v3.25.2
Derivatives and Hedging Activities
 6 Months Ended
Jun. 30, 2025
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivatives and Hedging Activities Derivatives and Hedging Activities
Risk Management Objective of Using Derivatives
The Company may use derivative financial instruments, including interest rate swaps, caps, collars, options, floors and other interest rate derivative contracts, to hedge all or a portion of the interest rate risk associated with its borrowings.
The principal objective of such arrangements is to minimize the risks and/or costs associated with the Company’s operating and financial structure as well as to hedge specific anticipated transactions. Additionally, in using interest rate derivatives, the Company aims to add stability to interest expense and to manage its exposure to interest rate movements. The Company does not intend to utilize derivatives for speculative purposes or purposes other than interest rate risk management. The use of derivative financial instruments carries certain risks, including the risk that the counterparties to these contractual arrangements are not able to perform under the agreements. To mitigate this risk, the Company only enters into derivative financial instruments with counterparties with high credit ratings and with major financial institutions with which the Company, and its affiliates, may also have other financial relationships. The Company does not anticipate that any of its counterparties will fail to meet their obligations.
The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the consolidated balance sheets as of June 30, 2025 and December 31, 2024:
(In thousands)Balance Sheet LocationJune 30,
2025		December 31, 2024
Derivatives designated as hedging instruments:
Interest rate “pay-fixed” swapsDerivative assets, at fair value$9,453 $16,652 
Derivatives not designated as hedging instruments:
Interest rate capsDerivative assets, at fair value$1,755 $2,554 
Cash Flow Hedges of Interest Rate Risk
As of June 30, 2025 and December 31, 2024, the Company had one derivative with a notional value of $330.2 million and $378.5 million, respectively, designated as a cash flow hedges of interest rate risk. 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. This derivative was used to hedge the variable cash flows associated with variable-rate debt.
The changes in the fair value of derivatives designated and that qualify as cash flow hedges are recorded in accumulated other comprehensive loss and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings.
Amounts reported in accumulated other comprehensive loss related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. During the next 12 months, from July 1, 2025 through June 30, 2026, the Company estimates that $7.2 million will be reclassified from other comprehensive income as a decrease to interest expense.
During the six months ended June 30, 2025, the Company received $1.5 million in connection with the partial unwind of a derivative. In conjunction with the partial unwind, the Company accelerated the reclassification of gains of $1.5 million from other comprehensive income to earnings as a result of the hedged forecasted transactions becoming probable not to occur. This gain was recorded as a reduction in interest expense in its consolidated statements of operations and comprehensive loss for the six months ended June 30, 2025.

The table below details the location in the financial statements of the gain (loss) recognized on interest rate derivatives designated as cash flow hedges for the periods presented:
Three Months Ended June 30,Six Months Ended June 30,
(In thousands)2025202420252024
Amount of (loss) gain recognized in accumulated other comprehensive income on interest rate derivatives
$58 $2,272 $(1,141)$9,319 
Amount of gain reclassified from accumulated other comprehensive income into income as interest expense$2,263 $3,548 $6,058 $8,315 
Total amount of interest expense presented in the consolidated statements of operations and comprehensive loss$(15,836)$(17,752)$(30,365)$(34,135)
Non-Designated Derivatives
These derivatives are used to manage the Company’s exposure to interest rate movements, but do not meet the strict hedge accounting requirements to be classified as hedging instruments. Changes in the fair value of derivatives not designated as hedges under a qualifying hedging relationship are recorded directly to net income and recorded in gain on non-designated derivatives in the Company’s consolidated statements of operations and comprehensive loss.
The Company had the following outstanding interest rate derivatives with current effective notional amounts that were not designated as hedges in qualified hedging relationships as of June 30, 2025 and December 31, 2024:
June 30, 2025December 31, 2024
Interest Rate DerivativesNumber of Instruments
Notional Amount (1)
Number of Instruments
Notional Amount (1)
(In thousands)(In thousands)
Interest rate caps (2)
9 $481,293 8 $369,218 
__________
(1)Notional amount represents the currently active interest rate cap contracts.
(2)All of the Company’s interest rate cap agreements limited one-month SOFR to 3.50% with terms through November 2026. The actual one-month SOFR rates during the three months ended June 30, 2025 exceeded the strike price rate of 3.50% and the Company received payments under these agreements. Changes in the fair market value of these non-designated derivatives, as well as any cash received, are presented within gain on non-designated derivatives in the Company’s consolidated statements of operations and comprehensive loss.
These derivatives are used to limit the Company’s exposure to interest rate movements for economic purposes, however, the Company has not elected to apply hedge accounting.
Three interest rate caps with an aggregate notional amount of $138.5 million matured in July 2025 and were replaced with three new interest rate caps with a notional of $133.8 million that limit one-month SOFR to 3.50% and will mature in November 2026.
Beginning in the year ended December 31, 2022, SOFR exceeded 3.50% and the Company began receiving payments under these interest rate caps. While the Company does not apply hedge accounting for these interest rate caps, they are economically hedging the Capital One Facility, KeyBank Facility and OMF Warehouse Facility. Changes in the fair value of, and any cash received from, derivatives not designated as hedges under a qualifying hedging relationship are recorded directly to net loss and are presented within gain on non-designated derivatives in the Company’s consolidated statements of operations and comprehensive loss.
Offsetting Derivatives
The table below presents a gross presentation, the effects of offsetting, and a net presentation of the Company’s derivatives (both designated and non-designated) as of June 30, 2025 and December 31, 2024. The net amounts of derivative assets or liabilities can be reconciled to the tabular disclosure of fair value. The tabular disclosure of fair value provides the location that derivative assets and liabilities are presented on the consolidated balance sheets.
Gross Amounts Not Offset in the Consolidated Balance Sheet
(In thousands)Gross Amounts of Recognized AssetsGross Amounts of Recognized (Liabilities)Gross Amounts Offset in the Consolidated Balance SheetNet Amounts of Assets presented in the Consolidated Balance SheetFinancial InstrumentsCash Collateral ReceivedNet Amount
June 30, 2025$11,208 $— $— $11,208 $— $— $11,208 
December 31, 2024$19,206 $— $— $19,206 $— $— $19,206 
Credit-risk-related Contingent Features
The Company has agreements in place with each of its derivative counterparties that contain a provision where if the Company either defaults or is capable of being declared in default on any of its indebtedness, then the Company could also be declared in default on its derivative obligations.
As of June 30, 2025, there were no derivatives in a net liability position. The Company is not required to post any collateral related to these agreements and was not in breach of any agreement provisions.