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Item 3. Quantitative and Qualitative Disclosures About Market Risk

2025-08-04 compared with 2025-05-05 · 67 added, 12 removed, 22 unchanged (78% of the section changed)

4 unchanged sentences

Floating Rate Debt

As of March 31, 2025, our outstanding floating rate debt consisted of the following:

Principal Annual Annual Maturity Interest Payments

Debt Balance Interest Rate (1)

Interest Expense Date Due

As of June 30, 2025, our outstanding floating rate debt consisted of the following:

Debt Principal Balance Annual Interest Rate (1)

Annual Interest Expense Maturity Date Interest Payments Due

Floating rate mortgage loan

$ 140,000 6.822% $ 9,681 3/31/2028 Monthly

Floating rate secured revolving credit facility — — — 6/11/2029 Monthly

$ 140,000 $ 9,681

(1) The annual interest rate is the rate stated in the applicable contract, as adjusted by our interest rate cap.

3 unchanged sentences

In connection with this mortgage loan, to hedge our exposure to risks related to changes in SOFR and pursuant to the terms of the applicable loan agreement, we have purchased an interest rate cap with a SOFR strike rate equal to 4.50%.

At June 30, 2025, we had no amounts outstanding under our revolving credit facility.

No principal repayments are required under our revolving credit facility prior to maturity and repayments may be made and redrawn subject to conditions at any time without penalty.

Borrowings under our revolving credit facility are in U.S.

dollars and require interest to be paid at a rate of SOFR plus a premium.

Accordingly, we are vulnerable to changes in U.S.

dollar based short term interest rates, specifically SOFR.

In addition, upon renewal or refinancing of these obligations, we are vulnerable to increases in interest rate premiums, including increases in the cost of replacement interest rate caps, due to market conditions and our perceived credit risk.

The following table presents the approximate impact a one percentage point increase in interest rates would have on our annual floating rate interest expense at March 31, 2025, including the impact of our interest rate cap:

The following table presents the approximate impact a one percentage point increase in interest rates would have on our annual floating rate interest expense at June 30, 2025, including the impact of our interest rate cap:

Impact of an Increase in Interest Rates

Total Interest Annual Earnings

Interest rate Outstanding Debt Expense Per Year Per Share Impact (1)

As of March 31, 2025

Interest Rate (1)

Outstanding Debt Expense Per Year Per Share Impact (2)

As of June 30, 2025

6.82% $ 140,000 $ 9,681 $ (0.04)

1 unchanged sentence

7.00% $ 140,000 $ 9,936 $ (0.04)

(1) Based on the diluted weighted average common shares outstanding for the three months ended March 31, 2025.

(2) A one percentage point increase in interest rates would be capped at 7.00% for our floating rate debt as a result of our 4.50% interest rate cap purchased for our $140,000 floating rate mortgage loan.

However, a one percentage point increase in the interest rate of our floating rate debt to 7.82% at March 31, 2025 would result in total floating rate interest expense per year of $11,107 and a decrease in annual earnings per share of $0.05.

(1) Based on SOFR plus a premium, which was 250 basis points per annum for our $140,000 floating rate mortgage loan, as of June 30, 2025.

(2) Based on the diluted weighted average common shares outstanding for the six months ended June 30, 2025.

(3) A one percentage point increase in interest rates would be capped at 7.00% for our $140,000 floating rate mortgage loan as a result of our 4.50% interest rate cap purchased for this debt.

However, a one percentage point increase in the interest rate of our floating rate debt to 7.82% at June 30, 2025 would result in total floating rate interest expense per year of $11,100 and a decrease in annual earnings per share of $0.05.

The following table presents the impact a one percentage point increase in interest rates would have on our annual floating rate interest expense at June 30, 2025 if we were fully drawn on our revolving credit facility:

Impact of an Increase in Interest Rates

Total Interest Annual Earnings

Interest Rate (1)

Outstanding Debt (2)

Expense Per Year Per Share Impact (3)

As of June 30, 2025

6.94% $ 290,000 $ 20,406 $ (0.09)

One percentage point increase (4)

7.54% $ 290,000 $ 22,170 $ (0.09)

(1) Based on SOFR plus a premium, which was 250 basis points per annum for both our revolving credit facility and our $140,000 floating rate mortgage loan, as of June 30, 2025.

