FATE THERAPEUTICS INC Leases Disclosure

8. Leases

The Company has lease agreements for office, laboratory and manufacturing spaces that are classified as operating leases on the consolidated balance sheets. These leases have original terms varying from six to approximately sixteen years, with renewal options of up to ten years, as well as early termination options. Extension and termination options are included in the total lease term when the Company is reasonably certain to exercise them. The leases are subject to additional variable charges, including common area maintenance, property taxes, property insurance and other variable costs. Given the variable nature of such costs, they are recognized as expense as incurred. Additionally, some of the Company’s leases are subject to certain fixed fees which the Company has determined to be non-lease components. The Company has elected to combine and account for lease and non-lease components as a single-lease component for purposes of determining the total future lease payments.

In October 2024, the Company exercised its right of early termination for its Torrey Pines operating lease, which consists of 72,000 square feet of office, laboratory, and Good Manufacturing Practice (GMP) space. In connection with such exercise, the Company paid $2.5 million to its landlord during the year ended December 31, 2024. Termination of the lease, which previously extended through December 31, 2028, took effect on October 31, 2025.

As of December 31, 2025, future undiscounted minimum contractual payments under the Company’s operating leases were $119.3 million, which will be paid over a remaining weighted-average lease term of 10.1 years. The weighted-average discount rate for the operating lease liabilities was 8.5%, which was the Company’s incremental borrowing rate at lease commencement, as the discount rates implicit in the leases could not be readily determined.

As described in Note 1 above, the Company incurred a $1.3 million impairment charge against its right-of-use asset during the year ended December 31, 2024. The Company applied a discounted cash flow method to estimate the fair value of the right-of-use asset, which represents Level 3 non-recurring fair value measurements. The estimated fair value of the was determined by discounting the estimated rental rates using market participant assumptions. No such expense was recognized for the year ended December 31, 2025. The Company’s estimates and assumptions used to determine the estimated fair value of the asset group is subject to risks, uncertainties, and changes in circumstances that may result in adjustments and material changes to the estimated fair values in future periods.