Leases

We conduct all of our retail sales and corporate operations in leased facilities. Lease terms generally range up to ten years and provide for escalations in base rents. We are generally not obligated to renew leases. Certain leases provide for additional rent based on a percentage of sales and annual rent increases generally based upon the Consumer Price Index. In addition, many of the store leases contain certain co-tenancy provisions that permit us to pay rent based on a pre-determined percentage of sales when the occupancy of the retail center falls below minimums established in the lease.

Operating leases

We lease office and warehouse space (11 Whatney, Irvine, California) from a company that is owned by one of the co-founders of Tillys. We incurred rent expense of $0.4 million, $0.4 million and $0.3 million in fiscal years 2016, 2015 and 2014, respectively, related to this lease. Pursuant to the lease agreement, the lease payment adjusts annually based upon the Los Angeles/Anaheim/Riverside Urban Consumer Price Index, not to exceed 7%, but a minimum of 3%, in any one annual increase. The lease expires on June 30, 2022.

We lease a building (17 Pasteur, Irvine, California) from a company that is owned by one of the co-founders of Tillys. We use this property as our e-commerce distribution center. We incurred rent expense of $0.9 million in each of the fiscal years 2016, 2015 and 2014, related to this lease. Pursuant to the lease agreement, the lease payment adjusts annually based upon the Los Angeles/Anaheim/Riverside Urban Consumer Price Index, not to exceed 7%, but a minimum of 3%, in any one annual increase. The lease expires on October 31, 2021.

Future minimum rental commitments, by year and in the aggregate, under non-cancellable operating leases, including fixed common area maintenance charges, if any, for the above buildings at 11 Whatney and 17 Pasteur and all of our store locations as of January 28, 2017 are as follows (in thousands):



Fiscal Year	Related Party		Other		Total
2017	$	2,226	$	66,643	$	68,869
2018	1,503		70,175		71,678
2019	1,430		56,467		57,897
2020	1,347		46,707		48,054
2021	1,233		44,655		45,888
Thereafter	176		96,283		96,459
Total	$	7,915	$	380,930	$	388,845

Rent expense under non-cancellable operating leases for fiscal years 2016, 2015 and 2014 was as follows (in thousands):



	January 28, 2017		January 30, 2016		January 31, 2015
Minimum rentals	$	42,988	$	43,176	$	40,290
Contingent rentals	1,212		403		832
Total rent expense	$	44,200	$	43,579	$	41,122

Capital lease

We lease our corporate headquarters and distribution center (10 and 12 Whatney, Irvine, California) from a company that is owned by the co-founders of Tillys. The lease expires on December 31, 2017, with two remaining five-year renewal option periods. The land component of this lease is accounted for as an operating lease (included in the operating lease commitments schedule above) and the building component is accounted for as a capital lease. We incurred rent expense of $1.0 million, $0.9 million, $0.9 million in fiscal years 2016, 2015 and 2014, respectively, related to the operating (land component) of this lease.

The obligation under the capital lease was $0.8 million and $1.7 million as of January 28, 2017 and January 30, 2016, respectively. The gross amount of the building under the capital lease was $7.8 million as of January 28, 2017 and January 30, 2016. The accumulated amortization of the building under the capital lease was $7.4 million and $6.8 million as of January 28, 2017 and January 30, 2016, respectively.

Future commitments under the related party capital lease obligation as of January 28, 2017 are as follows (in thousands):



Future minimum lease payments during fiscal 2017	$	861
Less: Amount representing interest	26
Present value of net minimum lease payments	$	835

Prior to signing each of the related party leases above, we received an independent market analysis regarding the property and therefore believe that the terms of each lease are reasonable and not materially different from terms we would have obtained from an unaffiliated third party.