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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q


|X|          QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended March 31, 2005
                                                 --------------

                         Commission file number 0-16249
                                                -------

             FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS
             (Exact name of Registrant as specified in its charter)

             Ohio                                                 34-6513657
             ----                                                 ----------
(State or other jurisdiction of                               (I.R.S. Employer
 incorporation or organization)                              Identification No.)

     P.O. Box 9507, 7 Bulfinch Place, Suite 500, Boston, Massachusetts 02114
     -----------------------------------------------------------------------
                    (Address of principal executive offices)

                                 (617) 570-4614
                                 --------------
              (Registrant's telephone number, including area code)

Indicate by check mark whether the Registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes |X| No |_|

Indicated by check mark whether Registrant is an accelerated filer (as
identified in Rule 12b-2 of the Exchange Act). Yes |_| No |X|

As of May 1, 2005, there were 32,058,913 shares of common stock outstanding.

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<PAGE>

                                      INDEX

                                                                            Page
Part I. Financial Information

   Item 1. Consolidated and Combined Financial Statements (Unaudited):

           Consolidated and Combined Balance Sheets as of March 31, 2005
           and December 31, 2004 ............................................  3

           Consolidated and Combined Statements of Operations and
           Comprehensive Loss for the Three Months Ended March 31, 2005
           and March 31, 2004 ...............................................  4

           Consolidated and Combined Statements of Cash Flows for the
           Three Months Ended March 31, 2005 and March 31, 2004 .............  5

           Notes to Consolidated and Combined Financial Statements ..........  6

   Item 2. Management's Discussion and Analysis of Financial
           Condition and Results of Operations .............................. 23

   Item 3. Quantitative and Qualitative Disclosure about Market Risk ........ 31

   Item 4. Controls and Procedures .......................................... 21

Part II. Other Information:

   Item 1. Legal Proceedings ................................................ 32

   Item 6. Exhibits ......................................................... 33

Signatures .................................................................. 34

Exhibit Index ............................................................... 35



                                       2
<PAGE>

             FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS
                           FORM 10-Q - MARCH 31, 2005

                    CONSOLIDATED AND COMBINED BALANCE SHEETS

                      (In thousands, except per-share data)

<TABLE>
<CAPTION>
                                                                           March 31, 2005  December 31, 2004
                                                                            (Unaudited)
                                                                           --------------  -----------------
<S>                                                                          <C>               <C>
ASSETS

  Investments in real estate, at cost
    Land                                                                     $   3,929         $   3,929
    Buildings and improvements                                                  87,977            87,599
                                                                             ---------         ---------
                                                                                91,906            91,528
    Less - Accumulated depreciation                                             (5,362)           (4,750)
                                                                             ---------         ---------
               Investments in real estate, net                                  86,544            86,778

  Real estate held for sale                                                      1,382             1,379
  Real estate held for syndication                                                  --            84,375
  Cash and cash equivalents                                                    172,096            82,559
  Restricted cash                                                                   81                --
  Loans receivable                                                               6,737             8,390
  Accounts receivable and prepayments, net of allowance
      of $32 and $57, respectively                                               7,204             3,391
  Real estate securities available for sale                                     22,512            14,734
  Lease intangibles, net                                                         6,898             7,205
  Unamortized debt issue costs, net                                              1,198             1,157
  Equity investment in limited partnership                                         618                --
                                                                             ---------         ---------
       TOTAL ASSETS                                                          $ 305,270         $ 289,968
                                                                             =========         =========

LIABILITIES

  Mortgage loans payable                                                     $  86,721         $  84,206
  Liabilities of real estate held for syndication                                   --            76,762
  Loan payable                                                                      39                44
  Accounts payable and accrued liabilities                                       3,843             5,615
  Dividends payable                                                              1,026               516
  Deferred items                                                                    61                68
  Liabilities of real estate held for sale and discontinued operations           2,159             2,615
                                                                             ---------         ---------
       TOTAL LIABILITIES                                                        93,849           169,826
                                                                             ---------         ---------

SHAREHOLDERS' EQUITY

  Series A Cumulative Convertible Redeemable Preferred Shares of
     Beneficial Interest, $25 per share liquidating preference, 2,300,000
      shares authorized, 983,082 outstanding in 2005 and 2004                   23,131            23,131
  Series B-1 Cumulative Convertible Redeemable Preferred Shares of
     Beneficial Interest, $25 per share liquidating preference, 3,640,000
     shares authorized and outstanding in 2005                                  85,875                --
  Common Shares of Beneficial Interest, $1 par, unlimited authorized,
     32,058,913 and 31,058,913 outstanding in 2005 in 2004, respectively        32,059            31,059

  Additional paid-in capital                                                   210,945           207,968

  Accumulated other comprehensive income                                         4,015             3,034

  Accumulated distributions in excess of net income                           (144,604)         (145,050)
                                                                             ---------         ---------

                  Total Shareholders' Equity                                   211,421           120,142
                                                                             ---------         ---------

       TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                            $ 305,270         $ 289,968
                                                                             =========         =========
</TABLE>

          See Notes to Consolidated and Combined Financial Statements.


                                       3
<PAGE>

             FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS
                           FORM 10-Q - MARCH 31, 2005

             CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS AND
                              COMPREHENSIVE INCOME
                                   (Unaudited)

                      (In thousands, except per-share data)

<TABLE>
<CAPTION>
                                                                      For the Three Months Ended
                                                                              March 31,
                                                                      --------------------------
                                                                          2005         2004
                                                                        --------     --------
<S>                                                                     <C>          <C>
Revenues
   Rents                                                                $  3,862     $    370
   Interest and dividends                                                  1,037          254
                                                                        --------     --------
                                                                           4,899          624
                                                                        --------     --------

Expenses
   Property operating                                                        185          196
   Real estate taxes                                                          21           16
   Depreciation and amortization                                             842           61
   Interest                                                                1,700           31
   General and administrative                                              1,000        1,310
                                                                        --------     --------
                                                                           3,748        1,614
                                                                        --------     --------
Other income
   Gain on sale of real estate securities available for sale                 142           --
   Gain on sale of real estate held for syndication                          169           --
   Equity in loss from investment in limited partnership                     (24)          --
                                                                        --------     --------
                                                                             287           --
                                                                        --------     --------

Income (loss) from continuing operations                                   1,438         (990)

Income from discontinued operations                                           34          785
                                                                        --------     --------

Net income (loss)                                                          1,472         (205)
   Preferred dividends                                                    (1,026)        (516)
                                                                        --------     --------
Net income (loss) applicable to Common Shares of Beneficial Interest    $    446     $   (721)
                                                                        ========     ========

Other comprehensive income
Net income (loss)                                                       $  1,472     $   (205)
Unrealized (loss) gain on available for sale securities                      (25)         396
Unrealized gain on interest rate derivative                                1,006           --
                                                                        --------     --------
Comprehensive income                                                    $  2,453     $    191
                                                                        ========     ========

Per share data - Basic:
Income (loss) from continuing operations, net of preferred dividend     $   0.01     $  (0.05)
Income from discontinued operations                                         0.00         0.03
                                                                        --------     --------
Net income (loss) applicable to Common Shares of Beneficial Interest    $   0.01     $  (0.02)
                                                                        ========     ========

Diluted:
Income (loss) from continuing operations, net of preferred dividend     $   0.01     $  (0.05)
Income from discontinued operations                                         0.00         0.03
                                                                        --------     --------
Net income (loss) applicable to Common Shares of Beneficial Interest    $   0.01     $  (0.02)
                                                                        ========     ========

Basic Weighted-Average Common Shares                                      31,537       31,059
                                                                        ========     ========
Diluted Weighted Average Common Shares                                    31,583       31,059
                                                                        ========     ========
</TABLE>

          See Notes to Consolidated and Combined Financial Statements.


                                       4
<PAGE>

             FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS
                           FORM 10-Q - MARCH 31, 2005

               CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

                      (In thousands, except per-share data)

<TABLE>
<CAPTION>
                                                                                   For the Three Months Ended
                                                                                           March 31,
                                                                                   --------------------------
                                                                                       2005          2004
                                                                                     ---------     ---------
<S>                                                                                  <C>           <C>
Cash flows from operating activities
   Net income (loss)                                                                 $   1,472     $    (205)
   Adjustments to reconcile net income (loss)
      to net cash provided by (used in) operating activities
         Depreciation and amortization                                                     724           499
         Amortization of lease intangibles                                                 307            --
         Straight-lining of rental income                                                1,027            --
         Gain on sale of real estate securities                                           (142)           --
         Gain on sale of real estate held for syndication                                 (169)           --
         Equity in loss of limited partnership                                              24            --
         (Decrease) increase in deferred items                                              (7)          103
         Net changes in other operating assets and liabilities                          (6,079)          267
                                                                                     ---------     ---------
            Net cash (used in) provided by operating activities                         (2,843)          664
                                                                                     ---------     ---------

Cash flows from investing activities
   Investments in real estate                                                             (381)         (650)
   Proceeds from disposition of real estate held for syndication                         5,802            --
   Purchase of real estate securities available for sale                                (8,210)       (6,054)
   Proceeds from maturity of investments held to maturity                                   --       254,173
   Proceeds from real estate securities available for sale                                 549            --
   Increase in restricted cash                                                             (81)           --
   Purchase of loans receivable                                                             --       (16,944)
   Collection of loans receivable                                                        3,008            --
                                                                                     ---------     ---------
            Net cash provided by investing activities                                      687       230,525
                                                                                     ---------     ---------

