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WAULT

WAULT is an abbreviation of weighted average unexpired lease term. It is used by property companies as an indicator of the average remaining life of the leases within their portfolios.

There are two commonly used forms: WAULT to expiry and WAULT to break.

Both are calculated by adding up all the contracted rental income on the portfolio between now and the time the leases expire, or the time until the leases have their first break, and dividing it by the contracted annual rent. The result is usually expressed as a number of years.

Simplistically, a low WAULT might be good news in an environment where rents are rising fast and the property is in a strong negotiating position. A higher WAULT is good news in weak property markets where rents are falling and/or tenants are looking to move.

We have also seen a similar term used – WALE or weighted average lease expiry – where the calculation is weighted by the amount of space rented rather than the amount of rent due.

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