FIRST UNION REAL ESTATE EQUITY
AND MORTGAGE INVESTMENTS
000 Xxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
December 8, 2003
To the Shareholders of First Union Real Estate
Equity and Mortgage Investments (the "Company"):
On November 26, 2003, the Company entered into a stock purchase
agreement (the "Stock Purchase Agreement") with FUR Investors, LLC (the
"Purchaser"), an entity controlled by Xxxxxxx X. Xxxxxx, providing, among other
things, that the Purchaser shall commence a tender offer for 5,000,000 common
shares of beneficial interest, par value $1.00 ("Shares") of the Company at a
purchase price of $2.30 per Share. The transactions contemplated by the Stock
Purchase Agreement (the "Transactions") are described in the Company's press
release issued on November 26, 2003, its Report on Form 8-K, filed on December
1, 2003, and the Company's Recommendation Statement on Schedule 14D-9, filed by
the Company today with the Securities and Exchange Commission ("SEC") (the
"Recommendation Statement"), a copy of which (without exhibits) is enclosed, and
which we urge you to read carefully.
After due consideration, the Company's Board of Trustees (the "Board")
has determined that the Transactions are in the best interests of the Company's
shareholders, but that the Board is remaining neutral and making no
recommendation as to whether shareholders should tender their Shares in the
offer. The following is a summary of the Board's reasons for its determination
to remain neutral, which are set forth in greater detail in the enclosed
Recommendation Statement:
o The Company has two remaining properties, both of which are
subject to change of control provisions that impede their
saleability.
o The Transactions contain features that, in the Board's view,
should align the Purchaser's interests with those of the other
shareholders, including:
- the Purchaser's offer to purchase 5,000,000 Shares in the
offer at $2.30 per Share, a price equal to their net asset
value and more than a 22% premium above their closing price
of $1.87 on November 26, 2003, the date the signing of the
Stock Purchase Agreement was announced.
- the Purchaser's commitment to purchase up to 5,185,724
Shares (depending on how many shares are purchased in the
Offer) directly from the Company at a price of $2.60 per
Share or more than 39% above the closing price on November
26.
- the Purchaser's agreement to enhanced corporate governance
standards for the Company to take effect before the
deadlines otherwise required by the New York Stock Exchange.
- the incentive features of the proposed Advisory Agreement
between the Company and an affiliate of the Purchaser.
o Shareholders whose Shares are purchased in the offer (subject to
proration) will lose the opportunity to participate in any future
growth of the Company or the increase, if any, in the market
price for the Shares. Accordingly, the decision whether to tender
is a personal one.
Please be sure to read the Company's Schedule 14D-9 and the
Purchaser's Offer to Purchase and other documents, set forth in its Tender Offer
Statement on Schedule TO, filed with the SEC on December 1, 2003, carefully.
Very truly yours,
Board of Trustees
FIRST UNION REAL ESTATE EQUITY
AND MORTGAGE INVESTMENTS
22062.0001 #447270