Cash flows from financing activities
   Decrease in loans payable                                                                (5)           (6)
   Proceeds from mortgage loan payable                                                   4,600            --
   Debt issuance costs                                                                    (153)           --
   Principal payments of mortgage loans                                                 (2,085)          (88)
   Issuance of Common Shares of Beneficial Interest, net                                 3,977            --
   Issuance of Series B-1 Cumulative Convertible Redeemable Preferred Shares, net       85,875            --
   Dividends paid on Preferred Shares of Beneficial Interest                              (516)         (516)
                                                                                     ---------     ---------
            Net cash provided by (used in) financing activities                         91,693          (610)
                                                                                     ---------     ---------
   Net increase in cash and cash equivalents                                            89,537       230,579
   Cash and cash equivalents at beginning of period                                     82,559        17,742
                                                                                     ---------     ---------
   Cash and cash equivalents at end of period                                        $ 172,096     $ 248,321
                                                                                     =========     =========

Supplemental Disclosure of Cash Flow Information

Interest paid                                                                        $   2,043     $     943
                                                                                     =========     =========

Supplemental Disclosure on Non-Cash Investing and Financing Activities

Dividends accrued on Preferred Shares of Beneficial Interest                         $   1,026     $     516
Loans to Limited Partners of 5400 Westheimer                                            (1,338)
Liabilities of real estate held for syndication satisfied in disposition               (76,762)           --
                                                                                     ---------     ---------
                                                                                     $ (77,074)    $     516
                                                                                     =========     =========
</TABLE>

          See Notes to Consolidated and Combined Financial Statements.


                                       5
<PAGE>

             FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS
                           FORM 10-Q - MARCH 31, 2005

             NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

1. General

The accompanying financial statements represent the consolidated and combined
results of the Registrant, First Union Real Estate Equity and Mortgage
Investments (the "Trust"), and First Union Management Inc. ("FUMI"). Under a
trust agreement, all of the outstanding shares of stock of FUMI are held for the
benefit of the shareholders of the Trust. Accordingly, the financial statements
of FUMI and the Trust have been combined.

The consolidated and combined financial statements included herein have been
prepared by the Trust, without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with accounting principles generally accepted in the United States of America
have been condensed or omitted pursuant to such rules and regulations, although
the Trust believes that the disclosures contained herein are adequate to make
the information presented not misleading. These consolidated and combined
financial statements should be read in conjunction with the consolidated and
combined financial statements and the notes thereto included in the Trust's most
recent annual report on Form 10-K.

Effective January 1, 2005, the Trust conducts its business through First Union
REIT L.P., a Delaware limited partnership (the "Operating Partnership"). The
Trust is the sole general partner of, and owns directly and indirectly, 100% of
the limited partnership interest in the Operating Partnership. The transfer of
interest of the Trust's assets and liabilities to the Operating Partnership had
no effect on the Trust's financial statements.

The consolidated and combined financial statements reflect, in the opinion of
the Trust, all adjustments (consisting of normal recurring adjustments)
necessary to present fairly the consolidated and combined financial position,
results of operations and cash flows for the respective periods in conformity
with accounting principles generally accepted in the United States of America
consistently applied. The results of operations for the three months ended March
31, 2005 are not necessarily indicative of results expected for the full year.

2. Summary of Significant Accounting Policies

Use of Estimates

The preparation of financial statements requires management to make estimates
and assumptions that affect the reported amounts of assets, liabilities,
revenues and expenses and the disclosure of contingent assets and liabilities.
Such estimates that are particularly susceptible to change relate to
management's estimate of the impairment of real estate. In addition, estimates
are used when accounting for the allowance for doubtful accounts and
contingencies, among others. Actual results could differ from these estimates.


                                       6
<PAGE>

             FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS
                           FORM 10-Q - MARCH 31, 2005

             NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

Investments in Real Estate

Real estate assets are stated at cost. Expenditures for repairs and maintenance
are expensed as incurred. Significant renovations that extend the useful life of
the properties are capitalized. Depreciation for financial reporting purposes is
computed using the straight-line method. Buildings and building improvements are
depreciated over their estimated useful lives of 10 to 40 years, based on the
property's age, overall physical condition, type of construction materials and
intended use. Improvements to the buildings are depreciated over the remaining
useful life of the building at the time the improvement is completed. Tenant
alterations are depreciated over the life of the lease of the tenant. The Trust
annually reviews each of its properties for any impairment losses. The Trust
records impairment losses when indicators of impairment are present and the
undiscounted cash flows are not sufficient to recover the asset's carrying
amount. The impairment loss is measured by comparing the fair market value of
the asset to its carrying amount.

Upon acquisitions of real estate, the Trust assesses the fair market value of
acquired assets (including land, buildings, tenant improvements and identified
intangibles, such as above and below market leases and acquired in-place leases
in accordance with SFAS Nos. 141 and 142) and acquired liabilities, and
allocates the purchase price based on these assessments. The Trust assesses fair
market value based on estimated cash flow projections that utilize appropriate
discount and capitalization rates and available market information. Estimates of
future cash flows are based on a number of factors, including the historical
operating results, known trends, and market/economic conditions that may affect
the property.

Real Estate Held for Syndication

Real estate acquired for the purpose of selling limited partnership interests
sponsored by the Trust is classified as real estate held for syndication.

Cash and Cash Equivalents

Cash and cash equivalents include checking and money market accounts and highly
liquid investments purchased with maturities of three months or less.

Restricted Cash

Restricted cash represents cash in escrow accounts and deposits securing a
mortgage loan payable.

Loans Receivable

The Trust's policy is to record loans receivable at cost. The Trust evaluates
the collectibility of both interest and principal of each of its loans, if
circumstances warrant, to determine whether it is impaired. A loan is considered
to be impaired when, based on current information and events, it is probable
that the Trust will be unable to collect all amounts due according to the
existing


                                       7
<PAGE>

             FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS
                           FORM 10-Q - MARCH 31, 2005

             NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

Loans Receivable (continued)

contractual terms. When a loan is considered to be impaired, the amount of the
loss accrual is calculated by comparing the recorded investment to either the
value determined by discounting the expected future cash flows at the loan's
effective interest rate or to the value of the collateral if the loan is
collateral dependent. The interest rate on the loans receivable ranges from 10%
to 12.25%. Interest income is recognized on an accrual basis.

Accounts Receivable

Accounts receivable are recorded at the invoiced amount and do not bear
interest. The allowance for doubtful accounts is the Trust's best estimate of
the amount of probable credit losses in the Trust's existing accounts
receivable. The Trust reviews its allowance for doubtful accounts monthly. Past
due balances over 90 days and over a specified amount are reviewed individually
for collectibility. Account balances are charged off against the allowance after
all means of collection have been exhausted and the potential for recovery is
considered remote. The Trust does not have any off-balance-sheet credit exposure
related to its tenants. Accounts receivable also includes amounts related to
insurance recoveries.

Real Estate Securities Available for Sale

The Trust classifies investments in real estate equity securities with readily
determinable fair market values on the balance sheet as available-for-sale,
based on the Trust's intent with respect to those securities. Specifically, the
Trust's investments in equity securities with readily determinable fair market
values are accounted for as available-for-sale because these securities are held
principally for investment purposes and not for sale in the short term.
Accordingly, the Trust records these investments at fair market value, and
unrealized gains and losses are recognized through shareholders' equity, as a
component of other comprehensive income. Realized gains and losses and changes
for other-than-temporary impairments are included in net income. Sales of
securities are recorded on the trade date and gains and losses are determined on
the specific identification method.

Lease Intangibles

Upon acquisition of real estate, the Trust records intangible assets and
liabilities acquired at their fair market value. The Trust amortizes identified
intangible assets over the period which the assets are expected to contribute to
future cash flows of the property acquired, generally the term of the applicable
leases.


                                       8
<PAGE>

             FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS
                           FORM 10-Q - MARCH 31, 2005

             NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

Unamortized Debt Issue Costs

Direct financing costs are deferred and amortized over the term of the related
agreements as a component of interest expense.

Equity Investment in Limited Partnership

The Trust accounts for its investment in entities which it can influence but not
control under the equity method.

Fair Value of Financial Instruments

Financial instruments include cash and cash equivalents, accounts receivable,
investments, accounts payable and long-term debt. The fair value of the cash and
cash equivalents, accounts receivable, investments in government securities,
equity securities and commercial paper and accounts payable approximate their
current carrying amounts due to their short-term nature. The fair value of the
Trust's mortgage loans payable and loan payable approximate their current
carrying amounts at March 31, 2005.

The Trust accounts for interest rate swap agreements under SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities ("SFAS No. 133").
At inception, the Trust designated its swap in connection with the Key Bank Loan
agreement as a cash flow hedge on the variable interest payments of our floating
rate financing. Accordingly, the Trust records the swap at fair market value and
records changes in market value in other comprehensive income to the extent the
hedge is effective. The hedge has been effective through March 31, 2005.

