NOTE 6 — LEASES

Description of leasing arrangements

The Company leased 23 stores at July 29, 2017, 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 29, 2017:



	Capital and financing leases		Operating leases
2018	$	4,959	$	11,102
2019	5,001		9,131
2020	5,173		7,776
2021	5,240		6,450
2022	5,240		4,997
Thereafter	54,355		38,046
Minimum lease payments	79,968		$	77,502
Less amount representing interest	36,784

Present value of minimum lease payments	43,184

Less current portion	652
	$	42,532

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



	2017		2016		2015
Minimum rentals	$	11,153	$	11,585	$	11,090
Contingent rentals	668		929		893

	$	11,821	$	12,514	$	11,983

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 paid $788, $918 and $982 of these costs in fiscal 2017, 2016 and 2015, respectively, with no remaining liability as of July 29, 2017.

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 paid $0, $266 and $531 of these costs in fiscal 2017, 2016 and 2015, respectively, with no remaining liability as of July 29, 2017.

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 $688, $642 and $640 in fiscal years 2017, 2016 and 2015, 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 $1,500, $1,400 and $1,300 in fiscal 2017, 2016 and 2015, 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, $1,316 and $1,296 in fiscal 2017, 2016 and 2015, respectively. Both leases contain normal periodic rent increases and options to extend the lease.