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?
Correct Answer
C) $51,000
Total rent = Base rent + Percentage rent. Base rent = $3,000 × 12 = $36,000. Percentage rent = ($800,000 - $500,000) × 5% = $15,000. Total = $36,000 + $15,000 = $51,000.
Why This Is the Correct Answer
Option C correctly calculates total annual rent by adding base rent ($3,000 × 12 months = $36,000) plus percentage rent (($800,000 - $500,000) × 5% = $15,000). The percentage rent only applies to sales exceeding the $500,000 breakpoint, so 5% is calculated on the excess $300,000, yielding $15,000. Total annual rent equals $36,000 + $15,000 = $51,000. This follows standard commercial lease percentage rent calculation principles.
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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?
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