A retail tenant pays $8,000 monthly base rent plus 3% of gross sales exceeding $500,000 annually. If their annual gross sales are $800,000, what is their total annual rent?
Correct Answer
D) $105,000
Base rent: $8,000 × 12 = $96,000. Percentage rent: ($800,000 - $500,000) × 3% = $9,000. Total annual rent: $96,000 + $9,000 = $105,000. Percentage leases only apply the percentage to sales above the breakpoint threshold.
Why This Is the Correct Answer
Option D correctly applies the percentage lease formula. Base rent is $8,000 × 12 months = $96,000. The percentage rent applies only to sales exceeding the $500,000 breakpoint: ($800,000 - $500,000) × 3% = $300,000 × 3% = $9,000. Total annual rent is $96,000 + $9,000 = $105,000. This follows standard commercial leasing practices where percentage rent is calculated only on sales above the established threshold.
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A retail tenant pays $5,000 base rent per month plus 3% of gross sales above $200,000 annually. If their annual gross sales are $350,000, what is their total annual rent?
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