* You are an associate analyst for Titan Investments, a private equity firm that leases 4,000 square feet of office space in the Davis Tower Building in Dallas, Texas. The lease agreement commenced on March 1, 2016 and provides for (1) an initial term of six (6) years and (2) a rental rate of $20 per square foot per year. On April 1, 2021, the owner of the Davis Tower Building (Lion Properties) made a proposal that, if Titan Investments will prepay two (2) years' of rent by May 1, 2021, then Lion Properties will discount future rent by ten percent (10%). In other words, if Titan Investments pays Lion Properties a single, lump sum of $144,000 on May 1, 2021, then Titan Investments can remain in Davis Tower Building until April 30, 2023 without paying any further rent. Section 5 of the lease agreement between Lion Properties and Titan Investments is below: Section 5. Triple Net Lease. Landlord and Tenant acknowledge that this Lease is triple net and Tenant shall be responsible for all costs and expenses reasonably associated with its occupancy of the leased space. To the extent such costs and expenses payable by Tenant cannot be charged directly to, and paid by, Tenant, then such costs and expenses shall be paid by Landlord but reimbursed by Tenant as Additional Rent. * The managing partner of Titan Investments asks you whether or not the proposal from Lion Properties should be accepted. What advice would you give and, more importantly, why? If you believe you need additional information to properly advise the managing partner, then identify what information you would need and how it would influence your advice. * You are an associate analyst for Titan Investments, a private equity firm that leases 4,000 square feet of office space in the Davis Tower Building in Dallas, Texas. The lease agreement commenced on March 1, 2016 and provides for (1) an initial term of six (6) years and (2) a rental rate of $20 per square foot per year. On April 1, 2021, the owner of the Davis Tower Building (Lion Properties) made a proposal that, if Titan Investments will prepay two (2) years' of rent by May 1, 2021, then Lion Properties will discount future rent by ten percent (10%). In other words, if Titan Investments pays Lion Properties a single, lump sum of $144,000 on May 1, 2021, then Titan Investments can remain in Davis Tower Building until April 30, 2023 without paying any further rent. Section 5 of the lease agreement between Lion Properties and Titan Investments is below: Section 5. Triple Net Lease. Landlord and Tenant acknowledge that this Lease is triple net and Tenant shall be responsible for all costs and expenses reasonably associated with its occupancy of the leased space. To the extent such costs and expenses payable by Tenant cannot be charged directly to, and paid by, Tenant, then such costs and expenses shall be paid by Landlord but reimbursed by Tenant as Additional Rent. * The managing partner of Titan Investments asks you whether or not the proposal from Lion Properties should be accepted. What advice would you give and, more importantly, why? If you believe you need additional information to properly advise the managing partner, then identify what information you would need and how it would influence your advice
