WAULT Calculator: Weighted Average Unexpired Lease Term

How WAULT works

WAULT, the weighted average unexpired lease term, is the average time left on a building’s leases, weighted by the rent each one pays. A tenant paying twice the rent counts twice as much. It is measured in years from a valuation date, either to each lease’s expiry or to the first date a tenant can legally leave, and commercial property uses it to judge how secure the contracted rent is across a building or a portfolio.⁴

The formula

WAULT = the sum of (years left on each lease × its annual rent) ÷ the total annual rent

Years left are counted from the valuation date: the calculator takes the days to each date and divides by 365.25. A lease that has already expired counts as zero, and a vacant unit pays no rent, so it adds nothing to either side of the sum. For a longer read, Adventures in CRE has a glossary entry and an article on the weighted average lease term.¹²

A worked example

The calculator’s first example, a multi-let office floor with made-up numbers. Five suites are let on leases with 1 to 5 years left, one has a break, and one suite is empty.

Lease	Rent (AED a year)	Years left	Rent × years
Suite 101, consultancy	200,000	1	200,000
Suite 102, law firm	150,000	2	300,000
Suite 103, regional office	300,000	5 (break at 3)	1,500,000
Suite 104, clinic	120,000	3	360,000
Suite 105, tech firm	230,000	4	920,000
Suite 106, vacant	0	vacant	0
Total	1,000,000		3,280,000

WAULT to expiry: 3,280,000 ÷ 1,000,000 = 3.28 years. Counted to break, Suite 103 runs 3 years instead of 5, so its line falls from 1,500,000 to 900,000 and the WAULT to break is 2,680,000 ÷ 1,000,000 = 2.68 years. The empty suite does not move either figure; it shows in occupancy instead, 8,500 of 10,000 sq ft let, or 85%. Load the example in the calculator above and it gives the same numbers.

To expiry or to break

A break option lets a tenant leave on a set date before the lease ends. WAULT to expiry runs every lease to its end date; WAULT to break runs it to the first break, or to the expiry where there is none, so it is the same or shorter. QuotedData’s glossary names both forms.⁵ INREV, the European association for investors in non-listed real estate, defines WAULT as the shorter of the first tenant break or the lease expiry, weighted by current headline rent per annum, in years.³ When a report quotes a single WAULT, check which one it is.

Weighted by income or by area (WALE)

The same average can be weighted by let area instead of rent, and it gives a different answer. In the example, Suite 103 is the largest suite and the longest lease but pays the least per square foot, so weighting by area lifts the figure to 3.46 years against 3.28 by rent. The calculator shows the area figure as WALE by area. PropertyMetrics sets out both weightings.⁶

The names change by market. WAULT is the term in the UK and Europe. Australia and New Zealand say WALE, weighted average lease expiry, and usually weight it by income too. In the US it is WALT, the weighted average lease term. Whatever the name, ask which weighting a figure uses before comparing two buildings.

What a short or long WAULT means

For value. Rent contracted for longer is more certain, so it can be priced with more confidence. A short WAULT means the price has to allow for re-letting: the months a unit may stand empty, the cost of finding the next tenant and the rent that tenant will agree to.

For a lender. A loan secured on a building is paid from its rent. The WAULT shows how long that rent is contracted for, and leases that end before the loan does are a risk the lender has to weigh.

For a buyer. Read the WAULT with the expiry ladder and the tenant list, never on its own. Five years spread across twenty tenants is a different thing from five years resting on one, and a large share of the rent ending in the same year is a risk the average hides. The calculator flags any tenant paying over 40% of the income for that reason.

In the UAE

Dubai commercial leases are commonly 1 to 3 years and registered in Ejari, so a building let only on leases like that has a WAULT of three years or less however full it is. Two of Dubai’s listed REITs have reported the figure. ENBD REIT, listed on Nasdaq Dubai, reported a portfolio WAULT of 3.56 years at 30 June 2019⁷ and 3.37 years at 31 December 2019, when its occupancy was 81%.⁸ Emirates REIT reported a weighted average lease expiry of 8.5 years at 30 September 2016, much of it schools on long leases.⁹ The tenants make the difference: long leases, such as those to schools, lift a portfolio’s figure, and a roll of one to three year leases holds it down.

Buying or holding a commercial building in Dubai or Abu Dhabi? See the commercial property we have on the market, or read Dubai commercial real estate: a four-part investor framework.

Common questions

What does WAULT stand for?

Weighted average unexpired lease term. It is the average time left on the leases of a building or a portfolio, in years, with each lease weighted by its annual rent, so the bigger rents count for more. Commercial property uses it to judge how secure the contracted rent is.

How do you calculate WAULT?

Multiply the years left on each lease by its annual rent, add the results together and divide by the total annual rent. A building with one lease of 4 years at AED 600,000 and one of 1 year at AED 400,000 has a WAULT of (4 × 600,000 + 1 × 400,000) ÷ 1,000,000 = 2.8 years.

What is the difference between WAULT to expiry and WAULT to break?

WAULT to expiry runs each lease to its end date. WAULT to break runs it to the first date the tenant can legally leave, where the lease has a break option, so it is the same or shorter. INREV, the European association for investors in non-listed real estate, defines WAULT on the shorter of the first break and the expiry.

Is WALE the same as WAULT?

Nearly. WALE, weighted average lease expiry, is the name used in Australia and New Zealand, where it is usually weighted by income as WAULT is; WALT is the American name. Some reports weight by let area instead of rent, which gives a different answer, so check the weighting before comparing two buildings.

Do vacant units count in the WAULT?

Not in the income weighting. A vacant unit pays no rent, so it adds nothing to either side of the sum. It shows up in occupancy instead, which is why a WAULT should be read next to the occupancy figure: a long WAULT on a building with a third of its space empty is weaker than the number alone suggests.

What is a good WAULT?

There is no single good number: it depends on the building, the tenants and what the owner wants from it. As a plain reading, this calculator calls under 2 years short, 2 to 5 years moderate and over 5 years long. For a listed example, ENBD REIT on Nasdaq Dubai reported a portfolio WAULT of 3.37 years at 31 December 2019.

WAULT Calculator

The rent roll

What the leases add up to

Commercial income, read properly