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          PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
                              EXCHANGE ACT OF 1934
 
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            FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS
               (NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
 
   (NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
 
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March 8, 1995
 
Dear Fellow Shareholder:
 
We are pleased to present your company's 1994 Annual Report, as well as the
Proxy Statement for the 1995 Annual Meeting of Shareholders, which will be held
April 11, 1995.
 
When I joined the Trust in 1993, I performed an exhaustive study to determine a
strategy for First Union by visiting every property and analyzing each market.
This extensive review revealed the opportunity for creation and enhancement of
the Trust's future value. Accordingly, I set my sights on rebuilding our company
with a new management team. We began in earnest in 1994 when I became Chairman
and CEO.
 
As you review the 1994 Annual Report, I hope you will appreciate the
considerable progress the new management team has made during the past year to
improve the future of the Trust's stock performance and to enhance shareholder
value. I remind you that in the short time the new team has been pursuing its
plan, the Trust's shareholders' equity has increased 28% and per share book
value has increased 23% primarily resulting from the sale of non-strategic
properties in the first quarter of 1995. The benefit shareholders receive from
these improvements will come from the Trust's ability to raise additional
capital to grow the company through asset acquisition, which in time will
provide greater earnings from which to distribute future dividends.
 
In 1995, the management team is continuing to implement its strategically sound
business plan, which emphasizes:
 
          
      -      Improving the performance and occupancy of our existing
             portfolio;
      -      Targeting capital improvements that will meet minimum
             investment return criteria;
      -      Executing acquisitions and property sales aimed at
             reallocating capital from lower-performing assets to those
             that will achieve greater returns;
      -      Reducing the debt levels and related interest expense of
             the Trust; and
      -      Intensifying our management training to support our growth
             plans.


 
Management and your Board of Trustees are confident that this strategy will
generate significant growth in 1995 and beyond.
 
As you consider the election of Trustees, I wish to point out the outstanding
credentials and public company operating experience of Stephen R. Hardis and E.
Bradley Jones, my fellow nominees for re-election to the Board of Trustees.
Collectively, your Board is committed to the fiduciary responsibility it has to
you, our shareholders.
   
    
   3
 
Fellow Shareholder
March 8, 1995
Page 2 of 2
 
Mr. Hardis is Vice Chairman and Chief Financial and Administrative Officer of
Eaton Corporation -- a world leader serving the automotive, industrial,
commercial and defense markets, with $4 billion in annual sales. He brings to
First Union the insights of a distinguished 35-year career plus service on the
boards of KeyCorp, Progressive Companies, and Nordson Corporation. Page two of
the 1995 Proxy Statement documents in greater detail Mr. Hardis' impressive
credentials.
 
Mr. Jones, meanwhile, is a Trustee of Fidelity Funds and a Director of TRW Inc.,
Consolidated Rail Corporation, NACCO Industries, Inc. and other major public
companies. Mr. Jones is the former Chairman and Chief Executive Officer of
Republic Steel Corporation. After Republic's merger with LTV Corp., he also led
LTV's steel company during a transitional period. Page two of the 1995 Proxy
Statement discusses in greater detail Mr. Jones' distinguished professional
career.
    
I hope you will agree that Messrs. Hardis and Jones complement my own background
of 23 years of real estate experience, including 15 years in development,
construction and operation of retail and residential properties. Page three of
the 1995 Proxy Statement contains my biographical summary.
    
    
Please demonstrate your endorsement of our existing business plan by casting
your vote on management's WHITE PROXY CARD for Messrs. Hardis, Jones and myself.
     
Sincerely,
James C. Mastandrea
Chairman & Chief Executive Officer
                                   IMPORTANT
 
       1) Be sure to vote only on management's WHITE PROXY CARD. We urge
          you not to sign any other color proxy card.
 
       2) If you have any questions about voting your shares or want
          further information, please contact us or our proxy solicitor.
 
                      FIRST UNION REAL ESTATE INVESTMENTS
                 THOMAS T. KMIECIK, VICE PRESIDENT -- TREASURER
                  (800) 394-4030 OR COLLECT AT (216) 781-4030
 
                    CORPORATE INVESTOR COMMUNICATIONS, INC.
                  (800) 346-7885 OR COLLECT AT (201) 896-1900