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The 11.5-month period of zero rent granted to BCE by the
lease agreement enhanced the ability of BCE, as sublessor, to
grant rent holidays that were consistent with commercial practice
in the Denver office market to prospective lessees in Republic
Plaza. In fact, prior to the execution of the lease agreement,
the lessor of Republic Plaza had granted periods of free rent as
concessions to lessees and, according to the Marshall and Stevens
appraisal report, it was expected that that practice in Republic
Plaza and in other office buildings in the Denver office market
would continue for a few years after the execution of the lease
agreement.
Mr. Whitcomb provided additional support for petitioner's
position regarding the 11.5-month period of zero rent. In a
letter he prepared with respect to a sale-leaseback transaction
involving persons unrelated to Partnership, he concluded that a
12-month rent holiday at the beginning of a 27-year lease, under
which the lessee was responsible for paying rent on the entire
leased building, was a reasonable and acceptable practice for
inducing a lessee to enter into such a lease. Mr. Whitcomb
testified that his conclusion in that letter would not have
changed if the lessee had not been planning to occupy the leased
premises, but had intended to act only as a sublessor.
17(...continued)
space in Republic Plaza and granting rent holidays at the incep-
tion of subleases.
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