1. What is Percentage Rent?

Definition: Percentage rent is an additional rent charged in commercial leases based on a percentage of the tenant's gross sales.

Purpose: It allows landlords to share in the success of retail tenants while providing tenants with lower base rent.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

• Percentage Rent — Additional rent amount ($)
• Percentage — Agreed percentage in lease (%)
• Gross Sales — Tenant's total sales ($)

Explanation: The percentage is divided by 100 to convert to decimal form, then multiplied by gross sales to calculate the additional rent.

3. Importance of Percentage Rent Calculation

Details: Proper calculation ensures fair compensation for landlords and helps tenants understand their full rent obligations.

4. Using the Calculator

Tips: Enter the percentage from your lease agreement and the gross sales amount. Both values must be > 0.

5. Frequently Asked Questions (FAQ)

Q1: What's a typical percentage in retail leases?
A: Most percentage rents range between 5-12% of gross sales, often with a breakpoint or natural breakpoint.

Q2: Are there different types of percentage rent?
A: Yes, common types include pure percentage rent, percentage over breakpoint, and percentage over natural breakpoint.

Q3: What expenses are typically excluded from gross sales?
A: Returns, sales taxes, and sometimes online sales may be excluded - check your lease agreement.

Q4: How often is percentage rent calculated?
A: Typically monthly or annually, depending on the lease terms.

Q5: Can percentage rent be capped?
A: Some leases include caps on percentage rent to protect tenants from excessive payments.