Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Item 7A. Quantitative and Qualitative Disclosures About Market Risk (dollars in thousands, except per share amounts)
We are exposed to risks associated with market changes in interest rates. We manage our exposure to this market risk by monitoring available financing alternatives. Other than as described below, we do not currently foresee any significant changes in our exposure to fluctuations in interest rates or in how we manage this exposure in the near future.
Fixed Rate Debt
At December 31, 2024, our outstanding fixed rate debt consisted of the following:
Debt Principal Balance Annual Interest
Rate Annual Interest
Expense Maturity Interest Payments Due
Senior unsecured notes $ 350,000 5.250 % $ 18,375 2026 Semi-Annually
Senior unsecured notes 450,000 4.750 % 21,375 2026 Semi-Annually
Senior unsecured notes 400,000 4.950 % 19,800 2027 Semi-Annually
Senior guaranteed unsecured notes 450,000 5.500 % 24,750 2027 Semi-Annually
Senior unsecured notes 400,000 3.950 % 15,800 2028 Semi-Annually
Net lease mortgage notes 606,611 5.600 % 33,970 2028 Monthly
Senior guaranteed unsecured notes 700,000 8.375 % 58,625 2029 Semi-Annually
Senior unsecured notes 425,000 4.950 % 21,038 2029 Semi-Annually
Senior unsecured notes 400,000 4.375 % 17,500 2030 Semi-Annually
Senior secured notes 1,000,000 8.625 % 86,250 2031 Semi-Annually
Senior guaranteed unsecured notes 500,000 8.875 % 44,375 2032 Semi-Annually
$ 5,681,611 $ 361,858
No principal repayments are due under our unsecured or secured senior notes until maturity. Our net lease mortgage notes require principal and interest payments through maturity pursuant to amortization schedules. Because these notes require interest at fixed rates, changes in market interest rates during the term of these debts will not affect our interest obligations. If these notes were refinanced at interest rates which are one percentage point higher than the rates shown above, our per annum interest cost would increase by approximately $56,816. 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. In response to significant and prolonged increases in inflation, the U.S. Federal Reserve has raised interest rates eleven times during 2022 and 2023 and then paused rate increases in the fourth quarter of 2023 following the deceleration of inflationary growth. Although the U.S. Federal Reserve cut interest rates three times in late 2024 and may seek to further reduce interest rates, we cannot be sure that it will do so, and interest rates may remain at the current levels or increase. Based on the balances outstanding at December 31, 2024 and discounted cash flows analyses through the respective maturity dates, and assuming no other changes in factors that may affect the fair value of our fixed rate debt obligations, a hypothetical immediate one percentage point change in interest rates would change the fair value of those debt obligations by approximately $198,197.
Our fixed rate debt arrangements may 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. Also, we have in the past repurchased and retired some of our outstanding debts 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 risks of refinancing our debts at their maturities at higher rates by refinancing prior to maturity.
Floating Rate Debt
At December 31, 2024, our floating rate debt consisted of $150,000 outstanding under our $650,000 revolving credit facility. The maturity date of our revolving credit facility is June 29, 2027, and, subject to our meeting certain conditions, including our payment of an extension fee, we have an option to extend the stated maturity date of the facility by two six-month periods. 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.
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Borrowings under our revolving credit facility are in U.S. dollars and require interest to be paid at a rate of SOFR plus premiums. Accordingly, we are vulnerable to changes in U.S. dollar based short term interest rates, specifically SOFR. In addition, upon renewal or refinancing of our revolving credit facility, we are vulnerable to increases in interest rate premiums due to market conditions or our perceived credit characteristics. Generally, a change in interest rates would not affect the value of this floating rate debt but would affect our operating results.
The following table presents the impact a one percentage point increase in interest rates would have on our annual floating rate interest expense as of December 31, 2024:
Impact of Increase in Interest Rates
Interest Rate
Per Year (1)
Outstanding
Debt Total Interest
Expense Per Year Annual Per
Share Impact (2)
At December 31, 2024 6.99 % $ 150,000 $ 10,485 $ 0.06
One percentage point increase 7.99 % $ 150,000 $ 11,985 $ 0.07
(1) Based on SOFR plus a premium, which was 250 basis points per annum at December 31, 2024.
(2) Based on diluted weighted average common shares outstanding for the year ended December 31, 2024.
The following table presents the impact a one percentage point increase in interest rates would have on our annual floating rate interest expense as of December 31, 2024 if we were fully drawn on our revolving credit facility:
Impact of Increase in Interest Rates
Interest Rate
Per Year (1)
Outstanding
Debt Total Interest
Expense Per Year Annual Per
Share Impact (2)
At December 31, 2024 6.99 % $ 650,000 $ 45,435 $ 0.27
One percentage point increase 7.99 % $ 650,000 $ 51,935 $ 0.31
(1) Based on SOFR plus a premium, which was 250 basis points per annum at December 31, 2024.
(2) Based on diluted weighted average common shares outstanding for the year ended December 31, 2024.
The foregoing table shows the impact of an immediate change in floating interest rates as of December 31, 2024. If interest rates were to change gradually over time, the impact would be spread over time. Our exposure to fluctuations in floating interest rates will increase or decrease in the future with increases or decreases in the outstanding amounts under our revolving credit facility or other floating rate debt, if any. Although we have no present plans to do so, we may in the future enter into hedge arrangements from time to time to mitigate our exposure to changes in interest rates.
Item 8. Financial Statements and Supplementary Data
The information required by this item is included in Part IV, Item 15 of this Annual Report on Form 10-K.
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
None.