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[CHASE LETTERHEAD]
EXHIBIT E
September 27, 2000
CHASE SECURITIES INC.
270 Park Avenue
New York, NY 10017-20070
Board of Directors
First Washington Realty Trust, Inc.
4350 East-West Highway, Suite 400
Bethesda, MD 20814
Members of the Board:
You have informed us that (i) USRP I, LLC, a Delaware limited
liability company ("USRP I"), First Washington Realty Trust, Inc., a Maryland
corporation (the "Company"), First Washington Realty Limited Partnership, a
Maryland limited partnership and a subsidiary of the Company (the
"Partnership"), and certain subsidiaries of the Company (such subsidiaries,
together with the Company and the Partnership, the "Real Estate Sellers")
propose to enter into a Real Estate Purchase Agreement (the "Real Estate
Agreement"), which provides, among other things, for the purchase by USRP I of
certain of the Real Estate Sellers' properties and the assumption of certain
liabilities of the Real Estate Sellers pursuant to the terms and conditions of
the Real Estate Agreement (the "Real Estate Purchase"), (ii) USRP LP, LLC, a
Delaware limited liability company ("USRP LP"), and the Company propose to
enter into a Limited Partnership Interest Purchase and Sale Agreement (the "LP
Purchase and Sale Agreement"), which provides, among other things, for the
purchase by USRP LP of all the Company's limited partnership interest in the
Partnership pursuant to the terms and conditions of the LP Purchase and Sale
Agreement (the "LP Purchase") and (iii) USRP GP, LLC, a Delaware limited
liability company ("MergerCo"), US Retail Partners Limited Partnership, a
Delaware limited partnership ("MergerLP"), the Company and the Partnership
propose to enter into an Agreement and Plan of Merger (the "Merger Agreement"
and, together with the Real Estate Agreement and the LP Purchase and Sale
Agreement, the "Sale Agreements"), which provides, among other things, for the
merger of the Company with and into MergerCo, pursuant to the terms and
conditions of the Merger Agreement (the "Company Merger") and the merger of the
Partnership with and into MergerLP (or, alternatively, a wholly-owned
subsidiary of MergerLP), pursuant to the terms and conditions of the Merger
Agreement (the "Partnership Merger" and, together with the Company Merger, the
"Mergers"). Under the terms of the Sale Agreements, the LP Purchase and the
Mergers are conditioned, among other things, on the consummation of the Real
Estate Purchase. The Real Estate Purchase, the LP Purchase and the Mergers,
taken together as a whole and not separately, are referred to herein as the
"Transactions". The consideration payable by USRP I pursuant to the Real
Estate Agreement, including the assumption of certain liabilities as provided
therein, is referred to herein as the "Real Estate Consideration". The Real
Estate Consideration and the consideration payable by MergerCo and MergerLP
pursuant to the Merger Agreement, taken together as a whole and not separately,
are referred to herein as the "Aggregate Consideration". The Sale Agreements,
the proposed Master Agreement among USRP I, USRP LP, MergerCo, MergerLP, US
Retail Partners, LLC, a Delaware limited liability company
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("Retail Partners"), and the Real Estate Sellers, and the proposed Voting
Agreement (as defined in the Merger Agreement) are referred to herein,
collectively, as the "Agreements".
You have requested that we render our opinion (i) as to the
fairness, from a financial point of view, to the Partnership of the Real Estate
Consideration to be paid by USRP I pursuant to the Real Estate Agreement and
(ii) as to the fairness, from a financial point of view, to the Company and its
shareholders and the Partnership and its partners of the Aggregate
Consideration to be paid by USRP I, MergerCo and MergerLP pursuant to the Real
Estate Agreement and the Merger Agreement.
In arriving at the opinion set forth below, we have, among
other things:
(a) reviewed drafts of the Agreements in the forms provided to us
and have assumed that the final forms of such Agreements will
not vary in any regard that is material to our analysis;
(b) reviewed certain publicly available business and financial
information we deemed relevant relating to the Company and the
Partnership and the industries in which they operate;
(c) reviewed certain internal non-public financial and operating
data provided to us by the management of the Company and the
Partnership relating to their businesses, including certain
forecast and projection information as to future financial
results of such businesses;
(d) discussed with members of the senior managements and
representatives of the Company and the Partnership, the
Company's and the Partnership's operations, historical
financial statements and future prospects, as well as such
other matters as we deemed necessary or appropriate;
(e) compared the financial and operating performance of the
Company and the Partnership with publicly available
information concerning certain other companies and businesses
we deemed comparable and reviewed the relevant stock market
information for such other companies;
(f) reviewed the financial terms of certain recent business
combinations and acquisition transactions we deemed reasonably
comparable to the Transactions and otherwise relevant to our
inquiry; and
(g) made such other analyses and examinations as we have deemed
necessary or appropriate.
