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concerning PFI's interest in investing in a sale-leaseback trans-
action involving a 56-story office building located in the
central business district of Denver, Colorado, that was known and
is herein referred to as Republic Plaza. During all relevant
periods, PFI and BCE were unrelated companies that, prior to
1987, had no business dealings with each other. The investment
that Commercial Union initially proposed to PFI involved a lease
of Republic Plaza to BCE for a period of 26 to 28 years, which
was to include a rent holiday2 of approximately 1 year that was
to occur at the beginning of the lease term.
During the course of its investigation of the investment
proposed by Commercial Union, PFI employed Marshall and Stevens
Incorporated (Marshall and Stevens) to prepare an appraisal
report (Marshall and Stevens appraisal report). Merle E. Atkins
(Mr. Atkins) and John H. Whitcomb (Mr. Whitcomb), who are quali-
fied as experts in the area of real estate appraisal, prepared
that report. PFI relied on the Marshall and Stevens appraisal
report in evaluating its proposed investment in Republic Plaza,
including, inter alia, the reasonableness of the rent holiday
included as part of that investment.
On June 14, 1988, Partnership was formed pursuant to a
partnership agreement entered into between BCE and PFI (partner-
2 As used herein, the term "rent holiday" means a period of zero
or reduced rent occurring at the beginning of a lease.
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