Derivative Financial Instruments and Hedging Activities

9 Months Ended

Sep. 30, 2025

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments and Hedging Activities

Derivative Financial Instruments and Hedging Activities

Risk Management Objective of Using Derivatives

Our objectives in using interest rate derivatives are to add predictability to interest expense and to manage our exposure to interest rate movements. To accomplish these objectives, we primarily use interest rate swaps, interest rate caps, and treasury locks as part of our interest rate management strategy. Interest rate swaps primarily involve the receipt of variable-rate and fixed-rate amounts from a counterparty in exchange for our making fixed-rate or variable-rate payments over the life of the agreements without exchange of the underlying notional amounts.

Changes in fair value of derivatives designated as cash flow hedges are recognized in other comprehensive income (loss) and subsequently reclassified into earnings as an increase or decrease to interest expense. During the three and nine months ended September 30, 2025, we reclassified gains of $1.0 million and $3.0 million, respectively, out of other comprehensive income (loss) into interest expense. During the three and nine months ended September 30, 2024, we reclassified gains of $1.0 million and $14.4 million, respectively. As of September 30, 2025, we estimate that during the next 12 months, we will reclassify into earnings approximately $3.4 million of the unrealized gain in other comprehensive income (loss).

Changes in fair value of derivatives not designated in a hedge relationship, or economic hedges, are recognized in gain (loss) on derivative instruments, net, in our condensed consolidated statements of operations once realized. During the three and nine months ended September 30, 2025 and 2024, gain (loss) on derivative instruments, net was $7.4 million, $(8.2) million, $(51.0) million, and $(36.2) million, respectively.

During the three months ended June 30, 2025, we entered into one interest rate cap not designated as a hedging instrument with a total notional value of $71.7 million to economically hedge our variable-rate property debt maturing in 2027.

During the three months ended September 30, 2025, we entered into four interest rate swaps with a total notional value of $1.8 billion. Additionally, we entered into one sold interest rate cap with a notional value of $1.0 billion as well as one interest rate cap with a total notional value of $241.7 million. None of these positions were designated in hedging relationships. During the three months ended September 30, 2025, four of our existing interest rate swaps had a change in notional principal, reducing their total notional principal by $1.0 billion. Additionally, one of our sold interest rate caps had a change in notional principal from $2.2 billion to $1.5 billion.

As of September 30, 2025, we have $518.6 million of notional value interest rate swaps and caps in excess of outstanding non-recourse variable-rate property debt.

The following tables summarize our derivative financial instruments (dollars in thousands):

	As of September 30, 2025
	Number of Instruments	Aggregate Notional Amount		Fair Value of Derivative Assets (included in Other Assets, net)		Fair Value of Derivative Liabilities (included in Accrued Liabilities and Other)
Derivatives not designated as hedging instruments:
Interest rate swaps, pay-fixed, receive-floating	19	$	5,300,000	$	8,467	$	(16,155)
Interest rate caps, net (1)	9	$	1,199,420	$	211	$	(98)

(1)Interest rate caps, net, is inclusive of six interest rate caps with an aggregate notional value of $4.5 billion, offset partially by three sold interest rate caps with an aggregate notional value of $3.3 billion.

	As of December 31, 2024
	Number of Instruments	Aggregate Notional Amount		Fair Value of Derivative Assets (included in Other Assets, net)		Fair Value of Derivative Liabilities (included in Accrued Liabilities and Other)
Derivatives not designated as hedging instruments:
Interest rate swaps, pay-fixed, receive-floating	15	$	4,550,000	$	10,177	$	(10,111)
Interest rate caps, net (1)	6	$	1,148,500	$	11,025	$	(5,763)

(1)Interest rate caps, net, is inclusive of four interest rate caps with an aggregate notional value of $4.1 billion, offset partially by two sold interest rate caps with an aggregate notional value of $3.0 billion.