Investments In Direct Financing Leases

12 Months Ended

Dec. 31, 2014

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

Investment in a Direct Financing Lease

The Company’s investment in a direct financing lease relates to the Company’s master lease of 23 public charter school properties as of December 31, 2014 and 27 public charter school properties as of December 31, 2013, 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 December 31, 2014 and 2013 (in thousands):



	2014			2013
Total minimum lease payments receivable	$	487,275		$	633,384
Estimated unguaranteed residual value of leased assets	172,880			215,207
Less deferred income ⁽¹⁾	(460,823		)	(606,379		)
Investment in a direct financing lease, net	$	199,332		$	242,212

(1) Deferred income is net of $1.5 million and $1.7 million of initial direct costs at December 31, 2014 and 2013, respectively.

Additionally, the Company has determined that no allowance for losses was necessary at December 31, 2014 and 2013.

On July 13, 2012, per the terms of the master lease of public charter schools with Imagine, the Company exchanged two Kansas City, Missouri schools for one located in Pittsburgh, Pennsylvania and another in Land O' Lakes, Florida. There was no impact on the Company's investment in direct financing lease as a result of this exchange. Additionally, on August 15, 2012, the Company completed the sale of a public charter school property for 4.5 million that was leased to Imagine. There was no gain or loss recognized on this sale.

On May 17, 2013, per the terms of the master lease of public charter schools with Imagine, the Company exchanged three St. Louis, Missouri schools for one located in Columbus, Ohio, one located in Dayton, Ohio and another located in Toledo, Ohio. In conjunction with this exchange, the Company completed the acquisition of a public charter school in Columbia, South Carolina for $3.3 million that is leased under the master lease to Imagine. Additionally, on October 31, 2013, the Company exchanged one St. Louis, Missouri school for one located in Columbus, Ohio. There was no impact on the Company's investment in direct financing lease as a result of these exchanges.

On April 2, 2014, the Company completed the sale of four public charter school properties located in Florida and previously leased to Imagine for net proceeds of $46.1 million. Accordingly, the Company reduced its investment in a direct financing lease, net, by $45.9 million which included $41.5 million in original acquisition cost. A gain of $0.2 million was recognized during the year ended December 31, 2014.

The Company’s direct financing lease has expiration dates ranging from approximately 17 to 20 years. Future minimum rentals receivable on this direct financing lease at December 31, 2014 are as follows (in thousands):



	Amount
Year:
2015	$	20,433
2016	21,046
2017	21,678
2018	22,328
2019	22,998
Thereafter	378,792
Total	$	487,275