Properties and Leases



	January 28, 2017		January 30, 2016
	(millions)
Land	$	1,541	$	1,629
Buildings on owned land	4,212		4,690
Buildings on leased land and leasehold improvements	1,545		1,672
Fixtures and equipment	4,541		4,910
Leased properties under capitalized leases	34		34
	11,873		12,935
Less accumulated depreciation and amortization	4,856		5,319
	$	7,017	$	7,616

In connection with various shopping center agreements, the Company is obligated to operate certain stores within the centers for periods of up to twenty years. Some of these agreements require that the stores be operated under a particular name.

The Company leases a portion of the real estate and personal property used in its operations. Most leases require the Company to pay real estate taxes, maintenance and other executory costs; some also require additional payments based on percentages of sales and some contain purchase options. Certain of the Company’s real estate leases have terms that extend for significant numbers of years and provide for rental rates that increase or decrease over time. In addition, certain of these leases contain covenants that restrict the ability of the tenant (typically a subsidiary of the Company) to take specified actions (including the payment of dividends or other amounts on account of its capital stock) unless the tenant satisfies certain financial tests.

Minimum rental commitments (excluding executory costs) at January 28, 2017, for noncancellable leases are:



	Capitalized Leases		Operating Leases		Total
	(millions)
Fiscal year
2017	$	3	$	321	$	324
2018	3		304		307
2019	3		283		286
2020	3		249		252
2021	3		237		240
After 2021	37		2,289		2,326
Total minimum lease payments	52		$	3,683	$	3,735
Less amount representing interest	24
Present value of net minimum capitalized lease payments	$	28

Capitalized leases are included in the Consolidated Balance Sheets as property and equipment while the related obligation is included in short-term ($1 million) and long-term ($27 million) debt. Amortization of assets subject to capitalized leases is included in depreciation and amortization expense. Total minimum lease payments shown above have not been reduced by minimum sublease rentals of $17 million on operating leases.

The Company is a guarantor with respect to certain lease obligations associated with The May Department Stores Company and previously disposed subsidiaries or businesses. The leases, one of which includes potential extensions to 2070, have future minimum lease payments aggregating $284 million and are offset by payments from existing tenants and subtenants. In addition, the Company is liable for other expenses related to the above leases, such as property taxes and common area maintenance, which are also payable by existing tenants and subtenants. Potential liabilities related to these guarantees are subject to certain defenses by the Company. The Company believes that the risk of significant loss from the guarantees of these lease obligations is remote.

Rental expense consists of:



	2016			2015			2014
	(millions)
Real estate (excluding executory costs)
Capitalized leases –
Contingent rentals	$	—		$	—		$	—
Operating leases –
Minimum rentals	312			288			265
Contingent rentals	12			19			22
	324			307			287
Less income from subleases –
Operating leases	(5		)	(6		)	(8		)
	$	319		$	301		$	279
Personal property – Operating leases	$	11		$	12		$	12

Included as a reduction to the expense above is deferred rent amortization of $9 million, $8 million and $7 million for 2016, 2015 and 2014, respectively, related to contributions received from landlords.