Real Estate Transactions

9 Months Ended

Sep. 30, 2023

Real Estate Transactions [Abstract]

Real Estate Transactions

13. Real Estate Transactions

In October 2022, we concurrently entered into two purchase and sale agreements with a real estate investor. In the same month, we closed the first transaction in which we sold the facilities at our headquarters in Carlsbad, California, which includes our primary R&D facility, for a purchase price of $263.4 million. In connection with this transaction, we leased back our headquarters facilities for an initial lease term of 15 years with options to extend the lease for two additional terms of five years each.

In August 2023, we closed the second transaction and transferred legal ownership of two lots of undeveloped land adjacent to our headquarters to the real estate investor for a purchase price of $33 million. In connection with this transaction, we entered into a build-to-suit lease agreement with the same real estate investor to lease a new R&D facility. The lessor will develop and construct a new building composed of R&D and office space. We will design and construct tenant improvements to customize the facility’s interior space. We will lease the facility for an initial term of 15 years with options to extend the lease for two additional terms of five years each. The lease will commence once the structure of this new facility is completed.

Since the building is under construction and unavailable to lease, we are unable to complete the sale-leaseback evaluation under ASC 842, Leases. As a result, the land remains in our condensed consolidated balance sheets and we accounted for the proceeds as a financial liability. We will reassess the transaction under the sale-leaseback accounting guidance when the facilities are available for lease commencement.

In October 2022, we entered into a build-to-suit lease agreement to lease a development chemistry and manufacturing facility to be constructed by the lessor in Oceanside, California. We capitalized costs that we incurred related to the design and development of tenant improvements as construction-in-progress in our condensed consolidated balance sheets. In August 2023, we reached a mutual agreement with the lessor to terminate the lease agreement. As a result, we recorded a charge of $18 million, primarily associated with the impairment of construction-in-progress assets, within selling, general and administrative, or SG&A, expense in our condensed consolidated statements of operations.