EXHIBIT 99.2

RADIANT PARTNERS LLC
June 20, 2000

William A. Ackman, Chairman
First Union Real Estate Equity and Mortgage Investments
110 E. 42nd Street, 18th Floor
New York, NY 10017

William A. Scully, Vice Chairman
First Union Real Estate Equity and Mortgage Investments
1301 Avenue of the Americas, 38th Floor
New York, NY 10019

Gentlemen:

On behalf of an affiliate of Radiant Partners LLC ("Radiant"), we are pleased to
outline the terms of a potential transaction (the "Transaction") for the
acquisition of the majority of the assets and associated liabilities of First
Union Real Estate Equity and Mortgage Investments ("First Union" or the
"Company") by Radiant.

Assets to be Purchased

Radiant will acquire the assets (the "Purchase Assets") and assume the
liabilities (the "Assumed Liabilities") listed on Schedule A from the Company.
In addition, Radiant would assume all income and expenses for the Purchase
Assets from June 1, 2000 until the date of closing the Transaction, as well as
capital expenditures approved by Radiant and committed to subsequent to May 9,
2000.

Radiant will not acquire the assets and liabilities listed on Schedule B from
First Union.

Price and Consideration

Radiant will pay total consideration to the Company of $ 205.0 million (the
"Consideration") consisting of approximately $79.9 million in cash (the "Cash")
and the assumption of the first mortgage financing, estimated to be $125.1
million, which is secured by the Purchase Assets (the "Assumed Debt")

Assumed Debt assumption costs (including prepayment and refinancing costs),
transfer taxes, title insurance, survey and recording fees shall be jointly paid
by First Union and Radiant on a 50/50 basis. First Union's obligation due to
these costs shall be capped at $2 million.

Additional Consideration

Radiant will manage the following assets of First Union:

Temple Mall
Park Plaza Mall
Circle Tower
Property Accounts Receivable and Rent Settlements
Ventek

Radiant will receive a two year noncancellable asset management contract at a
rate of $250,000 per year. Radiant will also receive 20% equity interest in
Ventek that vests upon First Union being relieved of all obligations and/or
guarantees under Ventek's current outstanding performance bonds. Radiant's
equity interest will be junior to the Company's outstanding line of credit.
(Approximately $2,000,000 outstanding as of June 5, 2000.)

Process

The Transaction will comprise the following process:

1. Upon First Union's signing of this letter, the Company acknowledges that
Radiant will seek a commitment for mezzanine financing of the Transaction
equal to the lesser of $40 million or an amount that provides the
transaction with leverage not to exceed an 80% loan to value ratio (the
"Mezzanine Commitment"). Radiant will have 10 business days to deliver
the Mezzanine Commitment to the Company. First Union will cooperate with
Radiant by providing information on the Purchase Assets and Assumed
Liabilities to Radiant and its advisors upon request, in a timely manner.

2. For a period of 45 days commencing on the date (the "Exclusivity
Commencement Date") of delivery by Radiant to the Company of a copy of a
Mezzanine Commitment that is reasonably satisfactory to the Company, the
Company shall not and it shall direct and use its reasonable best efforts
to cause its officers, trustees, employees, investment bankers,
consultants, attorneys, accountants, agents and other representatives
(collectively, "Representatives") not to, directly or indirectly, (i)
solicit or initiate the making of any Acquisition Proposal (as defined
below) or any third party proposal or offer to acquire one or more of the
Purchase Assets whether directly or indirectly, including by means of a
business combination (a "Purchase Assets Proposal"), or (ii) disclose any
nonpublic information or data to, any third party (other than the
Company's Representatives) in connection with any Acquisition Proposal or
Purchase Assets Proposal. This paragraph shall have no force or effect if
the Company does not receive a Mezzanine Commitment that is reasonably
satisfactory to it within 10 business days of the date hereof.

For purposes of this Agreement, "Acquisition Proposal" means any third
party proposal or offer (i) to engage in a merger, consolidation or
similar business combination transaction with the Company, unless such
Acquisition Proposal does not contemplate the acquisition of more than
50% of the Company's existing real estate assets (based on the fair
market value of such assets) or (ii) to acquire more than 50% of the
Company's assets (based on the fair market value of such assets). Clause
(ii) of the immediately preceding paragraph shall not apply to (a) any
bona fide Acquisition Proposal or Purchase Assets Proposal that the Board
of Trustees of the Company or a committee thereof determines, after
consultation with the Company's financial advisors, in its good faith

judgment, taking into account price, timing, closing conditions, the
likelihood of completion and any other factors deemed relevant by the
Board of Trustees of the Company or such committee, may be more favorable
to the Company's common shareholders than the Transaction.

3. If after the Exclusivity Commencement Date the Company enters into a
definitive agreement in connection with an Acquisition Proposal or one or
more Purchase Assets Proposals having an aggregate purchase price of (or
in which the Purchase Assets are valued at) $30.0 million or more (a
"Material Property Sale"), the Company shall reimburse Radiant, within 30
days of receipt by the Company of appropriate written evidence thereof,
for its reasonable legal fees and expenses, the reasonable legal fees and
expenses of its financial advisors, including the entity providing the
Mezzanine Commitment (the "Mezzanine Lender"), a reasonable commitment
fee payable to the Mezzanine Lender and the reasonable cost of any third
party reports, including environmental reports, in each case, to the
extent such fees, expenses and costs relate to the Transaction and are
incurred during the period ending on the date the Company notifies
Radiant that it has entered into a definitive agreement in connection
with an Acquisition Proposal or a Material Property Sale; provided,
however, that such notification will not relieve the Company from its
obligations pursuant to paragraph 2 above; provided, further, however,
that the total reimbursement obligations of the Company pursuant to this
paragraph shall not, in the aggregate, exceed $750,000.

