Execution Copy

                          REGISTRATION RIGHTS AGREEMENT

      THIS REGISTRATION RIGHTS AGREEMENT, dated as of November 7, 2005 (this
"Agreement"), between First Union Real Estate Equity and Mortgage Investments,
an unincorporated association in the form of a business trust organized in Ohio
(the "Company"), and Vornado Investments L.L.C., a Delaware limited liability
company (together with its successors and permitted assigns of all or any of the
Shares (as defined below), the "Shareholder").

      WHEREAS, the Company has filed with the SEC the Shelf Registration
Statement (as defined below) which has been declared effective by the SEC; and

      WHEREAS, pursuant to the Securities Purchase Agreement by and between the
Shareholder and the Company dated of even date herewith (the "Securities
Purchase Agreement"), Shareholder is the purchaser of an amount of the Company's
registered common shares of beneficial interest, par value $1.00 per share (the
"Common Stock") that is equal to the lesser of (i) 9.9% of the outstanding
shares of Common Stock as of the Closing Date, after giving effect to said
issuance and sale; and (ii) 4,000,0000 shares of Common Stock (such number of
shares of Common Stock, the "Shares"), in each case, at the purchase price of
$4.00 per Share, upon the terms and subject to the conditions set forth in the
Securities Purchase Agreement; and

      WHEREAS, the Company wishes to facilitate the disposition, and the
Shareholder wishes to have the ability to dispose, of such Shares.

      NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained and other good and valid consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties to this Agreement
hereby agree as follows:

1. CERTAIN DEFINITIONS.

      (a) Definitions. Capitalized terms not otherwise defined in this Agreement
shall have the meaning set forth in the Securities Purchase Agreement. As used
in this Agreement, the following terms have the meanings indicated below or in
the referenced sections of this Agreement:

      "Affiliate" of any Person means any other Person that directly, or
indirectly through one or more intermediaries, controls, or is controlled by, or
is under common control with, such Person. The term "control" (including the
terms "controlled by" and "under common control with") as used with respect to
any Person means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of such Person, whether
through the ownership of voting securities, by contract or otherwise.

      "Agreement" means this Registration Rights Agreement, including all
amendments, modifications and supplements and any exhibits or schedules to any
of the foregoing, and shall refer to this Registration Rights Agreement as the
same may be in effect at the time such reference becomes operative.

<PAGE>

      "Business Day" means any day on which commercial banks are open for
business in New York, New York and on which the New York Stock Exchange or such
other exchange as the Common Stock is listed is open for trading.

      "Exchange Act" means the Securities Exchange Act of 1934, as amended.

      "Other Registration Rights Agreements" means that certain Securities
Purchase Agreement, dated February 16, 2005, by and between the Company and
KIMCO Realty Corporation, and that certain Amended and Restated Registration
Rights Agreement dated as June 20, 2005, among the Company and the holders of
the Company's Series B-1 Cumulative Convertible Redeemable Preferred Shares of
Beneficial Interest, par value $1.00 per share.

      "Person" means any individual, sole proprietorship, partnership, limited
liability company, joint venture, trust, incorporated organization, association,
corporation, institution, public benefit corporation, government (whether
federal, state, county, city, municipal or otherwise, including, without
limitation, any instrumentality, division, agency, body or department thereof)
or any other entity.

      "Prospectus" means the prospectus or prospectuses included in any
Registration Statement, as amended or supplemented by any prospectus supplement
with respect to the terms of the offering of any portion of the Registerable
Common Stock covered by such Registration Statement and by all other amendments
and supplements to the prospectus, including any preliminary prospectus or
supplement, post-effective amendments and all material incorporated by reference
in such prospectus or prospectuses.

      "Registerable Common Stock" means those Shares issued or issuable to the
Shareholder pursuant to the Securities Purchase Agreement, including any
securities issued in respect of such securities by reason of or in connection
with any exchange for or replacement of such securities or any stock dividend,
stock distribution, stock split, purchase in any rights offering or in
connection with any combination of shares, recapitalization, merger or
consolidation, or any other equity securities issued pursuant to any other pro
rata distribution with respect to the Common Stock, until, in the case of any
such securities, the earliest to occur of (i) the date on which its resale has
been registered effectively pursuant to the Securities Act and disposed of in
accordance with the Registration Statement relating to it or (ii) the date on
which either it is distributed to the public pursuant to Rule 144 or is saleable
without restriction pursuant to Rule 144(k) promulgated by the Commission
pursuant to the Securities Act as confirmed in a written opinion of counsel to
the Company addressed to the Shareholder.

      "Registration Statement" means any registration statement, other than the
Shelf Registration Statement, of the Company which covers any of the
Registerable Common Stock pursuant to the provisions of this Agreement,
including any Prospectus, amendments and supplements to such Registration
Statement, including post-effective amendments, all exhibits and all materials
incorporated by reference in such Registration Statement.


                                       2
<PAGE>

      "SEC" or the "Commission" means the Securities and Exchange Commission.

