Company: DRH-PA
Filing Date: 2025-08-08
Form Type: 10-Q
Source: 0001298946-25-000077
Chunk: 62

Company: DiamondRock Hospitality Co
Filing Date: 2025-08-08
Form: 10-Q
Item: Part I, Item 8
Chunk 62
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 330 628 $832 $4,674 Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. During 2025, such derivatives were used to hedge the variable cash flows associated with variable-rate debt. The table below details the location in the consolidated financial statements of the gains and losses recognized related to derivative financial instruments (in thousands):Three Months Ended June 30,Six Months Ended June 30,Effect of derivative instrumentsLocation in Statements of Operations and Comprehensive Income2025202420252024Loss (gain) recognized in other comprehensive incomeUnrealized loss (gain) on interest rate derivative instruments$1,294 $1,355 $3,841 $394 Interest (income) for derivatives that were designated as cash flow hedgesInterest expense$(817)$(2,351)$(1,638)$(4,708)During the next 12 months, we estimate that $1.5 million will be reclassified from other comprehensive income as a decrease to interest expense.

7.  Fair Value Measurements

The fair value of certain financial assets and liabilities and other financial instruments are as follows (in thousands):June 30, 2025December 31, 2024Carrying   Amount (1)Fair ValueCarrying    Amount (1)Fair ValueDebt$1,020,320 $1,020,279 $1,095,294 $1,092,443 _______________(1)The carrying amount of debt is net of unamortized debt issuance costs.The fair value of our debt is a Level 2 measurement under the fair value hierarchy.  We estimate the fair value of our debt by discounting the future cash flows of each instrument at estimated market rates.  The fair value of our interest rate swaps is a Level 2 measurement under the fair value hierarchy. We estimate the fair value of the interest rate swaps based on the interest rate yield curve and implied market volatility as inputs and adjusted for the counterparty's credit risk.  We concluded the inputs for the credit risk valuation adjustment are Level 3 inputs; however these inputs are not significant to the fair value measurement in its entirety. 

The fair values of our other financial instruments not included in the table above are estimated to be equal to their carrying amount. 

8.  Equity

Common Shares