Commitments and Contingencies

Leases

We are engaged in the operation of shopping centers, which are either owned or, with respect to certain shopping centers, operated under long-term ground leases. These ground leases expire at various dates through 2069, with renewal options. Space in our shopping centers is leased to tenants pursuant to agreements that provide for terms ranging generally from one year to 25 years and, in some cases, for annual rentals subject to upward adjustments based on operating expense levels, sales volume, or contractual increases as defined in the lease agreements.

Scheduled minimum rental payments under the terms of all non-cancelable operating leases in which we are the lessee, principally for shopping center ground leases, for the subsequent five years and thereafter ending December 31, are as follows (in thousands):



2016	$	3,007
2017	3,016
2018	2,980
2019	2,916
2020	2,681
Thereafter	116,249
Total	$	130,849

Rental expense for operating leases was, in millions: $3.2 in 2015; $5.3 in 2014 and $5.6 in 2013. The decrease in rental expense from 2015 to 2014 is primarily due to dispositions of centers made in 2014.

The scheduled future minimum revenues under subleases, applicable to the ground lease rentals, under the terms of all non-cancelable tenant leases, assuming no new or renegotiated leases or option extensions for the subsequent five years and thereafter ending December 31, are as follows (in thousands):



2016	$	23,602
2017	21,483
2018	19,254
2019	14,835
2020	11,519
Thereafter	52,968
Total	$	143,661

Property under capital leases that is included in buildings and improvements consisted of two centers totaling $16.8 million at December 31, 2015 and 2014. Amortization of property under capital leases is included in depreciation and amortization expense, and the balance of accumulated depreciation associated with these capital leases at December 31, 2015 and 2014 was $13.8 million and $13.0 million, respectively. Future minimum lease payments under these capital leases total $34.6 million, of which $13.6 million represents interest. Accordingly, the present value of the net minimum lease payments was $21.0 million at December 31, 2015.

The annual future minimum lease payments under capital leases as of December 31, 2015 are as follows (in thousands):



2016	$	1,666
2017	1,674
2018	1,682
2019	1,691
2020	1,699
Thereafter	26,149
Total	$	34,561

Commitments and Contingencies

As of December 31, 2015 and 2014, we participated in two and three, respectively, real estate ventures structured as DownREIT partnerships that have centers in Arkansas, California (2014 only), North Carolina and Texas. As a general partner, we have operating and financial control over these ventures and consolidate them in our consolidated financial statements. These ventures allow the outside limited partners to put their interest in the partnership to us in exchange for our common shares or an equivalent amount in cash. We may acquire any limited partnership interests that are put to the partnership, and we have the option to redeem the interest in cash or a fixed number of our common shares, at our discretion. We also participate in a real estate venture that has a property in Texas that allows its outside partner to put operating partnership units to us. We have the option to redeem these units in cash or a fixed number of our common shares, at our discretion. For the year ended December 31, 2015, common shares valued at $.1 million were issued in exchange for certain of these interests. No common shares were issued in exchange for any of these interests during the year ended December 31, 2014. The aggregate redemption value of these interests was approximately $51 million and $52 million as of December 31, 2015 and 2014, respectively.

As of December 31, 2015, we have entered into commitments aggregating $63.9 million comprised principally of construction contracts which are generally due in 12 to 36 months.

We have executed an agreement to purchase the retail portion of a mixed-use project for approximately $24.0 million at delivery by the developer, which is estimated to occur in early 2017. Including this payment, our expected total investment in the retail portion of the project is approximately $30.1 million.

We issue letters of intent signifying a willingness to negotiate for acquisitions, dispositions or joint ventures, as well as other types of potential transactions, during the ordinary course of our business. Such letters of intent and other arrangements are non-binding to all parties unless and until a definitive contract is entered into by the parties. Even if definitive contracts relating to the acquisition or disposition of property are entered into, these contracts generally provide the purchaser a time period to evaluate the property and conduct due diligence. The purchaser, during this time, will have the ability to terminate a contract without penalty or forfeiture of any deposit or earnest money. No assurance can be provided that any definitive contracts will be entered into with respect to any matter covered by letters of intent, or that we will consummate any transaction contemplated by a definitive contract. Additionally, due diligence periods for property transactions are frequently extended as needed. An acquisition or disposition of property becomes probable at the time the due diligence period expires and the definitive contract has not been terminated. Our risk is then generally extended only to any earnest money deposits associated with property acquisition contracts, and our obligation to sell under a property sales contract.

We are subject to numerous federal, state and local environmental laws, ordinances and regulations in the areas where we own or operate properties. We are not aware of any contamination which may have been caused by us or any of our tenants that would have a material effect on our consolidated financial statements.

As part of our risk management activities, we have applied and been accepted into state sponsored environmental programs which will limit our expenses if contaminants need to be remediated. We also have an environmental insurance policy that covers us against third party liabilities and remediation costs.

While we believe that we do not have any material exposure to environmental remediation costs, we cannot give absolute assurance that changes in the law or new discoveries of contamination will not result in additional liabilities to us.

Litigation

We are involved in various matters of litigation arising in the normal course of business. While we are unable to predict the amounts involved, our management and counsel are of the opinion that, when such litigation is resolved, any additional liability, if any, will not have a material effect on our consolidated financial statements.