Derivative and Hedging Activities Derivative and Hedging Activities (Notes) |
6 Months Ended |
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Jun. 30, 2025 | |
| Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
| Derivative Financial Instruments and Hedging Activities Disclosure | 7. Derivative Financial Instruments and Hedging Activities Risk Management Objective of Using Derivatives. We are exposed to certain risks arising from both our business operations and economic conditions. We manage economic risks, including interest rate, liquidity, and credit risk, primarily by managing the amount, sources, and duration of our debt funding and the use of derivative financial instruments. Specifically, we may enter into derivative financial instruments to manage exposures arising from business activities resulting in differences in the amount, timing, and duration of our known or expected cash payments related to our borrowings. We do not utilize derivative financial instruments for trading or speculative purposes. See Note 2. "Summary of Significant Accounting Policies and Recent Accounting Pronouncements" for a further discussion of derivative financial instruments. Cash Flow Hedges. From time to time, we enter into designated cash flow hedges to manage the variability in cash flows due to changes in benchmark interest rates. We enter into interest rate swap agreements, including forward interest rate swaps and treasury locks, settled in cash based upon the difference between an agreed-upon benchmark rate and the prevailing benchmark rate at settlement. The agreements are generally settled around the time of the pricing of the related debt. Each cash flow derivative gain or loss is recorded to OCI and is subsequently reclassified to interest expense over the life of the related debt. We did not have any cash flow hedges at June 30, 2025 and 2024. During each of the three months ended June 30, 2025 and 2024, approximately $0.3 million was reclassified from AOCI as an increase to interest expense for derivative financial instruments settled in prior periods and approximately $0.7 million was reclassified from AOCI as an increase to interest expense during each of the six months ended June 30, 2025 and 2024. Fair Value Hedges. From time to time, we utilize interest rate swaps to achieve an additional level of floating rate debt relative to fixed rate debt as we deem appropriate. We designate fixed to floating interest rate swaps as fair value hedges. The changes in fair value of these derivative instruments and the offsetting changes in fair value of the underlying hedged debt due to changes in the relevant benchmark interest rates are recorded in interest expense. At June 30, 2025 and December 31, 2024, we had one interest rate swap with a notional amount of $500.0 million designated as a fair value hedge, which converted our $500.0 million principal amount of 5.85% fixed rate senior unsecured notes due November 2026 into a floating rate instrument with an interest rate based on a SOFR index. Refer to Note 6. "Notes Payable" for further discussion of the $500.0 million notes due in 2026. Refer to Note 12. "Fair Value Measurements" for the outstanding derivative instruments and the corresponding fair value classifications.
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