Investments In Direct Financing Lease

6 Months Ended

Jun. 30, 2015

Capital Leases, Net Investment in Direct Financing Leases [Abstract]

Investment in a Direct Financing Lease

The Company’s investment in a direct financing lease relates to the Company’s master lease of 21 public charter school properties as of June 30, 2015 and 23 public charter school properties as of December 31, 2014, with affiliates of Imagine Schools, Inc. (Imagine). Investment in a direct financing lease, net represents estimated unguaranteed residual values of leased assets and net unpaid rentals, less related deferred income. The following table summarizes the carrying amounts of investment in a direct financing lease, net as of June 30, 2015 and December 31, 2014 (in thousands):



	June 30, 2015			December 31, 2014
Total minimum lease payments receivable	$	449,354		$	487,275
Estimated unguaranteed residual value of leased assets	162,669			172,880
Less deferred income ⁽¹⁾	(422,820		)	(460,823		)
Investment in a direct financing lease, net	$	189,203		$	199,332

⁽¹⁾Deferred income is net of $1.4 million and $1.5 million of initial direct costs at June 30, 2015 and December 31, 2014, respectively.

Additionally, the Company determined that no allowance for losses was necessary at June 30, 2015 and December 31, 2014.

On May 21, 2015, the Company completed the sale of one public charter school property located in Pennsylvania and previously leased to Imagine for net proceeds of $4.7 million. Accordingly, the Company reduced its net investment in a direct financing lease, net by $4.7 million which included $4.1 million in original acquisition costs. There was no gain or loss recognized on this sale.

On June 30, 2015, the Company terminated a portion of its master lease with Imagine related to one public charter school property located in Ohio. The property was subsequently leased to another operator under a long-term triple-net lease agreement that is classified as an operating lease. There was no gain or loss recognized on this lease termination.

The Company’s direct financing lease has expiration dates ranging from approximately 17 to 20 years. Future minimum rentals receivable on this direct financing lease at June 30, 2015 are as follows (in thousands):



	Amount
Year:
2015	$	9,707
2016	19,787
2017	20,380
2018	20,992
2019	21,622
Thereafter	356,866
Total	$	449,354