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 ACQUISITION OF
            200,000 SQUARE FEET OF OFFICE SPACE IN AMHERST, NEW YORK

      Boston, Massachusetts- May 25, 2005-First Union Real Estate Equity and
Mortgage Investments (NYSE:FUR) announced today that it consummated its
previously announced acquisition of two adjacent office buildings in Amherst,
New York that are net leased to and serve as the east coast Headquarters of,
Ingram Micro, Inc. The properties contain an aggregate of 200,000 square feet of
office space and were acquired for an aggregate purchase price of $22 million.
In connection with this acquisition, First Union obtained an $18 million first
mortgage loan which bears interest at 5.65%, requires monthly payments of
approximately $112,000 and is scheduled to mature in November 2013. First Union
anticipates that this acquisition will generate a current yield on the
approximate $4.3 million net cash investment (inclusive of closing costs) of
approximately 15.5%.

      Michael L. Ashner, the Chief Executive Officer of First Union, commented:
"We are pleased to add this property to our increasing portfolio of assets. We
believe that the current yield to our equity as well as the projected residual
value of the investment will be both accretive to earnings and to shareholder
equity."

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      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.