Interest rate is weighted based on amounts outstanding.

(2) Represents the maximum amount available under our revolving credit facility and our $140,000 floating rate mortgage loan.

(3) Based on the diluted weighted average common shares outstanding for the six months ended June 30, 2025.

(4) A one percentage point increase in interest rates would be capped at 7.00% for our $140,000 floating rate mortgage loan as a result of our 4.50% interest rate cap purchased for this debt.

However, a one percentage point increase in the interest rate of our floating rate debt to 7.94% at June 30, 2025 would result in total floating rate interest expense per year of $23,346 and a decrease in annual earnings per share of $0.10.

The foregoing table shows the impact of an immediate one percentage point change in floating interest rates, including the impact of our interest rate cap.

2 unchanged sentences

Fixed Rate Debt

There have been no material changes to market interest rate risks associated with our fixed rate debt during the three months ended March 31, 2025.

For a discussion of market interest rate risks associated with our fixed rate debt, see "Quantitative and Qualitative Disclosures About Market Risk" included in Part II, Item 7A of our Annual Report.

As of June 30, 2025, our outstanding fixed rate debt consisted of the following:

Principal Balance Annual Interest

Annual Interest Expense Maturity Date Interest Payments Due

Senior secured notes (2)

$ 641,376 0.000 % $ — 1/15/2026 At Maturity

Senior unsecured notes 500,000 4.750 % 23,750 2/15/2028 Semiannually

Senior unsecured notes 500,000 4.375 % 21,875 3/1/2031 Semiannually

Senior unsecured notes 350,000 5.625 % 19,688 8/1/2042 Quarterly

Senior unsecured notes 250,000 6.250 % 15,625 2/1/2046 Quarterly

Mortgage note 64,000 6.572 % 4,264 6/7/2030 Monthly

Mortgage note 120,000 6.864 % 8,351 6/11/2034 Monthly

Mortgage note 108,873 6.220 % 6,866 5/1/2035 Monthly

Mortgage note 30,284 6.360 % 1,953 6/1/2035 Monthly

Mortgage note 6,652 6.444 % 435 7/1/2043 Monthly

$ 2,571,185 $ 102,807

(1) The annual interest rate is the rate stated in the applicable contract.

(2) These notes require no cash interest to accrue prior to maturity and will accrete at a rate of 11.25% per annum compounded semiannually on January 15 and July 15 of each year, such that the accreted value will equal the principal amount at maturity.

We have a one-time option to extend the maturity date of these notes by one year, to January 15, 2027, subject to satisfaction of certain conditions and payment of an extension fee.

No principal repayments are due under our senior notes until maturity.

Our mortgage loan maturing in June 2034 requires monthly interest payments and no principal payment is due until maturity, while our mortgage loans maturing in March 2028, May 2035 and June 2035 require monthly interest payments and no principal payment is due for a specified amount of time.

Our mortgage loans maturing in June 2030 and July 2043 require monthly principal and interest payments.

Because these debts require interest to be paid at a fixed rate, changes in market interest rates during the term of these debts will not affect our interest obligations.

If these debts were refinanced at interest rates which are one percentage point higher or lower than shown above, our annual interest cost would increase or decrease by approximately $19,344, which amount excludes $641,376 of our senior secured notes due 2026 as no interest is due until maturity.

Changes in market interest rates would affect the fair value of our fixed rate debt obligations.

Increases in market interest rates decrease the fair value of our fixed rate debt, while decreases in market interest rates increase the fair value of our fixed rate debt.

Interest rates continue to remain elevated despite recent reductions by the U.S.

Federal Reserve.

There are uncertainties surrounding interest rates and they may remain at current levels, decrease or increase.

Our debt agreements contain provisions that allow us to make repayments earlier than the stated maturity date.

In some cases, we are not allowed to make early repayment prior to a cutoff date, and we are generally allowed to make prepayments only at a premium equal to a make whole amount, as defined, which is generally designed to preserve a stated yield to the noteholder.

In the past, we have repurchased and retired some of our outstanding debt and we may do so again in the future.

These prepayment rights and our ability to repurchase and retire outstanding debt may afford us opportunities to mitigate the risk of refinancing our debts at maturity at higher rates by refinancing prior to maturity.

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.

What changed 10-Q

Item 3. Quantitative and Qualitative Disclosures About Market Risk