Escrow Deposits, Prepaid Expenses and Other Assets

9 Months Ended

Sep. 30, 2020

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Escrow Deposits, Prepaid Expenses and Other Assets

The following table summarizes the components of escrow deposits, prepaid expenses and other assets as of September 30, 2020 and December 31, 2019 (in thousands):


	September 30, 2020		December 31, 2019
Escrow deposits, prepaid expenses and other	$	45,687	$	54,545
Deferred costs and other intangibles, net	5,352		6,840
Notes receivable, net	35,434		36,834
Commercial real estate, software, vehicles and FF&E, net	48,778		42,742
Total	$	135,251	$	140,961

Depreciation expense related to commercial real estate, software, vehicles and furniture, fixtures and equipment (“FF&E”), net was $2.3 million and $2.0 million for the three months ended September 30, 2020 and 2019, respectively, and $6.4 million and $5.7 million for the nine months ended September 30, 2020 and 2019, respectively.

Deferred Costs and Other Intangibles, Net

Deferred costs and other intangibles, net, consisted of the following as of September 30, 2020 and December 31, 2019 (in thousands):


	September 30, 2020		December 31, 2019
Deferred leasing costs	$	3,632	$	3,738
Deferred financing costs	11,244		11,244
Database intangible asset	—		2,100
	14,876		17,082
Less: accumulated amortization	(9,524)		(10,242)
Total	$	5,352	$	6,840

Amortization expense related to deferred leasing costs, the value of in-place leases, and database intangibles was $1.0 million and $1.8 million for the three months ended September 30, 2020 and 2019, respectively, and $3.1 million and $6.7 million for the nine months ended September 30, 2020 and 2019, respectively, and was included in depreciation and amortization within the condensed consolidated statements of operations. Amortization of deferred financing costs that relate to our revolving credit facility was $0.5 million for both the three months ended September 30, 2020 and 2019 and $1.5 million for both the nine months ended September 30, 2020 and 2019 and was included in gross interest, prior to interest capitalization (see Note 8. Debt).

The following table sets forth the estimated annual amortization expense related to deferred costs and other intangibles, net as of September 30, 2020 for future periods (in thousands):


	Deferred Leasing Costs		Deferred Financing Costs		Total
Remaining 2020	$	832	$	495	$	1,327
2021	1,093		1,964		3,057
2022	—		968		968



Total	$	1,925	$	3,427	$	5,352

Notes Receivable, Net

The Company obtained promissory notes in connection with two bulk dispositions of our single-family properties. The promissory note obtained during the second quarter of 2019 matures in the second quarter of 2025 and the promissory note obtained during the first quarter of 2017 matures in the first quarter of 2022. The promissory notes are secured by first priority mortgages on the disposed homes, contain certain covenants and require monthly or quarterly interest payments with the full principal due at maturity.

Notes receivable are presented net of discounts, and interest income from the notes, including amortization of discounts, is presented in other revenues within the condensed consolidated statements of operations. Upon adoption of ASU 2016-13 on January 1, 2020 (see Note 2. Significant Accounting Policies), we are required to estimate and recognize lifetime expected losses, rather than incurred losses, on these notes receivable, which results in the earlier recognition of credit losses even if the expected risk of credit

loss is remote. An allowance for expected credit losses of $1.5 million was established with a cumulative-effect adjustment to accumulated deficit in the condensed consolidated statements of equity. Notes receivable are presented net of the allowance for expected credit losses, which the Company estimates on a quarterly basis based on (i) credit quality indicators such as the borrower’s historical performance, including the borrower’s financial results and satisfaction of scheduled payments, (ii) current conditions, including macroeconomic conditions and other conditions affecting the borrower, and (iii) other reasonable and supportable forecasts about the future. As part of the monitoring process, we may meet with a borrower’s management to better understand such borrower’s financial performance and its future plans on an as-needed basis. A note receivable will be categorized as non-performing if a borrower experiences financial difficulty and has failed to make scheduled payments. Changes to the allowance for expected credit losses are recognized in other expenses within the condensed consolidated statements of operations.