What is WALT in Real Estate and How is it Calculated?
What is WALT and How is it Calculated?
What is WALT in Real Estate?
WALT (Weighted Average Lease Term) is a metric used in real estate to measure the average remaining lease duration of a property’s tenants, weighted by their respective lease areas or rental income. It helps assess lease stability, income security, and tenant rollover risk.
How is WALT Calculated?
WALT is typically calculated using either leased area (square footage) or rental income as weights:
Formula (Based on Leased Area):
where:
- Lease Term = Remaining years on each tenant’s lease
- Leased Area = Tenant’s occupied space in square feet
Formula (Based on Rental Income):
where:
- Annual Rent = Rent paid by each tenant per year
Example Calculation (Leased Area Method)
Why WALT Matters
- Higher WALT = Stable long-term income, lower turnover risk
- Lower WALT = More leases expiring soon, higher renewal risk
- Used in investment analysis, property valuation, and lender underwriting
