percentage lease


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percentage lease

A lease that requires rent payments based on a percentage of the gross sales of the tenant. It is common with retail leases and food and beverage leases. Most contain a minimum payment clause so that if gross sales drop below a certain level the rent will be the minimum payment rather than a percentage of sales.

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Many property managers are rethinking cost structures with percentage leases and fee changes, said Lauri Greenblatt Hines, CPM, president of Promus Commercial in San Diego.
The percentage lease without a guaranteed minimum is a product of the Depression," MacDougall wrote.
MacDougall said, "If you have a poorly located property or one erected in advance of shopping requirements, then a percentage lease without a minimum may be of assistance--but there is no excuse for it in a sound shopping zone.
Ask for a reasonable minimum monthly payment in addition to the percentage lease.

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