U.S. SECURITIES AND EXCHANGE COMMISSION
                     Washington, D.C. 20549

                          FORM 10-KSB

                           (Mark One)
[X]   Annual Report Under Section 13 or 15(d) of the Securities
                     Exchange Act of 1934 [Fee Required]

          For the fiscal year ended December 31, 1997
                               or
[ ] Transition Report Under Section 13 or 15(d) of the Securities
             Exchange Act of 1934 [No Fee Required]

                  Commission File No. 0-28378
              AMERICAN ASSET ADVISERS, TRUST, INC.
         (Name of small business issuer in its charter)

 Maryland                                              76-0410050
(State or other jurisdiction of                     (I.R.S. Employer
Incorporation or organization)                     Identification No.)

8 Greenway Plaza, Suite 824
Houston, Texas                                           77046
(Address of principal executive offices)               (Zip Code)

Issuer's telephone number, including area code:  (713) 850-1400

     Securities registered under Section 12(b) of the Exchange Act:   None
     Securities registered under Section 12(g) of the
       Exchange Act:   Shares of Common Stock

Check whether the issuer (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act  during the past
12 months (or for such shorter period that the issuer was required
to file such reports), and (2) has been subject to such filing
requirements for the past 90 days:  Yes      X        No_____

Check if there is no disclosure of delinquent filers in response to
Item 405 of Registration S-B is not contained in this form, and no
disclosure will be contained, to the best of issuer's knowledge, in
definitive proxy or informative statements incorporated by
reference in Part III of this Form 10-KSB or any amendment to this
Form 10-KSB.  [X]

Issuer's revenues for its most recent fiscal year:    $1,710,710

Aggregate market value of the voting stock held by non-affiliates
of the issuer:
                 No Established Trading Market

Indicate the number of shares outstanding of each of the issuer's
classes of Common Stock, as of the latest practicable date:
     1,953,031 shares of Common Stock as of March 24, 1998


             DOCUMENTS  INCORPORATED  BY  REFERENCE

1.  Portions of the Prospectus of Registrant dated June 18, 1996
(included in Registration Statement No. 0-28378  of Registrant) and
as supplemented February 28, 1997, October 16, 1997, December 1,
1997 and February 11, 1998 are incorporated by reference into Part
III.

2.  The Acquisition Agreement dated January __, 1998, including the
exhibits attached thereto, filed as Addendum  A to the Preliminary
Proxy Statement filed by Registrant with the Commission on January
22, 1998.

3.  The valuation opinion of Houlihan Lokey Howard & Zukin Financial
Advisors, Inc. dated December 16, 1997 included as part of Addendum
B to the Preliminary Proxy Statement filed by Registrant with the
Commission on January 22, 1998.

4.  The fairness opinion of Bishop-Crown Investment Research, Inc.
dated January 15, 1998 included as part of Addendum B to the
Preliminary Proxy Statement filed by Registrant with the Commission
on January 22, 1998.

Transitional Small Business Disclosure Format (check one):   Yes____   No   X

                                   -2-

                                 PART I

Item 1.    Description of Business

American Asset Advisers Trust, Inc. ("Issuer" or "Company") was
incorporated in the state of Maryland on August 17, 1993.
Commencing March 17, 1994, the Company offered up to 2,000,000
shares of Common Stock at $10 per share together with 1,000,000
warrants exercisable at $9 per share, with one warrant issued with
each two shares purchased. The warrants were exercisable between
March 17, 1997 and March 15,  1998.  As of December 31, 1997,
501,583 warrants were outstanding.  The  offering period of the
initial public offering terminated on March 15, 1996 with gross
proceeds totaling $10,082,520 (1,008,252 shares).  In addition,
$200,010 (20,001 shares) had previously  been purchased by American
Asset Advisers Realty Corporation, ("AAA").  On June 18, 1996, the
Company commenced a follow-on offering of up to $29,250,000
(2,853,659 shares) of additional shares of its Common Stock.  The
offering will terminate on June 17, 1998 unless terminated earlier.
As of December 31, 1997, gross proceeds had been received for
$8,606,419 (839,960 shares) in this second offering bringing the
total gross proceeds to $18,888,949 (1,868,213 shares).

The Company focuses on acquiring frontage retail properties that
are located primarily on corner or out-parcel locations in strong
commercial corridors near traffic generators, such as major
regional malls. These properties are net-leased to tenants whose
net worth is equal to or greater than $40 million. These
properties, which attract a wide array of established retail
tenants, offer attractive opportunities for stable current return
and potential capital appreciation. In addition, management
believes that the location and design of properties in this niche
provide flexibility in use and tenant selection and an increased
likelihood of advantageous re-lease terms.

The Company has been successful in attracting tenants that operate
in different retail segments, including Radio Shack (leased to the
Tandy Corporation), Blockbuster Music (lease guaranteed by Viacom,
Inc.), Popeye's Famous Chicken (lease guaranteed by AFC, Inc.),
OneCare Health Industries, Inc., Just For Feet, Inc., Hollywood
Video (leased to Hollywood Entertainment Corp.) and Bank United, a
Federal Savings Bank.

Properties acquired by the Company are generally newly constructed
or recently constructed as of the time of acquisition. To date, the
Company has acquired only properties that are subject to a lease in
order to avoid the risks inherent in initial leasing. The Company's
leases typically provide that the tenant bears responsibility for
substantially all property costs and expenses associated with
ongoing maintenance and operation such as utilities, property taxes
and insurance. Some of the tenants' leases require that the Company
is responsible for roof and structural repairs. In these instances,
the Company normally requires warranties and/or guarantees to
mitigate the potential costs of repairs during the primary terms of
the leases.

