Property Management
What is 'percentage rent' in a retail lease and how is it calculated?
ARent based on the percentage of the building the tenant occupies
BRent based on a percentage of the tenant's gross sales above a breakpoint, in addition to minimum base rent✓ Correct
CA discount on rent for long-term tenants
DRent calculated as a percentage of the property's assessed value
Explanation
Percentage rent is commonly used in retail leases: the tenant pays a fixed base rent plus a percentage of gross sales above a 'natural breakpoint' (where base rent equals percentage rent). Example: $2,000/month base rent + 5% of sales over $480,000/year. This aligns the landlord's return with the tenant's business success.
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