v3.26.1
Risk Management and Use of Derivative Financial Instruments
 6 Months Ended
Jun. 30, 2026
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Risk Management and Use of Derivative Financial Instruments Risk Management and Use of Derivative Financial Instruments
Risk Management

In the normal course of our ongoing business operations, we encounter economic risk. There are four main components of economic risk that impact us: interest rate risk, credit risk, market risk, and foreign currency risk. We are primarily subject to interest rate risk on our interest-bearing liabilities, including our Senior Unsecured Credit Facility (Note 10) and unhedged variable-rate non-recourse mortgage loans. Credit risk is the risk of default on our operations and our tenants’ inability or unwillingness to make contractually required payments. Market risk includes changes in the value of our properties and related loans, Senior Unsecured Notes, and other securities, due to changes in interest rates or other market factors. We own investments in North America and Europe, and are subject to risks associated with fluctuating foreign currency exchange rates.
Derivative Financial Instruments

There have been no significant changes in our derivative financial instrument policies from what was disclosed in the 2025 Annual Report. At both June 30, 2026 and December 31, 2025, no cash collateral had been posted nor received for any of our derivative positions.

The following table sets forth certain information regarding our derivative instruments (in thousands):
Derivatives Designated as Hedging Instruments
Balance Sheet LocationDerivative Assets Fair Value atDerivative Liabilities Fair Value at
June 30, 2026December 31, 2025June 30, 2026December 31, 2025
Interest rate swaps
Other assets, net
$3,714 $244 $— $— 
Foreign currency collars
Other assets, net
2,868 1,468 — — 
Foreign currency collars
Accounts payable, accrued expenses and other liabilities
— — (5,414)(13,021)
Interest rate swaps
Accounts payable, accrued expenses and other liabilities
— — (267)(4,024)
6,582 1,712 (5,681)(17,045)
Derivatives Not Designated as Hedging Instruments
Foreign currency collarsOther assets, net1,792 133 — — 
Foreign currency collarsAccounts payable, accrued expenses and other liabilities— — — (1,390)
1,792 133 — (1,390)
Total derivatives$8,374 $1,845 $(5,681)$(18,435)

The following tables present the impact of our derivative instruments in the consolidated financial statements (in thousands):
Amount of Gain (Loss) Recognized on Derivatives in
 Other Comprehensive Income (Loss) (a)
Three Months Ended June 30,Six Months Ended June 30,
Derivatives in Cash Flow Hedging Relationships 2026202520262025
Interest rate swaps$(3,477)$(6,401)$7,210 $(5,721)
Foreign currency collars2,203 (25,777)9,008 (38,995)
Total$(1,274)$(32,178)$16,218 $(44,716)
Amount of Gain (Loss) on Derivatives Reclassified from
 Other Comprehensive Income (Loss)
Derivatives in Cash Flow Hedging Relationships
Location of Gain (Loss) Recognized in Income
Three Months Ended June 30,Six Months Ended June 30,
2026202520262025
Interest rate swapsInterest expense$(293)$586 $(626)$634 
Foreign currency collarsNon-operating income59 2,157 (108)5,971 
Total$(234)$2,743 $(734)$6,605 
__________
(a)Excludes net gains of less than $0.1 million recognized on unconsolidated jointly owned investments for both the three months ended June 30, 2026 and 2025, and net gains of $0.1 million for both the six months ended June 30, 2026 and 2025.
Amounts reported in Other comprehensive (loss) income related to interest rate derivative contracts will be reclassified to Interest expense as interest is incurred on our variable-rate debt. Amounts reported in Other comprehensive (loss) income related to foreign currency derivative contracts will be reclassified to Non-operating income when the hedged foreign currency contracts are settled. As of June 30, 2026, we estimate that an additional $2.1 million and $(2.5) million of gains (losses) will be reclassified as Interest expense and Non-operating income, respectively, during the next 12 months.
Amount of Gain (Loss) on Derivatives Recognized in Income
Derivatives in Cash Flow Hedging Relationships
Location of Gain (Loss) Recognized in Income
Three Months Ended June 30,Six Months Ended June 30,
2026202520262025
Foreign currency collarsNon-operating income$464 $(2,556)$426 $(3,811)
Interest rate swaps
Interest expense
293 (606)624 (674)
Derivatives Not in Cash Flow Hedging Relationships
Foreign currency collarsOther gains and (losses)825 (3,275)3,049 (5,015)
Total$1,582 $(6,437)$4,099 $(9,500)

See below for information on our purposes for entering into derivative instruments.

