First Union Announces $20 Million Share Repurchase Program, Receipt of Deposit on Sale of Six Malls, and Resignation of Two Trustees.

CLEVELAND--(BUSINESS WIRE)--Aug. 16, 1999--

First Union Real Estate Investments (NYSE:FUR) announced today that its Board of Trustees approved the purchase of up to $20 million of the Company's Common Shares in open market, privately negotiated or other types of transactions, from time-to-time as market conditions warrant.

As previously announced, First Union has entered into a contract to sell six of its Southwest regional malls to a joint venture between Whitehall Street Real Estate Limited Partnership XI, a real estate fund sponsored by Goldman, Sachs & Co., and Zamias Services, Inc. ("Whitehall/Zamias") for $191.5 million. First Union has received the $10 million deposit required by the contract, which is non-refundable except in certain limited circumstances. The transaction is expected to close in the fourth quarter of 1999.

First Union will receive approximately $188 million for the sale of the six malls after the payment of expenses, but not including operating income and expense prorations. Of this amount, approximately $73 million will be in cash and approximately $115 million will be from the assumption of the mortgage debt on the six malls. The Company plans to sell or refinance its Park Plaza Mall, which is cross-collateralized with the six malls. The Company expects to use approximately $51 million of proceeds from a Park Plaza Mall sale or refinancing, or from the Whitehall/Zamias transaction, to pay off the existing mortgage debt and a prepayment penalty relating to the Park Plaza Mall.

The Whitehall/Zamias transaction is contingent upon, among other things, the consent of First Union's beneficiaries, the existing mortgage lender's and rating agency approval of mezzanine financing and of the assumption of the existing mortgage debt by Whitehall/Zamias, the receipt of certain tenant and ground lease estoppels and the clearance of certain title objections. First Union may also be required to pay expenses related to certain environmental matters, although it may elect not to pay the expenses, to return 90% of the non-refundable deposit and to terminate the transaction.

Separately, the Company announced that two members retired from the Board of Trustees. The two Trustees who resigned were Mr. William E. Conway and Mr. Russell R. Gifford. Mr. Conway had been a member of the Board of Trustees since 1985 and Mr. Gifford had been a member since 1991.

Certain statements contained in this news 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. The uncertainties and risks include, but are not limited to, changes in market activity, changes in local real estate conditions and markets, actions by competitors, interest rate movements and general economic conditions. Further information about these matters can be found in the information included in the Annual Report on Form 10-K and the registration statement for the completed rights offering filed by the Company with the SEC.

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