The Structure of a Retail Lease
This paper develops an option-theoretic model of a retail lease. The standard retail lease contains provisions for a security deposit, a base rent, and a percentage rent or a sharing between landlord and tenant of rent revenue above a preset sales threshold or break point level. The findings show th...
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| Veröffentlicht in: | The Journal of real estate research 2004-04, Vol.26 (2), p.223-236 |
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| container_title | The Journal of real estate research |
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| creator | Benjamin, John D. Chinloy, Peter |
| description | This paper develops an option-theoretic model of a retail lease. The standard retail lease contains provisions for a security deposit, a base rent, and a percentage rent or a sharing between landlord and tenant of rent revenue above a preset sales threshold or break point level. The findings show that the tradeoff between the security deposit and base rent provisions is independent of percentage rent. The function of the security deposit and percentage rent is to sort separate tails of the distribution of tenants and landlords. Low-quality tenants are charged higher security deposits or are sorted from other tenants by their inability to pay them. High-quality tenants use percentage rent provisions as a method of distinguishing between landlords. Landlords who maintain capital expenditures and who have financial staying power are more likely to collect percentage rent. |
| doi_str_mv | 10.1080/10835547.2004.12091137 |
| format | Article |
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| fulltext | fulltext |
| identifier | ISSN: 0896-5803 |
| ispartof | The Journal of real estate research, 2004-04, Vol.26 (2), p.223-236 |
| issn | 0896-5803 2691-1175 |
| language | eng |
| recordid | cdi_proquest_journals_200315318 |
| source | JSTOR Archive Collection A-Z Listing |
| subjects | Commercial space Economic rent Landlords Leases Percentage leases Real estate leases Rental industry Rents Retail trade Revenue Security deposits Tenants Tradeoffs |
| title | The Structure of a Retail Lease |
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