How to Calculate Weighted Average Lease Term Excel (WALT)
Calculate the Weighted Average Lease Term (WALT) for your commercial property portfolio instantly. Understand the formula, learn how to calculate it in Excel, and analyze your lease expiry risk.
WALT / WAULT Calculator
Add leases below to calculate the portfolio's weighted average term.
Please enter a valid positive term.
Please enter a valid positive value.
This is the weighting factor (Rent or Area).
Tenant
Remaining Term (Yrs)
Weight (Rent/Area)
Weighted Value
Action
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Weighted Average Lease Term (WALT)
0.0 Years
Formula: Sum of (Term × Weight) ÷ Total Weight
Total Weight (Rent/Area)
0
Total Weighted Score
0
Lease Count
0
Figure 1: Lease Weight Expiring by Year (Risk Profile)
What is Weighted Average Lease Term (WALT)?
The Weighted Average Lease Term (WALT), often referred to as WAULT (Weighted Average Unexpired Lease Term), is a critical metric in commercial real estate. It measures the average time remaining on all leases within a property or portfolio, weighted by the financial value of each lease—typically annual rent or square footage.
Unlike a simple average, which treats a small 500 sq ft office the same as a 50,000 sq ft anchor tenant, WALT gives more importance to tenants who pay more rent or occupy more space. This provides a more accurate picture of the property's income security and vacancy risk.
Investors, asset managers, and lenders use WALT to assess the stability of cash flow. A higher WALT generally indicates lower risk and more stable long-term income, while a lower WALT suggests upcoming vacancies and potential re-leasing costs.
How to Calculate Weighted Average Lease Term Excel Formula
Learning how to calculate weighted average lease term excel is essential for analysts. The calculation involves multiplying the remaining term of each lease by its weighting factor (usually rent), summing these products, and dividing by the total weighting factor.
The Mathematical Formula
The formula for WALT is:
WALT = Σ (Remaining Term × Annual Rent) / Σ (Annual Rent)
Excel Implementation Steps
To calculate this in Excel, you would typically use the SUMPRODUCT and SUM functions. Assuming Column A contains the Lease Term and Column B contains the Annual Rent:
Step 1: List all lease terms in range A2:A10.
Step 2: List all annual rent amounts in range B2:B10.
Step 3: Use the formula: =SUMPRODUCT(A2:A10, B2:B10) / SUM(B2:B10)
Variable Definitions
Variable
Meaning
Unit
Typical Range
Remaining Term
Time until lease expiry
Years
0.5 – 20+ Years
Weighting Factor
Metric used to weight importance
Currency ($) or Area (sq ft)
Varies by property
Weighted Score
Product of Term × Weight
Unit-Years
Calculated Value
Practical Examples (Real-World Use Cases)
Example 1: Office Building with 3 Tenants
Consider a small office building with three tenants. We want to know the WALT based on Annual Rent.
Tenant A: 2 years remaining, paying $100,000/year.
Tenant B: 5 years remaining, paying $50,000/year.
Tenant C: 10 years remaining, paying $200,000/year.
Calculation:
Tenant A Score: 2 × 100,000 = 200,000
Tenant B Score: 5 × 50,000 = 250,000
Tenant C Score: 10 × 200,000 = 2,000,000
Total Weighted Score: 2,450,000
Total Rent: $350,000
WALT: 2,450,000 / 350,000 = 7.0 Years
Even though Tenant A has a very short lease, the long-term lease of Tenant C (who pays the most rent) pulls the average up significantly.
Example 2: Retail Strip Center (Area Weighted)
Sometimes WALT is calculated by Gross Leasable Area (GLA) rather than rent.
Our tool simplifies the process of how to calculate weighted average lease term excel logic into a user-friendly web interface.
Enter Tenant Details: Input a name for reference (optional).
Input Remaining Term: Enter the number of years left on the lease. If a lease has 18 months left, enter 1.5.
Input Weight: Enter the Annual Rent or Square Footage. Be consistent—do not mix rent for one tenant and sq ft for another.
Add Lease: Click the "Add Lease" button to include it in the portfolio.
Analyze Results: The calculator updates the WALT instantly. The chart visualizes when the bulk of your income (or space) is expiring.
Use the "Copy Results" button to export the data for your reports or email summaries.
Key Factors That Affect WALT Results
When analyzing WALT, several financial and operational factors influence the outcome and its interpretation:
Lease Break Options: If a tenant has a break option (the right to cancel early) at year 3 of a 10-year lease, conservative analysis often calculates WALT to the "break" rather than the "expiry" (WALT to Break).
Rent Concentration: A single tenant paying 60% of the total rent will disproportionately dictate the WALT. If that tenant leaves, the property value drops significantly.
Inflation and Market Rents: A long WALT is good for stability, but if market rents are rising fast (inflation), being locked into a long-term low-rent lease might actually reduce property value.
Tenant Credit Quality: A 10-year WALT with a bankrupt tenant is effectively 0. The "quality" of the WALT matters as much as the duration.
Lease Incentives: Rent-free periods can affect the effective weight if you are using Net Rent vs. Gross Rent for the calculation.
Vacancy: Vacant units have a term of 0. Including vacant units in the calculation (weighted by their potential rent or area) will significantly lower the WALT, providing a "Portfolio WALT" rather than just a "Leased WALT".
Frequently Asked Questions (FAQ)
What is the difference between WALT and WAULT?
They are effectively the same. WALT stands for Weighted Average Lease Term, while WAULT stands for Weighted Average Unexpired Lease Term. The "Unexpired" is implied in WALT.
Should I weight by Rent or Square Footage?
It depends on the goal. Weighting by Rent is better for financial analysis and income valuation. Weighting by Square Footage is better for facility management and understanding physical occupancy risk.
How do I handle vacant units in WALT?
Typically, WALT is calculated only for occupied leases. However, for a "Portfolio WALT," you can include vacant units with a term of 0 years to show the impact of vacancy on the overall asset duration.
Is a higher WALT always better?
Generally, yes, as it implies stability. However, in a rising market, a shorter WALT allows landlords to reset rents to higher market rates sooner.
How does WALT affect Cap Rate?
Properties with higher WALT usually command lower Cap Rates (higher value) because the income stream is viewed as lower risk, similar to a bond.
Can I calculate WALT in months?
Yes. Simply input the lease terms in months. The final result will be in months. To convert to years, divide the final result by 12.
What is "WALT to Break"?
This calculates the weighted average time until tenants have the option to leave (break clause), rather than when their lease legally expires. It is a more conservative metric.
How do I calculate weighted average lease term excel for 50+ tenants?
For large datasets, using the Excel SUMPRODUCT function is most efficient. Ensure your data is clean and aligned in columns before applying the formula.
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