Quarterly report [Sections 13 or 15(d)]

DEFERRED CHARGES AND OTHER ASSETS, NET

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DEFERRED CHARGES AND OTHER ASSETS, NET
 3 Months Ended
Mar. 31, 2026
Other Assets [Abstract]  
DEFERRED CHARGES AND OTHER ASSETS, NET DEFERRED CHARGES AND OTHER ASSETS, NET
(dollars in thousands) March 31,
2026		 December 31,
2025
Deferred leasing costs $ 5,860 $ 5,684
Deferred financing costs (a) 7,131 7,124
Deferred charges 12,991 12,808
Accumulated amortization (7,623) (6,759)
Deferred charges, net 5,368 6,049
In-place lease values, related intangibles and other assets, net 8,828 8,999
Right of use assets (b) 3,804 4,079
Prepaid expenses and other assets, net 18,241 21,461
Total deferred charges and other assets, net $ 36,241 $ 40,588
(a)This amount relates to the deferred financing costs associated with the revolving credit facility. Deferred financing costs related to all other debt liabilities are netted against those debt liabilities for all periods presented.
(b)This amount has a corresponding liability of $5.5 million and $5.7 million as of March 31, 2026 and December 31, 2025, respectively, which is included in Accounts payable, accrued expense and other liabilities. See Note 12: Commitments and Contingencies – Office and Ground Lease agreements for further details.
DERIVATIVE FINANCIAL INSTRUMENTS
Cash Flow Hedges of Interest Rate Risk
The Company’s objectives in using interest rate derivatives are to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate caps as part of its interest rate risk management strategy. Interest rate caps designated as cash flow hedges involve the receipt of variable amounts from a counterparty if interest rates rise above the strike rate on the contract in exchange for an up-front premium.
The changes in the fair value of derivatives designated and that qualify as cash flow hedges are recorded in accumulated other comprehensive income and subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. During the next 12 months, the Company estimates $0.4 million will be reclassified as an increase to interest expense.
As of March 31, 2026, the Company had two interest rate caps outstanding and in effect with a notional amount of $185.0 million designated as cash flow hedges of interest rate risk, and two undesignated interest rate caps outstanding and in effect with a notional amount of $145.0 million.
The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the consolidated balance sheets as of March 31, 2026 and December 31, 2025 (dollars in thousands):
Derivative Instruments
 Fair Value
Balance sheet location
March 31,
2026		 December 31,
2025
Interest rate caps designated as hedging instruments $ 204  $ 196  Deferred charges and other assets, net
Interest rate caps not designated as hedging instruments 94  110  Deferred charges and other assets, net
The table below presents the effect of the Company’s derivative financial instruments designated as hedging instruments on the Consolidated Statements of Operations for the three months ended March 31, 2026 and 2025, respectively (dollars in thousands):
Derivatives in Cash Flow Hedging Relationships
Amount of Gain or (Loss) Recognized in OCI on Derivative (a)
 Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income (a) (b)
 Total Amount of Interest Expense presented in the Consolidated Statements of Operations
Three months ended March 31, Three months ended March 31, Three months ended March 31,
2026 2025 2026 2025 2026 2025
Interest Rate Caps $ 110  $ (901) $ (260) $ (141) $ (17,871) $ (22,960)
(a)Amounts exclude net gains of $0.1 million and net losses of $0.3 million recognized on unconsolidated joint ventures during the three months ended March 31, 2026 and 2025, respectively.
(b)The gain or loss reclassified from Accumulated OCI into Income is recorded in Interest Expense.
Additionally, the Company recorded $0.1 million and zero of fair value adjustments related to the Company’s interest rate caps not designated as hedging instruments as a decrease in Interest Expense on the Consolidated Statements of Operations for the three months ended March 31, 2026 and 2025, respectively.
Credit-risk-related Contingent Features
The Company has agreements with each of its derivative counterparties that contain a provision where if the Company either defaults or is capable of being declared in default on any of its indebtedness, then the Company could also be declared in default on its derivative obligations. Specifically, the Company could be declared in default on its derivative
obligations if repayment of the underlying indebtedness is accelerated by the lender due to the Company's default on the indebtedness.
As of March 31, 2026, the Company did not have any interest rate derivatives in a net liability position.