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.
BREAKING DOWN '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.