DERIVATIVE FINANCIAL INSTRUMENTS

12 Months Ended

Dec. 31, 2023

DERIVATIVE FINANCIAL INSTRUMENTS

DERIVATIVE FINANCIAL INSTRUMENTS

NOTE 13. DERIVATIVE FINANCIAL INSTRUMENTS

Cash Flow Hedges of Interest Rate Risk

The Partnership’s objectives in using rate derivatives are to manage its exposure to interest rate movements. To accomplish this objective, the Partnership uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Partnership making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.

The changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income and subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on the Partnership’s variable rate debt. During the next 12 months, the Partnership estimates $111,000 will be reclassified as a decrease to interest expense.

As of December 31, 2023, the Partnership had one interest rate swap outstanding with a notional amount of approximately $236,000 designated as cash flow hedges of interest rate risk. As of December 31, 2023, the Partnership did not have any interest rate derivatives in a net liability position.

The table below presents the fair value of the Partnership’s derivative financial instruments as well as their classification on the consolidated balance sheets as of December 31, 2023 and 2022.

	Fair Value
Asset Derivatives designated	December 31,		December 31,
as hedging instruments	2023		2022		Balance sheet location
Interest rate swaps	$	236,377	$	294,931	Prepaid Expenses and Other Assets

The table below presents the effect the Partnership’s derivative financial instruments on the consolidated statements of income for the years ended December 31, 2023 and 2022

Derivatives in Cash Flow Hedging Relationships	Amount of Gain or (Loss) Recognized in OCI on Derivative						Location of Gain or (Loss) Reclassified from Accumulated OCI Into	Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income						Location of Gain or (Loss) Recognized in Income on	Total Amount of Interest Expense presented in the consolidated statements of operations
Year Ended December 31,	2023		2022		2021		Income	2023		2022		2021		Derivative	2023		2022		2021
Interest rate swaps	$	(58,554)	$	294,931	$	—	Interest expense	$	—	$	—	$	—	Interest and other investment income (loss)	$	(15,723,733)	$	(15,045,477)	$	(13,629,463)