Revenue Recognition

The Trust accounts for its leases with tenants as operating leases with rental
revenue recognized on a straight line basis over the lease term. Tenant leases
generally provide for (i) billings of fixed minimum rental and (ii) billings of
certain operating costs. The Trust accrues the recovery of operating costs based
on actual costs incurred.

Deferred revenue is derived primarily from revenue received in advance of its
due date.

Stock Options

Effective January 1, 2005, the Trust adopted the provisions of SFAS No. 123R,
"Accounting for Stock-Based Compensation." There was no impact on the net income
per share for the period ended March 31, 2005 on a basic and diluted basis.


                                       9
<PAGE>

             FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS
                           FORM 10-Q - MARCH 31, 2005

             NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

Income Taxes

The Trust operates in a manner intended to enable it to continue to qualify as a
real estate investment trust ("REIT") under Sections 856-860 of the Code. In
order to qualify as a REIT, the Trust is generally required each year to
distribute to its shareholders at least 90% of its taxable income (excluding any
net capital gain). The Trust intends to comply with the foregoing minimum
distributions requirements. As of March 31, 2005, the Trust has net operating
loss carryforwards of $47,300,000 which will expire from 2019 through 2023. In
connection with the issuance of the Series B-1 Cumulative Convertible Redeemable
Preferred Shares of Beneficial Interest, the Trust's net operating loss
carryforwards will be subject to annual limitations pursuant to Section 382 of
the Code. The Trust also has capital loss carryforwards of $12,300,000 as of
March 31, 2005 which will expire from 2006 through 2007.

The Trust owns stock in a corporation that has elected to be treated for Federal
income tax purposes as a taxable REIT subsidiary ("TRS"). In order for the Trust
to continue to qualify as a REIT, the value of the TRS stock cannot exceed 20%
of the value of the Trust's total assets; at March 31, 2005 the TRS did not
exceed 20% of the value of the Trust's total assets. A TRS is taxable on its net
income at regular corporate tax rates. Current income taxes are recognized
during the period in which transactions enter into the determination of
financial statement income, with deferred income taxes being provided for
temporary differences between the carrying values of assets and liabilities for
financial reporting purposes and such values as determined by income tax laws.
Changes in deferred income taxes attributable to these temporary differences are
included in the determination of income. A valuation allowance has been provided
for the entire amount of deferred tax assets, which consists of FUMI's net
operating loss carryforwards, due to the uncertainty of realization of the
deferred tax assets. FUMI has net operating loss carryforwards of $10,100,000
which will expire from 2009 through 2023. The Trust is currently exploring a
business combination with FUMI which would enable the Trust to utilize all or a
portion of these loss carryforwards. The Trust and FUMI do not file consolidated
tax returns.


                                       10
<PAGE>

             FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS
                           FORM 10-Q - MARCH 31, 2005

             NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

Earnings Per Share

The Trust has calculated earnings per share for the three months ended March 31,
2005 and 2004 in accordance with SFAS 128, "Earnings Per Share." SFAS 128
requires that common share equivalents be excluded from the weighted average
shares outstanding for the calculation of basic earnings per share. The
reconciliation of shares outstanding for the basic and diluted earnings per
share calculation is as follows (in thousands, except per share data):

<TABLE>
<CAPTION>
                                                                          Three Months Ended
                                                                               March 31,
                                                                        ---------------------
                                                                          2005         2004
                                                                        --------     --------
<S>                                                                     <C>              <C>
Basic
Income (loss) from continuing operations                                $  1,438         (990)
Preferred dividend                                                        (1,026)        (516)
                                                                        --------     --------
Income (loss) from continuing operations, net of preferred dividend          412       (1,506)
Income from discontinued operations                                           34          785
                                                                        --------     --------
Net income (loss) applicable to Common Shares of Beneficial Interest    $    446     $   (721)
                                                                        ========     ========

Basic weighted average Common Shares                                      31,537       31,059
                                                                        ========     ========

Income (loss) from continuing operations, net of preferred dividend     $   0.01     $  (0.05)
Income from discontinued operations                                         0.00         0.03
                                                                        --------     --------
Net income (loss) per Common Shares of Beneficial Interest              $   0.01     $  (0.02)
                                                                        ========     ========

Diluted
Income (loss) from continuing operations                                $  1,438         (990)
Preferred dividend                                                        (1,026)        (516)
                                                                        --------     --------

Income (loss) from continuing operations, net of
   Preferred dividend                                                        412       (1,506)
Income from discontinued operations                                           34          785
                                                                        --------     --------
Net income (loss) applicable to Common Shares of Beneficial Interest    $    446     $   (721)
                                                                        ========     ========

Basic weighted average Common Shares                                      31,537       31,059

Stock options                                                                 46           --
                                                                        --------     --------
Diluted weighted average Common Shares                                    31,583       31,059
                                                                        ========     ========

Income (loss) from continuing operations, net of preferred dividend     $   0.01     $  (0.05)
Income from discontinued operations                                         0.00         0.03
                                                                        --------     --------
Net income (loss) per Common Shares of Beneficial Interest              $   0.01     $  (0.02)
                                                                        ========     ========
</TABLE>

The Trust's Series A and Series B-1 preferred shares are anti-dilutive at March
31, 2005 and March 31, 2004 and, accordingly, are not included in the weighted
average shares outstanding for the dilutive earnings per share.


                                       11
<PAGE>

             FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS
                           FORM 10-Q - MARCH 31, 2005

             NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

Dividends

The Trust declared a dividend of $516,000 ($0.525 per share) on the Trust's
Series A Cumulative Preferred Shares of Beneficial Interest ("Series A Shares")
in the first quarter of 2005. The first quarter dividend was paid April 30, 2005
to beneficiaries of record at the close of business on March 31, 2005.

The Trust declared a dividend of $510,000 ($0.14 per share) on the Trust's
Series B-1 Cumulative Preferred Shares of Beneficial Interest ("Series B-1
Shares") in the first quarter of 2005, which dividend represented the pro rata
portion of the quarterly distribution of $0.40625 per share. The first quarter
dividend was paid April 30, 2005 to beneficiaries of record at the close of
business on March 31, 2005.

3. Related Party Transactions

The affairs of the Trust and its subsidiaries are administered by FUR Advisors
LLC ("FUR Advisors") pursuant to the terms of an Advisory Agreement (the
"Advisory Agreement") dated December 31, 2003 between the Trust and FUR
Advisors, which agreement was negotiated and approved by the Board of Trustees
of the Trust prior to, and in connection with, the acquisition by FUR Investors
LLC of its interest in the Trust and the entering into with FUR Investors and
Michael Ashner the Covenants Agreement and the Exclusivity Services Agreement.
FUR Advisors is controlled by and partially owned by the executive officers of
the Trust. Pursuant to the terms of the Advisory Agreement, FUR Advisors is
responsible for providing asset management services to the Trust and
coordinating with the Trust's shareholder transfer agent and property managers.
Effective as of January 1, 2005, the terms of the Advisory Agreement were
modified to provide that the quarterly fee payable to FUR Advisors for providing
such services would equal the lesser of an asset based fee or an outstanding
equity based fee. In general, the asset based fee was the original fee set forth
in the Advisory Agreement which is calculated as follows: (x) 1% of the gross
asset value of the Trust up to $100 million, 0.75% of the gross asset value of
the Trust between $100 million and $250 million, 0.625% of the gross asset value
of the Trust between $250 million and $500 million and 0.50% of the gross asset
value of the Trust in excess of $500 million (in light of the net lease nature
of the 16 net lease properties, FUR Advisors agreed to reduce its fee for these
properties to 0.25% of the gross asset value for the portion of this portfolio
that is subject to leverage) plus (y) a fee, not exceeding commercially
reasonable rates approved by a majority of the independent trustees, for
providing administrative and clerical services with respect to loans made by the
Trust to third parties.


                                       12
<PAGE>

             FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS
                           FORM 10-Q - MARCH 31, 2005

             NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

3. Related Party Transactions (Continued)

The equity based fee is equal to (i) 1.5% of the issued and outstanding equity
securities of the Trust plus (ii) .25% of any equity contribution by a third
party to a joint venture managed by the Trust. For purposes of the equity based
calculation, the 31,058,913 Common Shares outstanding at January 1, 2005 are to
be valued as follows: $2.30 (FUR Investors' tender offer price in its December
2003 tender offer) with respect to 26,058,913 Common Shares and $2.60 (the
purchase price paid by FUR Investors) with respect to the 5,000,000 Common
Shares acquired by FUR Investors on December 31, 2003. The Trust's Series A
Shares are valued at their liquidation preference amount of $25 per share. All
Preferred and Common Shares issued subsequent to January 1, 2005 are valued at
the issuance price.

In addition to the foregoing modification, the reimbursement to FUR Advisors of
up to $100,000 per annum for the costs associated with the employment of one or
more asset managers has been eliminated.

