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Notes Receivable and Allowance for Credit Losses
 3 Months Ended
Mar. 31, 2021
Accounts and Financing Receivable, after Allowance for Credit Loss [Abstract]  
Notes Receivable and Allowance for Credit Losses Notes Receivable and Allowance for Credit Losses The Company has provided financing in the form of notes receivable loans to franchisees to support the development of properties in strategic markets.
The composition of notes receivable balances based on the level of security credit quality indicator and the allowance for credit losses is as follows:
(in thousands)March 31, 2021December 31, 2020
Senior$105,333 $104,716 
Subordinated33,672 33,234 
Unsecured1,550 1,367 
Total notes receivable140,555 139,317 
Total allowance for notes receivable credit losses19,618 19,484 
Total notes receivable, net of allowance$120,937 $119,833 
Current portion, net of allowance$38,286 $24,048 
Long-term portion, net of allowance$82,651 $95,785 
Amortized cost basis by year of origination and level of security credit quality indicator are as follows:
(in thousands)202120202019PriorTotal
Senior$— $— $28,981 $76,352 $105,333 
Subordinated— — 2,591 31,081 33,672 
Unsecured— — — 1,550 1,550 
Total notes receivable$— $— $31,572 $108,983 $140,555 
The following table summarizes the activity related to the Company’s notes receivable allowance for credit losses, including the impacts of adopting Topic 326:
(in thousands)March 31, 2021December 31, 2020
Beginning balance$19,484 $4,556 
Allowances established from adoption of Topic 326— 8,348 
Provision for credit losses134 7,634 
Write-offs— (1,054)
Ending balance$19,618 $19,484 
The provisions recorded in the three months ended March 31, 2021 primarily results from changes in the classification of certain loans as collateral-dependent and associated revisions to their allowances. Allowances for credit losses attributable to collateral-dependent loans is $3.5 million and $7.8 million as of March 31, 2021 and December 31, 2020, respectively.
As of March 31, 2021, two loans with senior or subordinated tranches met the definition of collateral-dependent and are collateralized by either land parcels or membership interests in the borrowing entities. The Company used a discounted cash flow ("DCF") technique to project cash flows or a market approach via quoted market prices to value the underlying collateral. In projecting cash flows, the Company reviewed the borrower's financial statements, economic trends, industry projections for the market, and comparable sales capitalization rates. These nonrecurring fair value measurements are classified as level three of the fair value measurement hierarchy, as there are unobservable inputs which are significant to the overall fair value. Based on these analyses, the fair value of collateral secures the carrying value of each loan to a significant extent.
During the first quarter of 2021, a loan with senior and subordinated tranches, that met the definition of collateral-dependent as of December 31, 2020, was restructured and as a result no longer meets the classification of collateral-dependent as of March 31, 2021.
As a result of the COVID-19 pandemic, the Company extended interest deferral terms on certain notes receivable. The Company considers loans to be past due and in default when payments are not made when due in accordance with then current loan provisions or terms extended to borrowers, including loans with concessions or interest deferral. Although the Company considers loans to be in default if payments are not received on the due date, the Company does not suspend the accrual of interest until those payments are more than 30 days past due. The Company applies payments received for loans on non-accrual status first to interest and then to principal. The Company does not resume interest accrual until all delinquent payments are received based on then current loan provisions. The amortized cost basis of notes receivable on non-accrual status was $50.7 million and $28.9 million at March 31, 2021 and December 31, 2020, respectively.
The Company has identified loans totaling approximately $13.1 million as of both March 31, 2021 and December 31, 2020, with stated interest rates that are less than market rate, representing a total unamortized discount of $0.6 million and $0.8 million as of March 31, 2021 and December 31, 2020, respectively. These discounts are reflected as a reduction of the outstanding loan amounts and are amortized over the life of the related loan.
The past due balances by credit quality indicator of notes receivable are as follows:
(in thousands)30-89 days
Past Due		> 90 days
Past Due		Total
Past Due		CurrentTotal
 Notes Receivable
As of March 31, 2021
Senior$— $15,200 $15,200 $90,133 $105,333 
Subordinated— 2,209 2,209 31,463 33,672 
Unsecured— — — 1,550 1,550 
$— $17,409 $17,409 $123,146 $140,555 
As of December 31, 2020
Senior$— $15,200 $15,200 $89,516 $104,716 
Subordinated— 2,209 2,209 31,025 33,234 
Unsecured— — — 1,367 1,367 
$— $17,409 $17,409 $121,908 $139,317 
The Company evaluated its off-balance-sheet credit exposure for loan commitments and determined the likelihood of having to perform is remote as of March 31, 2021. Refer to Note 12.
Variable Interest through Notes Issued
The Company has issued notes receivables to certain entities that have created variable interests in these borrowers totaling $120.1 million and $119.3 million as of March 31, 2021 and December 31, 2020, respectively. The Company has determined that it is not the primary beneficiary of these variable interest entities ("VIEs"). These loans have stated fixed and/or variable interest amounts.