      "Securities Act" means the Securities Act of 1933, as amended.

      "Shelf Registration Statement" shall mean the registration statement of
the Company on Form S-3 (No. 333-125987) and all amendments and supplements
thereto, covering the registration of Company securities, including the Shares,
under the Securities Act.

      "Underwritten Registration" or "Underwritten Offering" means a
registration in which securities of the Company are sold or to be sold to
underwriters for reoffering to the public.

2. AUTOMATIC AND DEMAND REGISTRATIONS.

      (a) Shelf Registration. The Shelf Registration Statement, which covers the
Shares, including a Prospectus and such amendments or supplements to such Shelf
Registration Statement as may have been required prior to the date of this
Agreement, has been prepared by the Company under the provisions of the Act, has
been filed with the SEC, and has become effective. The Company has prepared a
prospectus supplement (the "Prospectus Supplement"), to the prospectus included
in the Shelf Registration Statement referred to above and the documents
incorporated by reference therein, setting forth the terms of the offering, sale
and plan of distribution of the Shares and additional information concerning the
Company and its business.

      (b) Right to Request Registration. Any time after the Closing Date, the
Shareholder may make a one-time request pursuant to this Section 2(b) for
registration under the Securities Act of the disposition of all or part of the
Shareholder's Shares in an Underwritten Offering pursuant to an effective
Registration Statement ("Demand Registration"); so long as (i) Shareholder then
holds the 4,000,000 Shares or, if less, 9.9% of the outstanding shares of the
Company's Registerable Common Stock; and (ii) Shareholder pays all out-of-pocket
costs associated with such registration statement. If requested by KIMCO Realty
Corp. ("KIMCO") and approved by Shareholder, 1,000,000 shares of Common Stock
held by KIMCO may be included in the Registration Statement, provided that KIMCO
shall pay its proportionate share of the expenses of Shareholder pursuant to
Section 5 hereof.

      (c) Restrictions on Demand Registrations. In no event shall the Company be
obligated to effect more than two (2) Demand Registrations collectively pursuant
to this Agreement and the Other Registration Rights Agreements in any single
twelve (12) month period, with the first such period measured from the date of
the first Demand Registration and ending on the same date twelve months
following such Demand Registration, whether or not a Business Day; provided,
however, that if (i) the Company is requested to effect a Demand Registration
under this Agreement and (ii) is also requested to effect one or more Demand
Registrations pursuant to the Other Registration Rights Agreements within any
eighteen (18) month period during which the Company is eligible to file a
registration statement on Form S-3 or on a successor form, then the Company


                                       3
<PAGE>

shall only be obligated with respect to such latter registration statement
during such period to register that percentage of the Registerable Common Stock
equal to the product obtained by dividing (i) the number of shares of
Registerable Common Stock held by the Shareholder and proposed to be registered
hereunder by (ii) the total of the number of shares of Registerable Common Stock
proposed to be registered hereunder and the number of shares of Common Stock
which are registerable and are proposed to be registered under all of the Other
Registration Rights Agreements. In the event that any of the Shares of the
Shareholder have not been included in a Registration Statement because of the
preceding sentence, then the Shareholder shall not be deemed to have utilized a
Demand Registration under this Agreement. The Company may (i) postpone for up to
ninety (90) days the filing or the effectiveness of a Registration Statement for
a Demand Registration if, based on the good faith judgment of the Company's
board of directors, such postponement or withdrawal is necessary in order to
avoid premature disclosure of a matter the board has determined would be
reasonably expected to result in a material adverse effect to the Company's
business, financial condition, results of operations or prospects or the loss of
a material opportunity to be disclosed at such time or (ii) postpone the filing
of a Demand Registration in the event the Company shall be required to prepare
audited financial statements as of a date other than its fiscal year end (unless
the shareholders requesting such registration agree to pay the expenses of such
an audit); provided, however, that in no event shall the Company withdraw a
Registration Statement under clause (i) after such Registration Statement has
been declared effective; and provided, further, however, that in any of the
events described in clause (i) or (ii) above, the Shareholder shall be entitled
to withdraw such request and, if such request is withdrawn, such Demand
Registration shall not count as one of the permitted Demand Registrations. The
Company shall provide written notice to the Shareholder of (x) any postponement
or withdrawal of the filing or effectiveness of a Registration Statement
pursuant to this Section 2(c), (y) the Company's decision to file or seek
effectiveness of such Registration Statement following such withdrawal or
postponement and (z) the effectiveness of such Registration Statement. The
Company may defer the filing of a particular Registration Statement pursuant to
this Section 2(c) only once.

      (d) Selection of Underwriters. If any of the Registerable Common Stock
covered by the Demand Registration granted hereunder is to be sold in an
Underwritten Offering, the Shareholder shall have the right to select the
managing underwriter(s) to administer the offering subject to the approval of
the Company, which will not be unreasonably withheld.