The Company's leases typically do not limit the Company's recourse
against the tenant and any guarantor in the event of a default, and
for this reason are considered "full-credit" leases. All of the
Company's properties have been 100 percent leased since they were
acquired by the Company.

A further description of the Company's business is included in
Management's Discussion and Analysis of Financial Condition and
Results of Operations included in Item 6 of this Form 10-KSB.

                                     -3-

The Objectives of the Company are:

     (1)     to provide regular distributions to Shareholders. The
     Company has paid quarterly distributions to Shareholders since
     July 1994 and intends to continue paying quarterly
     distributions to Shareholders.  Distribution payments may
     fluctuate during the life of the Company.

     (2)     to provide distributions that are partially free from
     current taxation. So long as the Company qualifies as a REIT,
     it will generally not be taxed on taxable income to the extent
     it pays distributions to the Shareholders. Company
     distributions will not be currently taxable to Shareholders to
     the extent the distributions exceed Company taxable income.
     The Company expects to incur less taxable income (and thus
     greater cash flow) because of its non-cash deductions for
     depreciation. However, depreciation deductions decrease the
     Company's tax basis in its properties and thus, will increase
     the Company's taxable income when the Company sells these
     properties.

     (3)      to provide Shareholders with long-term appreciation on
     their investment. Management believes that the Company can
     realize its objective of long-term appreciation of its
     property portfolio based on the fact  that most of the leases
     on the properties in which the Company presently holds
     interests contain, and the Company expects that most of the
     leases on the additional properties that it will acquire will
     contain, periodic rent escalation provisions over the original
     and renewal terms of such leases.  Because the Company's
     properties are and are expected to continue to be valued on
     the basis of their ability to produce income, the Company
     believes that successive periodic rental income increases
     resulting from such escalation provisions should increase the
     value of the Company's properties over the long term.  There
     is of course no assurance the Company will in fact realize
     portfolio appreciation.

     (4)     to provide investors with an inflation hedge. During
     times of inflation, it is management's experience that
     commodities such as real estate experience price increases
     commensurate with increases in inflation. However, inflation
     has become a less significant factor in recent years as rates
     of inflation have been low. Also, real property which is
     subject to long-term leases requiring fixed rents over future
     years may not experience an increase in price commensurate
     with inflation or commensurate with similar properties which
     are not subject to such leases.

     (5)     to conserve capital. The Company will attempt to conserve
     capital by endeavoring to continue to invest in a diversified
     portfolio of quality real estate under long-term leases to
     creditworthy tenants. The amount of money raised in the
     offering will affect the number of properties the Company will
     be able to purchase.  The more properties the Company
     acquires, the more diversified it will be and the less it will
     be affected by any single property that does not perform as
     expected.

There is no assurance these objectives can be achieved.

Properties

At December 31, 1997, the Company owned eleven properties, five
directly and six through joint ventures, all in fee simple.  Four
of these properties are located in Texas, two are located in
Louisiana and one each in Arizona, Georgia, Kansas, Mississippi and
Missouri.  Although the specific terms of each lease vary, a
summary of the terms of the leases is as follows:

The primary term of the leases ranges from ten to twenty years.
Eight of the leases also provide for two to four five-year renewal
options.  The leases are all "triple-net" leases whereby the

                                  -4-

tenants are responsible for the property taxes, insurance and
operating costs.  Annual rental income ranges from $59,641 to
$405,896.  Ten of the leases provide for either percentage rents
based on sales in excess of certain amounts, periodic escalations
in the annual rental rates or both.

As of December 31, 1997, two of the Company's leases each accounted
for more than 10% of the Company's total assets. Summarized as
follows are the significant items pertaining to each of these
leases:

On June 9, 1997, the Company acquired a 51% interest in a newly
constructed property on lease to Just For Feet, Inc. through a
joint venture with an entity with common management for the
combined purchase price of $2,908,785.  This 1.735 acre property is
being operated as a Just For Feet retail store on the southeast
corner of Promenade Avenue and Cortana Place in Baton Rouge,
Louisiana.  The improvements are a single-tenant retail building
that contains approximately 15,600 square feet. The lease agreement
extends for fifteen years, however the tenant has the option to
renew the lease for two additional terms of five years each. The
lease has provisions for an escalation in the rent after the fifth
and tenth years of the lease.  The Company recorded $184,296 of
income from Just For Feet in 1997.

On September 11, 1996, the Company acquired a 51.9% interest in a
newly constructed property on lease to Just For Feet, Inc. through
a joint venture with two entities with common management for the
combined purchase price of $3,680,383. This 2.938 acre property is
being operated as a Just For Feet retail store on the northwest
corner of North Oracle Road and Old Tucson Florence Highway in
Tucson, Arizona.  The improvements are a single-tenant retail
building that contains approximately 15,200 square feet.  The lease
agreement extends for twenty years, however the tenant has the
option to renew the lease for two additional terms of five years
each.  The lease has provisions for an escalation in the rent after
the fifth, tenth, and fifteenth years of the lease.  The Company
recorded $405,896 of income from Just For Feet in 1997.

For information regarding the results of operations and financial
condition of Just For Feet, Inc. refer to their Annual Report on
Form 10-K as filed with the Securities and Exchange Commission for
the year ended January 31, 1997.

The Company's  leases specify the amount, if any, of insurance
coverage required to be carried by each tenant.  Management of the
Company believes that the insurance policies required to be carried
by the tenants combined with the insurance carried by the Company
will adequately cover the replacement cost of the properties and
any personal liability losses which the Company may sustain.

