Derivatives

12 Months Ended

Dec. 31, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

The Company uses derivative financial instruments to minimize the risks and/or costs associated with the Company’s investments and financing transactions. These derivatives may or may not qualify as net investment, cash flow, or fair value hedges under the hedge accounting requirements of ASC 815 - “Derivatives and Hedging." Derivatives not designated as hedges are not speculative and are used to manage the Company’s exposure to interest rate movements, fluctuations in foreign exchange rates, and other identified risks.

The use of derivative financial instruments involves certain risks, including the risk that the counterparties to these contractual arrangements do not perform as agreed. To mitigate this risk, the Company enters into derivative financial instruments with counterparties it believes to have appropriate credit ratings and that are major financial institutions with which the Company and its affiliates may also have other financial relationships.

Interest Rate Contracts

Certain of the Company’s transactions expose the Company to interest rate risks, which include exposure to variable interest rates on certain loans secured by the Company’s real estate in addition to its secured financings of investments in real estate debt. The Company uses derivative financial instruments, which includes interest rate swaps and caps, and may also include options, floors, and other interest rate derivative contracts, to limit the Company’s exposure to the future variability of interest rates. The Company has the right of offset for certain derivatives, and presents them net on its consolidated financial statements.

The following tables detail the Company’s outstanding interest rate derivatives (notional amount in thousands):


	December 31, 2023
Interest Rate Derivatives	Number of Instruments	Notional Amount		Weighted Average Strike	Index	Weighted Average Maturity (Years)
Derivatives designated as hedging instruments
Interest rate swaps - property debt	21	$	6,386,770	2.6%	SOFR	4.6
Derivatives not designated as hedging instruments
Interest rate caps - property debt	153	9,580,354		5.8%	SOFR	0.5
Interest rate swaps - property debt	51	26,015,600		1.6%	SOFR, EURIBOR	4.5
Interest rate swaps - secured financings of investments in real estate debt	17	581,915		3.4%	SOFR	6.6
Total		$	36,177,869
	December 31, 2022
Interest Rate Derivatives	Number of Instruments	Notional Amount		Weighted Average Strike	Index	Weighted Average Maturity (Years)
Derivatives designated as hedging instruments
Interest rate swaps - property debt	20	$	7,417,852	2.6%	LIBOR, SOFR	6.1
Derivatives not designated as hedging instruments
Interest rate caps - property debt	135	14,147,947		4.1%	LIBOR, SOFR	0.8
Interest rate swaps - property debt	50	25,015,600		2.0%	LIBOR, SOFR, EURIBOR	7.3
Interest rate swaps - secured financings of investments in real estate debt	61	1,392,960		1.4%	LIBOR, SOFR	4.1
Total		$	40,556,507

Foreign Currency Forward Contracts

Certain of the Company’s international investments expose it to fluctuations in foreign currency exchange rates and interest rates. These fluctuations may impact the value of the Company’s cash receipts and payments in terms of its functional currency, the U.S. dollar. The Company uses foreign currency forward contracts to protect the value or fix the amount of certain investments or cash flows in terms of the U.S. dollar.

The following table details the Company’s outstanding foreign currency forward contracts that were non-designated hedges of foreign currency risk (notional amount in thousands):


	December 31, 2023			December 31, 2022
Foreign Currency Forward Contracts	Number of Instruments	Notional Amount		Number of Instruments	Notional Amount
Buy USD / Sell EUR Forward	9	€	139,913	14	€	160,206
Buy USD / Sell GBP Forward	9	£	57,377	12	£	132,563
Buy EUR / Sell USD Forward	2	€	10,421	—	€	—

Valuation and Financial Statement Impact

The following table details the fair value of the Company’s derivative financial instruments ($ in thousands):


	Fair Value of Derivatives in an Asset(1) Position				Fair Value of Derivatives in a Liability(2) Position
	December 31, 2023		December 31, 2022		December 31, 2023		December 31, 2022
Derivatives designated as hedging instruments
Interest rate swaps - property debt	$	246,350	$	409,260	$	1,320	$	—
Total derivatives designated as hedging instruments	246,350		409,260		1,320		—
Derivatives not designated as hedging instruments
Interest rate caps - property debt(3)	31,134		183,392		17,020		36,173
Interest rate swaps - property debt	1,874,065		2,310,511		—		—
Interest rate swaps - secured financings of investments in real estate debt	8,643		130,181		12,210		—
Foreign currency forward contracts	74		251		3,686		14,384
Total derivatives not designated as hedging instruments	1,913,916		2,624,335		32,916		50,557
Total interest rate and foreign currency hedging derivatives	$	2,160,266	$	3,033,595	$	34,236	$	50,557

(1)Included in Other Assets in the Company’s Consolidated Balance Sheets.

(2)Included in Other Liabilities in the Company’s Consolidated Balance Sheets.

(3)Includes interest rate caps presented on a net basis with an aggregate fair value of $189.7 million and $237.7 million as of December 31, 2023 and December 31, 2022, respectively.

The following table details the effect of the Company’s derivative financial instruments on the Consolidated Statements of Operations and Consolidated Statements of Comprehensive Income (Loss) ($ in thousands):

















Type of Derivative	Realized/Unrealized Gain (Loss)	Location of Gain (Loss) Recognized	Year Ended December 31,
			2023		2022		2021
Included in Net Loss
Interest rate swap – property debt	Unrealized (loss) gain	(1)	$	(772,224)	$	2,262,337	$	(7,711)
Interest rate swaps – property debt	Realized gain	(1)	297,606		—		—
Interest rate caps – property debt	Unrealized (loss) gain	(1)	(146,621)		180,988		—
Interest rate swaps – secured financings of investments in real estate debt	Unrealized (loss) gain	(1)	(134,280)		119,407		57,470

Foreign currency forward contract	Realized (loss) gain	(2)	(18,291)		85,889		27,606
Foreign currency forward contract	Unrealized gain (loss)	(2)	10,447		(6,865)		8,145
Total			$	(763,363)	$	2,641,756	85,510
Included in Other Comprehensive Income
Interest rate swap – property debt(3)	Unrealized gain		(75,707)		408,069		—
Total			$	(839,070)	$	3,049,825	$	85,510

(1)Included in (loss) income from interest rate derivatives in the Company’s Consolidated Statements of Operations.

(2)Included in income (loss) from investments in real estate debt in the Company’s Consolidated Statements of Operations.

(3)During the years ended December 31, 2023 and December 31, 2022, net gain of $171.4 million and $79.4 million, respectively, was reclassified from accumulated other comprehensive income into net income.

Credit-Risk Related Contingent Features

The Company has entered into agreements with certain of its derivative counterparties that contain provisions whereby if the Company were to default on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, the Company may also be declared in default under its derivative obligations. In addition, certain of the Company’s agreements with its derivative counterparties require the Company to post collateral based on a percentage of derivative notional amounts and/or to secure net liability positions.

As of December 31, 2023, the Company was in a net liability position and posted collateral of $23.4 million with three of its counterparties as required under the derivative contracts. As of December 31, 2022, the Company was in a net liability position and posted collateral of $47.6 million with two of its counterparties as required under the derivatives contracts.