ATLANTIC REALTY TRUST
                                747 THIRD AVENUE
                            NEW YORK, NEW YORK 10017
                                 (212) 355-1255

                              FOR IMMEDIATE RELEASE

                   SPECIAL COMMITTEE OF ATLANTIC REALTY TRUST
                 UNANIMOUSLY REJECTS FIRST UNION MERGER PROPOSAL
                 -----------------------------------------------

    NEW  YORK,  NY,  MAY 5, 2004 - The  following  statement  was  issued by the
Atlantic Realty Trust (NASDAQ Small Cap: ATLRS) Special Committee:

     The Special Committee of Atlantic Realty Trust today  unanimously  rejected
the  proposal by First  Union Real Estate  Equity and  Mortgage  Investments  to
acquire  Atlantic in exchange for $19.25 per share (subject to  adjustments)  in
either (i) cash or (ii) First Union Series A  Convertible  Redeemable  Preferred
Shares at the rate of 0.8  Preferred  Shares per share of Atlantic.  The Special
Committee  indicated  that  it  intended  to  proceed  with  Atlantic's  planned
solicitation  of offers  for the Hylan  Shopping  Center,  its sole real  estate
asset,  located in Staten  Island,  New York, as the means by which  shareholder
value  can be  maximized.  The  Special  Committee  noted  that  as  part of the
solicitation  of offers for the Hylan Shopping  Center,  Atlantic may consider a
variety of  proposals  that  could  include a  proposal  to  acquire  the entire
company.

     The Special  Committee  stated,  "We are committed to creating  shareholder
value now and in the future and will carefully consider any legitimate  proposal
that would accomplish that objective." The Special  Committee also expressed its
confidence in the Disposition  Committee's efforts to expand and reconfigure the
Hylan  Shopping  Center as a means of enhancing the value of the center.  In any
proposal to acquire  Atlantic or its remaining real estate asset,  Atlantic will
consider  and  assess the value to be  received  in  exchange  for the shares of
Atlantic or for the Hylan Shopping Center,  including the tax ramifications,  to
reflect the full value of Atlantic.  Furthermore,  the Special Committee expects
that Atlantic's current strategy to solicit offers for the Hylan Shopping Center
represents the appropriate  strategy at this time to maximize shareholder value.
The interests of Atlantic shareholders, which represent the fundamental priority
of the  Special  Committee,  would not be served by  accepting  any  acquisition
proposal  without an  appropriate  market  check  confirming  that the  proposal
reflects the full value of Atlantic.

    Note: Some statements in this release constitute  forward-looking statements
within the meaning of Section 21E of the Securities Exchange Act of 1934. Actual
results may differ materially from the results implied by these  forward-looking
statements,  depending upon a variety of factors  including the general state of
the economy and other factors  identified in our filings with the Securities and
Exchange  Commission,  including  our most  recent  Annual  Report





on Form 10-K. Neither Atlantic Realty Trust nor its Special Committee undertakes
any responsibility to update those statements.

CONTACT:       Atlantic Realty Trust
               Edwin Frankel, 212-702-8561



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