Which of the following best describes a tenant's obligation in a percentage lease?

In a percentage lease, the tenant's obligation is to pay a base rent plus a specified percentage of their business profits. This type of lease is common in commercial real estate, particularly for retail spaces, where the landlord essentially shares in the success of the tenant's business. By tying part of the rent to the tenant’s revenue, both the landlord and tenant have aligned interests; the landlord benefits when the tenant performs well, while the tenant may benefit from lower base rent costs.

The structure of a percentage lease allows for flexibility and incentivizes the tenant to maximize their sales. It also reflects the reasoning that the property’s location and the tenant's business operations can significantly affect revenue generation. Thus, the defining feature of this type of lease is that the rent is variable and dependent on the tenant's business performance, making option C the best choice to describe a tenant's obligation in this context.