FEDERATED HERMES, INC.FHI

FEDERATED HERMES, INC. Leases Disclosure

10-KFiled Feb 27, 20262 min read
Leases
Federated Hermes has material operating leases related to its corporate headquarters in Pittsburgh, Pennsylvania. These leases expire in 2030 and have renewal options for additional periods through 2040. These leases include provisions for leasehold improvement incentives, rent escalation and certain penalties for early termination. In addition, Federated Hermes has various other operating lease agreements primarily for facilities. These leases are noncancelable and expire on various dates through the year 2055. Most leases include renewal options for additional rental periods that would end on various dates through 2041 and, in certain cases, escalation clauses. The value of the ROU assets and lease liabilities recognized do not include the consideration of any renewal options, as they are not yet reasonably certain to be exercised.
Federated Hermes may enter into, modify or terminate certain leases in accordance with the lease agreements. During the year ended December 31, 2025, these transactions resulted in non-cash increases of $3.4 million, $3.0 million and $6.4 million to Right-of-Use Assets, net, Other Long-Term Assets and Lease Liabilities, respectively, on the Consolidated Balance Sheets. During the years ended December 31, 2024 and 2023, these transactions resulted in non-cash increases of $20.0 million and $20.3 million, respectively, to Right-of-Use Assets, net and Lease Liabilities (both current and long-term) on the Consolidated Balance Sheets.
During the years ended December 31, 2025, 2024 and 2023, Federated Hermes recorded $19.8 million, $19.2 million and $19.5 million, respectively, in operating lease costs to Operating Expenses – Office and Occupancy on the Consolidated Statements of Income.
The following table reconciles future minimum undiscounted payments of the operating lease liabilities recorded on the Consolidated Balance Sheets as of December 31, 2025:
(in millions) 
2026$20.7 
202719.8 
202819.2 
202919.3 
203015.1 
2031 and Thereafter37.3 
Total Undiscounted Lease Payments$131.4 
Present Value Adjustment1
(22.8)
Net Operating Lease Liabilities$108.6 
1    Calculated using the IBR for each lease.
The following information relates to the operating leases recorded on the Consolidated Balance Sheets as of December 31, 2025:
Weighted-average remaining lease term (in years)7.8
Weighted-average discount rate (IBR)4.3 %
Cash paid in 2025 for the amounts included in the measurement of lease liabilities (in millions)$17.7 

Historical Timeline

Fiscal YearFiled
2025Feb 27, 2026Showing above
2024Feb 28, 2025
2023Feb 23, 2024
2022Feb 24, 2023
2021Feb 25, 2022
2020Feb 26, 2021
2019Feb 21, 2020
2018Feb 22, 2019
2017Feb 23, 2018
2016Feb 24, 2017
2015Feb 22, 2016

About Leases Disclosures

Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.

Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.

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