Property Management

AAA provides property management services to the Company. Prior to
September, 1997, AAA provided these services for reimbursement of
their costs and expenses only.  Commencing September, 1997, AAA
began charging property management fees of 3% of total rental
income.  Three of AAA's executive officers have an average of over
20 years of experience in the commercial real estate business.
Under the direction of the Company's Board of Directors, AAA has
responsibility for day-to-day operations of the Company, including
investment analysis, acquisitions, due diligence, asset management
and accounting services. The Company's President and Chief
Executive Officer is H. Kerr Taylor, who has served AAA and its
predecessor (H. Kerr Taylor Company) and its affiliates for over 20
years.

The Company's Board of Directors has maximized the Company's cash
distributions to shareholders by avoiding a relatively fixed
overhead cost structure and, instead, contracting to receive
services from AAA. AAA has provided administrative staff and
facilities to the Company at a cost less than the Company would
incur in providing such personnel and administrative services
itself. However, at the Company's current asset and revenue levels,

                                  -5-

the Company's Board of Directors has determined it to be more
economical to become a self-managed REIT by acquiring AAA.

Financing - Borrowing Policies

The Company may incur unsecured and secured borrowings, so long as
the total amounts of such borrowings do not exceed 300% of the
Company's net assets on a consolidated basis.

Sale of Properties

The Company expects to sell some or all of its properties over
time. The determination of whether a particular property should be
sold or otherwise disposed of will be made after consideration of
performance of the property and market conditions and will depend,
in part, on the economic benefits of continued ownership. In
deciding whether to sell properties, the Directors will consider
factors such as potential capital appreciation, cash flow and
federal income tax consequences. Affiliates of one or more
Directors may be selected to perform various substantial real
estate brokerage functions in connection with the sales of
properties by the Company.

Any net proceeds from the sale of any property may, at the election
of the Directors based upon their then current evaluation of the
real estate market conditions, either be distributed to the
Shareholders or be reinvested in other properties. A reinvestment
in other properties would be feasible only if it can be
accomplished on a tax deferred basis so that the Company will not
suffer any significant adverse tax consequences. Any properties in
which net proceeds from a sale are reinvested will be subject to
the same acquisition guidelines as properties currently acquired by
the Company.

Competitive Conditions

The properties owned by the Company are leased to fast-food and
family style restaurants, retail businesses, banks and to a medical
facility. These businesses face competition from similar
establishments within the surrounding areas.

At the time a property is sold or otherwise disposed of, the
Company will be in competition with others who are also seeking
buyers for their properties.

Employees

The overall management decisions for the day-to-day business
affairs of the Company are made by AAA under the direction of the
Board of Directors.  The Company itself has officers and directors,
but no other employees.

Proposed Acquisition of the Company's Adviser

At a special meeting of the Company's  Board of Directors held on
December 31, 1997, the Board of Directors, other than Mr. H. Kerr
Taylor, who abstained from the vote due to his interest in the
transaction, approved the Company's becoming a self-managed REIT
through the acquisition by the Company of its Adviser, American
Asset Advisers Realty Corp., a Texas corporation (the "Adviser
Acquisition").  Under the terms of the Adviser Acquisition, the
Adviser will be merged into a newly formed, wholly owned subsidiary
of the Company, which will be the surviving corporation.  In the
merger, the Company will issue up to 900,000 shares of its $.01 par
value common stock to Mr. Taylor, the sole shareholder of the
Adviser.  Mr. Taylor would receive 213,260 Common Shares upon the
closing date of the merger (the "Initial Shares") and up to 686,740
additional shares (the "Share Balance") would be issuable at the

                                  -6-

end of each of the twenty-four calendar quarters following the
quarter in which the closing date occurs in an amount which, when
added to the Initial Shares and any previously issued portion of
the Share Balance, would not exceed 9.8% of the total common shares
of the Company outstanding after giving effect to such issuance.
Upon consummation of the Adviser Acquisition, the Company will
thereupon internalize all of its acquisition, development, property
management and administrative functions and cease paying fees for
these  external services.  The consummation of the Adviser
Acquisition will be subject to approval of the shareholders of the
Company and to customary closing conditions.

If the Adviser Acquisition is consummated, Mr. Taylor will become
the full time employee of the Company.  His base salary during the
initial two years of his employment would be $25,000 and $30,000
per annum, respectively.  Mr. Taylor could also receive such
additional incentive compensation as the Independent Directors may
determine.  The Acquisition Agreement also contains certain
continuing covenants by Mr. Taylor restricting his non-Company
related real estate activities.  A copy of the Acquisition
Agreement, which includes as an addendum the H. Kerr Taylor
Employment Agreement, is incorporated by reference into this
Report.

The Independent Directors engaged Houlihan Lokey Howard & Zukin
Financial Advisors, Inc. ("Houlihan") and Bishop-Crown Investment
Research, Inc. ("Bishop-Crown") as their financial advisers
regarding the proposed Adviser Acquisition.  Houlihan has
delivered its opinion regarding the value of the Adviser and
Bishop-Crown delivered its opinion that the acquisition of the
Adviser is fair, from a financial point of view, to the Company and
to its shareholders, other than Mr. Taylor.  Each opinion is
subject to the terms, conditions and limitations therein.  Copies
of the Houlihan valuation opinion dated December 16, 1997 and the
Bishop-Crown fairness opinion dated January 15, 1998 are
incorporated by reference in this Report.

