Note 6 — Leases

Operating Leases

In August 2017, we entered into a Lease Agreement (the “Lease”) with ARE-San Francisco No. 19, LLC (ARE) and terminated our sublease with Pfizer, Inc., effectively extending our lease term from 2020 to 2030 for our 129,732 square foot corporate office and R&D facility located at 455 Mission Bay Boulevard, San Francisco, California (the “Mission Bay Facility”).

The term of the Lease commenced on September 1, 2017, and will expire January 31, 2030, subject to our right to extend the term of the Lease for two consecutive five-year periods. The monthly base rent for the Mission Bay Facility will escalate over the term of the Lease at various intervals. During the term of the Lease, we are responsible for paying our share of operating expenses specified in the Lease, including insurance costs and taxes. The Lease also obligates Nektar to rent from ARE a total of an additional approximately 23,000 square feet of space at the Mission Bay Facility at specified delivery dates. The Lease includes various covenants, indemnities, defaults, termination rights, security deposits and other provisions customary for lease transactions of this nature. In addition to the Lease, we have entered into other operating leases for locations in San Francisco and India.

We recognize rent expense on a straight-line basis over the lease period. For the year ended December 31, 2017, rent expense was approximately $4.7 million and for the years ended December 31, 2016, and 2015, rent expense was approximately $3.2 million in each year. As of December 31, 2017 and 2016, we had total deferred rent balances of $6.0 million and $6.6 million, respectively, which are recorded in other current and other long-term liabilities in our Consolidated Balance Sheets.

Our future minimum lease payments for our operating leases at December 31, 2017 are as follows (in thousands):

Year ending December 31,
2018	$	5,965
2019		5,511
2020		5,884
2021		8,739
2022		9,024
2023 and thereafter		71,127
Total future minimum lease payments	$	106,250

Capital Leases

During the year ended December 31, 2017, we repaid the $5.1 million due under our capital leases on our Consolidated Balance Sheet as of December 31, 2016 and have no capital lease balances as of December 31, 2017.