Law.com Subscribers SAVE 30%
Call 855-808-4530 or email [email protected] to receive your discount on a new subscription.
Understanding and Utilizing Percentage Rent Provisions
As retailers like to say, 'The three most important factors in retailing are location, location, location.' The real value of a retail lease, however, resides in the volume of sales produced at the location; therefore, the provider of the location ' namely, the landlord ' is a key player in the retailer's success. That is why percentage rent has developed in retail leases as a way by which the landlord that provides a successful location might share to some degree in that success.
A developer setting out to construct a shopping center or strip mall typically prepares a pro forma plan for the project, thereby determining the fixed rent that must be realized from the project in order to cover its debt service and meet its desired rate of return. This is similar to what the developer of an office building would do. In the case of most retail centers, that fixed rent is a triple net rent, with the tenants paying all common area costs, property taxes, and the landlord's insurance premiums. Most pro forma plans are prepared without regard to any percentage rent; thus, percentage rent is truly the icing on the cake. However, it has also been suggested that percentage rent permits a lower fixed rent than would otherwise be the case and, therefore, lends stability to the project by enabling retailers to ride out downturns in retail activity.
This premium content is locked for Entertainment Law & Finance subscribers only
ENJOY UNLIMITED ACCESS TO THE SINGLE SOURCE OF OBJECTIVE LEGAL ANALYSIS, PRACTICAL INSIGHTS, AND NEWS IN ENTERTAINMENT LAW.
- Stay current on the latest information, rulings, regulations, and trends
- Includes practical, must-have information on copyrights, royalties, AI, and more
- Tap into expert guidance from top entertainment lawyers and experts
Already a have an account? Sign In Now Log In Now
For enterprise-wide or corporate acess, please contact Customer Service at [email protected] or 877-256-2473
New York's Latest Cybersecurity Commitment
On Aug. 9, 2023, Gov. Kathy Hochul introduced New York's inaugural comprehensive cybersecurity strategy. In sum, the plan aims to update government networks, bolster county-level digital defenses, and regulate critical infrastructure.
Law Firms are Reducing Redundant Real Estate by Bringing Support Services Back to the Office
A trend analysis of the benefits and challenges of bringing back administrative, word processing and billing services to law offices.
Bit Parts
Summary Judgment Denied Defendant in Declaratory Action by Producer of To Kill a Mockingbird Broadway Play Seeking Amateur Theatrical Rights
How AI Has Affected PR
When we consider how the use of AI affects legal PR and communications, we have to look at it as an industrywide global phenomenon. A recent online conference provided an overview of the latest AI trends in public relations, and specifically, the impact of AI on communications. Here are some of the key points and takeaways from several of the speakers, who provided current best practices, tips, concerns and case studies.