LEASES

12 Months Ended

Dec. 31, 2023

10. 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)	2023		2022		2021
Fixed lease costs (1)	$	19,718	$	20,186	$	(1,694)
Short-term lease costs	2,884		3,356		2,244
Variable lease costs	8,148		3,894		4,480
	$	30,750	$	27,436	$	5,030

(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, 2023		December 31, 2022
Right of use assets (1)	$	64,198	$	76,114
Operating lease liabilities (2)	$	15,000	$	14,976
Long-term operating lease liabilities	$	66,901	$	79,152

(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, 2023		December 31, 2022
Weighted-average remaining lease term	6.8 years		7.5 years
Weighted-average discount rate (1)	4.0	%	4.1	%

(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, 2023
2024	$	17,971
2025	15,602
2026	11,164
2027	10,114
2028	9,372
Thereafter	30,177
Total lease payments	94,400
Less: imputed interest (1)	(12,499)
	$	81,901

(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)


(in thousands)	2023		2022
Cash paid for operating leases, net of tenant improvement allowances	$	20,045	$	7,690
Right of use assets recognized for new leases and amendments (non-cash)	$	1,460	$	4,733

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