Leases

At July 1, 2018, Wendy’s and its franchisees operated 6,656 Wendy’s restaurants. Of the 332 Company-operated Wendy’s restaurants, Wendy’s owned the land and building for 144 restaurants, owned the building and held long-term land leases for 139 restaurants and held leases covering land and building for 49 restaurants. Wendy’s also owned 520 and leased 1,293 properties that were either leased or subleased principally to franchisees.

Rental expense for operating leases consists of the following components:



	Three Months Ended				Six Months Ended
	July 1, 2018		July 2, 2017		July 1, 2018		July 2, 2017
Rental expense:
Minimum rentals	$	25,070	$	22,786	$	49,924	$	42,704
Contingent rentals	5,390		4,722		9,461		9,010
Total rental expense (a) (b)	$	30,460	$	27,508	$	59,385	$	51,714

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(a)	Amounts include rental expense related to (1) leases for Company-operated restaurants recorded to “Cost of sales,” (2) leased properties that are subsequently leased to franchisees recorded to “Franchise rental expense” and (3) leases for corporate offices and equipment recorded to “General and administrative.”


(b)	Amounts exclude sublease income of $34,950 and $69,256 recognized during the three and six months ended July 1, 2018, respectively, and $30,849 and $57,412 recognized during the three and six months ended July 2, 2017, respectively.

Rental income for operating leases and subleases consists of the following components:



	Three Months Ended				Six Months Ended
	July 1, 2018		July 2, 2017		July 1, 2018		July 2, 2017
Rental income:
Minimum rentals	$	45,930	$	41,560	$	92,258	$	80,165
Contingent rentals	5,599		5,375		9,378		9,687
Total rental income	$	51,529	$	46,935	$	101,636	$	89,852

The following table illustrates the Company’s future minimum rental payments and rental receipts for non-cancelable leases and subleases, including rental receipts for direct financing leases as of July 1, 2018. Rental receipts below are presented separately for owned properties and for leased properties based on the classification of the underlying lease.



	Rental Payments					Rental Receipts
Fiscal Year	Capital Leases			Operating Leases		Capital Leases		Operating Leases		Owned Properties
2018 (a)	$	24,412		$	48,499	$	32,627	$	37,599	$	26,980
2019	45,681			94,249		65,695		75,456		54,827
2020	46,610			93,136		66,792		75,213		55,435
2021	48,228			92,635		68,609		75,196		57,027
2022	49,339			92,355		69,810		75,652		58,600
Thereafter	760,160			1,123,911		1,056,005		919,959		948,646
Total minimum payments	$	974,430		$	1,544,785	$	1,359,538	$	1,259,075	$	1,201,515
Less interest	(508,350		)
Present value of minimum capital lease payments (b)	$	466,080

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(a)	Represents future minimum rental payments and rental receipts for non-cancelable leases and subleases for the remainder of the 2018 fiscal year.


(b)	The present value of minimum capital lease payments of $7,868 and $458,212 are included in “Current portion of long-term debt” and “Long-term debt,” respectively.

Properties owned by the Company and leased to franchisees and other third parties under operating leases include:



	July 1, 2018			December 31, 2017
Land	$	272,626		$	272,411
Buildings and improvements	313,470			313,108
Restaurant equipment	2,443			2,444
	588,539			587,963
Accumulated depreciation and amortization	(135,601		)	(128,003		)
	$	452,938		$	459,960

Our net investment in direct financing leases is as follows:



	July 1, 2018			December 31, 2017
Future minimum rental receipts	$	649,893		$	662,889
Unearned interest income	(420,417		)	(433,175		)
Net investment in direct financing leases	229,476			229,714
Net current investment in direct financing leases (a)	(638		)	(625		)
Net non-current investment in direct financing leases	$	228,838		$	229,089

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(a)	Included in “Accounts and notes receivable, net.”

During the three and six months ended July 1, 2018, the Company recognized $6,976 and $14,017 in interest income related to our direct financing leases, respectively, and $5,389 and $9,845 recognized during the three and six months ended July 2, 2017, respectively, which is included in “Interest expense, net,”