PROMISSORY NOTE

(Development Loan)

U.S. $8,800,000.00   April 6, 2005
Denver, Colorado

        FOR VALUE RECEIVED, GOLD PEAK AT PALOMINO PARK LLC, a Colorado limited
liability company, having an address at c/o Wellsford Real Properties, Inc.,
6700 Palomino Parkway, Highlands Ranch, Colorado 80130 (“Maker”), hereby
promises to pay to the order of KEYBANK NATIONAL ASSOCIATION, a national banking
association (“Payee”), having an address at 1675 Broadway, Suite 400, Mailstop
CO-02-WT-0401, Denver, Colorado 80202, the principal sum of Eight Million Eight
Hundred Thousand Dollars ($8,800,000.00) or so much thereof as may be advanced
from time to time, and interest from the date hereof on the balance of principal
from time to time outstanding, in United States currency, at the rates and at
the times hereinafter described.

        This Note is issued by Maker pursuant to that certain Development Loan
Agreement of even date herewith (the “Development Loan Agreement”) entered into
between Payee and Maker. This Note evidences the Loan (as defined in the
Development Loan Agreement). Payment of this Note is governed by the Development
Loan Agreement, the terms of which are incorporated herein by express reference
as if fully set forth herein. Capitalized terms used and not otherwise defined
herein shall have the meanings given to them in the Development Loan Agreement.

1.     Interest. The principal amount hereof outstanding from time to time shall
bear interest until paid in full at the Daily LIBOR Rate.

2.     Monthly Payments. Interest only shall be payable in arrears on the first
(1st) Business Day of each calendar month after the date hereof up to and
including the Maturity Date (as hereinafter defined) in the amount of all
interest accrued during the immediately preceding calendar month. All payments
on account of the indebtedness evidenced by this Note shall be made to Payee not
later than 11:00 a.m. Denver, Colorado time on the day when due in lawful money
of the United States and shall be first applied to late charges, costs of
collection or enforcement and other similar amounts due, if any, under this Note
and any of the other Loan Documents, then to interest due and payable hereunder
and the remainder to principal due and payable hereunder.

3.     Maturity Date. The indebtedness evidenced hereby shall mature on November
1, 2006, as such date may be extended to May 1, 2007, and further extended to
February 1, 2008, pursuant to the terms of the Development Loan Agreement (the
“Maturity Date”). On the Maturity Date, the entire outstanding principal balance
hereof, together with accrued and unpaid interest and all other sums evidenced
by this Note, shall, if not sooner paid, become due and payable.

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4.    General Provisions.

        (a)     In the event (i) the principal balance hereof is not paid when
due whether by acceleration or upon the Maturity Date or (ii) an Event of
Default exists, then the principal balance hereof shall bear interest from and
after the occurrence of such event at the Default Rate. In addition, for any
installment (exclusive of the payment due upon the Maturity Date) which is not
paid within five (5) days of the due date thereof a late charge equal to the
greater of (a) five percent (5%) of the amount of such installment or (b) $25
shall be due and payable to the holder of this Note on demand to cover the extra
expense involved in handling delinquent payments.

        (b)     Maker agrees that the obligation evidenced by this Note is an
exempt transaction under the Truth-in-Lending Act, 15 U.S.C. § 1601, et seq.

        (c)     The parties hereto intend and believe that each provision in
this Note comports with all applicable local, state and federal laws and
judicial decisions. However, if any provision or provisions, or if any portion
of any provision or provisions, in this Note is found by a court of law to be in
violation of any applicable local, state or federal ordinance, statute, law,
administrative or judicial decision, or public policy, and if such court should
declare such portion, provision or provisions of this Note to be illegal,
invalid, unlawful, void or unenforceable as written, then it is the intent of
all parties hereto that such portion, provision or provisions shall be given
force to the fullest possible extent that they are legal, valid and enforceable,
that the remainder of this Note shall be construed as if such illegal, invalid,
unlawful, void or unenforceable portion, provision or provisions were not
contained therein, and that the rights, obligations and interest of Maker and
the holder or holders hereof under the remainder of this Note shall continue in
full force and effect. All agreements herein are expressly limited so that in no
contingency or event whatsoever, whether by reason of advancement of the
proceeds hereof, acceleration of maturity of the unpaid principal balance
hereof, or otherwise, shall the amount paid or agreed to be paid to the holders
hereof for the use, forbearance or detention of the money to be advanced
hereunder exceed the highest lawful rate permissible under applicable usury
laws. If, from any circumstances whatsoever, the fulfillment of any provision
hereof, at the time performance of such provision shall be due, shall involve
transcending the limit of validity prescribed by law which a court of competent
jurisdiction may deem applicable hereto, then, ipso facto, the obligation to be
fulfilled shall be reduced to the limit of such validity and if from any
circumstance the holder hereof shall ever receive as interest an amount which
would exceed the highest lawful rate, such amount which would be excessive
interest shall be applied to the reduction of the unpaid principal balance due
hereunder and not to the payment of interest.

