A more thorough explanation:

A derivative lease is also known as a sublease. It is a lease agreement where the original lessee (the person who leased the property) leases some or all of the property to a third party for a shorter term than their own lease. The original lessee retains a reversion in the lease, which means they still have some rights to the property.

For example, let's say John leases an apartment from a landlord for a year. After six months, John decides to move out of the apartment but still has six months left on his lease. Instead of breaking the lease, John finds someone else to lease the apartment for the remaining six months. This new person is the sublessee, and John is the sublessor.

Another example is if a business leases a large office space but only needs a portion of it. The business can sublease the unused portion to another company for a shorter term than their own lease.

These examples illustrate how a derivative lease works. The original lessee leases some or all of the property to a third party for a shorter term, allowing them to recoup some of their costs and avoid breaking the lease.