A percentage lease calculates rent based on which metric?

• A. Net Income
• B. Gross Profit
• C. Operating Revenue
• D. Gross Sales

Answer: (D)

Percentage leases tie rent to the tenant’s on-site sales, specifically using gross sales as the metric. Gross sales are the total revenue from all sales made on the property, before deductions like returns or allowances. The landlord collects a portion of that top-line sales as additional rent, which links the rent to how well the business performs on the premises. This differs from net income (profit after expenses), gross profit (sales minus cost of goods sold), or operating revenue (a broader accounting measure of revenue)—these focus on profitability or overall revenue rather than the raw on-site sales volume used for rent in a percentage lease.