v3.26.1
Interest Rate Contracts
 3 Months Ended
Mar. 31, 2026
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Interest Rate Contracts Interest Rate Contracts
Risk Management Objective of Using Derivatives
The Company is exposed to certain risks arising from both business operations and economic conditions. The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of debt funding and the use of derivative financial instruments. Specifically, the Company enters into interest rate hedging instruments (collectively, “Interest Rate Swaps”) to provide greater predictability in interest expense by protecting against potential increases in floating interest rates and allow for more precise budgeting, financial planning and forecasting. Interest Rate Swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. The Company does not use derivatives for trading or speculative purposes.
Derivative Instruments
As of March 31, 2026 and December 31, 2025, the Company has Interest Rate Swaps in place to hedge the variable cash flows associated with its variable-rate debt (which consists of the KeyBank Loans as of both periods). The Interest Rate Swaps
are cross-defaulted to other indebtedness of the Operating Partnership, if that indebtedness exceeds certain thresholds. The change in the fair value of the Interest Rate Swaps designated and qualifying as cash flow hedges is initially recorded in accumulated other comprehensive income (“AOCI”) and is subsequently reclassified into earnings through interest expense as interest payments are made on the Company's variable-rate debt.
The following table sets forth a summary of the Interest Rate Swaps at March 31, 2026 and December 31, 2025:
Fair Value (1)
Current Notional Amounts
Derivative InstrumentEffective DateMaturity Date
Interest Strike Rate (2)
March 31, 2026December 31, 2025March 31, 2026December 31, 2025
Interest Rate Swap (3)
7/1/20257/1/20293.57%$(120)$(696)$85,000 $85,000 
Interest Rate Swap (3)
7/1/20257/1/20293.60%(220)(901)100,000 100,000 
Interest Rate Swap (3)
7/1/20257/1/20293.58%(169)(847)100,000 100,000 
Total$(509)$(2,444)$285,000 $285,000 
(1)The Company records all derivative instruments on a gross basis in the consolidated balance sheets, and accordingly there are no offsetting amounts that net assets against liabilities. As of March 31, 2026, derivatives in an asset or liability position are included in the line item “Interest rate swap asset” or “Interest rate swap liability”, respectively, in the consolidated balance sheets at fair value.
(2)In connection with the Eighth Amendment, the Operating Partnership entered into certain interest rate swaps, in the form of forward-starting, floating to fixed SOFR interest rate swaps. These swaps became effective July 1, 2025, and mature July 1, 2029 and have the effect of converting SOFR to a weighted average fixed rate of 3.58%.
(3)Subsequent to March 31, 2026, the Company terminated all remaining Interest Rate Swaps with an aggregate notional amount of $285.0 million.
The following table sets forth the impact of the Interest Rate Swaps on the consolidated statements of operations for the periods presented:
Three Months Ended March 31,
20262025
Interest Rate Swaps in Cash Flow Hedging Relationship:
Amount of (loss) gain recognized in AOCI on derivatives
$(2,005)$(7,453)
Amount reclassified from AOCI into earnings
$39 $(4,632)
Total “Interest expense” reported on the consolidated statements of operations
$7,697 $14,306 
During the twelve months subsequent to March 31, 2026, the Company estimates that an additional $0.2 million of its income will be recognized from AOCI into earnings.
The Company was not required to post collateral related to these agreements.