Percentage Rent Formula
Description
How to fill out Lease Of Retail Store With Additional Rent Based On Percentage Of Gross Receipts - Real Estate?
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FAQ
(a) Beginning with the first lease year, Tenant shall pay to the Landlord, in addition to minimum rent, upon the conditions and at the times hereinafter set forth, percentage rent equal to two percent (2%) of Tenant's gross sales (as hereinafter defined) in excess of the number obtained by dividing (a) minimum rent for ...
Advantages of a Percentage Lease Although the base rent of a percentage lease is generally lower, if the tenant's business is successful, the landlord is able to gain a significant amount of rent upside from the percentage rent.
The percentage rent is typically calculated when the clients have paid a base rent, and factors in the tenant's gross sales as a point of measurement in determining the percentage rent payable.
The Natural Breakpoint is the minimum annual base rent divided by the percentage rent. For example, if the minimum annual base rent is $100,000 per year and the percentage rent is 5%, then the Natural Breakpoint is $2,000,000.
What Is a Percentage Lease? A percentage lease is a type of lease where the tenant pays a base rent plus a percentage of any revenue earned while doing business on the rental premises. It is a term used in commercial real estate.