Derivative Financial Instruments

3 Months Ended

Mar. 31, 2026

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

Derivative Financial Instruments

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 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.

Changes in the fair value of cash flow and fair value hedges are recorded in accumulated other comprehensive income and subsequently reclassified into earnings in the period that the hedged transaction affects earnings. Amounts reported in accumulated other comprehensive income for our interest rate swaps and interest rate caps will be reclassified to interest expense as interest payments are made on the Company’s mortgages and unsecured credit facility, and reclassified to interest income as interest payments are received on the Company’s investments in real estate debt. Refer to Note 2 - Summary of Significant Accounting Policies and Estimates for additional detail.

Interest Rate Contracts

Certain of the Company’s financing transactions expose the Company to interest rate risks, which include exposure to variable interest rates on certain unsecured loans and loans secured by the Company’s real estate and fixed rate investments in real estate debt where the Company is the lender. The Company uses derivative financial instruments to minimize the risks and/or costs associated with the Company’s financing and to limit the Company’s exposure to the future variability of interest rates. 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.

The Company’s objective in using interest rate derivatives is to add stability to its interest expense and to manage its exposure to interest rate fluctuations. To accomplish this objective, we use interest rate swap and interest rate cap contracts to manage our exposure to variability in interest rates and fluctuations in the fair value of our fixed rate investments in real estate debt. The Company has designated these derivative financial instruments as cash flow and fair value hedges, respectively, as defined under GAAP as of March 31, 2026 and December 31, 2025.

Total Return Swap

A total return swap is a contract in which one party agrees to make periodic payments to another party based on the change in the market value of the assets underlying the total return swap, which may include a specified security or loan, basket of securities or loans, or securities or loan indices during the specified period, in return for periodic payments based on a fixed or variable interest rate. A total return swap is typically used to obtain synthetic exposure to an underlying security, loan, or market without owning or taking physical custody of such security or loan or investing directly in such market. The Company holds one total return swap as of March 31, 2026, included in Other Assets on the Condensed Consolidated Balance Sheet, and did not hold any total return swaps as of December 31, 2025.

Foreign Currency Exchange Rate Derivatives

Certain of the Company’s foreign investments expose it to fluctuations in foreign currency exchange rates. The Company uses foreign exchange rate derivatives, including foreign currency forwards and currency options, to reduce the risk from fluctuations in foreign exchange rates associated with its assets and liabilities denominated in foreign currencies. The Company also uses foreign currency derivatives to hedge the foreign exchange risk associated with certain of its net investments in foreign operations.

The Company enters into currency options that give it the right, but not the obligation, to sell the foreign currency amount in exchange for a functional currency amount within a limited time at a contracted price. The contracts may also be net settled in cash, based on differentials in the foreign currency exchange rate and the strike price. The Company uses currency options as an economic hedge of foreign currency exposure related to the Company’s non-U.S. investments.

The following table details the Company’s outstanding derivatives:

			Notional Amount (1)
Financial Instruments	Number of Instruments	Weighted Average Maturity Date	March 31, 2026		December 31, 2025
Derivatives Designated as hedging instruments	20	6/16/2028	$	1,738,847	$	1,718,611
Derivatives Not Designated as hedging instruments	12	6/15/2028	$	2,671,364	$	2,519,598

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(1)The notional amount reflects the balance we expect to settle at the maturity date based on the contractual strike price at trade execution or the initial reference value of the underlying asset, established at trade execution, upon which all payment obligations are calculated.

The fair value of our derivative financial instruments and their classification on our Condensed Consolidated Balance Sheets as of March 31, 2026 and December 31, 2025 are detailed below.

		Asset Derivatives					Liability Derivatives
		Fair Value					Fair Value
Financial Instruments	Balance Sheet Location	March 31, 2026		December 31, 2025		Balance Sheet Location	March 31, 2026		December 31, 2025
Derivatives Designated as Hedging Instruments	Other Assets	$	4,604	$	725	Other Liabilities	$	3,484	$	10,572
Derivatives Not Designated as Hedging Instruments	Other Assets	$	34,386	$	8,174	Other Liabilities	$	7,508	$	14,633

The following table details the effect of the Company’s derivative financial instruments on the Condensed Consolidated Statements of Operations during the three months ended March 31, 2026 and 2025:

	Amount of Unrealized Gain (Loss) Recognized in OCI				Location of Gain (Loss) Recognized in Income on Derivatives	Amount of Gain Reclassified from Accumulated OCI into Income
	March 31, 2026		March 31, 2025			March 31, 2026		March 31, 2025
Derivatives Designated as Hedging Instruments	$	2,196	$	(11,898)	Interest Income	$	174	$	2,326
Derivatives Designated as Hedging Instruments	$	9,126	$	—	Interest Expense	$	137	$	—

The following table details the effect of the Company’s derivative financial instruments not designated as hedging instruments on the Condensed Consolidated Statements of Operations for the three months ended March 31, 2026 and 2025:

		Three Months Ended
	Income Statement Location	March 31, 2026		March 31, 2025
Derivatives Not Designated as Hedging Instruments	Other Income (Expense)	$	(2,232)	$	(1,388)