Lease Agreements |
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| Lease Agreements |
11.Lease Agreements
We currently lease our research and office space under a noncancelable lease agreement with our landlord, HCP BTC, LLC (formerly known as Slough BTC, LLC) which expires in 2018. The lease term provides for renewal option for up to two additional periods of five years each. In April 2017, we notified our landlord that we exercised our option to extend the term of our lease for another five years through 2023 and is in the process of negotiating certain terms of our lease agreement.
In December 2014, we entered into a sublease agreement with an unrelated third party to occupy approximately 57,000 square feet of our research and office space. In connection with this sublease, we recognized a loss on sublease of $9.3 million during the fourth quarter of 2014. In February 2017, we entered into an amendment to the sublease agreement to increase the subleased research and office space for an additional 9,328 square feet under the same term of the sublease, and recognized an additional loss on sublease of $495,000. We expect to receive approximately $1.8 million in future sublease income (excluding our subtenant’s share of facilities operating expenses) through January 2018, the end of the initial term of the sublease. During the second quarter of 2017 and pursuant to the terms of the sublease agreement, our sublessee exercised its right to extend the sublease term for another five years through 2023 at a monthly rate equal to the amount we will pay our landlord.
We record rent expense on a straight-line basis for our lease, net of sublease income. For our sublease arrangement which we classified as an operating lease, our loss on the sublease was comprised of the present value of our future payments to our landlord less the present value of our future rent payments expected from our subtenant over the term of the sublease. The liability arising from this sublease agreement was determined using a credit-adjusted risk-free rate to discount the estimated future net cash flows. The changes in the liability related to the sublease agreement for the six months ended June 30, 2017 were as follows (in thousands):
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