Compute percentage rent without inventing the sales

1 · Learn the move · Verified-data override

Your hold model has a line for percentage rent, and the partner who built it wants a number. The formula gives a natural breakpoint: annual base rent divided by the rate. The lease may state a different breakpoint, and when it does the lease wins, with the clause quoted so the override can be checked. That is the verified-data override, and it applies twice more on an owner's desk. The tenant's certified sales report is the only source of sales, so a year with no report is UNKNOWN, never carried forward from the year before. And the tenant's own deductions from gross sales only count if the lease's definition of gross sales allows them. Where the definition is silent on a deduction the tenant took, you show the overage both ways, label neither as right, and send the question to counsel. One invented sales figure in a model your lender reads is a misstatement, not a rounding choice.

Work out percentage rent for this tenant from the lease and the sales report only. Show the natural breakpoint, quote any stated breakpoint and say which governs per the quote. Check each deduction the tenant took against the lease's definition of gross sales. Where the definition is silent, show overage both ways and pick neither. Any year with no report is UNKNOWN. [lease sections] [sales reports]