Leases

As lessor:

We lease space to tenants under operating leases. Most of the leases provide for the payment of fixed base rentals payable monthly in advance. Office building leases generally require the tenants to reimburse us for operating costs and real estate taxes above their base year costs. Certain leases provide for pass-through to tenants for the tenant’s share of real estate taxes, insurance and maintenance. Certain leases also provide for the payment by the lessee of additional rent based on a percentage of the tenants’ sales. As of December 31, 2017, future base rental revenue under non-cancelable operating leases, excluding rents for leases with an original term of less than one year and rents resulting from the exercise of renewal options, are as follows:



(Amounts in thousands)
Year Ending December 31:
2018	$	1,469,201
2019	1,441,139
2020	1,369,636
2021	1,298,798
2022	1,230,172
Thereafter	5,841,213

These amounts do not include percentage rentals based on tenants’ sales. These percentage rents approximated $4,062,000, $3,590,000 and $1,575,000, for the years ended December 31, 2017, 2016 and 2015, respectively.

None of our tenants accounted for more than 10% of total revenues in any of the years ended December 31, 2017, 2016 and 2015.

As lessee:

We are a tenant under operating leases for certain properties. These leases have terms that expire during the next thirty years. Future minimum lease payments under operating leases at December 31, 2017 are as follows:



(Amounts in thousands)
Year Ending December 31:
2018	$	33,703
2019	34,301
2020	34,779
2021	35,295
2022	36,319
Thereafter	1,113,171

Rent expense, a component of “operating" expenses on our consolidated statements of income, was $40,219,000, $40,170,000 and $37,575,000 for the years ended December 31, 2017, 2016 and 2015, respectively.


18.	Leases – continued

1535 Broadway

We are a lessee under a long-term capital lease for the retail and signage components of the Marriott Marquis Times Square Hotel at 1535 Broadway. At inception of the lease in 2012, we recorded a $240,000,000 capital lease asset and liability on our consolidated balance sheet based on the present value of future minimum lease payments. The capital lease asset is being depreciated on a straight-line basis over the estimated life of the asset and the related expense is included in “depreciation and amortization” on our consolidated statements of income. During 2017, we substantially completed the redevelopment of the leased space, as required under the lease, at a total redevelopment cost of approximately $197,209,000. The lease contains a put/call purchase option under which the lessor may exercise its “put” on predetermined dates after March 31, 2018 and we may exercise our “call” at any time after July 30, 2027 and before January 3, 2032.

As of December 31, 2017, future minimum lease payments under this capital lease are as follows:



(Amounts in thousands)
Year Ending December 31:
2018	$	13,508
2019	12,508
2020	12,508
2021	12,508
2022	12,508
Thereafter	297,330
Total minimum obligations	360,870
Interest portion	(120,870		)
Present value of net minimum payments	$	240,000

As of December 31, 2017, the gross carrying amount of the property leased under the capital lease was $436,984,000, which is a component of “buildings and improvements” on our consolidated balance sheets.