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Derivatives and Hedging
 12 Months Ended
Dec. 31, 2025
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivatives and Hedging Derivatives and Hedging
The Company uses derivatives as part of our overall strategy to manage our exposure to market risks associated with the fluctuations in interest rates. We are also required to enter into interest rate derivative instruments in compliance with certain debt agreements. We do not enter into derivative financial instruments for trading or speculative purposes. The interest rate derivative instruments are not designated as hedges under ASC 815-20, Derivatives - Hedging. All changes in the fair value of the instruments are included as a component of interest expense in the consolidated statements of operations and "loss on derivative instruments, net" on the consolidated statements of cash flows.

In connection with a loan related to the Company's acquisition of a community located in Macedonia, Ohio in May 2024, the Company entered into a SOFR-based interest rate cap to reduce exposure to the variable interest rate fluctuations associated with the mortgage. The total cost of the IRC was $0.2 million and has an aggregate notional amount of $9.4 million. The IRC has a 24-month term and caps SOFR at 6.00%.

On March 1, 2022, the Company entered into an interest rate cap agreement for an aggregate notional amount of $50.3 million to reduce exposure to interest rate fluctuations associated with a portion of our variable mortgage notes payable. The interest rate cap agreement had a 24-month term and capped the interest rate at 4.00% from March 1, 2022 through March 1, 2024 with respect to the portion of our floating rate indebtedness. During April 2024, the Company entered into an interest rate cap transaction for an aggregate notional amount of $49.2 million for $1.1 million to reduce exposure to interest rate fluctuations associated with a portion of our variable mortgage notes payable to Fannie Mae. The interest rate cap has 24-month term and effectively caps SOFR at 4.00%. The April 2024, interest rate cap replaced the interest rate cap that expired in March 2024.

On February 2, 2024, as part of the Ally Term Loan expansion, the Company entered into a SOFR-based interest rate cap transaction for an aggregate notional amount of $24.8 million at a cost of $0.6 million for a 2.25% interest rate cap expiring on December 1, 2024. On December 1, 2024, the Company entered into a SOFR-based interest rate cap transaction for an aggregate notional amount of $113 million at a cost of $1.4 million to replace the previous IRC that expired on December 1,
2024. The interest rate cap agreement had a 12-month term and effectively capped the interest rate at 3.00% with respect to the portion of our floating rate indebtedness. On August 27, 2025, as part of the 2025 Ally Term Loan, the Company terminated its existing IRC with Ally and entered into a new SOFR-based IRC transaction for an aggregate notional amount of $122 million at a cost of $0.1 million. The interest rate cap agreement has a 36-month term and effectively caps the interest rate at 5.50% with respect to the portion of our floating rate indebtedness.
In July 2024, one of the affiliates in the Palatine JV's entered into a SOFR-based IRC at 4.75% to reduce exposure to the variable interest rate fluctuations associated with two of its mortgages at a cost of $0.1 million. The IRC expires in July 2026 and was for an aggregate notional amount of $13.6 million.
The following table presents the fair values of derivative assets and liabilities in the consolidated balance sheets (in thousands):

December 31, 2025
Derivative AssetDerivative Liability
Notional Amount
Fair Value 1
Notional AmountFair Value
Interest rate cap (SOFR-based)
194,190 72 — $— 
Total derivatives$194,190 $72 $— $— 
1 Of this amount, $8 thousand is presented on the balance sheet as Current assets - derivative assets and $64 thousand is Other assets, net.

December 31, 2024
Derivative AssetDerivative Liability
Notional Amount
Fair Value 1
Notional AmountFair Value
Interest rate cap (SOFR-based)
185,145 1,465 — $— 
Total derivatives$185,145 $1,465 $— $— 
1 Of this amount, $1.4 million is presented on the balance sheet as Current assets - derivative assets and $0.1 million is Other assets, net.

The following table presents the effect of the derivative instrument on the consolidated statements of operations (in thousands):
Years ended December 31,
20252024
Derivatives not designated as hedges
Interest rate caps
Loss on derivatives not designated as hedges included in interest expense
(1,069)(3,950)