The Board plans to notice a special meeting of the Shareholders to
consider and approve the Adviser Acquisition and certain matters
related thereto including the proposed changes in the Company's
investment policies respecting restrictions on leasing of its
properties.  The Company intends to set a Record Date of March 31,
1998 for voting at the Special Meeting.  Those Shareholders who
purchased their shares after the Record Date will not be entitled
to vote at the Special Meeting.

Item 2.     Description of Property

At March 24, 1998,  the Company owned twelve properties in fee
simple, six directly and six through  joint ventures with related
parties. Properties are located in Texas, Georgia, Arizona,
Missouri, Louisiana, Mississippi and Kansas.  On February 20, 1998,
the Company acquired a newly constructed property on lease to
OfficeMax, Inc. This property is being operated as an OfficeMax
store in Lake Jackson, Texas. In addition, the Company has entered
into agreements for the purchase of properties to be constructed in
Dover, Delaware, The Woodlands, Texas and Sugarland, Texas.
Properties are operated as retail stores, banks, a fast food and
family style restaurant and a medical facility.

Land - The Company's property sites range from approximately 34,000
to 125,000 square feet,  depending upon building size and local
demographic factors. Sites purchased by the Company are in high
traffic corridors and have been reviewed for traffic and
demographic pattern and history.

                                  -7-

Buildings - The buildings are all single tenant and are generally
rectangular. They are positioned for good exposure to traffic flow
and are constructed from various combinations  of stucco, steel,
wood, brick and tile. Buildings range from approximately 2,350 to
24,000 square feet. Buildings are suitable for possible conversion
to various uses, although modifications may be required prior to
use for other operations.  There are no plans for renovations or
improvements.

Leases - Tenants are companies whose net worth exceeds a minimum of
$40 million. Tenants are diversified by business type and are
represented by the following types of business: consumer
electronics, food, banking,  consumer retail and a medical
facility.

Geographic Location - The properties are located within major
metropolitan areas (Standard Metropolitan Statistical Areas) with
populations that exceed 250,000.

As of December 31, 1997, a total of $17,577,874 has been invested
in properties by the Company on a consolidated basis. This includes
land, building and acquisition costs. A further description of the
Company properties, including acquisition fees and certain
acquisition expenses, is included in Item 1 and in Schedule
III-Real Estate Owned and Accumulated Depreciation of this Form
10-KSB.

Item 3.     Legal Proceedings

The Company does not have any material legal proceedings pending.

Item 4.     Submission of Matters to a Vote of Security Holders

The Company held a special meeting of the shareholders on November
12, 1997. At this meeting , the shareholders voted to approve the
following proposals: (i) to increase the number of shares to
110,000,000 of which 10,000,000 are preferred shares (996,445 voted
for, 74,813 voted against and 42,558 abstained), (ii) indemnify the
Directors, Officers, Employees and Agents to the fullest extent
under Maryland law (1,020,402 voted for, 54,381 voted against and
39,034 abstained), (iii) limit the liability of the Company's
Directors and Officers to non-monetary damages (939,773 voted for,
130,898 voted against and 43,146 abstained), (iv) define, limit,
and/or regulate certain powers of the corporation, its
shareholders, directors and agents (1,039,499 voted for, 42,437
voted against and 31,880 abstained), (v) clarify vote of
shareholders required for approval of certain matters to be simple
majority  (986,164 voted for, 88,994 voted against and 38,658
abstained), (vi) amend the Company's bylaws regarding compensation
of Directors (920,360 voted for, 134,421 voted against and 59,036
abstained), (vii) amend the Company's bylaws regarding transactions
involving the purchase of properties from and sale and lease of
properties to the Adviser, a Director or any affiliate of such
person (957,957 voted for, 79,617 voted against and 76,243
abstained), (viii) delete restriction regarding equity investments
(968,715 voted for, 63,598 voted against and 81,504 abstained),
(ix) remove restrictions on amounts of unsecured and secured
borrowings by the Company (922,512 voted for, 89,204 voted against
and 102,101 abstained), (x) specify certain rights of Directors,
Officers, Employees and Agents (975,049 voted for, 57,616 voted
against and 81,152 abstained), and (xi) delete or amend certain
inconsistent or ambiguous provisions (990,149 voted for, 59,812
voted against and 63,856 abstained).

                                  -8-

                                PART II

Item 5.     Market for Common Equity and Related Stockholder Matters

As of March 24, 1998, there were approximately 1,041 record holders
of 1,953,031 shares of the Company's Common Stock. No established
public trading market currently exists for the stock.

For the years ended December 31, 1997 and 1996, the Company paid
distributions of $1,093,439 and $737,277, respectively. A summary
of the distributions by quarter is as follows:

       Quarter Ended                    1997                1996
       March 31                      $ 227,387           $ 162,725
       June 30                         257,901             180,921
       September 30                    289,679             186,453
       December 31                     318,472             207,178

The second quarter of 1994 marked the beginning of the Company's
regular operations and, consequently, the beginning of regular
quarterly distribution payments. The Company intends to continue
the payment of regular quarterly distributions.  Other than certain
loan covenants, there are currently no material legal restrictions
that would limit the Company's ability to pay distributions.

For every two shares of stock acquired pursuant to the Company's
initial public offering, an investor also received one warrant.
These warrants were exercisable at $9 per share between March 17,
1997 and March 15, 1998. At December 31, 1997, 501,583 warrants
were outstanding.

Item 6.     Management's Discussion and Analysis of Financial Condition
            and Results of Operations.

The Company was organized on August 17, 1993 to acquire, either
directly or through joint venture arrangements, undeveloped, newly
constructed and existing net-lease real estate that is located
primarily on corner or out-parcel  locations in strong commercial
corridors, to lease on a net-lease basis to tenants having a
minimum net worth of $40 million and to hold the properties with
the expectation of equity appreciation producing a steadily rising
income stream for its Shareholders.

