A retail tenant's lease includes a base rent of $25 per square foot plus 6% of gross sales exceeding $500,000 annually. If the tenant occupies 2,000 square feet and generates $800,000 in annual sales, what is the total annual rent?
Correct Answer
B) $68,000
Base rent: 2,000 sq ft × $25 = $50,000. Percentage rent: ($800,000 - $500,000) × 6% = $18,000. Total annual rent: $50,000 + $18,000 = $68,000. This demonstrates how percentage leases combine fixed base rent with variable percentage rent on sales above a threshold.
Why This Is the Correct Answer
Option B correctly calculates the total annual rent by combining both lease components. Base rent equals 2,000 sq ft × $25/sq ft = $50,000. Since annual sales of $800,000 exceed the $500,000 threshold, percentage rent applies to the excess: ($800,000 - $500,000) × 6% = $18,000. Total annual rent is $50,000 + $18,000 = $68,000. This demonstrates proper application of percentage lease calculations commonly found in retail commercial leases.
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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?
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A retail tenant's lease includes a percentage rent clause of 5% of gross sales above a breakpoint of $500,000 annually. If the tenant's annual sales are $800,000 and base rent is $3,000 monthly, what is the total annual rent?