Derivative Instruments

9 Months Ended

Sep. 30, 2024

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Interest Rate Swaps and Caps on EZOP Debt. During the nine months ended September 30, 2024 and 2023, EZOP entered into interest rate swaps and caps for an aggregate notional amount of $259.9 million and $924.4 million, respectively, to economically hedge its exposure to the variable interest rates on a portion of the outstanding EZOP debt. No collateral was posted for the interest rate swaps and caps as they are secured under the EZOP revolving credit facility. In July 2024, the notional amount of the interest rate swaps and caps began decreasing to match EZOP's estimated monthly principal payments on the debt. During the nine months ended September 30, 2024 and 2023, EZOP unwound interest rate swaps and caps with an aggregate notional amount of $699.7 million and $659.6 million, respectively, and recorded a realized gain of $26.7 million and $26.8 million, respectively.

Interest Rate Swaps and Caps on TEPH Debt. During the nine months ended September 30, 2024 and 2023, TEPH entered into interest rate swaps and caps for an aggregate notional amount of $968.0 million and $601.6 million, respectively, to economically hedge its exposure to the variable interest rates on a portion of the outstanding TEPH debt. No collateral was posted for the interest rate swaps and caps as they are secured under the TEPH revolving credit facility. In October 2025, the notional amount of the interest rate swaps and caps will begin decreasing to match TEPH's estimated quarterly principal payments on the debt. During the nine months ended September 30, 2024 and 2023, TEPH unwound interest rate swaps and caps with an aggregate notional amount of $889.0 million and $241.1 million, respectively, and recorded a realized gain of $23.0 million and $6.2 million, respectively.

Interest Rate Swaps and Caps on AP8 Debt. During the nine months ended September 30, 2024 and 2023, AP8 entered into interest rate swaps and caps for an aggregate notional amount of $0 and $140.0 million, respectively, to economically hedge its exposure to the variable interest rates on a portion of the outstanding AP8 debt. No collateral was posted for the interest rate swaps and caps as they are secured under the AP8 revolving credit facility. The notional amount of the interest rate swaps and caps is locked for the life of the contract. During the nine months ended September 30, 2024 and 2023, AP8 unwound interest rate swaps and caps with an aggregate notional amount of $0 and recorded a realized gain of $1.8 million and $470,000, respectively.

Interest Rate Swaps and Caps on AP9 Debt. During the nine months ended September 30, 2024 and 2023, AP9 entered into interest rate swaps and caps for an aggregate notional amount of $0 and $25.0 million, respectively, to economically hedge its exposure to the variable interest rates on a portion of the outstanding AP9 debt. No collateral was posted for the interest rate swaps and caps as they are secured under the AP9 revolving credit facility. During the nine months ended September 30, 2024 and 2023, AP9 unwound interest rate swaps and caps with an aggregate notional amount of $25.0 million and $0, respectively, and recorded a realized gain of $227,000 and $0, respectively. In September 2024, all AP9 interest rate swaps and caps were unwound and terminated.

The following table presents a summary of the outstanding derivative instruments:


	As of September 30, 2024					As of December 31, 2023


	Effective Date	Termination Date	Fixed Interest Rate	Aggregate Notional Amount		Effective Date	Termination Date	Fixed Interest Rate	Aggregate Notional Amount
	(in thousands, except interest rates)
EZOP	June 2024 - July 2024	October 2031 - December 2031	4.000%	$	133,421	July 2023 - December 2023	December 2028 - November 2035	2.000%	$	489,581
TEPH	December 2023 - August 2024	April 2038 - January 2043	3.430% - 4.312%	1,073,190		July 2022 - December 2023	October 2031 - October 2041	2.620% - 4.202%	994,403
AP8	November 2022 - August 2023	October 2025	4.250%	215,000		November 2022 - August 2023	September 2025	4.250%	215,000
AP9				—		September 2023	September 2027	4.250%	25,000


Total				$	1,421,611				$	1,723,984

The following table presents the fair value of the interest rate swaps and caps as recorded in the Unaudited Condensed Consolidated Balance Sheets:


	As of September 30, 2024		As of December 31, 2023


	(in thousands)
Other assets	$	2,470	$	55,471

Other long-term liabilities	(44,847)		—
Total, net	$	(42,377)	$	55,471

We did not designate the interest rate swaps and caps as hedging instruments for accounting purposes. As a result, we recognize changes in fair value immediately in interest expense, net. The following table presents the impact of the interest rate swaps and caps as recorded in the Unaudited Condensed Consolidated Statements of Operations:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
	(in thousands)
Realized gain	$	(16,875)	$	(17,753)	$	(51,789)	$	(33,522)
Unrealized (gain) loss	66,657		(18,219)		61,820		(10,208)
Total	$	49,782	$	(35,972)	$	10,031	$	(43,730)