Breakpoint tiers
Breakpoint tiers allow a lessee to pay rent based on their store’s sales, as defined in the lease agreement. The contract specifies multiple turnover ranges—or tiers—each with its own rent calculation method: a percentage, a fixed amount, or both. These ranges are defined by breakpoints.
In some cases, the 'from' value is set to zero not only for the first tier, but also for others. When that happens, Planon uses the total reported turnover to select the correct tier and applies that tier’s rules to the entire sales amount, skipping all previous tiers.
Example
• For sales up to and including $1,000,000 a fixed amount of $20,000 is to be paid.
• For sales between $1,000,000 and $3,000,000 5% turnover rent is to be paid.
• For sales above $3,000,000 a 6% turnover rent is to be paid.
The lessee has a reported turnover of $4,750,000 for the turnover rent settlement period.
The turnover rent due is calculated as follows:
(4,750,000 – 3,000,000) * 6% = 105,000
(3,000,000 – 1,000,000) * 5% = 100,000
1,000,000 at 20,000 = 20,000
Turnover rent due: 105,000 + 100,000 + 20,000 = 225,000