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 ANNOUNCES APPOINTMENT OF
  CHIEF INVESTMENT OFFICER, REJECTION OF LEASE BY WINN-DIXIE AND OTHER MATTERS

      FOR IMMEDIATE RELEASE - Boston, Massachusetts- October 21, 2005-First
Union Real Estate Equity and Mortgage Investments (NYSE:FUR) announced today
that:

            o     It has named John Alba as its Chief Investment Officer. Mr.
                  Alba was previously a Vice President of First Union as well as
                  its external advisor, FUR Advisors LLC.

            o     It recently made a $3,500,000 first mortgage loan secured by
                  an office building in Northbrook, Illinois. The loan bears
                  interest at prime and matures in twelve months, subject to two
                  six month extensions. At the time of the loan satisfaction,
                  First Union has the right to make a mezzanine loan to the
                  property owner or acquire an ownership interest in the
                  property owner on substantially the same terms as the prior
                  mezzanine loans made with respect to the other Chicago area
                  properties.

            o     It has been notified that Winn-Dixie Stores, Inc., its tenant
                  at its Jacksonville, Florida property, has elected to reject
                  its lease with First Union in connection with Winn-Dixie's
                  bankruptcy. First Union does not believe that the rejection of
                  the lease will have a material impact on its operating results
                  and will promptly begin marketing the property for lease
                  and/or sale.

            o     It has entered into agreements to acquire (1) 127,000 square
                  feet of retail and office space in a mixed-use building in
                  Chicago, Illinois and (2) two office buildings located in the
                  New England area which are triple-net leased to Verizon. Each
                  of these acquisitions is subject to customary due diligence
                  review by First Union and requisite consents.

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

      Certain statements contained in this press release that are
forward-looking are based on current expectations that are subject to a number
of uncertainties and risks, and actual results may differ materially. Further
information about these matters and the risks generally with respect to First
Union can be found in First Union's Annual Report on Form 10-K and Quarterly
Reports on Form 10-Q filed with the Securities and Exchange Commission.

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