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SCHEDULE 14A
(RULE 14a)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
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<S> <C>
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[X] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
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FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies: .......
(2) Aggregate number of securities to which transaction applies: ..........
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): ............
(4) Proposed maximum aggregate value of transaction: ......................
(5) Total fee paid: .......................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: ...............................................
(2) Form, Schedule or Registration Statement No.: .........................
(3) Filing Party: .........................................................
(4) Date Filed: ...........................................................
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FIRST UNION REAL ESTATE INVESTMENTS
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AT THE COMPANY IN CLEVELAND IN CHICAGO
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Thomas T. Kmiecik Stanley L. Ulchaker Peter Wentz
Senior Vice President Edward Howard & Co. The Dilenschneider Group
(216) 781-4030 (216) 781-2400 (312) 553-0700
IN NEW YORK
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Art Gormley
The Dilenschneider Group
(212) 922-0900
FOR IMMEDIATE RELEASE
FIRST UNION ANNOUNCES FIRST QUARTER EARNINGS
--------------------------------------------
CLEVELAND, OHIO, APRIL 24, 1998 --- FIRST UNION REAL ESTATE INVESTMENTS
(NYSE:FUR) announced that first quarter revenues and property net operating
income (NOI) increased from last year's first quarter but, as previously
forecast, funds from operations (FFO) declined from the same period last year.
Revenues for the quarter were $80.4 million as compared to $22.1 million for the
same period in 1997, an increase of 264 per cent. Property NOI for the quarter
was $19.6 million, an increase of 66 per cent over the $11.8 million reported in
the first quarter of 1997. The increases in revenue and property NOI are
primarily due to acquisitions completed in 1997. "Same store" property NOI also
increased compared to the prior-year period.
Consistent with the company's announcement last week regarding the outlook for
first quarter earnings, FFO was below expectations. Before the preferred
dividend, FFO was $3.5 million, or $.10 per share, in the first quarter of 1998
compared to $5.4 million, or $.20 per share for the same period in 1997. FFO,
after preferred dividend, was $2.6 million, or $.09 per share in 1998 compared
to $4.2 million, or $.21 per share in 1997. Fully converted shares outstanding
for the first quarter 1998 were 35.1 million compared to 27.5 million for the
first quarter 1997.
James C. Mastandrea, chairman and chief executive officer of First Union,
commented, "As we previously announced, our earnings were negatively impacted by
costs and litigation expenses associated with the proxy contest with Gotham
Partners and because of a loss from operations in Imperial Parking's equipment
manufacturing and distribution businesses resulting from lower than expected
sales volume. The proxy challenge added approximately $900,000 in incremental
costs. Parking equipment subsidiaries generated a loss of approximately
$900,000.
"These are uncertain times for `stapled stock' REITs, with Congress considering
legislation that would limit our anticipated business activities," continued
Mastandrea. "The management of First Union continues to work through the proper
channels in Washington to preserve as many of the benefits of the stapled stock
structure as possible. Fortunately, the Trust is well positioned to respond
should this legislation be enacted."
Mastandrea concluded, "We also continued to successfully manage and operate our
core businesses under the unusual circumstances brought about by the current
proxy contest." During the first quarter, First Union completed parking
acquisitions in Richmond, Virginia, Chicago, Illinois, Cleveland, Ohio, and
Arlington, Texas, and signed an agreement to acquire a 275-space, free-standing
garage in Nashville, Tennessee.
First Union Real Estate Investments is a unique stapled-stock real estate
investment trust (REIT) headquartered in Cleveland, Ohio, and traded on the New
York Stock Exchange.
# # #
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FIRST UNION REAL ESTATE INVESTMENTS
COMBINED STATEMENTS OF INCOME
Unaudited (In thousands, except per share data)
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<CAPTION>
Three Months Ended
March 31,
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1998 1997
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REVENUES
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Rents $ 79,104 $ 19,003
Interest - Mortgage loans 619 931
- Short-term investments 229 348
- Investments 190
Joint venture income and fees 122 1,104
Other 90 736
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80,354 22,122
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EXPENSES
Property operating 57,286 6,914
Real estate taxes 2,998 2,339
Interest 11,902 5,256
Depreciation and amortization 6,374 3,230
General and administrative 3,260 2,205
Litigation and proxy expenses 931
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82,751 19,944
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NET INCOME (LOSS) BEFORE PREFERRED DIVIDEND -2,397 2,178
Preferred dividend -875 -1,208
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NET INCOME (LOSS) APPLICABLE TO SHARES OF
BENEFICIAL INTEREST $ -3,272 $ 970
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Funds from operations before preferred dividend $ 3,520 $ 5,433
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Funds from operations after preferred dividend $ 2,645 $ 4,225
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Dividends declared $ 3,478 $ 2,379
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PER SHARE DATA
Net income (loss) applicable to shares of
beneficial interest - basic and diluted $ (.11) $ .05
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Funds from operations before preferred dividend $ .10 $ .20
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Funds from operations after preferred dividend $ .09 $ .21
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Dividends declared $ .11 $ .11
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Shares of beneficial interest - basic 29,230 19,896
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Shares of beneficial interest - fully converted 35,167 27,509
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<FN>
NOTES TO THE COMBINED STATEMENTS OF INCOME
1. Income per share of beneficial interest has been computed 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. Shares and per share amounts
for 1997 have been restated accordingly.
2. The amount of funds from operations (FFO) is calculated as net income
(loss) both before and after the preferred dividend, plus noncash charges
for depreciation and amortization for both First Union and the joint
venture. However, amortization of intangible assets from the acquisition of
Impark has been included in FFO. First Union adopted the definition of FFO
as recommended by the National Association of Real Estate Investment Trusts
in 1997.
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