Breakpoint tiers
With breakpoint tiers, a lessee pays turnover rent depending on the total sales for a retail store. A tiered structure is defined in the contract and turnover rent is applied based on amounts falling in a specific tier. Turnover breakpoints allow to define the ranges of reported turnover and indicate per range how the turnover is charged: what percentage and what fixed amount.
 | There are also cases where the 'From value' is not only zero on the first tier, but also on the second tier, the third tier and so on. In this case, the reported turnover determines which tier should be taken into account as the start and the entire turnover is accounted for for that ignored tier (starting at zero, so any previous tier is skipped). |
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