Leases

12 Months Ended

Dec. 31, 2023

Redwood City

The Company has a lease for a facility in Redwood City, which provided a total of tenant improvement allowances of $6.8 million. Related to this lease, the Company provided the landlord with a letter of credit in the amount of $2.7 million. The Redwood City lease expires in December 2031, with an option to extend for a period of eight years.

Prior to September 30, 2023, the Company had two facility leases in Redwood City with the same landlord (the “Redwood City Premises”). In March 2023, the Company entered into an amendment to accelerate the lease expiration of one of its Redwood City Premises from December 31, 2031 to September 30, 2023. Concurrently, the Company entered into an agreement to increase the tenant improvement allowance towards the second of its Redwood City Premises. The Company accounted for this amendment as a lease modification in accordance with ASC 842-10-25-11(d). As a result of the modification the Company revalued the lease liability based on the new and remaining lease terms, which resulted in a reduction to the lease liability with a corresponding reduction of the right-of-use asset of $8.3 million. The estimated value of non-cash consideration, composed primarily of leasehold improvements and furniture and fixtures, was $14.9 million, which was fully amortized as of September 30, 2023. There was no charge recognized in the consolidated statement of operations. In October 2023, the Company entered into an amendment to the letter of credit which reduced the amount to $1.9 million, which is classified as restricted cash under long-term assets on the Company's consolidated balance sheets.

North Carolina

On January 8, 2021, the Company entered into an operating lease agreement for a building in North Carolina (“NC Premises”). The lease commenced in April 2021, when the Company obtained control of the NC Premises, and the lease term expires in October 2037 with two options to extend the lease term for a period of five years each.

On October 26, 2021, the Company entered into a sublease agreement with a subtenant for the NC Premises through October 2037, the remainder of the lease term, and concurrently changed the lease payment terms of the head lease. In addition, the remainder of the tenant improvement allowance under the original lease of approximately $22.7 million was transferred to the subtenant. This change in the Company’s payment terms with the landlord at the time of the sublease was considered to be a lease modification and the Company remeasured the lease liability and right-of-use asset on the modification date, with no amounts recognized in the consolidated statement of operations. The base annual rental rates, payment schedules and amounts under the sublease agreement are substantially the same as the original payment terms by Adverum to the landlord.

On April 3, 2023, the Company entered into an amendment of the lease of its NC Premises with the landlord and subtenant. Under this amendment, the parties agreed to substantially reduce the total tenant improvement allowance in exchange for lower monthly rent. The Company accounted for this amendment as a lease modification in accordance with ASC 842-10-25-11(d). The Company remeasured the lease liability, resulting in a reduction to the lease liability with a corresponding reduction of the right-of-use asset of $5.7 million in the quarter ended June 30, 2023. There was no charge recognized in the consolidated statement of operations.

During the year ended December 31, 2022, management reassessed the probability of collection of the deferred rent receivable from the subtenant over the remaining term of a sublease. Management assessed the collectability to be less than probable and the Company recognized an adjustment to eliminate the deferred rent receivable as a current period adjustment to sublease income, resulting in an increase in general and administrative expenses during the year ended December 31, 2022. The deferred rent receivable was zero as of December 31, 2023 and 2022.

As of December 31, 2023, the weighted-average remaining lease term was 11.6 years for the Company's leases and the weighted-average Incremental Borrowing Rate (“IBR”) was 11.7%. As of December 31, 2022, the weighted-average remaining lease term was 10.2 years for the Company's leases and the weighted-average IBR was 9.9%.

The following table summarizes the undiscounted future non-cancellable lease payments under the lease agreements as of December 31, 2023 (in thousands):


December 31,	Operating Leases		Sublease Payment Receivable

2024	$	11,086	$	5,248
2025	11,448		5,405
2026	11,821		5,568
2027	12,207		5,735
2028	12,606		5,907
Thereafter	82,047		60,509
Total undiscounted lease payments	$	141,215	$	88,372
Less: Imputed Interest	(66,179)


Total	$	75,036

Rent expense for the years ended December 31, 2023, and 2022 was $25.3 million and $17.2 million, respectively. Included in rent expense for the years ended December 31, 2023, and 2022 were variable lease costs for utilities, parking, maintenance, and real estate taxes of $2.4 million and $2.3 million, respectively. Cash paid for amounts included in the measurement of lease liabilities for the twelve months ended December 31, 2023 and 2022 was $12.8 million and $6.0 million, respectively. Sublease income was $5.3 million and $(0.3) million for the years ended December 31, 2023 and 2022, respectively, which was classified in general and administrative expense.