        (d)     This Note and all provisions hereof shall be binding upon Maker
and all persons claiming under or through Maker, and shall inure to the benefit
of Payee, together with its successors and assigns, including each owner and
holder from time to time of this Note.

        (e)     Time is of the essence as to all dates set forth herein.

        (f)     Maker agrees that its liability shall not be in any manner
affected by any indulgence, extension of time, renewal, waiver, or modification
granted or consented to by Payee; and Maker consents to any indulgences and all
extensions of time, renewals, waivers, or

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modifications that may be granted by Payee with respect to the payment or other
provisions of this Note, and to any substitution, exchange or release of the
collateral, or any part thereof, with or without substitution, and agrees to the
addition or release of any makers, endorsers, guarantors, or sureties, all
whether primarily or secondarily liable, without notice to Maker and without
affecting its liability hereunder.

        (g)     Maker hereby waives and renounces for itself, its successors and
assigns, all rights to the benefits of any statute of limitations and any
moratorium, reinstatement, marshalling, forbearance, valuation, stay, extension,
redemption, appraisement, or exemption and homestead laws now provided, or which
may hereafter be provided, by the laws of the United States and of any state
thereof against the enforcement and collection of the obligations evidenced by
this Note.

        (h)     If this Note is placed in the hands of attorneys for collection
or is collected through any legal proceedings, Maker promises and agrees to pay,
in addition to the principal, interest and other sums due and payable hereon,
all costs of collecting or attempting to collect this Note, including all
reasonable attorneys’ fees and disbursements.

        (i)     All parties now or hereafter liable with respect to this Note,
whether Maker, principal, surety, guarantor, endorsee or otherwise hereby
severally waive presentment for payment, demand, notice of nonpayment or
dishonor, protest and notice of protest. No failure to accelerate the
indebtedness evidenced hereby, acceptance of a past due installment following
the expiration of any cure period provided by this Note, any Loan Document or
applicable law, or indulgences granted from time to time shall be construed
(i) as a novation of this Note or as a reinstatement of the indebtedness
evidenced hereby or as a waiver of such right of acceleration or of the right of
Payee thereafter to insist upon strict compliance with the terms of this Note,
or (ii) to prevent the exercise of such right of acceleration or any other right
granted hereunder or by the laws of the State. Maker hereby expressly waives the
benefit of any statute or rule of law or equity now provided, or which may
hereafter be provided, which would produce a result contrary to or in conflict
with the foregoing.

        (j)     THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF COLORADO AND ANY APPLICABLE LAWS OF THE UNITED
STATES OF AMERICA.

        (k)     MAKER BY ITS EXECUTION AND DELIVERY HEREOF AND PAYEE BY ITS
ACCEPTANCE HEREOF HEREBY EXPRESSLY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY
ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS NOTE OR THE LOAN
DOCUMENTS OR UNDER ANY AMENDMENT, INSTRUMENT OR DOCUMENT DELIVERED OR WHICH MAY
IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR ARISING FROM ANY CREDIT
RELATIONSHIP EXISTING IN CONNECTION WITH THIS NOTE OR THE OTHER LOAN DOCUMENTS,
AND AGREE THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND
NOT BEFORE A JURY.

        MAKER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY COLORADO
STATE COURT OR ANY FEDERAL COURT SITTING IN THE CITY AND

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COUNTY OF DENVER OR COUNTY OF DOUGLAS, STATE OF COLORADO, OR OVER ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE OR THE OTHER LOAN DOCUMENTS.
MAKER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO,
THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR
PROCEEDING IN ANY SUCH COURTS. NOTHING IN THIS PARAGRAPH SHALL AFFECT THE RIGHT
OF PAYEE TO BRING ANY ACTION OR PROCEEDING AGAINST MAKER OR ANY OF ITS PROPERTY
IN THE COURTS OF ANY OTHER JURISDICTION.

        (l)     When the context and construction so require, all words used in
the singular herein shall be deemed to have been used in the plural and vice
versa.

        (m)     Except as otherwise indicated, any reference herein to the
“Maker” or any other collective or plural term shall be deemed a reference to
each and every item included within the category described by such collective or
plural term, so that a reference to the “Maker” shall be deemed a reference to
any or all of the applicable makers.

[SIGNATURE PAGE TO FOLLOW]

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        Maker has delivered this Note as of the day and year first set forth
above.

  MAKER:

  GOLD PEAK AT PALOMINO PARK LLC, a Colorado limited liability company

  By: Wellsford Park Highlands Corp., a Colorado corporation, its manager

  By: /s/ David M. Strong

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    David M. Strong, Vice President

STATE OF COLORADO )     ) ss.   CITY AND COUNTY OF DENVER )  

        The foregoing instrument was acknowledged before me this _____ day of
April, 2005, by David M. Strong as Vice President of Wellsford Park Highlands
Corp., a Colorado corporation, manager of GOLD PEAK AT PALOMINO PARK LLC, a
Colorado limited liability company.

          Witness my hand and official seal.

          My commission expires November 28, 2008.

  /s/ Diane Enebol

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Notary Public

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