The institutional idea: WALE and WALT
In commercial property, WALE (weighted average lease expiry) and WALT (weighted average lease term) describe how much of a portfolio's rental income sits on leases due to expire soon, versus income that's secured for years. A commercial portfolio with a long WALE is considered more stable — most of its income is locked in — while a short WALE signals near-term re-leasing risk across a meaningful share of the portfolio.
Residential leases are usually 6 or 12 months, not the multi-year commercial terms these metrics were built for, and residential investors don't typically use this terminology. But the underlying idea doesn't disappear just because the leases are shorter — it becomes more relevant, not less, once several residential leases can plausibly expire in the same window.
Why remaining lease term matters at scale
With one property, lease expiry is a single date to keep in mind. With four or more, it becomes a portfolio-timing question: are your leases spread through the year, or clustered around the same few months? Clustering matters because re-letting several properties at once compounds the things that make any single re-let stressful — vacancy days, reduced rent to secure a new tenant quickly, and the admin of running several tenancy changes in parallel — all landing on the portfolio's cash flow simultaneously instead of one at a time.
Average remaining lease term
Average Remaining Lease Term = Sum of Months Remaining ÷ Number of Properties
| Metric | City Apartment | Family House | Townhouse | Regional House |
|---|---|---|---|---|
| Weekly rent | $400/week | $750/week | $560/week | $480/week |
| Lease expires in | 2 months | 3 months | 4 months | 10 months |
(2 + 3 + 4 + 10) months ÷ 4 properties = 4.75 months average remaining term. This treats every lease as equally significant — useful as a first read, but it hides which leases actually carry the most rent.
Income-weighted remaining lease term
Income-Weighted Remaining Term = Σ(Rent × Months Remaining) ÷ Total Rent
Weighting by rent instead gives: (400 × 2 + 750 × 3 + 560 × 4 + 480 × 10) ÷ 2,190 = 4.61 months — slightly lower than the simple average. That gap tells you something the simple average can't: the two properties carrying the most rent, Family House and City Apartment, also have the two shortest remaining terms. A larger gap between the simple and income-weighted figures always means income and near-term expiry are correlated — which is the specific pattern worth watching for.
If instead the two longest leases carried the most rent, the income-weighted figure would come out higher than the simple average — a portfolio where the money that matters most is also the most secure. The direction of the gap, not just its size, tells you whether income and lease-timing risk are aligned or offsetting.
Lease-expiry concentration
The most actionable version of this analysis is the share of total rental income attached to leases expiring within a given window:
| Window | Within 3 months | Within 6 months | Within 12 months |
|---|---|---|---|
| Share of portfolio rental income exposed | 52.5% | 78.1% | 100% |
City Apartment (2 months) and Family House (3 months) together already account for 52.5% of portfolio rent expiring within a quarter. Add Townhouse's 4-month lease and 78.1% of the portfolio's entire rental income is exposed within six months — only Regional House's income, on a 10-month lease, sits outside that window. That's a materially higher concentration than the 4.75-month average remaining term alone would suggest.
What to do with this information
Stagger renewals deliberately
When a lease comes up for renewal on a property whose expiry would otherwise cluster with others, offer a term length that shifts it into a quieter month instead of defaulting to another 12 months.
Size your buffer to the concentration, not the average
A cash buffer sized only for one average vacancy at a time may not cover the scenario where several near-term leases end and re-let more slowly than expected, all at once.
This is also the input a vacancy resilience check and a portfolio stress test both need — check any single lease's remaining term with the lease expiry calculator.
Portfolio Performance series
Lease expiry risk FAQs
- What is WALE and WALT, and do residential investors need to know them?
- WALE (weighted average lease expiry) and WALT (weighted average lease term) are commercial property metrics describing how much income sits close to lease expiry across a portfolio of tenancies. Residential investors don't need the commercial jargon — leases are shorter and terminology differs — but the underlying question is equally relevant once a portfolio grows past one or two properties: how much rental income is exposed to leases ending within the same window?
- What is average remaining lease term?
- The simple, unweighted average of the time remaining on every lease across a portfolio: sum the months remaining on each lease, divide by the number of properties. In a worked four-property example with leases expiring in 2, 3, 4 and 10 months, the average remaining term is 4.75 months.
- What is income-weighted remaining lease term?
- The average remaining lease term weighted by each property's share of total rental income, rather than treating every lease equally. Formula: Σ(Rent × Months Remaining) ÷ Total Rent. In the worked example, the income-weighted figure is 4.61 months — lower than the simple average, because the two highest-rent properties in the portfolio also happen to have the two shortest remaining lease terms.
- How much of my rental income should be allowed to expire at once?
- There's no universal rule, but the practical question is whether the portfolio's cash flow and buffer could absorb re-letting several properties around the same time — vacancy periods, reduced rent during re-letting, or a soft rental market at that specific moment. In the worked example, 78.1% of total portfolio rent is attached to leases expiring within six months, which is a meaningfully concentrated exposure worth actively managing (renewing early, staggering new lease terms) rather than simply monitoring.
- How do I reduce lease-expiry concentration in my portfolio?
- The main lever is staggering lease terms deliberately when leases renew or when a property is newly let — offering a 6-month term instead of 12 on a property whose expiry would otherwise cluster with others, for example. It can take a few renewal cycles to spread expiries meaningfully, so this is a multi-year exercise rather than a one-off fix.