Weighted Average Lease Term (WALT) Explained
Weighted Average Lease Term (WALT): Weighted Average Lease Term (WALT) measures the average remaining duration of all active lease contracts across a REIT's property portfolio, weighted by each tenant's annualized rental revenue or occupied square footage.
Institutional Analysis & Context
WALT provides institutional investors an immediate snapshot of revenue visibility and lease rollover risk. A REIT with a 10+ year WALT has guaranteed contractual cash flows shielded from near-term economic recessions. Conversely, a REIT with a low 2-to-3 year WALT faces perpetual re-leasing costs and the risk of vacancies if tenant retention falters.
Formula & Calculation Breakdown
| Metric Component | Definition & Application |
|---|---|
| Remaining Years | Years left until contractual lease expiration date |
| Tenant Annual Rent | Annualized base contractual rental revenue contribution |
| Total Portfolio Rent | Sum of all active tenant revenues across all properties |
Real-World Calculation Example
Flagship REITs Exemplifying This Metric
Analyze how top public REITs perform across this dimension in the live market:
Frequently Asked Questions
Which REIT sectors have the longest WALT?
Gaming REITs (VICI, GLPI) lead the industry with WALT exceeding 30 to 40 years, followed by Triple-Net Retail (9 to 12 years) and Cell Towers (10 to 15 years).
Which REIT sectors have the shortest WALT?
Self-Storage and Hotels/Lodging have the shortest WALT. Hotels re-price rooms daily, self-storage leases re-price monthly (30 days), and residential apartments re-price annually (12 months).
Is a longer WALT always better?
Not during high inflation. Short WALT (like self-storage and apartments) allows landlords to adjust rents upward immediately with inflation, whereas long WALT locks in fixed 2-3% escalators.