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Advanced CLE

2022 Percentage Rent Leases in Commercial Real Estate Audio Replay

Total Credits: 1.2 MCLE, 0.0 Kansas Credit

Practice Area:
Real Property



Percentage rent is used in retail leases where the landlord has bargaining power to demand a share of the tenant’s economic gains.  Demand for retail space may be high or a landlord’s specific location may be particularly attractive such that the tenant is willing to pay not only a fixed amount of rent but a share of its gross revenue.  These types of leases require a sophisticated understanding of the underlying economics of tenant’s business. These leases also require very careful drafting. How is gross revenue defined?  Is there a minimum amount or a maximum amount?  How are these numbers verified?  And what are all the related protections for the landlord or the tenant?  This program will provide you with a practical guide to negotiating and drafting percentage leases.

•    Circumstances where percentage rent is commonly seen
•    Economics of percentage rent – landlord and tenant perspectives
•    Defining key terms – “gross sales,” exclusions, percent of rent
•    Determining thresholds – minimum rent, sliding scales
•    Financial reporting and audit rights
•    Important related provisions – non-competition, continuous use, payment terms


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