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 June 30, 2024, approximately $8.9 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.


	June 30, 2024		December 31, 2023
Derivatives designated as cash flow hedges:
Denominated in U.S. Dollars (1)	$	753,750	$	753,750
Denominated in Canadian Dollars (2)	$	300,000	$	300,000
Derivatives designated as net investment hedges:
Denominated in Canadian Dollars	$	49,545	$	55,335
Financial instruments designated as net investment hedges:
Denominated in Canadian Dollars	$	188,800	$	194,300
Derivatives not designated as net investment hedges:
Denominated in Canadian Dollars	$	6,755	$	965

(1) Balance as of June 30, 2024 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 June 30, 2024 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 June 30, 2024 and December 31, 2023 (dollars in thousands):


		Count as of June 30, 2024	Fair Value as of				Maturity Dates
Type	Designation		June 30, 2024		December 31, 2023			Balance Sheet Location
Assets:

Interest rate swaps	Cash flow	5	$	4,204	$	6,002	2024 - 2028	Accounts receivable, prepaid expenses and other assets, net
Interest rate collars	Cash flow	2	926		3,216		2024	Accounts receivable, prepaid expenses and other assets, net
Forward starting interest rate swaps	Cash flow	4	17,096		6,736		2028	Accounts receivable, prepaid expenses and other assets, net
Cross currency interest rate swaps	Net investment	2	4,252		2,964		2025	Accounts receivable, prepaid expenses and other assets, net
			$	26,478	$	18,918
Liabilities:




CAD borrowings under Revolving Credit Facility	Net investment	1	28,367		33,429		2027	Revolving credit facility
CAD Term Loan	Net investment	1	109,665		113,190		2028	Term loans, net
			$	138,032	$	146,619

The following presents the effect of the Company’s derivative and financial instruments designated as hedging instruments on the consolidated statements of income and the consolidated statements of equity for the three and six months ended June 30, 2024 and 2023 (in thousands):


	Gain (Loss) Recognized in Other Comprehensive Income
	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Cash Flow Hedges:
Interest rate products	$	3,066	$	15,546	$	14,562	$	17,089
Net Investment Hedges:
Foreign currency products	382		(778)		1,293		(792)
CAD borrowings under Revolving Credit Facility	46		(1,667)		(457)		(2,692)
CAD term loan	1,095		(2,355)		3,525		(2,495)
	$	4,589	$	10,746	$	18,923	$	11,110


		Gain Reclassified from Accumulated Other Comprehensive Income into Income
		Three Months Ended June 30,				Six Months Ended June 30,
	Income Statement Location	2024		2023		2024		2023
Cash Flow Hedges:
Interest rate products	Interest expense	$	2,390	$	1,907	$	4,838	$	3,479

As of June 30, 2024, the Company had one outstanding cross currency interest rate swap, of which a portion was not designated as a hedging instrument, in an asset position with a fair value of $0.5 million that is included in accounts receivable, prepaid expenses and other assets, net on the consolidated balance sheets. During each of the three and six months ended June 30, 2024, the Company recorded $0.1 million of other income related to the portion of derivatives not designated as hedging instruments and no such expense was recorded during each of the three and six months ended June 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 June 30, 2024 and December 31, 2023 (in thousands):


	As of June 30, 2024
	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	$	26,478	$	—	$	26,478	$	—	$	—	$	26,478
Offsetting Liabilities:
Derivatives	$	—	$	—	$	—	$	—	$	—	$	—


	As of December 31, 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	$	18,918	$	—	$	18,918	$	—	$	—	$	18,918
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 June 30, 2024, the Company had no derivatives in a net liability position related to these agreements.