Percentage lease
National Real Estate Exam glossary · Leasing/Management
Definition
A lease, common in retail, under which rent is a base amount plus a percentage of the tenant's gross sales above a stated breakpoint, tying the landlord's return to the tenant's business volume.
Percentage lease in plain English
A percentage lease is a rent deal often used for stores in malls, where the landlord's payment rises and falls with how well the shop is doing. The tenant pays a fixed base rent, plus a slice of their sales once those sales pass a set line called the breakpoint. So a busy store hands over more, a slow one hands over just the base — the landlord is basically a quiet partner in the business's success. "Gross sales" here means total money taken in before any of the store's own costs are subtracted.
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