20-F: Apollomics Extends Office Lease, Modifies Terms in Foster City

Apollomics Inc. amends its office lease in Foster City, California, extending the term while reducing the leased space.

Summary

• Apollomics Inc. has agreed to amend its existing office lease at 989 East Hillsdale Boulevard, Foster City, California.
• The amendment extends the lease term through February 28, 2029, while reducing the leased space by 2,516 rentable square feet.
• The remaining premises will consist of 5,092 rentable square feet.
• Base rent for the remaining premises will vary throughout the extended term, starting at $64.44 per square foot in March 2024 and decreasing to $45.00 per square foot from April 2024 to February 2025.
• The base rent will then gradually increase to $51.00 per square foot by March 2028.
• Base rent will be abated for two full calendar months in April 2024, March 2025, March 2027 and January 2029.
• Tenant's share of expenses and taxes for the remaining premises during the extended term will be 3.6322%, with 2024 as the base year.
• Tenant will reduce parking spaces from 23 to 16.
• The amendment includes a release and waiver related to exposure to pathogens, including COVID-19.
• Tenant has the option to accelerate the lease expiration date to August 30, 2027, subject to certain conditions and payment of an $88,600.80 fee.

Sentiment

Score: 7

Explanation: The document is a standard legal agreement, so the sentiment is neutral. However, the extension of the lease suggests a degree of stability and commitment to the location, which is mildly positive.

Positives

• Apollomics secures long-term office space through February 2029.
• Rent abatements provide short-term cost savings.
• Tenant has the option to accelerate the lease expiration to August 30, 2027, for a fee of $88,600.80.

Negatives

• Apollomics reduces its office footprint, potentially indicating a change in business operations.
• The amendment includes a release and waiver related to exposure to pathogens, including COVID-19.

Risks

• Tenant fails to surrender any portion of the Reduction Space on or before the Existing Expiration Date, Tenants tenancy with respect to the Reduction Space shall be subject to Section 16 of the Lease.
• Tenant defaults under the Lease (as amended) (including, without limitation, by failing to timely pay the Acceleration Fee), Landlord, at its option, may (i) declare Tenants exercise of the Acceleration Option to be null and void (in which event Landlord shall return to Tenant any Acceleration Fee received from Tenant, but only after applying it against any past due Rent), or (ii) continue to honor Tenants exercise of its Acceleration Option in accordance with the terms hereof.

Future Outlook

The document outlines the terms for Apollomics' continued lease of office space, providing a framework for its operational footprint and associated costs through February 2029, with a potential acceleration option.

Management Comments

• Tenant acknowledges that it is in possession of the Remaining Premises and agrees to accept them as is without any representation by Landlord regarding their configuration or condition and without any obligation on the part of Landlord to perform or pay for any alteration or improvement, except as may be otherwise expressly provided in this Amendment.

Industry Context

In the biotech industry, office space is crucial for research, development, and administrative functions. Lease agreements are common, and amendments reflect changing needs and financial strategies. This amendment aligns with typical real estate practices, balancing operational requirements with cost management.

Comparison to Industry Standards

• Comparable companies in the biotech sector, such as Gilead Sciences or Amgen, also lease office and lab spaces.
• Lease terms and rates are often negotiated based on market conditions, company size, and location.
• The rent abatements and acceleration options are common features in commercial leases, providing flexibility for both landlord and tenant.
• The base rent rates appear to be within the typical range for office space in the Foster City, California area, but would require a more detailed market analysis to confirm.

Stakeholder Impact

• Shareholders: Securing long-term office space provides operational stability.
• Employees: Continued presence in Foster City ensures minimal disruption.
• Landlord: Guaranteed income stream for the extended lease term.

Next Steps

• Landlord shall perform improvements to the Remaining Premises and the Reduction Space in accordance with the Reduction/Extension Work Letter attached hereto as Exhibit B.
• Landlord shall deliver the Acceleration Amendment to Tenant within 15 days after receiving the Acceleration Notice, and Tenant shall execute and return the Acceleration Amendment to Landlord within 15 days after receiving it.

Key Dates

Keywords

office lease, lease amendment, real estate, Apollomics, Foster City, rent, expiration date, reduction space