Glossary

Weighted average lease expiry (WALE)

What WALE means for a commercial property, and why a longer weighted average lease expiry generally supports better lending terms.

Weighted average lease expiry, or WALE, is the average time remaining on a commercial property's leases, weighted by each tenancy's contribution to rental income, giving a single figure for how much of the building's income is genuinely secured versus exposed to near-term renewal risk. A property with a long WALE and a handful of strong tenants is generally viewed as a safer income stream than one with a short WALE or a concentration of leases expiring around the same time, and lenders price and structure commercial property loans accordingly. A short WALE does not rule out finance, but it typically means a lender looks more closely at re-leasing prospects, the tenant mix and the broader market before settling on terms. WALE is usually read alongside tenant covenant strength, since a long lease to a financially weak tenant is not the same quality of income as a shorter lease to a strong one.

Related

Commercial property loans · Cap rate · DSCR

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