The Company enters into derivative instruments for risk management purposes to hedge its exposure to cash flow variability caused by changing interest rates. The primary goal of the Company’s risk management practices related to interest rate risk is to prevent changes in interest rates from adversely impacting the Company’s ability to achieve its investment return objectives. The Company does not enter into derivatives for speculative purposes.

The Company enters into interest rate swaps as a fixed rate payer to mitigate its exposure to rising interest rates on its variable rate notes payable. The value of interest rate swaps is primarily impacted by interest rates, market expectations about interest rates, and the remaining life of the instrument. In general, increases in interest rates, or anticipated increases in interest rates, will increase the value of the fixed rate payer position and decrease the value of the variable rate payer position. As the remaining life of the interest rate swap decreases, the value of both positions will generally move towards zero.

The Company enters into interest rate caps to mitigate its exposure to rising interest rates on its variable rate notes payable. The values of interest rate caps are primarily impacted by interest rates, market expectations about interest rates, and the remaining life of the instrument. In general, increases in interest rates, or anticipated increases in interest rates, will increase the value of interest rate caps. As the remaining life of an interest rate cap decreases, the value of the instrument will generally decrease towards zero.

As of December 31, 2024, the Company has entered into 14 interest rate swaps, which were not designated as hedging instruments. The following table summarizes the notional amount and other information related to the Company’s interest rate swaps as of December 31, 2024 and 2023. The notional amount is an indication of the extent of the Company’s involvement in each instrument at that time, but does not represent exposure to credit, interest rate or market risks (dollars in thousands):


	December 31, 2024			December 31, 2023				Weighted-Average Fix Pay Rate	Weighted-Average Remaining Term in Years
Derivative Instruments	Number of Instruments	Notional Amount		Number of Instruments	Notional Amount		Reference Rate as of December 31, 2024
Derivative instruments not designated as hedging instruments
Interest rate swaps (1)	14	$	1,100,000	16	$	1,300,000	Fallback SOFR (2)/ Fixed at 1.08% - 1.28% One-month Term SOFR/ Fixed at 2.38% - 3.92%	3.1%	1.4
Interest rate cap (3)	—	$	—	1	$	125,000	(3)	(3)	(3)

(1) In February 2024, the Company terminated two interest rate swap agreements and received aggregate settlement payments of $6.6 million.

(2) Upon cessation of one-month LIBOR on June 30, 2023, eight of the Company’s interest rate swaps which bore interest at one-month LIBOR were automatically converted to a fallback rate (“Fallback SOFR”) plus an 11.448 basis point adjustment. As of December 31, 2024, the Company had two remaining interest rate swaps which had been converted to Fallback SOFR, each with a maturity date of January 1, 2025.

The following table sets forth the fair value of the Company’s derivative instruments as well as their classification on the consolidated balance sheets as of December 31, 2024 and 2023 (dollars in thousands):


		December 31, 2024			December 31, 2023
Derivative Instruments	Balance Sheet Location	Number of Instruments	Fair Value		Number of Instruments	Fair Value
Derivative instruments not designated as hedging instruments
Interest rate swaps	Prepaid expenses and other assets, at fair value	14	$	10,509	15	$	23,891
Interest rate swaps	Other liabilities, at fair value	—	$	—	1	$	(175)
Interest rate cap	Prepaid expenses and other assets, at fair value	—	$	—	1	$	—

The following table summarizes the effects of derivative instruments on the Company’s consolidated statements of operations (in thousands):


	For the Years Ended December 31,
	2024		2023		2022





Derivatives not designated as hedging instruments
Realized loss recognized on interest rate swaps	$	—	$	—	$	7,152
Realized gain recognized on interest rate swaps	(24,289)		(31,358)		(6,895)
Unrealized loss (gain) on interest rate swaps (1)	6,833		16,426		(52,189)
Gains related to swap terminations	(178)		—		—
Unrealized loss on interest rate cap	—		25		—
Net gain on derivative instruments	$	(17,634)	$	(14,907)	$	(51,932)