Republic Plaza Properties Partnership, PFI Republic Limited, Inc., Tax Matters Partner - Page 6

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               Pursuant to the lease agreement dated June 14, 1988, Part-             
          nership leased Republic Plaza to BCE for a fixed term that                  
          commenced on June 17, 1988, and ends at midnight on June 1, 2013            
          (lease term), unless extended at the option of BCE, the lessee.             
          At the time Partnership and BCE entered into the lease agreement,           
          tenants occupied approximately 71 percent of Republic Plaza                 
          pursuant to existing leases, and approximately 29 percent of that           
          office building was vacant.  Pursuant to the lease agreement, BCE           
          became the sublessor with respect to those existing tenants and             
          was given the right to receive rent from them.                              
               In order to satisfy the requirements of TIAA, the mortgagor            
          of Republic Plaza, the lease agreement required monthly payments            
          of rent that were to (1) start on July 1, 1989, and terminate on            
          May 1, 2011, (2) be at least equal to the amounts required to pay           
          the monthly debt service on the TIAA term loan, and (3) be used             
          first to satisfy Partnership's obligations under that loan.                 
          Starting on June 1, 2011, after the TIAA term loan was to have              
          been paid in full, the lease agreement required an annual payment           
          of rent for each of the last 2 years of the lease term.  In order           
          to service the TIAA term loan during the initial lease period of            
          approximately 11.5 months that began on June 17, 1988, and ended            
          on May 31, 1989, during which the rent to be paid according to              
          the lease agreement was zero (11.5-month period of zero rent),              
          BCE and PFI agreed in the partnership agreement to make total               





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