      (e) Effective Period of Demand Registration. After the Demand Registration
filed pursuant to this Agreement has become effective, the Company shall use its
best efforts to keep such Demand Registration effective until such time as the
Registerable Common Stock registered thereon has been disposed of pursuant
thereto. If the Company shall withdraw the Demand Registration pursuant to
subsection (c) of this Section 2 before all of the Shareholders Registerable
Common Shares covered by the withdrawn Demand Registration are sold, the
Shareholder shall be entitled to a replacement Demand Registration at the


                                       4
<PAGE>

Company's sole expense (subject to the provisions of this Article 2). After the
replacement Demand Registration has become effective, the Company shall use its
best efforts to keep such Registration effective until such time as the
Registerable Common Stock registered thereon has been disposed of pursuant
thereto. Such replacement Demand Registration otherwise shall be subject to all
of the provisions of this Agreement.

3. OTHER REGISTRATIONS.

      (a) If the Company has previously filed a Registration Statement with
respect to shares of Registerable Common Stock pursuant to Section 2 (other than
Section 2(a)), and if such previous registration has not been withdrawn or
abandoned, the Company shall not be obligated to cause to become effective any
other registration of such same shares of Registerable Common Stock or any of
its securities under the Securities Act, whether on its own behalf or at the
request of any holder or holders of such securities.

      (b) Except as specifically provided herein or in the Other Registration
Rights Agreements, the Company shall not grant to other holders of its
securities the right to include any of their securities of the Company in a
Demand Registration.

4. REGISTRATION PROCEDURES.

      Whenever the Shareholder requests that any of its Registerable Common
Stock be registered pursuant to this Agreement, the Company shall use its best
efforts to effect the registration and the sale of such Registerable Common
Stock in accordance with the intended methods of disposition thereof as provided
by the Shareholder, and pursuant thereto the Company shall as expeditiously as
possible:

      (a) prepare and file with the SEC a Registration Statement with respect to
such Registerable Common Stock, which shall be on Form S-3 (or a successor form)
providing for "short-form" registration if the Company is eligible at such time
to use such form, and use its best efforts to cause such Registration Statement
to become effective as soon as practicable thereafter; and before filing a
Registration Statement or Prospectus or any amendments or supplements thereto,
furnish to the Shareholder and the underwriter or underwriters, if any, copies
of all such documents proposed to be filed, including documents incorporated by
reference in the Prospectus and, if requested by the Shareholder, the exhibits
incorporated by reference, and the Shareholder shall have the opportunity to
object to any information pertaining to the Shareholder that is contained
therein and the Company will make the corrections reasonably requested by the
Shareholder with respect to such information prior to filing any Registration
Statement or amendment thereto or any Prospectus or any supplement thereto;

      The Company, at least 10 days prior to filing a Registration Statement or
at least five days prior to filing a Prospectus or any amendment or supplement
to such Registration Statement or Prospectus, including a document incorporated
by reference therein, will furnish to (i) the Shareholder, (ii) counsel to the
Shareholder and (iii) each underwriter, if any, named in the Registration
Statement or an amendment or supplement thereto of the Shares covered by such
Registration Statement, copies of such Registration Statement and each amendment


                                       5
<PAGE>

or supplement as proposed to be filed, together with exhibits thereto, which
documents will be subject to reasonable review and approval (which approval may
not be unreasonably withheld) by each of the foregoing within five days after
delivery (except that such review and approval of any Prospectus or any
amendment or supplement to such Registration Statement or Prospectus must be
within three days), and thereafter, furnish to the Shareholder, Shareholder's
counsel and underwriters, if any, such number of copies of such Registration
Statement, each amendment and supplement thereto (in each case including all
exhibits thereto and documents incorporated by reference therein), the
Prospectus included in such Registration Statement (including each preliminary
Prospectus) and such other documents or information as the Shareholder,
Shareholder's counsel or any underwriter of the Shareholder's Shares may
reasonably request in order to facilitate the disposition of the Shares;
provided, however, that notwithstanding the foregoing, if the Company intends to
file any Prospectus, Prospectus supplement or Prospectus sticker which does not
make any material changes in the documents already filed (including, without
limitation, any prospectus under Rule 430A or 424(b)), then Shareholder's
counsel will be afforded such opportunity to review such documents prior to
filing consistent with the time constraints involved in filing such document,
but in any event no less than one day.

      (b) The Company will promptly notify the Shareholder of any stop order
with respect to the Registration Statement issued or threatened by the
Commission and take all commercially reasonable actions required to prevent the
entry of threatened stop order or to remove it as soon as reasonably possible if
entered.

