Property Management
What is a 'percentage lease' in retail commercial property management?
AA lease where the rent is a percentage of the property's assessed value
BA lease where rent includes a base amount plus a percentage of the tenant's gross sales above a breakpoint✓ Correct
CA lease where the broker earns a percentage of all rent collected
DA lease with annual rent escalations tied to a percentage increase
Explanation
A percentage lease has two components: a base rent plus additional rent calculated as a percentage of the tenant's gross sales exceeding a 'natural breakpoint' (base rent ÷ percentage rate = breakpoint). Above the breakpoint, the landlord shares in the tenant's success. Percentage leases are common in retail spaces (especially shopping centers) and align the landlord's income with the tenant's business performance.
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