Percentage Rent Review for Partner CAM Audits

Percentage rent is extra rent tied to sales above a lease-defined breakpoint. A partner review checks whether the landlord used the right breakpoint, the right sales base, and the right formula.

The work starts with the lease. The signed lease and amendments define the rate, breakpoint, gross sales definition, reporting period, and excluded sales categories. The landlord statement is the charge to test against those terms.

Percentage rent review: A partner-led review of the breakpoint, percentage rate, gross sales definition, reporting period, and billed amount used for sales-based rent in a retail lease.

Partner-led percentage rent review should connect the signed lease, amendments, sales definition, landlord statement, and backup before a finding is signed.

How to review percentage rent in a commercial lease

Collect the rent terms. Pull the signed lease, amendments, side letters, breakpoint language, percentage rate, and gross sales definition.
Identify the breakpoint type. Record whether the lease uses a natural breakpoint, a fixed breakpoint, or another defined trigger.
Review the sales definition. Compare the reported sales base to the lease definition and mark any excluded or unsupported category.
Check the billed amount. Compare the landlord statement to the lease formula and note any input that needs backup.
Prepare the partner workpaper. Document the clause, source statement, review questions, and recommended next step for partner signoff.

What percentage rent is

Percentage rent is common in retail and shopping center leases. The tenant pays base rent, then may owe more rent when sales pass a defined trigger.

The formula can look direct, but the inputs carry the real review work. The lease may define gross sales, excluded sales, reporting periods, rate changes, and breakpoint changes across amendments.

Breakpoint review

The breakpoint is the sales level that triggers percentage rent. Some leases calculate it from base rent and the percentage rate. Some leases state a fixed threshold. Some use a schedule that changes by year or by amendment.

Partner review should answer these questions:

Which lease document controls the breakpoint?
Does an amendment change the threshold?
Does the lease use an annual, monthly, or other reporting period?
Did the landlord statement use the same period?
Does the statement show enough support to rebuild the calculation?

If the documents conflict, mark the issue for partner review instead of forcing a conclusion.

Gross sales review

Gross sales language can be detailed. The lease may include or exclude sales tax, returns, discounts, gift cards, online orders, wholesale sales, affiliate transfers, or sales assigned to another location.

Useful review questions include:

What sales report did the landlord use?
Which sales categories did the lease exclude?
Were excluded categories removed from the sales base?
Are online, pickup, or delivery sales covered by the signed lease language?
Does the landlord statement tie to the client sales support?

The signed lease controls the review. A template, market practice, or landlord preference is not enough support on its own.

Billed amount review

After the partner captures the breakpoint and sales base, the billed amount can be checked against the lease formula. The workpaper should show the source for each input.

Use a table like this:

Input	Lease source	Landlord source	Review note
Percentage rate	Rent clause	Landlord statement	Confirm or request support
Breakpoint	Lease or amendment	Landlord statement	Confirm document version
Gross sales definition	Sales clause	Sales backup	Mark excluded categories
Billed amount	Formula result	Landlord statement	Note variance or support gap

This format keeps the review tied to evidence and makes the partner's next step easier to sign off.

Backup to request

Ask for the records needed to confirm the formula inputs:

Executed lease and amendments
Percentage rent clause and reporting clause
Landlord percentage rent statement
Sales reports used for the charge
Support for excluded sales categories
Prior statements if the same breakpoint or sales base carried forward

Keep the request narrow. The partner needs enough support to review the formula, not a broad document dump.

How CAMAudit supports the review

CAMAudit helps partner firms organize lease terms, sales definitions, statement inputs, and backup gaps. It can surface percentage rent questions for the partner review queue.

CAMAudit does not decide legal interpretation, request records from the landlord, or replace the partner's review-and-sign step. The partner remains the auditor and owns the client-facing deliverable.

FAQ

Frequently Asked Questions

What is percentage rent review?

It is a partner review of the lease formula, breakpoint, sales definition, landlord statement, and backup used for sales-based rent.

What is a breakpoint?

A breakpoint is the sales level that triggers percentage rent. The lease may calculate it from base rent and rate, or it may state a fixed threshold.

What sales categories should the partner check?

The lease controls the answer. Common review categories include taxes, returns, discounts, gift cards, online orders, wholesale sales, and affiliate transfers.

What documents are needed for percentage rent review?

The partner should review the signed lease, amendments, percentage rent clause, reporting clause, landlord statement, sales support, and support for excluded sales categories.

Does CAMAudit decide whether the charge is wrong?

No. CAMAudit organizes the source material and review questions. The partner reviews the evidence and decides what belongs in the client deliverable.

When should a partner escalate a percentage rent question?

Escalate when the lease language is unclear, the landlord will not provide support, or the question needs legal judgment before delivery.