Add Percentage Rent Payment Information

1. Click Edit in the Actions menu on the rightmost side of the page.

2. Click Add Percentage Rent in the Percentage Rent list then complete the form:

   • Sales Group: Select the sales group to associate this percentage rent record with. Add a Sales Group if none are available for selection. You can track sales and add sales data on the Sales tab.

   • Description

   • Rent Year Start Month: Select the start month of the rent year.

   • Begin Date and End Date: Click Calendar to open the Date Picker and select the date.

   • Is Mid Month?: Displays if the enableMidMonthPercentRent feature switch is turned on in your firm. When selected, the system supports percent rent periods that start on any day of the month, not just the beginning or end:

     • Daily sales are allocated to the period even when a period starts mid-month.

     • Breakpoints are prorated correctly when the percent rent period does not align with calendar months so that they align with the defined sales periods.

     • You can enter custom sales periods based on the lease start date.

     • Begin Date for percent rent must be 28th of the month or earlier. If you enter a later Begin Date, a validation message displays.

     When selected, Rent Year Start Month and Partial Term options are removed.

   • Partial Term: Select if the term length is greater than 12 months but less than 2 years.
   • Trailing 12 months: Use a full 12 months of sales and your annual breakpoint to calculate the prorated amount due, even if the full 12 months is not within the same fiscal year.
   • Right to audit: Select if your landlord has the right to audit your percentage rent.

   • Payment Frequency

   • Reporting Frequency

   • Period Report Due Day

   • Annual Report Due Day

   • Expense Group: Create a new group or category. Groups are the first level of organization in Lucernex. Groups are the parents of types, and grandparents of categories. Groups, types, and categories are used to simplify reporting.

   • Expense Type: If none are listed, add an expense type.

   • Currency Type

   • Cap Frequency: Select the frequency to apply. If you had a max cap of $100,000.00, the cap frequency could determine whether that cap is applied monthly, quarterly, or annually.If no cap frequency is specified, the cap amount is assumed to be the amount that applies for each percentage rent payment period. For example, if percentage rent is paid monthly and a $500 cap is specified, the system assumes that the cap is applied monthly if the frequency is not set.

   • Min Cap (Floor): Enter the minimum payment required. This is used to capture the rent payment that is required regardless of sales performance. This value is in fact a “de facto base rent" and must be included in your accounting schedules.

     You can see this value in your expense forecast on the Contract Expense Forecast page. This value impacts ASC 842, IFRS 16, and GASB 87. It does not impact Straight Line (ASC 840) schedules.

   • Max Cap (Ceiling): Enter the maximum payment allowed.

   • Proration Method: Select the proration method for breakpoints.

     • • First period is not prorated, but full period rent owed.

       • Last period prorates based on equally divided 12 month periods of 30 days.

     • • First period is not prorated, but full period rent owed.

       • Last period prorates based on 12 periods in a 365 day year.

   • Calculation Method: The calculation method you select impacts the values displayed in the Lease YTD and Breakpoint columns on the Percentage Rent Schedule pages.

     • Annual: The annual breakpoint is compared against the annual sales. Percentage rent is paid in the final month of the year.

     • Annual Gross-Up: The Year-to-Date (YTD) sales are compared against a YTD breakpoint. Percentage rent is paid according to the payment frequency specified.

     • Cumulative: The YTD sales are compared against the annual breakpoint. Percentage rent is paid according to the payment frequency specified.

     • Per Period: Period sales are compared to the prorated breakpoint. Percentage rent is paid according to the payment frequency specified. The Per Period calculation for artificial breakpoints in a partial year is:

       Annual Amount / Number of Periods = Per Period Amount

       The Per Period calculation for partial periods where the Begin or End date of the contract does not fall on the first or last day of the month respectively is:

       Number of days in the first OR last month of the lease * (Per Period Amount / total days in month)

     • Period Gross-Up: Period sales are compared to the prorated breakpoint for the first 11 months of the year. In the final period, the total annual sales are compared against the annual breakpoint. Percentage rent is paid according to the payment frequency specified. Potential credits will only be generated in the final period of the term.

     View our Percentage Rent Calculation Method Examples.

   • Breakpoint Type:

     • Natural Breakpoint: Use when the tenant will not pay percentage rent until they know they have enough sales to cover base rent. The payment rate is the amount of sales that is allocated for paying base rent.

       View our Percentage Rent Natural Breakpoint Examples.

     • Artificial Breakpoint: Used when the landlord sets a sales amount that, when exceeded, the tenant must pay percentage rent. The breakpoint amount is a set amount specified in the contract. The payment rate is how much the tenant will need to pay when sales exceed the breakpoint.

       View our Percentage Rent Artificial Breakpoint Examples.

     • Count Based Rate: Used when the tenant bases their breakpoints on the number of units sold, rather than the dollar amount. An example of this scenario could be a movie theater basing their percentage rent on number of tickets sold.

   • Annualize Rent: Displays when the enableAnnualizePercentRent feature switch is turned on in your firm and Natural Breakpoint is selected in the Breakpoints section of the Percentage Rent record. This option displays initially when you Add a Percent Rent record, but only applies when Natural Breakpoint is selected. This enables an annualized algorithm for calculating the natural breakpoint in rent calculations. When selected, the system uses an annualized method to compute the breakpoint. The Proration Method determines the number of days at different payment amounts.

3. Click Add.

4. Click Save Changes in the Actions menu on the rightmost side of the page.