1
================================================================================
 
                                  SCHEDULE 14A
                                   (RULE 14a)
                    INFORMATION REQUIRED IN PROXY STATEMENT
                            SCHEDULE 14A INFORMATION
          PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
                              EXCHANGE ACT OF 1934
 
Filed by the Registrant  [X]
 
Filed by a Party other than the Registrant  [ ]
 
Check the appropriate box:
 
                                             
[ ]  Preliminary Proxy Statement                [ ]  CONFIDENTIAL, FOR USE OF THE COMMISSION
                                                     ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[ ]  Definitive Proxy Statement
[ ]  Definitive Additional Materials
[X]  Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12


 
            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)
 
Payment of Filing Fee (Check the appropriate box):
[X]  No fee required.
[ ]  Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
 
     (1) Title of each class of securities to which transaction applies: .......
 
     (2) Aggregate number of securities to which transaction applies: ..........
 
     (3) Per unit price or other underlying value of transaction computed
         pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
         filing fee is calculated and state how it was determined): ............
 
     (4) Proposed maximum aggregate value of transaction: ......................
 
     (5) Total fee paid: .......................................................
 
[ ]  Fee paid previously with preliminary materials.
 
[ ]  Check box if any part of the fee is offset as provided by Exchange Act Rule
     0-11(a)(2) and identify the filing for which the offsetting fee was paid
     previously. Identify the previous filing by registration statement number,
     or the Form or Schedule and the date of its filing.
 
     (1) Amount Previously Paid: ...............................................
 
     (2) Form, Schedule or Registration Statement No.: .........................
 
     (3) Filing Party: .........................................................
 
     (4) Date Filed: ...........................................................
 
================================================================================
   2


FIRST UNION REAL ESTATE INVESTMENTS 
FIRST QUARTER EARNINGS CONFERENCE CALL
Friday, April 23, 1998 - 3:00 p.m.



STAN ULCHAKER
- -------------

Thank you for joining us for this conference call on First Union Real Estate
Investment's first quarter earnings.

During the course of this conference call, projections or other forward looking
statements may be made regarding future events or the future performance of the
Trust. These statements are only predications and actual events or results may
differ materially. We refer you to the documents the Trust files from time to
time with the Securities and Exchange Commission, particularly the annual report
filed on Form 10-K. These documents contain and identify important factors that
could cause the actual results to differ materially from those contained in our
projections or forward looking statements. Now let me turn the call over to Jim
Mastandrea.

JIM MASTANDREA
- --------------

Good afternoon. Welcome and thank you for joining us on First Union's first
quarter `98 conference call today. I am Jim Mastandrea, Chairman, President and
Chief Executive Officer of First Union Real Estate Investments. I have two other
members of our executive team with me today. They are:

- -   Steve Edelman, Executive Vice President and chief Financial Officer, and
- -   Tom Kmiecik, Senior Vice President and Treasurer

I trust that you have all seen the news release we issued this morning
concerning our first quarter results. I will have comments later in this call
but first, let me turn to Steve Edelman to discuss the financial details for the
quarter.

STEVE EDELMAN
- -------------

Our first quarter FFO per share is not a story that we are very happy with. I'd
like to analyze the results in terms of, first, what happened, then why did it
happen, and finally what are we doing about it.

In terms of what happened, I break the results into three areas -- core real
estate operations, third party parking and ancillary businesses, and G&A. I've
stressed the importance of our core business every quarter, and in the first
quarter the traditional real 


   3

estate operations performed generally as expected. The retail division -- and
from now on I speak of retail inclusive of our southwest properties -- was up
2.5% on a same store basis from last year. There was no significant change in
occupancy from December 31st, indicating that we survived the post-Christmas
tenant shake out in good shape. The apartment portfolio performed flat relative
to the first quarter of 1997, and was down as compared to the most recent prior
quarter because of higher expenses. What I consider a more significant factor,
however, is that our average rental rate across the apartment portfolio is about
5% higher now than a year ago. The office and redevelopment division also posted
strong year over year results, up 16% from 1997. The one percentage point
decline in occupancy for the division over the past 90 days was caused by the
continued termination of non-office, low rent tenants at our Denver
redevelopment as we build space out for new occupants.

