Tenant Concentration

Tenant concentration is the proportion of rent, revenue, or space attributable to a tenant or group of tenants.

A simple example

If one tenant provides 20% of a REIT’s rent, the loss of that lease would matter far more than the loss of a tenant providing 1%. The REIT may eventually replace the rent, but vacancy and leasing costs can come first.

Why this matters to income investors

Dependence on a few tenants can put a large share of rent at risk.

How to use tenant concentration in your research

Find the share of rent from the largest tenants, then check their lease expirations and ability to pay. A single large lease can matter more to future rent than a small change in portfolio-wide occupancy.

This material is general education and information, not individualized investment, tax, or legal advice.