Finance Receivables (Tables)

6 Months Ended

Jun. 30, 2020

Receivables [Abstract]

Schedule of capital leases net investment In direct financing leases

Net investments in direct financing leases is summarized as follows (in thousands):

	June 30, 2020			December 31, 2019
Lease payments receivable	$	547,795		$	686,149
Unguaranteed residual value	710,429			828,206
	1,258,224			1,514,355
Less: unearned income	(494,777		)	(617,806		)
Less: allowance for credit losses (a)	(10,817		)	—
	$	752,630		$	896,549

__________

(a)

In accordance with ASU 2016-13 (Note 2), we applied changes in loss reserves through a cumulative-effect adjustment to retained earnings totaling $14.8 million. During the six months ended June 30, 2020, we recorded a net allowance for credit losses of $1.9 million due to changes in expected economic conditions, which was included within Other gains and (losses) in our consolidated statements of income. In addition, during the six months ended June 30, 2020, we reduced the allowance for credit losses balance by $5.9 million, in connection with the reclassification of certain properties from Net investments in direct financing leases to Land, buildings and improvements subject to operating leases, as described below.

Schedule of finance receivables credit quality indicators

A summary of our finance receivables by internal credit quality rating, excluding our deferred acquisition fees receivable, is as follows (dollars in thousands):

	Number of Tenants / Obligors at		Carrying Value at
Internal Credit Quality Indicator	June 30, 2020	December 31, 2019	June 30, 2020		December 31, 2019
1 – 3	19	28	$	605,740	$	798,108
4	11	8	157,707		146,178
5	2	—	36,737		—
			$	800,184	$	944,286