Base Rent refers to the minimum amount of rent that a tenant needs to pay to the landlord, on top of other provisions such as overage rent.

In most lease agreements, the base rent is subject to periodic increases that are usually done annually. This is also sometimes referred to as ‘rent bumps’, or positive rental reversions, and ensures growth in operating income for the REIT.

The prospective REITs investor would do well to check for built-in provisions that allows for annual base rent escalations in a REIT's lease agreements, on top of other favourable terms such as robust overage rent, and triple net lease agreements.

This entry is part of REITsWeek's glossary of REITs and real estate investment terms.

By Ridzwan Rahmat

Ridzwan has been analysing REITs and business trusts since 2008, and personally manages a portfolio comprising mainly of SGX-listed REITs. He founded REITsWeek in 2013.