FUR Advisors is also entitled under both the asset based fee and the equity
based fee pursuant to the Advisory Agreement to receive (i) property and
construction management fees at commercially reasonable rates as determined by
the independent Trustees of the Board, and (ii) an incentive fee, both of which
were provided for in the original Advisory Agreement. The incentive fee entitles
FUR Advisors to receive an amount equal to 20% of all distributions paid to
Beneficiaries of Common Shares after December 31, 2003 in excess of the
Threshold Amount and, upon the termination of the Advisory Agreement, an amount
equal to 20% of the "liquidation value" of the Trust in excess of the Threshold
Amount at the termination date. As defined in the Advisory Agreement, the
Threshold Amount is equal to (x) $71.3 million, increased by the net issuance
price of all Common Shares, with an adjustment for Preferred Shares converted,
issued after December 31, 2003, and decreased by the redemption price of all
shares redeemed after December 31, 2003, plus (y) a return on the amount, as
adjusted, set forth in (x) equal to 7% per annum compounded annually. The
incentive fee is reduced by any direct consequential damages to the Trust if the
Advisory Agreement is terminated by the Trust for cause.

Effective February 1, 2004, Kestrel Management L.P., an affiliate of FUR
Advisors and the Trust's executive officers, assumed property management
responsibilities for Circle Tower. Pursuant to the terms of the property
management agreement, Kestrel Management L.P. receives a fee equal to 3% of the
monthly revenues of Circle Tower which fee has been approved by the independent
members of the Board of Trustees, and is less than the amount paid to the prior
management company.


                                       13
<PAGE>

             FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS
                           FORM 10-Q - MARCH 31, 2005

             NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

3. Related Party Transactions (Continued)

The following table sets forth the fees and reimbursements paid by the Trust for
the three months ended March 31, 2005 to FUR Advisors and Kestrel Management
L.P.: (In thousands)

                                                             Three Months Ended
                                                                  March 31,
                                                            --------------------
                                                              2005        2004
                                                            --------    --------
      Asset Management Fee (1)                              $487,000    $385,000
      Loan Servicing Fee (1)                                   1,000       2,000
      Property Management (2)                                 10,000      10,000
      Reimbursement (1)                                           --       3,000

(1)   FUR Advisors
(2)   Kestrel Management L.P.

The Trust and FUMI paid fees of $23,000 and $68,000 for the three months ended
March 31, 2005 and 2004 to the Real Estate Systems Implementations Group, LLC
("RE Systems") for financial reporting and advisory services. The managing
member of RE Systems assumed the position of Interim Chief Financial Officer of
the Trust on August 18, 2000, and Interim Chief Executive Officer in January
2003. In addition, he became a trustee of the Trust in June 2003. He resigned as
Interim Chief Executive Officer and Interim Chief Financial Officer on December
31, 2003 and resigned as trustee on April 15, 2004.

4. Common Share Issuance

On February 17, 2005, the Trust sold to Kimco Realty Corporation, through a
private placement, 1,000,000 of its Common Shares for an aggregate purchase
price of $4,000,000. The Trust incurred a total of $23,000 in legal fees in
connection with this transaction.

5. Series B-1 Preferred Share Issuance

On February 28, 2005, the Trust sold to a number of institutional investors,
through a private offering, 3,640,000 shares of its Series B-1 Shares for
$91,000,000 in gross proceeds. The Trust incurred a total of $5,125,000 of
underwriting, placement agent and legal fees to unaffiliated third parties in
connection with this issuance. The Series B-1 Shares entitle the holders to
cumulative dividends at a minimum rate of 6.5% and can be convertible into
Common Shares at a conversion price of $4.50, subject to anti-dilution
adjustments. If fully converted, the Series B-1 Shares would represent
approximately 38.7% of the outstanding Common Shares (based on the number of
Common Shares outstanding at March 31, 2005). In addition, the holders of the
Series B-1 Shares have the right to elect one Trustee to the Board of Trustees
of the Trust as long as 910,000 Series B-1 Shares are outstanding.


                                       14
<PAGE>

             FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS
                           FORM 10-Q - MARCH 31, 2005

             NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

6. Loans Receivable

As of March 31, 2005, the Trust held the following loans receivable (in
thousands):

<TABLE>
<CAPTION>
                                       Outstanding
                                        Principal    Accrued    Carrying     Interest
Property/Collateral    Location          Balance     Interest   Amount       Rate          Maturity
-------------------    --------          -------     --------   ------       ----          --------
<S>                    <C>              <C>           <C>       <C>          <C>           <C>
Wingate Inn (1)        Clearwater, FL   $ 2,781       $ 23      $ 2,804      10%           February
                                                                                           2007

536 West 28th St. (1)  New York, NY       2,530         27        2,557      12.25%        April 2009
                                                                             (LIBOR
                                                                             +9.5%)
5400 Westheimer L.P.                                                                       January 2007
Interests (2)          Houston, TX        1,338         38        1,376      12%
                                        -------       ----      -------

                                        $ 6,649       $ 88      $ 6,737
                                        =======       ====      =======
</TABLE>

      (1)   Secured by a first mortgage.

      (2)   Seven loans secured by limited partnership interests.

For the quarter ended March 31, 2005, activity related to the principal balance
of loans is as follows (in thousands):

      Balance at January 1, 2005                                        $ 8,319
      Advances made                                                       1,338
      Repayments                                                         (3,008)
                                                                        -------
      Balance at March 31, 2005                                         $ 6,649
                                                                        =======


                                       15
<PAGE>

             FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS
                           FORM 10-Q - MARCH 31, 2005

             NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

7. Real Estate Securities Available for Sale

The detail of real estate securities held for sale as of March 31, 2005 is as
follows (in thousands):

<TABLE>
<CAPTION>
                                                                          Unrealized
                                   Date             Cost at             Gain (Loss) at       Balance at March
            Name                Purchased        March 31, 2005         March 31, 2005           31, 2005
            ----                ---------        --------------         --------------           --------
<S>                              <C>               <C>                    <C>                  <C>
Sizeler Property Investors,
Inc.                             Various           $   13,449             $     3,336          $    16,785

Securities of other real
estate companies                 Various                5,729                      (2)               5,727
                                                   ----------             -----------          -----------

                                                   $   19,178             $     3,334          $    22,512
                                                   ==========             ===========          ===========
</TABLE>

8. Circle Tower Mortgage Loan

On March 17, 2005, the Trust obtained a $4,600,000 loan from Nomura Credit &
Capital, Inc., an unaffiliated third party lender, which is secured by the
Trust's Indianapolis, Indiana property. The loan bears interest at 5.82%,
requires monthly payments of principal and interest of $54,000 and is scheduled
to mature on April 11, 2015, at which time the outstanding principal balance is
estimated to be approximately $3,831,000. The Trust received net proceeds from
this loan, after satisfying closing costs, of approximately $4,387,000.

9. Portfolio Investments

Chicago Office Properties

On March 16, 2005, the Trust entered into an agreement with Laurence Weiner and
Gerald Nudo, two private individuals unaffiliated with the Trust. The agreement
provides as follows: (i) the Trust will make secured mezzanine loans with
respect to 22 properties in an amount equal to 49% of the equity in the
properties ("as defined"), with an option to make an additional advance
increasing its funding to 60% of the equity of the properties; (ii) the Trust
will make secured mezzanine loans with respect to three properties in an amount
equal to 60% of the equity in the properties; (iii) the Trust will have an
option to make secured mezzanine loans with respect to five additional
properties in an amount equal to 49% of the equity in the properties, with an
option to make an additional advance increasing its funding to 60% of the equity
of the properties; and (iv) the Trust will acquire an equity interest in the
sole member of each property which interests will entitle the Trust to receive a
portion of the distributions from sales, refinancings and other capital
transactions with respect to the applicable property.


                                       16
<PAGE>

             FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS
                           FORM 10-Q - MARCH 31, 2005

             NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

9. Portfolio Acquisitions

Chicago Office Properties (continued)

The loans will bear interest at 7.65%, require monthly payments of interest only
and have a seven year maturity. The loans may be converted into an equity
interest in the applicable borrower after one year at the Trust's request or
after three years at the option of the borrower. Substantially all of the
properties are located in the Chicago, Illinois metropolitan and suburban area.

In addition, the agreement provides for certain obligations on the part of the
Trust as well as Messrs. Weiner and Nudo to make additional loans to the
properties with respect to costs expected to be incurred at the properties. The
Trust also has co-investment rights with respect to all other office properties
acquired by Messrs. Weiner and Nudo and their affiliates in the Chicago,
Illinois metropolitan and suburban areas.

This transaction was consummated in April 2005 at which time the Trust made
convertible mezzanine loans aggregating approximately $75,292,000.

Purchase Contract for Amherst, New York Property

On March 21, 2005, the Trust entered into an agreement to acquire two office
building properties in Amherst, New York with an aggregate square footage of
200,000. The properties are net leased to and serve as the east coast
headquarters of Ingram Micro, Inc. The contract purchase price for the
properties is approximately $22 million. This acquisition is expected to be
consummated in May 2005.

10. 5400 Westheimer Holding, L.P.

