Investment in Direct Financing Leases

The Company’s investment in direct financing leases relates to the Company’s leases of six public charter school properties as of June 30, 2018 and December 31, 2017, with affiliates of Imagine Schools, Inc. (Imagine). Investment in direct financing leases, 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 direct financing leases, net as of June 30, 2018 and December 31, 2017 (in thousands):



	June 30, 2018			December 31, 2017
Total minimum lease payments receivable	$	109,294		$	112,411
Estimated unguaranteed residual value of leased assets	47,000			47,000
Less deferred income ⁽¹⁾	(97,989		)	(101,508		)
Investment in direct financing leases, net	$	58,305		$	57,903

⁽¹⁾Deferred income is net of $0.8 million of initial direct costs at June 30, 2018 and December 31, 2017.

During the year ended December 31, 2017, the Company recorded an impairment charge of $9.6 million, which included an allowance for lease loss of $7.3 million and a charge of $2.3 million related to estimated unguaranteed residual value. The Company determined that no additional allowance for losses was necessary at June 30, 2018.

Additionally, during the year ended December 31, 2017, the Company performed its annual review of the estimated unguaranteed residual value on its other properties leased to Imagine and determined that the residual value on one of these properties was impaired. As such, the Company recorded an impairment charge of the unguaranteed residual value of $0.6 million during the year ended December 31, 2017.

The Company’s direct financing leases have expiration dates ranging from approximately 14 to 16 years. Future minimum rentals receivable on these direct financing leases at June 30, 2018 are as follows (in thousands):



	Amount
Year:
2018	$	3,184
2019	6,490
2020	6,685
2021	6,885
2022	7,092
Thereafter	78,958
Total	$	109,294

Subsequent to June 30, 2018, the Company completed the sale of four public charter school properties leased to Imagine, located in Arizona, Ohio and Washington D.C for net proceeds of $43.4 million. In connection with this sale, the Company expects to recognize a gain on sale of $5.5 million during the third quarter of 2018.