Core TSIs : Turnover rent : Concepts : Minimum guaranteed rent
Minimum guaranteed rent
Turnover rent calculations are based on the lessee's revenue, but lessors often seek a minimum guaranteed rent to ensure a stable income. A minimum guaranteed rent is a fixed amount that a lessee must pay regardless of the actual revenue of the leased property. This amount is stipulated in the lease agreement and provides the lessor with a guaranteed base income, even if the turnover-based rent is lower.
If the turnover rent falls below the agreed minimum, the lessor will receive the fixed amount as stipulated. Once the turnover rent exceeds this minimum, the lessor will also benefit from a share of the additional revenue. This arrangement ensures a stable revenue stream for the lessor while allowing the lessee to potentially benefit from lower payments during periods of reduced revenue.