Overage rent is the?

Overage rent refers specifically to the additional rent paid by a tenant to a landlord once certain sales thresholds are exceeded, typically in retail leases. It is structured so that tenants pay a fixed base rent, which is often described as the guaranteed minimum rent, and then pay an additional percentage based on their sales revenue above that minimum. This percentage rent allows landlords to benefit from the success of the tenant’s business, potentially resulting in higher overall rental income as the tenant's sales increase.

This concept is important in retail leasing arrangements where the landlord has a vested interest in the tenant’s business performance. The lease outlines the specifics of how the percentage is calculated and at what sales level the overage rent kicks in, making it a performance-based rent structure distinct from fixed rents. This aligns with various market practices, making overage rent a significant component in commercial real estate investments and negotiations.