HERTZ GLOBAL HOLDINGS, INCHTZ
HERTZ GLOBAL HOLDINGS, INC Leases Disclosure
Leases
The Company enters into certain agreements as a lessor under which it rents vehicles to customers. The Company enters into certain agreements as a lessee to rent real estate, vehicles and other equipment and to conduct its vehicle rental operations under concession agreements. If any of the following criteria are met, the Company classifies the lease as a financing lease (as a lessee) or as a direct financing or sales-type lease (both as a lessor):
•The lease transfers ownership of the underlying asset to the lessee by the end of the lease term;
•The lease grants the lessee an option to purchase the underlying asset that the Company is reasonably certain to exercise;
•The lease term is for 75% or more of the remaining economic life of the underlying asset, unless the commencement date falls within the last 25% of the economic life of the underlying asset;
•The present value of the sum of the lease payments equals or exceeds 90% of the fair value of the underlying asset; or
•The underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease term.
Leases that do not meet any of the above criteria are accounted for as operating leases.
The Company combines lease and non-lease components in its contracts under ASC 842, Lease Accounting ("Topic 842"), when permissible.
The following further describes the Company's leasing transactions.
Revenue (as Lessor)
The Company's operating leases for vehicle rentals have rental periods that are typically short term (e.g., daily or weekly) and can generally be extended for up to one month or terminated at the customer's discretion. Rental charges are computed on a limited or unlimited mileage rate, or on a time rate plus a mileage charge. In connection with the vehicle rental, the Company offers supplemental equipment rentals (e.g., child seats and ski racks) which are deemed lease components. The Company also offers value-added services in connection with the vehicle rental, which are deemed non-lease components, such as loss or collision damage waiver, theft protection, liability and personal accident/effects insurance coverage, premium emergency roadside service and satellite radio. Additionally, the Company charges for variable services primarily consisting of tolls, refueling and recharging during the rental period, and for fees associated with the early or late termination of the vehicle lease. The Company mitigates residual value risk of its revenue earning vehicles by utilizing manufacturer repurchase and guaranteed
depreciation programs, using sophisticated vehicle diagnostic and repair equipment to maintain the condition of its vehicles and through periodic reviews of vehicle depreciation rates based on management's ongoing assessment of present and estimated future market conditions.
The following table summarizes the amount of operating lease income and other income included in total revenues in the accompanying consolidated statements of operations for each of the years ended December 31, 2025, 2024 and 2023:
| (In millions) | 2025 | 2024 | 2023 | ||||||||||||||
| Operating lease income from vehicle rentals | $ | 7,660 | $ | 8,183 | $ | 8,546 | |||||||||||
| Variable operating lease income | 600 | 627 | 588 | ||||||||||||||
| Revenue accounted for under Topic 842 | 8,260 | 8,810 | 9,134 | ||||||||||||||
| Revenue accounted for under Topic 606 | 244 | 239 | 237 | ||||||||||||||
| Total revenues | $ | 8,504 | $ | 9,049 | $ | 9,371 | |||||||||||
Expenses (as Lessee)
As a lessee, the Company has the following types of operating leases:
•Concession agreements which grant the Company the right to conduct its vehicle rental operations at airports, hotels and train stations and to use building space such as terminal counters and parking garages;
•Real estate leases for its off airport vehicle rental locations and other premises;
•Revenue earning vehicle leases; and
•Other equipment leases.
The Company's lease terms generally range from one month to thirty-five years and a number of agreements contain escalation clauses, which increase the payment obligation based on a fixed or variable rate and renewal options. The length of renewals vary and may result in different payment terms. Payment terms are based on fixed rates explicit in the lease, including guaranteed minimums and/or variable rates based on:
•Operating expenses, such as common area charges, real estate taxes and insurance;
•A percentage of revenues or sales arising at the relevant premises; and/or
•Periodic inflation adjustments.
