DERIVATIVES

12 Months Ended

Dec. 31, 2024

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVES

8. DERIVATIVES

In the ordinary course of business, the Company may use certain types of derivative instruments for the purpose of managing or hedging its interest rate risk.

The following table summarizes the terms of the Company’s interest rate cap agreement as of December 31, 2024 (dollar amounts in thousands):

		Outstanding Notional					Fair Value of Assets as of
	Balance Sheet	Amount as of		Strike	Effective	Maturity	December 31,
	Location	December 31, 2024		Rates (1)	Date	Date	2024
Interest Rate Caps	Other assets	$	171,346	4.5% to 5.75%	5/3/2023 - 12/6/2024	7/7/2025 - 1/1/2027	$	107

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(1)The index used for the Company’s interest rate cap agreement is 1-Month Term SOFR.

Additional disclosures related to the fair value of the Company’s derivative instrument are included in Note 13. The notional amount under the derivative instrument is an indication of the extent of the Company’s involvement in such instrument but does not represent exposure to credit, interest rate or market risks.

Accounting for changes in the fair value of a derivative instrument depends on the intended use and designation of the derivative instrument. The Company has an interest rate cap that is used to manage exposure to interest rate movements but does not meet the requirements to be designated as a hedging instrument. The change in fair value of the derivative instrument that is not designated as a hedge is recorded directly to earnings as interest expense on the accompanying consolidated statements of operations. During the year ended December 31, 2024 and 2023, the Company recorded an unrealized loss of $463,000 and $539,000, respectively, which was included in interest expense on the accompanying consolidated statements of operations related to its interest rate caps.