The Company had the following notes receivable outstanding as of June 30, 2021 and December 31, 2020 ($ in thousands):


	Outstanding loan amount									Interest compounding
Development Project	June 30, 2021		December 31, 2020		Maximum loan commitment		Interest rate

Delray Beach Plaza	$	—	$	14,289	$	17,000	15.0	%	(a)	Annually

Interlock Commercial	93,991		85,318		103,000		15.0	%	(b)	None
Nexton Multifamily	11,716		—		22,315		11.0	%		Annually
Solis Apartments at Interlock	—		28,969		41,100		13.0	%		Annually
Total mezzanine	105,707		128,576		$	183,415
Other notes receivable	7,018		6,809
Notes receivable guarantee premium	1,850		2,631
Allowance for credit losses	(2,129)		(2,584)

Total notes receivable	$	112,446	$	135,432

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 generally added to the loan receivable balances. The Company recognized interest income for the three and six months ended June 30, 2021 and 2020 as follows (in thousands):


	Three Months Ended June 30,						Six Months Ended June 30,
Development Project	2021			2020			2021			2020


The Residences at Annapolis Junction	$	—		$	—	(a)	$	—		$	2,468	(a)(b)
Delray Beach Plaza	—			—		(a)	—		(a)	489		(a)
Nexton Multifamily	261			—			261			—
Nexton Square	—			405			—			797
Interlock Commercial	3,310		(b)	3,157		(b)	6,384		(b)	6,175		(b)
Solis Apartments at Interlock	3,068		(c)	838			4,005		(c)	1,675
Total mezzanine	6,639			4,400			10,650			11,604
Other interest income	107			12			212			34
Total interest income	$	6,746		$	4,412		$	10,862		$	11,638

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, which consisted of $12.3 million of principal and $2.0 million of accrued interest.

In March 2021, the Company loaned an additional $7.5 million as part of the Interlock Commercial loan to fund project costs due to an additional equity requirement to reduce the senior loan. In June 2021, the borrower repaid $6.1 million of this loan, comprised of $3.0 million of principal and $3.1 million of accrued interest.

On April 1, 2021, the Company entered into a $22.3 million preferred equity investment for the development of a multifamily property located in Summerville, South Carolina, adjacent to the Company's Nexton Square property. The investment has economic terms consistent with a note receivable, including a mandatory redemption or maturity on October 1, 2026, and it is accounted for as a note receivable. The Company's investment bears interest at a rate of 11%, compounded annually. The Company funded $11.5 million of this investment during the six months ended June 30, 2021.

Management has concluded that this entity is a VIE. Because the other investor in the project, TP Nexton LLC, is the developer of Nexton Multifamily, the Company does not have the power to direct the activities of the project that most significantly impact its performance. Accordingly, the Company is not the project's primary beneficiary and does not consolidate the project in its consolidated financial statements.

On June 7, 2021 the borrower paid off the Solis Apartments at Interlock note receivable in full. The Company received a total of $33.0 million, which consisted of $23.2 million outstanding principal, $7.4 million of accrued interest, and a prepayment premium of $2.4 million that resulted from the early payoff of the loan.

The Company is exposed to credit losses primarily through its mezzanine lending activities. As of June 30, 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 June 30, 2021 and obtained industry loan loss data relative to these risk ratings. Each of the outstanding loans as of June 30, 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 June 30, 2021, the Company reported $112.4 million of notes receivable, net of allowances of $2.1 million. Changes in the allowance for the three and six months ended June 30, 2021 and 2020 were as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Beginning balance	$	1,741	$	3,202	$	2,584	$	—
Cumulative effect of accounting change	—		—		—		2,825
Unrealized credit loss provision (release)	388		(117)		333		260
Extinguishment due to acquisition	—		—		(788)		—


Ending balance	$	2,129	$	3,085	$	2,129	$	3,085

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 June 30, 2021, there were no loans on non-accrual status.