AAA has conducted a comprehensive review of its computer systems to
identify the systems that could be affected by the Year 2000 Issue.
The Year 2000 Issue is the result of computer programs being
written using two digits rather than four to define the applicable
year. Any programs that have time-sensitive software may recognize
a date using "00" as the year 1900 rather than the year 2000. AAA's
hardware and software are believed to be Year 2000 compliant.
Accordingly, the Company does not expect to incur any material
costs in connection with the compliance of the Year 2000 Issue.

Liquidity and Capital Resources

The initial issuance of 20,001 shares of stock for $200,010 was to
AAA.  On March 17, 1994, the Company commenced an offering of
2,000,000 Shares of Common Stock,  together with 1,000,000 Warrants
(collectively "Securities"). Until the completion of the offering
in March 1996, the Securities were offered on the basis of two (2)
Shares of Common Stock and one (1) Warrant for a total purchase
price of $20.00. The Shares and Warrants were separately
transferable by an investor.   Each Warrant entitled the holder to
purchase one Share for $9.00 until  March 15, 1998.  As of December
31, 1997, 501,583 warrants were outstanding.  The offering period
for the initial public offering terminated on March 15, 1996 with
gross proceeds totaling $10,082,520 (1,008,252 shares).  On June

                                  -9-

18, 1996, the Company commenced a follow-on offering of up to
$29,250,000 (2,853,659 shares) of additional shares of its common
stock.  The offering will terminate June 17, 1998 unless terminated
earlier.  As of December 31, 1997, gross proceeds had been received
for $8,606,419 (839,960 shares) in this second offering bringing
the total gross proceeds to $18,888,949 (1,868,213 shares).

In December 1997, the Company entered into an amended and restated
unsecured revolving credit agreement (the "Amended Credit
Agreement") with a borrowing capacity up to $15,000,000 through
February 1999.  The actual amount available to the Company is
dependent on certain covenants such as the value of unencumbered
assets.  The Amended Credit Agreement currently bears interest at
2.00% over varying London Interbank Offered Rates and it is being
used to acquire additional properties.  As of December 31, 1997,
$5,981,489 was outstanding under the Amended Credit Agreement.
These funds were advanced to third parties and entities with common
management to develop properties that will be acquired by the
Company upon completion.

The Company has an investment strategy of acquiring properties and
leasing them under net-leases to corporations having a minimum net
worth of $40 million, which strategy  minimizes the Company's
operating expenses. The Company believes that the leases will
continue to generate cash flow in excess of operating expenses. Due
to low operating expenses and ongoing cash flow, the Company does
not believe that large working capital reserves are necessary at
this time.  In addition, because all leases of the Company's
Properties are and are intended to continue to be on a net-lease
basis, it is not anticipated that a large reserve for maintenance
and repairs will be necessary.  The Company intends to distribute
a significant portion of its funds from operations unless it
becomes necessary to maintain additional reserves.

As of December 31, 1997, the Company had acquired six Properties
directly and five Properties through  joint ventures with entities
with common management and had invested $12,270,249, exclusive of
any minority interests, including certain acquisition expenses
related to the Company's investment in these properties. These
expenditures resulted in a corresponding decrease in the Company's
liquidity.

Until Properties are acquired by the Company, proceeds are held in
short-term, highly liquid investments which the Company believes to
have appropriate safety of principal. This investment strategy has
allowed, and continues to allow, high liquidity to facilitate the
Company's use of these funds to acquire properties at such time as
properties suitable for acquisition are located.  At December 31,
1997, the Company's cash and cash equivalents totaled $1,401,740.

The Company made cash distributions to the Shareholders during each
quarter of 1997 and 1996, distributing a total of $1,093,439 and
$737,277, respectively, for each such fiscal year to the investors.

On February 20, 1998, the Company acquired a newly constructed
property on lease to OfficeMax, Inc. for the purchase price of
$2,392,442. This property is being operated as an OfficeMax store
in Lake Jackson, Texas.

Inflation has had very little effect on income from operations.
Management expects that increases in store sales volumes due to
inflation as well as increases in the Consumer Price Index
(C.P.I.),  may contribute to capital appreciation of the Company
Properties. These factors, however, also may have an adverse impact
on the operating margins of the tenants of the Properties.

Funds From Operations

Funds from operations (FFO) increased $311,211 or 47% to $967,762
in 1997 from $656,551 in 1996.  The Company has adopted the
National Association of Real Estate Investment Trusts (NAREIT)
definition of FFO.  FFO is calculated as net income (computed in
accordance with generally accepted accounting principles) excluding

                                   -10-

gains or losses from sales of property, depreciation and
amortization of real estate assets, and nonrecurring items of
income or expense.  For purposes of the table below, FFO excludes
the nonrecurring potential acquisition costs.  FFO is generally
considered by industry analysts to be the most appropriate measure
of performance and does not represent cash provided by operating
activities in accordance with generally accepted accounting
principles and are not necessarily indicative of cash available to
meet cash needs. FFO is not defined by generally accepted
accounting principles.

