Real Estate Glossary | What is Annual Percentage Rate?

What is Annual Percentage Rate (APR)?

Percentage lease is a type of commercial real estate lease in which the tenant pays a base rent, as well as a percentage of their gross sales in addition to the base rent.

This type of lease is commonly used for retail businesses, where the landlord wants to share in the success of the tenant's business. The percentage that the tenant pays is based on a portion of their gross sales and is calculated on a monthly or annual basis.

This type of lease is attractive to landlords because they can benefit from the success of the tenant's business while also providing the tenant with stability in their rent payment.

However, tenants should be cautious when signing a percentage lease, as their rent will increase as their sales increase, which can become a burden for their business if not properly managed.

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