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In pursuing our business plan, we expect that the primary market risk to which we will be exposed is interest rate risk.
−Removed: There were no material changes in our market risk exposures, or in the methods we use to manage market risk, from those that were provided for in our 2023 Annual Report on Form 10-K, as filed with the SEC on March 22, 2024.
+Added: There were no material changes in our market risk exposures, or in the methods we use to manage market risk, from those that were provided for in our 2024 Annual Report on Form 10-K, as filed with the SEC on February 28, 2025.
Interest Rate Risk
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therefore, changes in the fair value of interest rate derivative financial instruments were recorded as a component of interest expense in gain or loss in fair value of derivative financial instruments in our accompanying condensed consolidated statements of operations and comprehensive loss.
−Removed: As of September 30, 2024, our interest rate swaps are recorded in other liabilities in our accompanying condensed consolidated balance sheet at their aggregate fair value of $3,088,000.
+Added: As of March 31, 2025, our interest rate swaps are recorded in other assets and other liabilities in our accompanying condensed consolidated balance sheet at their aggregate fair value of $571,000 and $(1,217,000), respectively.
We do not enter into derivative transactions for speculative purposes.
−Removed: For information on our interest rate swaps, see Note 10, Derivative Financial Instruments, and Note 14, Fair Value Measurements, to our accompanying condensed consolidated financial statements for further discussion.
−Removed: As of September 30, 2024, the table below presents the principal amounts and weighted average interest rates by year of expected maturity to evaluate the expected cash flows and sensitivity to interest rate changes, excluding the effect of our interest rate swaps (dollars in thousands):
+Added: For information on our interest rate swaps, see Note 9, Derivative Financial Instruments, and Note 13, Fair Value Measurements, to our accompanying condensed consolidated financial statements for a further discussion.
+Added: As of March 31, 2025, the table below presents the principal amounts and weighted average interest rates by year of expected maturity to evaluate the expected cash flows and sensitivity to interest rate changes, excluding the effect of our interest rate swaps (dollars in thousands):
Expected Maturity Date
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$ — $ — $ 550,000 $ 93,000 $ — $ — $ 643,000 $ 643,059
−Removed: Weighted average interest rate on maturing variable-rate debt (based on rates in effect as of September 30, 2024)
+Added: Weighted average interest rate on maturing variable-rate debt (based on rates in effect as of March 31, 2025)
— % — % 5.66 % 5.71 % — % — % 5.67 % —
Debt Security Investment, Net
−Removed: As of September 30, 2024, the net carrying value of our debt security investment was $90,144,000.
+Added: As of March 31, 2025, the net carrying value of our debt security investment was $91,698,000.
As we expect to hold our debt security investment to maturity and the amounts due under such debt security investment are limited to the outstanding principal balance and any accrued and unpaid interest, we do not expect that fluctuations in interest rates, and the resulting change in fair value of our debt security investment, would have a significant impact on our operations.
See Note 13, Fair Value Measurements, to our accompanying condensed consolidated financial statements for a discussion of the fair value of our investment in a held-to-maturity debt security.
−Removed: The effective interest rate on our debt security investment was 4.24% per annum as of September 30, 2024.
+Added: The effective interest rate on our debt security investment was 4.24% per annum as of March 31, 2025.
Mortgage Loans Payable, Net and Lines of Credit and Term Loan
−Removed: Mortgage loans payable were $1,307,702,000 ($1,282,853,000, net of discount/premium and deferred financing costs) as of September 30, 2024.
−Removed: As of September 30, 2024, we had 97 fixed-rate mortgage loans payable and three variable-rate mortgage loans payable with effective interest rates ranging from 2.21% to 8.20% per annum and a weighted average effective interest rate of 4.28%.
−Removed: In addition, as of September 30, 2024, we had $596,532,000 ($591,490,000, net of deferred financing fees) outstanding under our lines of credit and term loan, at a weighted average interest rate of 6.39% per annum.
−Removed: As of September 30, 2024, the weighted average effective interest rate on our outstanding debt, factoring in our interest rate swaps, was 4.72% per annum.
−Removed: An increase in the variable interest rate on our variable-rate mortgage loans payable and lines of credit and term loan constitutes a market risk.
−Removed: As of September 30, 2024, a 0.50% increase in the market rates of interest would have increased our overall annualized interest expense on all of our other variable-rate mortgage loans payable and lines of credit by $1,070,000, or 1.2% of total annualized interest expense on our mortgage loans payable and lines of credit and term loan.
+Added: Mortgage loans payable were $1,023,241,000 ($1,000,489,000, net of discount/premium and deferred financing costs) as of March 31, 2025.
+Added: As of March 31, 2025, we had 89 fixed-rate mortgage loans payable with effective interest rates ranging from 2.21% to 5.99% per annum and a weighted average effective interest rate of 3.72%.
+Added: In addition, as of March 31, 2025, we had $643,000,000 ($642,567,000, net of deferred financing fees) outstanding under our line of credit and term loan, at a weighted average interest rate of 5.67% per annum.
+Added: As of March 31, 2025, the weighted average effective interest rate on our outstanding debt, factoring in our fixed-rate interest rate swaps, was 4.39% per annum.
+Added: An increase in the variable interest rate on our variable-rate line of credit and term loan constitutes a market risk.
+Added: As of March 31, 2025, a 0.50% increase in the market rates of interest would have increased our overall annualized interest expense on our variable-rate line of credit by $471,000, or 0.6% of total annualized interest expense on our line of credit and term loan.
See Note 7, Mortgage Loans Payable, Net, and Note 8, Lines of Credit and Term Loan, to our accompanying condensed consolidated financial statements.
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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.