DERIVATIVES AND HEDGING |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2026 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| DERIVATIVES AND HEDGING [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| DERIVATIVES AND HEDGING | NOTE 16 – DERIVATIVES AND HEDGING We are exposed to, among other risks, the impact of changes in foreign currency exchange rates as a result of our investments in the U.K. and interest rate risk related to our capital structure. As a matter of policy, we do not use derivatives for trading or speculative purposes. Our risk management program is designed to manage the exposure and volatility arising from these risks, and utilizes foreign currency forward contracts, interest rate swaps and debt issued in foreign currencies to offset a portion of these risks. Derivatives Designated as Hedging Instruments As of June 30, 2026, we have nine interest rate swaps with $300.0 million in notional value. The swaps are designated as cash flow hedges of interest payments on one variable interest loan. Additionally, we have 11 foreign currency forward contracts with £258.0 million in notional value issued at a weighted average GBP-USD forward rate of 1.2899 that are designated as net investment hedges. Derivatives Not Designated as Hedging Instruments We enter into foreign currency forward contracts to reduce the effects of currency exchange rate fluctuations between the USD, our reporting currency, and GBP. These derivative contracts generally mature within one year and are not designated as hedge instruments for accounting purposes. In the third quarter of 2025, Omega entered into six GBP/USD currency forward contracts with notional amounts totaling £108.0 million and a weighted average GBP-USD rate of 1.3600, each of which mature between October 2, 2025 and January 5, 2027. In addition, in the second quarter of 2026, the Company entered into two GBP/USD currency forward contracts totaling £350.0 million of notional value at a weighted average rate of 1.3257 that mature on October 30, 2026. For the three and six months ended June 30, 2026, we recognized fair value losses of $0.1 million and fair value gains of $0.8 million, respectively, related to these forward contracts that are recorded within other income – net in the Consolidated Statements of Operations. As of June 30, 2026, we have five GBP/USD currency forward contracts remaining with notional amounts totaling £390.5 million and a weighted average GBP-USD rate of 1.3295, each of which mature between July 2, 2026 and January 5, 2027. The location and fair value of Omega’s derivative instruments at the respective balance sheet dates were as follows:
The fair value of the interest rate swaps and foreign currency forwards is derived from observable market data such as yield curves and foreign exchange rates and represents a Level 2 measurement on the fair value hierarchy. |
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