Real Estate & REITs
A retail tenant pays $100K base rent with percentage rent of 5% over a natural breakpoint. Sales come in at $2.5M. What is total rent? Explain the mechanics.
Model answer
The NATURAL breakpoint is the sales level at which the percentage rate applied to all sales would exactly equal base rent: base rent / rate = $100K / 5% = $2.0M. The tenant pays percentage rent only…
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