Republic Plaza Properties Partnership, PFI Republic Limited, Inc., Tax Matters Partner - Page 28

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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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