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Notes Receivable and Current Expected Credit Losses | 3 Months Ended
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Mar. 31, 2021
Receivables [Abstract] |
Notes Receivable and Current Expected Credit Losses | Notes Receivable and Current Expected Credit Losses Notes Receivable The Company had the following notes receivable outstanding as of March 31, 2021 and December 31, 2020 ($ in thousands):
|  | Outstanding loan amount |  |  |  |  |  | Interest compounding
Development Project |  | March 31, 2021 |  | December 31, 2020 |  | Maximum loan commitment |  | Interest rate
Delray Beach Plaza |  | $ | — |  |  | $ | 14,289 |  |  | $ | 17,000 |  |  | 15.0 | % | (a) | Annually
Interlock Commercial |  | 95,922 |  |  | 85,318 |  |  | 103,000 |  |  | 15.0 | % | (b) | None
Solis Apartments at Interlock |  | 29,907 |  |  | 28,969 |  |  | 41,100 |  |  | 13.0 | % |  | Annually
Total mezzanine |  | 125,829 |  |  | 128,576 |  |  | $ | 161,100 |  |  |  |  |
Other notes receivable |  | 6,912 |  |  | 6,809 |  |  |  |  |  |  |
Notes receivable guarantee premium |  | 2,206 |  |  | 2,631 |  |  |  |  |  |  |
Allowance for credit losses |  | (1,741) |  |  | (2,584) |  |  |  |  |  |  |
Total notes receivable |  | $ | 133,206 |  |  | $ | 135,432 |  |  |  |  |  |  |
________________________________________ (a) Loan was placed on nonaccrual status effective April 1, 2020. (b) $3.0 million of this loan is subject to an interest rate of 18%. Interest on the mezzanine loans is accrued and funded utilizing the interest reserves for each loan, which are components of the respective maximum loan commitments, and such accrued interest is added to the loan receivable balances. The Company recognized interest income for the three months ended March 31, 2021 and 2020 as follows (in thousands):
|  | Three Months Ended March 31, |  |  |
Development Project |  | 2021 |  | 2020 |  |  |  |  |
The Residences at Annapolis Junction |  | $ | — |  |  | $ | 2,468 |  | (a)(b) |  |  |  |
Delray Beach Plaza |  | — |  | (a) | 489 |  | (a) |  |  |  |
Nexton Square |  | — |  |  | 391 |  |  |  |  |  |
Interlock Commercial |  | 3,075 |  | (b) | 3,017 |  | (b) |  |  |  |
Solis Apartments at Interlock |  | 938 |  |  | 838 |  |  |  |  |  |
Total mezzanine |  | 4,013 |  |  | 7,203 |  |  |  |  |  |
Other interest income |  | 103 |  |  | 23 |  |  |  |  |  |
Total interest income |  | $ | 4,116 |  |  | $ | 7,226 |  |  |  |  |  |
________________________________________ (a) Loan was placed on nonaccrual status effective April 1, 2020. (b) Includes recognition of interest income related to an exit fee that is due upon repayment of the loan. Interlock Commercial In March 2021, the Company loaned an additional $7.5 million as part of the Interlock Commercial loan to fund project costs not funded by the senior lender on the project. Delray Beach Plaza On February 26, 2021, the Company acquired Delray Beach Plaza, a Whole Foods-anchored retail property located in Delray Beach, Florida for a contract price of $27.6 million plus capitalized transaction costs of $0.2 million. The developer of this property repaid the Company's mezzanine note receivable of $14.3 million at the time of the acquisition. Allowance for Loan Losses The Company is exposed to credit losses primarily through its mezzanine lending activities. As of March 31, 2021, the Company had two mezzanine loans, both of which are financing development projects in various stages of completion or lease-up. Each of these projects is subject to a loan that is senior to the Company’s mezzanine loan. Interest on these loans is paid in kind and is generally not expected to be paid until a sale of the project after completion of the development. The Company's management performs a quarterly analysis of the loan portfolio to determine the risk of credit loss based on the progress of development activities, including leasing activities, projected development costs, and current and projected mezzanine and senior construction loan balances. The Company estimates future losses on its notes receivable using risk ratings that correspond to probabilities of default and loss given default. The Company's risk ratings are as follows: •Pass: loans in this category are adequately collateralized by a development project with conditions materially consistent with the Company's underwriting assumptions. •Special Mention: loans in this category show signs that the economic performance of the project may suffer as a result of slower-than-expected leasing activity or an extended development or marketing timeline. Loans in this category warrant increased monitoring by management. •Substandard: loans in this category may not be fully collected by the Company unless remediation actions are taken. Remediation actions may include obtaining additional collateral or assisting the borrower with asset management activities to prepare the project for sale. The Company will also consider placing the loan on nonaccrual status if it does not believe that additional interest accruals will ultimately be collected. On a quarterly basis, the Company compares the risk inherent in its loans to industry loan loss data experienced during past business cycles. The Company updated the risk ratings for each of its notes receivable as of March 31, 2021 and obtained industry loan loss data relative to these risk ratings. The Company obtained industry loan loss data relative to these risk ratings as of December 31, 2020. Each of the outstanding loans as of March 31, 2021 was Pass-rated. At December 31, 2020, the Company reported $135.4 million of notes receivable, net of allowances of $2.6 million. At March 31, 2021, the Company reported $133.2 million of notes receivable, net of allowances of $1.7 million. Changes in the allowance for the three months ended March 31, 2021 and 2020 were as follows (in thousands):
|  | Three Months Ended March 31, |  |
|  | 2021 |  | 2020 |  |
Beginning balance (December 31, 2020 and 2019, respectively) |  | $ | 2,584 |  |  | $ | — |  |  |
Cumulative effect of accounting change |  | — |  |  | 2,825 |  |  |
Unrealized credit loss provision (release) |  | (55) |  |  | 377 |  |  |
Extinguishment due to acquisition |  | (788) |  |  | — |  |  |
Ending balance |  | $ | 1,741 |  |  | $ | 3,202 |  |  |
The Company places loans on non-accrual status when the loan balance, together with the balance of any senior loan, approximately equals the estimated realizable value of the underlying development project. As of December 31, 2020, the Company had one loan with non-accrual status with an amortized cost basis of $13.6 million. As of March 31, 2021, there were no loans on non-accrual status.

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- Definition The entire disclosure for financing receivable. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 10 -URI http://asc.fasb.org/subtopic&trid=2196772 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=2196816 + Details
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