On January 3, 2005, the loan previously made by the Trust to 5400 Westheimer
Holding L.P. ("5400 Westheimer") was satisfied by the payment of $7,140,000 with
the Trust retaining a 7% limited partnership interest in 5400 Westheimer. Also
on January 3, 2005, the Trust made loans to seven limited partners in 5400
Westheimer aggregating $1,338,000 (the "LP Loans"), the proceeds of which were
used by the limited partners to fund their capital contribution requirements to
5400 Westheimer. The LP Loans are secured by the applicable limited partner's
interest in 5400 Westheimer. The loans bear interest at 12% per annum and
require quarterly payments of interest only. Aggregate principal payments of
$669,000 are required to be made on January 5, 2006 and January 5, 2007. If all
of the borrowers of the LP Loans were to default on their LP Loans, the Trust
would acquire an additional 25% limited partner interest in 5400 Westheimer. In
addition to the 7% limited partnership interest transferred to the Trust in
satisfaction of its initial loan, the Trust also holds a 1% general partner
interest in 5400 Westheimer. 5400 Westheimer indirectly holds a 100% ownership
interest in real property located at 5400 Westheimer Court, Houston, Texas (the
"Houston Property").


                                       17
<PAGE>

             FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS
                           FORM 10-Q - MARCH 31, 2005

             NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

10. 5400 Westheimer Holding, L.P. (continued)

For financial reporting purposes, at December 31, 2004, the Houston Property was
classified as real estate held for syndication and reflected 100% of 5400
Westheimer's assets and liabilities. As of March 31, 2005, this investment was
classified on the Trust's balance sheet as a loan receivable in the amount of
$1,338,000 and an equity investment in limited partnership of $618,000.

11. Winn-Dixie Bankruptcy

On February 22, 2005, Winn-Dixie Stores, Inc., the tenant at the Trust's
Jacksonville, Florida property, filed for protection under Chapter 11 of the
United States Bankruptcy Code. The Trust has not received notification as to
whether Winn-Dixie will assume or reject its lease. If it elects to reject its
lease, the lease will be terminated and the Trust will become responsible for
all costs associated with the property. If the lease is rejected, the Trust will
seek to re-tenant or sell the property. Until such time as Winn-Dixie makes its
election, all rents (approximately $1,500,000 a year) and other payments due
under the lease from and after the date of Winn-Dixie's bankruptcy filing are
required to be paid. All required payments have been made through March 31,
2005.

12. Discontinued Operations

The tenant for the Trust's Sherman, Texas property has exercised its purchase
option under the lease pursuant to which it intended to acquire the property
effective May 1, 2005 for a gross sales price of approximately $2,018,000. Due
to negotiations between the tenant and the ground owner, the consummation of
this sale is not anticipated to occur until the third quarter 2005. The tenant
will continue to be obligated to make its scheduled rental payments until the
sale has closed. For financial reporting purposes, the Trust expects to
recognize a net gain on the sale of this property of approximately $535,000.

SFAS No. 144 requires discontinued operations presentation for disposals of a
"component" of an entity. In accordance with SFAS No. 144, for all periods
presented, the Trust reclassified its combined statement of income to reflect
income and expenses for properties held for sale as discontinued operations. In
addition, the Trust has reflected assets and liabilities related to such
properties as real estate held for sale and liabilities of real estate held for
sale and discontinued operations.


                                       18
<PAGE>

             FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS
                           FORM 10-Q - MARCH 31, 2005

             NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

12. Discontinued Operations (continued)

The combined results related to discontinued operations for the three months
ended March 31, 2005 and March 31, 2004 are as follows:

(Amounts in thousands)                                      2005           2004
                                                           ------         ------
Total revenues                                             $   51         $4,164
Total expenses                                                 17          3,446
                                                           ------         ------
Income from discontinued operations                        $   34         $  718
                                                           ======         ======

Liabilities of discontinued operations at March 31, 2005 and December 31, 2004
are as follows:

(Amounts in thousands)                                       2005          2004
                                                            ------        ------
Mortgage loans payable                                      $  924        $  956
Accounts payable and accrued expenses                        1,235         1,659
                                                            ------        ------
                                                            $2,159        $2,615
                                                            ======        ======

Discontinued operations for 2004 consist of FUMI's formerly wholly-owned
subsidiary, Ventek International Inc., the Trust's Park Plaza Mall property and
the Sherman, Texas property. Discontinued operations for 2005 consists solely of
the Sherman, Texas property.

13. Legal Proceedings

Peach Tree Mall Litigation

The Trust, as one plaintiff in a consolidated action composed of numerous
businesses and individuals, has pursued legal action against the State of
California associated with the 1986 flood of Sutter Buttes Center, formerly
Peach Tree Mall. On March 4, 2005, the court approved the settlement of this
matter pursuant to which the State of California has agreed to pay the Trust
$11,000,000. Payment of the settlement remains subject to legislative
appropriation. It is expected that the funding for this settlement will be
incorporated in the State of California's budget for its 2005-2006 fiscal year
at which time the Trust will be able to recognize the settlement as income. In
connection with the settlement, the parties will exchange mutual releases.


                                       19
<PAGE>

             FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS
                           FORM 10-Q - MARCH 31, 2005

             NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

13.      Legal Proceedings (continued)

Indemnity to Imperial Parking Limited

In 1999, Newcourt Financial Ltd. ("Newcourt") brought a claim in Ontario, Canada
against FUMI and Imperial Parking Limited, then a subsidiary of FUMI, alleging a
breach of a contract between FUMI and Newcourt's predecessors-in-interest,
Oracle Credit Corporation and Oracle Corporation Canada, Inc. The Trust's
affiliate and Imperial Parking Limited brought a separate action in British
Columbia, Canada against Newcourt, Oracle Credit Corporation and Oracle
Corporation Canada claiming, among other things, that the contract at issue was
not properly authorized by the Trust's Board of Trustees and Imperial Parking
Limited's Board of Directors. On March 27, 2000, in connection with the spin-off
of Imperial Parking Corp. of Canada ("Imperial Parking") (the successor in
interest to Imperial Parking Limited) to the Trust's shareholders, the Trust
gave an indemnity to Imperial Parking Corporation in respect to damages arising
from the outstanding actions.

On March 1, 2005, the Trust settled all claims involved in this matter by paying
$800,000 to Newcourt; this amount was fully reserved at December 31, 2004.

Contingencies

Revenue Canada has made inquiries of Imperial Parking relating to deductions
taken by Imperial Parking at the time it was owned by FUMI. It is possible that
if these deductions are ultimately disallowed Imperial Parking could make a
claim for indemnification on any amounts owed to Revenue Canada. Although FUMI
is required to indemnify Imperial Parking for certain damages, it is not
possible to determine at this time if FUMI would be required to indemnify
Imperial Parking for these damages. As a result, the Trust has reserved certain
amounts for expenses related to this matter.

14. Business Segments

The Trust operates in three business segments: (i) ownership of real estate
operating properties (the "Operating Properties"), (ii) ownership of loans
receivable ("Loans") and (iii) ownership and trading of real estate securities
("Real Estate Securities"). The Trust's management evaluates the performance of
its business segments based upon net operating income. With respect to Operating
Properties, net operating income is defined by management as property rent less
property operating expense, and real estate taxes. The Trust and FUMI's other
assets ("Other Assets") consist primarily of cash and cash equivalents,
investments held to maturity, deferred issue costs for loans payable and real
estate held for syndication. All intercompany transactions between segments have
been eliminated. Revenues and expenses from discontinued operations have been
excluded from the segment presentation.


                                       20
<PAGE>

             FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS
                           FORM 10-Q - MARCH 31, 2005

             NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
Business Segments (in thousands)                         Three Months Ended March 31,
                                                              2005        2004
                                                            -------     -------
<S>                                                         <C>         <C>
Rents and Other Revenues
   Operating Properties                                     $ 3,862     $   370
   Loans                                                        199         198
   Real Estate Securities                                       272          --
                                                            -------     -------
                                                              4,333         568
                                                            -------     -------

Less - Operating Expenses
   Operating Properties                                         185         196
                                                            -------     -------
                                                                185         196
                                                            -------     -------

Less - Real Estate Taxes
   Operating Properties                                          21          16
                                                            -------     -------
                                                                 21          16
                                                            -------     -------

Net Operating Income
   Operating Properties                                       3,656         158
   Loans                                                        199         198
   Real Estate Securities                                       272          --
                                                            -------     -------
                                                              4,127         356
                                                            -------     -------

Less - Depreciation and Amortization                            842          61

Less - Interest Expense                                       1,700          31

Corporate Income (Expense)
    Interest and dividends                                      708          56
    General and administrative                               (1,000)     (1,310)
    Gain on sale of real estate held for syndication            169          --
    Other income (expense)                                      (24)         --
                                                            -------     -------

Income (loss) from continuing operations                      1,438        (990)

Income from discontinued operations (1)                          34         785
                                                            -------     -------

Net income (loss)                                           $ 1,472     $  (205)
                                                            =======     =======

Capital Expenditures
   Operating Properties                                     $   381     $   650
                                                            -------     -------
                                                            $   381     $   650
                                                            =======     =======
</TABLE>


                                       21
<PAGE>

             FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS
                           FORM 10-Q - MARCH 31, 2005

             NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

                                                         March 31,  December 31,
                                                           2005        2004
                                                           ----        ----

Identifiable Assets
   Operating Properties                                  $ 86,544    $ 95,540
   Loans                                                    6,737       8,390
   Real Estate Securities                                  22,240      14,734
   Other Assets                                           189,749     171,304
                                                         --------    --------

Total Assets                                             $305,270    $289,968
                                                         ========    ========

      (1) Discontinued operations for 2004 consist of FUMI's formerly
wholly-owned subsidiary, Ventek International Inc., the Trust's Park Plaza Mall
property and the Sherman, Texas property. Discontinued operations for 2005
consists solely of the Sherman, Texas property.


