NOTE 6 — LEASES

Description of leasing arrangements

The Company leased 23 stores at July 30, 2016, including five that are capitalized for financial reporting purposes. The majority of initial lease terms range from 20 to 30 years.

Most of the Company’s leases contain renewal options at increased rents of five years each. These options enable Village to retain the use of facilities in desirable operating areas. Management expects that in the normal course of business, most leases will be renewed or replaced by other leases. The Company is obligated under all leases to pay for real estate taxes, utilities and liability insurance, and under certain leases to pay additional amounts based on maintenance and a percentage of sales in excess of stipulated amounts.

Future minimum lease payments by year and in the aggregate for all non-cancelable leases with initial terms of one year or more consist of the following at July 30, 2016:



	Capital and financing leases		Operating leases
2017	$	4,875	$	10,763
2018	4,959		10,383
2019	5,001		8,552
2020	5,173		7,197
2021	5,240		5,871
Thereafter	59,596		38,711
Minimum lease payments	84,844		$	81,477
Less amount representing interest	41,146

Present value of minimum lease payments	43,698

Less current portion	514
	$	43,184

The following schedule shows the composition of total rental expense for the following years:



	2016		2015		2014
Minimum rentals	$	11,585	$	11,090	$	11,308
Contingent rentals	929		893		872

	$	12,514	$	11,983	$	12,180

On November 6, 2013, the Company closed the Morris Plains, New Jersey store and opened a 77,000 sq. ft. replacement store in Hanover Township, New Jersey. The Company recorded a $3,481 charge to Operating and administrative expense in fiscal 2014 for the remaining lease obligations, net of estimated sublease rentals, on the Morris Plains store. The Company has paid $918, $982 and $710 of these costs in fiscal 2016, 2015 and 2014, respectively, with a remaining liability of $871 in Accounts payable and accrued expenses as of July 30, 2016.

On April 30, 2014, Village opened a 59,000 sq. ft. store in Union, New Jersey and closed our existing 40,000 sq. ft. store. The Company recorded a $929 charge to Operating and administrative expense in fiscal 2014 for the remaining lease obligations, net of estimated sublease rentals, on the old Union store. The Company has paid $266, $531 and $132 of these costs in fiscal 2016, 2015 and 2014, respectively, with no remaining liability as of July 30, 2016.

Related party leases

The Company leases a supermarket from a realty firm 30% owned by certain officers of Village. The Company paid rent to related parties under this lease of $642, $640 and $640 in fiscal years 2016, 2015 and 2014, respectively. This lease expires in fiscal 2021 with options to extend at increasing annual rent.

The Company has ownership interests in three real estate partnerships. Village paid aggregate rents to two of these partnerships for leased stores of $1,400, $1,300 and $1,008 in fiscal 2016, 2015 and 2014, respectively.

One of these partnerships is a variable interest entity, which is not consolidated as Village is not the primary beneficiary. This partnership owns one property, a stand-alone supermarket leased to the Company since 1974. Village is a general partner entitled to 33% of the partnership's profits and losses.

The Company subleases the Galloway and Vineland stores from Wakefern under sublease agreements which provided for combined annual rents of $1,316, $1,296 and $1,296 in fiscal 2016, 2015 and 2014, respectively. Both leases contain normal periodic rent increases and options to extend the lease.