Investment in finance lease

9 Months Ended

Sep. 30, 2011

Investment in finance lease [Abstract]

Investment in finance lease

4. Investment in finance lease

On August 19, 2011, the Partnership entered into a lease transaction for a public address system for a Scottish Premier League football team located in Scotland for £602,794 ($985,509 applying exchange rates at August 31, 2011) with a lease term of 48 months. Under the terms of the agreement the Partnership is to receive quarterly lease payments of £58,797 ($96,127 applying exchange rates at August 31, 2011) through May 16, 2014 and quarterly lease payments of £13,931 ($22,775 applying exchange rates at August 31, 2011) through November 16, 2016. At the termination of the lease the lessee has a bargain purchase option to acquire the public address system for $1. The Partnership paid initial direct costs of $59,131 related to the acquisition of this leased equipment. For the three and nine months ended September 30, 2011, the Partnership incurred amortization expense related to this $7,494.

On June 29, 2011, the Partnership entered into a lease transaction for a bottle recycling and extrusion line located in the United Kingdom for £1,830,000 ($2,931,294 applying exchange rates at June 30, 2011) with a lease term of 60 months. Under the terms of the agreement the Partnership is to fund the lessee in two installments; an initial installment of £1,100,000 and a second installment of £730,000. The Partnership paid the initial installment on June 29, 2011, in the amount of $1,774,520. The second installment was contingent upon the lessee raising its own equity of £3,000,000, which it reached during September 2011 and the Partnership funded the second installment on September 30, 2011 in the amount of $1,185,220. At lease termination the lessee has an option to purchase the leased equipment for £253,821 ($406,570 applying exchange rates at June 30, 2011). On July 14, 2011, the Partnership paid initial direct costs of $73,322 related to the acquisition of this leased equipment.

During the period from the initial payment until the lease commences the Partnership earns monthly rental income of £11,229 ($17,987 applying exchange rates at June 30, 2011). For the three and nine months ended September 30, 2011, the Partnership earned $36,633 in rental income and incurred $8,000 in depreciation expense. Once the lease commences, the Partnership will receive monthly payments of £40,937 ($65,573 applying exchange rates at June 30, 2011).

Investment in finance lease consists of the following at September 30, 2011:

Minimum rents receivable	$	4,935,476
Estimated residual value		406,570
Unearned income		(1,658,776	)
	$	3,683,270

At September 30, 2011, the aggregate amounts of future minimum lease payments receivable are as follows:

Years Ending September 30,
2012	$	283,762
2013		1,135,048
2014		1,135,048
2015		994,840
2016		811,102
Thereafter		575,676
	$	4,935,476