Readers of my blog will know that I am generally fond of REITs for their distribution payouts and preference for an income investing strategy, making them a popular component (and in some cases, predominantly so) of one's portfolio.
Previously I have discussed about the Property Sector, Gearing and Financing. In this article, I will talk about Weight Average Lease Expiry and Management.
Weighted Average Lease Expiry (WALE)
One of the key risk REITs face is vacancy of their properties. When properties remains vacant for too long, income and hence distribution gets cut as well. This is where WALE comes in as a metric to evaluate the REIT.
WALE is measured across all tenants’ remaining lease in years and is weighted with either:
