Occupancy tells you the building is full today. Weighted average lease term tells you how long it stays full at the rent you already contracted. That difference is the whole argument. A property can be 100 percent leased and still be fragile if every lease expires next year, and a property at 85 percent occupancy can be more durable if its remaining income is locked for a decade. Weighted average lease term, WALT, is the single number that captures this, because it measures not whether income exists but how long it is contractually committed. In an income-producing asset, durability is not a function of how much rent you collect. It is a function of how long you are guaranteed to keep collecting it.
The thesis: cash flow durability is a duration question, and WALT is the only headline metric that answers it. Occupancy, net operating income, and cap rate all describe the present. WALT describes the runway.
Key Takeaways
Weighted average lease term measures the average remaining lease term across a property, weighted by each tenant's contribution to rent or to leased area. It is the clearest single proxy for how long contracted income will last.
WALT is synonymous with WAULT (weighted average unexpired lease term) and WALE (weighted average lease expiry), terms used interchangeably across North American, UK, and European reporting per PropertyMetrics.
Weighting by rent rather than by square footage is the correct choice for cash flow durability, because it gives the tenants that pay the most the most influence over the score.
Investors typically look for a WALT of at least three years, though the benchmark varies by asset class, with net lease portfolios often running well into double digits, per PropertyMetrics.
A high occupancy rate with a low WALT is a warning, not a strength. It means the income is real today and unprotected tomorrow.
What is weighted average lease term and what does it measure?
Weighted average lease term is the average remaining duration of the leases in a property or portfolio, weighted by each tenant's share of rent or of occupied space. It measures income durability: how long the current contracted cash flow is expected to continue before it must be renewed, replaced, or repriced. A higher WALT signals more predictable future income and lower near-term rollover risk.
The weighting is what separates WALT from a simple average of lease terms. A plain average treats a 500 square foot tenant and a 50,000 square foot anchor as equals. WALT does not. By weighting each lease by its rent contribution, the metric reflects the reality that the departure of a large tenant threatens far more income than the departure of a small one. PropertyMetrics defines the calculation as each lease's remaining term multiplied by its annual rent, summed, then divided by total portfolio rent.
WALT travels under several names. As PropertyMetrics notes, it is synonymous with WAULT, the weighted average unexpired lease term used widely in the UK and Europe, and with WALE, weighted average lease expiry. The concept is identical across all three: the rent-weighted runway of contracted income. See the weighted average lease term glossary entry for the full definition.
How is weighted average lease term calculated?
Weighted average lease term is calculated by multiplying each lease's remaining term by its weight (annual rent or square footage), summing those products, and dividing by the total of the weights. Weighting by rent prioritizes cash flow risk; weighting by area prioritizes physical exposure. For income durability, rent weighting is the correct method.
Work the canonical two-lease example, the one PropertyMetrics uses. Lease A generates 100,000 dollars of annual rent with three years remaining. Lease B generates 200,000 dollars with six years remaining.
Lease | Annual rent | Remaining term | Rent x term |
A | 100,000 dollars | 3 years | 300,000 |
B | 200,000 dollars | 6 years | 1,200,000 |
Total | 300,000 dollars | 1,500,000 |
WALT equals 1,500,000 divided by 300,000, which is 5.0 years. Note what the weighting did: a simple average of three and six years would give 4.5 years, but because the longer lease also pays twice the rent, the rent-weighted figure pulls to 5.0. The metric correctly reports that most of the income is protected for six years, not the 4.5 an unweighted average implies.
Now change one input to show why the weighting method matters. If Lease A were the larger payer instead, the same two terms would produce a WALT of 4.0 years. Identical lease durations, opposite durability, and only the rent weighting reveals it. That sensitivity is exactly why weighting by rent is the right call when the question is cash flow.
Why is weighted average lease term a better durability signal than occupancy or NOI?
WALT is a better durability signal because occupancy and NOI are snapshots of the present, while WALT is a measure of the future. Occupancy tells you the building is full now. NOI tells you what it earns now. Neither tells you how long that income is contractually secure, which is the actual definition of durability. WALT does exactly that.
Consider two identical buildings, both 100 percent leased, both producing the same net operating income. Building One has a WALT of nine years. Building Two has a WALT of eighteen months. On occupancy and NOI they are indistinguishable. On durability they are not remotely comparable. Building Two faces a re-leasing event on nearly all of its income within two years, with the downtime, concessions, and commissions that come with it. Building One does not. A metric that scores them identically is a metric that is blind to the thing that matters.
This is why lenders and investors underwrite WALT directly. PropertyMetrics reports that investors generally look for a WALT of at least three years, with the benchmark scaling by asset class: a multi-tenant office building and a single-tenant net lease asset live in different worlds, and net lease portfolios frequently report double-digit WALTs. A longer WALT supports more aggressive financing and a lower cap rate precisely because the income is more bankable.
The expert-voice line worth keeping: occupancy tells you the building is full, WALT tells you how long it stays that way, and only one of those is a promise. The durability that WALT measures flows directly into net-operating-income stability and, through it, into value.
What are the limits of weighted average lease term as a durability metric?
The main limit of WALT is that it measures the length of contracted income, not its quality or its distribution. A long WALT built on a weak-covenant tenant, or one that hides a cliff where most leases expire in a single year, can overstate durability. WALT is necessary but not sufficient; it must be read alongside tenant credit and the expiration schedule.
Two blind spots deserve attention. First, WALT is silent on covenant strength. A ten-year lease to a fragile tenant and a ten-year lease to an investment-grade tenant produce the same WALT and sharply different real durability. Second, WALT is an average, and averages conceal shape. A portfolio can post a healthy WALT while carrying a concentration of expirations in one year, the exact profile that creates rollover risk. Two portfolios with an identical WALT can have opposite risk profiles if one expires smoothly and the other expires all at once.
The correct reading, then, is layered. WALT answers the duration question better than any other single number, and that is why it belongs at the top of the durability analysis. But it is a headline, and headlines require the story underneath: who the tenants are, how strong their covenants are, and whether the expirations are spread or stacked.
Frequently Asked Questions
What is a good weighted average lease term?
A commonly cited floor is at least three years, per PropertyMetrics, but the right benchmark depends on the asset class. Multi-tenant office and retail typically run shorter WALTs, while single-tenant net lease portfolios often report figures in the ten-to-fifteen-year range. Higher is generally safer for income durability, though an unusually long WALT can also limit the ability to reset below-market rents.
Is WALT the same as WAULT and WALE?
Yes. WALT (weighted average lease term), WAULT (weighted average unexpired lease term), and WALE (weighted average lease expiry) are the same metric under different names, per PropertyMetrics. WAULT is more common in the UK and Europe, while WALT and WALE appear more often in North American and Asia-Pacific reporting. All three measure the rent-weighted or area-weighted runway of remaining lease term.
Should WALT be weighted by rent or by square footage?
For cash flow durability, weight by rent. Rent weighting gives the tenants that contribute the most income the most influence over the score, which is what you want when the question is how secure the cash flow is. Weighting by square footage measures physical exposure instead and can understate the impact of a high-paying tenant occupying a small footprint.
Conclusion
Durability is a duration question, and weighted average lease term is the metric built to answer it. Occupancy and NOI describe the money coming in today; WALT describes how long that money is contractually promised, which is the only definition of durability that survives a downturn. Weighted by rent, read alongside tenant covenant and the expiration schedule, WALT is the single best proxy an operator has for how bankable a stream of income is. The operator's discipline is to stop reading a full building as a safe one. A property is only as durable as the leases that hold it, and WALT is the number that tells you how long those leases have left to run.