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Additionally, we periodically enter into interest rate swap and cap agreements to manage our exposure to interest rate fluctuations.
−Removed: Our interest rate swap and cap agreements involve the exchange of fixed and variable rate interest payments between two parties, based on common notional principal amounts and maturity dates.
−Removed: The notional amounts of the agreements represent balances used to calculate the exchange of cash flows and are not our assets or liabilities.
+Added: Our interest rate cap agreements are derivative instruments that provide protection against increases in variable interest rates above a specified contractual rate, based on common notional principal amounts and maturity dates.
+Added: The notional amounts of the agreements represent balances used solely to calculate contingent cash settlements and do not represent our assets or liabilities.
+Added: Under these agreements, we receive cash payments from the counterparty when the applicable variable interest rate exceeds the cap rate.
Our credit risk related to these agreements is considered low because the agreements are with creditworthy financial institutions.
−Removed: The interest payments under these agreements are settled on a net basis.
+Added: Cash settlements under these agreements are made on a net basis.
These derivatives have been recognized in the financial statements at their respective fair values.
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Without derivatives, interest rate changes would result in gains or losses in the market value of our fixed rate debt portfolio due to differences in market interest rates and the rates at the inception of the debt agreements.
−Removed: Based on our indebtedness and the effectiveness of our interest rate cap agreements at September 30, 2025, we do not expect changes in interest rates to have a material effect on our net earnings or cash flows in 2025.
+Added: Based on our indebtedness and the effectiveness of our interest rate cap agreements at March 31, 2026, we do not expect changes in interest rates to have a material effect on our net earnings or cash flows in 2026.
For more information regarding our interest rate swap and cap agreements, please refer to Note 5 .
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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.