The gross sales threshold that triggers percentage rent obligations.
By Angel Campa, Founder · Updated March 2026
The breakpoint determines the sales level at which percentage rent obligations begin. An artificially low breakpoint means the tenant starts paying percentage rent sooner, while a high breakpoint delays the trigger. The difference between a $1.5 million and $2 million breakpoint at a 6% rate is $30,000 in annual savings. Natural breakpoints (base rent divided by percentage rate) are standard, but landlords sometimes negotiate lower "artificial" breakpoints.
Stated in the "Percentage Rent" section alongside the percentage rent rate. May be expressed as a fixed dollar amount or calculated as the "natural breakpoint" from base rent divided by the percentage rate.
Lextract uses a combination of AWS Textract OCR and Claude AI to identify and extract the breakpoint amount from your lease PDF. The AI searches for all pages of the document, then assigns a confidence score based on OCR quality and extraction certainty. Fields with lower confidence are flagged for human review.
Annual Base Rent
The total base rent payable for the first full lease year.
Payment Frequency
The interval at which rent is due.
Escalation Type
The methodology used to increase rent over the term.
Fixed Escalation %
The static percentage by which rent increases annually, if applicable.
CPI Index Used
The specific inflation index utilized for variable escalations.
Percentage Rent Rate
The percentage of gross sales payable to the landlord.
A natural breakpoint is calculated by dividing annual base rent by the percentage rate. An artificial breakpoint is a fixed amount negotiated independently of base rent. Artificial breakpoints set below the natural breakpoint result in the tenant paying more total rent.
It depends on the lease language. Some leases recalculate the natural breakpoint each year based on the current base rent. Others fix the breakpoint at a specific dollar amount that never changes, which effectively lowers the threshold relative to growing sales over time.
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