Derivatives and Hedging Activities

3 Months Ended

Mar. 31, 2025

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Risk Management Objective of Using Derivatives. The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the type, amount, sources, and duration of its debt funding and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company's derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company's known or expected cash receipts and its known or expected cash payments principally related to the Company's investments and borrowings.

Cash Flow Hedges of Interest Rate Risk. The Company's objectives in using interest rate derivatives are to add stability to interest expense, to manage its exposure to interest rate movements and therefore manage its cash outflows as it relates to the underlying debt instruments. To accomplish these objectives, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy relating to certain of its variable rate debt instruments. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.

The changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income (loss) and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. The Company did not incur any ineffectiveness during the three months ended March 31, 2025 and 2024.

The following table summarizes the terms of our outstanding derivative financial instruments on the Company's balance sheet as of March 31, 2025 and December 31, 2024:


Derivative Type	Number of Instruments	Effective Date	Maturity Date	Notional Value			Fair Value of Asset
						March 31, 2025			December 31, 2024
Term Loan Interest Rate Swap	4	7/1/2022	1/31/2025	$	300,000		$	—		$	678
Term Loan Interest Rate Swap	5	1/31/2025	1/31/2027	250,000			2,163			3,762
Trust Preferred Securities Interest Rate Swap	2	10/30/2024	10/30/2027	82,500			781			1,694
				$	632,500		$	2,944		$	6,134

During the next 12 months, the Company estimates that an additional $2,291 will be reclassified as a decrease in interest expense if the swaps remain outstanding.

The table below presents the effect of the Company's derivative financial instruments on the unaudited condensed consolidated statements of operations for the three months ended March 31, 2025 and 2024:


Derivatives in Cash Flow	Amount of Gain Recognized in OCI on Derivatives March 31,				Amount of (Income) Loss Reclassified from Accumulated OCI into Income(1) March 31,
Hedging Relationships	2025		2024		2025		2024
Interest Rate Swaps	$	(1,804)	$	1,715	$	(1,385)	$	(2,816)
The Company's share of non-consolidated entity's interest rate cap	(37)		147		16		(106)
Total	$	(1,841)	$	1,862	$	(1,369)	$	(2,922)

(1) Amounts reclassified from accumulated other comprehensive income (loss) for the Company's interest rate swaps are included in interest expense and for the Company's share of non-consolidated entity's interest rate cap are reclassified to equity in earnings (losses) of non-consolidated entities within the unaudited condensed consolidated statements of operations.

Total interest expense presented in the unaudited condensed consolidated statements of operations, in which the effects of cash flow hedges are recorded, was $16,280 and $16,984 for the three months ended March 31, 2025 and 2024, respectively.

The Company's agreements with the swap derivative counterparties contain provisions whereby if the Company defaults on the underlying indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then the Company could also be declared in default of the swap derivative obligation. As of March 31, 2025, the Company had not posted any collateral related to the agreements.