Every term here is checked or graded on a real site before I'll act on it. No definitions copied from a textbook, no jargon left unexplained. If you want to see how any of these plays out on an actual deal, that's what the Deal Grade and the Feaso Filter™ are for.
WALE stands for weighted average lease expiry, the average time left on a property's leases weighted by the rent each tenant pays, not by floor area or headcount.
A round number hides more than it shows. A five-year WALE where one tenant paying 80% of the rent has a year left is a very different risk to a five-year WALE spread evenly across five tenants, even though the raw average is identical. I weight WALE by income for exactly that reason: four-plus years, weighted by income, is one of the checks a lease has to pass before the building gets looked at.
WALE matters because it's buying time, and time is the one thing a lease can't hand back once it's gone. A short, income-weighted WALE means the rent, and the value it supports, is exposed sooner than the brochure average suggests.
A tenant covenant is the financial strength standing behind a lease: how likely that tenant is to keep paying rent for the rest of the term, whatever happens to their business or the economy.
A national, ASX-listed or government tenant, or a genuine spread across several tenants, is a strong covenant. A single small operator with no track record is a weak one, no matter how good the fit-out looks on inspection day. I grade covenant strength before I grade the building, because the building's value depends on that rent actually arriving.
The covenant is why two properties with an identical lease term and an identical rent can be worth very different amounts. The number on the lease is only as good as the business behind it.
Escalations are the contracted rent increases written into a lease: how, and by how much, the rent goes up each year without a new negotiation.
Fixed annual increases of 3% or more, or CPI-plus structures, are a known number you can put straight into a cash flow model. Market-review-only clauses aren't: they reset to "market" at review, which is a promise to negotiate later rather than a figure you can rely on now. I grade fixed and CPI-plus escalations higher for exactly that reason.
Escalations decide how much of your income growth is contracted and how much you're trusting a future negotiation to deliver. A lease with strong escalations grows the return without you doing anything; a lease without them asks you to hope the market does the growing for you.
In a net lease the tenant pays the outgoings, rates, insurance and building costs, on top of the rent. In a gross lease the landlord pays them, and the rent is meant to cover it.
The difference matters most when costs rise. In a true net lease, a jump in insurance or council rates is the tenant's problem and your net income holds. In a gross lease, that same rise comes straight off your return for the rest of the term, whether or not the rent has moved. I grade net leases higher because they protect the income you actually modelled.
It's the fastest way to check whether a quoted yield is the yield you'll actually receive, or a yield that assumes costs never go up.
Reversion is what happens to the rent when a lease resets to the current market rate, at renewal, review or expiry, rather than the rate the current lease was signed at.
If the passing rent is at or under market, that reset is upside: the income has room to move up without you doing anything except waiting for the lease event. If the property is over-rented, the same reset works against you, and what looked like a strong yield on day one is really an income cliff arriving on a fixed date. I price every commercial property on term and reversion, not on the passing rent alone, because the passing rent only tells you what the seller negotiated, not what the market will pay next.
Reversion is why the same headline yield can be a buy signal on one property and a warning on the next.
Incentives are what a landlord gives a tenant to sign: rent-free periods, fit-out contributions or cash back, on top of the headline rent on the lease. They lower what the tenant is really paying, even though the face rent on paper stays the same.
A yield built on face rent, with heavy incentives amortised invisibly through the term, looks stronger than the property actually performs. I strip incentives out before I'll quote a yield on anything, because face rent tells you what's on the lease and effective rent tells you what's actually landing in the account.
Incentives are also the fastest way to spot a soft market: when incentives are climbing across a precinct, it usually means asking rents are being propped up rather than genuinely holding.
A cap rate, short for capitalisation rate, is a property's net annual income divided by its price. A property priced at $1,000,000 returning $50,000 a year in net income is trading on a 5% cap rate.
The cap rate isn't fixed to the building, it moves with the lease. Strengthen the tenant covenant or lock in a longer term and the same income is worth more, so the cap rate compresses. Let vacancy rise or the covenant weaken and the same income is worth less, so the cap rate expands, with nothing about the physical building having changed at all. I price against cap-rate comps from settled sales, not the number in an agent's guide, because a guide is a starting position and a settled sale is what the market actually paid.
The cap rate is the market's verdict on the lease, not on the bricks. That's why the lease gets graded before the building does.
GRV stands for gross realisation value: the total sale value of every finished lot, townhouse or unit in a project, added together, before a single cost comes out.
GRV is not profit and it's not close to profit. Build costs, holding costs and margin all still have to come out of that number before you know whether a site actually works. It's the first number in the Feaso Filter™, the feasibility screen every site gets before a client spends a dollar on consultants: GRV, then build and holding costs, then margin, checked in that order, on day one.
Get GRV wrong at the front end and every number calculated after it, including the margin the whole deal is being bought on, is wrong too. That's why it's checked before due diligence starts, not after.
DA precedent is a review of what development applications have actually been approved on nearby sites, not what the zoning table or a council's own planning material says should be possible.
Zoning sets the ceiling on paper. DA precedent tells you what a council has actually approved in that pocket recently: the yield, the setbacks, the outcome that got through, and the ones that didn't. It's often a better predictor of what your own application will get through than the planning controls themselves, because it reflects how the council is applying its own rules today, not how the code reads. Every site gets a DA precedent review before an offer goes in.
DA precedent is the strongest signal available on a development site, because it's evidence, not policy. A zoning code tells you what's allowed in theory; DA precedent tells you what's been allowed in practice.
The Feaso Filter™ is a rapid feasibility screen run on every development site before a client spends real money on consultants: gross realisation value, build and holding costs, and margin, checked in that order.
It's deliberately quick. A one-pager is enough for a smaller site; a full model gets built once a site clears the filter and looks worth the deeper due diligence spend. The job of the Filter is to kill bad sites early and cheaply, before town planners, surveyors and engineers get engaged on a margin that was never going to work. Bring a site to a strategy call and the Filter runs free, on the spot.
If the margin isn't there at the filter stage, nobody spends money finding that out the expensive way, three consultants and two months later.
Every one of these gets checked before a client's money moves, not after. If you've got a site or a property you want run through the same grading, that's what a strategy call is for.