Marketable Securities, Derivative Financial Instruments and Fair Value Measurements

9 Months Ended

Sep. 30, 2025

Marketable Securities, Derivative Financial Instruments and Fair Value Measurements [Abstract]

Marketable Securities, Derivative Financial Instruments and Fair Value Measurements

4. Marketable Securities, Derivative Financial Instruments and Fair Value Measurements

Marketable Securities

The following is a summary of the Company’s available for sale marketable securities as of the dates indicated:

	As of September 30, 2025
	Adjusted Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Debt securities:
Corporate and Government Bonds	$	3,824	$	124	$	(41	)	$	3,907

	As of December 31, 2024
	Adjusted Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Debt securities:
Corporate and Government Bonds	$	3,858	$	53	$	(84	)	$	3,827

As of September 30, 2025, the Company has not recognized an allowance for expected credit losses related to available-for-sale debt securities as the Company has not identified any unrealized losses for these investments attributable to credit factors. The Company’s unrealized loss on investments in debt securities was primarily caused by changes in market interest rates. The Company does not currently intend to sell these investments and it is not more likely than not that the Company will be required to sell these investments before recovery of their amortized cost basis. 

The following table summarizes the estimated fair value of the Company’s investments in marketable debt securities with stated contractual maturity dates, accounted for as available-for-sale securities and classified by the contractual maturity date of the securities:

	As of September 30, 2025
Due in 1 year	$	592
Due in 1 year through 5 years		3,096
Due in 5 years through 10 years		219
Due after 10 years		-
Total	$	3,907

Derivative Financial Instruments

The Company has entered into interest rate cap contracts with unrelated financial institutions in order to reduce the effect of interest rate fluctuations associated with certain of its variable rate debt. The Company is exposed to credit risk in the event of non-performance by the counterparty to these financial instruments. Management believes the risk of loss due to non-performance is remote. 

The Company accounts for its interest rate cap contracts as economic hedges marking them to their fair value taking into account present market interest rates compared to the contractual fixed rate over the life of the contract. The changes in the fair value of these economic hedges represent unrealized gains or losses which are classified as mark to market adjustment on derivative financial instruments on the consolidated statements of operations.

As of September 30, 2025, the Company had one interest rate cap contract which was entered into at a cost of $0.5 million on October 10, 2024 with an effective date of October 11, 2024, has a notional amount of $44.0 million, matured on October 11, 2025 and effectively capped SOFR at 3.00% during its term. On October 9, 2025, the Company extended the maturity date of this interest rate cap contract through October 11, 2026, at a cost of $0.3 million.

The fair value of the Company’s interest rate cap contracts was $43 and $0.9 million as of September 30, 2025 and December 31, 2024, respectively, and is included in prepaid expenses and other assets on the consolidated balance sheets.

During the three and nine months ended September 30, 2025, the Company earned $0.2 million and $0.9 million, respectively, and during the three and nine months ended September 30, 2024, the Company earned $0.7 million and $2.3 million, respectively, from its interest rate cap contracts. Earnings from interest rate cap contracts are recorded in interest expense, net on the Company’s consolidated statements of operations.

Fair Value Measurements

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. 

The standard describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value:

● Level 1 – Quoted prices in active markets for identical assets or liabilities.

● Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

● Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The fair value of the Company’s investments in debt securities are measured using quoted prices for these investments; however, the markets for these assets are not active. The fair values of the Company’s interest rate cap contracts are measured using other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. As of September 30, 2025 and December 31, 2024, all of the Company’s debt securities and interest rate cap contracts were classified as Level 2 assets and there were no transfers between the level classifications during the nine months ended September 30, 2025 and 2024.

As of September 30, 2025 and December 31, 2024, management estimated that the carrying value of the Company’s cash and cash equivalents, restricted cash, prepaid expenses and other assets (exclusive of interest rate cap contracts) and accounts payable and accrued and other liabilities were at amounts that reasonably approximated their fair value based on their highly-liquid nature and/or short-term maturities.

The fair values of the Company’s notes payable are categorized as a Level 2 in the fair value hierarchy. The fair values were estimated using a discounted cash flow analysis valuation on the estimated borrowing rates available for loans with similar terms and maturities. The fair values of the notes payable were determined by discounting the future contractual interest and principal payments by a market rate. Disclosure about fair values of financial instruments is based on pertinent information available to management as of September 30, 2025 and December 31, 2024. 

Carrying amounts of the Company’s notes payable and the related estimated fair value are as follows:

	As of September 30, 2025				As of December 31, 2024
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Notes payable, net	$	299,185	$	298,676	$	323,168	$	316,088