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Net Investment in Leases | 9 Months Ended
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Sep. 30, 2020
Leases [Abstract] |
Net Investment in Leases | Net Investment in Leases In May 2019, the Company entered into a transaction with an operator of bowling entertainment venues, consisting of the purchase of nine bowling centers for $56.7 million, of which seven were acquired from the lessee for $44.1 million, and a commitment to invest up to $55.0 million in additional bowling centers over the next several years. The new centers were added to the Company's existing master leases with the tenant. In connection with this transaction, the maturities of the master leases were extended by 15 years to 2047. In the second quarter 2020, the Company entered into a transaction with the lessee whereby it would apply $10 million of the net proceeds it received from certain sales of the lessee's facilities to the lessee's upcoming rent obligations to the Company. In exchange, the Company's obligation under the lease to acquire an equal amount of new facilities for them or to reduce their rent in the future has been terminated. In the third quarter 2020, the Company granted the lessee a nine-month rent deferral on its two wholly-owned master leases in exchange for eliminating the Company's commitment to invest up to $55.0 million in additional bowling centers over the next several years. All deferred amounts are required to be repaid with interest beginning in January 2023. As a result of the May 2019 modifications to the leases, the Company classified the leases as sales-type leases and recorded $424.1 million in "Net investment in leases" on its consolidated balance sheet. As a result of the modifications in the second and third quarter 2020, the Company reassessed this classification as required by ASC 842, and concluded that the leases should continue to be classified as sales-type leases. In May 2019, the Company determined that the seven bowling centers acquired did not qualify as a sale leaseback transaction and recorded $44.1 million in "Loans receivable and other lending investments, net" on its consolidated balance sheet (refer to Note 7). The Company recognized $180.4 million in "Selling profit from sales-type leases" in its consolidated statements of operations for the nine months ended September 30, 2019 as a result of the transaction. For the three and nine months ended September 30, 2020, the Company recognized $1.5 million and $10.7 million, respectively, of cash interest income and $6.9 million and $14.3 million, respectively, of non-cash interest income in "Interest income from sales-type leases" in the Company's consolidated statements of operations. For the three and nine months ended September 30, 2019, the Company recognized $6.9 million and $10.1 million, respectively, of cash interest income and $1.4 million and $2.1 million, respectively, of non-cash interest income in "Interest income from sales-type leases" in the Company's consolidated statements of operations. The Company's net investment in leases were comprised of the following as of September 30, 2020 and December 31, 2019 ($ in thousands):
|  | September 30, 2020 |  | December 31, 2019
Total undiscounted cash flows |  | $ | 1,020,921 |  |  | $ | 1,042,019 |
Unguaranteed estimated residual value |  | 345,815 |  |  | 340,620 |
Present value discount |  | (935,206) |  |  | (963,724) |
Allowance for losses on net investment in leases |  | (11,113) |  |  | — |
Net investment in leases(1) |  | $ | 420,417 |  |  | $ | 418,915 |
_______________________________________________________________________________ (1)As of September 30, 2020 and December 31, 2019, all of the Company's net investment in leases were current in their payment status and performing in accordance with the terms of the respective leases. As of September 30, 2020, the risk rating on the Company's net investment in leases was 2.0 (refer to Note 3). Future Minimum Lease Payments under Sales-type Leases—Future minimum lease payments to be collected under sales-type leases, excluding lease payments that are not fixed and determinable, in effect as of September 30, 2020, are as follows by year ($ in thousands):
|  |  |  |  |  |  |  | Amount
2020 (remaining three months) |  |  |  |  |  |  |  | $ | — |
2021 |  |  |  |  |  |  |  | 14,248 |
2022 |  |  |  |  |  |  |  | 30,481 |
2023 |  |  |  |  |  |  |  | 41,855 |
2024 |  |  |  |  |  |  |  | 41,584 |
Thereafter |  |  |  |  |  |  |  | 892,753 |
Total undiscounted cash flows |  |  |  |  |  |  |  | $ | 1,020,921 |
Allowance for Losses on Net Investment in Leases—Changes in the Company's allowance for losses on net investment in leases for the three and nine months ended September 30, 2020 were as follows ($ in thousands):
|  | Three Months Ended September 30, 2020 |  | Nine Months Ended September 30, 2020 |  |  |  |  |  |  |  |  |  |
Reserve for losses on net investment in leases at beginning of period |  | $ | 10,937 |  |  | $ | — |  |  |  |  |  |  |  |  |  |  |
Initial allowance recorded upon adoption of new accounting standard(1) |  | — |  |  | 9,111 |  |  |  |  |  |  |  |  |  |
Provision for losses on net investment in leases(2) |  | 176 |  |  | 2,002 |  |  |  |  |  |  |  |  |  |  |
Allowance for losses on net investment in leases at end of period |  | $ | 11,113 |  |  | $ | 11,113 |  |  |  |  |  |  |  |  |  |  |
_________________________________________________________ (1)The Company recorded an initial allowance for losses on net investment in leases of $9.1 million upon the adoption of ASU 2016-13 on January 1, 2020 (refer to Note 3). (2)During the three and nine months ended September 30, 2020, the Company recorded an allowance for losses on net investment in leases of $0.2 million and $2.0 million, respectively, primarily resulting from the macroeconomic impact of COVID-19 on commercial real estate markets and the adoption of ASU 2016-13 (refer to Note 3).

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- Definition The entire disclosure of lessor's sales-type leases. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 842 -SubTopic 30 -URI http://asc.fasb.org/subtopic&trid=77888252 + Details
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