      (c) prepare and file with the SEC such amendments and supplements to such
Registration Statement and the Prospectus used in connection therewith as may be
necessary to keep such Registration Statement effective for such period as is
necessary to complete the distribution of the securities covered by such
Registration Statement and comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such Registration
Statement during such period in accordance with the intended methods of
disposition by the sellers thereof set forth in such Registration Statement;

      (d) furnish to each seller of Registerable Common Stock such number of
copies of such Registration Statement, each amendment and supplement thereto,
the Prospectus included in such Registration Statement (including each
preliminary Prospectus) and such other documents as such seller may reasonably
request in order to facilitate the disposition of the Registerable Common Stock
owned by such seller;

      (e) use its commercially reasonable efforts to become and remain eligible
to file registration statements on Form S-3 or any successor thereto then
available, and if applicable to utilize "well known seasoned issuer status", and
to register or qualify such Registerable Common Stock under such other
securities or blue sky laws of such jurisdictions as any seller reasonably
requests and do any and all other acts and things which may be reasonably
necessary or advisable to enable such seller to consummate the disposition in


                                       6
<PAGE>

such jurisdictions of the Registerable Common Stock owned by such seller
(provided, that the Company will not be required to (i) qualify generally to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this subparagraph (d), (ii) subject itself to taxation in any such
jurisdiction or (iii) consent to general service of process in any such
jurisdiction);

      (f) notify each seller of such Registerable Common Stock, at any time when
a Prospectus relating thereto is required to be delivered under the Securities
Act, of the occurrence of any event as a result of which the Prospectus included
in such Registration Statement contains an untrue statement of a material fact
or omits any fact necessary to make the statements therein not misleading, and
prepare promptly a supplement or amendment to such Prospectus so that such
Prospectus, as then amended or supplemented, shall not contain an untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein not misleading;

      (g) in the case of an Underwritten Offering, enter into such customary
agreements (including underwriting and related lockup agreements in customary
form) and take all such other actions as the underwriters, if any, reasonably
request in order to expedite or facilitate the disposition of such Registerable
Common Stock (including, without limitation, effecting a stock split or a
combination of shares and making members of senior management of the Company
available to participate in, and cause them to cooperate with the underwriters
in connection with, "road-show" and other customary marketing activities
(including one-on-one meetings with prospective purchasers of the Registerable
Common Stock)) and cause to be delivered to the underwriters and the sellers, if
any, opinions of counsel to the Company in customary form, as well as closing
certificates and other customary documents covering such matters as are
customarily covered by opinions for and certificates in an underwritten public
offering as the underwriters may request and addressed to the underwriters and
the sellers; provided, however, notwithstanding anything else contained in this
Agreement, that under this Agreement and the Other Registration Rights
Agreements the Company shall not be obligated to effect an aggregate of more
than three Underwritten Offerings or participate in more than two "road shows"
(which, for the purposes of this sentence shall not include presentations that
involve only telephonic or internet-based marketing and do not require any
travel by the Company's management) in any twenty-four (24) month period, and
not more than one Underwritten Offering every six (6) months. Except as
expressly provided herein, only the Shareholder and its affiliates holding
Registerable Common Stock shall be entitled to participate in any Underwritten
Offering pursuant to this Agreement with respect to Registerable Common Stock;

      (h) make available, for inspection by the Shareholder, any underwriter
participating in any disposition pursuant to such Registration Statement, and
any attorney, accountant or other agent retained by the Shareholder or
underwriter, all financial and other records, pertinent corporate documents and
properties of the Company, and cause the Company's officers, directors,
employees and independent accountants to supply all information reasonably
requested by any Shareholder, underwriter, attorney, accountant or agent in
connection with such Registration Statement;


                                       7
<PAGE>

      (i) to use its best efforts to cause all such Registerable Common Stock to
be listed on each securities exchange on which securities of the same class
issued by the Company are then listed or, if no such similar securities are then
listed, on Nasdaq or a national securities exchange selected by the Company;

      (j) provide a transfer agent and registrar for all such Registerable
Common Stock not later than the effective date of such Registration Statement;

      (k) if requested, cause to be delivered, immediately prior to the
effectiveness of the Registration Statement (and, in the case of an Underwritten
Offering, at the time of delivery of any Registerable Common Stock sold pursuant
thereto), letters from the Company's independent certified public accountants
addressed to the Shareholder (unless the Shareholder does not provide to such
accountants the appropriate representation letter required by rules governing
the accounting profession) and each underwriter, if any, stating that such
accountants are independent public accountants within the meaning of the
Securities Act and the applicable rules and regulations adopted by the SEC
thereunder, and otherwise in customary form and covering such financial and
accounting matters as are customarily covered by letters of the independent
certified public accountants delivered in connection with primary or secondary
underwritten public offerings, as the case may be;

      (l) make generally available to its shareholders a consolidated earnings
statement (which need not be audited) for the 12 months beginning after the
effective date of a Registration Statement as soon as reasonably practicable
after the end of such period, which earnings statement shall satisfy the
requirements of an earning statement under Section 11(a) of the Securities Act;

      (m) promptly notify the Shareholder and the underwriter or underwriters,
if any:

            (i) when the Registration Statement, any pre-effective amendment,
      the Prospectus or any Prospectus supplement or post-effective amendment to
      the Registration Statement has been filed and, with respect to the
      Registration Statement or any post-effective amendment, when the same has
      become effective;

