The Company leases its rental equipment on either short-term operating leases through master lease agreements, long-term non-cancelable operating leases, or finance leases. The following table summarizes the components of lease revenue (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Lease revenue - operating leases	$	60,730	$	65,962	$	121,129	$	135,159
Interest income on finance leases		11,292		11,092		22,915		22,482
Other revenue		2,945		3,100		5,162		5,905
Interest income on financing receivable		758		594		1,435		594
Total lease revenue	$	75,725	$	80,748	$	150,641	$	164,140

For finance leases, the net selling loss recognized at lease commencement, representing the difference between the estimated fair value of rental equipment placed on lease and net book value, in the amount of $2.6 million for the three and six months ended June 30, 2019 is included in “gain on sale of rental equipment” in the consolidated statement of operations.

Net investment in finance leases

The following table represents the components of the Company’s net investment in finance leases (in thousands):



	June 30,		December 31,
	2020		2019
Gross finance lease receivables (1)	$	757,461	$	806,019
Unearned income (2)		(218,260)		(238,651)
Net investment in finance leases		539,201		567,368
Allowance for credit losses		(44)		-
Net investment in finance leases, net of allowance for credit losses	$	539,157	$	567,368

(1)At the inception of the lease, the Company records the total minimum lease payments, executory costs, if any, and unguaranteed residual value as gross finance lease receivables. The gross finance lease receivables are reduced as customer payments are received. There was $74.3 million of unguaranteed residual value at June 30, 2020 and December 31, 2019, respectively, included in gross finance lease receivables. There were no executory costs included in gross finance lease receivables as of June 30, 2020 and December 31, 2019.

(2)The difference between the gross finance lease receivables and the cost of the equipment or carrying amount at the lease inception is recorded as unearned income. Unearned income, together with initial direct costs, are amortized to income over the lease term so as to produce a constant periodic rate of return. There were no unamortized initial direct costs as of June 30, 2020 and December 31, 2019.

(3)One major customer represented 66% and 65% of the Company’s finance lease portfolio as of June 30, 2020 and December 31, 2019, respectively. No other customer represented more than 10% of the Company’s finance lease portfolio in each of those periods.

Contractual maturities of the Company's gross finance lease receivables subsequent to June 30, 2020 for the years ending June 30 are as follows (in thousands):


2021	$	117,567
2022		108,526
2023		108,342
2024		72,990
2025		57,037
2026 and thereafter		292,999
	$	757,461

Financing receivable

During 2020 and 2019, the Company purchased containers and leased back the containers to the seller-lessees through finance leaseback arrangements. As control of the equipment was retained by the customers, the Company concluded that sale-leaseback accounting was not applicable and treated the arrangements as financing transactions. The Company recorded a financing receivable in the amount paid for the containers. Payments made by the seller-lessee are recorded as a reduction to the financing receivable and as interest income, calculated using the effective interest method.

The following table summarizes the components of the Company’s financing receivable (in thousands):


	June 30,		December 31,
	2020		2019
Gross financing receivable	$	78,669	$	45,530
Unearned income		(15,638)		(11,111)
		63,031		34,419
Allowance for credit losses		(3)		-
Total financing receivable	$	63,028	$	34,419
Amounts due within one year (1)		9,207		3,726
Amounts due beyond one year (2)		53,821		30,693
Total financing receivable	$	63,028	$	34,419

(1)Included in prepaid expenses and other current assets in the consolidated balance sheets.

(2)Included in financing receivable in the consolidated balance sheets.
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In order to estimate the allowance for losses contained in net investment in finance leases and financing receivable, the Company reviews the credit worthiness of its customers on an ongoing basis. The review includes monitoring credit quality indicators, historical credit loss activity, current market and economic conditions, and reasonable and supportable forecasts.

Tier 1— These customers are typically large international shipping lines that have been in business for many years and have world-class operating capabilities and significant financial resources. In most cases, the Company has had a long commercial relationship with these customers and currently maintains regular communication with them at several levels of management, which provides the Company with insight into the customer's current operating and financial performance. In the Company's view, these customers have the greatest ability to withstand cyclical down turns and would likely have greater access to needed capital than lower-rated customers. The Company views the risk of default for Tier 1 customers to range from minimal to moderate.

Tier 2— These customers are typically either smaller shipping lines or freight forwarders with less operating scale or with a high degree of financial leverage, and accordingly the Company views these customers as subject to higher volatility in financial performance over the business cycle. The Company generally expects these customers to have less access to capital markets or other sources of financing during cyclical down turns. The Company views the risk of default for Tier 2 customers as moderate.

Tier 3— Customers in this category exhibit volatility in payments on a regular basis.

As of June 30, 2020 and December 31, 2019, based on the most recent analysis performed, the risk category of the Company’s net investment in finance leases and financing receivable, based on year of origination is as follows (in thousands):


June 30, 2020	2020		2019		2018		2017		2016		Prior		Total
Net investment in finance leases
Tier 1	$	2,967	$	56,469	$	242,365	$	167,783	$	6,800	$	1,401	$	477,785
Tier 2		3,609		29,859		13,955		6,456		1,830		5,707		61,416
Tier 3		-		-		-		-		-		-		-
Total net investment in finance leases	$	6,576	$	86,328	$	256,320	$	174,239	$	8,630	$	7,108	$	539,201

Financing receivable
Tier 1	$	30,420	$	31,948	$	-	$	-	$	-	$	-	$	62,368
Tier 2		-		663		-		-		-		-		663
Tier 3		-		-		-		-		-		-		-
Total financing receivable	$	30,420	$	32,611	$	-	$	-	$	-	$	-	$	63,031