[WSBARP] Percentage rent leases

[Roger Moss]

Kary, percentage rent leases were once ubiquitous in retail; now they are less common outside of big shopping centers and that is a shame. They were invented by retailers and when done right make things work for both sides, because sales determines value for both the tenant and landlord’s asset in a retail environment.

Asking for sales info is an important way to analyze the problem even if there no percentage rent lease, and is a great way to create solutions when operations re-start. There are industry standards that relate occupancy costs to a retailer’s use which are important tools in fashioning solutions.

Roger A. Moss, Esq. 
Pacific Conflict Intervention
206.790.1971 Seattle
415.371.9724 San Francisco
www.pacific-ci.com

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> On Apr 23, 2020, at 3:06 PM, Kary Krismer <Krismer at comcast.net> wrote:
> 
> On 4/23/2020 1:00 PM, nestor at pplsweb.com <mailto:nestor at pplsweb.com> wrote:
> 
>> This will probably managed with built-in forbearance clauses for either reduced rent during the shutdown, spreading out the payments over a specified term and or extending the lease.
>>  
>> Nestor Gorfinkel, Attorney at Law
>> Licensed in Washington & Florida
>> Florida Civil-Law (International) Notary
>>  
>> 
> Outside my past or current areas, but how common are leases with a base rent plus a percentage of sales revenue?   I can see those would raise other issues, but it would be a way to share the risk in these situations without having one side being the sole winner and the other the sole loser.  I guess though you could just have a government shutdown clause that would provide for a reduced rental amount during such shutdowns.
> 
> Kary L. Krismer
> 
> 206 723-2148
> 
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