            (ii) of any SEC comments applicable to the Registration Statement or
      Prospectus or written request from the SEC for any amendments or
      supplements to the Registration Statement or Prospectus;

            (iii) of the notification to the Company by the SEC of its
      initiation of any proceeding with respect to the issuance by the SEC of
      any stop order suspending the effectiveness of the Registration Statement;

            (iv) of the receipt by the Company of any notification with respect
      to the suspension of the qualification of any Registerable Common Stock
      for sale under the applicable securities or blue sky laws of any
      jurisdiction;


                                       8
<PAGE>

            (v) of the existence of, any fact or the happening of any event that
      makes any statement of material fact made in any registration statement
      filed pursuant to this Agreement or related prospectus untrue in any
      material respect, or that requires the making of any changes in such
      registration statement so that, in the case of the registration statement,
      it will not contain any untrue statement of a material fact or omit to
      state any material fact required to be stated therein or necessary to make
      the statements therein not misleading and that, in the case of the
      prospectus, including documents incorporated by reference therein, such
      prospectus will not contain any untrue statement of a material fact or
      omit to state any material fact required to be stated therein or necessary
      to make the statements therein, in light of the circumstances under which
      they were made, not misleading; and

            (vi) of the determination by the Company that a post-effective
      amendment to a registration statement filed pursuant to this Agreement
      will be filed with the SEC and is due.

      The Company shall file, and shall use its commercially reasonable efforts
to timely file, all reports required to be filed by it under the Securities Act
and the Exchange Act and the rules and regulations adopted by the SEC
thereunder, and take such further action as the Shareholder may reasonably
request, all to the extent required to enable the Shareholder to be eligible to
sell Registerable Common Stock pursuant to Rule 144 (or any similar rule then in
effect).

      In connection with any registration pursuant to which any of a
Shareholder's Registerable Common Stock is to be sold, the Company may require
that the Shareholder furnish to the Company any other information regarding the
Shareholder and the distribution of such securities as the Company may from time
to time reasonably request in writing.

      The Company shall as promptly as practicable take such actions as are
necessary to respond to or eliminate, as the case may be, any of the events
referred to in clause (m)(ii), (iii), (iv) or (v), so that the prospectus, as
then amended or supplemented, as the case may be, shall not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading, provided, however, that notwithstanding the foregoing, the
Shareholder agrees that by having its stock treated as Registerable Common Stock
hereunder, upon notice of the happening of any event described in m(v) above (a
"Suspension Notice"), the Shareholder will forthwith discontinue disposition of
Registerable Common Stock until the Shareholder is advised in writing by the
Company that the use of the Prospectus may be resumed and is furnished with a
supplemented or amended Prospectus as contemplated by Section 4(f) hereof, and,
if so directed by the Company, the Shareholders will deliver to the Company (at
the Company's expense) all copies, other than permanent file copies then in the
Shareholder's possession, of the Prospectus covering such Registerable Common
Stock current at the time of receipt of such notice; provided, however, that


                                       9
<PAGE>

such postponement of sales of Registerable Common Stock shall not exceed ninety
(90) days in the aggregate in any one year; provided, further, however, that not
later than the last day of such ninety (90) day period or such shorter period as
may apply, the Company shall have provided to the Shareholders a supplemented or
amended Prospectus as contemplated by Section 4(f) hereof. If the Company shall
give any notice to suspend the disposition of Registerable Common Stock pursuant
to a Prospectus, the Company shall extend the period of time during which the
Company is required to maintain the Registration Statement effective pursuant to
this Agreement by the number of days during the period from and including the
date of the giving of such notice to and including the date the Shareholder
either is advised by the Company that the use of the Prospectus may be resumed
or receives the copies of the supplemented or amended Prospectus contemplated by
Section 4(f). In any event, the Company shall not be entitled to deliver more
than one (1) Suspension Notice in any one year.

5. REGISTRATION EXPENSES.

      All expenses incident to the Company's performance of or compliance with
this Agreement, including, without limitation, all registration and filing fees,
underwriting discounts and commissions, NASD fees, fees and expenses of
compliance with securities or blue sky laws, listing application fees, printing
expenses, transfer agent's and registrar's fees, cost of distributing
Prospectuses in preliminary and final form as well as any supplements thereto,
and fees and disbursements of one counsel for the Company, one independent
certified public accountant and other Persons retained by the Company (all such
expenses being herein called "Registration Expenses"), shall be borne by the
Shareholder; provided, however, that the Company shall pay its internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), and the expense of any annual
audit or quarterly review, and the expense of any liability insurance.

