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Allowance for Credit Losses | 3 Months Ended
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Mar. 31, 2021
Credit Loss [Abstract] |
Allowance for Credit Losses | Allowance for Credit Losses Adoption of ASC 326 On January 1, 2020, we adopted ASC 326 and, as a result, we are required to estimate and record non-cash credit losses related to our historical and any future investments in sales-type leases, lease financing receivables and loans. Upon adoption, we recorded a $309.4 million cumulative adjustment, representing a 2.88% CECL allowance. Such amount was recorded as a cumulative-effect adjustment to our opening balance sheet with a reduction in our Investments in leases - sales-type and a corresponding charge to retained (deficit) earnings. Allowance for Credit Losses During the three months ended March 31, 2021, we recognized a $4.4 million decrease in our allowance for credit losses primarily driven by the decrease in the R&S Period PD of our tenants and their parent guarantors as a result of an improvement in their economic outlook due to the reopening of a majority of their gaming operations and relative performance of such operations during the first quarter of 2021. During the three months ended March 31, 2020, we recognized a $149.5 million increase in our allowance for credit losses. The increase in the CECL allowance was primarily driven by (i) an increase in the R&S Period PD and LGD of our tenants and their parent guarantors due to decreases in the equity market capitalization of the stock of the parent public-entities of certain of our tenants due to the uncertain economic conditions caused by the COVID-19 pandemic and closure of the tenants operations at our properties during such period, as well as the utilization of forecasted scenarios that incorporated the expected negative impact of the COVID-19 pandemic on the economy, (ii) an increase in the Long-term Period PD of our tenants due to downgrades on certain of the credit ratings of our tenants’ senior secured debt and (iii) an increase related to our initial investment in JACK Cleveland/Thistledown and the ROV Loan in January 2020. As of March 31, 2021 and December 31, 2020, and since our formation date on October 6, 2017, all of our Lease Agreements and loan investments are current in payment of their obligations to us and no investments are on non-accrual status. The following tables detail the allowance for credit losses included as a component in our Investments in leases - sales-type, Investments in leases - financing receivables and Investments in loans as of March 31, 2021 and December 31, 2020:
| March 31, 2021
(In thousands) | Amortized Cost |  | Allowance |  | Net Investment |  | Allowance as a % of Amortized Cost
Investments in leases - sales-type | $ | 13,505,376 |  |  | $ | (451,241) |  |  | $ | 13,054,135 |  |  | 3.34 | %
Investments in leases - financing receivables | 2,719,868 |  |  | (91,446) |  |  | 2,628,422 |  |  | 3.36 | %
Investments in loans | 515,371 |  |  | (120) |  |  | 515,251 |  |  | 0.02 | %
Other assets - sales-type sub-leases | 284,190 |  |  | (6,692) |  |  | 277,498 |  |  | 2.35 | %
Totals | $ | 17,024,805 |  |  | $ | (549,499) |  |  | $ | 16,475,306 |  |  | 3.23 | %
| December 31, 2020
(In thousands) | Amortized Cost |  | Allowance |  | Net Investment |  | Allowance as a % of Amortized Cost
Investments in leases - sales-type | $ | 13,481,845 |  |  | $ | (454,201) |  |  | $ | 13,027,644 |  |  | 3.37 | %
Investments in leases - financing receivables | 2,709,520 |  |  | (90,958) |  |  | 2,618,562 |  |  | 3.36 | %
Investments in loans | 538,547 |  |  | (1,826) |  |  | 536,721 |  |  | 0.34 | %
Other assets - sales-type sub-leases | 284,376 |  |  | (6,894) |  |  | 277,482 |  |  | 2.42 | %
Totals | $ | 17,014,288 |  |  | $ | (553,879) |  |  | $ | 16,460,409 |  |  | 3.26 | %
The following chart reflects the roll-forward of the allowance for credit losses on our real estate portfolio for the three months ended March 31, 2021 and 2020:
|  | Three Months Ended March 31,
(In thousands) |  | 2021 |  | 2020
Beginning Balance December 31, |  | $ | 553,879 |  |  | $ | — |
Initial allowance upon adoption |  | — |  |  | 309,362 |
Initial allowance from current period investments |  | — |  |  | 22,158 |
Current period change in credit allowance |  | (4,380) |  |  | 127,350 |
Charge-offs |  | — |  |  | — |
Recoveries |  | — |  |  | — |
Ending Balance March 31, |  | $ | 549,499 |  |  | $ | 458,870 |
Credit Quality Indicators We assess the credit quality of our investments through the credit ratings of the senior secured debt of the guarantors of our leases, as we believe that our Lease Agreements have a similar credit profile to a senior secured debt instrument. The credit quality indicators are reviewed by us on a quarterly basis as of quarter-end. In instances where the guarantor of one of our Lease Agreements does not have senior secured debt with a credit rating, we use either a comparable proxy company or the overall corporate credit rating, as applicable. We also use this credit rating to determine the Long-term Period PD when estimating credit losses for each investment. The following tables detail the amortized cost basis of our investments by the credit quality indicator we assigned to each lease or loan guarantor as of March 31, 2021 and 2020:
| March 31, 2021
(In thousands) | Ba2 |  | Ba3 |  | B1 |  | B2 |  | B3 |  | N/A(1) |  | Total
Investments in leases - sales-type and financing receivable, Investments in loans and Other assets | $ | — |  |  | $ | — |  |  | $ | 15,761,205 |  |  | $ | 917,138 |  |  | $ | 281,450 |  |  | $ | 65,012 |  |  | $ | 17,024,805 |
| March 31, 2020
(In thousands) | Ba2 |  | Ba3 |  | B1 |  | B2 |  | B3 |  | N/A(1) |  | Total
Investments in leases - sales-type and financing receivable, Investments in loans and Other assets | $ | 561,349 |  |  | $ | — |  |  | $ | 9,889,284 |  |  | $ | 901,005 |  |  | $ | 280,485 |  |  | $ | — |  |  | $ | 11,632,123 |
____________________ (1)We estimate the CECL allowance for the Chelsea Piers Mortgage Loan using a traditional commercial real estate model based on standardized credit metrics to estimate potential losses.

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- Definition The entire disclosure for credit loss on financial instrument measured at amortized cost basis, net investment in lease, off-balance sheet credit exposure, and available-for-sale debt security. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 326 -SubTopic 30 -Section 50 -Paragraph 7 -URI http://asc.fasb.org/extlink&oid=121582814&loc=SL82922895-210455 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 326 -SubTopic 20 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=121599337&loc=SL82919272-210447 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 326 -SubTopic 20 -Section 50 -Paragraph 8 -URI http://asc.fasb.org/extlink&oid=121599337&loc=SL82919236-210447 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 326 -SubTopic 20 -Section 50 -Paragraph 20 -URI http://asc.fasb.org/extlink&oid=121599337&loc=SL82919269-210447 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 326 -SubTopic 30 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=121582814&loc=SL82922888-210455 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 326 -SubTopic 20 -Section 50 -Paragraph 11 -URI http://asc.fasb.org/extlink&oid=121599337&loc=SL82919244-210447 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 326 -SubTopic 20 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=121599337&loc=SL82919230-210447 + Details
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