Below is the reconciliation of net income to funds from operations:

                                        1997          1996

Net income                          $ 538,857     $ 542,807
Plus depreciation                     146,015       113,744
Plus potential acquisition costs      282,890             -
Total funds from operations         $ 967,762     $ 656,551

Results of Operations

Years Ended December 31, 1997 and 1996:

During the years ended December 31, 1997 and 1996, the Company
owned and leased 11 and 8 properties, respectively.  During the
years ended December 31, 1997 and 1996, the Company earned
$1,556,815 and $924,788, respectively, in rental income from
operating leases and earned income from direct financing leases.
The 68 percent increase in rental income and earned income during
1997, as compared to 1996, is primarily attributable to rental
income earned on the three properties acquired during 1997.  In
addition, rental and earned income increased during 1997 as a
result of the fact that the three properties acquired during 1996
were operational for a full fiscal year in 1997.  Rental and earned
income is expected to increase in 1998 as the Company acquires
additional properties and due to the fact that the three properties
acquired during 1997 will contribute to the Company's income for a
full fiscal year in 1998.

During the years ended December 31, 1997 and 1996, the Company's
expenses were $716,627 and $302,857, respectively.  The $413,770
increase in expenses is primarily attributable to $282,890 of costs
incurred during 1997 related to potential acquisition costs related
to the proposed acquisition of the Company's adviser.    See Item
1 of this report for a description of the proposed acquisition of
the Company's adviser.  The increase is also attributable to (i) a
$68,594 increase in reimbursements and fees to a related party as
a result of increased rental income for the year ended December 31,
1997, (ii) a $28,050 increase in general operating and
administrative expenses primarily attributable to an increase in
legal fees and director fees since more director meetings were held
during 1997, and (iii) a $32,271 increase in depreciation as a
result of the depreciation of the additional properties acquired
during 1997 and a full year of depreciation on the properties
acquired during 1996.

Item 7.     Financial Statements.

The response to this item is submitted in Item 13(a) of this report
and is incorporated herein by reference.

Item 8.     Changes in and Disagreements with Accountants on Accounting
            and Financial Disclosure.

None.

                                  -11-

                                PART III

Item 9.     Directors and Executive Officers

The directors and executive officers of the Company are as follows:


        Name                Age    Position Held               Officer Since

H. Kerr Taylor              47     President
                                   Chief Executive Officer
                                   Director                        1993

Robert S. Cartwright, Jr.   48     Director                        1993

George A. McCanse, Jr.      44     Director                        1993

L. Larry Mangum             33     Vice President and Treasurer    1996

H. Kerr Taylor, age 47, serves as the President and Chairman of the
Board of Directors of the Company. Mr. Taylor is a graduate of
Trinity University.  Mr. Taylor also received a Masters of Business
Degree from Southern Methodist University and a Doctor of
Jurisprudence from South Texas College of Law.  Mr. Taylor has over
twenty years experience and has participated in over 300 real
estate transactions.  Mr. Taylor has served on a board and
governing bodies of a bank, numerous private and public
corporations and charitable institutions.  Mr. Taylor is the
president, the sole director and sole shareholder of AAA, a real
estate operating company he founded in 1988.  Mr. Taylor has served
in this capacity since the company's formation.

Mr. Taylor is currently a general partner or principal of a general
partner of eleven affiliated limited partnerships.  Mr. Taylor is
a member of the National Board of Realtors, Texas Association of
Realtors and Texas Bar Association.

Robert S. Cartwright, Jr., age 48, is currently a Professor of
Computer Science at Rice University.  He earned a bachelor's degree
magna cum laude in Applied Mathematics from Harvard College in 1971
and a doctoral degree in Computer Science from Stanford University
in 1977.  From September 1976 until June 1980, he was Assistant
Professor of Computer Science at Cornell University.  In July 1980,
he joined the faculty of Rice University as Associate Professor of
Computer Science.  He was promoted to the rank of Professor in July
1986.  During his eighteen years as a faculty member at Rice
University, he has twice served as department Chair.

Professor Cartwright has compiled an extensive record of
professional service.  He is a Fellow of the Association for
Computing Machinery (ACM) and a member of the ACM Education Board,
chairing the ACM Pre-College Education Committee.  He is also a
member of the Board of Directors of the Computing Research
Association, an umbrella organization representing academic and
industrial computing researchers. Professor Cartwright has served
as a charter member of the editorial boards of two professional
journals and has chaired several major ACM conferences.  From
1991-1996, he was a member of the ACM Turing Award Committee, which
selects the annual recipient of the most prestigious international
prize for computer science research.

George A. McCanse, Jr. , age 44, is the President of Valuation
OnLine, Inc., an online computer communications and data access
service for the commercial real estate valuation industry.

Mr. McCanse is a member of the Appraisal Institute (MAI
designation) and the International Council of Shopping Centers. He
was formally a member of the Valuation Committee of the National
Council of Real Estate Investment Fiduciaries.

                                    -12-

Mr. McCanse  resides in New Canaan, Connecticut.  He holds a BBA
degree from the University of Texas and has pursued graduate level
study in real estate, architecture and finance.  He has also been
involved in real estate investing and development, including the
acquisition and sale of over $150,000,000 of real estate during the
1970s and 1980s.

L. Larry Mangum, age 33, serves as Vice President and Treasurer of
the Company.  Mr. Mangum is the Vice President of Finance of AAA.
Mr. Mangum is responsible for the financial accounting and
reporting relating to the AAA-sponsored partnerships and their
properties.  He has over ten years of accounting experience,
including four years with a public accounting firm.  He previously
worked for American General Corporation, a national insurance
company, from 1991-1996 as part of a team responsible for
supervising their reporting activities.  Mr. Mangum received a
B.B.A. degree in accounting from Stephen F. Austin State University
and subsequently earned the CPA designation.

