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Investment in Direct Financing Lease
12 Months Ended
Dec. 31, 2012
Investment in Direct Financing Lease  
Investment in Direct Financing Lease

Note 4. Investment in Direct Financing Lease

        We have an investment in a direct financing lease that relates to a lease with a term that exceeds 75% of the useful life of an office tower located within a mixed use property in Phoenix, AZ. We recognize income using the effective interest method to produce a level yield on funds not yet recovered. Estimated unguaranteed residual values at the date of lease inception represent our initial estimates of the fair value of the leased assets at the expiration of the lease, which do not exceed their original cost. Significant assumptions used in estimating residual values include estimated net cash flows over the remaining lease term and expected future real estate values. The carrying amount of our net investment is included in other assets in our consolidated balance sheets. The following table summarizes the carrying amount of our net investment in this direct financing lease:

 
  December 31,  
 
  2012   2011  

Total minimum lease payments receivable

  $ 31,084   $ 39,182  

Estimated unguaranteed residual value of leased asset

    4,951     4,951  

Unearned income

    (9,302 )   (10,754 )
           

Net investment in direct financing lease

  $ 26,733   $ 33,379  
           

        We monitor the payment history and credit profile of the tenant and have determined that no allowance for losses related to our direct financing lease was necessary at December 31, 2012 and 2011.

        Our direct financing lease has an expiration date in 2045. Future minimum rentals receivable on this direct financing lease as of December 31, 2012 are as follows:

2013

  $ 8,098  

2014

    8,098  

2015

    8,098  

2016

    226  

2017

    226  

Thereafter

    6,338  
       

 

  $ 31,084