Republic Plaza Properties Partnership, PFI Republic Limited, Inc., Tax Matters Partner - Page 7

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          additional capital contributions to Partnership on the first day            
          of each month during the period July 1, 1988, through June 1,               
          1989, in the amount of approximately $1,759,144.                            
               The amounts and due dates of rent payable under the lease              
          agreement that were not required by TIAA in order to service the            
          TIAA term loan were developed through the use of a computer                 
          program that took into consideration certain requirements of the            
          lessor and the lessee.  Those requirements included (1) creating            
          a schedule for the payment of rent that took account of projected           
          increases in rent in the Denver market for office space (Denver             
          office market) and that not only provided a certain yield for the           
          lessor and its partners3 but also minimized the cost to the                 
          lessee and (2) structuring the total amount of rent to be paid              
          during each of the 24-annual lease periods that start on June 1             
          and end on May 31 (annual lease period) following the 11.5-month            
          period of zero rent (including the amount of rent to be paid                
          monthly to service the TIAA term loan) so that such total amount            
          during each such period was always within 90 percent to 110                 
          percent of the average annual amount of the aggregate rent that             


          3  PFI entered into the sale-leaseback transaction involving Re-            
          public Plaza in order to make a profit.  At the time PFI was de-            
          termining the profit that it expected to realize from that trans-           
          action, it anticipated that it would (1) pay Federal and State              
          income taxes at the highest marginal rate throughout the lease              
          term, (2) realize $205 million of pretax profit, and (3) pay in             
          the aggregate approximately $75 million in income taxes over the            
          lease term.                                                                 




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