Weighted Average Lease Term Report

The Weighted Average Lease Term (WALT) report provides a single average lease term that represents the average duration of all leases within a company’s portfolio, weighted by the lease liability associated with each lease. This metric is useful for understanding the remaining duration of the company’s lease obligations and is a key disclosure requirement under ASC 842.

1. Lease Liabilities: The WALT calculation involves the lease liabilities associated with each lease. These liabilities are typically the present value of future lease payments, calculated using the appropriate discount rate for each lease.

2. Lease Term for Each Lease: The term of each lease includes the non-cancellable period plus any periods covered by options to extend the lease that the lessee is reasonably certain to exercise.

3. Weighted Calculation: The WALT is calculated by weighting each lease's term by its corresponding lease liability. This provides an average lease term that reflects the significance of each lease's contribution to the company's overall lease obligations.

4. Reporting Period: The WALT report is generated for specific reporting periods (e.g., quarterly or annually) and is typically included in the financial statement disclosures under ASC 842.

5. Financial Statement Disclosure: Companies are required to disclose the WALT in their financial statements to give users insight into the remaining lease obligations' duration.