Interest Rate Swaps and Caps

We are exposed to the impact of interest rate changes primarily through our borrowing activities. To limit this exposure, we generally seek long-term debt financing on a fixed-rate basis. However, from time to time, we have obtained, and may in the future obtain, variable-rate (i) non-recourse mortgage loans and (ii) unsecured term loans (Note 10) and, as a result, we have entered into, and may continue to enter into, interest rate swap agreements or interest rate cap agreements with counterparties. Interest rate swaps, which effectively convert the variable-rate debt service obligations of a loan to a fixed rate, are agreements in which one party exchanges a stream of interest payments for a counterparty’s stream of cash flow over a specific period. The notional, or face, amount on which the swaps are based is not exchanged. Interest rate caps limit the effective borrowing rate of variable-rate debt obligations while allowing participants to share in downward shifts in interest rates. Our objective in using these derivatives is to limit our exposure to interest rate movements.

The interest rate swaps that our consolidated subsidiaries had outstanding at June 30, 2026 are summarized as follows (currency in thousands):
Interest Rate Derivatives Number of InstrumentsNotional
Amount
Fair Value at
June 30, 2026 (a)
Designated as Cash Flow Hedging Instruments
Interest rate swaps4528,991 EUR$3,411 
Interest rate swaps2270,000 GBP36 
$3,447 
__________ 
(a)Fair value amounts are based on the exchange rate of the euro at June 30, 2026, as applicable.

Foreign Currency Collars

We are exposed to foreign currency exchange rate movements, primarily in the euro and, to a lesser extent, the British pound sterling and certain other currencies. In order to hedge certain of our foreign currency cash flow exposures, we enter into foreign currency collars. A foreign currency collar consists of a written call option and a purchased put option to sell the foreign currency at a range of predetermined exchange rates. A foreign currency collar guarantees that the exchange rate of the currency will not fluctuate beyond the range of the options’ strike prices. Our foreign currency collars have maturities of 51 months or less.
The following table presents the foreign currency collars that we had outstanding at June 30, 2026 (currency in thousands):
Foreign Currency Derivatives Number of InstrumentsNotional
Amount
Fair Value at
June 30, 2026
Designated as Cash Flow Hedging Instruments
Foreign currency collars37259,000 EUR$(2,837)
Foreign currency collars1416,000 GBP291 
Not Designated as Cash Flow Hedging Instruments
Foreign currency collars541,000 EUR1,792 
$(754)

Credit Risk-Related Contingent Features

We measure our credit exposure on a counterparty basis as the net positive aggregate estimated fair value of our derivatives, net of any collateral received. No collateral was received as of June 30, 2026. At June 30, 2026, our total credit exposure and the maximum exposure to any single counterparty was $5.7 million and $2.5 million, respectively.

Some of the agreements we have with our derivative counterparties contain cross-default provisions that could trigger a declaration of default on our derivative obligations if we default, or are capable of being declared in default, on certain of our indebtedness. At June 30, 2026, we had not been declared in default on any of our derivative obligations. The estimated fair value of our derivatives in a net liability position was $5.7 million and $18.5 million at June 30, 2026 and December 31, 2025, respectively, which included accrued interest and any nonperformance risk adjustments. If we had breached any of these provisions at June 30, 2026 or December 31, 2025, we could have been required to settle our obligations under these agreements at their aggregate termination value of $5.7 million and $18.6 million, respectively.

Net Investment Hedges

Certain borrowings under our Senior Unsecured Notes, Unsecured Revolving Credit Facility, and Unsecured Term Loans (all as defined in Note 10) denominated in euro, British pounds sterling, or Canadian dollars are designated as, and are effective as, economic hedges of our net investments in foreign entities.

Exchange rate variations impact our financial results because the financial results of our foreign subsidiaries are translated to U.S. dollars each period, with the effect of exchange rate variations being recorded in Other comprehensive (loss) income as part of the cumulative foreign currency translation adjustment. As a result, changes in the value of our designated borrowings under our euro-denominated senior notes and changes in the value of our euro, British pounds sterling, and Canadian dollar borrowings under our Senior Unsecured Credit Facility, related to changes in the spot rates, will be reported in the same manner as foreign currency translation adjustments, which are recorded in Other comprehensive (loss) income as part of the cumulative foreign currency translation adjustment. Such gains (losses) related to non-derivative net investment hedges were $43.2 million and $(329.2) million for the three months ended June 30, 2026 and 2025, respectively and $150.2 million and $(489.7) million for the six months ended June 30, 2026 and 2025, respectively.