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March 11, 2004 at 12:00 AM EST

First Union Real Estate Equity and Mortgage Investments Announces Financial Results for Three and Twelve Months Ended December 31, 2003

First Union Real Estate Equity and Mortgage Investments Announces Financial Results for Three and Twelve Months Ended December 31, 2003BOSTON, Mar 11, 2004 /PRNewswire-FirstCall via COMTEX/ -- First Union Real Estate Equity and Mortgage Investments (FUR), a real estate investment trust, announced the operating results for the three and twelve months ended December 31, 2003.

Financial results for the three and twelve months ended December 31, 2003 and 2002 are as follows:

                          Three Months Ended          Twelve Months Ended
    (in thousands)      December 31,  December 31, December 31,  December 31,
                           2003          2002          2003          2002

    Revenues              $3,892        $4,701       $16,646       $18,701

    Loss before gain
     on sale              (1,019)       (1,229)       (5,956)       (5,032)
    Gain on sale               -             -            54             -

    Net loss             $(1,019)      $(1,229)      $(5,902)      $(5,032)

    Net loss applicable
     to shares of bene-
     ficial interest     $(1,535)      $(1,745)      $(7,966)      $(7,099)

    Net loss applicable
     to shares of bene-
     ficial interest
     (per share)          $(0.06)       $(0.05)       $(0.26)       $(0.20)



For the three months ended December 31, 2003, First Union's net loss applicable to shares of beneficial interest was $1.5 million compared to a net loss applicable to shares of beneficial interest of $1.7 million for the same period in 2002 due primarily to a decrease in expenses for the comparable periods. Net loss applicable to shares of beneficial interest for the three months ended December 31, 2003 and 2002 included $0.0 million and $0.4 million, respectively, of transaction costs related to the proposed transaction with Gotham Golf Corp., which are included in general and administrative expenses. In addition, the net loss applicable to shares of beneficial interest for the three months ended December 31, 2003 and 2002 included $0.1 million $0.5 million, respectively, of costs related to the lawsuits brought in connection with the Gotham transaction, which are included in general and administrative expenses. Property net operating income (which is defined as rent less operating expenses) and real estate taxes increased for the three months ended December 31, 2003 to $2.4 million from $2.3 million for the same period in 2002. The increase was attributable to lower real estate tax expense. VenTek's sales decreased for the three months ended December 31, 2003 to $76,000 from $0.7 million for the comparable period in 2002 and cost of goods sold decreased to $0.5 million from $1.3 million for the same period in 2002. The decrease in both sales and cost of goods sold is due to the winding down of VenTek's current contracts.

Interest income decreased during the three months ended December 31, 2003, as compared to the same period in 2002, due primarily to lower cash balances maintained in 2003.

During the three months ended December 31, 2003, the Trust used $12.538 million from its cash reserves to repay in full its senior notes. In addition, during this period, the Company closed its transactions under the previously announced Stock Purchase Agreement between the Trust and FUR Investors LLC including, without limitation, the acquisition by FUR Investors LLC purchased 5,000,000 newly issued common shares from the Trust at a price of $2.60 per share ($13,000,000 in the aggregate).

The Combined Statements of Operations for First Union for the three and twelve month periods ended December 31, 2003 and 2002 accompanies this release.

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.


           FIRST UNION REAL ESTATE EQUITY and MORTGAGE INVESTMENTS
                      Combined Statements of Operations
    (In thousands, except per share data)
                               Three Months Ended         Twelve Months Ended
                                  December 31,                December 31,
                               2003          2002          2003          2002
    Revenues
     Rents                   $3,660        $3,630       $13,916       $13,643
     Sales                       76           730         1,892         2,924
     Interest and dividends     156           341           838         1,659
     Other income                 -             -             -           475
                              3,892         4,701        16,646        18,701

    Expenses
     Property operating       1,203         1,097         4,965         5,043
     Cost of goods sold         525         1,354         3,279         4,892
     Real estate taxes           99           225           773           899
     Depreciation and
      amortization              549           537         2,161         2,077
     Interest                   943         1,217         4,551         5,102
     General and
      administrative          1,592         1,500         6,873         5,720
                              4,911         5,930        22,602        23,733

    Loss before gains on
     sales                   (1,019)       (1,229)       (5,956)       (5,032)
    Gains on sales                -             -            54             -
    Net loss                 (1,019)       (1,229)       (5,902)       (5,032)
    Preferred dividend         (516)         (516)       (2,064)       (2,067)
    Net loss applicable
     to shares of benef-
     icial interest         $(1,535)      $(1,745)      $(7,966)      $(7,099)

    Per share data
    Basic:
    Net loss applicable
     to shares of bene-
     ficial interest         $(0.06)       $(0.05)       $(0.26)       $(0.20)

     Diluted:
     Net loss applicable
      to shares of bene-
      ficial interest        $(0.06)       $(0.05)       $(0.26)       $(0.20)
    Basic weighted
     average shares          26,168        34,809        30,885        34,807
    Diluted weighted
     average shares          26,168        34,809        30,885        34,807


SOURCE First Union Real Estate Equity and Mortgage Investments 

Carolyn Tiffany, Chief Operating Officer of First Union Real
Estate Equity and Mortgage Investments, +1-617-570-4614
(FUR)