Our second breakdown area is the parking business. Although the parking
management side performed as expected for the quarter, results from the combined
Imperial businesses were far below those achieved during the first three
quarters that we've owned the company. In particular, the equipment
manufacturing and distribution subsidiaries had extremely poor bottom line
results, and while they are small parts of the whole operation their impact on
First Union was dramatic. As a combined entity, Imperial generated no
significant return on investment this past quarter. This is primarily
responsible for the 1997 vs 1998 comparative per share numbers.

Last, G&A was at a reasonable run rate with the exception of the special line
item for proxy and litigation costs.

In answer to why per share performance was below both last year and the current
expectations of management and the investment community, there are common
answers. The Imperial performance, especially in the unpredictable equipments
subsidiaries, has created dilution in our per share numbers and a management
issue in the equipment businesses which must be addressed immediately. Our
extraordinary proxy and litigation expenses cost us about $.03 per share, and
our inability to do the anticipated volume of acquisitions this year, due to the
inability to access capital because of the ongoing litigation and proxy
challenge, is going to cost several cents.

Finally, what are we doing about the $.10 per share results. Unfortunately, some
of the factors contributing to the performance are going to continue, like
extraordinary litigation and proxy expenses and a continued shutting out of the
capital markets until this uncertainty is behind us. The good news is that these
issues do have a finite life and at some point in the near future, First Union
will be able to return to focusing on creating value in its core businesses. Our
1st quarter acquisitions are performing well, which will help 1998 results. The
Chicago garage acquired in January is already generating an annualized yield of
9%, several months ahead of pro forma. Our most recent acquisition, in
Arlington, Texas, is a surface lot next to The Ballpark at Arlington, and with
the Texas Rangers in first place the lot continues to be jammed. In fact, we may
be the only Texas Ranger fans in Cleveland. We already are turning our attention
to correcting the 


                                                                               2

   4

equipment subsidiary problems. The issues are being personally handled by top
management at both First Union and Impark, and solutions as radical as
discontinuing direct manufacturing and outsourcing that function under our own
label are being explored and evaluated. We still believe that this company has
terrific potential down the road, but we need to ensure that the growing pains
it encounters while it gets there are kept to a minimum.

Jim, that's the financial review.

JIM MASTANDREA
- --------------

As all of you are aware, we are in a proxy contest seeking to elect three
candidates to the Board of Trustees and to increase the size of the Board from
nine to 15 members. We will begin presenting our plan to our shareholders and
let them have the opportunity to make a choice -- to choose between a highly
experienced management team which understands real estate and how to create
value, as we do; or to turn over a portfolio of highly leveraged properties that
require intense management to people who are inexperienced.

For our investors who have been with us since 1994 or prior, they know our
capabilities. For those investors who are relatively new, we look forward to the
opportunity to demonstrate our capabilities.

Relative to our proxy contest, I want to make clear my views on the matter --
this is the wrong time to make a change and this is the wrong change to make.
The times are uncertain and the proposed changes are unsound.

We all know that these are uncertain times for "stapled stock" or "paired share"
REITS. Congress has yet to decide on their fate. The Clinton administration is
supporting legislation that has been introduced by the chairmen of both the
House and the Senate tax-writing committees that would exclude future deals from
the advantages of the stapled stock structure. Existing operations would be
exempted but acquisitions after March 17, 1998, would have to be operated under
standard REIT rules.

We are monitoring the progress of the legislation closely and working with
Congress to salvage the legitimate benefits of the existing tax structure.

In the meantime, our Board of Trustees recently announced that they have formed
an independent committee and have retained Credit Suisse First Boston in an
expanded role to advise and assist the Board in evaluating alternatives to find
a solution to our situation and maximizing shareholder value.

Thank you for your attention.  We will now take questions.

                                      # # #

                                                                               3