Net lease glossary
Percentage Rent
Additional rent equal to a percentage of the tenant's gross sales above a set breakpoint.
Percentage rent is extra rent a retail tenant pays when its sales exceed a breakpoint. For example, a lease might require 5% of gross sales above $2 million per year. A natural breakpoint is calculated by dividing base rent by the percentage rate. Percentage rent lets landlords share in a strong store's success, and the sales reporting it requires gives the landlord valuable visibility into store performance and rent coverage.