DERIVATIVE INSTRUMENTS

6 Months Ended

Jun. 30, 2024

DERIVATIVE INSTRUMENTS

DERIVATIVE INSTRUMENTS

8 – DERIVATIVE INSTRUMENTS

The Company is exposed to interest rate risk on its floating rate debt. As of December 31, 2023, the Company had one interest rate cap agreement outstanding to manage interest costs and the risk associated with variable interest rates. This $50,000 interest rate cap agreement expired on March 28, 2024, therefore as of June 30, 2024, the Company no longer has any interest rate cap agreements. The interest rate cap agreement was initially designated and qualified as a cash flow hedge. The premium paid was recognized in income on a rational basis, and all changes in the fair value of the caps were deferred in Accumulated other comprehensive income (“AOCI”) and were subsequently reclassified into Interest expense in the period when the hedged interest affected earnings.

The Company recorded a $527 unrealized loss for the six months ended June 30, 2024 in AOCI. There is no remaining AOCI as of June 30, 2024.

The Effect of Cash Flow Hedge Accounting on the Statements of Operations
	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2024		2023		2024		2023
	Interest Expense		Interest Expense		Interest Expense		Interest Expense
Total amounts of income and expense line items presented in the statements of operations in which the effects of cash flow hedges are recorded	$	3,452	$	2,131	$	7,492	$	4,160
The effects of cash flow hedging
Gain or (loss) on cash flow hedging relationships in Subtopic 815-20:
Interest contracts:
Amount of gain or (loss) reclassified from AOCI to income	$	—	$	(1,617)	$	(568)	$	(3,341)
Premium excluded and recognized on an amortized basis		—		35		18		74
Amount of gain or (loss) reclassified from AOCI to income as a result that a forecasted transaction is no longer probable of occurring		—		—		—		—

The following table shows the interest rate cap assets as of June 30, 2024 and December 31, 2023:

			June 30,		December 31,
	Balance Sheet Location		2024		2023
Derivatives designated as hedging instruments
Interest rate caps	Fair value of derivative instruments - current	$	—	$	515
Interest rate caps	Fair value of derivative instruments - noncurrent	$	—	$	—
Derivatives not designated as hedging instruments
Interest rate caps	Fair value of derivative instruments - current	$	—	$	57
Interest rate caps	Fair value of derivative instruments - noncurrent	$	—	$	—

The components of AOCI included in the accompanying Condensed Consolidated Balance Sheet consists of net unrealized losses on cash flow hedges as of June 30, 2024.

AOCI — January 1, 2024	$	527
Amount recognized in OCI on derivative, intrinsic		(533)
Amount recognized in OCI on derivative, excluded		6
Amount reclassified from OCI into income		—
AOCI — June 30, 2024	$	—