11. Commitments and Contingencies

Litigation

We are involved from time‑to‑time in various legal and regulatory proceedings that arise in the ordinary course of our business, including, but not limited to, commercial disputes, environmental matters, and litigation in connection with transactions such as acquisitions and divestitures. We believe that current proceedings will not have a material adverse effect on our financial condition, liquidity, or results of operations. We record a liability when a loss is considered probable and the amount can be reasonably estimated.

In May 2010, Opry Mills sustained significant flood damage. Insurance proceeds of $50 million have been funded by the primary insurer and remediation and restoration work has been completed. The property re‑opened on March 29, 2012. The excess insurance carriers (those providing coverage above $50 million) denied our claim under the policy for additional proceeds (of up to $150 million) to pay further amounts for restoration costs and business interruption losses. In the first quarter of 2015, summary judgment was granted by the trial court in our favor, concluding that up to $150 million of additional coverage is available under our excess insurance policies for this claim. In July and August 2015, trial on the damages portion of our claim was completed and the jury entered a verdict for damages in the amount of $204.1 million (inclusive of the $50.0 million previously paid by the primary carrier). In April 2016, the court entered final judgment in the amount of the jury verdict, which amount will bear interest from the date of the jury's verdict. We and the excess insurance carriers have appealed certain portions of the trial court’s rulings and the jury’s verdict, respectively. On January 26, 2018, the Court of Appeals of Tennessee reversed the trial court’s summary judgment on the amount of available coverage and ruled that the policy limit was $50 million. The Company intends to seek review of this ruling by the Tennessee Supreme Court. We will continue our efforts through the conclusion of the pending litigation including any and all appeals to recover our losses, including consequential damages, under the excess insurance policies for Opry Mills and from our former insurance broker, Aon Risk Services Central Inc., who is a defendant in this case, but did not participate in the trial, but no assurance can be made that our efforts to recover these losses will be successful.

Lease Commitments

As of December 31, 2017, a total of 23 of the consolidated properties are subject to ground leases. The termination dates of these ground leases range from 2019 to 2090. These ground leases generally require us to make fixed annual rental payments, or a fixed annual rental payment plus a percentage rent component based upon the revenues or total sales of the property. In addition, we have several regional office locations that are subject to leases with termination dates ranging from 2018 to 2028. These office leases generally require us to make fixed annual rental payments plus pay our share of common area, real estate and utility expenses. Some of our ground and office leases include escalation clauses and renewal options. We incurred ground lease expense and office lease expense, which are included in other expense and home office and regional expense, respectively, as follows:


	For the Year Ended
	December 31,
	2017		2016		2015
Ground lease expense	$	40,864	$	38,764	$	38,851
Office lease expense		4,481		4,105		4,067

Future minimum lease payments due under these leases for years ending December 31, excluding applicable extension options and any sublease income, are as follows:


2018	$	26,401
2019		25,936
2020		24,829
2021		24,061
2022		23,886
Thereafter		655,309
	$	780,422

Insurance

We maintain insurance coverage with third party carriers who provide a portion of the coverage for specific layers of potential losses, including commercial general liability, fire, flood, extended coverage and rental loss insurance on all of our properties in the United States. The initial portion of coverage not provided by third party carriers is either insured through our wholly‑owned captive insurance company, Bridgewood Insurance Company, Ltd., or other financial arrangements controlled by us. If required, a third party carrier has, in turn, agreed to provide evidence of coverage for this layer of losses under the terms and conditions of the carrier’s policy. A similar policy either written through our captive insurance company or other financial arrangement controlled by us, also provides initial coverage for property insurance and certain windstorm risks at the properties located in coastal windstorm locations.

We currently maintain insurance coverage against acts of terrorism on all of our properties in the United States on an “all risk” basis in the amount of up to $1 billion. The current U.S. federal laws which provide this coverage are expected to operate through 2020. Despite the existence of this insurance coverage, any threatened or actual terrorist attacks where we operate could adversely affect our property values, revenues, consumer traffic and tenant sales.

Hurricane Impacts

During the third quarter of 2017, two of our wholly-owned properties located in Puerto Rico sustained significant damage as a result of Hurricane Maria. Due to the conditions on the island, we were unable to determine a reliable estimate or a range of reliable estimates of the extent of the damages at these properties at the end of the third quarter. During the fourth quarter, as additional information became available, we recorded an impairment of approximately $19.0 million related to damages at these properties, which is offset by an insurance recovery receivable.

We believe we maintain adequate insurance coverages for these properties and all property damage losses, as well as future losses from business interruption, are fully recoverable from insurance proceeds. The extent of the impact related to property damage is limited to our $1.0 million insurance deductible per occurrence, which was recorded in our statements of operations during the third quarter.

Damage to our properties from the hurricanes in Florida and Texas was minimal. The impact was primarily limited to repairs at the affected properties and, as such, we did not recognize any significant impairment charges. The extent of the impact related to the property damage in Texas was not significant. The extent of the impact related to the property damage in Florida is limited to our $1.0 million insurance deductible, which was recorded in our statements of operations during the third quarter.

Guarantees of Indebtedness

Joint venture debt is the liability of the joint venture and is typically secured by the joint venture property, which is non‑recourse to us. As of December 31, 2017 and 2016, the Operating Partnership guaranteed joint venture related mortgage indebtedness of $211.6 million and $400.5 million, respectively (of which we have a right of recovery from our venture partners of $10.8 million and $87.3 million, respectively). Mortgages guaranteed by the Operating Partnership are secured by the property of the joint venture which could be sold in order to satisfy the outstanding obligation and which has an estimated fair value in excess of the guaranteed amount.

Concentration of Credit Risk

Our U.S. Malls, Premium Outlets and Mills rely heavily upon anchor tenants to attract customers; however, anchor retailers do not contribute materially to our financial results as many anchor retailers own their spaces. All material operations are within the United States and no customer or tenant accounts for 5% or more of our consolidated revenues.