General Conditions

The closing of any transaction would be structured to accommodate legal, tax,
accounting, operational and timing issues of both Radiant and the Company,
provided that such structure does not adversely affect the economic benefits of
the Transaction.

The Principals of Radiant have held discussions with advisors and financing
sources indicating interest in the Transaction. This letter should be considered
an indication of interest in a possible transaction on the terms described in
this letter and does not create a legally binding obligation, except for the
"Process" section of this letter which is legally binding This letter is
intended to outline the general terms which could result in a definitive
agreement between the Parties and supercedes any prior discussions or indication
of interest by Radiant, including our letter to you dated May 31, 2000;
provided, however, that the confidentiality letter agreement between First Union
and Radiant dated April 28, 2000 remains in full force and effect.

We look forward to discussing this transaction with you in more detail in the
coming days.

Very truly yours,

Radiant Partners LLC

/s/Daniel P. Friedman /s/David Schonberger /s/Anne N. Zahner
- --------------------- -------------------- -----------------
Daniel P. Friedman David Schonberger Anne N. Zahner
Managing Member Managing Member Managing Member

ACCEPTED AND AGREED TO:

By: /s/William A. Ackman
--------------------
William A. Ackman, Chairman
First Union Real Estate Equity and Mortgage Investments

/s/William A. Scully
--------------------
William A. Scully, Vice Chairman
First Union Real Estate Equity and Mortgage Investments

SCHEDULE A

ASSETS

1. 55 Public Square Office Building - Cleveland, Ohio
2. 55 Public Square Garage - Cleveland, Ohio
3. North Valley Tech Center - Thornton, Colorado
4. Two Rivers Business Center - Clarksville, Tennessee
5. Westgate Shopping Center - Abilene, Texas
6. Pecanland Mall - Monroe, Louisiana (including excess land and proceeds of
land sales, including Residence Inn)
7. Huntington Garage - Cleveland, Ohio
8. Long Street Garage - Columbus, Ohio
9. Madison and Wells Garage - Chicago, Illinois
10. Printers Alley Garage - Nashville, Tennessee
11. 5th and Marshall Garage - Richmond, Virginia
12. All restricted, reserve and escrow accounts as of March 31, 2000(excluding
reserves and escrows for real estate taxes and insurance related to time
periods prior to closing of the Transaction) on the Purchase Assets,
including but not limited to:

- 5th and Marshall Garage
- North Valley Tech Call Center
- 55 Public Square Office Building
- 55 Public Square Garage
- Madison and Wells Garage

13. Net operating income from all Purchase Assets (net of 2/3 of asset
management fees paid to Radiant Partners) from June 1, 2000 forward
14. Furniture, fixtures and equipment of First Union
15. Club Associates note receivable
16. West Third Street Parking Lot - Cleveland, Ohio

LIABILITIES

1. Mortgage debt balances as of the Transaction closing date (see Schedule A(i)
for a complete list of mortgage debt to be assumed)
2. Liabilities arising out of the operations of the Purchase Assets from June
1, 2000 forward and Westgate environmental liability, to the extent not
covered by offsetting insurance proceeds
3. New capital expenditures on the Purchase Assets committed from May 9, 2000
forward
4. 551 Fifth Avenue office lease, including offsetting security deposits and
rights as tenant

SCHEDULE A(i)

MORTGAGE DEBT

- ------------------------------------------------------------------------------------------------------------
March 31, Interest Maturity
Property Lender 2000 Balance Rate Date Comment
- ------------------------------------------------------------------------------------------------------------

55 Public Square J.P. Morgan 21,100,000 LIBOR Sep-02
+ 325 bp
North Valley Tech Salomon 16,000,000 LIBOR Jul-02
Center Brothers + 295 bp

Pecanland Mall TIAA 38,014,265 12.25% Dec-17
+ participation

Huntington Garage Lutherans 7,845,291 8.55% Jan-04

Long Street Midland Mutual 613,315 8.63% Apr-09
(1st Mortgage)

Long Street Marwed 800,000 8.25% Oct-03
(2nd Mortgage) Corporation

Madison and G.E. Capital 30,000,000 LIBOR Oct-01
Wells Garage +175 bp

Printers Alley South Trust 4,000,000 LIBOR Jul-01
Garage Bank + 175 bp

Westgate N/A 7,500,000 N/A N/A To be
Shopping Center originated

TOTAL MORTGAGE DEBT 125,872,871

SCHEDULE B

ASSETS

1. Unrestricted Cash and "T" Bills
2. Park Plaza Mall - Little Rock, Arkansas
3. Impark Loan
4. Temple Mall Partnership Interest
5. Loan to Temple Mall Partnership
6. Severance and Trustees Escrow
7. Circle Tower - Indianapolis, Indiana
8. All Rent and property settlements including accounts receivable from owned
and prior owned properties outstanding as of June 1, 2000
9. Peachtree Mall lawsuit claim
10. Ventek

LIABILITIES

1. Convertible preferred equity
2. Senior Notes
3. Pending Oracle lawsuit
4. One Galleria Tower Dallas office lease, including offsetting security
deposits
5. All liabilities arising out of the operation of the Purchase Assets prior
to June 1, 2000, except the Westgate environmental liability
6. Corporate expenses and liabilities not related to Purchase Assets
7. Park Plaza mortgage from FUNB