v3.26.1
Derivatives and Hedging Activities
 3 Months Ended
Mar. 31, 2026
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivatives and Hedging Activities

7. Derivatives and Hedging Activities

The following table sets forth the key terms and fair values of our interest rate swap derivatives, each of which was designated as a cash flow hedge as of March 31, 2026. We entered into these interest rate swap derivatives to reduce our exposure to the variability in future cash flows attributable to changes in our floating rate debt (amounts in thousands):

Notional Amount

 

 

Fixed Rate

 

 

Floating Rate Index

 

Effective Date

 

Expiration Date

 

Fair Value

 

$

40,000

 

 

 

3.85

%

 

USD-SOFR with -5 Day Lookback

 

December 23, 2024

 

December 23, 2027

 

$

(180

)

$

30,000

 

 

 

3.86

%

 

USD-SOFR with -5 Day Lookback

 

December 23, 2024

 

December 23, 2027

 

$

(139

)

$

30,000

 

 

 

3.86

%

 

USD-SOFR with -5 Day Lookback

 

December 23, 2024

 

December 23, 2027

 

$

(141

)

$

100,000

 

 

 

3.72

%

 

USD-SOFR with -5 Day Lookback

 

March 24, 2025

 

April 1, 2028

 

$

(299

)

$

50,000

 

 

 

3.66

%

 

USD-SOFR with -5 Day Lookback

 

June 30, 2025

 

July 1, 2028

 

$

(124

)

$

50,000

 

 

 

3.67

%

 

USD-SOFR with -5 Day Lookback

 

June 30, 2025

 

July 1, 2028

 

$

(127

)

The table below sets forth the fair value of our interest rate derivatives as well as their classification on our Consolidated Balance Sheets (amounts in thousands):

Balance Sheet Line Item

 

As of March 31, 2026

 

 Interest rate swaps - Asset

 

$

—

 

 Interest rate swaps - Liability

 

 

(1,010

)

Cash Flow Hedges of Interest Rate Risk

The gains or losses on derivatives designated and that qualify as cash flow hedges are recorded in Accumulated other comprehensive income (“AOCI”) and will be reclassified to interest expense in the period that the hedged forecasted transactions affect earnings on our variable rate debt.

We estimate that $0.6 million will be reclassified from AOCI as a net increase to interest expense over the next 12 months.

The table below presents the effects of our interest rate derivatives on our Consolidated Statements of Operations and Comprehensive Income (Loss) (amounts in thousands):

 

 

For the three months ended March 31,

 

 

 

2026

 

 

2025

 

 Unrealized gain (loss) recognized in AOCI

 

$

1,963

 

 

$

(3,447

)

 Gain (loss) reclassified from AOCI into interest expense

 

 

(131

)

 

 

385

 

Credit-Risk-Related Contingent Features

We have agreements with each of our derivative counterparties that contain a provision where we could be declared in default on our derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to our default on such indebtedness. As of March 31, 2026, the net fair value of derivatives in a liability position, which includes accrued interest, related to agreements with our derivative counterparties was $1.0 million. As of March 31, 2026, the Company had not breached any provisions of these agreements and had not posted any collateral related to these agreements. If the Company were to breach any such provisions of these agreements, it would be required to settle its obligations under the agreements at their termination value of $1.1 million.