Leasing Definitions - What Does "Percentage Lease" Mean?

Glossary of Commercial Leasing Terms

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Definition: A Percentage Lease typically requires a tenant to pay "Base Rent" and then on top of that amount, the tenant also pays a percentage based on monthly sales volumes. Percentage leases are commonly executed in retail mall outlets and other commercial retail leases.

Percentage leases should not take a percentage of all sales made, but should include a percentage paid to the landlord (lessor) only when a tenant has made a certain amount in any given month.

For example, a percentage lease might require a tenant to pay 5% of all sales that exceed more than $25,000 in any given month.

Also see, "Base Rent" and "Average Percentage Rents Charged in Commercial Leases."

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Also Known As: Percent Lease; Percentage Leasing; Retail Lease; Participation Lease