Which lease type ties rent to a percentage of sales?

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Multiple Choice

Which lease type ties rent to a percentage of sales?

Explanation:
Rent tied to a percentage of sales is a percentage lease. In this setup, the landlord charges a base rent plus a portion of the tenant’s gross sales, so the total rent moves up or down with how well the business performs. This aligns the landlord’s revenue with the tenant’s success, which is especially common in retail where location and foot traffic strongly influence sales. This differs from a straight lease, where rent is fixed regardless of sales; a graduated lease, where rent increases at predetermined times; and a revaluation lease, where rent is adjusted based on changes in property value or an index. For example, with a base rent of 2,000 and a 5% sales share, sales of 100,000 would result in rent of 7,000 (2,000 + 5% of 100,000).

Rent tied to a percentage of sales is a percentage lease. In this setup, the landlord charges a base rent plus a portion of the tenant’s gross sales, so the total rent moves up or down with how well the business performs. This aligns the landlord’s revenue with the tenant’s success, which is especially common in retail where location and foot traffic strongly influence sales.

This differs from a straight lease, where rent is fixed regardless of sales; a graduated lease, where rent increases at predetermined times; and a revaluation lease, where rent is adjusted based on changes in property value or an index. For example, with a base rent of 2,000 and a 5% sales share, sales of 100,000 would result in rent of 7,000 (2,000 + 5% of 100,000).

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