UNDERTAKING

      This Undertaking is made and delivered this 7th day of November, 2005 by
FUR HOLDINGS LLC, a Delaware limited liability company ("Holdings") and FUR
Advisors LLC ("Advisors"). Concurrently with the delivery of this Undertaking,
First Union Real Estate Equity and Mortgage Investments, an Ohio trust ("First
Union") and Advisors are entering into that certain Amended and Restated
Advisory Agreement (the "Advisory Agreement") pursuant to which First Union is
retaining Advisors to provide advisory services to First Union. It is
acknowledged and agreed by Holdings and Advisors that this Undertaking is made
as an inducement to First Union to enter into the Advisory Agreement. Each
capitalized term used herein and not otherwise defined shall have the meaning
ascribed thereto in the Advisory Agreement.

      WHEREAS, Holdings is the sole member of Advisors and holds an 80%
membership interest in NKT Advisors LLC ("NKT"), which has agreed to provide
advisory services pursuant to the Newkirk Advisory Agreement;

      WHEREAS, Holdings and Advisors acknowledge that it is an inducement and a
condition to First Union entering into the Advisory Agreement that Holdings
deliver this Undertaking;

      WHEREAS, Holdings and Advisors are deriving material benefit from First
Union entering into the Advisory Agreement and are delivering this Undertaking
to induce First Union to enter into the Advisory Agreement.

      NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Holdings and Advisors hereby
jointly and severally agree as follows.

      1. Undertakings

            a. At all times from and after a termination (if any) of the
      Advisory Agreement and during such period as the Newkirk Advisory
      Agreement is then in effect, Holdings shall pay or cause to be paid to
      First Union within five days of receipt thereof by Holdings (i) an amount
      equal to 80% of all payments made to NKT pursuant to the Newkirk Advisory
      Agreement on account of the Incentive Management Fee (as defined in the
      Newkirk Advisory Agreement) (herein, the "80% Fee"); and (ii) any amount
      or amounts payable and unpaid by Advisors to First Union with respect to
      the 80% Fee prior to the termination of the Advisory Agreement;

            b. At all times from and after a termination (if any) of the Newkirk
      Advisory Agreement, Holdings shall pay or cause to be paid to First Union
      within five days of receipt thereof by Holdings any amount or amounts
      payable and unpaid by NKT to Advisors with respect to the 80% Fee; and

<PAGE>

            c. Holdings and Advisors shall direct NKT, and by delivery of a copy
      of this Undertaking hereby direct NKT, in satisfaction of the obligations
      of Holdings pursuant paragraph 1 hereof, to pay directly to First Union
      from amounts otherwise distributable to Holdings by NKT the amounts
      contemplated by Paragraphs 1(a) and 1 (b) hereof.

      2. Holdings and Advisors represent, warrant and covenant to First Union
      that:

      a.    Holdings and Advisors have the power to execute and deliver this
            Undertaking and to incur and perform their obligations hereunder;

      b.    Holdings and Advisors have duly taken all necessary action to
            authorize the execution, delivery and performance of this
            Undertaking and to incur and perform its obligations hereunder;

      c.    No consent, approval, authorization or other action by, and no
            notice to or of, or declaration or filing with, any governmental or
            other public body, or any other person or entity, is required for
            the due authorization, execution, delivery and performance by
            Holdings or Advisors of this Undertaking or the consummation of the
            transactions contemplated hereby;

      d.    The execution, delivery and performance by Holdings and Advisors of
            this Undertaking does not and will not, with the passage of time or
            the giving of notice or both, violate or otherwise conflict with any
            term or provision of any material agreement, instrument, judgment,
            decree, order or any statute, rule or governmental regulation
            applicable to Holdings or result in the creation of any lien upon
            any of its properties or assets pursuant thereto; and

      e.    This Undertaking has been duly authorized, executed and delivered by
            Holdings and Advisors and constitutes the legal, valid and binding
            obligation of Holdings and Advisors, and is enforceable against
            Holdings and Advisors in accordance with its terms, except as
            enforcement thereof may be subject to the effect of any applicable
            bankruptcy, insolvency, reorganization, moratorium or similar law
            affecting creditors' rights generally, and general principles of
            equity (regardless of whether such enforcement is sought in a
            proceeding in equity or at law).


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<PAGE>

      IN WITNESS WHEREOF, Holdings and Advisors have duly executed or caused
this Undertaking to be duly executed as of the date first above set forth.

                                            FUR HOLDINGS LLC

                                            By: WEM-FUR Investors LLC
                                                Managing Member

                                                By
                                                   -----------------------------
                                                   Michael L. Ashner
                                                   Managing Member


                                            FUR ADVISORS LLC

                                            By: FUR Holdings LLC
                                                Member

                                                By: WEM-FUR Investors LLC
                                                    Managing Member

                                                    By
                                                       -------------------------
                                                       Michael L. Ashner
                                                       Managing Member

                  [signature page to FUR Holdings undertaking}


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