Properties and Leases



	February 3, 2018		January 28, 2017
	(millions)
Land	$	1,494	$	1,541
Buildings on owned land	4,106		4,212
Buildings on leased land and leasehold improvements	1,444		1,545
Fixtures and equipment	4,204		4,541
Leased properties under capitalized leases	34		34
	11,282		11,873
Less accumulated depreciation and amortization	4,610		4,856
	$	6,672	$	7,017

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 February 3, 2018, for noncancellable leases are:



	Capitalized Leases		Operating Leases		Total
	(millions)
Fiscal year
2018	$	3	$	327	$	330
2019	3		312		315
2020	3		274		277
2021	3		259		262
2022	3		235		238
After 2022	34		2,139		2,173
Total minimum lease payments	49		$	3,546	$	3,595
Less amount representing interest	22
Present value of net minimum capitalized lease payments	$	27

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 ($26 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 $3 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 $254 million and are offset by payments from existing tenants and subtenants. In addition, the Company is contingently 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:



	2017			2016			2015
	(millions)
Real estate (excluding executory costs)
Operating leases –
Minimum rentals	$	317		$	312		$	288
Contingent rentals	11			12			19
	328			324			307
Less income from subleases –
Operating leases	(3		)	(5		)	(6		)
	$	325		$	319		$	301
Personal property – Operating leases	$	10		$	11		$	12

Included as a reduction to the expense above is deferred rent amortization of $14 million, $9 million and $8 million for 2017, 2016 and 2015, respectively, related to contributions received from landlords.