v3.26.3
Derivative Instruments
 9 Months Ended
Sep. 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 $4.6 million and $0.3 million at September 30, 2026 and December 31, 2025, respectively. The Company had no derivative liabilities at September 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 variable rate 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.

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.

The Company had one interest rate swap agreement designated as a cash flow hedge of interest rate risk that expired on September 30, 2026. This interest rate swap limited the variable portion of the interest rate (SOFR) on a $25.0 million bond to 2.5325%. Upon its maturity, the Company did not renew, replace or enter into a new interest rate swap agreement to hedge the related variable-rate exposure. As a result, the $25.0 million variable-rate borrowing is no longer hedged and will bear interest at the prevailing variable rate.
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.

On August 17, 2026, the Company de-designated its eight CAD to USD cross-currency swaps in conjunction with entering into new net investment hedge agreements described below and terminated the previous cross-currency swap agreements. The Company received $0.1 million in connection with the settlement of the CAD to USD cross-currency swaps. As these agreements were terminated prior to their maturity, the remaining AOCI balance of approximately $0.1 million was frozen and will be amortized to other income through December 1, 2026, which is the original term of the de-designated swaps.

Net Investment Hedges of Foreign Exchange Risk
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 and cross-currency swaps to manage its exposure to changes in foreign exchange rates on certain of its foreign net investments.

On August 17, 2026, the Company de-designated its CAD to USD forward contracts in conjunction with entering into new cross-currency swap agreements described below. The Company paid $3.0 million in connection with the settlement of the CAD to USD forward contracts. The corresponding change in value of the forward contracts for the period from inception through de-designation continues to be reported in AOCI until the net investment is sold or liquidated.

On August 17, 2026, the Company entered into five cross-currency swaps designated as net investment hedges. As of September 30, 2026, the terms of these cross-currency swaps were:
Fixed rateNotional Amount (in millions, CAD)Annual Cash Flows (in millions, CAD)CAD per USD exchange rate on monthly settlements (1)Maturity
$1.39 CAD per USD
$240.0 $19.2 1.19August 1, 2028
$1.39 CAD per USD
120.0 9.6 1.21August 1, 2029
Total$360.0 $28.8 

(1) The cross-currency swaps have a monthly settlement feature. The net effect of the monthly settlement is an excluded component from the designated hedging relationship.

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. These 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 designated hedging relationship 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.

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 a cross-currency swap 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 $1.39 CAD per USD to fund the principal amount of the mortgage note receivable and monthly exchanges as noted below.
As of September 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.
Below is a summary of the effect of derivative instruments on the consolidated statements of changes in equity and income for the three and nine months ended September 30, 2026 and 2025.
Effect of Derivative Instruments on the Consolidated Statements of Changes in Equity and Comprehensive Income for the Three and Nine Months Ended September 30, 2026 and 2025 (Dollars in thousands)
Three Months Ended September 30,Nine Months Ended September 30,
Description2026202520262025
Cash Flow Hedges
Interest Rate Swaps
Amount of (Loss) Gain Recognized in AOCI on Derivative$(3)$23 $36 $151 
Amount of (Expense) Income Reclassified from AOCI into Earnings (1)(14)32 (39)272 
Cross-Currency Swaps
Amount of (Loss) Gain Recognized in AOCI on Derivative (143)540 252 (660)
Amount of Income Reclassified from AOCI into Earnings (2)114 96 298 434 
Net Investment Hedges
Cross-Currency Swaps
Amount of Gain Recognized in AOCI on Derivative 4,930 — 4,930 — 
Amount of Income Recognized in Earnings (2) (3)427 — 427 — 
Currency Forward Agreements
Amount of (Loss) Gain Recognized in AOCI on Derivative (4,559)4,504 3,682 (4,258)
Fair Value Hedges
Cross-Currency Swaps
Amount of Loss Recognized in AOCI on Derivative (3)(77)(60)(260)(60)
Amount of Income Reclassified from AOCI into Earnings (2)— 3 — 3 
Amount of Gain (Loss) Recognized in Earnings (2)(3)49 (2)131 (2)
Total
Amount of Gain (Loss) Recognized in AOCI on Derivatives $148 $5,007 $8,640 $(4,827)
Amount of Income Reclassified from AOCI into Earnings 100 131 259 709 
Amount of Gain (Loss) Recognized in Earnings476 (2)558 (2)
Interest expense, net in accompanying consolidated statements of income and comprehensive income $40,310 $33,238 $113,348 $99,505 
Other income in accompanying consolidated statements of income and comprehensive income $14,230 $12,135 $36,064 $35,989 
(1) Included in "Interest expense, net" in the accompanying consolidated statements of income and comprehensive income for the three and nine months ended September 30, 2026 and 2025.
(2) Included in "Other income" in the accompanying consolidated statements of income and comprehensive income for the three and nine months ended September 30, 2026 and 2025.
(3) Amounts excluded from the designated hedging relationship.
Credit-risk-related Contingent Features
As of September 30, 2026, the Company had no derivatives in a liability position, had not posted any collateral related to derivative agreements and was not in breach of any provisions in these agreements.