6. INDEMNIFICATION.

      (a) The Company shall indemnify, to the fullest extent permitted by law,
each Shareholder, its officers, directors, trustees, partners, and Affiliates
and each Person who controls such Shareholder (within the meaning of the
Securities Act) against all losses, claims, damages, expenses and liabilities,
joint or several, actions or proceedings, to which each such indemnified party
may become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages, expenses (including reasonable costs of investigation)
or liabilities (or actions or proceedings in respect thereof) arise out of or
based upon any untrue or alleged untrue statement of material fact contained in
any Registration Statement, Prospectus or any amendment thereof or supplement
thereto or any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein not misleading or any
violation or alleged violation by the Company of the Securities Act, the
Exchange Act or applicable "blue sky" laws and the Company will reimburse each
such Shareholder and each such director, trustee, officer, partner, agent,
employee or affiliate, underwriter and controlling person for any legal or other
expenses reasonably incurred by them (as such legal or other expenses are
incurred and for which reasonably sufficient documentation is provided) in


                                       10
<PAGE>

connection with investigating or defending any such loss, claim, damage,
expense, liability, action or proceeding, except insofar as the same are made in
reliance and in conformity with information relating to the Shareholder
furnished in writing to the Company by the Shareholder expressly for use therein
or caused by Shareholder's failure to deliver to the Shareholder's immediate
purchaser a copy of a final prospectus or any amendments or supplements thereto
(if the same was required by applicable law to be so delivered) after the
Company has furnished the Shareholder with a sufficient number of copies of the
same and the claim would not have arisen if the final prospectus, amendment or
supplement had been delivered to the claimant. In connection with an
Underwritten Offering, the Company shall indemnify such underwriters, their
officers and directors and each Person who controls such underwriters (within
the meaning of the Securities Act) to the same extent as provided above with
respect to the indemnification of the Shareholder.

      (b) In connection with any Registration Statement in which the Shareholder
is participating, the Shareholder shall furnish to the Company in writing such
information and affidavits as the Company reasonably requests expressly for use
in connection with any such Registration Statement or Prospectus and, shall
indemnify, to the fullest extent permitted by law, the Company, its officers,
directors, Affiliates, and each Person who controls the Company (within the
meaning of the Securities Act) against all losses, claims, damages, expenses and
liabilities joint or several, actions or proceedings, to which each such
indemnified party may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages, expenses or liabilities (or actions or
proceedings in respect thereof) arise out of or based upon any untrue or alleged
untrue statement of material fact contained in the Registration Statement,
Prospectus or preliminary Prospectus or any amendment thereof or supplement
thereto or any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
the Shareholder will reimburse the Company and each director, trustee, officer,
partner, agent, employee or affiliate, underwriter and controlling person for
any legal or other expenses reasonably incurred by them (as such legal or other
expenses are incurred and for which reasonably sufficient documentation is
provided) in connection with investigating or defending any such loss, claim,
damage, expense, liability action or proceeding, but only to the extent that the
same are made in reliance and in conformity with information relating to the
Shareholder furnished in writing to the Company by the Shareholder expressly for
use therein. Notwithstanding anything in this Section 6(b), the aggregate amount
which may be recovered from the Shareholder pursuant to the indemnification
provided for in this Section 6(b) shall be limited to the total proceeds
received by such Shareholder from the sale of such Shareholder's Registerable
Common Stock (net of underwriting discounts and commissions). In no event shall
the Shareholder be jointly liable with any other holder of securities involved
in the sale of the Company's securities.

      (c) Any Person entitled to indemnification hereunder shall (i) give prompt
written notice to the indemnifying party of any claim with respect to which it
seeks indemnification and (ii) unless in such indemnified party's reasonable
judgment a conflict of interest between such indemnified and indemnifying
parties may exist with respect to such claim, permit such indemnifying party to
assume the defense of such claim with counsel reasonably satisfactory to the
indemnified party. The failure to give prompt notice as provided herein shall
not relieve the indemnifying party of its obligations hereunder, except to the
extent that the indemnifying party is actually and materially prejudiced by such
failure. The indemnifying party will not, without the prior written consent of


                                       11
<PAGE>

the indemnified party, settle or compromise or consent to the entry of any
judgment in any pending or threatened claim, action, suit or proceeding in
respect of which indemnification may be sought hereunder (whether or not such
indemnified party or any Person who controls such indemnified party is a party
to such claim, action, suit or proceeding), if such settlement, compromise or
consent (i) does not include an unconditional release of such indemnified party
from all liability and no finding of liability arising out of such claim,
action, suit or proceeding or (ii) requires anything from the indemnified party
other than the payment of money damages which the indemnifying party has agreed
to pay in full. An indemnifying party who is not entitled to, or elects not to,
assume the defense of a claim shall not be obligated to pay the fees and
expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable judgment
of any indemnified party there may be one or more legal or equitable defenses
available to such indemnified party which are in addition to or may conflict
with those available to another indemnified party with respect to such claim.

      (d) The indemnification provided for under this Agreement shall remain in
full force and effect regardless of any investigation made by or on behalf of
the indemnified party or any officer, director or controlling Person of such
indemnified party and shall survive the transfer of securities.

