A commercial landlord is reviewing lease types for a new office building. All of the following are accurate descriptions of commercial lease types EXCEPT.
Correct Answer
C) A percentage lease requires the tenant to pay a percentage of the building's appraised value as rent each year
A percentage lease requires the tenant to pay a percentage of the tenant's gross sales revenue, not a percentage of the building's appraised value. The appraised value of the building is irrelevant to percentage lease calculations.
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Previous Question
A percentage lease has a base rent of $60,000 per year and a percentage rent rate of 6 percent. The natural breakpoint is the sales volume at which percentage rent begins. What is the natural breakpoint for this lease?
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A tenant holds a ground lease and uses the leasehold interest as collateral for a construction loan to build on the site. What is this type of financing called?