Percentage rent is rent calculated using a stated percentage of a tenant’s sales, often after sales exceed an agreed threshold.
How it works in retail
Retail leases define eligible sales, reporting periods and how the calculation interacts with base rent. The threshold may be described as a breakpoint.
A retail example
A lease requires 5% of eligible annual sales above $500,000. At $600,000 of eligible sales, the additional percentage rent is $5,000.
What to keep in mind
The example is illustrative, not a standard lease term. Returns, online sales, taxes and other exclusions must be checked against the actual agreement.
Examples are illustrative. Terminology and measurement conventions can vary by business and market.