Investment in Direct Financing Lease

9 Months Ended

Sep. 30, 2014

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

Investment in Direct Financing Lease

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 condensed consolidated balance sheets.  The following table summarizes the carrying amount of our net investment in this direct financing lease (in thousands):

	September 30, 2014			December 31, 2013
Total minimum lease payments receivable	$	16,913		$	22,986
Estimated unguaranteed residual value of leased asset	4,951			4,951
Unearned income	(7,551		)	(8,174		)
Net investment in direct financing lease	$	14,313		$	19,763

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 September 30, 2014 and December 31, 2013.  The direct financing lease has an expiration date in 2045.