1. Set up Store Categories

2. Set up the Tenant – Percentage Rent screen for current year

3. Enter sales figures on the Tenant – Sales for previous and current year

4. Set up the Tenant – Charge History – for previous and current year.

5. Calculate Percentage Rent

Enter a sales code up to 10 characters

Enter the description of the sales category

Select Store Category

Lease Building/Unit:

Select the tenant’s building and unit #.

Sales Category:

Select a sales category (previously set up under Master Codes) from the combo box.

Bill Frequency:

Your choices are Monthly, Quarterly, Semi-Annually, or Annually

% Rent Code

Select the Regular Charge code from the combo box for Percentage Rent.

YTD Billed

If you were setting up your system part way through the year, how much have you billed so far for percentage rent? The system would need to know that to complete the year’s billing properly. If you are setting up for the beginning of the year, leave this field set at $0.00.

Budget Sales

This field is a totally informational field and is not used by the system in any calculations.

Last Year Sales

The system will keep track of this field.

Report Sort Code

The system will report based on sales categories, but if you want your report shown in a certain order, perhaps you want your anchor tenants first or your food courts last, then you can designate a maximum of four report sorting codes. If you set up a sort code for anchor tenants, you may enter this code in some reports to have anchor tenants excluded from building totals.

Summary Code

You would use this field for those tenants who report sales for two or more different sales categories. For percentage rent calculation, you would want these sales separated because you have different percentages, but when you do your sales comparison you would probably want them grouped together. Under summary codes on all this tenant’s screens, indicate the sales category in which they should be grouped.

Sales Year

Enter the 4-digit year of the last month of the sales year. E.g. July 2022 - June 2023 is 2023.

Year End

Enter the year end in the format YYYYMM.

Last Month Charged

Previous Year’s Record: Enter the year end in the format YYYYMM.

Last Month Reported

Previous Year’s Record: Enter the year end in the format YYYYMM.

Current Year’s Record: Leave blank, as the system will track this field.

Credit Overcharge

Select this field if you want credits issued during the year for over billing of percentage rent. E.g. If the first quarter of the year results in a percentage rent charge and the sales for the second quarter would result in a credit due to the tenant, do you want the system to credit this overcharge? Some don’t, they would rather wait until the end of the year and then do a final calculation. If you want the over charges credited, select this option. We recommend that this option not be selected and that any credit be issued at the end of the year.

Sales Over Only

See Example 4 below

Cumulative Calculation

Select this flag if you want all calculations done on a year to date basis. Do not select this flag if you want each month or quarter calculated separately.

History

The system will not calculate percentage rents on any records flagged as “History”, so only select this option for historical records.

Base Charge Codes

If you want to deduct the base rent from the percentage rent, select one or more base rent charge codes from the combo box.

This is an example of how to set up a straightforward percentage rent calculation of 5% on all sales less Retail Base Rent:

Enter the annual sales levels. The system will prorate these sales levels depending upon whether your calculation is monthly or quarterly.

If you had a tenant whose lease agreement indicated that they would pay 5% on sales up to $250,000, 6% on sales from $250,000 to $500,000, and 7% on sales over $500,000, you would set that record up as follows:

You may select the Base Charge Code if this should be deducted from the percentage rent calculation.

Set the Sales Level and Percentage as # 1 above, but do not select a base rent charge code.

Select Sales Over Only. In this example, the tenant has a sales level of $2.5 million and a billing frequency of monthly. The system will take that $2.5 million and divide it by twelve to come up with a base amount every month of $208,333 ($2,500,000 divided by twelve). If they have sales figures of $250,000, the system would take $250,000 less $208,333, and calculate 5% on the balance. There is no base rent deduction indicated, so the tenant would be charged percentage rent on sales over $2.5 million in a year.

A tenant may have 2 types of sales categories, e.g. General Merchandise and Tobacco. For illustration purposes, they pay 6% on the General Merchandise and 2% on Tobacco sales. The Base Rent is to be deducted once.

When you do your sales reporting, how do you want these sales grouped together? For percentage rent calculation, you want them separated because you have different percentages, but when you do your sales comparison you may want them grouped together. Under summary codes on both screens, indicate the sales category in which they should be grouped.

Even if a tenant is not paying Percentage Rent, a sales level with percentage is required on the % Rent screen in order for all sales reports to include this tenant. To prevent the system from charging percentage rent, you could set the tenant as an annual billing and after the last month’s figures are entered, put the History flag on, so that the system will ignore this tenant for billing purposes. Or, you could set all the rent charges to be deducted from the percentage rent calculation, so that the tenant would never be in a percentage rent position.