1 unchanged sentence
The market risk associated with financial instruments and derivative financial instruments is the risk of loss from adverse changes in market prices or interest rates.
−Removed: Our long-term debt, which consists of secured financings, the Fannie Mae Master Credit Facilities and the OMF Warehouse Facility, bear interest at fixed rates and variable rates.
+Added: Our long-term debt, which consists of the Credit Facilities, the Fannie Mae Secured Debt and our other secured financings, bear interest at fixed rates and variable rates.
Our interest rate risk management objectives are to limit the impact of interest rate changes on earnings and cash flows and to lower our overall borrowing costs.
To achieve these objectives, from time to time, we may enter into interest rate hedge contracts such as swaps, caps, collars and treasury rate lock agreements in order to mitigate our interest rate risk with respect to various debt instruments.
−Removed: We will not hold or issue these derivative contracts for trading or speculative purposes.
−Removed: As of December 31, 2024, we had entered into eight SOFR-based non-designated interest rate caps with a current notional amount of approximately $369.2 million and one SOFR-based designated interest rate swap with a notional amount of $378.5 million.
+Added: We do not intend to hold or issue these derivative contracts for trading or speculative purposes.
+Added: As of December 31, 2025, we had entered into six SOFR-based non-designated interest rate caps with a notional amount of approximately $338.0 million and 10 SOFR-based designated interest rate swaps with a notional amount of $150.0 million.
We do not have any foreign operations and thus we are generally not directly exposed to foreign currency fluctuations.
Mortgage Notes Payable
−Removed: As of December 31, 2024, all of our mortgages were either fixed-rate ($425.7 million) or variable-rate ($364.0 million), before consideration of interest rate swaps.
−Removed: Our mortgages had a gross aggregate carrying value of $789.6 million and a fair value of $747.5 million as of December 31, 2024.
+Added: As of December 31, 2025, all of our mortgages were fixed-rate ($375.5 million).
+Added: Our mortgages had a gross aggregate carrying value of $375.5 million as of December 31, 2025.
As of December 31, 2024, all of our mortgages were either fixed-rate ($425.7 million) or variable-rate ($364.0 million), before consideration of interest rate swaps.
−Removed: Our mortgages had a gross aggregate carrying value of $821.4 million and a fair value of $787.7 million as of December 31, 2023.
−Removed: Credit Facilities
−Removed: Our Fannie Mae Master Credit Facilities and OMF Warehouse Facility are variable-rate.
−Removed: Our Fannie Mae Master Credit Facilities and OMF Warehouse Facility had a gross aggregate carrying amount of $362.2 million and a fair value of $363.0 million as of December 31, 2024.
−Removed: Our Fannie Mae Master Credit Facilities had a gross aggregate carrying amount of $346.3 million and a fair value of $347.0 million, and our MOB Warehouse Facility had a gross carrying value of $14.7 million and a fair value of $14.8 million as of December 31, 2023.
+Added: Fannie Mae Secured Debt
+Added: Our Fannie Mae Secured Debt is variable-rate with one-month SOFR capped at 3.50% via interest rate cap contracts.
+Added: Our Fannie Mae Secured Debt had a gross aggregate carrying amount of $334.7 million and bore interest at a weighted-average annual rate of 6.65% as of December 31, 2025.
+Added: Unsecured Credit Facilities
+Added: Our Credit Facilities, consisting of the Revolving Facility and the Term Loan, are variable-rate.
+Added: The Term Loan has interest rate swaps that convert variable interest rates to fixed interest rates.
+Added: Our Revolving Facility and Term Loan had a gross aggregate carrying amount of $186.0 million and $150.0 million, respectively, as of December 31, 2025.
+Added: The borrowings under the Revolving Facility and Term Loan both bore interest at a weighted-average annual rate of 5.94% as of December 31, 2025.
Sensitivity Analysis — Interest Expense
1 unchanged sentence
Interest Rate Swaps
−Removed: As noted above, we have one SOFR-based designated interest rate swap with a notional amount of $378.5 million, which effectively create a fixed interest rate for a portion of our variable-rate debt.
−Removed: This interest rate swap effectively hedges all of our variable rate debt with the exception of our Fannie Mae Master Credit Facilities and OMF Warehouse Facility discussed below.
+Added: As noted above, we have 10 SOFR-based designated interest rate swaps with a notional amount of $150.0 million, which effectively create a fixed interest rate for the $150.0 million Term Loan.
+Added: As a result of our interest rate swaps, our only variable rate debt is the Revolving Facility discussed below.
Interest Rate Caps
−Removed: We also have entered into eight SOFR-based, non-designated interest rate cap contracts with a current notional amount of $369.2 million as of December 31, 2024, which limits SOFR exposure on our Fannie Mae Master Credit Facilities and OMF Warehouse Facility to 3.50%.
+Added: We entered into six SOFR-based, non-designated interest rate cap contracts with a notional of $338.0 million as of December 31, 2025, which limit SOFR exposure on our Fannie Mae Secured Debt to 3.50%.
The active caps began limiting SOFR during the fourth quarter of 2022 as SOFR rates exceeded the strike price of 3.50% and we are receiving monthly cash payments on these contracts.
−Removed: Because these are non-designated derivatives, the amounts received are included in (loss) gain on non-designated derivatives in our statement of operations and comprehensive loss.
−Removed: As of December 31, 2024, we are not currently negatively exposed to rising interest rates.
−Removed: Assuming all other variables besides interest rates remain constant, a 100 basis point increase in variable interest rates would not impact our net interest payments due to our interest rate swaps and effective interest rate caps.
−Removed: Assuming all other variables besides interest rates remain constant, a 100 basis point decrease in variable interest rates would also not impact our swapped debt, and based on the SOFR rate as of December 31, 2024, a 100 basis point decrease would not have a material impact on our net interest payments (inclusive of cash received from our non-designated derivatives included in (loss) gain on non-designated derivatives).
+Added: Because these are non-designated derivatives, the amounts received are included in (loss) gain on non-designated derivatives in our statements of operations and comprehensive loss.
+Added: Assuming a 100 basis point increase in variable interest rates related to our $186.0 million Revolving Facility and assuming no change in the balance outstanding as of December 31, 2025, interest expense on an annualized basis would increase by approximately $1.9 million.
Sensitivity Analysis — Fair Value of Debt
4 unchanged sentences
A 100 basis point decrease in market interest rates would result in an increase in the fair value of our debt by $19.1 million.
−Removed: A 100 basis point increase in market interest rates would result in an increase in the fair value of our designated interest rate swap by $6.4 million.
−Removed: A 100 basis point decrease in market interest rates would result in a decrease in the fair value of our designated interest rate swap by $6.6 million.
+Added: A 100 basis point increase in market interest rates would result in an increase in the fair value of our derivatives by $5.9 million.
+Added: A 100 basis point decrease in market interest rates would result in a decrease in the fair value of our derivatives by $4.6 million.
These amounts were determined by considering the impact of hypothetical interest rate changes on our borrowing costs, and assuming no other changes in our capital structure.
6 unchanged sentences
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.