We are exposed to certain risks arising from both our business operations and economic conditions. We principally manage our exposures to a wide variety of business and operational risks through management of our core business activities. We manage economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of our debt funding and the use of derivative financial instruments. Specifically, we enter into derivative financial instruments to manage exposures that arise from business activities that result in our payment of future cash amounts, the value of which are determined by interest rates. Our derivative financial instruments are used to manage differences in the amount, timing, and duration of our known or expected cash payments principally related to our borrowings.

Our objective in using interest rate derivatives is to manage our exposure to interest rate movements. To accomplish this objective, we primarily use interest rate swaps as part of our interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for us making fixed- rate payments over the life of the agreements without exchange of the underlying notional amount. The changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded on our Consolidated Balance Sheets in accumulated other comprehensive income and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During the year ended December 31, 2024, such derivatives were used to hedge the variable cash flows associated with existing variable-rate debt.

As of December 31, 2024, $435 million of our variable-rate debt is hedged with notional values totaling $435 million. As of December 31, 2023, $375 million of our variable-rate debt was hedged by swaps with notional values totaling $375 million.

During the year ended December 31, 2024, we entered into seven interest rate swaps to hedge the interest rate variability associated with the term loan portion of our credit facility.


Product	Fixed Rate			Notional Amount ($ in thousands)		Index	Effective Date	Maturity Date
Swap		0.44	%	$	50,000	Daily Simple SOFR + 10 bps	10/25/2022	11/9/2025
Swap		2.70	%		25,000	Daily Simple SOFR + 10 bps	11/9/2022	11/9/2025
Swap		4.12	%		25,000	Daily Simple SOFR + 10 bps	3/9/2023	11/9/2026
Swap		0.82	%		50,000	Daily Simple SOFR + 10 bps	11/9/2023	11/9/2025
Swap		3.65	%		25,000	Daily Simple SOFR + 10 bps	11/9/2023	11/9/2026
Swap		4.25	%		25,000	Daily Simple SOFR + 10 bps	11/9/2023	11/9/2028
Swap		4.42	%		25,000	Daily Simple SOFR + 10 bps	11/13/2023	11/9/2028
Swap		4.04	%		25,000	Daily Simple SOFR + 10 bps	4/9/2024	4/9/2029
Swap		3.91	%		30,000	Daily Simple SOFR + 10 bps	4/9/2024	4/9/2029
Swap		3.88	%		30,000	Daily Simple SOFR + 10 bps	4/9/2024	4/9/2029
Swap		3.97	%		25,000	Daily Simple SOFR + 10 bps	11/9/2024	11/9/2029
Swap		3.81	%		25,000	Daily Simple SOFR + 10 bps	1/31/2025	1/31/2030
Swap		3.80	%		25,000	Daily Simple SOFR + 10 bps	1/31/2025	1/31/2030
Swap		3.09	%		25,000	Daily Simple SOFR + 10 bps	1/31/2025	1/31/2030
Swap		1.48	%		50,000	Daily Simple SOFR + 10 bps	11/10/2025	11/9/2027
Swap		1.54	%		50,000	Daily Simple SOFR + 10 bps	11/10/2025	11/9/2027
Swap		2.25	%		25,000	1 month Term SOFR	11/10/2025	11/9/2028
Swap		1.49	%		50,000	Daily Simple SOFR + 10 bps	11/10/2025	11/9/2028
Swap		2.02	%		50,000	Daily Simple SOFR + 10 bps	11/10/2025	11/9/2028

The Company enters into forward-starting interest rate swap agreements to hedge against changes in future cash flows resulting from changes in interest rates from the trade date through the forecasted issuance date of long-term debt. During the year ended December 31, 2024, the Company terminated one cash flow hedge in connection with the $85 million Term Loan that was entered into on March 11, 2024 and funded on March 14, 2024. This cash flow hedge had a total notional value of $25 million and was entered into in August 2023 to hedge the interest rate on a future offering or term loan. The swap was terminated on February 28, 2024, with the corresponding asset of $211 thousand which will be amortized over the next 10 years as an increase to interest expense. The Company also terminated two cash flow hedges in connection with the $225 million Amended Term Loan. See Note 15 - Subsequent Events - Capital Resources. The cash flow hedges had a total notional value of $75 million and were entered into in June 2024 and August 2024 to hedge the interest rate on a future offering or term loan. The swaps were terminated on December 10, 2024, with the corresponding asset of $243 thousand which will be amortized over the next 10 years as an increase to interest expense.

