A tool designed to compute lease payments based on a tenant’s gross revenue, often used in commercial real estate. For instance, a retail tenant might pay a base rent plus a percentage of their sales exceeding a predetermined breakpoint. This approach allows landlords to share in the success of thriving businesses while offering tenants flexibility during slower periods.
This method of lease calculation offers distinct advantages for both landlords and tenants. It provides a built-in mechanism for rent adjustments tied to business performance, promoting a mutually beneficial relationship. Historically, such arrangements have been prevalent in retail settings, particularly shopping malls, but their application extends to other commercial sectors as well. This approach can foster a collaborative environment where landlords are incentivized to support tenant prosperity.