                                       22
<PAGE>

             FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS
                           FORM 10-Q - MARCH 31, 2005

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS.

CAUTIONARY STATEMENTS UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995.

Statements contained herein may constitute "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. Any statements
contained herein which are not statements of historical facts and that address
activities, events or developments that First Union Real Estate Equity and
Mortgage Investments expects, believes or anticipates will or may occur in the
future shall be deemed to be forward-looking statements. Forward-looking
statements are inherently subject to risks and uncertainties, many of which
cannot be predicted with accuracy and some of which might not even be
anticipated. Future events, actual results and performance, financial and
otherwise, could differ materially from those set forth in or contemplated by
the forward-looking statements herein. Factors that could cause actual results
to differ materially from those in forward-looking statements include the terms
of future property sales, investments and financings, general economic and
business conditions and various other risk factors listed in the annual report
on Form 10-K of First Union Real Estate Equity and Mortgage Investments filed
with the Securities and Exchange Commission.

This item should be read in conjunction with the financial statements, footnotes
thereto and other items contained elsewhere in the report.

General

We are a real estate investment trust ("REIT") engaged in the business of owning
real property and real estate related assets. As of March 31, 2005, we held, in
addition to our cash reserves, the following assets: (i) an office building
located in Indianapolis, Indiana commonly referred to as Circle Tower; (ii) 16
net lease properties; (iii) a 1% general partner interest in 5400 Westheimer
Holding L.P. ("5400 Westheimer"), a limited partnership that indirectly owns an
office building in Houston, Texas; (iv) an additional 7% limited partnership
interest in 5400 Westheimer; (v) loans secured by limited partnership interests
in 5400 Westheimer; (vi) a 25% participation interest in a loan secured by a
first mortgage on a commercial property located in New York City's Chelsea area;
(vii) a first mortgage loan secured by a Wingate Hotel and the land on which it
is situated located in Clearwater Florida; (viii) 8.83% of the outstanding
shares of common stock of Sizeler Property Investors, Inc. (NYSE:SIZ); and (ix)
equity interests in various public and private REITs. In addition, subsequent to
March 31, 2005, we made 24 separate convertible mezzanine loans aggregating
approximately $75,292,000. See "Chicago Office Properties" below.

The average occupancy rate at Circle Tower for the three months ended March 31,
2005 and March 31, 2004 was 82.87% and 87.73% respectively. The net lease
portfolio purchased in November 2004 is 100% leased at March 31, 2005, however,
on February 22, 2005, Winn-Dixie Stores, Inc., the tenant at our Jacksonville,
Florida property, filed for protection under Chapter 11


                                       23
<PAGE>

             FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS
                           FORM 10-Q - MARCH 31, 2005

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS (CONTINUED)

General (Continued)

of the United States Bankruptcy Code. We have not received notification as to
whether Winn-Dixie will assume or reject its lease. If it elects to reject its
lease, the lease will be terminated and we will become responsible for all costs
associated with the property. If the lease is rejected, we will seek to
re-tenant or sell the property. Until such time as Winn-Dixie makes its
election, all rents (annually, approximately $1,500,000) and other payments due
under the lease from and after the date of Winn-Dixie's bankruptcy filing are
required to be paid.

Investment Policy

Rather than focus on a particular type of real estate asset or a specific
geographic sector, our investments will be based, at least for the foreseeable
future, on our assessment that a potential investment is significantly
undervalued or presents an opportunity to outperform the marketplace.
Additionally, we will make investments in assets believed to be underperforming
and in which we believe, through an infusion of capital and improved management,
an appropriate return on investment can be realized. Consequently, with certain
limitations, we will seek to invest in or acquire most types of real estate
assets or securities. Moreover, except as limited by the restrictions placed on
us in order to meet our requirements to maintain REIT status or other regulatory
restrictions, our investment decisions will not be materially affected by the
nature of an investment or where that investment falls in an entity's capital
structure. We will acquire entities that own real estate, invest in the equity
of a real estate asset directly or through a venture, acquire preferred equity,
mezzanine debt or first mortgage debt of a real estate asset to the extent we
believe the ownership of the underlying real estate would be consistent with our
investment strategy. In general, it is not expected that we will invest in an
entity in which we do not own 100% of the equity unless we control, have the
means to acquire control of the investment or have a mechanism in place to exit
the investment for a price consistent with fair market value. In order to fund
future acquisitions, we will utilize our cash reserves, obtain debt financing
and/or sell additional equity.

In view of the foregoing, our near-term investment strategy will be to identify
and invest in discrete real estate investments consistent with the foregoing
criteria. As appropriate investment opportunities arise, we will aggressively
pursue such opportunities. For the long-term, as investments mature in value to
the point where we are unlikely to achieve better than a market return on their
then enhanced value, it is likely we will exit the investment and seek to
redeploy the capital to higher yielding opportunities. Accordingly, our
Statements of Operations and Comprehensive Income include both income from
continuing operations and discontinued operations.

Investments and dispositions made by us during the three months ended March 31,
2005 included the following:


                                       24
<PAGE>

             FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS
                           FORM 10-Q - MARCH 31, 2005

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS (CONTINUED)

West 38th Street Loan

We held a 50% interest in a $20,000,000 first mortgage loan secured by a
property located at 63 West 38th Street, New York, New York ("West 38th Street
Loan"). The interest rate was LIBOR plus 400 basis points (with a minimum rate
of 5.42%). The loan had a three-year term and required payments of interest
only. We indirectly obtained $7,000,000 of financing in connection with this
investment that had a stated interest rate of LIBOR plus 175 basis points and
required payments of interest only. The West 38th Street Loan was repaid in full
on January 18, 2005. Total cash received was $3,165,000.

Presidential Realty Corp.

We had previously acquired 54,500 shares in Presidential Realty Corp.
("Presidential Realty") (AMEX:PDLA) for a total cost of $407,000. We sold our
shares at various times during February of 2005 for a total gain of $142,000.

Sizeler Property Investors, Inc.

Beginning in August 2004, we began acquiring shares of common stock in Sizeler
Property Investors, Inc. ("Sizeler") (NYSE:SIZ), a real estate investment trust
that primarily is in the business of owning and operating income producing
retail shopping centers and apartment communities in the southeastern United
States. As of May 5, 2005, we had acquired a total of 1,490,600 shares of common
stock of Sizeler which represents approximately 7.1% of all of the outstanding
shares of common stock of Sizeler for an aggregate purchase price of
approximately $12,275,000. On December 21, 2004, we sent a letter to Sizeler
advising Sizeler of our intention to nominate a slate of three directors,
consisting of Michael L. Ashner, Peter Braverman and Steven Zalkind, for
election at Sizeler's 2005 annual meeting of stockholders. On January 19, 2005,
we filed with the Securities and Exchange Commission a preliminary proxy
statement in connection with our intention to nominate a slate of directors at
Sizeler's 2005 annual meeting of stockholders. In March 2005, Sizeler brought an
action (i) alleging that we had violated Federal Securities laws by not
disclosing all required information in our Schedule 13D filings and (ii) seeking
declaratory relief that the actions taken by Sizeler's Board in connection with
its approval of a below market stock sale on March 15, 2005 did not breach their
fiduciary duty or breach their obligation not to act fraudulently, in bad faith,
recklessly, negligently or with corporate waste. We have filed an answer denying
all of Sizeler's material allegations with respect to our 13D filings and will
continue to vigorously defend this claim. Our answer also requested that the
court deny the declaratory relief requested by Sizeler with respect to the March
15 stock sale. Sizeler's claims do not seek monetary damages. Sizeler recently
announced, on the heels of a counterclaim brought by us seeking the court to set
a meeting date, that their 2005 Annual Meeting of Stockholders will be held on
the last Thursday of September or within 30 days thereafter.


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             FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS
                           FORM 10-Q - MARCH 31, 2005

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS (CONTINUED)

Chicago Office Properties

On March 16, 2005, we entered into an agreement with Laurence Weiner and Gerald
Nudo, two private individuals unaffiliated with the Trust, which agreement
amended and restated in its entirety a prior agreement entered into on February
15, 2005. As amended, the agreement provides as follows: (i) we will make
secured mezzanine loans with respect to 22 properties in an amount equal to 49%
of the equity in the properties, with an option to make an additional advance
increasing our funding to 60% of the equity of the properties; (ii) we will make
secured mezzanine loans with respect to three properties in an amount equal to
60% of the equity in the properties; (iii) we will have an option to make
secured mezzanine loans with respect to five properties in an amount equal to
49% of the equity in the properties, with an option to make an additional
advance increasing our funding to 60% of the equity of the properties; and (iv)
we will acquire an equity interest in the sole member of each property which
interests will entitle the Trust to receive distributions from sales,
refinancings and other capital transactions with respect to the applicable
property. The loans will bear interest at 7.65%, require monthly payments of
interest only and have a seven year maturity. The loans may be converted into an
equity interest in the applicable borrower after one year at our request or
after three years at the option of the borrower. Substantially all of the
properties are located in the Chicago, Illinois metropolitan and suburban area.

