v3.26.1
Financial Instruments and Fair Values
 6 Months Ended
Jun. 30, 2026
Fair Value Disclosures [Abstract]  
Financial Instruments and Fair Values Financial Instruments and Fair Values
Derivative Financial Instruments
We use derivative financial instruments primarily to manage interest rate risk and such derivatives are not considered speculative. These derivative instruments are typically in the form of interest rate swap and forward agreements, and the primary objective is to minimize interest rate risks associated with investing and financing activities. The counterparties of these arrangements are major financial institutions with which we may also have other financial relationships. We are exposed to credit risk in the event of non-performance by these counterparties; however, we currently do not anticipate that any of the counterparties will fail to meet their obligations.
We have agreements with our derivative counterparties that contain a provision where if we either default or are capable of being declared in default on any of our indebtedness, then we could also be declared in default on our derivative obligations. If we had breached any of these provisions, we could have been required to settle our obligations that were in a net liability position under the agreements at their termination value. As of June 30, 2026, we did not have derivatives in a net liability position.
As of June 30, 2026 and December 31, 2025, we had interest rate swaps and caps with an aggregate notional value of $566.0 million and $567.0 million, respectively. The notional value does not represent exposure to credit, interest rate or market risks. These interest rate swaps have been designated as cash flow hedges and hedge the variability in future cash flows associated with our existing variable-rate term loan facilities. Interest rate caps not designated as hedges are not speculative and are used to manage our exposure to interest rate movements, but do not meet the strict hedge accounting requirements.
As of June 30, 2026 and 2025, our cash flow hedges are deemed highly effective. A net unrealized gain of $4.9 million and $9.3 million for the three and six months ended June 30, 2026, respectively, and a net unrealized loss of $2.0 million and $7.1 million for the three and six months ended June 30, 2025, respectively, relating to both active and terminated hedges of interest rate risk, are reflected in the consolidated statements of comprehensive income (loss). Amounts reported in accumulated other comprehensive income (loss) related to derivatives will be reclassified to interest expense as interest payments are made on the debt. We estimate that $2.3 million net gain of the current balance held in accumulated other comprehensive income (loss) will be reclassified into interest expense within the next 12 months. Cash payments and receipts related to our cash flow hedges are classified as operating activities and are included within our disclosure of cash paid for interest on our consolidated statements of cash flows, consistent with the classification of the hedged interest payments.
In February 2026, we entered into treasury locks, designated as cash flow hedges, in the aggregate notional amount of $50.0 million to manage exposure to fluctuations in interest rates in anticipation of the refinancing of the 10 Union Square East mortgage loan. In March 2026, concurrent with the issuance of the new 10 Union Square East mortgage loan (see Note 5), the Company settled its treasury locks, resulting in a $1.1 million cash inflow reported in cash flows from operating activities. The $1.1 million gain was recorded in accumulated other comprehensive income (loss) and will be amortized into earnings over the term of the 10 Union Square East mortgage loan.
The table below summarizes the terms of agreements and the fair values of our derivative financial instruments:
(amounts in thousands, except percentages)June 30, 2026December 31, 2025
DerivativeNotional AmountReceive RatePay RateEffective DateExpiration Date
Asset(1)
Liability(2)
Asset(1)
Liability(2)
Interest rate swap$36,820 
70% of 1 Month SOFR
2.5000%December 1, 2021November 1, 2030$458 $— $— $(9)
Interest rate swap103,790 
70% of 1 Month SOFR
2.5000%December 1, 2021November 1, 20331,942 — 698 — 
Interest rate swap10,710 
70% of 1 Month SOFR
1.7570%December 1, 2021November 1, 2033569 — 472 — 
Interest rate swap11,247 1 Month SOFR2.2540%December 1, 2021November 1, 2030421 — 354 — 
Interest rate swap175,000 SOFR Compound2.5620%August 31, 2022December 31, 20261,112 — 1,421 — 
Interest rate cap6,780 
70% of 1 Month SOFR
4.5000%October 1, 2024November 1, 203016 — 11 — 
Interest rate cap6,676 1 Month SOFR5.5000%October 1, 2024November 1, 203039 — 27 — 
Interest rate swap47,500 1 Month SOFR3.3090%March 19, 2025March 8, 2029711 — — (13)
Interest rate swap47,500 1 Month SOFR3.3030%March 19, 2025March 8, 2029717 — — (5)
Interest rate swap35,000 SOFR3.2265%November 14, 2025February 1, 2029576 — 68 — 
Interest rate swap35,000 SOFR3.2530%December 3, 2025February 1, 2029553 — 40 — 
Interest rate swap50,000 SOFR3.3975%December 18, 2025December 31, 2026103 — — (4)
Interest rate swap(3)
— SOFR3.7970%July 15, 2026January 9, 2032115 — — — 
Interest rate swap(4)
— SOFR3.0110%December 31, 2026February 1, 20291,558 — 398 — 
Interest rate swap(4)
— SOFR3.0140%December 31, 2026February 1, 20291,552 — 393 — 
$566,023 $10,442 $— $3,882 $(31)
(1) Included as a component of prepaid expenses and other assets on the consolidated balance sheets.
