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Percentage Rent Leases in Commercial Real Estate

Description

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 provides 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

Contributors

  • John S. Hollyfield

    John S. Hollyfield is of counsel and a former partner in the Houston office Norton Rose Fulbright, LLP. He has more than 40 years' experience in real estate law practice. He formerly served as chair of the ABA Real Property, Probate and Trust Law Section, president of the American College of Real Estate Lawyers, and chair of the Anglo-American Real Property Institute. He has been named a "Texas Super Lawyer" in Real Estate Law by Texas Monthly magazine and is listed in Who’s Who in American Law. He is co-editor of Modern Banking and Lending Forms (4th Edition), published by Warren, Gorham & Lamont. He received his B.B.A. from the University of Texas and his LL.B. from the University of Texas School of Law.

    Click here for more information about John.

    Speaker Contact Information:

    John S. Hollyfield
    Norton Rose Fulbright LLP, Houston, TX
    (o) 713.651.3717
    john.hollyfield@nortonrosefulbright.com

  • Richard R. Goldberg

    Richard R. Goldberg is a retired partner, resident in the Philadelphia office of Ballard Spahr, LLP, where he established an extensive real estate practice, including development, financing, leasing, and acquisition. Earlier in his career, he served as vice president and associate general counsel of The Rouse Company for 23 years. He is past president of the American College of Real Estate Lawyers, past chair of the Anglo-American Real Property Institute, and past chair of the International Council of Shopping Centers Law Conference. Mr. Goldberg is currently a Fellow of the American College of Mortgage Attorneys and is a member of the American Law Institute. Mr. Goldberg received his B.A. from Pennsylvania State University and his LL.B. from the University of Maryland School of Law.

    Click here for more information about Richard.

December 8, 2020
Tue 1:00 PM EST

Duration 1H 0M

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