Weighted average lease term (WALT) is the average time remaining on a property's leases, weighted by each tenant's share of income. It measures how long in-place cash flow is contractually locked in. A higher WALT signals more durable income; a lower WALT signals more near-term rollover risk.
How Is Weighted Average Lease Term Calculated?
Weighted average lease term is calculated by multiplying each tenant's remaining lease term by its annual rent, summing those products, and dividing by total annual rent. Per PropertyMetrics, the formula weights by rental income, so higher-paying tenants move the figure more than smaller ones. The result is expressed in years and reflects income-weighted, not simple-average, lease duration.
The metric is also known as WAULT, weighted average unexpired lease term, and as WALE, weighted average lease expiry. Per Adventures in CRE, WALT can be weighted by rental income or by square footage, and the two answers differ. Weighting by rent measures cash-flow risk, giving more influence to higher-paying tenants. Weighting by area measures leasing risk, giving more influence to larger tenants regardless of what they pay.
Term | Meaning |
WALT | Weighted average lease term, the standard label in US markets |
WAULT | Weighted average unexpired lease term, common in the UK and Europe |
WALE | Weighted average lease expiry, common in Australia and Asia |
Weighting basis | Rental income for cash-flow risk, or square footage for leasing risk |
Why Weighted Average Lease Term Matters
Weighted average lease term matters because it quantifies how exposed a property's income is to near-term lease rollover, which drives both financing and pricing. A single-tenant asset with 12 years left carries very different risk than a multi-tenant building where the largest tenant expires next year, even at the same current rent.
For an operator, WALT is a lens on both stability and opportunity. Lenders favor a long WALT because it means contractual income covers debt service well past the loan term, often supporting higher proceeds. A short WALT is not automatically bad: it can be repricing upside if in-place rents sit below market. WALT tells the underwriter when the income is contractually protected and when it is exposed to re-leasing.
Example
A building has three tenants. WALT is each tenant's remaining term multiplied by its rent, summed, then divided by total rent. Total rent is $1,000,000. The weighted numerator is $6,300,000, so WALT is 6.30 years, above the simple average of the three terms.
Tenant | Annual rent | Remaining term (years) | Rent x term |
A | $600,000 | 8 | $4,800,000 |
B | $250,000 | 3 | $750,000 |
C | $150,000 | 5 | $750,000 |
Total | $1,000,000 | $6,300,000 |
The weighted numerator is $4,800,000 + $750,000 + $750,000 = $6,300,000. Dividing by $1,000,000 in total rent gives a WALT of 6.30 years. The simple average of the three terms is (8 + 3 + 5) / 3 = 5.33 years. Because Tenant A pays 60% of the rent and holds the longest term, income-weighting pulls WALT above the simple average, which is the point of the metric.
Variations and Edge Cases
Weighted average lease term behaves differently by weighting basis and by how break options and renewals are treated, so two analysts can report different WALTs for the same building. The table below covers the assumptions to confirm before comparing figures.
Variant | Treatment |
Rent-weighted vs area-weighted | Rent weighting measures cash-flow risk; area weighting measures leasing risk |
WALT to break vs to expiry | Measuring to the earliest break option gives a shorter, more conservative figure |
Renewal options | Contractual term only; unexercised options are typically excluded |
Vacant space | Excluded, since vacant units carry no lease term or income |
Rolling calculation | WALT shortens every day as remaining terms count down toward zero |
The most common inconsistency is comparing a WALT-to-expiry from one property against a WALT-to-break from another. A tenant with a 10-year lease and a break at year 5 contributes 10 years to expiry-based WALT and 5 to break-based WALT, so the basis must match before the comparison means anything.
Weighted Average Lease Term vs Vacancy Rate
Weighted average lease term is often confused with vacancy rate, and they measure different dimensions of leasing health. WALT measures the time remaining on the leases that exist, weighting occupied income by duration. Vacancy rate measures the share of space with no lease at all, ignoring how long the existing leases run.
A property can be fully occupied with a low WALT, meaning every unit is leased but many leases expire soon. It can also carry high vacancy yet a long WALT on the space that is leased. WALT answers how long the current income lasts; vacancy rate answers how much space is currently producing income. Underwriters track both because a full building with imminent expirations is riskier than the occupancy figure alone suggests.
Frequently Asked Questions
How do you calculate weighted average lease term?Multiply each tenant's remaining lease term by its annual rent, sum those products, then divide by total annual rent across all tenants. The result is in years and weights higher-paying tenants more heavily, so it differs from a simple average of lease terms.
What is a good WALT?There is no universal target, because it depends on strategy. Lenders and core investors favor a long WALT, often 7 years or more, for durable income that covers debt service. Value-add investors may accept a short WALT because near-term expirations let them reprice below-market rents.
What is the difference between WALT, WAULT, and WALE?They are the same metric under different regional names. WALT, weighted average lease term, is standard in US markets. WAULT, weighted average unexpired lease term, is common in the UK and Europe. WALE, weighted average lease expiry, is common in Australia and Asia.
Related Terms
Rent Roll
Net Operating Income
Vacancy Rate
Anchor Tenant
Cap Rate