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Percentage Rent Breakpoint Shift Calculator
Breakpoint negotiation is a core retail lease structural decision.
Additional rent collected
$15,000
Current overage rent
$30,000
Proposed overage rent
$45,000
How the math works
Overage = max(0, sales − breakpoint) × overage %. Impact = proposed − current.
$2.5M − $2M = $500k × 6% = $30k current. $2.5M − $1.75M = $750k × 6% = $45k proposed. $15k additional.
How to Use
- Enter current breakpoint.
- Enter proposed breakpoint.
- Enter tenant sales.
- Enter overage rent %.
- Read rent impact.
Frequently Asked Questions
What is a percentage rent breakpoint?
Level of tenant sales above which tenant owes additional 'overage' rent to landlord, typically 5-10% of sales over breakpoint. Natural breakpoint = base rent ÷ overage %. E.g., $120k base rent / 6% = $2M natural breakpoint. Artificial breakpoints (higher or lower than natural) are negotiated in lease. Lower breakpoint = tenant pays more, earlier; higher = tenant protected.
Why negotiate breakpoints?
Tenant wants protection from paying overage on normal operations. Landlord wants participation in tenant's success. Natural breakpoint is mathematically 'neutral' — overage only when tenant generates enough to justify base rent. Artificial (unnatural) breakpoints shift risk. Tenant preference: artificial breakpoint above natural (harder to trigger). Landlord preference: artificial breakpoint below natural (easier to trigger).
Typical structures?
Unnatural high breakpoint: 120-150% of natural. Tenant takes more risk of strong year triggering. Landlord gives up some overage. Common in anchor leases. Unnatural low breakpoint: 70-90% of natural. Landlord wins. Common for inline. Sliding: 5% on first $X of overage, 7% on next tier, 10% above. Incentive structure for landlord to focus on tenant success.
How does sales reporting work?
Lease requires tenant to report monthly or quarterly sales. Annual reconciliation: actual sales vs breakpoint × overage % = additional rent. Audit rights in lease (typical 12-24 month lookback). Some tenants under-report; landlord audits catch 10-30% under-reporting on average. Make sure lease has strong audit rights — your overage collection depends on accurate reporting.
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