Detailed lease for store space within a shopping center, with an option for rent as a percentage of gross sales.
Guam Shopping Center Lease Agreement - percentage rent option
State:
Multi-State
Control #:
US-808LT
Format:
Word;
Rich Text
Instant download
Description
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How to fill out Shopping Center Lease Agreement - Percentage Rent Option?
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FAQ
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.
A common method for determining percentage rent is to use a natural breakpoint. A natural breakpoint is calculated by dividing the base rent by an agreed percentage. The percentage rent payable by a tenant will then be equal to this percentage multiplied by the amount by which gross sales exceeds the breakpoint.
A percentage rent provision provides that if the tenant achieves a certain amount of gross sales in a given year, they will pay a percentage of such gross sales to the landlord as additional rent.
Percentage leases are commonly executed in retail mall outlets. This type of lease agreement is most common for businesses with notoriously large sales volumes, but even a small business that wants to set up shop in a mallto take advantage of the high volume of foot trafficmay be subject to it.
Here's how to calculate the leased percentage: current number of units occupied + (number of units with signed leases yet to move in) / total number of units 100%.
Commercial tenants should be able to spend 5% to 10% of their gross sales per foot on rent. Your gross sales divided by the location's square footage will give you sales per square foot. For example, you estimate your business will make $300,000 per year in total sales, and you are looking at a 1,500 square foot space.
To calculate, simply divide your annual gross income by 40. Another rule of thumb is the 30% rule, meaning that you can put 30% of your annual gross income in rent. If you make $90,000 a year, you can spend $27,000 on rent, and so your monthly rent should be $2,250.
Percent rent is normally considered an additional rent term. For example, if a tenant has a base rent of $1,000 per month, and a percentage rent of 5% of income on an annualized basis, then the natural breakpoint is (12 x 1,000) / 5% = $240,000.
Percentage rent is usually about 7 percent A percentage lease is a lease that requires a commercial space tenant to pay a "base rent" and, on top of that, to pay the landlord a percentage that is based on the business owner's monthly sales volumes.
