First Union Real Estate Equity And Mortgage Investments Reaffirms Pursuit Of Proposed Merger With Gotham Golf Corp.

Business Editors

NEW YORK--(BUSINESS WIRE)--Jan. 7, 2003

First Union Real Estate Equity and Mortgage Investments (NYSE: FUR) announced today that its Board of Trustees has informed Gotham Partners and Gotham Golf Corp. that it does not intend to pursue the alternate transactions proposed by Gotham Golf Corp. in its press release of December 11, 2002 or in Gotham Partners' amended Schedule 13D filed with the Securities and Exchange Commission on December 23, 2002.

First Union reconfirmed that it is committed to pursuing the consummation of the transactions contemplated by the Agreement and Plan of Merger and Contribution dated February 13, 2002 providing for the merger of First Union with and into Gotham Golf Corp.

First Union has filed an appeal with the Appellate Division of the New York Supreme Court seeking to lift the preliminary injunction of the New York Supreme Court for New York County that currently bars the proposed merger. The injunction stems from a motion filed by a purported holder of shares of First Union's Series A Cumulative Convertible Redeemable Preferred Stock, $25.00 par value (the "Preferred Shares"), in connection with the proposed merger. First Union and Gotham Partners filed their joint brief with respect to the appeal on January 6, 2003 and anticipate that oral argument on the appeal will take place in March 2003. First Union cannot predict the timing of a decision by the Appellate Division on the appeal.

Materials with respect to the merger have been filed with the Securities and Exchange Commission and sent to the First Union shareholders in early November. As previously announced, the Company's common shareholders approved the merger at a special meeting on November 27, 2002. In the proposed merger transaction, holders of Preferred Shares would receive preferred shares of Gotham Golf Corp., as provided for under the terms of the Preferred Shares. Holders of First Union common shares would receive for each common share held (i) $1.98 in cash, (ii) a choice of $0.35 in cash or approximately 1/174th of a debt instrument to be issued by a First Union subsidiary with a face value of $100 and which is indirectly secured by First Union's principal real estate assets and (iii) rights to purchase common shares of Gotham Golf Corp.

In the event that the appeal of the injunction ultimately is not successful and First Union is legally unable to complete the transaction under contract, First Union intends to continue its operations as a real estate investment trust (REIT). The First Union Board of Trustees has no present intention of liquidating First Union.

INVESTORS AND SECURITY HOLDERS SHOULD READ THE DEFINITIVE MERGER AGREEMENT AND THE REGISTRATION STATEMENT ON FORM S-4, AS AMENDED, OF GOTHAM GOLF AND SOUTHWEST SHOPPING CENTERS CO. II, LLC ("SSCC") FILED ON OCTOBER 31, 2002, TO APPRISE THEMSELVES OF THE PROPOSED TRANSACTION. IN ADDITION, INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE DEFINITIVE PROXY STATEMENT/FINAL PROSPECTUS REGARDING THE PROPOSED TRANSACTION REFERENCED IN THE FOREGOING BECAUSE IT CONTAINS IMPORTANT INFORMATION. The definitive proxy statement/final prospectus has been filed with the Securities and Exchange Commission by First Union, Gotham Golf and SSCC and was mailed to First Union's shareholders on or about November 6, 2002. Investors and security holders may obtain a free copy of the definitive proxy statement/final prospectus and other documents filed by First Union, Gotham Golf and SSCC with the Securities and Exchange Commission at the Commission's website at www.sec.gov. The definitive proxy statement/final prospectus and these other documents may also be obtained for free from First Union.

The definitive proxy statement/final prospectus filed on October 31, 2002 may be found at the Commission's website under the listings for either Gotham Golf Corp. or Southwest Shopping Centers Co. II, L.L.C.

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 filed by First Union with the SEC on Form 10-K, as amended, for its fiscal year ended December 31, 2001.

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