EX-99.(C)(3) 4 dex99c3.txt DUFF & PHELPS LLC'S LIQUIDATION ANALYSIS 01/28/02 Exhibit (c)(3) FIRST UNION REAL ESTATE EQUITY & MORTGAGE INVESTMENTS CHANGES IN HYPOTHETICAL LIQUIDATION ANALYSIS FROM JANUARY 18, 2002 PRESENTATION [_] Increased unidentified contingent liabilities and expenses by $500,000, from $1.5 million to $2.0 million. [_] Interest expense payable on June 30, 2002 includes $1.4 million in defeasance expense for senior notes (senior notes mature on October 1, 2003). [_] Low-end value of Park Plaza has been reduced to zero due to the fact the liquidation triggers an event of default under the terms of the mortgage loan and the property could be foreclosed, creating the potential for no equity value. [_] A timing difference in the release of $4.9 million in cash related to the NCB Escrow Agreement. [_] A reduction in the discount rate for the 2/nd/ distribution from 20% to 15% due to the low probability of claims against the NCB Escrow funds by May 2003. DUFF & PHELPS, LLC CONFIDENTIAL - JANUARY 28, 2002 FIRST UNION REAL ESTATE EQUITY & MORTGAGE INVESTMENTS HYPOTHETICAL LIQUIDATION ANALYSIS
-------------------------------------------------- ----------------------------- --------------------------------- JUNE 30, 2002 DISTRIBUTION DECEMBER 31, 2003 DISTRIBUTION ----------------------------- --------------------------------- ($000's) RANGE RANGE -------------------------------------------------- ----------------------------- --------------------------------- ASSETS ------ Cash and Equivalents Unrestricted $ 2,743 $ 2,743 $11,360 $11,360 Restricted 1,227 1,227 - - Treasury Investments 115,832 115,832 - - Real Estate Investments: - - - - Park Plaza Mall - - - 31,493 Circle Tower 1,900 2,500 - - Accounts Receivable 591 591 - - Ventek (160) - (1,300) 1,700 -------------------------------------------------- ------------ ---------- ---------- ---------- TOTAL ASSETS $122,133 $122,893 $10,060 $44,553 LIABILITIES & PREFERRED STOCK ----------------------------- Accounts Payable/Accrued Liabilities 4,985 4,985 - - Additional Accrual for Transaction Costs 2,500 2,500 - - Note Payable 97 97 - - Senior Notes 12,538 12,538 - - Preferred Shares of Beneficial Interest/(1)/ 24,620 24,620 - - -------------------------------------------------- ------------ ---------- ---------- ---------- TOTAL LIABILITIES $ 44,740 $ 44,740 $ 0 $ 0 INTERIM CASH FLOWS (1,642) (1,642) 2,801 2,801 RESERVES: VENTEK BONDS & NCB ESCROW 11,360 11,360 - - -------------------------------------------------- ------------ ---------- ---------- ---------- NET CASH FOR DISTRIBUTION TO COMMON $ 64,391 $ 65,151 $12,861 $47,354 ================================================== ============ ========== ========== ========== Total Common Shares Outstanding 34,806 34,806 34,806 34,806 NET DISTRIBUTION PER COMMON SHARE $ 1.85 $ 1.87 $ 0.37 $ 1.36 ================================================== ============ =========== ========== ========== PRESENT VALUE OF DISTRIBUTION PER SHARE /(2)/ $ 1.85 $ 1.87 $ 0.30 $ 1.10 ================================================== ============ =========== ========== ========== SUMMARY NET PRESENT VALUE PER SHARE /(3)/ $ 2.15 $ 2.97 ---------------------------------------------------------------------------------
/(1)/ Based on liquidation preference price of $25 and 984,800 shares outstanding. /(2)/ Net present value as of June 30, 2002 assuming a 15% discount rate. /(3)/ $2.55 net present value per share, assuming Ventek has no cash flow impact in 2003, the implied sale price of Park Plaza would be $58 million. DUFF & PHELPS, LLC CONFIDENTIAL - JANUARY 28, 2002