The affairs of the Company are conducted by AAA.  In addition to
Mr. Taylor as president and L. Larry Mangum as Vice President of
Finance, other officers of AAA include:

Tim Kelley, age 50, serves as Vice President of Operations of AAA.
Mr. Kelley's career spans over twenty years of debt and equity
industry experience.  Mr. Kelley has held senior management,
compliance and sales responsibilities in Broker/Dealers and in
investment banking firms including Lehman Brothers Kuhn Loeb,
Oppenheimer and Co., Inc., and McKenna and Company.  Mr. Kelley
holds the series 24, 27, 7, 3, 15, and 63 NASD licenses.  He
received his B.S. degree from Kent State University.

Randal Garbs, age 44, serves as Vice President of Acquisitions of
AAA.  Mr. Garbs is responsible for property acquisitions as well as
marketing services to its tenants and developers.  Mr. Garbs has
over twenty years experience in marketing including acting as CEO
of a Houston based service company.  Mr. Garbs has earned the
series 7 and 63 NASD licenses, the Texas Real Estate license and is
a candidate for the CCIM designation.  Mr. Garbs received his B.S.
and M.B.A. from Houston Baptist University.

Other individuals who are specialists in their respective fields
are periodically employed by AAA and are engaged on an as-needed
basis to perform services on behalf of the Company. These
individuals are not employees of the Company nor are they employees
of other AAA-sponsored partnerships, although they do perform
various services and activities for those partnerships.

These individuals are:

Don Grieb, age 46, is the Director of Development and Acquisitions
of AAA.  Mr. Grieb has over twenty years experience within the real
estate industry including development, investment analysis and
administration.  Mr. Grieb has served within management of such
real estate firms as Hines Interests and AEW.  Mr. Grieb received
his B.S. and M.B.A. from the University of Illinois and is a
registered architect.

Joe Mayer, age 42, is a permanent advisor of AAA responsible for
debt and equity issues.  Mr. Mayer has over twenty years of
experience in business, accounting, investments and real estate
transactions.  Mr. Mayer is a certified public accountant and
worked for a national public accounting firm.  Mr. Mayer received
his B.B.A. degree in accounting from the University of Kentucky and
is a licensed real estate broker.

Jane Costello, age 41, is a certified public accountant and is
responsible for the tax accounting related to the AAA-sponsored
partnerships and their properties. She has over eighteen years
experience as an accountant including over 4 years with a national
public accounting firm and the last eight years with her own
accounting practice. Ms. Costello received a B.B.A. degree in
accounting from the University of Texas.

                                   -13-

Item 10.     Executive Compensation

No executive officer of the Company received any salary or bonus
from the Company during the year ended December 31, 1997. See Note
8 in the accompanying financial statements for a description of
related party transactions. The overall management decisions for
the day-to-day business affairs of the Company are made by AAA
under the direction of the Board of Directors.  The Company itself
has officers and directors, but no other employees.

The Company paid each Director a fee ranging from $500 to $750 for
meetings in which they participated and, where applicable,
reimbursed directors for travel expenses. In addition, the Company
paid each independent Director an additional $1,000 in 1997 in
recognition of the additional time and effort expended in
consideration of certain potential acquisitions. There is no other
basis of compensation for the Directors. During 1997, a total of
$19,250 was paid as Directors' Fees.

Item 11.     Security Ownership of Certain Beneficial Owners and Management

As of March 17, 1998, no person was known by the Issuer to be the
beneficial owner of more than 5% of the Units of the Issuer.

The following table sets forth, as of March 17, 1998, the
beneficial ownership interest of the Executive Officers and
Directors of the Company:


Title of Class  Name & Address of      Amount & Nature of   Percentage of Class
                Beneficial Owner      Beneficial Ownership

                H. Kerr Taylor
                5300 Mercer
Common Stock    Houston, TX 77005         20,524 Shares *      Less than 2%

                George McCanse, Jr.
                128 Orchard Street
Common Stock    New Canaan, CT 06840         770 Shares        Less than 1%

                Robert S. Cartwright, Jr.
                3310 Underwood
Common Stock    Houston, TX 77025          2,005 Shares        Less than 1%

                Officers & Directors      23,299 Shares        Less than 2%


* 523 Shares are owned directly and 20,001 Shares are beneficially
  owned by AAA.  The Common Stock of AAA is wholly owned by H. Kerr Taylor.

Item 12.     Certain Relationships and Related Transactions

See Item 1 of this report for a description of the proposed
acquisition of the Company's adviser. AAA owns 20,001 shares of the
Company's stock.  The common stock of AAA is wholly owned by the
president and director of the Company.  Distributions paid to AAA
totaled $14,429 and $14,156 in 1997 and 1996, respectively. In
addition, the Company has entered into an Omnibus Services
Agreement with AAA whereby AAA provides property acquisition,
leasing, administrative and management services for the Company.

                                   -14-

Reimbursements and fees of $106,504 and $37,910 were incurred and
charged to expense in 1997 and 1996, respectively.

AAA has incurred certain costs in connection with the organization
and syndication of the Company.  Reimbursement of these costs
become obligations of the Company in accordance with the terms of
the offering.  Costs of $164,985 and $98,494 were incurred by AAA
in 1997 and 1996, respectively, in connection with the issuance and
marketing of the Company's stock.  These costs are reflected as
issuance costs and are recorded as a reduction to capital in excess
of par value.

Acquisition fees, including real estate commissions, finders fees,
consulting fees and any other non-recurring fees incurred in
connection with locating, evaluating and selecting properties and
structuring and negotiating the acquisition of properties are
included in the basis of the properties.  Acquisition fees of
$1,059,805 and $222,785 were incurred and paid to AAA during 1997
and 1996, respectively.  Acquisition fees paid to AAA in 1997
included $372,686 that was earned prior to purchasing certain
properties.

