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As of December 31, 2024, the interest rates for 58% of our consolidated borrowings were fixed or swap-fixed with interest rate swaps, and 15% were capped with interest rate caps.
−Removed: Our use of interest rate swaps and caps exposes us to credit risk from the potential inability of our counterparties to perform under the terms of those agreements.
−Removed: We attempt to minimize this credit risk by contracting with a variety of financial counterparties with investment grade ratings.
−Removed: As of December 31, 2023, the maximum amount the interest expense on our capped-rate borrowings could increase is $14.3 million per year.
+Added: As of December 31, 2024, the maximum amount the interest expense on our capped-rate borrowings could increase by is $21.7 million per year.
Higher interest rates would cause an increase in our future interest expense on our capped-rate debt, which would reduce our future net income, cash flows from operations and FFO.
+Added: Our interest rate swap agreements generally expire two years before the maturity date of the related loan, during which time we can refinance the loan without any interest penalty.
+Added: After the interest rate swap agreements expire the related debt will be floating rate.
+Added: Higher interest rates, to the extent they are higher than our swap-fixed rates when our interest rate swaps expire, would cause our future interest expense on our debt to increase, which would reduce our future net income, cash flows from operations and FFO.
+Added: See Note 8 to our consolidated financial statements in Item 15 of this Report for more information regarding our debt maturities and our interest rate swap expirations.
+Added: Our use of interest rate swaps and caps also exposes us to credit risk from the potential inability of our counterparties to perform under the terms of those agreements.
+Added: We attempt to minimize this credit risk by contracting with a variety of financial counterparties with investment grade ratings.
+Added: See Note 10 to our consolidated financial statements in Item 15 of this Report for more information regarding our interest rate swaps and caps.
Unhedged Floating-Rate Borrowings
As of December 31, 2024, the interest rates for 27% of our consolidated borrowings were floating.
−Removed: As of December 31, 2023, the interest expense for our floating-rate borrowings that are not hedged would increase by $9.3 million per year for every one hundred basis point increase in the related benchmark interest rate.
+Added: As of December 31, 2024, the interest expense for our unhedged floating-rate borrowings would increase by $15.0 million per year for every one hundred basis point increase in the related benchmark interest rate.
Higher interest rates would cause an increase in our future interest expense on our floating-rate debt, which would reduce our future net income, cash flows from operations and FFO.
−Removed: See Note 8 to our consolidated financial statements in Item 15 of this Report for more information regarding our debt and our future swap and cap expirations.
−Removed: See Note 10 to our consolidated financial statements in Item 15 of this Report for more information regarding our swaps and caps.
−Removed: Market Transition to SOFR from LIBOR
−Removed: During the third quarter of 2023, we converted all of our LIBOR loans and swaps to SOFR.
−Removed: The LIBOR loans converted to SOFR include a small SOFR adjustment (an increase to the SOFR rate) to calculate the interest payable to the lender.
−Removed: The SOFR conversion did not change the swap-fixed interest rates for our swap-fixed loans.
−Removed: See Notes 8 and 10 to our consolidated financial statements in Item 15 of this Report for more information regarding our debt and derivatives, respectively.
+Added: See Note 8 to our consolidated financial statements in Item 15 of this Report for more information regarding our floating rate debt.
Financial Statements and Supplementary Data
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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.