For the years ended December 31, 2024, 2023, and 2022, we did not record hedge ineffectiveness in earnings.

Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on our variable-rate debt. We estimate that during 2025 an additional $7.9 million (unaudited) will be reclassified to earnings as a reduction to interest expense.

We do not use derivatives for trading or speculative purposes. During the years ended December 31, 2024 and 2023, we did not have any derivatives that were not designated as cash flow hedges for accounting purposes.

Tabular Disclosure of Fair Values of Derivative Instruments on the Consolidated Balance Sheets

The table below presents the fair value of our derivative financial instruments as well as their classification on the Consolidated Balance Sheets.


	Derivative Assets					Derivative Liabilities
		Fair Value at December 31,					Fair Value at December 31,
(Dollars in thousands)	Balance Sheet Location	2024		2023		Balance Sheet Location	2024		2023
Derivatives designated as hedging instruments:
Interest rate swaps	Derivative assets	$	20,733	$	20,952	Derivative liabilities	$	473	$	2,968
Total		$	20,733	$	20,952		$	473	$	2,968

Tabular Disclosure of the Effect of Derivative Instruments on the Consolidated Statements of Comprehensive Income

The table below presents the effect of our interest rate swaps on the Comprehensive Income Statement.


(Dollars in thousands)	Amount of Gain or (Loss) Recognized in OCI on Derivative (Effective Portion)		Location of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)	Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)			Location of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)	Amount of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amounts Excluded from Effectiveness Testing)		Total Amount of Interest Expense Presented in the Consolidated Income Statements
Interest rate swaps
Year Ended December 31, 2024	$	14,306	Interest expense	$	(12,648	)	Interest expense	$	—	$	49,231
Year Ended December 31, 2023		1,795	Interest expense		(10,773	)	Interest expense		—		44,606
Year Ended December 31, 2022		39,396	Interest expense		1,430		Interest expense		—		36,405

The table below presents a gross presentation, the effects of offsetting, and a net presentation of our derivatives. The net amounts of derivative assets or liabilities can be reconciled to the tabular disclosure of fair value which provides the location that derivative assets and liabilities are presented on the Consolidated Balance Sheets.

Offsetting of Derivative Assets


							Gross Amounts Not Offset in the Consolidated Balance Sheets
(In thousands)	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Consolidated Balance Sheets		Net Amounts of Assets Presented in the Consolidated Balance Sheets		Financial Instruments			Cash Collateral Received		Net Amount
December 31, 2024	$	20,733	$	—	$	20,733	$	(350	)	$	—	$	20,383
December 31, 2023		20,952		—		20,952		(920	)		—		20,032

Offsetting of Derivative Liabilities


							Gross Amounts Not Offset in the Consolidated Balance Sheets
(In thousands)	Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Consolidated Balance Sheets		Net Amounts of Liabilities Presented in the Consolidated Balance Sheets		Financial Instruments			Cash Collateral Posted		Net Amount
December 31, 2024	$	473	$	—	$	473	$	(350	)	$	—	$	123
December 31, 2023	$	2,968	$	—	$	2,968	$	(920	)	$	—	$	2,048

The agreement with our derivative counterparties provides that if we default on any of our indebtedness, including default for which repayment of the indebtedness has not been accelerated by the lender, then we could also be declared in default on our derivative obligations.

At December 31, 2024 the fair value of derivative in a net asset position related to these agreements was approximately $20.3 million and at December 31, 2023 the fair value of the derivative in a net asset position related to these agreements was $18.0 million. As of December 31, 2024, we have not posted any collateral related to these agreements. If we or our counterparty had breached any of these provisions at December 31, 2024, we would have been entitled to the termination value of approximately $20.3 million.