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
- --------------------------------------------------------------------------------

AT THE COMPANY                                     IN CLEVELAND, OHIO
- --------------                                     ------------------
Thomas T. Kmiecik                                  Patrick Gallagher
Senior Vice President and Treasurer                Edward Howard & Co.
(216) 781-4030                                     (216) 781-2400


FOR IMMEDIATE RELEASE

             FIRST UNION ANNOUNCES SETTLEMENT TERMS WITH MASTANDREA
             ------------------------------------------------------

CLEVELAND, OHIO, MAY 19, 1998 --- FIRST UNION REAL ESTATE INVESTMENTS (NYSE:FUR)
today announced the terms of a settlement with its former Chairman and Chief
Executive Officer, James C. Mastandrea. First Union terminated Mr. Mastandrea
without cause on Monday, May 18, in accordance with his employment agreement.

Mr. Mastandrea and First Union signed a settlement agreement on May 18 under
which Mr. Mastandrea will receive $3.4 million, which includes the spread on
vested stock options based on the closing price of First Union shares on Friday,
May 15, and the present value of three years of salary and benefits. Under his
employment agreement, his termination caused restrictions to be removed on only
128,000 shares of First Union stock granted to Mr. Mastandrea during his tenure
with the Trust. The settlement also includes a mutual release between Mr.
Mastandrea and the Trust.

Separately, First Union announced that Daniel G. DeVos resigned, effective May
18, from the Board of Trustees.

First Union Real Estate Investments is a real estate investment trust (REIT)
headquartered in Cleveland, Ohio, and traded on the NYSE.


                                      # # #