Leases

As of January 3, 2017 (Successor) and December 29, 2015 (Successor), deferred rent liability was $18.7 million and $20.4 million, respectively, which includes unfavorable lease liabilities of $17.1 million and $19.7 million, respectively, net of accumulated amortization of $3.9 million and $1.3 million, respectively.

Franchise sublease expenses which include minimum rent, percentage rent, real estate taxes and common area maintenance are classified separately under occupancy and other – franchise subleases on the consolidated statements of comprehensive income (loss) and totaled $2.2 million for the fifty-three weeks ended January 3, 2017 (Successor), $1.1 million for both the twenty-six weeks ended December 29, 2015 (Successor) and June 30, 2015 (Predecessor), and $2.1 million for the fifty-two weeks ended December 30, 2014 (Predecessor).

Total rent expense for the Company for all non-cancelable operating leases and third party subleases comprise the following (in thousands):



	Successor						Predecessor
	53 Weeks Ended			26 Weeks Ended			26 Weeks Ended			52 Weeks Ended
	January 3, 2017			December 29, 2015			June 30, 2015			December 30, 2014
Minimum rental expense	$	26,465		$	12,384		$	12,405		$	23,819
Favorable and unfavorable lease assets and liabilities amortization, net	(607		)	(364		)	3			144
Straight-line rent expense	781			518			277			648
Contingent rent expense	805			2,033			2,063			3,912
Sublease rent income	(2,121		)	(1,100		)	(1,100		)	(2,087		)
	$	25,323		$	13,471		$	13,648		$	26,436

Sublease rent income includes contingent rentals based on sales totaling $0.1 million during the fifty-three weeks ended January 3, 2017 (Successor), $0.3 million during both the twenty-six weeks ended December 29, 2015 (Successor) and June 30, 2015 (Predecessor), and $0.5 million during the fifty-two weeks ended December 30, 2014 (Predecessor). As of January 3, 2017 (Successor), the Company is obligated under various capital leases having interest rates that average approximately 8%.

Minimum rental commitments and sublease minimum rental receipts as of January 3, 2017 (Successor), under capital and operating leases having an initial non-cancelable term of one year or more are shown in the following table (in thousands):



	Rental Payments					Rental Receipts
	Capital Lease and Deemed Landlord Financing Liabilities			Operating Leases		Operating Subleases			Net Lease Commitments
2017	$	3,237		$	29,916	$	(2,507	)	$	30,646
2018	2,922			28,576		(2,567		)	28,931
2019	2,424			25,978		(2,552		)	25,850
2020	2,180			24,118		(2,499		)	23,799
2021	2,049			22,661		(2,478		)	22,232
Thereafter	18,833			144,551		(21,349		)	142,035
Total minimum lease payments	$	31,645		$	275,800	$	(33,952	)	$	273,493
Imputed interest	(13,930		)
Present value of payments	$	17,715

The Company has subleased 30 properties to other third parties where the Company remains primarily liable to the landlord for the performance of all obligations in the event that the sub-lessee does not perform its obligations under the lease. As a result of the sublease arrangements, future minimum rental commitments under operating leases will be offset by sublease amounts to be paid by the sub-lessee. The total of minimum sublease amounts to be received in the future under non-cancelable subleases is $34.0 million as of January 3, 2017 (Successor).

The amounts in operating lease and operating subleases in the table above include amounts for restaurant operating leases related to 11 of the 12 restaurants closed in the fourth fiscal quarter of 2015 (one such lease was terminated) and related subleases both of which have been included in our restaurant closure liability on our consolidated balance sheets as of January 3, 2017 (Successor) on a present value basis.

During Fiscal 2016, the Company entered into two sale-leaseback arrangements with third party private investors. These sale-leaseback transactions do not provide for any continuing involvement by the Company other than normal leases where the Company intends to use the properties during the lease terms. The leases have been accounted for as operating leases. The net proceeds from these transactions were $3.4 million. Under one of the arrangements, the Company sold the land and building of an existing restaurant and leased it back for a term of one year with the option to terminate with 60 days notice. Under the other arrangement, the Company sold the land and building of an acquired franchise-operated restaurant (see Note 6) and leased it back for a term of 20 years. The sale of these properties resulted in an immaterial loss which is included in loss (gain) on disposal of assets in the consolidated statements of comprehensive income (loss).