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          First Union Real Estate Equity and Mortgage Investments
          -------------------------------------------------------
              (Name of Registrant as Specified in Its Charter)

                           Gotham Partners, L.P.
          -------------------------------------------------------
                  (Name of Person Filing Proxy Statement)

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FOR IMMEDIATE RELEASE
- ---------------------

Contacts:   Bill Ackman       or       George Sard/David Reno/Fred Bratman
            David Berkowitz            Sard Verbinnen & Co.
            Gotham Partners            (212) 687-8080
            (212) 286-0300

        GOTHAM PARTNERS SAYS FIRST UNION PROHIBITED FROM MAKING
            PAYMENTS TO FORMER CHAIRMAN AND CEO MASTANDREA

     NEW YORK, MAY 19, 1998 -- Gotham Partners today released the following
letter sent yesterday to the Board of Trustees of First Union Real Estate
(NYSE:FUR) following First Union's announcement that it had terminated the
employment of Chairman, President and CEO James C. Mastandrea.


Board of Trustees
c/o Mr. Steven Edelman, Acting Chief Executive Officer
First Union Real Estate Equity
  and Mortgage Investments
55 Public Square
Suite 1900
Cleveland, Ohio  44113

Dear Sirs:

     We have reviewed First Union's press release, dated May 18, 1998,
announcing the termination of the employment of James C. Mastandrea. To the
extent that, as a result of such termination, Mr. Mastandrea is to receive
anything more than he would have if he were terminated for cause, we will
seek to hold personally liable all those who participated in this action.

     Furthermore, under the order issued by the Court of Common Pleas,
Cuyahoga County, Ohio, on March 31, 1998, First Union is prohibited from
making any payments arising under Mr. Mastandrea's employment contract or
otherwise to Mr. Mastandrea in respect of any benefits or compensation
arrangement. The order states in relevant part that "[t]here will be no
employment benefits or compensation outside the ordinary course of business
and no transfer of assets not for fair value" by First Union pending the
seating of Trustees following the Special Meeting on May 19, 1998. Any
payment referenced in the first sentence of this paragraph, including any
transfer of funds into an escrow account for the benefit of Mr. Mastandrea,
would constitute both employment benefits or compensation outside the
ordinary course of business and a transfer of assets not for fair value,
and would therefore be prohibited by the order. Please confirm in a writing
by noon on May 19, 1998, First Union's intention not to make any payment
described in the first sentence of this paragraph. In the absence of such
confirmation, we shall be required to seek Judge McGinty's intervention.

     Please also note that Gotham took the position in its motion for
preliminary injunction made on March 30, 1998, and continues to take the
position, that all decisions made by the Board of Trustees or any committee
thereof after January 8, 1998 are unlawful to the extent that they have the
purpose or effect of bestowing any benefits upon any First Union Trustee,
officer or employee, including without limitation the amendment to Mr.
Mastandrea's employment contract and any policies, practices or procedures
acted on by the Trustees on or about March 23, 1998 concerning employee
severance and accelerated vesting of options and restricted shares.

     In addition, the press release does not present all material
information relating to the termination of Mr. Mastandrea's employment and
therefore violates the SEC's disclosure rules. Gotham hereby requests that
you provide to Gotham immediately all relevant information in connection
with such termination. Among other things, you should provide us with a
copy of any letter of termination, the minutes of any meeting of the Board
of Trustees or any committee thereof relating to the termination, any
communications between the Board of Trustees or any committee thereof and
Mr. Mastandrea, and any documents or other materials considered by the
Board of Trustees in connection with the termination.

                                          Sincerely,

                                          GOTHAM PARTNERS, L.P.



     Gotham has proposed expanding First Union's Board of Trustees from
nine to 15 members, and has nominated a slate to fill the nine seats that
would be up for election at today's Special Meeting if the proposal is
adopted. 

     Gotham Partners is a private investment partnership. First Union is a
stapled-stock real estate investment trust (REIT).

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