Real Estate Property Asset Management Practice Test

The option highlighting the percentage lease is correct because this type of lease is frequently utilized in retail spaces. In a percentage lease, the tenant pays a base rent plus a percentage of their sales revenue to the landlord. This arrangement is particularly advantageous in retail settings, as it allows landlords to share in the success of their tenants and aligns the interests of both parties. As sales increase, the landlord benefits from additional rental income, while tenants may enjoy lower fixed costs during quieter periods.

This lease structure is designed to accommodate the variable income situation of retail businesses, which can fluctuate significantly based on customer traffic and market conditions. Retail businesses often prefer percentage leases because they can help manage costs more effectively, especially in the initial stages of their operations when sales may be lower.

In contrast, apartments, office spaces, and industrial properties typically operate under fixed leases that do not directly tie rent to the tenant's revenue, making percentage leases distinctly advantageous for the retail sector.