Weighted Average Lease Expiry (WALE)

A portfolio metric that expresses the average time remaining until leases expire across a property or portfolio, weighted by each lease's annual rent or net lettable area. WALE is a primary indicator of income security and rollover risk in commercial real estate investment.

Extended Definition

Weighted Average Lease Expiry (WALE) measures how long, on average, leases in a portfolio or property are expected to remain in force — weighted to reflect the relative size of each tenancy. A higher WALE signals more predictable future income and lower near-term re-leasing risk; a lower WALE indicates that a significant portion of income is at risk of expiry in the near term. **WALE Formula:** WALE (by income) = Σ (Lease Remaining Term × Annual Rent) ÷ Total Annual Rent WALE (by area) = Σ (Lease Remaining Term × Net Lettable Area) ÷ Total Net Lettable Area **Worked Example:** A property has three tenants: - Tenant A: $200,000/year, 4.5 years remaining - Tenant B: $150,000/year, 2.0 years remaining - Tenant C: $100,000/year, 7.0 years remaining WALE (income-weighted) = (200,000 × 4.5 + 150,000 × 2.0 + 100,000 × 7.0) ÷ 450,000 = (900,000 + 300,000 + 700,000) ÷ 450,000 = 1,900,000 ÷ 450,000 = **4.22 years** **WALE vs. WALT:** WALE (Weighted Average Lease Expiry) and WALT (Weighted Average Lease Term) measure the same concept — remaining lease duration — but the terminology varies by geography. WALE is the preferred term in Australia, the UK, and Asia-Pacific commercial real estate markets. WALT is more common in North American REIT reporting. Both are calculated using the same formula. **WALE Risk Profiles:** | WALE Range | Risk Profile | Investor Implication | |---|---|---| | Under 3 years | Short WALE — High rollover risk | Income uncertainty; may require significant leasing incentives | | 3–7 years | Medium WALE — Moderate risk | Balanced profile; standard for active asset management | | Over 7 years | Long WALE — Low rollover risk | Bond-like income; preferred by passive investors and REITs | **Why WALE matters for lease abstraction:** Accurate WALE calculations depend on having precise lease expiration dates and annual rent figures for every lease in a portfolio. Manual data entry introduces errors that distort the WALE figure and the underlying investment thesis. Lextract extracts lease expiration dates, rent commencement dates, and rent schedules from individual lease PDFs as structured fields, enabling accurate WALE calculations across any portfolio size. **WALE in investment analysis:** Lenders, REIT analysts, and acquirers use WALE as a risk indicator alongside occupancy rate and in-place rent versus market rent. A property with high occupancy but a WALE of 1.5 years carries substantially more risk than the same property with a WALE of 8 years, because the current income stream is largely uncommitted beyond the near term.

Related Terms