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Occupancy, Leasing Spreads & WALT

Occupancy, leasing spreads and WALT explained together, the leasing statistics that drive every REIT's same-store NOI growth story

Occupancy: How Full Is the Portfolio

Occupancy is the percentage of a REIT's available space (square footage, units, or beds, depending on the property type) that's currently leased or occupied. It's the most basic operating metric in real estate, and small movements matter, for a large portfolio, even a single percentage point of occupancy can represent millions of dollars of annual rent. Some REITs distinguish between "leased" occupancy (space under signed lease, including some not yet generating rent) and "occupied" or "commenced" occupancy (space actually paying rent); the gap between the two is a useful clue about near-term revenue still in the pipeline.

Leasing Spreads: The Direction of New Rent

A leasing spread compares the rent on a new or renewed lease to the rent the previous tenant was paying on that same space. A positive spread means the REIT is capturing higher rent than before, a sign of pricing power and rising market rents in that submarket. A negative spread means new leases are being signed below the expiring rate.

Illustration: a retail REIT renews a tenant's lease at $32 per square foot, where the expiring lease was $28 per square foot. That's a leasing spread of ($32 - $28) / $28 = +14.3%. Spreads are often reported on both a "cash" basis (using the actual first-year rent) and a "GAAP" basis (using the average rent over the new lease term, consistent with the straight-line rent concept covered in AFFO explained), and the two can differ meaningfully, so it's worth noting which one a company is citing.

WALT: How Long the Leases Run

WALT, or weighted average lease term, measures the average remaining time left on a REIT's leases, weighted by the size (or rent contribution) of each lease. A long WALT, common in net lease and some healthcare or specialty REITs, means rent is locked in and highly predictable for years to come, but also means the portfolio captures market rent increases more slowly. A short WALT, more typical of apartments (which reset roughly annually) or hotels (which effectively reprice nightly), means more frequent repricing opportunity, but also more exposure if market rents soften. Neither is inherently better; they represent different points on the same trade-off between predictability and upside.

How the Three Fit Together

These three metrics combine into the operating story behind same-store NOI growth: rising occupancy plus positive leasing spreads is a strong combination, pointing to both more space generating rent and higher rent per square foot on top of it. A well-laddered WALT (leases expiring in manageable, staggered amounts each year rather than all bunched together) gives a REIT steady opportunities to push rents to market without exposing too much revenue to renewal risk in any single year.

Sector Differences Are the Point, Not a Flaw

These metrics look very different by design across property types. A net lease REIT might report a WALT of ten or more years with occupancy in the high 90s but modest leasing spreads, since the whole point of the model is long, stable leases. An apartment REIT reports occupancy and "spreads" that reset constantly with each new lease-up cycle. Comparing WALT or leasing-spread figures across sectors without accounting for that structural difference can be misleading. See REIT sectors for how each property type's leasing model differs.

Where to Find It

Occupancy, leasing spreads, and WALT are reported in a REIT's quarterly earnings supplemental, not on the standard financial statements. See how to read a REIT earnings supplement for where in that package to look. These figures aren't yet part of this site's own datasets; each REIT's profile page links to the company's latest 8-K filing as a starting point for finding them.

A WALT Calculation, and Occupancy in Context

A simplified WALT calculation: suppose a property has two leases - one covering 60% of the building's rent roll with 8 years remaining, and another covering the remaining 40% with 3 years remaining. WALT is the rent-weighted average: (0.60 x 8 years) + (0.40 x 3 years) = 4.8 + 1.2 = 6.0 years. Applied across an entire portfolio of hundreds of leases, the same weighted-average logic produces the single WALT figure REITs disclose each quarter.

Occupancy figures are usually reported for the stabilized portfolio separately from properties still in initial lease-up or under redevelopment, since folding a half-finished, largely vacant new development into the same occupancy figure as a mature, fully leased portfolio would understate how well the existing business is actually performing. Leasing spreads, similarly, are typically disclosed for the trailing quarter and sometimes the trailing twelve months, since a single quarter can include just a handful of large leases that swing the average considerably - a REIT that happens to renew one very large, below-market legacy lease in a given quarter can show a negative spread that doesn't represent the broader portfolio's trend.

Self-storage operates on a model closer to month-to-month agreements with frequent rate adjustments, giving it a very short effective WALT and among the fastest repricing ability of any REIT sector, in contrast to the decade-plus WALT typical of net lease portfolios.

See it in the data: See a REIT profile → Compare REIT sectors →

Research and education only — nothing here is investment advice. Figures such as the 90% distribution rule are general and can change; always confirm against a company's filings.