v3.26.1
Derivative Instruments
 6 Months Ended
Jun. 30, 2026
Summary of Derivative Instruments [Abstract]  
Derivative Instruments Derivative Instruments
All derivatives are recognized at fair value in the consolidated balance sheets within the line items "Other assets" and "Accounts payable and accrued liabilities" as applicable. The Company has elected not to offset its derivative position for purposes of balance sheet presentation and disclosure. The Company had derivative assets of
$2.2 million and $0.3 million at June 30, 2026 and December 31, 2025, respectively. The Company had no derivative liabilities at June 30, 2026 and derivative liabilities of $6.9 million at December 31, 2025. See Note 9 for disclosures relating to the fair value of the derivative instruments.

Risk Management Objective of Using Derivatives
The Company is exposed to certain risks arising from both its business operations and economic conditions, including the effect of changes in foreign currency exchange rates on foreign currency transactions and interest rates on its SOFR-based borrowings. The Company manages this risk by following established risk management policies and procedures including the use of derivatives. The Company’s objective in using derivatives is to add stability to reported earnings and to manage its exposure to foreign exchange and interest rate movements or other identified risks. To accomplish this objective, the Company primarily uses interest rate swaps, cross-currency swaps and foreign currency forwards.

Cash Flow Hedges of Interest Rate Risk
The Company uses interest rate swaps as its interest rate risk management strategy for certain variable rate debt. Interest rate swaps designated as cash flow hedges involve the receipt or payment of variable-rate amounts from a counterparty, which results in the Company recording net interest expense that is fixed over the life of the agreements without exchange of the underlying notional amount.

At June 30, 2026, the Company had one interest rate swap agreement designated as a cash flow hedge of interest rate risk. The interest rate swap agreement outstanding as of June 30, 2026 is summarized below:

Fixed rateNotional Amount (in millions)IndexMaturity
2.5325%$25.0 USD SOFRSeptember 30, 2026

The change in the fair value of interest rate derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income (AOCI) and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings within the same income statement line item as the earnings effect of the hedged transaction.

Amounts reported in AOCI related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. As of June 30, 2026, the Company estimates that through maturity, $10 thousand of losses will be reclassified from AOCI to interest expense.

Cash Flow Hedges of Foreign Exchange Risk
The Company is exposed to foreign currency exchange risk against its functional currency, USD, on CAD denominated cash flow from its seven Canadian properties. The Company uses cross-currency swaps to mitigate its exposure to fluctuations in the USD-CAD exchange rate on cash inflows associated with these properties, which should hedge a significant portion of the Company's expected CAD denominated cash flows. As of June 30, 2026, the Company had the following cross-currency swaps:
Fixed rateNotional Amount (in millions, CAD)Annual Cash Flow (in millions, CAD)Maturity
$1.35 CAD per USD
$170.0 $15.3 December 1, 2026
$1.35 CAD per USD
90.0 8.1 December 1, 2026
$260.0 $23.4 

The change in the fair value of foreign currency derivatives designated and that qualify as cash flow hedges of foreign exchange risk is recorded in AOCI and reclassified into earnings in the period that the hedged forecasted transaction affects earnings within the same income statement line item as the earnings effect of the hedged transaction. As of June 30, 2026, the Company estimates that through maturity, $316 thousand of gains will be reclassified from AOCI to other income.
Fair Value Hedges of Foreign Exchange Risk
The Company has a CAD denominated mortgage note receivable secured by a fitness & wellness property in Winnipeg, Canada. The Company uses cross-currency swaps designated as a fair value hedge to mitigate foreign currency risk associated with fluctuations in the USD-CAD spot rate associated with the principal remeasurement of this mortgage note. The Company has a cross-currency swap with an interim and final notional exchange of $27.9 million CAD and $20.0 million USD at a spot rate of $1.392 CAD per USD to fund the principal amount of the mortgage note receivable and monthly exchanges as noted below.

