Derivative Instruments

12 Months Ended

Dec. 31, 2024

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 and caps 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. In addition, we classify cash flows from qualifying cash flow hedging relationships in the same category as the cash flows from the hedged items in our consolidated statements of cash flows. We do not use interest rate derivatives for trading or speculative purposes.

Interest rate derivatives not designated as hedges for GAAP are not speculative and are used to manage our exposure to interest rate movements and other identified risks but we have elected not to apply hedge accounting. Changes in the fair value of interest rate derivatives not designated in hedging relationships are recorded in derivative fair value adjustment within our consolidated statements of operations.

Foreign Currency Hedge

Our objectives in using foreign currency derivatives are to add stability to potential fluctuations in exchange rates between foreign currencies and the U.S. dollar and to manage our exposure to exchange rate movements. To accomplish this objective, we have used foreign currency options as part of our exchange rate risk management strategy. A foreign currency option contract is a commitment by the seller of the option to deliver, solely at the option of the buyer, a certain amount of currency at a certain price on a specific date.

For derivatives designated as net investment hedges for GAAP purposes, the changes in the fair value of the derivatives are reported in accumulated other comprehensive income. Amounts are reclassified out of accumulated other comprehensive income (loss) into earnings when the hedged net investment is either sold or substantially liquidated. The change in the value of the designated portion of our settled and unsettled foreign currency hedges is recorded net in foreign currency hedge contract gain (loss) in our consolidated statements of comprehensive income (loss) in the related period.

The change in the value of the portion of our settled and unsettled foreign currency hedge that is not designated for hedge accounting for GAAP is recorded in Foreign currency adjustment within our consolidated statements of operations and represented a gain of approximately $2.2 million and loss of approximately $0.2 million for the years ended December 31, 2024 and 2023, respectively.

The following table summarizes the terms of our derivative financial instruments as of December 31, 2024:


	Notional Amount		Strike			Effective Date	Maturity Date
Interest Rate Derivatives:
CORRA Swap - Burlington Loan (1)	$	15,015,000		4.02	%	September 27, 2022	September 20, 2025 (5)
CORRA Swap - Cambridge Loan (1)	$	13,891,404		3.53	%	April 30, 2024	December 22, 2025 (5)
CORRA Swap - North York Loan (1)	$	24,083,333		3.79	%	January 31, 2023	February 2, 2026 (5)
SOFR Swap - Huntington Credit Facility(2)	$	107,574,000		2.89	%	November 15, 2024	November 30, 2027
CDOR Swap - Bank of Montreal Loan (1)	$	21,625,000		4.47	%	May 4, 2023	May 4, 2026 (5)
CORRA Swap - Ontario Loan (3)	$	124,232,000		4.73	%	June 15, 2023	June 15, 2026 (5)
Foreign Currency Hedge:
CAD Put (4)	$	200,000,000		1.40	%	December 20, 2024	December 19, 2025

(1)

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

(2)

Notional amount is denominated in USD and $87.1 million was designated as a cash flow hedge. On March 4, we amended the SOFR swap and entered into a new notional amount of $87.1 million.

(3)

Notional amount is denominated in CAD and we have elected not to apply hedge accounting.

(4)

Notional amount is denominated in CAD and was partially designated for hedge accounting.

(5)

This interest rate derivative was terminated subsequent to year end. Please see Note 13 - Subsequent events.

The following table summarizes the terms of our derivative financial instruments as of December 31, 2023:


	Notional Amount		Strike			Effective Date	Maturity Date
Interest Rate Derivatives:
CDOR Swap - Burlington Loan (1)	$	15,675,000		4.02	%	September 27, 2022	September 20, 2025
CDOR Swap - Cambridge Loan (1)	$	15,044,683		3.83	%	December 20, 2022	December 22, 2025
CDOR Swap - North York Loan (1)	$	25,000,000		3.79	%	January 31, 2023	February 2, 2026
SOFR Swap - Huntington Credit Facility I (2)	$	38,000,000		4.01	%	April 12, 2023	November 28, 2025
SOFR Swap - Huntington Credit Facility II (2)	$	22,000,000		4.01	%	April 12, 2023	November 28, 2025
CDOR Swap - Bank of Montreal Loan (1)	$	21,625,000		4.47	%	May 4, 2023	May 4, 2026
CDOR Swap - Ontario Loan (3)	$	127,200,000		4.73	%	June 15, 2023	June 15, 2026
SOFR Cap - Huntington Credit Facility (4)	$	47,574,000		1.10	%	September 28, 2023	November 28, 2025
Foreign Currency Hedge:
CAD Put (5)	$	200,000,000		1.39	%	December 22, 2023	December 20, 2024

(1)

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

(2)

Notional amount is denominated in USD and has been designated as a cash flow hedge.

(3)

Notional amount is denominated in CAD and we have elected not to apply hedge accounting.

(4)

Notional amount is denominated in USD and we have elected not to apply hedge accounting.

(5)

Notional amount is denominated in CAD and $95 million CAD was designated for hedge accounting.

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 as of December 31, 2024 and 2023:


	Asset/Liability Derivatives Fair Value
	December 31, 2024		December 31, 2023
Interest Rate Hedges:
Other assets	$	3,219,413	$	2,920,664
Accounts payable and accrued liabilities	$	2,448,275	$	1,760,292
Foreign Currency Hedges:
Other assets	$	4,409,134	$	1,074,185

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,					Location of Gain or (Loss) Recognized in Income on Derivative	Amount of Gain or (Loss) Recognized in Income on Derivative
Type	2024		2023				2024		2023				2024		2023
Interest Rate Swaps	$	285,991	$	1,118,835		Interest Expense	$	1,230,229	$	(1,141,365	)	Interest Expense	$	2,526	$	—
Interest Rate Caps		—		994,111		Interest Expense		349,914		(326,789	)	Interest Expense		—		—
Foreign Currency Put		1,106,438		(174,712	)	N/A		—		—		N/A		—		—
	$	1,392,429	$	1,938,234			$	1,580,143	$	(1,468,154	)		$	2,526	$	—

Based upon the forward rates in effect as of December 31, 2024, we estimate that approximately $0.1 million related to our qualifying cash flow hedges will be reclassified to reduce interest expense during the next 12 months.