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Property and Equipment, net

6 Months Ended

Jun. 30, 2021

Property and Equipment, net

Property and Equipment, net

7. Property and equipment, net

Property and equipment, net consists of the following (in thousands):


		June 30,			December 31,
		2021			2020
Office equipment		$	18,190		$	17,880
Manufacturing and laboratory equipment			100,599			86,021
Computer equipment			69,863			66,640
Land			10,435			10,671
Building and leasehold improvements			263,010			238,042
Operating lease right-of-use assets			26,953			26,816
Construction in progress			331,569			257,929
			820,619			703,999
Less accumulated depreciation and amortization			(159,259)			(144,374)
Property and equipment, net		$	661,360		$	559,625

In March 2017, we acquired additional adjacent buildings to our global headquarters in Wilmington, Delaware and in 2019, began demolition of these buildings and construction of a new laboratory and office building totaling approximately 200,000 square feet. As of June 30, 2021, we have capitalized approximately $125.6 million in on site preparation, design and construction costs and currently expect the building to be completed in the first half of 2022.

In February 2018, we signed an agreement to rent a building in Morges, Switzerland for an initial term of 15 years plus one year of free rent, with multiple options to extend for an additional 20 years. The building serves as our European headquarters and consists of approximately 100,000 square feet of office space. This building allowed for consolidation of our European operations that were located in Geneva and Lausanne, Switzerland. In June 2019, we obtained control of the Morges building to begin our construction activity, which was completed in 2020. At that time, we determined the lease to be a finance lease and recorded a lease liability of $31.1 million and a finance lease right-of-use asset of $29.1 million, net of a lease incentive from our landlord of $2.0 million. At March 31, 2021, we capitalized approximately $19.1 million in leasehold improvements.

In July 2018, we signed an agreement to purchase land located in Yverdon, Switzerland. The land was purchased, in cash, for approximately $4.8 million. Upon this parcel, we are constructing a large molecule production facility. Construction activity commenced in July 2018 and as of June 30, 2021, we have capitalized approximately $188.8 million in costs for construction, ground preparation and architectural and engineering studies. We currently expect the facility will be operational in the first half of 2022.

We are the lessee of several contracts, including those to secure fleet vehicles, buildings and equipment. Our lease agreements do not contain any material residual value guarantees or restrictive covenants. Some of our building leases include options to renew and the exercise of these options is at our discretion. Our current operating lease liabilities are reflected in accrued and other current liabilities and our noncurrent operating lease liabilities are reflected in other liabilities on the condensed consolidated balance sheets and are as follows (in thousands):


		June 30,			December 31,
		2021			2020
Current
Operating lease liabilities		$	10,995		$	12,674
Finance lease liabilities			2,408			2,284
Noncurrent
Operating lease liabilities			15,501			14,188
Finance lease liabilities			31,838			32,573
Total lease liabilities		$	60,742		$	61,719

The cash paid for amounts included in the measurement of our operating lease liabilities for the six months ended June 30, 2021 and 2020 was $6.9 million and $5.9 million, respectively, in operating cash flows. The cash paid for amounts included in the measurement of our finance lease liabilities for the six months ended June 30, 2021 and 2020 was $1.2 million and $0.4 million, respectively, in financing cash flows.

As of June 30, 2021, our finance and operating leases had a weighted average lease term of approximately 13.8 and 4.7 years, respectively. The discount rate of our leases is an approximation of an estimated incremental borrowing rate and is dependent upon the term and economics of each agreement. The weighted average discount rate of our finance and operating leases is approximately 3.9% and 6.7%, respectively.

For the three and six months ended June 30, 2021, we incurred approximately $3.7 million and $7.2 million, respectively, of expense related to our operating leases, approximately $0.7 million and $1.3 million, respectively, of amortization on our finance lease right-of-use assets and approximately $0.3 million and $0.6 million, respectively, of interest expense on our finance lease liabilities. For the three and six months ended June 30, 2020, we incurred approximately $2.9 million and $6.1 million, respectively, of expense related to our operating leases, approximately $0.7 million and $1.3 million, respectively, of amortization on our finance lease right-of-use assets and approximately $0.3 million and $0.6 million, respectively, of interest expense on our finance lease liabilities. For the three and six months ended June 30, 2021 and 2020, the cost of our short term leases with a term less than 12 months was de minimis.