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Net Investment in Direct Financing Leases
 9 Months Ended
Sep. 30, 2018
Leases, Capital [Abstract]  
Net Investment in Direct Financing Leases
Net Investment in Direct Financing Leases
Net investment in DFLs consists of the following (dollars in thousands):
 
September 30,
2018
 
December 31,
2017
Minimum lease payments receivable
$
1,028,487

 
$
1,062,452

Estimated residual value
507,484

 
504,457

Less unearned income
(821,262
)
 
(852,557
)
Net investment in direct financing leases
$
714,709

 
$
714,352

Properties subject to direct financing leases
29

 
29


In February 2017, the Company sold a hospital within a DFL in Palm Beach Gardens, Florida for $43 million to the current tenant and recognized a gain on sale of $4 million.
Direct Financing Lease Internal Ratings
The following table summarizes the Company’s internal ratings for DFLs at September 30, 2018 (dollars in thousands):
 
 
Carrying
Amount
 
Percentage of
DFL Portfolio
 
Internal Ratings
Segment
 
 
 
Performing DFLs
 
Watch List DFLs
 
Workout DFLs
Senior housing triple-net
 
$
630,105

 
88
 
$
278,085

 
$
352,020

 
$
—

Other non-reportable segments
 
84,604

 
12
 
84,604

 
—

 
—

 
 
$
714,709

 
100
 
$
362,689

 
$
352,020

 
$
—


Beginning September 30, 2013, the Company placed a 14-property senior housing triple-net DFL (the “DFL Watchlist Portfolio”) on nonaccrual status and “Watch List” status. The Company determined that the collection of all rental payments was and continues to be no longer reasonably assured; therefore, rental revenue for the DFL Watchlist Portfolio is being recognized on a cash basis. During both the three months ended September 30, 2018 and 2017, the Company recognized income from DFLs of $4 million and received cash payments of $5 million from the DFL Watchlist Portfolio. During the nine months ended September 30, 2018 and 2017, the Company recognized income from DFLs of $11 million and $10 million, respectively, and received cash payments of $14 million during each period from the DFL Watchlist Portfolio. The carrying value of the DFL Watchlist Portfolio was $352 million and $356 million at September 30, 2018 and December 31, 2017, respectively.