LEASES

12 Months Ended

Dec. 31, 2022

11. LEASES

Corporate headquarters

In February 2021, the Company agreed to accelerate its exit from its previous corporate headquarters to October 1, 2021, in exchange for a one-time payment from its landlord of $18 million, which was amortized over the remaining lease term. The exit accelerated depreciation on the related leasehold improvements and reduced the Company’s future lease liabilities by $21.1 million and right of use assets by $20.3 million. 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.

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 became payable on August 1, 2022. Base rent for the first year is approximately $6 million and will increase by 3% annually. In addition, the Company received an improvement allowance from the landlord of $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


(in thousands)	2022		2021		2020
Fixed lease costs (1)	$	20,186	$	(1,694)	$	20,235
Short-term lease costs	3,356		2,244		1,669
Variable lease costs	3,894		4,480		4,470
	$	27,436	$	5,030	$	26,374

(1) The lower fixed lease costs in 2021 was due to the modification of the corporate headquarters lease.

Right of use assets and lease liabilities


(in thousands)	December 31, 2022		December 31, 2021
Right of use assets (1)	$	76,114	$	87,521
Operating lease liabilities (2)	$	14,976	$	6,989
Long-term operating lease liabilities	$	79,152	$	87,818

(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.

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


	December 31, 2022		December 31, 2021
Weighted-average remaining lease term	7.5 years		7.7 years
Weighted-average discount rate (1)	4.1	%	4.4	%

(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)	December 31, 2022
2023	$	18,476
2024	17,101
2025	14,444
2026	10,860
2027	9,814
Thereafter	39,265
Total lease payments	109,960
Less: imputed interest (1)	(15,832)
	$	94,128

(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 (1) (2)


(in thousands)	2022		2021
Cash paid for operating leases, net of tenant improvement allowances	$	7,690	$	18,428
Right of use assets recognized for new leases and amendments (non-cash)	$	4,733	$	55,068

(1) In 2022 and 2021, the Company received tenant improvement allowances of $8.8 million and $3.0 million, respectively, as part of the lease of the Company’s new corporate headquarters in Waltham, Massachusetts.

(2) In 2021, the Company received $18 million as a one-time payment for the Company’s accelerated exit from its then corporate headquarters in Cambridge, Massachusetts. This payment has been excluded from the above table.