SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 2)
First Union Real Estate Equity and Mortgage Investments
(Name of Issuer)
Shares of Beneficial Interest, $1.00 par value
(Title of class of securities)
337400105
(CUSIP Number)
Stephen Fraidin, P.C.
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004
(212) 859-8140
(Name, address and telephone number of person authorized to
receive notices and communications)
July 24, 1997
(Date of event which requires filing of this statement)
If the filing person has previously filed a statement on Schedule
13G to report the acquisition which is the subject of this
Schedule 13D, and is filing this schedule because of Rule 13d-
1(b)(3) or (4), check the following box [ ].
Check the following box if a fee is being paid with the statement
[ ]. (A fee is not required only if the reporting person: (1)
has a previous statement on file reporting beneficial ownership
of more than five percent of the class of securities described in
Item 1; and (2) has filed no amendment subsequent thereto
reporting beneficial ownership of five percent or less of such
class.) (See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits,
should be filed with the Commission. See Rule 13d-1(a) for other
parties to whom copies are to be sent.
* The remainder of this cover page shall be filled out for a
reporting person's initial filing on this form with respect to
the subject class of securities, and for any subsequent amendment
containing information which would alter disclosures provided in
a prior cover page.
The information required on the remainder of this cover page
shall not be deemed to be "filed" for the purpose of Section 18
of the Securities Exchange Act of 1934 ("Act") or otherwise
subject to the liabilities of that section of the Act but shall
be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
SCHEDULE 13D
CUSIP No. 337400105 Page 2 of 3 Pages
This Amendment No. 2 amends and supplements the statement on
Schedule 13D (the "Schedule 13D") filed by Gotham Partners, L.P. and Gotham
Partners II, L.P. (Gotham Partners, L.P. and Gotham Partners II, L.P. are
collectively referred to hereinafter as the "Reporting Persons"), relating to
shares of Beneficial Interest, par value $1.00 per share, of First Union Real
Estate Equity and Mortgage Investments, an Ohio business trust (the
"Company").
1. Item 4 of the Schedule 13D, "Purpose of the Transaction," is
hereby amended by adding the following:
"On July 23, 1997, the letter attached hereto as
Exhibit 7 and incorporated herein by this reference was sent to
Mr. James Mastandrea, Chairman, President and Chief Executive
Officer of the Company.
"Except to the extent indicated in this Item 4,
neither of the Reporting Persons has any plans or proposals which
would relate to or result in any of the matters set forth in items
(a) through (j) of Item 4 of Schedule 13D."
2. Item 7 of the Schedule 13D, "Material to be Filed as
Exhibits," is hereby amended by adding the following:
"7. Letter, dated July 23, 1997, sent to Mr. James
Mastandrea."
<PAGE>
Page 3 of 3 Pages
After reasonable inquiry and to the best of our knowledge and
belief, the undersigned certify that the information set forth in this
statement is true, complete and correct.
Dated: July 24, 1997
GOTHAM PARTNERS, L.P.
By: SECTION H PARTNERS, L.P.,
its general partner
By: DPB CORP.,
a general partner
By: /s/ David P. Berkowitz
David P. Berkowitz
President
GOTHAM PARTNERS II, L.P.
By: SECTION H PARTNERS, L.P.,
its general partner
By: DPB CORP.,
a general partner
By: /s/ David P. Berkowitz
David P. Berkowitz
President
July 23, 1997
Mr. James C. Mastandrea
Chairman/President/CEO
First Union Real Estate
55 Public Square, Suite 1900
Cleveland, OH 44113
Dear Mr. Mastandrea:
On July 14, we sent a letter to the Trustees of First Union Real Estate and
Mortgage Investments and the Directors of First Union Management, Inc. In
that letter we asked the Trustees and Directors, as fiduciaries for the
company's shareholders, to consider two questions. First, is the company's
new strategic plan the most appropriate plan to ensure long-term maximization
of shareholder value? Second, is the current management team capable of
identifying, executing, and integrating the acquisitions necessary to maximize
the value of the company's unusual corporate structure?
We offered what we believe to be reasoned arguments for questioning the logic
of the company's recently revised strategic plan and current management's
ability to implement it. In the subsequent week, we have received no
substantive response to our letter.
We are truly interested in being long-term shareholders of First Union and
enjoying the benefit of the company's unusual corporate structure over a
multi-year period. We have absolutely no interest in any arrangement through
which we receive short-term benefit at the expense of other shareholders.
Further, we have several specific proposals which we believe will manifest our
long-term commitment to First Union.
We would appreciate the opportunity to meet with the Trustees of First Union
Real Estate and Mortgage Investments and the Directors of First Union
Management, Inc. to discuss our original concerns and our proposals for the
future. We will make ourselves available at your convenience in Cleveland,
New York, or any other mutually agreeable location. We look forward to your
response.
Very truly yours,
Gotham Partners, L.P.
Gotham Partners II, L.P.
______________________
William A. Ackman
______________________
David P. Berkowitz
