Tag Archives: Natural Breakpoint

Natural Breakpoint

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.