FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS

AT THE COMPANY
--------------
Carolyn Tiffany
Chief Operating Officer
(617) 570-4614

        FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS JOINS THE
                           NEW RUSSELL MICROCAP INDEX

      FOR IMMEDIATE RELEASE - Boston, Massachusetts- July 5, 2005 - First Union
Real Estate Equity and Mortgage Investments (NYSE:FUR) announced that effective
June 24, 2005 First Union's common shares of beneficial interest have been
included in the new Russell MicrocapTM Index.

      Russell indexes are widely used by investment managers and institutional
investors for index funds and as benchmarks for both passive and active
investment strategies. More than $2.5 trillion in assets currently are
benchmarked to them. Investment managers who oversee these funds purchase shares
of member stocks according to that company's weighting in the particular index.

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

      First Union Real Estate Equity and Mortgage Investments is a NYSE-listed
real estate investment trust (REIT) headquartered in Boston, Massachusetts.