Property and Equipment

6 Months Ended

Jun. 30, 2015

6.Property and Equipment

Property and equipment consists of the following:

	June 30, 2015			December 31, 2014
	(in thousands)
Office equipment	$	6,279		$	6,090
Laboratory equipment	28,702			26,800
Computer equipment	20,746			18,648
Building and leasehold improvements	65,606			64,926

	121,333			116,464
Less accumulated depreciation and amortization	(39,731		)	(34,674		)

	$	81,602		$	81,790

In 2013, we entered into a lease agreement for a new corporate headquarters, which consists of approximately 190,000 square feet of laboratory and office space located in Wilmington, Delaware. The term of this lease is 15 years from the date of commencement. The construction of the facility was completed and the lease commenced on October 1, 2014 with a monthly lease rate of $0.5 million for the first 10 years of the lease and with the monthly lease rate increasing annually during the last five years of lease.

We are accounting for the lease as a direct financing arrangement whereby over the construction period, we recorded the value of the facility (consisting of the estimated fair value of the existing shell, plus construction costs incurred) as a capital asset, with a corresponding lease liability, net of build out costs paid for by us during the construction period. The lease liability will be amortized over the term of the lease using the effective interest method. In addition, we have posted a $15.0 million letter of credit for the facility lease for the benefit of the landlord, which is collateralized by a restricted investments account for the same amount. This amount was recorded as restricted investments on the condensed consolidated balance sheets and will be reduced over a period of time during the duration of the lease. The letter of credit could be subject to accelerated reductions if we meet certain pre-defined financial targets. Restricted investments related to this direct financing lease on the condensed consolidated balance sheets at June 30, 2015 and December 31, 2014 were $14.3 million and $14.5 million, respectively.