(2) Included as a component of accounts payable and accrued expenses on the consolidated balance sheets.
(3) The notional amount of the interest rate swap effective July 15, 2026 is $50.0 million.
(4) The notional amount of each interest rate swap effective December 31, 2026 is $87.5 million.
The table below shows the effect of our derivative financial instruments designated as cash flow hedges on accumulated other comprehensive income (loss):
Three Months Ended June 30,Six Months Ended June 30,
(amounts in thousands)2026202520262025
Amount of gain (loss) recognized in other comprehensive income (loss)$4,819 $(1,472)$9,222 $(5,588)
Amount of (gain) loss reclassified from accumulated other comprehensive income (loss) into interest expense42 (484)120 (1,533)
The table below shows the effect of our derivative financial instruments designated as cash flow hedges on the consolidated statements of operations:
Three Months Ended June 30,Six Months Ended June 30,
(amounts in thousands)2026202520262025
Total interest expense presented in the consolidated statements of operations in which the effects of cash flow hedges are recorded$(27,805)$(25,126)$(55,942)$(52,064)
Amount of gain (loss) reclassified from accumulated other comprehensive income (loss) into interest expense(42)484 (120)1,533 
Fair Valuation
The estimated fair values at June 30, 2026 and December 31, 2025 were determined by management, using available market information and appropriate valuation methodologies. Considerable judgment is necessary to interpret market data and develop estimated fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts we could realize on disposition of the financial instruments. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.
The fair value of derivative instruments is determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative. Although the majority of the inputs used to value our derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with our derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by ourselves and our counterparties. The impact of such credit valuation adjustments, determined based on the fair value of each individual contract, was not significant to the overall valuation. As a result, all of our derivatives were classified as Level 2 of the fair value hierarchy.
The fair value of our mortgage notes payable, senior unsecured notes, unsecured term loan facilities and unsecured revolving credit facility which are determined using Level 3 inputs are estimated by discounting the future cash flows using current interest rates at which similar borrowings could be made by us.
The following tables summarize the carrying and estimated fair values of our financial instruments:
June 30, 2026
Estimated Fair Value
(amounts in thousands)Carrying
Value		TotalLevel 1Level 2Level 3
Interest rate swaps and caps included in prepaid expenses and other assets$10,442 $10,442 $— $10,442 $— 
Mortgage notes payable443,102 430,198 — — 430,198 
Senior unsecured notes - Series B-L1,271,149 1,219,075 — — 1,219,075 
Unsecured term loan facilities337,125 340,000 — — 340,000 
Unsecured revolving credit facility175,000 175,000 — — 175,000 
December 31, 2025
Estimated Fair Value
(amounts in thousands)Carrying
Value		TotalLevel 1Level 2Level 3
Interest rate swaps and caps included in prepaid expenses and other assets$3,882 $3,882 $— $3,882 $— 
Interest rate swaps included in accounts payable and accrued expenses31 31 — 31 — 
Mortgage notes payable619,269 586,773 — — 586,773 
Senior unsecured notes - Series B-L1,270,668 1,244,255 — — 1,244,255 
Unsecured term loan facilities336,794 340,000 — — 340,000 
Unsecured revolving credit facility145,000 145,000 — — 145,000 
Disclosure about the fair value of financial instruments is based on pertinent information available to us as of June 30, 2026 and December 31, 2025. Although we are not aware of any factors that would significantly affect the reasonable fair value amounts, such amounts have not been comprehensively revalued for purposes of these consolidated financial statements since that date and current estimates of fair value may differ significantly from the amounts presented herein.