The Company leases an office space in Houston, Texas under an operating lease that expires in September 2022. The Company also sub-leased, on a month-to-month basis, a portion of ElevateBio's office space in Cambridge, Massachusetts, which terminated effective January 31, 2022. During the years ended December 31, 2021 and 2020, total short-term lease expense recognized was $0.4 million (of which approximately $37.5 thousand relates to non-lease costs, such as utilities and cleaning), and $0.4 million (of which approximately $58.2 thousand relates to non-lease costs such as utilities and cleaning), respectively.

In April 2021, the Company entered into a Statement of Work (“SOW”) with a third-party supplier under the Development and Manufacturing Services Agreement (“DMS Agreement”) made effective in July 2019. This SOW is to lease a dedicated manufacturing suite for the manufacture of AlloVir’s products at the facility. On July 30, 2021, the Company provided a notification to reduce capacity to the third-party supplier which terminates this lease agreement in the first quarter of 2022. During the years ended December 31, 2021 and 2020, total lease expense recognized under this SOW was $0.5 million and $0, respectively.

Operating lease liabilities and their corresponding right-of-use ("ROU") assets are recorded based on the present value of future lease payments over the expected remaining lease term. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at the lease commencement date based on the present value of the lease payments over the lease term. The Company uses an incremental borrowing rate based on information available at the commencement date in determining the present value of lease payments. The incremental borrowing rate represents the rate of interest that a lessee would have to pay to borrow on a collateralized basis over a similar term at an amount equal to the lease payments in a similar economic environment. The Company estimates this rate based on prevailing market conditions, comparable company and credit analysis, the impact of collateralization, and the term of each of the Company’s lease agreements.

In March 2019, the Company entered into an interim services agreement which ultimately led to a DMS Agreement with a third-party supplier in July 2019. The DMS Agreement specifies a dedicated manufacturing suite for the manufacture of AlloVir’s products at the facility. The DMS Agreement will expire upon the later of: 1) two years from the Effective Date, or July 2021, and 2) the completion of services under all SOWs. The term may be extended by agreement of the parties for additional two-year periods upon written notice to the supplier at least 30 days prior to expiration of the then-current term. The DMS Agreement (or any individual SOW) may be terminated earlier by AlloVir at any time by providing 190 days’ notice. The Company has extended the DMS Agreement, and estimates that early termination is not reasonably certain to occur. The total estimated lease term of approximately 4.25 years expires in July 2023. In March 2019, at the inception of this lease, the Company recorded a ROU asset and lease liability of $6.9 million. In September 2019, the Company executed a SOW for another dedicated manufacturing suite under the DMS Agreement with substantially the same terms as the original SOW. In September 2019, at the inception of this lease, the Company recorded a ROU asset and lease liability of $6.3 million. The SOW calls for a fixed monthly payment through July 2023, with additional two-year renewal options. The total estimated lease term of approximately 3.75 years expires in July 2023. The use of these manufacturing suites qualify as a lease under ASC 842, as it includes an identified asset for exclusive use by the Company at its direction.

In May 2020, the Company entered into a new Development and Manufacturing Services Agreement (“2020 DMS Agreement”) with ElevateBio BaseCamp, Inc. and signed a SOW in November 2020. The 2020 DMS Agreement and related SOW contained an embedded lease for a dedicated manufacturing suite for the manufacture of AlloVir’s products at the facility because the Company directs how and for what purpose the suite is used for and obtains substantially all of the economic benefit of the suite. In exchange for this dedicated manufacturing suite, AlloVir will pay the supplier a monthly fixed suite utilization fee, and other related fixed costs, totaling $3.2 million over the two-year lease term (one year lease with a one-year renewal option), that covers costs associated with reserving capacity for AlloVir, as well as cleaning services, utilities, handling and maintenance of the manufacturing suite. The Company estimates that the exercise of the one-year renewal option is reasonably certain to occur, and the Company is reasonably certain that it will not exercise its early termination right, providing for a total estimated lease term of two years expiring in January 2023. As part of

the arrangement, there were also variable costs for materials, non-fixed batch payments, storage, knowledge and tech transfer and other common area maintenance fees that were not included in the measurement of the lease. The lease of the facility was determined to be classified as an operating lease and commenced in February 2021, the point at which the new facility area was substantially complete and available for use by the Company. Accordingly, at inception, the Company recorded a ROU asset of $3.1 million and a lease liability of $2.5 million. The Company prepaid $0.6 million of the suite utilization fee, which was reclassified from prepaid expense to the ROU asset upon lease commencement.

In September 2021, the Company entered into a new lease agreement with BP Bay Colony LLC and a sublease with AMAG Pharmaceuticals Inc. for the lease of property in Waltham, Massachusetts (collectively, the "Waltham leases"). The space identified under the Waltham leases is intended for general office space, research and development, laboratory use, and light manufacturing. The Waltham leases have been classified as operating leases and commenced in September 2021. At the inception date, the Company has recorded an ROU asset and lease liability of $6.0 million for the lease and a ROU asset and lease liability of $17.3 million for the sublease based on a July 30, 2030 end date for the Waltham leases. As part of the arrangement, there were also variable costs for common area maintenance fees that were not included in the measurement of the lease. The agreement also provides a $3.1 million tenant improvement allowance which is to be reimbursed by the landlord over the duration of the first two years of the Waltham leases. As of December 31, 2021 no allowances have been used and therefore no reduction to the tenant improvement allowance has been made. The Company will monitor the timing of the reimbursements and adjust the ROU asset and lease liability at such time. The Company has the option to renew the leased space for an additional one time period of five years with written notice from the Company. As of December 31, 2021, the Company has no reasonable certainty that this option to extend will be exercised.

Maturities of operating lease liabilities at December 31, 2021 are as follows (in thousands):


2022	$	7,767
2023		5,273
2024		3,177
2025		3,255
2026		3,334
Thereafter		13,247
Total lease payments		36,053
Less: interest (3.40% - 5.75%)		(5,987	)
Total lease liability	$	30,066
Lease liability – current	$	6,591
Lease liability – long-term	$	23,475

Total lease costs were $6.2 million and $4.0 million for the years ended December 31, 2021 and 2020, respectively. Cash paid for operating leases was $5.2 million and $3.6 million for the year ended December 31, 2021 and 2020, respectively. The Company’s total variable non-lease costs, such as materials, non-fixed batch payments, storage, tech transfer and other common area maintenance fees, related to the operating leases was $14.5 million and $4.5 million for the years ended December 31, 2021 and 2020, respectively. The weighted average remaining lease term is 7.17 years at December 31, 2021. The weighted average discount rate is 4.96%.