As of June 30, 2026, the Company had the following cross-currency swap designated as a fair value hedge:
Interim settlement exchange rateNotional Amount (in millions, CAD)Annual Cash Flow (in millions, CAD)Maturity
$1.25 CAD per USD
$27.9 $2.2 October 1, 2030

The change in fair value of the foreign currency derivative designated and qualifying as a fair value hedge of foreign exchange risk is recorded at fair value each period on the Company's consolidated balance sheets, with the difference resulting from the changes in the spot rate recognized in foreign currency gain (loss). The foreign currency gain (loss) is included in "Other income" or "Other expense," as applicable, on the Company's consolidated statements of income and comprehensive income, which will offset the earnings impact of the foreign currency changes in the underlying transaction being hedged. The initial value of the component excluded from the assessment of effectiveness is recorded in AOCI and reclassified into earnings over the life of the hedging instrument. As of June 30, 2026, the Company estimates that during the twelve months ending June 30, 2027, $195 thousand of gains will be reclassified from AOCI to other income.

Net Investment Hedges
The Company is exposed to fluctuations in the USD-CAD exchange rate on its net investments in Canada. As such, the Company uses currency forward agreements to manage its exposure to changes in foreign exchange rates on certain of its foreign net investments. As of June 30, 2026, the Company had the following foreign currency forwards designated as net investment hedges:
Fixed rateNotional Amount (in millions, CAD)Maturity
$1.40 CAD per USD
$200.0 December 1, 2026
$1.40 CAD per USD
90.0 December 1, 2026
Total$290.0 

For qualifying foreign currency derivatives designated as net investment hedges, the change in the fair value of the derivatives is reported in AOCI as part of the cumulative translation adjustment. Amounts are reclassified out of AOCI into earnings when the hedged net investment is either sold or substantially liquidated. Gains and losses on the derivative representing hedge components excluded from the assessment of effectiveness are recognized over the life of the hedge on a systematic and rational basis, as documented at hedge inception in accordance with the Company's accounting policy election.
Below is a summary of the effect of derivative instruments on the consolidated statements of changes in equity and income for the three and six months ended June 30, 2026 and 2025.
Effect of Derivative Instruments on the Consolidated Statements of Changes in Equity and Comprehensive Income for the Three and Six Months Ended June 30, 2026 and 2025 (Dollars in thousands)
 Three Months Ended June 30,Six Months Ended June 30,
Description2026202520262025
Cash Flow Hedges
Interest Rate Swaps
Amount of Gain Recognized in AOCI on Derivative$3 $108 $39 $128 
Amount of (Expense) Income Reclassified from AOCI into Earnings (1)(14)120 (25)240 
Cross-Currency Swaps
Amount of Gain (Loss) Recognized in AOCI on Derivative 140 (1,268)395 (1,200)
Amount of Income Reclassified from AOCI into Earnings (2)103 66 184 338 
Fair Value Hedges
Cross-Currency Swaps
Amount of Loss Recognized in AOCI on Derivative (3)(226)— (183)— 
Amount of Gain Recognized in Earnings (2)(3)43 — 82 — 
Net Investment Hedges
Currency Forward Agreements
Amount of Gain (Loss) Recognized in AOCI on Derivative 4,387 (9,074)8,241 (8,762)
Total
Amount of Gain (Loss) Recognized in AOCI on Derivatives $4,304 $(10,234)$8,492 $(9,834)
Amount of Income Reclassified from AOCI into Earnings 89 186 159 578 
Amount of Gain Recognized in Earnings43 — 82 — 
Interest expense, net in accompanying consolidated statements of income and comprehensive income $38,275 $33,246 $73,038 $66,267 
Other income in accompanying consolidated statements of income and comprehensive income $11,764 $12,218 $21,834 $23,854 
(1) Included in "Interest expense, net" in the accompanying consolidated statements of income and comprehensive income for the three and six months ended June 30, 2026 and 2025.
(2) Included in "Other income" in the accompanying consolidated statements of income and comprehensive income for the three and six months ended June 30, 2026 and 2025.
(3) Amounts excluded from the effectiveness testing.

Credit-risk-related Contingent Features
The Company has an agreement with its interest rate derivative counterparty that contains a provision where, if the Company defaults on any of its obligations for borrowed money or credit in an amount exceeding $50.0 million and such default is not waived or cured within a specified period of time, including default where repayment of the indebtedness has not been accelerated by the lender, the Company could also be declared in default on its interest rate derivative agreements.

As of June 30, 2026, the Company had no derivatives in a liability position. As of June 30, 2026, the Company had not posted any collateral related to derivative agreements and was not in breach of any provisions in these agreements.