Commitments and Contingencies

Unfunded Commitments—The Company generally funds construction and development loans and build-outs of space in real estate assets over a period of time if and when the borrowers and tenants meet established milestones and other performance criteria. The Company refers to these arrangements as Performance-Based Commitments. In addition, the Company has committed to invest capital in several real estate funds and other ventures. These arrangements are referred to as Strategic Investments.

As of December 31, 2017, the maximum amount of fundings the Company may be required to make under each category, assuming all performance hurdles and milestones are met under the Performance-Based Commitments and that 100% of its capital committed to Strategic Investments is drawn down, are as follows ($ in thousands):



	Loans and Other Lending Investments⁽¹⁾		Real Estate		Other Investments		Total
Performance-Based Commitments	$	338,290	$	10,934	$	28,585	$	377,809
Strategic Investments	—		—		10,743		10,743
Total	$	338,290	$	10,934	$	39,328	$	388,552

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(1)	Excludes $102.1 million of commitments on loan participations sold that are not the obligation of the Company.

Other Commitments—Total operating lease expense for the years ended December 31, 2017, 2016 and 2015 was $5.2 million, $5.9 million and $6.0 million, respectively. Future minimum lease obligations under non-cancelable operating leases are as follows ($ in thousands):



2018	$	4,970
2019	3,919
2020	3,812
2021	1,439
2022	837
Thereafter	2,914

Legal Proceedings—The Company and/or one or more of its subsidiaries is party to various pending litigation matters that are considered ordinary routine litigation incidental to the Company's business as a finance and investment company focused on the commercial real estate industry, including loan foreclosure and foreclosure-related proceedings. In addition to such matters, the Company is a party to the following legal proceedings:

U.S. Home Corporation ("Lennar") v. Settlers Crossing, LLC, et al. (Civil Action No. DKC 08-1863)

This litigation involved a dispute over the purchase and sale of approximately 1,250 acres of land in Prince George’s County, Maryland. Following a trial, in January 2015, the United States District Court for the District of Maryland (the District Court) entered judgment in favor of the Company, finding that the Company was entitled to specific performance of the purchase and sale agreement and awarding the Company the aggregate amount of: (i) the remaining unpaid purchase price; plus (ii) simple interest on the unpaid amount at a rate of 12% annually from 2008; plus (iii) real estate taxes paid by the Company; plus (iv) actual and reasonable attorneys' fees and costs incurred by the Company in connection with the litigation. Lennar appealed the District Court's judgment. On April 12, 2017, the United States Court of Appeals for the Fourth Circuit affirmed the judgment of the District Court in its entirety. Lennar’s petition for rehearing en banc was summarily denied.

On April 21, 2017, the Company and Lennar completed the transfer of the land, pursuant to which the Company conveyed the land to Lennar and received net proceeds of $234.1 million after payment of $3.3 million in documentary transfer taxes, consisting of $114.0 million of sales proceeds, $121.8 million of interest and $1.6 million of real estate tax reimbursements. The interest and real estate tax reimbursements are recorded in "Other income" in the Company's consolidated statements of operations. A portion of the net proceeds received by the Company was paid to the third party that holds a 4.3% participation interest in all proceeds received by the Company.

Lennar filed a petition for a writ of certiorari with the U.S. Supreme Court seeking review of two specific issues decided in the Company's favor by the lower courts. The Company filed a brief in opposition to the petition. On December 4, 2017, the U.S. Supreme Court issued an order denying Lennar’s petition for a writ of certiorari.

The Company has applied for the recovery of attorneys' fees and costs it incurred in connection with the litigation. The amount of attorneys’ fees and costs to be recovered by the Company will be determined through further proceedings before the District Court. A hearing on the Company’s application for attorney’s fees has not yet been scheduled.

On a quarterly basis, the Company evaluates developments in legal proceedings that could require a liability to be accrued and/or disclosed. Based on its current knowledge, and after consultation with legal counsel, the Company believes it is not a party to, nor are any of its properties the subject of, any pending legal proceeding that would have a material adverse effect on the Company's consolidated financial statements.