      (e) If the indemnification provided for in or pursuant to this Section 6
is due in accordance with the terms hereof, but is held by a court to be
unavailable or unenforceable in respect of any losses, claims, damages,
liabilities or expenses referred to herein, then each applicable indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified Person as a result of such losses,
claims, damages, liabilities or expenses in such proportion as is appropriate to
reflect the relative fault of the indemnifying party on the one hand and of the
indemnified party on the other in connection with the statements or omissions
which result in such losses, claims, damages, liabilities or expenses as well as
any other relevant equitable considerations. The relative fault of the
indemnifying party on the one hand and of the indemnified Person on the other
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the indemnifying
party or by the indemnified party, and by such party's relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. In no event shall the liability of any selling
Shareholder under this Section 6(e) be greater in amount than the amount of net
proceeds received by such Shareholder upon such sale or the amount for which
such indemnifying party would have been obligated to pay by way of
indemnification if the indemnification provided for under Section 6(b) hereof
had been available under the circumstances less any amounts recovered from the
Shareholder under Section 6(b).


                                       12
<PAGE>

      (f) In the event that advances are not made pursuant to this Section 6 or
payment has not otherwise been timely made, each indemnified party shall be
entitled to seek a final adjudication in an appropriate court of competent
jurisdiction of the entitlement of the indemnified party to indemnification or
advances hereunder.

      The Company and the Shareholder agree that they shall be precluded from
asserting that the procedures and presumptions of this Section 6 are not valid,
binding and enforceable. The Company and the Shareholder further agree to
stipulate in any such court that the Company and the Shareholder are bound by
all the provisions of this Section 6 and are precluded from making any assertion
to the contrary.

      To the extent deemed appropriate by the court, interest shall be paid by
the indemnifying party to the indemnified party at a reasonable interest rate
for amounts which the indemnifying party has not timely paid as the result of
its indemnification and contribution obligations hereunder.

      In the event that any indemnified party is a party to or intervenes in any
proceeding to which the validity or enforceability of this Section 6 is at issue
or seeks an adjudication to enforce the rights of any indemnified party under,
or to recover damages for breach of, this Section 6, the indemnified party, if
the indemnified party prevails in whole in such action, shall be entitled to
recover from the indemnifying party and shall be indemnified by the indemnifying
party against, any expenses incurred by the indemnified party. If it is
determined that the indemnified party is entitled to indemnification for part
(but not all) of the indemnification so requested, expenses incurred in seeking
enforcement of such partial indemnification shall be reasonably prorated among
the claims, issues or matters for which the indemnified party is entitled to
indemnification and for such claims, issues or matters for which the indemnified
party is not so entitled.

      The indemnity agreements contained in this Section 6 shall be in addition
to any other rights (to indemnification, contribution or otherwise) which any
indemnified party may have pursuant to law or contract and shall remain
operative and in full force and effect regardless of any investigation made or
omitted by or on behalf of any indemnified party and shall survive the transfers
and sale of any Registerable Common Stock by the Shareholder.

7. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS.

      No Person may participate in any registration hereunder that is
underwritten unless such Person (a) agrees to sell such Person's securities on
the basis provided in any underwriting arrangements approved by the Person or
Persons entitled hereunder to approve such arrangements and (b) completes and
executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents required under the terms of such underwriting
arrangements.

8. RULE 144.

      The Company covenants that it will file the reports required to be filed
by it under the Securities Act and the Exchange Act and the rules and
regulations adopted by the SEC thereunder, and it will take such further action
as the Shareholder may reasonably request to make available adequate current
public information with respect to the Company meeting the current public


                                       13
<PAGE>

information requirements of Rule 144(c) under the Securities Act (to the extent
such information is available), to the extent required to enable the Shareholder
to sell Registerable Common Stock without registration under the Securities Act
within the limitation of the exemptions provided by (i) Rule 144 under the
Securities Act, as such rule may be amended from time to time, or (ii) any
similar rule or regulation hereafter adopted by the SEC. Upon the request of the
Shareholder, the Company will deliver to the Shareholder a written statement as
to whether it has complied with such information and requirements.

9. MISCELLANEOUS.

      (a) Notices. All notices, requests and other communications to any party
hereunder shall be in writing (including facsimile or similar writing) and shall
be given,

            If to the Company:

            First Union Real Estate Equity and Mortgage Investments
            7 Bulfinch Place, Suite 500
            P.O. Box 9507
            Boston, Massachusetts 02114
            Attn: Carolyn Tiffany
            Fax: (617) 742-4643
            Tel: (617) 570- 4606

            with a copy to:

            Hahn Loeser + Parks, LLP
            3300 BP tower
            200 Public Square
            Cleveland, Ohio 44114-2301
            Attn: F. Ronald O'Keefe
            Fax: (216) 241-2824
            Tel: (216) 621-0150

            If to the Shareholder:

            Vornado Realty Trust
            Address: 888 Seventh Avenue
            New York, NY 10019
            Facsimile No.: (212) 894-7035
            Attn: Cliff Broser
            Fax: (212) 894-1073
            Tel: (212) 894-7012


                                       14
<PAGE>

            With a copy to:

            Sullivan & Cromwell LLP
            125 Broad Street
            New York, New York 10004
            Attn: William G. Farrar
            Fax: (212) 558-1600
            Tel: (212) 558-4940

or such other address or facsimile number as such party (or transferee) may
hereafter specify for the purpose by notice to the other parties. Each such
notice, request or other communication shall be effective (a) if given by
facsimile, when such facsimile is transmitted to the facsimile number specified
in this Section and the appropriate facsimile confirmation is received or (b) if
given by any other means, when delivered at the address specified in this
Section.

