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 the Net investments in direct financing leases described below. Operating leases are not included in finance receivables as such amounts are not recognized as an asset in the consolidated financial statements.

AT&T Investment

As discussed in Note 4, on May 19, 2014, in conjunction with the transaction with AT&T, we entered into a domestic net lease financing transaction in which we acquired an industrial warehouse located in Chicago, Illinois. The total cost of the building was $8.6 million.

Janus Investment

On May 16, 2014, we acquired an office building and two manufacturing facilities from Janus International, or Janus. One property, located in Houston, Texas, was considered to be a domestic net lease financing transaction with a total cost of $1.6 million and the other two properties were considered to be acquisitions of real estate properties (Note 4).

Swift Spinning

On April 21, 2014, we acquired two industrial facilities from Swift Spinning, Inc., or Swift Spinning. One property, located in Columbus, Georgia, was considered to be a domestic net lease financing transaction (total cost of $3.4 million) and the other property was considered to be a real estate property acquisition (Note 4).

Crowne Group Investment

On March 7, 2014, we entered into a domestic net lease financing transaction with a subsidiary of Crowne Group from which we acquired two industrial facilities located in Michigan. The total cost was $8.0 million, including land of $1.0 million, building of $6.8 million and transaction costs of $0.2 million that were capitalized. This is a follow-on transaction to the acquisition that we completed with Crowne Group in December 2013. We amended the existing lease with Crowne Group to include the two new properties in Michigan. The amended lease now encompasses a total of five properties, all of which are leased for a 25-year term. Crowne Group will continue to serve as the guarantor under the lease.

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



	June 30, 2014			December 31, 2013
Minimum lease payments receivable	$	91,763		$	50,006
Unguaranteed residual value	44,003			22,064
	135,766			72,070
Less: unearned income	(91,741		)	(50,006		)
	$	44,025		$	22,064

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		Net Investments in Direct Financing Leases at
Internal Credit Quality Indicator	June 30, 2014	December 31, 2013	June 30, 2014		December 31, 2013
1	—	—	$	—	$	—
2	1	—	8,905		—
3	2	1	31,685		22,064
4	1	—	3,435		—
5	—	—	—		—
			$	44,025	$	22,064

At June 30, 2014, Other assets, net included less than $0.1 million of accounts receivable related to amounts billed under our direct financing leases. We did not have any outstanding account receivables related to the aforementioned direct financing lease at December 31, 2013.