Derivative Instruments

12 Months Ended

Dec. 31, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Note 6. Derivative Instruments

Interest Rate Derivatives

Our objectives in using interest rate derivatives are to add stability to interest expense and to manage our exposure to interest rate movements. To accomplish this objective, we use interest rate swaps as part of our interest rate risk management strategy. The effective portion of the change in the fair value of the derivative that qualifies as a cash flow hedge is recorded in accumulated other comprehensive income (loss) (“AOCI”) and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. Amounts reported in AOCI related to derivatives will be reclassified to interest expense as interest payments are made on our variable-rate debt.

The following table summarizes the terms of our derivative financial instruments as of December 31, 2022:


	Notional Amount		Strike			Effective Date	Maturity Date
Interest Rate Derivative:
CDOR Swap (1)	$	16,500,000		4.02	%	September 27, 2022	September 20, 2025
CDOR Swap II (1)	$	15,500,000		3.84	%	December 20, 2022	December 20, 2025

(1)

Notional amounts are denominated in CAD and have been designated as a cash flow hedge.

The following table presents a gross presentation of the fair value of our derivatives financial instruments as well as their classification on our consolidated balance sheets:


	Asset/Liability Derivatives Fair Value
	December 31, 2022		December 31, 2021
Interest Rate Swap
Other assets, net	$	126,864	$	—

The following table presents the effects of our derivative financial instruments on our consolidated statements of operations for the periods presented:


	Gain (loss) recognized in OCI for the Year Ended December 31,				Location of amounts reclassified from OCI into income	Gain (loss) reclassified from OCI for the Year Ended December 31,
Type	December 31, 2022		December 31, 2021			December 31, 2022			December 31, 2021
Interest Rate Swaps	$	132,705	$	—	Interest Expense	$	(5,841	)	$	—
	$	132,705	$	—		$	(5,841	)	$	—

Based upon the forward rates in effect as of December 31, 2022, we estimate that approximately $0.2 million related to our qualifying cash flow hedges will be reclassified to reduce interest expense during the next 12 months.