In addition, the agreement provides for certain obligations on our part as well
as Messrs. Weiner and Nudo to make additional loans to the properties with
respect to costs expected to be incurred at the properties. We also have
co-investment rights with respect to all other office properties acquired by
Messrs. Weiner and Nudo and their affiliates in the Chicago, Illinois
metropolitan and suburban areas.

This transaction was consummated in April 2005 at which time we made convertible
mezzanine loans aggregating approximately $75,292,000 secured by ownership
interests in entities holding 25 office buildings in the Chicago, Illinois
metropolitan and suburban areas.

Purchase Contract for Amherst, New York Property

On March 21, 2005, we entered into an agreement to acquire two office building
properties in Amherst, New York with an aggregate square footage of 200,000. The
properties are net leased to and serve as the East Coast Headquarters of Ingram
Micro, Inc. The contract purchase price for the properties is approximately
$22,000,000. The acquisition is subject to our due diligence review. If
consummated, it is expected that the transaction will close during the second
quarter of 2005.


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             FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS
                           FORM 10-Q - MARCH 31, 2005

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATION (CONTINUED)

Liquidity and Capital Resources

General

Liquidity is a measurement of our ability to meet potential cash requirements,
including ongoing commitments to repay borrowings, fund and maintain investments
and other general business needs. Additionally, to maintain our status as a REIT
under the Internal Revenue Code, we must distribute annually at least 90% of our
REIT taxable income.

Our primary sources of funds for liquidity consist of cash and cash equivalents,
net cash provided by operating activities, payments received on the loans
receivable and dividends received on the real estate equity securities. In the
future, we may raise additional funds through debt financing and/or equity
offerings.

Our ability to execute our business strategy, particularly the growth of our
investment portfolio, depends to a significant degree on our ability to
implement our investment policy as described above. We compete with numerous
other companies for investments, including other REITs, insurance companies and
other investors. Some of our competitors have greater resources than we do and
for this and other reasons, we may not be able to compete successfully for
investments.

We had cash and cash equivalents of $172,096,000 at March 31, 2005, which
consisted of $6,485,000 in cash and $165,611,000 in cash equivalents with
maturities of less than 90 days. U.S. Treasury Bills are classified as cash
equivalents. The average annual yields on the U.S. Treasury Bills were 2.37% and
0.98% for the three months ended March 31, 2005 and 2004, respectively.

Our level of liquidity based upon cash and cash equivalents increased by
approximately $89,537,000 for the three months ended March 31, 2005. The
increase resulted from $91,693,000 of cash provided by financing activities,
$687,000 provided by investing activities, which was partially offset by
$2,843,000 of cash used in operating activities.

Cash provided by financing activities consisted of $85,875,000 of net proceeds
from the issuance of the Series B-1 Cumulative Convertible Redeemable Preferred
Shares ("Series B-1 Shares"), $3,977,000 of net proceeds from the issuance of
Common Shares of Beneficial Interest and $4,600,000 of mortgage loan proceeds.

Cash used in financing activities consisted of $516,000 of dividend payments on
our Series A Cumulative Convertible Redeemable Preferred Shares of Beneficial
Interest ("Series A Shares"), $2,085,000 of mortgage loan repayments and
$153,000 of debt issuance costs.


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             FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS
                           FORM 10-Q - MARCH 31, 2005

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATION (CONTINUED)

Liquidity and Capital Resources (Continued)

General (Continued)

Cash provided by investing activities consisted of $5,802,000 of proceeds from
the sale of 5400 Westheimer (disposition of real estate held for syndication),
$3,008,000 received from the repayment of the West 38th Street Loan and $549,000
of proceeds from the sale of shares in Presidential Realty. Cash used in
investing activities consisted of $8,210,000 of purchases of various real estate
securities and $381,000 of capital improvements to our operating properties.

Cash used in operating activities amounted to $2,843,000 which was primarily the
result of a $3,600,000 increase in accounts receivable due to certain of the
leases on our net lease properties which require that the tenants pay rent
semi-annually.

We declared a dividend of $516,000 ($0.525 per share) on our Series A Shares in
the first quarter of 2005. The first quarter dividend was paid April 30, 2005 to
beneficiaries of record at the close of business on March 31, 2005.

We declared a dividend of $510,000 ($0.14 per share) on our Series B-1 Shares in
the first quarter of 2005, which dividend represented the pro rata portion of
the quarterly distribution of $0.40625 per share. The first quarter dividend was
paid April 30, 2005 to beneficiaries of record at the close of business on March
31, 2005.

Results of Operations - March 31, 2005 Versus March 31, 2004

We operate in three business segments: (i) ownership of real estate operating
properties, (ii) ownership of loans receivable and (iii) ownership and trading
of real estate securities. (See Business Segments - Footnote 14 to the financial
statements in Item 1).

Net Income (Loss)

Net income applicable to Common Shares of Beneficial Interest for the three
months ended March 31, 2005 was $446,000 as compared to a net loss of $721,000
for the three months ended March 31, 2004. The primary reason for the increase
in net income was an increase in revenues of $4,275,000 and other income of
$287,000, partially offset by increased expenses of $2,134,000, a decrease in
income from discontinued operations of $751,000.


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             FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS
                           FORM 10-Q - MARCH 31, 2005

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATION (CONTINUED)

Results of Operations - March 31, 2005 Versus March 31, 2004 (Continued)

Rents

Rental income increased by $3,492,000 to $3,862,000 for the three months ended
March 31, 2005 from $370,000 for the three months ended March 31, 2004. The
increase was primarily due to the acquisition of the net lease properties in
November 2004 by our operating properties business segment which contributed
$3,601,000 of revenue. This increase in rental income was partially offset by a
decrease in revenues at Circle Tower of $9,000.

Interest and Dividends

Interest income increased by $783,000 to $1,037,000 for the three months ended
March 31, 2005 from $254,000 for the three months ended March 31, 2004. The
increase was the result of dividends on real estate securities of $130,000 in
our real estate securities business segment, interest income of $652,000 on
higher amounts invested in government securities and higher interest rates on
the invested cash balances.

Property Operating

Property operating expenses decreased by $11,000 to $185,000 for the three
months ended March 31, 2005 from $196,000 for the three months ended March 31,
2004. The decrease was due to a reduction in utilities expense at our Circle
Tower property.

Real Estate Taxes

Real estate taxes increased by $5,000 to $21,000 for the three months ended
March 31, 2005 from $16,000 for the three months ended March 31, 2004 due to
higher taxes at the Circle Tower property. The 2004 expense reflects an
abatement.

Depreciation and Amortization

Depreciation and amortization expense increased by $781,000 to $842,000 for the
three months ended March 31, 2005 compared to $61,000 for the three months ended
March 31, 2004. The increase was due primarily to depreciation and amortization
of $736,000 on the newly acquired net lease properties.


                                       29
<PAGE>

             FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS
                           FORM 10-Q - MARCH 31, 2005

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATION (CONTINUED)

Results of Operations - March 31, 2005 Versus March 31, 2004 (Continued)

Interest Expense

Interest expense increased by $1,669,000 to $1,700,000 for the three months
ended March 31, 2005 compared to $31,000 for the three months ended March 31,
2004. The increase was due to the debt related to the net lease portfolio.

General and Administrative Expenses

General and administrative expenses decreased by $310,000 to $1,000,000 for the
three months ended March 31, 2005 from $1,310,000 for the three months ended
March 31, 2004. The primary cause of this decrease was a reduction in the annual
premiums for directors' and officers' insurance.

Gain on Sale of Securities Available for Sale

The gain on sale of securities available for sale consists primarily of the gain
on sale of shares in Presidential Realty.

Discontinued Operations

Income from discontinued operations decreased by $751,000 to $34,000 for the
three months ended March 31, 2004 compared to $785,000 for the three months
ended March 31, 2004. The decrease is attributed to the sale of the Park Plaza
Mall and VenTek, which comprise the majority of the 2004 discontinued
operations. The 2005 discontinued operations represent the Sherman, Texas net
lease property.


                                       30
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             FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS
                           FORM 10-Q - MARCH 31, 2005

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES OF MARKET RISK

Interest Rate Risk

We have exposure to fluctuations in market interest rates. Market interest rates
are highly sensitive to many factors beyond our control. Various financial
vehicles exist which would allow management to mitigate the impact of interest
rate fluctuations on our cash flows and earnings.

At March 31, 2005, we had one loan payable that had a variable interest rate.
The loan payable had an outstanding balance of $52,500,000 at March 31, 2005,
was obtained in November 2004 and has a three-year term. Interest on the
outstanding balance accrues at the LIBOR rate plus 450 basis points. As of March
31, 2005, we have an interest rate swap with a $40,000,000 notional amount that
effectively converted the interest rate on that portion of principal from a
floating LIBOR plus 4.5% (7.25% at March 31, 2005) to a fixed rate of 8.55%.

The following table shows what the effect of a change in the LIBOR rate will
have on annual interest expense.

                                                       Change in LIBOR
                                                       ---------------
                                               1%            2%            3%
                                               --            --            --

         Additional interest expense        $ 125,000    $ 250,000     $ 375,000

The fair market value of our debt, based on discounted cash flows at current
market conditions and interest rates, approximates the aggregate carrying value
of the debt at March 31, 2005.

