16. Leases

The Company leases most of its retail stores and certain distribution facilities under noncancellable operating and capital leases, most of which have initial lease terms ranging from 5 to 22 years. The Company also leases certain of its equipment and other assets under noncancellable operating leases with initial terms ranging from 3 to 10 years. In addition to minimum rental payments, certain store leases require additional payments based on sales volume, as well as reimbursements for taxes, maintenance and insurance. Most leases contain renewal options, certain of which involve rent increases. Total rental expense, net of sublease income of $4,682, 4,813, and $6,397, was $628,511, $634,539, and $607,490 in fiscal 2018, 2017, and 2016, respectively. These amounts include contingent rentals of $8,339, $10,229 and $11,574 in fiscal 2018, 2017, and 2016, respectively.

During fiscal 2018 and 2017, the Company did not enter into any sale-leaseback transactions whereby the Company sold owned operating stores to independent third parties and concurrent with the sale, entered into an agreement to lease the store back from the purchasers.

During fiscal 2016, the Company sold seven owned operating stores to independent third parties. Net proceeds from the sale were $26,953. Concurrent with these sales, the Company entered into agreements to lease the stores back from the purchasers over minimum lease terms of 20 years. Eight leases were accounted for as operating leases and the remaining two were accounted for as capital leases. The transactions resulted in a gain for certain stores of $670 which is deferred over the life of the leases. In addition, the transaction resulted in a loss for certain stores of $546 which is included in the loss on sale of assets, net for the fifty-two weeks ended February 27, 2016.

As a result of the Sale to WBA and the related Amended and Restated Asset Purchase Agreement, the Company has lease guarantee obligations related to 1,886 former stores. The majority of the lease guarantee obligations have a term of less than 10 years; however, 210 former stores have guarantees that exceed 10 years. The Company is only obligated to pay for the lease guarantees in the event that WBA fails to perform under the lease agreements, as WBA is the primary obligor. If WBA fails to perform under the lease agreements, the maximum lease guarantee obligations the Company would be liable for would be approximately $2,300,000 as of March 3, 2018. During fiscal 2018, WBA has performed under the lease agreements. The Company has assessed that it is highly unlikely that WBA will not perform under the leases as of March 3, 2018.

The net book values of assets under capital leases and sale-leasebacks accounted for under the financing method at March 3, 2018 and March 4, 2017 are summarized as follows:

	2018			2017
Land	$	3,458		$	3,760
Buildings		86,012			84,796
Leasehold improvements		—			1,258
Equipment		25,225			30,653
Accumulated depreciation		(78,637	)		(84,333	)

	$	36,058		$	36,134

Following is a summary of lease finance obligations at March 3, 2018 and March 4, 2017:

	2018			2017
Obligations under financing leases	$	51,446		$	52,418
Sale-leaseback obligations		—			2,405
Less current obligation		(20,671	)		(17,619	)

Long-term lease finance obligations	$	30,775		$	37,204

Following are the minimum lease payments for all properties under a lease agreement that will have to be made in each of the years indicated based on non-cancelable leases in effect as of March 3, 2018:

Fiscal year	Lease Financing Obligations			Operating Leases
2019	$	24,571		$	674,739
2020		9,732			609,830
2021		4,642			528,370
2022		4,420			462,222
2023		4,214			407,226
Later years		21,992			1,782,987

Total minimum lease payments		69,571		$	4,465,374


Amount representing interest		(18,125	)

Present value of minimum lease payments	$	51,446