How do you calculate WALE?

List each lease's remaining years, multiply each by its share of the building's total rent, and add the results. A lease paying a quarter of the rent with eight years left contributes two years. To weight by area, use each tenant's share of the lettable floor space instead. The answer is only comparable with another building's WALE if both use the same weight, the same end date and the same treatment of vacant space.

What is the difference between WALE and WAULT?

They measure the same thing. WALE is the usual term in Australia and New Zealand; WAULT, the weighted average unexpired lease term, is the usual term in the UK. UK reports commonly state it both to expiry and to the first tenant break, and the break figure is the lower of the two. When comparing figures from different markets, check the end date first.

Do renewal options count towards WALE?

Usually not. An option to renew is the tenant's choice, so the rent after the current term ends is not contracted, and reports normally measure each lease to the end of the term already agreed. A lease with three years left and a three-year option counts as three. A figure that assumes the options will be taken is a forecast of tenant behaviour, and a lender reads it as one. The report's notes should say which basis was used.

Does WALE include vacant space?

Practice differs. Some reports count vacant space as a lease with no time left, which pulls the average down and shows the vacancy in the figure; others leave it out and report occupancy separately, which can make a half-empty building look secure. On an income basis, space earning nothing carries no weight either way, so the area basis is where the choice shows. The report's notes should say which was used.

// WORKED EXAMPLETHE ARITHMETIC A DECISION RESTS ON

Weighted Average Lease Expiry: a Worked Example

One number for four leases, and a loan term to hold it against.

BY MICHAEL SHANG · SIXTEEN YEARS IN COMMERCIAL BANKING · UPDATED 2026-11-07

// THE SHORT ANSWER

A property lender is repaid out of rent, so the first question about a let building is how long that rent is promised for. Weighted average lease expiry answers it in a single figure, the remaining term of the leases averaged by how much of the income, or the space, each one carries. Its working use is comparison with the loan: a figure that ends before the debt does says that part of the repayment rests on tenants not yet found. Because an average hides when each lease ends, a lender reads it with the expiry schedule in the rent roll.

BASIS Practitioner judgment from sixteen years in commercial banking, set out in How Bankers Think (Highbank Press, 2026). Every borrower on this site is a composite constructed for teaching, not a client. The market is mid-market commercial lending as practised in New Zealand and Australia; where a convention differs elsewhere, the page says so.

// MAKE THE CALL

Issue 08 — Basalt Ridge Developments. A new-to-bank developer, a claimed 28% ROE and two other banks circling. Your bank has a growth target. Your call first, then the senior banker's.

Read the file →

// 01 — WHY THE LEASE TERM MATTERS TO A LENDER

Rent under a signed lease is income the borrower has a right to. Rent after a lease ends is a forecast. Between the two sit the costs of a tenant leaving: months with the space empty, outgoings the landlord now pays itself, agents' fees, and the incentives a new tenant expects, such as rent-free months or a contribution to its fit-out. A lender whose interest cover rests on the rent wants to know how much of the income is contracted for the life of the loan and how much has to be won again.

The value is exposed in the same way. A valuer capitalises the income, and a building with short leases is usually valued at a higher yield, so a lower price, than the same building let for longer. At the loan's maturity the borrower needs a new lender or a buyer to read the leases then in place, which is why the term left at maturity matters as much as the term left today.

// 02 — HOW IT IS CALCULATED

WALE = Σ (years left on each lease × that lease's weight)

weight = its rent ÷ total rent (income basis)

or its area ÷ total area (area basis)

Three choices change the answer, and a report should say which it made. The first is the weight. Rent weighting measures how long the income is secured; area weighting measures how long the space is occupied, and gives a cheap, large tenant more say. The second is the end date. Measured to expiry, a ten-year lease with a tenant's option to leave after five counts as ten; measured to the first break, it counts as five. UK reports call the figure WAULT and commonly give both, and the definition published by INREV, the European association of investors in non-listed property, takes the earlier of break and expiry. The third is what counts as a lease: whether vacant space enters at zero years, and whether a tenant holding over on a monthly basis counts at all.

// 03 — THE EXAMPLE

An office building of 10,000 square metres, constructed for this page like every figure in it, is let to four tenants for US$2.0m a year. The owner asks for a five-year loan of US$16m.

Tenant Area Rent Years to expiry

A 4,000 0.90 6.0 (tenant may break at 3.0)

B 3,400 0.60 2.5

C 1,300 0.24 4.0

D 1,300 0.26 2.0

By rent: 0.45×6.0 + 0.30×2.5 + 0.12×4.0 + 0.13×2.0 = 4.19 years

By area: 0.40×6.0 + 0.34×2.5 + 0.13×4.0 + 0.13×2.0 = 4.03 years

To break: 0.45×3.0 + 0.30×2.5 + 0.12×4.0 + 0.13×2.0 = 2.84 years

A WALE of 4.19 years against a five-year loan looks close. The schedule says otherwise. Fifty-five per cent of the rent expires inside the loan term, and the tenant paying the other 45% can leave after three years. If A stays, the only lease left at maturity is A's, with a year to run. On the break basis, the average rent is contracted for less than three of the loan's five years.

