Percentage Lease

AAA

DEFINITION of 'Percentage Lease'

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. It is a term used in commercial real estate. Percentage lease agreements can often decrease the base rate while simultaneously providing the lessor with additional upside potential.

INVESTOPEDIA EXPLAINS 'Percentage Lease'

A percentage lease is a lease where the rental is based on a percentage of the monthly or annual gross sales made on the premises, usually coupled with a base rent. This is a common lease type for retail stores operating in leased spaces, where the tenant pays a base rent regardless of profits/losses plus a percentage of revenue earned as a result of conducting business on the premises.

RELATED TERMS
  1. Recapture Clause

    A provision usually found in percentage leases, especially in ...
  2. Gross Lease

    A type of commercial lease where the landlord pays for the building's ...
  3. Capital Lease

    A lease considered to have the economic characteristics of asset ...
  4. Lease

    A legal document outlining the terms under which one party agrees ...
  5. Operating Lease

    A contract that allows for the use of an asset, but does not ...
  6. Commercial Real Estate

    Property that is used solely for business purposes. Examples ...
Related Articles
  1. Rental Properties: Cash Cow Or Money ...
    Home & Auto

    Rental Properties: Cash Cow Or Money ...

  2. Tax Deductions For Rental Property Owners
    Taxes

    Tax Deductions For Rental Property Owners

  3. Simple Ways To Invest In Real Estate
    Home & Auto

    Simple Ways To Invest In Real Estate

  4. Payback Period
    Investing

    Payback Period

Hot Definitions
  1. Return On Sales - ROS

    A ratio widely used to evaluate a company's operational efficiency. ROS is also known as a firm's "operating profit margin". ...
  2. Halloween Strategy

    An investment technique in which an investor sells stocks before May 1 and refrains from reinvesting in the stock market ...
  3. Halloween Massacre

    Canada's decision to tax all income trusts domiciled in Canada. In October 2006, Canada's minister of finance, Jim Flaherty, ...
  4. Zombies

    Companies that continue to operate even though they are insolvent or near bankruptcy. Zombies often become casualties to ...
  5. Witching Hour

    The last hour of stock trading between 3pm (when the bond market closes) and 4pm EST. Witching hour is typically controlled ...
  6. October Effect

    The theory that stocks tend to decline during the month of October. The October effect is considered mainly to be a psychological ...
Trading Center