Our corporate headquarters are located in South San Francisco, California. In April 2018, we signed a lease (the “Lease Agreement”) for approximately 47,500 square feet of office, research and development and laboratory space with occupancy commencing on February 1, 2019 for a seven-year period with an option to extend for another seven-year period subject to certain conditions. Pursuant to the Lease Agreement, we provided a letter of credit to the landlord for $0.6 million which was recorded as long-term restricted cash at March 31, 2020 and December 31, 2019. The Lease Agreement allows for a landlord-provided tenant improvement allowance of up to $7.1 million to be applied to the cost of construction of tenant improvements to the new leased premises. The Lease Agreement also provides, and we have utilized, an additional tenant improvement allowance of up to $1.2 million to be applied to the costs of tenant improvements. We utilized the aggregate amount of allowances available to us and have recorded $8.3 million of tenant improvement costs as leasehold improvements in our condensed consolidated balance sheets, with a corresponding lease incentive obligation which was classified as deferred rent as of December 31, 2019.

On January 1, 2020, we adopted ASC 842 and recorded an operating lease ROU asset and lease liability in our condensed consolidated balance sheet related to the Lease Agreement. Upon adoption, we recorded an operating lease ROU asset of $6.8 million, an operating lease liability of $15.6 million, and eliminated our existing deferred rent balance of $8.8 million. There was no impact to accumulated deficit upon adoption.

We recognize ROU assets and lease liabilities based on the present value of lease payments due over the lease term, and adjust ROU assets for any lease prepayments made or lease incentives received. In determining the present value of remaining lease payments for our corporate headquarters lease, we used an estimated incremental borrowing rate based on the information available at the adoption date. As of March 31, 2020, the remaining lease term related to the Lease Agreement was 5.8 years, through January 2026, and the incremental borrowing rate used to determine the present value of remaining lease payments was 9%. Cash paid for amounts included in the measurement of our lease liability for the three months ended March 31, 2020 was $0.8 million and was included in net cash used in operating activities in our condensed consolidated statements of cash flows.

We recorded rent expense of $0.7 million for each of the three months ended March 31, 2020 and 2019. We recognize lease expense on a straight-line basis over the lease term. Where leases contain escalation clauses, rent abatements, and/or concessions such as rent holidays and landlord or tenant incentives or allowances, we apply them in the determination of straight-line rent expense over the lease term. We amortize leasehold improvements over the shorter of their estimated useful life or the term of the lease. We do not assume renewals in our determination of the lease term unless the renewals are deemed by management to be reasonably assured at lease inception. We have determined that our lease related to the Lease Agreement commenced on August 1, 2018, when we had right to use or control physical access to the new leased premises.

The following table reconciles future lease payments for the periods presented to our operating lease liability as of March 31, 2020 (in thousands):

Year ended December 31,
2020 (remaining 9 months)	$	2,326
2021		3,193
2022		3,296
2023		3,403
2024		3,514
2025 and beyond		3,933
Total lease payments		19,665
Present value adjustment		(4,530	)
Operating lease liability	$	15,135

Our previous lease, which expired on January 31, 2019, was for 30,000 square feet of office, research and development, and laboratory space in South San Francisco. It was subject to several amendments to secure additional space, sublease certain office and laboratory space and/or extend the lease term.

We are required to recognize a liability for the fair value of any obligations we assume upon the issuance of a guarantee. We have certain agreements with licensors, licensees, collaborators and service providers that contain indemnification provisions. In such provisions, we typically agree to indemnify the licensor, licensee collaborator or service provider against certain types of third party claims. The maximum amount of the indemnifications is usually not limited. We accrue for known indemnification issues when a loss is probable and can be reasonably estimated. There were no accruals for expenses related to indemnifications for any periods presented.

We indemnify each of our officers and directors, as well as certain employees, for certain events or occurrences, subject to certain limitations, while the officer, director or employee is or was serving at our request in such capacity, as permitted under Delaware law and in accordance with our certificate of incorporation, our bylaws and certain indemnification agreements between us and each of our directors, officers and applicable employees. The term of the indemnification period lasts as long as an officer, a director or applicable employee may be subject to any proceeding arising out of acts or omissions of such officer, director or applicable employee in such capacity. The maximum amount of potential future indemnification is unlimited; however, we currently hold director and officer liability insurance. This insurance allows the transfer of risk associated with our exposure and may enable us to recover a portion of any future amounts paid with regards to our officers and directors. We believe that the fair value of these indemnification obligations is minimal. Accordingly, we have not recognized any liabilities relating to these obligations for any period presented.