Calculating Leases

Question 1

Calculating the rent owned for a percentage lease: Typically, percentage leases involve a base or minimum monthly rent plus a percentage of the gross sales in excess of an amount specified in the lease.
For example : assume that a lease calls for monthly minimum rent of 1000.00 plus 3% of annual gross sales in excess of 325,000. What is the annual rent for the year if the annual gross sales were 450,700 ?

Answer 1

Step 1 - Begin by determining how much of the gross sales are subject to the 3% of charge : 450,700 total gross sales- 325,000 = 125,700 subject to 3 %

Step 2- Multiply the amount subject to the 3% charge :
125,700x.03 = 3,771 annual rent

Step 3- Add the additional annual rent to the base rent to determine the total annual rent due:
1000.00 x12 months = 12,000 annual base rent
12,000 annual base rent + 3,771 additional rent = 15,771 total rent

Question 2

Formula: Variable (Index Lease)
new index
———————
original index x original rental rate = new rental rate

For example : assume that a building rents for $12 per square foot with an index of 1.5. The index increases to 1.8 What is the adjusted rental rate ?

Answer 2

Step 1 - Divide the new index by the original index
1.8 / 1.5 = 1.2
Step 2 -Multiply the number from step one 1 by the original rental rate
1.2 X $ 12 = 14.40 new rental rate