The Company recognizes a ROU asset and lease liability in its accompanying consolidated balance sheets for leases with a term greater than twelve months. Options to extend or terminate a lease are included in the Company's ROU asset and lease liability when it is reasonably certain that such options will be exercised. The Company does not recognize ROU assets or lease liabilities for short-term leases (i.e., those with a term of twelve months or less) and recognizes lease expense on a straight-line basis over the lease term, as applicable.
In June 2025, the Company sold and leased back certain land and buildings, inclusive of site improvements, associated with operating sites in its Americas RAC segment. The land portions of the sales qualified for sale-leaseback accounting, and were accounted for as operating leases with then expected terms of 40 years, inclusive of extensions the Company intends to exercise, and aggregate future minimum lease payments of $483 million. See Note 3, "Divestitures," for additional information.
In July 2025, the Company sold and leased back certain real estate associated with two operating sites in its Americas RAC segment. The sales qualified for sale-leaseback accounting, and were accounted for as operating leases with then expected terms of 50 years, inclusive of extensions the Company intends to exercise, and 15 years, respectively. The operating leases have aggregate future minimum lease payments of $384 million. See Note 3, "Divestitures," for additional information.
In December 2025, the Company sold and leased back certain real estate associated with an operating site in its Americas RAC segment. The sale qualified for sale-leaseback accounting, and was accounted for as an operating lease with a term of 19 years. The operating leases have aggregate future minimum lease payments of $22 million. See Note 3, "Divestitures," for additional information.
In the third quarter of 2024, the Company recognized an impairment on the Long-Lived Assets, which included ROU assets, in the Americas RAC segment. See Note 4, "Long-Lived Assets Impairment," for further details.
To determine the present value of its lease payments, the Company utilizes the interest rate implicit in the lease agreement. If the implicit interest rate cannot be determined in the lease agreement, the Company utilizes the Company's collateralized incremental borrowing rate as of January 1, 2019, the adoption date of Topic 842, or the commencement date of the lease, whichever is later.
The following table summarizes the amount of lease costs incurred by the Company for each of the years ended December 31, 2025, 2024 and 2023:
| Years ended December 31, | |||||||||||||||||
| (In millions) | 2025 | 2024 | 2023 | ||||||||||||||
| Minimum fixed lease costs: | |||||||||||||||||
| Short-term lease costs | $ | 177 | $ | 107 | $ | 92 | |||||||||||
| Operating lease costs | 654 | 588 | 543 | ||||||||||||||
| Total | 831 | 695 | 635 | ||||||||||||||
| Variable lease costs | 274 | 279 | 339 | ||||||||||||||
Total lease costs | $ | 1,105 | $ | 974 | $ | 974 | |||||||||||
The following summarizes the weighted-average remaining lease term and weighted-average discount rate for the Company's operating leases as a lessee as of December 31, 2025:
| Weighted-average remaining lease term (in years) | 11.3 | ||||
| Weighted-average discount rate | 11.65 | % | |||
The following table summarizes the Company's minimum fixed lease obligations under existing agreements as a lessee, excluding variable concession obligations in excess of minimum annual guarantees and short-term leases, as of December 31, 2025:
| (In millions) | |||||
| 2026 | 610 | ||||
| 2027 | 515 | ||||
| 2028 | 434 | ||||
| 2029 | 364 | ||||
| 2030 | 249 | ||||
| After 2030 | 2,429 | ||||
| Total lease payments | 4,601 | ||||
| Interest | (2,326) | ||||
Operating lease liabilities as of December 31, 2025 | 2,275 | ||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 26, 2026 | Showing above |
| 2024 | Feb 18, 2025 | |
| 2023 | Feb 12, 2024 | |
| 2022 | Feb 7, 2023 | |
| 2021 | Feb 23, 2022 | |
| 2020 | Feb 26, 2021 | |
| 2019 | Feb 25, 2020 | |
| 2018 | Feb 25, 2019 | |
| 2017 | Feb 27, 2018 | |
| 2016 | Mar 6, 2017 | |
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.