Weighted Average Lease Term (WALT) in Commercial Real Estate: Complete Guide

What It Means

Weighted Average Lease Term measures the average remaining lease duration across a property or portfolio, weighted by each tenant's rent contribution. WALT is a key risk metric because it indicates income certainty — a higher WALT means the property's revenue is secured for a longer period, reducing re-leasing risk.

How It's Calculated

For each tenant: Remaining lease term (in years) × Annual base rent. Sum these products and divide by total portfolio rent. A WALT of 6.5 years means the property's weighted average remaining lease duration is 6.5 years. WALT can be calculated including or excluding renewal options.

Common Mistakes

Calculating WALT by square footage rather than rent (misweights tenants); including renewal option periods as certain when they're discretionary; not updating WALT calculations as time passes (WALT declines by one year every year if no new leasing occurs).

Connection to Lease Abstraction and Financial Spreading

WALT depends entirely on accurate lease term extraction from every tenant's lease. Missing amendments that extend or shorten lease terms directly corrupt the WALT calculation. AI abstraction ensures WALT is computed from the actual effective lease terms, not stale data.