INTEREST RATE SWAP DERIVATIVES |
12 Months Ended |
|---|---|
Dec. 31, 2025 | |
| Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
| INTEREST RATE SWAP DERIVATIVES | INTEREST RATE SWAP DERIVATIVES In January 2025, the Company, through its Operating Partnership, entered into two swap agreements, effective December 31, 2024, for $125.0 million each, for an aggregate of $250.0 million, corresponding to the Term Loan, which fixed SOFR for the year ending December 31, 2025 at 2.45%, resulting in a fixed rate of 4.25% based on the Company’s leverage ratio. The fixed rate increases if the Company’s leverage ratio increases above 50%. The Company paid aggregate premiums of $4.2 million, including accrued interest receivable of $0.3 million, to buy down the fixed rate below the market rate. The Company designated the pay-fixed, receive-floating interest rate swaps as cash flow hedges and therefore the change in fair value of $3.9 million from the swap execution dates to December 31, 2025 was recorded as accumulated other comprehensive income in the Company's consolidated balance sheet as of December 31, 2025. The Company, through its Operating Partnership, entered into a five-year swap agreement in May 2022 to fix SOFR at 2.258% effective May 31, 2022 related to the variable interest rate on its original $150.0 million Term Loan. The Company designated the pay-fixed, receive-floating interest rate swap as a cash flow hedge, which was effective through December 31, 2022. The derivative instrument failed to qualify as a cash flow hedge during the year ended December 31, 2023 and as a result, the net change in fair value of the $150.0 million derivative instrument was recorded as a component of interest expense with any losses resulting in an increase to interest expense and any gains resulting in a decrease to interest expense. The Company recognized $3.0 million of unrealized losses on the valuation of the $150.0 million derivative instrument for the year ended December 31, 2024. Due to the $150.0 million derivative instrument’s failure to qualify as a cash flow hedge, the unrealized gain on interest rate swap derivative of $4.1 million as of December 31, 2022 (recorded in the Company’s financial statements as follows: (i) $3.5 million of accumulated other comprehensive income and (ii) $0.6 million of noncontrolling interest in operating partnership), is being amortized on a straight-line basis as a reduction to interest expense through the original maturity date of the Credit Facility, January 18, 2027. There is no income tax expense resulting from this amortization. During each of the years ended December 31, 2025 and 2024, interest expense was reduced by $1.0 million for amortization of the unrealized gain on this swap previously recorded in accumulated other comprehensive income and noncontrolling interest in Operating Partnership. As of December 31, 2025, the Company’s unamortized unrealized gain on interest rate swap derivative in accumulated other comprehensive income and noncontrolling interest in operating partnership in the Company’s consolidated balance sheet amounted to $1.1 million. The Company estimates that $1.0 million of the remaining unrealized gain on interest rate swap derivative will be reclassified from accumulated other comprehensive income and noncontrolling interest in operating partnership as a reduction to interest expense in the Company’s accompanying consolidated statements of operations over the next twelve months. The Company, through its Operating Partnership, also entered into another five-year swap agreement in October 2022 to fix SOFR at 3.440% effective November 30, 2022 related to the variable interest rate on its additional $100.0 million Term Loan commitment. The Company did not designate the pay-fixed, receive-floating interest rate swap as a cash flow hedge. On December 31, 2024, the counterparties to the swap agreements exercised their one-time option to cancel the swap agreements. The $0.5 million unrealized gain for the year ended December 31, 2024 was recognized as a decrease to interest expense in the Company’s accompanying consolidated statements of operations.
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