|12 Months Ended|
Dec. 31, 2019
In August 2017, the Company entered into a lease agreement to lease 24,357 square feet of combination laboratory and office space in 4000 Shoreline Court, South San Francisco, California. The lease commenced on March 1, 2018 and terminates on February 28, 2025.
The contractually specified minimum rent and annual rent increases for the operating lease are included in the measurement of the ROU asset and related lease liabilities. Under the lease arrangement, we may be required to pay directly, or reimburse the lessor for real estate taxes, insurance, utilities, maintenance and other operating costs. Such amounts are generally variable and therefore not included in the measurement of the ROU asset and related lease liability but are instead recognized as variable lease expense in our Condensed Consolidated Statements of Operations when they are incurred. The operating lease agreement has one option to extend the lease term for a period of five years at the fair market rate at the time of the extension. The option to extend the lease was not recognized as part of the Company’s lease liability and ROU asset as the Company determined the renewal rent costs are uncertain and the option is not reasonably certain to be exercised.
Because the rate implicit in the lease is not readily determinable, the Company uses its incremental borrowing rate to determine the present value of the lease payments. The Company recorded lease liabilities and ROU asset for its office lease based on the present value of lease payments over the expected lease term. As of December 31, 2019, the weighted average remaining lease term was 5.17 years and the weighted average discount rate used to determine the operating lease liability was 10.0%.
Information related to the Company’s ROU asset and related lease liabilities were as follows (in thousands):
ASC 840 Disclosure
The Company elected the alternative modified transition method and included the following table previously disclosed. As of December 31, 2018, future minimum lease payments under the noncancelable facility operating lease, were as follows (in thousands):
For the years ended December 31, 2019, 2018 and 2017, the Company recognized $1.1 million, $1.0 million and $0.3 million of rent expense, respectively. Variable lease costs were $0.5 million, $0.4 million and $0.1 million for the years ended December 31, 2019, 2018 and 2017, respectively.
The entire disclosure for operating leases of lessee. Includes, but is not limited to, description of operating lease and maturity analysis of operating lease liability.
Reference 1: http://www.xbrl.org/2003/role/disclosureRef