LEASES

9 Months Ended

Sep. 30, 2021

NOTE 7. LEASES

Corporate headquarters

In February 2021, the Company agreed to accelerate its exit from its corporate headquarters to October 1, 2021, in exchange for a one-time payment from our landlord of $18 million, which was amortized over the remaining lease term. The accelerated exit from this lease reduced our future lease liabilities by $21.1 million and accelerated corporate headquarters-related depreciation. On March 31, 2021 the Company leased office space at One Main Street, Cambridge, Massachusetts, to serve as its corporate headquarters. The 4.5 year lease includes a base rent of $2 million per year.

New Waltham Office

On July 6, 2021, the Company entered into an office space lease for 131 thousand square feet in Waltham, Massachusetts. The lease term of 11 years began on August 1, 2021. The annual rent equals the base rent plus a portion of building operating costs and real estate taxes. Rent first becomes payable on August 1, 2022. Base rent for the first year is approximately $6 million and will increase by 3 percent annually. In addition, the Company will receive an improvement allowance from the landlord of up to $11.8 million. This lease increased the Company’s lease liabilities and lease-related right of use assets by $42.1 million on August 1, 2021.

Expense


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2021		2020		2021		2020
Fixed lease costs (1)	$	(3,108)	$	5,172	$	(6,780)	$	14,933
Short-term lease costs	542		422		1,516		1,248
Variable lease costs	1,099		1,259		3,826		3,506
	$	(1,467)	$	6,853	$	(1,438)	$	19,687

(1) The decrease in fixed lease costs in three and nine months ended September 30, 2021 was due to the modification of the corporate headquarters lease.

Right of use assets and lease liabilities


(in thousands)	September 30, 2021		December 31, 2020
Right of use assets (1)	$	91,349	$	67,651
Operating lease liabilities (2)	$	10,668	$	18,541
Long-term operating lease liabilities	$	87,088	$	59,053

(1) Represents the Company’s right to use the leased asset during the lease term. Included in other long-term assets.

(2) Included in other current liabilities.

Weighted-average remaining lease term and discount rate for the Company’s leases were:


	September 30, 2021		December 31, 2020
Weighted-average remaining lease term	7.8 years		4.7 years
Weighted-average discount rate (1)	4.4	%	5.4	%

(1) The rates implicit in most of the Company’s leases are not readily determinable. Therefore, the Company uses its incremental borrowing rate as the discount rate when measuring operating lease liabilities. The incremental borrowing rate represents an estimate of the interest rate the Company would incur to borrow an amount equal to the lease payments on a collateralized basis over the lease term in a similar economic environment.

Maturities of lease liabilities:


(in thousands)	September 30, 2021
Remainder of 2021	$	961
2022	9,948
2023	19,607
2024	16,482
2025	13,607
2026	9,866
Thereafter	48,515
Total lease payments	118,986
Less: imputed interest (1)	(21,230)
	$	97,756

(1) Lease liabilities are measured at the present value of the remaining lease payments using a discount rate determined at lease commencement unless the discount rate is updated due to a lease reassessment event.

Cash flow information


	Nine Months Ended September 30,
(in thousands)	2021		2020
Cash paid for leases	$	14,403	$	15,503
Right of use assets recognized for new leases and amendments (non-cash)	$	54,716	$	24,276