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                                                                    EXHIBIT 99.1

             FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS
     RECEIVES NEW GOTHAM PROPOSAL; SPECIAL COMMITTEE EVALUATING ALTERNATIVES


NEW YORK - (Business Wire) - July 3, 2001 - First Union Real Estate Equity and
Mortgage Investments (NYSE: FUR) today announced that Gotham Partners, L.P.
("Gotham"), a major shareholder of the Company, has today made a new proposal
(the "Gotham Proposal") to a Special Committee previously established by the
Board of Trustees for the purpose of evaluating and advising the Board with
respect to proposed transactions and other possible business alternatives that
the Company may pursue. William A. Ackman, Chairman of the Company, is a
principal in Gotham, which had previously made and withdrawn another proposal in
May 2001.

In summary, the Gotham Proposal involves three primary steps. First, the Company
would restructure itself by transferring to a new company to be formed,
designated as "First Union Asset Company" ("FAC"), all of its non-cash assets.
Shareholders would then be given the option to: (1) sell their combined interest
in the Company and FAC for cash consideration per share of approximately $2.70,
(2) elect to receive $2.35 per share in cash plus an interest in FAC, (3) elect
to receive $0.35 per share in lieu of participating in the distribution of FAC,
but continue as a shareholder of the Company, which will combine with a new real
estate-related operating company as described below, or (4) continue as a
shareholder of both FAC and the Company.

The second element of the proposed transaction would involve the contribution by
Gotham of Gotham Golf Partners LP and related assets ("GGP") to the Company in
exchange for newly issued common shares of the Company. The number of shares to
be issued to Gotham in exchange for GGP would be determined by valuing the
shares of the Company at net asset value and valuing GGP at fair value as
determined by negotiations between the parties.

The Gotham Proposal calls for the FAC shares to be distributed to those existing
Company shareholders that elect to receive the FAC shares before the
contribution of GGP to the Company. Accordingly, it is anticipated that cash and
cash equivalents will be the Company's only remaining asset following the
transfer to FAC of the Company's non-cash assets and prior to the contribution
of GGP to the Company in exchange for newly issued shares.

The third element of the Gotham Proposal would be a self-tender by the Company
for up to 34.8 million shares at net asset value, which Gotham anticipates will
be approximately $2.35 per share. Gotham will commit not to tender to the
Company any of the Company shares received by it in respect of its contribution
of GGP to the Company. Gotham will also commit to purchase for $0.35 per share
FAC shares from shareholders, resulting in total cash payments to shareholders
electing to dispose of their combined interest in the Company and FAC of
approximately $2.70 per share.


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Under the Gotham Proposal, FAC will assume all existing current and contingent
liabilities of the Company other than the $12.5 million of 8.875% Senior Notes
due October 1, 2003 and the $24.7 million of the Company's Series A Cumulative
Convertible Redeemable Preferred Shares of Beneficial Interest, having a
dividend rate of 8.4%, which will remain, respectively, obligations of and
interests in the Company.

The Gotham Proposal provides that it will be subject to approval by the
shareholders of First Union and other customary conditions, including
registration of the shares to be issued.

Mr. Altobello, Chair of the Special Committee, stated "The Committee is
evaluating the Gotham Proposal and is also evaluating and will continue to
evaluate other alternatives for the Company with the assistance of its
professional advisors. There can be no assurances that the Company will pursue
the Gotham Proposal or come to terms with Gotham with respect to the Gotham
Proposal. No determinations have been reached at this time with respect to the
pursuit of any specific alternatives."

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
the Company with the SEC on Form 10-K.

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.

Contact:    First Union Real Estate Equity and Mortgage Investments
            Neil Koenig, Interim Chief Financial Officer
            (212) 949-1373