Finance Receivables

Assets representing rights to receive money on demand or at fixed or determinable dates are referred to as finance receivables. Our finance receivables portfolio consists of our Net investments in direct financing leases and Note receivable. Operating leases are not included in finance receivables as such amounts are not recognized as an asset in the consolidated financial statements.

Note Receivable

In December 2010, we provided financing of $40.0 million to China Alliance Properties Limited, a subsidiary of Shanghai Forte Land Co., Ltd, or Forte. The financing was provided through a collateralized loan that is guaranteed by Forte’s parent company, Fosun International Limited, and has an interest rate of 11% and matures in December 2015. At both June 30, 2014 and December 31, 2013, the balance of the note receivable was $40.0 million. Our Note receivable is included in Other assets, net in the consolidated financial statements.

Net Investment in Direct Financing Lease

During the six months ended June 30, 2014, we entered into a net lease financing transaction for a manufacturing facility located in Bluffton, Indiana for $3.7 million, including capitalized acquisition-related fees and expenses of $0.3 million.

Credit Quality of Finance Receivables

We generally seek investments in facilities that we believe are critical to a tenant’s business and that we believe have a low risk of tenant defaults. At both June 30, 2014 and December 31, 2013, none of the balances of our finance receivables were past due and we had not established any allowances for credit losses. Additionally, there were no modifications of finance receivables during the six months ended June 30, 2014 or the year ended December 31, 2013. We evaluate the credit quality of our finance receivables utilizing an internal five-point credit rating scale, with one representing the highest credit quality and five representing the lowest. The credit quality evaluation of our finance receivables was last updated in the second quarter of 2014.

A summary of our finance receivables by internal credit quality rating is as follows (dollars in thousands):



	Number of Tenants / Obligors at		Carrying Value
Internal Credit Quality Indicator	June 30, 2014	December 31, 2013	June 30, 2014		December 31, 2013
1	—	—	$	—	$	—
2	1	1	2,254		2,250
3	9	8	435,384		430,713
4	3	3	87,452		86,953
5	—	—	—		—
			$	525,090	$	519,916

At June 30, 2014 and December 31, 2013, Other assets, net included $0.6 million and $0.8 million, respectively, of accounts receivable related to amounts billed under these direct financing leases.