v3.25.2
Derivatives
 12 Months Ended
Dec. 31, 2024
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivatives
10.
Derivatives

 

The Company uses derivative financial instruments to minimize the risks and/or costs associated with the Company’s investments and financing transactions. The Company has not designated any of its derivative financial instruments as hedges as defined under GAAP. Although not designated as hedging instruments under GAAP, the Company’s derivatives are not speculative and are used to manage the Company’s exposure to interest rate movements, fluctuations in foreign exchange rates, and other identified risks.

 

The use of derivative financial instruments involves certain risks, including the risk that the counterparties to these contractual arrangements do not perform as agreed. To mitigate this risk, the Company enters into derivative financial instruments with counterparties it believes to have appropriate credit ratings and that are major financial institutions with which the Company and its affiliates may also have other financial relationships.

 

Interest Rate Contracts

 

Certain of the Company’s transactions expose the Company to interest rate risks, which include exposure to variable interest rates on certain loans secured by the Company’s real estate in addition to its secured financings of investments in real estate debt. The Company uses derivative financial instruments, which includes interest rate caps and swaps, and may also include options, floors, and other interest rate derivative contracts, to limit the Company’s exposure to the future variability of interest rates.

 

The following tables detail the Company’s outstanding interest rate derivatives that were non-designated hedges of interest rate risk (notional amounts in thousands):

 

 

December 31, 2024

Interest Rate Derivatives

 

Number of Instruments

 

Notional Amount

 

 

Weighted Average Strike Rate

 

Index

 

Weighted Average Maturity (Years)

Interest Rate Caps - Property debt

 

69

 

 $

 

9,401,374

 

 

2.1%

 

SOFR

 

1.3

Interest Rate Caps - Property debt

 

3

 

 €

 

109,905

 

 

1.0%

 

EURIBOR

 

0.4

Interest Rate Swaps - Property debt

 

1

 

 $

 

120,061

 

 

0.8%

 

SOFR

 

0.2

Interest Rate Swaps - Property debt

 

3

 

 €

 

207,721

 

 

1.9%

 

EURIBOR

 

2.6

Interest Rate Swaps - Property debt

 

2

 

 NOK

 

520,000

 

 

2.5%

 

NIBOR

 

3.1

  Total interest rate derivatives

 

78

 

 

 

 

 

2.1%

 

 

 

1.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2023

Interest Rate Derivatives

 

Number of Instruments

 

Notional Amount

 

 

Weighted Average Strike Rate

 

Index

 

Weighted Average Maturity (Years)

Interest Rate Caps - Property debt

 

70

 

 $

 

9,567,541

 

 

1.6%

 

SOFR

 

2.1

Interest Rate Caps - Property debt

 

4

 

 €

 

175,468

 

 

1.1%

 

EURIBOR

 

1.0

Interest Rate Swaps - Property debt

 

1

 

 $

 

117,863

 

 

0.8%

 

SOFR

 

1.2

Interest Rate Swaps - Property debt

 

3

 

 €

 

213,458

 

 

1.9%

 

EURIBOR

 

3.6

Interest Rate Swaps - Property debt

 

2

 

 NOK

 

520,000

 

 

2.5%

 

NIBOR

 

4.1

  Total interest rate derivatives

 

80

 

 

 

 

 

1.6%

 

 

 

2.1

 

Foreign Currency Forward Contracts

 

Certain of the Company’s international investments expose it to fluctuations in foreign currency exchange rates and interest rates. These fluctuations may impact the value of the Company’s cash receipts and payments in terms of its functional currency, the U.S. dollar. The Company uses foreign currency forward contracts to protect the value or fix the amount of certain investments or cash flows in terms of the U.S. dollar.

 

The following table details the Company’s outstanding foreign currency forward contracts that were non-designated hedges of foreign currency risk (notional amounts in thousands):

 

 

December 31, 2024

 

 

December 31, 2023

 

Foreign Currency Forward Contracts

 

Number of Instruments

 

Notional Amount

 

 

Number of Instruments

 

Notional Amount

 

Buy USD/Sell EUR Forward

 

40

 

 €

 

528,759

 

 

60

 

 €

 

577,283

 

Buy USD/Sell DKK Forward

 

8

 

 DKK

 

1,210,016

 

 

12

 

 DKK

 

1,301,016

 

Buy USD/Sell AUD Forward

 

5

 

 AUD

 

621,759

 

 

5

 

 AUD

 

621,759

 

Buy USD/Sell NOK Forward

 

12

 

 NOK

 

412,700

 

 

9

 

 NOK

 

1,160,941

 

Buy USD/Sell GBP Forward

 

—

 

 £

 

—

 

 

4

 

 £

 

142,858

 

 

Valuation and Financial Statement Impact

 

The following table details the fair value of the Company’s derivative financial instruments ($ in thousands):

 

 

 

Fair Value of Derivatives in an Asset (1) Position

 

 

Fair Value of Derivatives in a Liability (2) Position

 

 

 

December 31, 2024

 

 

December 31, 2023

 

 

December 31, 2024

 

 

December 31, 2023

 

Interest rate derivatives

 

$

325,991

 

 

$

537,390

 

 

$

—

 

 

$

—

 

Foreign currency forward contracts

 

 

42,880

 

 

 

16,873

 

 

 

9,505

 

 

 

46,178

 

Total derivatives

 

$

368,871

 

 

$

554,263

 

 

$

9,505

 

 

$

46,178

 

 

(1)
Included in Other assets on the Company’s Consolidated Balance Sheets.
(2)
Included in Other liabilities on the Company’s Consolidated Balance Sheets.

The following table details the effect of the Company’s derivative financial instruments in the Consolidated Statements of Operations and Comprehensive Loss ($ in thousands):

 

 

 

 

For the Year Ended December 31,

 

Type of Derivative

 

Net Realized/Unrealized (Loss) Gain

 

2024

 

 

2023

 

 

2022

 

Interest Rate Caps - Property debt

 

Unrealized (loss) gain(1)

 

$

(212,711

)

 

$

(305,693

)

 

$

498,696

 

Interest Rate Swaps - Property debt

 

Unrealized (loss) gain(1)

 

 

(9,031

)

 

 

(26,468

)

 

 

32,972

 

Foreign Currency Forward Contracts

 

Unrealized gain (loss) (2)

 

 

62,680

 

 

 

(67,466

)

 

 

30,556

 

Foreign Currency Forward Contracts

 

Realized gain(1)

 

 

14,034

 

 

 

26,112

 

 

 

57,176

 

Interest Rate Caps - Property debt

 

Realized gain(1)

 

 

1,831

 

 

 

26,778

 

 

 

—

 

Interest Rate Swaps - Property debt

 

Realized gain(1)

 

 

179

 

 

 

12,088

 

 

 

—

 

     Total

 

 

 

$

(143,018

)

 

$

(334,649

)

 

$

619,400

 

 

(1) Included in Other (expense) income, net in the Company’s Consolidated Statements of Operations and Comprehensive Loss.

(2) A portion of this amount is included in Income from investments in real estate debt, net and the remaining amount is included in Other (expense) income, net in the Company’s Consolidated Statements of Operations and Comprehensive Loss.