A national clothing retailer signs a mall lease requiring $5,000 monthly base rent plus 6% of gross sales above a natural breakpoint of $83,333 per month. In a December holiday month, the store rings up $150,000 in sales and the landlord receives $5,000 in base rent plus an additional $4,000 calculated as 6% of the amount above the breakpoint, for $9,000 total. In slow months when sales never cross the breakpoint, the landlord receives only the base rent. Which lease structure did the retailer and landlord enter?
Correct Answer
A) Percentage lease
The landlord receives a fixed minimum every month plus an additional payment tied to sales above a defined threshold — base plus a sales-tied component. That dual-stream structure is a percentage lease, common in retail.
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