WAULT explained: to break vs to expiry, and why it matters for UK CRE

WAULT — weighted average unexpired lease term — is the single line in an Investment Memorandum that tells a buyer how long contracted income might survive before re-letting risk bites. It is not defined in a single statute; it is a market convention built from lease events (expiry, tenant break, landlord break, and sometimes rent review milestones in advanced variants). For UK CRE agents, the job is to compute it consistently and to label which WAULT you mean.

Definition (practical, not textbook-pedantic)

Take each tenant cash-flow stream, assign a remaining term measured to a chosen endpoint (expiry or earliest break), weight by income (usually passing rent or ERV in specialist cases), and sum:

WAULT = Σ (weight_i × term_i) / Σ weight_i

Where term_i is expressed in years (or years and decimal months) from the valuation / transaction date.

To expiry vs to break

WAULT to expiry uses the contractual termination date assuming no break is exercised. It is longer and smoother — fine for stable, covenant-heavy assets where breaks are remote economically.
WAULT to break uses, for each lease, the earliest date the tenant (or sometimes landlord) can terminate if conditions are met. It is shorter and more volatile — and in 2024–2026 financing markets, it is often the primary headline in institutional packs because refinancing and reversion risk dominate pricing.

If you show only one number, label it. Mixing definitions across comparables destroys credibility in IC.

Worked example (three tenants)

Assume valuation date today; passing rent weights:

| Tenant | Passing rent (£k p.a.) | Years to break | Years to expiry | | ------ | ---------------------- | -------------- | --------------- | | A | 400 | 2.0 | 8.0 | | B | 250 | — (no break) | 5.0 | | C | 350 | 3.5 | 10.0 |

Total rent weight = 1,000.

WAULT to break: for B, with no tenant break, use expiry as the relevant endpoint (unless a landlord break exists — then model that explicitly).

A: 2.0 × 400 = 800
B: 5.0 × 250 = 1,250
C: 3.5 × 350 = 1,225

Sum = 3,275 → WAULT to break ≈ 3.28 years.

WAULT to expiry:

A: 8.0 × 400 = 3,200
B: 5.0 × 250 = 1,250
C: 10.0 × 350 = 3,500

Sum = 7,950 → WAULT to expiry = 7.95 years.

The spread (here ~4.7 years) is information, not noise — it tells you how much of the income stack sits behind break optionality.

Why investors care more about break in a rising-risk environment

When cost of debt and void assumptions move, buyers shorten their effective horizon. A tenant out of the money on rent may still exercise a break to resize or relocate. WAULT to break captures that asymmetric downside more honestly than expiry-only metrics — provided your abstract correctly captures notice dates, rolling breaks, and conditional breaks (where professional judgement still applies).

From leases to IM in one pipeline

Rubo ties rent-roll / lease extraction to deal deck / IM generation so WAULT is not a Friday-night spreadsheet afterthought. Feed the system consistent lease events, review the assumptions, and export a buyer-ready narrative.

Generate an IM: see Deal decks & Investment Memoranda — or book a demo to run a live multi-tenant example with your branding.