v3.26.1
Derivatives and Hedging
 3 Months Ended
Mar. 31, 2026
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivatives and Hedging Derivatives and Hedging
The Company uses derivatives as part of its overall strategy to manage our exposure to market risks associated with the fluctuations in variable interest rates associated with our debt. 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.
During August 2025, the Company entered into an interest rate cap transaction for an aggregate notional amount of $122.0 million for $0.1 million to reduce exposure to interest rate fluctuations in connection with the 2025 Ally Term Loan. The interest rate cap has a 36-month term and effectively caps SOFR at 5.50%.
During March 2026, the Company entered into an interest rate cap transaction for an aggregate notional amount of $49.2 million for $0.5 million to reduce exposure to interest rate fluctuations associated with a portion of our variable mortgage notes payable to the Federal National Mortgage Association (“Fannie Mae”). The interest rate cap has a 34-month term and effectively caps SOFR at 4.00%. The newly purchased March 2026 interest rate cap replaced the existing interest rate cap that expired in March 2026. Due to the timing of the replacement, both interest rate caps were active as of March 31, 2026. The IRC is not designated as a cash flow hedge under ASC 815-20, Derivatives – Hedging, and therefore, all changes in the fair value of the instrument are included as a component of interest expense in our condensed consolidated statements of operations.
During March 2026, the Company entered into two separate interest rate cap transactions for an aggregate notional amount of $270.0 million and $262.5 million for a premium of $0.04 million and $0.6 million, respectively, to reduce exposure to interest rate fluctuations associated with the Bridge Facility and the term loan tranche maturing in three years. The interest rate caps have a 12-month and 36-month term and cap SOFR at 4.25% and 4.50%, respectively.
The following table presents the fair values of derivative assets and liabilities in the condensed consolidated balance sheets (in thousands):
March 31, 2026
Derivative AssetDerivative Liability
Notional Amount
Fair Value 1
Notional AmountFair Value
Interest rate cap (SOFR-based)
$726,690 $1,667 $— $— 
Total derivatives, net$726,690 $1,667 $— $— 

1 Of this amount, $0.2 million is presented on the balance sheet as Current assets - derivative assets and $1.5 million is Other assets, net.
December 31, 2025
Derivative AssetDerivative Liability
Notional AmountFair ValueNotional AmountFair Value
Interest rate cap (SOFR-based)
$194,190 $72 $— $— 
Total derivatives, net$194,190 $72 $— $— 

The following table presents the effect of the derivative instruments on the condensed consolidated statements of operations (in thousands):
Three Months Ended March 31,
20262025
Derivative not designated as hedge
Interest rate cap
Gain (loss) on derivatives not designated as hedges included in interest expense$393 $(490)