Derivatives and Hedging Activities (Tables)

3 Months Ended

Mar. 31, 2026

Derivative Instruments and Hedging Activities Disclosure [Abstract]

The following table summarizes the Company’s interest rate swaps, designated as cash flow hedges for interest rate risk (dollars in thousands):

Number of instruments

Notional amount

Index

Pay rate

Effective date

Maturity date

Fair value

As of March 31, 2026

Interest rate “pay-fixed” swap (1)

$150,000

USD-SOFR with -5 Day Lookback

3.34%

12/11/2025

12/11/2028

759

As of December 31, 2025

Interest rate “pay-fixed” swaps (2)

$150,000

USD-SOFR with -5 Day Lookback

3.34%

12/11/2025

12/11/2028

(188)

__________

(1)Recorded at fair value in “Derivative assets, at fair value” on the consolidated balance sheets.

(2)Recorded at fair value in “Derivative liabilities, at fair value” on the consolidated balance sheets.

Schedule of Derivatives Included in AOCI

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 (dollars in thousands):


	Three months ended March 31,
	2026		2025
Gain (loss) recognized in accumulated other comprehensive income on interest rate derivatives	$	1,070	$	(1,200)
Gain reclassified from accumulated other comprehensive income into income as interest expense	$	1,598	$	3,794
Total interest expense presented in the consolidated statements of operations and comprehensive loss	$	(14,671)	$	(14,529)

Schedule of Derivative Instruments

The Company had the following interest rate derivatives that were not designated as hedges in qualifying hedging relationships as of March 31, 2026 and December 31, 2025 (dollars in thousands):


	March 31, 2026					December 31, 2025
	Number of instruments	Notional amount		Fair value		Number of instruments	Notional amount		Fair value
Interest rate caps (1)	7	$	394,098	$	636	6	$	337,999	$	569

__________

(1)Recorded at fair value in “Derivative assets, at fair value” on the consolidated balance sheets. Fair and notional values may include contracts acquired but not yet effective as of the dates presented. All of the Company’s interest rate cap agreements

limited one-month Secured Overnight Financing Rate (“SOFR”) to 3.50% with terms through November 2026. The actual one-month SOFR rates during the three months ended March 31, 2026 exceeded the strike price rate of 3.50% and the Company received payments under these agreements. While the Company does not apply hedge accounting for these interest rate caps, they are economically hedging the Fannie Mae Secured Debt. Changes in the fair market value of these non-designated derivatives, as well as any cash received, are presented within gain (loss) on non-designated derivatives in the Company’s consolidated statements of operations and comprehensive loss.