Income Concentration
Measure tenant concentration risk using share analysis and a Herfindahl index.
Introduction
Who this is for: Portfolio and multi-let investors assessing income risk.
Why it matters: A portfolio yielding 7% from one tenant is a fundamentally different asset from one yielding 7% from twenty. Concentration is the risk that does not show up in the yield.
Typical scenario: A multi-let estate where the anchor tenant provides nearly half the income.
- Counting tenant numbers rather than income share.
- Ignoring that several units let to the same group are one covenant.
- Treating a strong covenant as removing concentration risk — it reduces default probability, not exposure.
Inputs
Tenant Income
Cost Base
Analysis
Across 5 tenants producing £200,000, the largest provides 47.5% and the top two 68.5%. The concentration index of 0.305 rates this portfolio as concentrated — equivalent to 3.3 equally-sized tenants.
This analysis provides context, not financial advice. Consult a qualified adviser before making investment decisions.
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Export
Live Results
Largest Tenant Share
47.50%
Top Two Share
68.50%
Concentration Index
0.31x
Net Income if Largest Lost
£67,000