The lender then tests the year it fears. With US$0.2m of outgoings the tenants do not repay, net income is US$1.8m and interest at 6.5% is US$1.04m:

Fully let: 1.80 ÷ 1.04 = 1.73×

B leaves, unlet: (1.80 − 0.60 − 0.10) ÷ 1.04 = 1.10 ÷ 1.04 = 1.06×

The US$0.10m is the outgoings B was repaying under its lease, which the owner now carries itself. One tenant leaving takes cover close to one times. The rate, the outgoings and the vacancy are the example's.

// 04 — WHAT A LENDER READS BESIDE IT

The expiry profile comes first: the share of rent ending in each year of the loan. Two buildings with the same WALE can carry very different risk if one has its expiries spread evenly and the other has them stacked in the year before maturity. The lender then reads who the tenants are, because a long lease to a weak tenant is worth less than a short one to a strong tenant who is likely to renew, and how much of the income depends on one name.

It also compares passing rent with market rent. A tenant paying above the market is a risk at expiry even if it stays, since the new rent will be lower; one paying below the market makes a vacancy less costly. The rent roll holds every one of these facts, and the capitalisation rate shows what the valuer has assumed about them.

DEFINED IN ONE PARAGRAPH → · RENT ROLL, READ BY A LENDER → · LVR, SECURITY AND COLLATERAL →

// 05 — WHERE IT DECIDES A FILE

It decides the shape of the loan more often than whether there is one. A lender looking at the example can shorten the term to fall before the main expiries, ask for principal to be repaid out of the rent while it is contracted, or set aside part of the income in a reserve ahead of B's expiry to pay for re-letting. It can make A's break date a review point in the facility, so that both sides talk before the tenant decides.

It also decides the refinance. A borrower who signs new leases in the last year of a loan arrives at the next lender with a longer WALE and an easier conversation; one who lets the expiries run arrives with a building that has to be valued on the hope of re-letting. The figure is one line in the credit paper, but the lease dates behind it are what the next three years of the file are about.

DEBT YIELD → · SIX MONTHS BEFORE YOUR LOAN MATURES → · INTEREST COVER, DEFINED →

// SOURCES

The documents the statements on this page rest on. Each was opened and checked when cited.

INREV, Definitions Wiring Guide — WAULT (definition ALD2.1) — Defines the weighted average unexpired lease term as weighted by current headline rent and measured to the shorter of the first tenant break or lease expiry — section 02 and the FAQ.

// QUESTIONS PEOPLE ASK

How do you calculate WALE?: List each lease's remaining years, multiply each by its share of the building's total rent, and add the results. A lease paying a quarter of the rent with eight years left contributes two years. To weight by area, use each tenant's share of the lettable floor space instead. The answer is only comparable with another building's WALE if both use the same weight, the same end date and the same treatment of vacant space.
What is the difference between WALE and WAULT?: They measure the same thing. WALE is the usual term in Australia and New Zealand; WAULT, the weighted average unexpired lease term, is the usual term in the UK. UK reports commonly state it both to expiry and to the first tenant break, and the break figure is the lower of the two. When comparing figures from different markets, check the end date first.
Do renewal options count towards WALE?: Usually not. An option to renew is the tenant's choice, so the rent after the current term ends is not contracted, and reports normally measure each lease to the end of the term already agreed. A lease with three years left and a three-year option counts as three. A figure that assumes the options will be taken is a forecast of tenant behaviour, and a lender reads it as one. The report's notes should say which basis was used.
Does WALE include vacant space?: Practice differs. Some reports count vacant space as a lease with no time left, which pulls the average down and shows the vacancy in the figure; others leave it out and report occupancy separately, which can make a half-empty building look secure. On an income basis, space earning nothing carries no weight either way, so the area basis is where the choice shows. The report's notes should say which was used.

THE IN-TRAY · ONE MINUTE

Make the call on one file.

A short file on the ground this page covers. Every option opens with how far it sits from a senior banker’s read.

SIGNAL OR NOISE · THE ECONOMY · COLLATERAL MARKETS

A loan is secured on a shopping centre valued 14 months ago. Since then comparable centres have sold at yields a full point higher, and the anchor tenant has given notice.

Signal or noise?

3 MORE ON THE ECONOMY · COLLATERAL MARKETS →WHERE DO YOU READ FROM? THE PLACEMENT →

THE GLOSSARYIN ONE PARAGRAPHWeighted average lease expiry (WALE) What is weighted average lease expiry (WALE), and why does a property lender use it?