Description

A percentage lease is a type of lease agreement where the tenant pays a base rent plus a percentage of their sales. This type of lease is commonly used in retail properties. The base rent is usually lower than the market rate to account for the percentage rent. The percentage rent is calculated based on the tenant's gross sales, and the rate can be fixed or on a tier scale. There is also a break point, which is the threshold at which the percentage rent kicks in. The payment frequency and negotiation of the lease terms can vary.

Takeaways

1. A percentage lease is a win-win situation for both landlords and tenants.
2. The base rent is usually lower than the market rate in a percentage lease.
3. The percentage rent is calculated based on the tenant's gross sales.
4. There is a break point at which the percentage rent kicks in.
5. Payment frequency and lease terms can be negotiated.

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