The Company is exposed to various market risks, including the potential loss arising from adverse changes in interest rates and foreign exchange rates. The Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates and foreign exchange rates. The Company’s derivative financial instruments are used to manage differences in the amount of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s investments and borrowings.

Certain of the Company’s foreign operations expose the Company to fluctuations of foreign interest rates and exchange rates. These fluctuations may impact the value in the Company’s functional currency, the U.S. dollar, of the Company’s investment in foreign operations, the cash receipts and payments related to these foreign operations and payments of interest and principal under Canadian dollar denominated debt. The Company enters into derivative financial instruments to protect the value of its foreign investments and fix a portion of the interest payments for certain debt obligations. The Company does not enter into derivatives for speculative purposes.

The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish these objectives, the Company primarily uses interest rate swaps and collars as part of its interest rate risk management strategy. As of September 30, 2023, approximately $9.6 million of gains, which are included in accumulated other comprehensive income, are expected to be reclassified into earnings in the next 12 months.

The Company is exposed to fluctuations in foreign exchange rates on investments it holds in Canada. The Company uses cross currency interest rate swaps to hedge its exposure to changes in foreign exchange rates on these foreign investments.


	September 30, 2023		December 31, 2022
Derivatives designated as cash flow hedges:
Denominated in U.S. Dollars (1)	$	753,750	$	436,250
Denominated in Canadian Dollars (2)	$	300,000	$	125,000
Derivatives designated as net investment hedges:
Denominated in Canadian Dollars	$	56,300	$	55,991
Financial instruments designated as net investment hedges:
Denominated in Canadian Dollars	$	194,300	$	329,500
Derivatives not designated as net investment hedges:
Denominated in Canadian Dollars	$	—	$	309

(1) Balance as of September 30, 2023 includes two forward starting interest rate swaps with an effective date of August 2024 and an aggregate notional amount of $323.8 million.

(2) Balance as of September 30, 2023 includes two forward starting interest rate swaps with an effective date of September 2024 and an aggregate notional amount of CAD $150.0 million.

The following is a summary of the derivative and financial instruments designated as hedging instruments held by the Company at September 30, 2023 and December 31, 2022 (dollars in thousands):


		Count as of September 30, 2023	Fair Value as of				Maturity Dates
Type	Designation		September 30, 2023		December 31, 2022			Balance Sheet Location
Assets:

Interest rate swaps	Cash flow	5	$	11,986	$	11,004	2024 - 2028	Accounts receivable, prepaid expenses and other assets, net
Interest rate collars	Cash flow	2	5,133		6,622		2024	Accounts receivable, prepaid expenses and other assets, net
Forward starting interest rate swaps	Cash flow	4	18,164		—		2028	Accounts receivable, prepaid expenses and other assets, net
Cross currency interest rate swaps	Net investment	2	4,048		3,851		2025	Accounts receivable, prepaid expenses and other assets, net
			$	39,331	$	21,477
Liabilities:




CAD borrowings under Revolving Credit Facility	Net investment	1	32,623		150,982		2027	Revolving credit facility
CAD Term Loan	Net investment	1	110,460		92,288		2028	Term loans, net
			$	143,083	$	243,270

The following presents the effect of the Company’s derivative and financial instruments designated as hedging instruments on the consolidated statements of (loss) income and the consolidated statements of equity for the three and nine months ended September 30, 2023 and 2022 (in thousands):


	Gain (Loss) Recognized in Other Comprehensive Income
	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Cash Flow Hedges:
Interest rate products	$	11,373	$	6,817	$	28,462	$	20,146
Net Investment Hedges:
Foreign currency products	1,140		2,253		349		2,840
CAD borrowings under Revolving Credit Facility	42		8,790		(2,650)		11,157
CAD term loan	2,760		5,988		265		7,463
	$	15,315	$	23,848	$	26,426	$	41,606


		Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
		Three Months Ended September 30,				Nine Months Ended September 30,
	Income Statement Location	2023		2022		2023		2022
Cash Flow Hedges:
Interest rate products	Interest expense	$	2,369	$	(602)	$	5,848	$	(5,264)

As of September 30, 2023, the Company’s derivatives were all designated as hedging instruments. During the nine months ended September 30, 2022, the Company recorded $0.1 million of other expense related to the portion of derivatives not designated as hedging instruments and no such expense was recorded during each of the three months ended September 30, 2022 and the three and nine months ended September 30, 2023.

The Company enters into master netting arrangements, which reduce credit risk by permitting net settlement of transactions with the same counterparty. The table below presents a gross presentation, the effects of offsetting, and a net presentation of the Company’s derivatives as of September 30, 2023 and December 31, 2022 (in thousands):


	As of September 30, 2023
	Gross Amounts of Recognized Assets / Liabilities		Gross Amounts Offset in the Balance Sheet		Net Amounts of Assets / Liabilities presented in the Balance Sheet		Gross Amounts Not Offset in the Balance Sheet
							Financial Instruments		Cash Collateral Received		Net Amount
Offsetting Assets:
Derivatives	$	39,331	$	—	$	39,331	$	—	$	—	$	39,331
Offsetting Liabilities:
Derivatives	$	—	$	—	$	—	$	—	$	—	$	—


	As of December 31, 2022
	Gross Amounts of Recognized Assets / Liabilities		Gross Amounts Offset in the Balance Sheet		Net Amounts of Assets / Liabilities presented in the Balance Sheet		Gross Amounts Not Offset in the Balance Sheet
							Financial Instruments		Cash Collateral Received		Net Amount
Offsetting Assets:
Derivatives	$	21,477	$	—	$	21,477	$	—	$	—	$	21,477
Offsetting Liabilities:
Derivatives	$	—	$	—	$	—	$	—	$	—	$	—

The Company has agreements with each of its derivative counterparties that contain a provision pursuant to which the Company could be declared in default on the derivative obligation if the Company defaults on any of its indebtedness, including a default where repayment of the indebtedness has not been accelerated by the lender. As of September 30, 2023, the Company had no derivatives in a net liability position related to these agreements.