Natural Breakpoint

Posted by Ted Mannon on Thursday, May 29th, 2014 Category1

The Natural Breakpoint is the amount of gross sales that, when multiplied by the applicable percentage, equals the amount of annual fixed rent (natural breakpoint x _% = annual fixed rent). Stated another way, it is determined by dividing annual fixed rent by the applicable percentage (natural breakpoint = annual fixed rent ÷ %). For example, if the percentage rent is 5% and the annual fixed rent is $100,000.00, then the natural breakpoint would be 100,000 ÷ 5%, or $2,000,000. Therefore, the tenant would be obligated to pay to the landlord 5% of its gross sales on gross sales in excess of $2,000,000.

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