Property Management
In Michigan, a 'percentage rent' threshold in a retail lease (breakeven point) is calculated as:
ABase rent divided by the percentage rate
BThe gross sales level above which percentage rent kicks in, calculated as base rent divided by the percentage rate✓ Correct
CMonthly rent multiplied by 12
DAnnual NOI divided by the cap rate
Explanation
The breakeven point (natural breakpoint) in a percentage lease is the gross sales level at which percentage rent equals the base rent: Breakpoint = Base Rent / Percentage Rate. Sales above this level trigger additional percentage rent payments.
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