We are exposed to the impact of interest rate changes primarily through our borrowing activities. We have obtained, and may in the future obtain, variable-rate debt (our NLOP Financing Arrangements (Note 8)), and, as a result, we have entered into, and may continue to enter into, interest rate cap agreements with counterparties. Interest rate caps limit the effective borrowing rate of variable-rate debt obligations. Our objective in using these derivatives is to limit our exposure to interest rate movements.

During the third quarter of 2024, we de-designated our interest rate cap as a hedging instrument, since we determined that the derivative is no longer highly effective, given mismatches between the hedged notional of the interest rate cap versus the outstanding principal on the NLOP Mortgage Loan (which was fully repaid during 2024 and is defined in Note 8). The maturity date of this interest rate cap is November 2025.
The interest rate caps that our consolidated subsidiaries had outstanding at June 30, 2025 are summarized as follows (currency in thousands):
Interest Rate Derivatives Number of InstrumentsNotional
Amount
Fair Value at
June 30, 2025
Not Designated as Cash Flow Hedging Instruments
Interest rate cap1150,904 USD$— 
$— 

Credit Risk-Related Contingent Features

We measure our credit exposure on a counterparty basis as the net positive aggregate estimated fair value of our derivatives, net of any collateral received. No collateral was received as of June 30, 2025. At June 30, 2025, both our total credit exposure and the maximum exposure to any single counterparty was less than $0.1 million.