      (b) No Waivers. No failure or delay by any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.

      (c) Expenses. Except as otherwise provided for herein or otherwise agreed
to in writing by the parties, all costs and expenses incurred in connection with
the preparation of this Agreement shall be paid by the Company.

      (d) Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that neither party may assign its
rights or obligations under this Agreement without the prior written consent of
the other party, except that the Shareholder may assign its rights hereunder to
any Affiliate and such Affiliate shall be entitled to the benefits of this
Agreement as if it had been a signatory hereto.

      (e) Governing Law. This Agreement shall be construed in accordance with
and governed by the law of the State of New York, without regard to principles
of conflicts of law.

      (f) Jurisdiction. Any suit, action or proceeding seeking to enforce any
provision of, or based on any matter arising out of or in connection with, this
Agreement or the transactions contemplated hereby may be brought in any federal
or state court located in the County and State of New York, and each of the
parties hereby consents to the jurisdiction of such courts (and of the
appropriate appellate courts therefrom) in any such suit, action or proceeding
and irrevocably waives, to the fullest extent permitted by law, any objection
which it may now or hereafter have to the laying of the venue of any such suit,
action or proceeding in any such court or that any such suit, action or
proceeding which is brought in any such court has been brought in an
inconvenient forum. Process in any such suit, action or proceeding may be served
on any party anywhere in the world, whether within or without the jurisdiction
of any such court. Without limiting the foregoing, each party agrees that
service of process on such party as provided in Section 9(a) shall be deemed
effective service of process on such party.


                                       15
<PAGE>

      (g) Waiver of Jury Trial.

      EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO
TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

      (h) Counterparts; Effectiveness. This Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same effect
as if the signatures thereto and hereto were upon the same instrument.

      (i) Entire Agreement. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter of this Agreement and
supersedes all prior agreements and understandings, both oral and written,
between the parties with respect to the transactions contemplated herein. Except
as provided herein, no provision of this Agreement or any other agreement
contemplated hereby is intended to confer on any Person other than the parties
hereto any rights or remedies.

      (j) Captions. The captions herein are included for convenience of
reference only and shall be ignored in the construction or interpretation
hereof.

      (k) Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction or other authority to be
invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party. Upon such a
determination, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner in order that the transactions contemplated
hereby be consummated as originally contemplated to the fullest extent possible.

      (l) Amendments. The provisions of this Agreement, including the provisions
of this sentence, may not be amended, modified or supplemented, and waivers or
consents to departures from the provisions hereof may not be given without the
prior written consent of the parties hereto.

      (m) Aggregation of Stock. All Common Stock held by or acquired by any
Affiliated Persons will be aggregated together for the purpose of determining
the availability of any rights under this Agreement.

      (n) Equitable Relief. The parties hereto agree that legal remedies may be
inadequate to enforce the provisions of this Agreement and that equitable
relief, including specific performance and injunctive relief, may be used to
enforce the provisions of this Agreement.


                                       16
<PAGE>

      (o) No Inconsistent Agreements. The Company will not enter into any
agreement that is inconsistent with the rights granted to the Shareholder in
this Agreement or that otherwise conflicts with the provisions hereof. The
rights granted to the Shareholder hereunder do not in any way conflict with and
are not inconsistent with the rights granted to the holders of the Company's
other issued and outstanding securities under any such agreements.

      (p) No Adverse Action Affecting the Registerable Common Stock. The Company
shall take no action with respect to the Registerable Common Stock with an
intent to adversely affect or that does adversely affect the ability of any of
the Shareholder to include such Registerable Common Stock in a registration
undertaken pursuant to this Agreement or their offer and sale. Notwithstanding
the foregoing, the provisions of this Section 9(p) shall not apply to the Other
Registration Rights Agreements.

      IN WITNESS WHEREOF, this Registration Rights Agreement has been duly
executed by each of the parties hereto as of the date first written above.

                                              Vornado Investments LLC.

                                              By:
                                                  ------------------------------
                                              Name:
                                                    ----------------------------
                                              Title:
                                                     ---------------------------


                                              First Union Real Estate Equity and
                                              Mortgage Investments

                                              By:
                                                  ------------------------------
                                              Name: Peter Braverman
                                                    ----------------------------
                                              Title: President
                                                     ---------------------------


                                       17