Lease Event Concentration Risk 2: Add complexity only where it adds decision value.
By Doug Parker, Montbart
First published 19th August 2026
I’ve been writing articles on the various aspects of commercial property risk for a year or two now. During the course of attempting to conceptualise the idea of measuring the concentration of risk to lease breaks and expiries, I arrived at ‘Lease Event Concentration Risk’.
The idea was fairly simple. WAULT is the well-established method to look at average lease duration, but averages can easily hide the pattern of lease events underneath.
It’s perfectly possible two portfolios can have the same WAULT figure, and still present very different risks to the owner.
One portfolio might have lease events spread quite evenly over time, but another might have a large proportion of its rent exposed to breaks and expiries within a narrow period. So the average (WAULT) might look the same, but the management of the events is certainly not. This was the starting point for LECR.
What LECR is trying to measure
Lease Event Concentration Risk looks at the proportion of passing rent exposed to lease events within defined future periods.
At its simplest:
LECR = Passing rent which is exposed to relevant lease events within the selected period ÷ Total passing rent.
So this becomes:
LECR 12 measures exposure within 12 months
LECR 24 measures exposure within 24 months
LECR 36 measures exposure within 36 months
LECR 60 measures exposure within 60 months
The measure is rent-weighted rather than tenancy-count weighted. For example a lease break affecting £150,000 of passing rent must carry more significance than one affecting £10,000.
This does not make LECR a prediction of tenant departure however. It simply identifies how much income becomes contractually exposed within a given period.
Why WAULT is not enough on its own
Of course WAULT is very useful, and answers the important question of “how long, on average, is the income contracted for?”
What we’re missing though, is sight of how income exposure is distributed. This distinction became very clear when the model was tested against a worked commercial property rent roll.
The portfolio had:
WAULT to expiry: 3.08 years
WAULT to break: 2.04 years
So, at first glance, that may appear a little short but not especially alarming. However the underlying lease-event profile showed:
Event LECR 12: 30.68%
Event LECR 24: 45.58%
Event LECR 36: 66.96%
So almost a third of the total passing rent reached a break or expiry within 12 months, and roughly two-thirds within three years. The WAULT would not have a hope of showing this.
Event dates are only part of the story
The next refinement turned out to be even more interesting (and created a new headache within Excel for me). It seems obvious now, but a break date is not necessarily the date on which management needs to act decisively.
If a tenant has a break in 12 months but must give a minimum of six months' notice, the practical management date arrives far earlier.
And rolling breaks create an even more obvious issue. A lease might have several years left until contractual expiry, but if the tenant can terminate at any time on six or twelve months' notice, the exposure exists right now, it’s just a delayed financial effect.
This led to a second measure of ‘Action LECR’.
So, where ‘Event LECR’ looks at when the income position changes (i.e. the break date or the lease expiry date), ‘Action LECR’ looks at the window of timing where the owner/portfolio manager can actually do something about the risk (i.e. before the expiry of the break notice window)
Once notice periods and rolling breaks were included, the worked example changed significantly:
Event LECR 12: 30.68%
Action LECR 12: 46.97%
Event LECR 24: 45.58%
Action LECR 24: 61.87%
Event LECR 36: 66.96%
Action LECR 36: 100%
The lease dates had not changed, but the interpretation had. Almost half the total rent roll needed management attention within 12 months when the action dates were incorporated.
By 36 months, every tenancy in the rent roll had reached an actionable point. Of course this doesn’t mean every tenant will leave, but it does mean the income can’t simply be treated as passive.
Fixed periods can still hide concentrations
The next issue was the use of fixed reporting periods.
LECR 12 measures the 12 months immediately following the analysis date, this is a useful reference but what if the worst cluster falls between months 8 and 20? Using fixed annual ‘chunks’ the concentration can be split across two reporting periods and make it look less severe.
To deal with this, the model also calculates a:
Peak Rolling 12-Month LECR
Instead of measuring only one fixed year, the model moves a 12-month window forward through the lease profile and calculates the exposure within each period.
The highest result becomes the peak.
In the worked example:
Fixed Event LECR 12: 30.68%
Peak Rolling 12-Month Event LECR: 34.98%
The difference admittedly was not massive, but it proved the point that the worst 12-month concentration did not align perfectly with the first reporting year. When the same rolling analysis was applied to action dates, the peak rose to approximately 47%, with the highest-exposure period beginning immediately from the analysis date (due to the rolling breaks).
This gives the owner two quite useful pieces of information - how much exposure is concentrated? And when does that concentration peak?
Why it matters in practice
This is where the model becomes appropriate and useful beyond the spreadsheet. If the peak exposure period is two years ahead, the owner has time to prepare. This could mean:
opening discussions early (a lease regear?);
working to stagger lease events where possible;
preparing a letting strategy;
planning incentives for any incoming tenants;
budgeting for necessary refurbishment or capex;
Looking at the timing of a refinance;
preparing a property for disposal;
making management resources available.
The aim is not to try to forecast what tenants will do, it’s to prevent exposure to large concentrations of leasing risk.
The model measures the structure. The asset manager interprets the consequence.
It’s important to understand that two identical lease events can have completely different practical consequences. One tenant might be financially strong and very likely to renew the lease, and another might already be looking at relocation.
The LECR exposure may be identical, but the investment risk is not. This is why I don’t believe tenant covenant strength, probability of renewal, void assumptions or capital expenditure should be buried inside the core LECR calculation.
These considerations matter enormously, and because of this they need to be in a separate layer of professional judgement. The LECR model looks at the shape of the exposure, and the asset manager interprets the consequence. This keeps the methodology clear and avoids the false sense of mathematical precision.
Where the framework goes next
The current version of LECR is still being developed, and future applications may include:
Incorporation of appropriate 1954 Act notice periods (this is my next project)
portfolio-level analysis across selected properties;
covenant and consequence;
scenario testing for acquisitions and disposals;
expected void-cost modelling;
capex;
action summaries;
visual portfolio dashboards (I have to figure out how this would work).
Of course, there’s a temptation to keep adding variables into the model until the output becomes more complicated than the problem, and I’m keen to avoid this.
The intention is to develop LECR into a simple Excel-based tool that others can use and adapt. I like the idea of the methodology being transparent and practical, rather than guarded, but the model is still being refined before I release a clean version.
So my guiding principle is simple: Add complexity only where it adds decision value.
And for now, the core questions are:
How much rent is exposed?
When does that exposure occur?
When does management need to act?
And where is the concentration greatest?
These questions alone can paint a surprisingly different picture from WAULT viewed in isolation. LECR is not intended to reinvent lease risk, it’s simply an attempt to make a familiar problem more visible, measurable and actionable.
By Doug Parker, Montbart
First published 19th August 2026