We have assumed and relied upon, without assuming any
responsibility for verification, the accuracy and completeness of all of the
financial and other information provided to, discussed with, or reviewed by or
for us, or publicly available, for purposes of this opinion and have further
relied upon the assurances of management of the Company and the Partnership
that they are not aware of any facts that would make such information
inaccurate or misleading. We have neither made nor obtained any independent
evaluations or appraisals of the assets or
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liabilities of the Company or the Partnership, nor have we conducted a physical
inspection of the properties and facilities of the Company or the Partnership.
We have assumed that the financial forecast and projection information provided
to or discussed with us by or on behalf of Company and the Partnership have
been reasonably determined on bases reflecting the best currently available
estimates and judgments of the management of the Company and the Partnership as
to the future financial performance of such companies. We express no view as
to such forecast or projection information, or the assumptions upon which they
were based.
In connection with the preparation of this opinion, we have
not been authorized by the Company or the Partnership to solicit, nor have we
solicited, offers from third parties for the acquisition of all or any part of
the equity or assets of the Company or the Partnership.
For purposes of rendering our opinion we have assumed, in all
respects material to our analysis, that the representations and warranties of
each party contained in the Agreements are true and correct, that each party
will perform all of the covenants and agreements required to be performed by it
under the Agreements and that all conditions to the consummation of the
Transactions will be satisfied without waiver thereof. We have also assumed
that all material governmental, regulatory or other consents and approvals will
be obtained and that in the course of obtaining any necessary governmental,
regulatory or other consents and approvals, or any amendments, modifications or
waivers to any documents to which either of the Company or the Partnership are
party, as contemplated by the Agreements, no restrictions will be imposed or
amendments, modifications or waivers made that would have any material adverse
effect on the contemplated benefits to the Company or the Partnership of the
Transactions.
Our opinion herein is necessarily based on market, economic
and other conditions as they exist and can be evaluated on the date of this
letter. Our opinion is limited to the fairness, from a financial point of
view, (i) to the Partnership of the Real Estate Consideration to be paid by
USRP I pursuant to the Real Estate Agreement and (ii) to the Company and its
shareholders and the Partnership and its partners of the Aggregate
Consideration to be paid by USRP I, MergerCo and MergerLP pursuant to the Real
Estate Agreement and the Merger Agreement. In our review and analysis and in
arriving at our opinions, we have not attempted to value any of the non-cash
consideration being offered under the Merger Agreement to the holders of
limited partnership interests in the Partnership and it is expressly understood
that we are not rendering any opinion with respect to any non-cash
consideration. Accordingly, for purposes of our opinions, we have assumed that
all the limited partners of the Partnership will elect to receive cash
consideration under the Merger Agreement. We express no opinion as to the
merits of the underlying decision by the Company and the Partnership to engage
in the Transactions. We also express no opinion as to the future trading value
of the Company's common stock or the Partnership's units or the amounts that
may ultimately be distributed to the holders of the Company's common stock or
the Partnership's units in connection with the proposed liquidation of the
Company. In addition, we express no opinion on matters of a tax, accounting or
legal nature related to the Transactions. This opinion does not constitute a
recommendation to any holder of equity interests in the Company or the
Partnership as to how such holder should vote with respect to the Transactions.
Chase Securities Inc., as part of its financial advisory
business, is continually engaged in the valuation of businesses and their
securities in connection with mergers and
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acquisitions and valuations for estate, corporate and other purposes. We have
acted as financial advisor to the Company in connection with the Transactions
and will receive a fee for our services, including for rendering this opinion,
payment of a significant portion of which is contingent upon the consummation
of the Real Estate Purchase. In addition, the Company has agreed to indemnify
us for certain liabilities arising out of our engagement. As we have
previously advised you, The Chase Manhattan Corporation and its affiliates,
including Chase Securities Inc., in the ordinary course of business, have from
time to time, provided, and in the future may continue to provide, for
customary compensation, commercial and investment banking services to the
Company and Retail Partners and their respective affiliates (including, in the
case of Retail Partners, the California Public Employees Retirement System).
In the ordinary course of business, we or our affiliates may trade in the debt
and equity securities of the Company and affiliates of Retail Partners
(including affiliates of the California Public Employees Retirement System) for
our own accounts and for the accounts of our customers and, accordingly, may at
any time hold a long or short position in such securities.
Based upon and subject to the foregoing, we are of the
opinion, as of the date hereof, that (i) the Real Estate Consideration to be
paid by USRP I pursuant to the Real Estate Agreement is fair, from a financial
point of view, to the Partnership and (ii) the Aggregate Consideration to be
paid by USRP I, MergerCo and MergerLP pursuant to the Real Estate Agreement and
the Merger Agreement is fair, from a financial point of view, to the Company
and its shareholders and the Partnership and its partners.
This opinion is for the use and benefit of the Board of
Directors of the Company in its evaluation of the Transactions and shall not be
used for any other purpose without the prior written consent of Chase
Securities Inc.
Very truly yours,
CHASE SECURITIES INC.
