Financial Instruments - Derivatives and Hedging

6 Months Ended

Jun. 30, 2025

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Financial Instruments - Derivatives and Hedging

Financial Instruments – Derivatives and Hedging

The Company’s use of derivative instruments is intended to manage its exposure to interest rate movements and such instruments are not utilized for speculative purposes. In certain situations, the Company may enter into derivative financial instruments, such as interest rate swap agreements and interest rate cap agreements that result in the receipt and/or payment of future known and uncertain cash amounts, the value of which are determined by market interest rates.

Cash Flow Hedges of Interest Rate Risk

Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts, generally based on the Secured Overnight Financing Rate ("SOFR"), from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchanging the underlying notional amount. The Company utilizes interest rate swaps to partially hedge the cash flows associated with variable-rate debt or future cash flows associated with forecasted fixed-rate debt issuances. During the six months ended June 30, 2025, the Company did not enter into any new interest rate swap agreements. During the year ended December 31, 2024, the Company did not enter into any new interest rate swap agreements, terminated three outstanding interest rate swap agreements, and four interest rate swap agreements expired at maturity. The Company has elected to present its interest rate derivatives on its unaudited Consolidated Balance Sheets on a gross basis as interest rate swap assets and interest rate swap liabilities. The gross derivative assets are included in Other assets and the gross derivative liabilities are included in Accounts payable, accrued expenses and other liabilities on the Company’s unaudited Condensed Consolidated Balance Sheets.

Detail on the terms and fair value of the Company’s interest rate derivatives designated as cash flow hedges outstanding as of June 30, 2025 is as follows:


							Fair Value
Effective Date	Maturity Date	Swapped Variable Rate	Fixed Rate		Notional Amount		Assets		Liabilities
5/1/2023	7/26/2027	1 Month SOFR	3.5890	%	$	100,000	$	—	$	(327)
5/1/2023	7/26/2027	1 Month SOFR	3.5950	%	75,000		—		(254)
5/1/2023	7/26/2027	1 Month SOFR	3.5930	%	25,000		—		(84)
7/26/2024	7/26/2027	1 Month SOFR	4.0767	%	100,000		—		(1,302)
7/26/2024	7/26/2027	1 Month SOFR	4.0770	%	100,000		—		(1,303)
7/26/2024	7/26/2027	1 Month SOFR	4.0767	%	50,000		—		(652)
7/26/2024	7/26/2027	1 Month SOFR	4.0770	%	50,000		—		(652)
					$	500,000	$	—	$	(4,574)

Detail on the terms and fair value of the Company’s interest rate derivatives designated as cash flow hedges outstanding as of December 31, 2024 is as follows:


							Fair Value
Effective Date	Maturity Date	Swapped Variable Rate	Fixed Rate		Notional Amount		Assets		Liabilities
5/1/2023	7/26/2027	1 Month SOFR	3.5890	%	$	100,000	$	993	$	—
5/1/2023	7/26/2027	1 Month SOFR	3.5950	%	75,000		735		—
5/1/2023	7/26/2027	1 Month SOFR	3.5930	%	25,000		246		—
7/26/2024	7/26/2027	1 Month SOFR	4.0767	%	100,000		—		(199)
7/26/2024	7/26/2027	1 Month SOFR	4.0770	%	100,000		—		(199)
7/26/2024	7/26/2027	1 Month SOFR	4.0767	%	50,000		—		(100)
7/26/2024	7/26/2027	1 Month SOFR	4.0770	%	50,000		—		(100)
					$	500,000	$	1,974	$	(598)

All of the Company's outstanding interest rate swap agreements for the periods presented were designated as cash flow hedges of interest rate risk. The fair value of the Company’s interest rate derivatives is determined using market standard valuation techniques, including discounted cash flow analyses, on the expected cash flows of each derivative. These analyses reflect the contractual terms of the derivative, including the period to maturity, and use observable market-based inputs, including interest rate curves and implied volatility. These inputs are classified as Level 2 of the fair value hierarchy. The effective portion of changes in the fair value of derivatives designated as cash flow hedges is recognized in Other comprehensive income (loss) on the Company's unaudited Condensed Consolidated Statements of Comprehensive Income and is reclassified into earnings as interest expense in the period that the hedged transaction affects earnings.

The effective portion of the Company’s interest rate swaps that was recognized on the Company’s unaudited Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2025 and 2024 is as follows:


Derivatives in Cash Flow Hedging Relationships (Interest Rate Swaps)	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Change in unrealized gain (loss) on interest rate swaps	$	(1,273)	$	6,019	$	(4,839)	$	21,223
Accretion of interest rate swaps to interest expense	(740)		(3,115)		(1,476)		(6,190)
Change in unrealized gain (loss) on interest rate swaps, net	$	(2,013)	$	2,904	$	(6,315)	$	15,033

The Company estimates that $0.3 million will be reclassified from Accumulated other comprehensive income as a decrease to Interest expense over the next twelve months. No gain or loss was recognized related to hedge ineffectiveness or to amounts excluded from effectiveness testing on the Company’s cash flow hedges during the three and six months ended June 30, 2025 and 2024.

Non-Designated (Mark-to-Market) Hedges of Interest Rate Risk

The Company does not use derivatives for trading or speculative purposes. As of June 30, 2025 and December 31, 2024, the Company did not have any non-designated hedges.

Credit-risk-related Contingent Features

The Company has agreements with its derivative counterparties that contain provisions whereby if the Company defaults on certain of its indebtedness and the indebtedness has been accelerated by the lender, then the Company could also be declared in default on its derivative obligations. If the Company was to be declared in default on its derivative contracts, it would be required to settle its obligations under such agreements at their termination value, including accrued interest.

- Definition

The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts.

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+ Details

Brixmor Property Group Inc. 10-Q