Investments In Direct Financing Lease

9 Months Ended

Sep. 30, 2016

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

Investments in a Direct Financing Lease

Investment in a Direct Financing Lease

The Company’s investment in a direct financing lease relates to the Company’s master lease of 20 public charter school properties as of September 30, 2016 and 21 public charter school properties as of December 31, 2015, 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 September 30, 2016 and December 31, 2015 (in thousands):

	September 30, 2016			December 31, 2015
Total minimum lease payments receivable	$	416,369		$	439,646
Estimated unguaranteed residual value of leased assets	159,303			162,669
Less deferred income (1)	(386,520		)	(411,435		)
Investment in a direct financing lease, net	$	189,152		$	190,880

⁽¹⁾ Deferred income is net of $1.3 million and $1.4 million of initial direct costs at September 30, 2016 and December 31, 2015, respectively.

Additionally, the Company determined that no allowance for losses was necessary at September 30, 2016 and December 31, 2015.

On April 13, 2016, the Company completed the sale of one public charter school property in Georgia with a net carrying value of $4.0 million, which was previously leased to Imagine under the master lease. There was no gain or loss recognized on this sale.

The Company’s direct financing lease has expiration dates ranging from approximately 16 to 19 years. Future minimum rentals receivable on this direct financing lease at September 30, 2016 are as follows (in thousands):

	Amount
Year:
2016	$	4,893
2017	19,947
2018	20,546
2019	21,162
2020	21,797
Thereafter	328,024
Total	$	416,369