v3.25.2
Derivative Instruments
 6 Months Ended
Jun. 30, 2025
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivatives Derivative Instruments
Our objectives in using derivatives are to add stability to interest expense and to manage our cash flow volatility and exposure to interest rate movements. To accomplish these objectives, we primarily use derivative instruments as part of our interest rate risk management strategy. Derivative instruments designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.
During May 2025, in connection with the issuance of the 2031 Notes, we entered into two treasury locks with an aggregate notional value of $350,000 (the "2030 Treasury Locks") to manage our exposure to changes in the five-year U.S. Treasury rate. We paid approximately $250 to settle the 2030 Treasury Locks with our counterparties. The 2030 Treasury Locks effectively fixed the five-year U.S. Treasury rate at a weighted average of 4.12%. We designated the 2030 Treasury Locks as cash flow hedges and the settlement payment will be amortized into interest expense over the five-year hedge period (see Note 4).
We have interest rate swaps to manage our exposure to changes in SOFR related to our unsecured term loans. We have three interest rate swaps with an aggregate notional value of $200,000, that fix the SOFR rate component at 0.86% at June 30, 2025 and mature on February 2, 2026 (the "2021 Swaps").
We have eight interest rate swaps with an aggregate notional value of $425,000 that fix the SOFR rate component at 2.69% and mature on September 30, 2027 (the "2022 Swaps").
We have seven interest rate swaps, with an aggregate notional value of $300,000 that fix the SOFR rate component at 3.93% (the "2022 II Swaps"). $150,000 of the 2022 II Swaps' aggregate notional value matures on December 1, 2025 and the remaining $150,000 of the 2022 II Swaps' aggregate notional value matures on August 1, 2027. We have designated the 2021 Swaps, the 2022 Swaps and the 2022 II Swaps as cash flow hedges.
Our agreements with our derivative counterparties contain cross-default provisions, which may be triggered if we default on other indebtedness, subject to certain thresholds. As of June 30, 2025, we had not posted any collateral under these agreements and were in compliance with all contractual provisions of these agreements. In the event of a breach, we could be required to settle our obligations at the termination values within the agreements.
The following table sets forth our financial assets and liabilities related to the 2021 Swaps, the 2022 Swaps and the 2022 II Swaps, which are included in the line items Prepaid Expenses and Other Assets, Net or Accounts Payable, Accrued Expenses and Other Liabilities on the Consolidated Balance Sheets and are accounted for at fair value on a recurring basis as of June 30, 2025 and December 31, 2024:
  Fair Value Measurements:
Description
Fair Value at
June 30, 2025
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)		Significant Other
Observable Inputs
(Level 2)		Unobservable
Inputs
(Level 3)
Derivatives designated as a hedging instrument:
Assets:
2021 Swaps$3,758 — $3,758 — 
2022 Swaps$6,567 — $6,567 — 
2022 II Swaps$61 — $61 — 
Liabilities:
2022 II Swaps$(989)— $(989)— 
Fair Value at December 31, 2024
Derivatives designated as a hedging instrument:
Assets:
2021 Swaps$6,902 — $6,902 — 
2022 Swaps$14,461 — $14,461 — 
2022 II Swaps$896 — $896 — 
There was no ineffectiveness recorded on the 2021 Swaps, the 2022 Swaps or the 2022 II Swaps during the six months ended June 30, 2025. See Note 7 for more information regarding our derivatives.
The estimated fair value of the 2021 Swaps, the 2022 Swaps and the 2022 II Swaps was determined using the market standard methodology of netting the discounted fixed cash payments and the discounted expected variable cash receipts. The variable cash receipts are based on an expectation of interest rates (forward curves) derived from observable market interest rate curves. In addition, credit valuation adjustments are incorporated in the fair value to account for potential non-performance risk, including our own non-performance risk and the respective counterparty's non-performance risk. We determined that the significant inputs used to value the 2021 Swaps, the 2022 Swaps and the 2022 II Swaps fell within Level 2 of the fair value hierarchy.