Item 4. CONTROLS AND PROCEDURES

The Registrant's principal executive and financial officers have, within 90 days
of the filing date of this quarterly report, evaluated the effectiveness of the
Registrant's disclosure controls and procedures (as defined in Securities
Exchange Act Rules 13a - 14(c)) and have determined that such disclosure
controls and procedures are adequate to ensure that information required to be
disclosed by the Registrant in the reports filed or submitted under the
Securities Exchange Act is recorded, processed, summarized and reported within
the time periods specified by the Securities and Exchange Commission. There have
been no significant changes in the Registrant's internal controls or in other
factors that could significantly affect such internal controls since the date of
evaluation.


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             FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS
                           FORM 10-Q - MARCH 31, 2005

                           PART II - OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

Peach Tree Mall Litigation

The Trust, as one plaintiff in a consolidated action composed of numerous
businesses and individuals, has pursued legal action against the State of
California associated with the 1986 flood of Sutter Buttes Center, formerly
Peach Tree Mall. On March 4, 2005, the court approved the settlement of this
matter pursuant to which the State of California has agreed to pay the Trust
$11,000,000. Payment of the settlement remains subject to legislative
appropriation. It is expected that the funding for this settlement will be
incorporated in the State of California's budget for its 2005-2006 fiscal year
at which time the Trust will be able to recognize the settlement as income. In
connection with the settlement, the parties will exchange mutual releases.

Indemnity to Imperial Parking Limited

In 1999, Newcourt Financial Ltd. ("Newcourt") brought a claim in Ontario, Canada
against FUMI and Imperial Parking Limited, then a subsidiary of FUMI, alleging a
breach of a contract between FUMI and Newcourt's predecessors-in-interest,
Oracle Credit Corporation and Oracle Corporation Canada, Inc. The Trust's
affiliate and Imperial Parking Limited brought a separate action in British
Columbia, Canada against Newcourt, Oracle Credit Corporation and Oracle
Corporation Canada claiming, among other things, that the contract at issue was
not properly authorized by the Trust's Board of Trustees and the Imperial
Parking Limited's Board of Directors. On March 27, 2000, in connection with the
spin-off of Imperial Parking Corp. of Canada ("Imperial Parking") (the successor
in interest to Imperial Parking Limited) to the Trust's shareholders, the Trust
gave an indemnity to Imperial Parking Corporation in respect to damages arising
from the outstanding actions.

On March 1, 2005, the Trust settled all claims involved in this matter by paying
$800,000 to Newcourt which was fully reserved at December 31, 2004.


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             FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS
                           FORM 10-Q - MARCH 31, 2005

Item 6. EXHIBITS

Exhibits required by Item 601 of Regulation S-K are filed herewith or
incorporated herein by reference and are listed in the attached Exhibit Index.


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             FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS
                           FORM 10-Q - MARCH 31, 2005

                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Trust
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.

                                              First Union Real Estate Equity and
                                              Mortgage Investments


Date: May 13, 2005                            By: /s/ Michael L. Ashner
                                                  ------------------------------
                                                  Michael L. Ashner
                                                  Chief Executive Officer


Date: May 13, 2005                            By: /s/ Thomas C. Staples
                                                  ------------------------------
                                                  Thomas C. Staples
                                                  Chief Financial Officer


                                       34
<PAGE>

             FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS
                           FORM 10-Q - MARCH 31, 2005

                                  EXHIBIT INDEX

Exhibit                            Description                             Page
                                                                          Number

3.1     Bylaws of Trust as amended                                         (a)

3.2     Certificate of Amendment to Amended and Restated Declaration of    (b)
        Trust as of March 6, 2001

3.3     Amendments to Amended and Restated Declaration of Trust dated      (f)
        April 15, 2004

3.4     By-Law Amendments                                                  (n)

4.1     Form of certificate for Shares of Beneficial Interest              (c)

4.2     Certificate of Designations relating to Trust's Series A           (d)
        Cumulative Redeemable Preferred Shares of Beneficial Interest

4.3     Warrant to purchase 500,000 shares of Beneficial Interest of       (a)
        Trust

4.4     Agreement of Limited Partnership of First Union REIT L.P.,         (k)
        dated as of January 1, 2005

4.5     Certificate of Designations relating to Trust's Series B-1         (n)
        Cumulative Convertible Redeemable Preferred Shares of Beneficial
        Interest

10.1    1999 Trustee Share Option Plan                                     (e)

10.2    1999 Long Term Incentive Performance Plan                          (e)

10.3    Indemnification Agreement with Neil Koenig, dated as of April 29,  (n)
        2002

10.4    Stock Purchase Agreement between First Union Real Estate Equity    (h)
        and Mortgage Investments and FUR Investors, LLC, dated as of
        November 26, 2003 ("Stock Purchase Agreement"), including Annex A
        thereto, being the list of Conditions to the Offer.

10.5    Guaranty of Michael L. Ashner, Guarantor, dated November 26,       (h)
        2003, in favor of First  Union Real Estate Equity and Mortgage
        Investments, Guarantee, in the form provided as Annex F to the
        Stock Purchase Agreement.

10.6    Advisory Agreement between First Union Real Estate Equity and      (h)
        Mortgage Investments and FUR Advisors, LLC.

10.7    Exclusivity Services Agreement between First Union Real Estate     (h)
        Equity and Mortgage Investments and Michael L. Ashner.

10.8    Covenant Agreement between First Union Real Estate Equity and      (h)
        Mortgage Investments and FUR Investors, LLC.

10.9    Loan Agreement, dated November 18, 2004, among FT-Fin Acquisition  (j)
        LLC, Keybank National Association, Newstar CP Funding LLC,
        Keybank National Association, as agent for itself and such other
        lending institutions, and Keybanc Capital Markets, as the
        Arranger


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             FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS
                           FORM 10-Q - MARCH 31, 2005

10.10   Form of Mortgage, dated November 18, 2004, in favor of Keybank     (j)
        National Association

10.11   Ownership Interest Pledge Agreement, dated November 18, 2004,      (j)
        from FT-Fin Acquisition LLC to Keybank National Association

10.12   Guaranty, dated as of November 18, 2004, by First Union Real       (j)
        Estate Equity and Mortgage Investments in favor of Keybank
        National Association, as the agent.

10.13   Indemnity Regarding Hazardous Materials, dated as of November 18,  (j)
        2004, by First Union Real Estate Equity and Mortgage Investments
        in favor of Keybank National Association, as the agent.

10.14   Amended and Restated Omnibus Agreement, dated March16, 2005,       (l)
        among Gerald Nudo, Laurence Weiner and First Union REIT L.P.

10.15   Securities Purchase Agreement, dated February 16, 2005, between    (m)
        First Union Real Estate Equity and Mortgage Investments and Kimco
        Realty Corporation

10.16   Securities Purchase Agreement, dated February 25, 2005, between    (n)
        First Union Real Estate Equity and Mortgage Investments, Perrin
        Holden & Davenport Capital Corp. and the Investors named therein

10.17   Registration Rights Agreement, dated February 28, 2005, between    (n)
        First Union Real Estate Equity and Mortgage Investments and the
        Investors named therein

10.18   Investor Rights Agreement, dated February 28, 2005, between First  (n)
        Union Real Estate Equity and Mortgage Investments and the
        Investors named therein

10.19   Purchase and Sale Agreement, dated March 10, 2005, between         (o)
        Amherst Investors Business Trust and Micron Realty LLC

10.20   Assignment of Purchase and Sale Agreement, dated March 21, 2005,   (o)
        between Micron Realty LLC and First Union Real Estate Equity and
        Mortgage Investments

31      Certifications Pursuant to Section 302 of the Sarbanes-Oxley        *
        Act of 2002

32      Certification Pursuant to Section 906 of the Sarbanes-Oxley         *
        Act of 2002

* filed herewith

      (a)   Incorporated by reference to the Trust's 1998 Form 10-K
      (b)   Incorporated by reference to the Trust's 2000 Form 10-K
      (c)   Incorporated by reference to the Trust's Registration Statement on
            Form S-3 No. 33-2818
      (d)   Incorporated by reference to the Trust's Form 8-K dated October 24,
            1996
      (e)   Incorporated by reference to the Trust's 1999 Proxy Statement for
            Special Meeting held May 17, 1999 in lieu of Annual Meeting
      (f)   Incorporated by reference to the Trust's March 31, 2004 Form 10-Q
      (g)   Incorporated by reference to the Trust's 2002 Form 10-K
      (h)   Incorporated by reference to the Trust's Form 8-K dated November 26,
            2003
      (i)   Incorporated by reference to the Trust's Form 8-K dated March 2,
            2004
      (j)   Incorporated by reference to the Trust's Form 8-K dated November 18,
            2004


                                       36
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             FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS
                           FORM 10-Q - MARCH 31, 2005

      (k)   Incorporated by reference to the Trust's Form 8-K dated January 1,
            2004
      (l)   Incorporated by reference to the Trust's Form 8-K dated March 18,
            2005
      (m)   Incorporated by reference to the Trust's Form 8-K dated February 17,
            2005
      (n)   Incorporated by reference to the Trust's Form 8-K dated March 2,
            2005
      (o)   Incorporated by reference to the Trust's Form 8-K dated March 23,
            2005


                                       37