On August 8, 1997, the Company entered into a loan agreement as the
lender with AmReit Development Corp., an entity with common
management, in the amount of $2,247,254 for the purpose of
developing a property in Lake Jackson, Texas that will be acquired
by the Company upon completion of the property.  As of December 31,
1997, $1,928,974 was outstanding on the loan.  The loan bears
interest at the prime lending rate and matures on May 1, 1998.

On September 18, 1997, the Company entered into a loan agreement as
the lender with Centurion Video, Ltd. in the amount of $1,153,794
for the purpose of developing a property in Ridgeland, Mississippi
that was acquired by the Company upon completion of the property.
AAA Net Developers, Ltd., an entity with common management, was the
limited partner in Centurion Video, Ltd.  As of December 31, 1997,
the loan was repaid in full. The loan had interest at the prime
lending rate plus .5%.

For further information see Notes 4, 8 and 9 to the financial
statements and see the MANAGEMENT AND AFFILIATE COMPENSATION
section of the Company's Prospectus dated June 18, 1996.

                                  -15-

                                 PART IV

Item 13.    Exhibits, Financial Statements, Schedules and Reports on Form 8-K.

(a) (1)     Financial Statements

            Independent Auditors' Report
            Consolidated Balance Sheet, December 31, 1997
            Consolidated Statements of Income for the Years Ended
              December 31, 1997 and 1996
            Consolidated Statements of Shareholders' Equity for the
              Years Ended December 31, 1997 and 1996
            Consolidated Statements of Cash Flows for the Years Ended
              December 31, 1997 and 1996
            Notes to Consolidated Financial Statements for the Years
              Ended December 31, 1997 and 1996

    (2)     Financial Statement Schedules: See (d) below

    (3)     Exhibits See (c) below

(b)         Reports on Form 8-K filed after September 30, 1997:

    (1)     November 12, 1997 to report the results of a special meeting
            of the shareholders held on November 12, 1997.

    (2)     October 10, 1997 report the increase in its credit line to
            $15 million and to report the proposed amendments to its
            Charter and Bylaws to be voted at its special shareholders
            meeting in November 1997.

(c)         Exhibits

            3 (i)     Articles of Incorporation (included as Exhibit
                      3.1 of the Exhibits to Registration Statement No.
                      33-70654 of the Company and incorporated herein
                      by reference).

            3 (ii)    Articles of Amendment to the Articles of
                      Incorporation (included as Exhibit 3 (ii) of the
                      Company's Annual Report on Form 10-K for the year
                      ended December 31, 1994 and incorporated herein
                      by reference).

            3 (iii)   Amended and Restated By-Laws (included as Exhibit
                      3 (iii) of the Exhibits to the Company's Annual
                      Report on Form 10-K for the year ended December
                      31, 1994 and incorporated herein by reference).

            3 (iv)    Amended and Restated By-Laws, dated August 1,
                      1996 (included as Exhibit 3 (iv) of the Exhibits
                      to the Company's Annual Report on Form 10-K for
                      the year ended December 31, 1996 and incorporated
                      herein by reference).

            3 (v)     Articles of Amendment to the Articles of
                      Incorporation dated December 16, 1997.

            3 (vi)    Amended and Restated By-Laws, dated November 12, 1997.

                                   -16-

            4 (a)     Subscription Agreement and Signature Page-Order
                      Form (included in Exhibit B to the Prospectus of
                      Company dated March 17, 1994, contained in
                      Registration Statement No. 33-70654 of Company
                      and incorporated herein by reference).

            4 (b)     Form of Sales Warrant (included as Exhibit 4.3 to
                      Registration Statement No. 33-70654 of Company
                      and incorporated herein by reference).

           10 (a)     Omnibus Service Agreement by and between Company
                      and American Asset Advisers Realty Corporation
                      (included as Exhibit 10.2 of the Exhibits to
                      Registration Statement No. 33-70654 of Company
                      and incorporated herein by reference).

           10 (b)(2)  Lease between Ironwood Development Corporation, as
                      landlord and Tandy Corporation, a Delaware corporation,
                      dated August, 1991 (included as Exhibit 10 (b) (2) of
                      the Exhibits to the Company's Annual Report on Form 10-K
                      for the year ended December 31, 1995 and incorporated
                      herein by reference).

           10 (b)(3)  Assignment and Assumption of the Lease between Ironwood
                      Development Corporation and American Asset Advisers
                      Trust, Inc., dated June 14, 1994 (included as Exhibit 10
                      (b) (1) of the Exhibits to the Company's Annual Report
                      on Form 10-K for the year ended December 31, 1994, and
                      incorporated herein by reference).

           10 (b)(4)  Assignment of Guaranties and Warranties from Ironwood
                      Development Corporation to American Asset Advisers Trust,
                      Inc., dated June 14, 1994 (included as Exhibit 10 (b) (4)
                      of the Exhibits to the Company's Annual Report on Form
                      10-K for the year ended December 31, 1995 and incorporated
                      herein by reference).

           10 (b)(5)  Real Estate Sales Agreement between America's Favorite
                      Chicken Company and AAA Net Realty Fund X, Ltd., dated
                      June 13, 1994 (included as Exhibit 10 (b) (5) of the
                      Exhibits to the Company's Annual Report on Form 10-K
                      for the year ended December 31, 1995 and incorporated
                      herein by reference).

           10 (b)(6)  Lease (the "AFCC Lease") between AAA Net Realty Fund X,
                      Ltd., as landlord and America's Favorite Chicken Company,
                      as tenant, dated June 13, 1994 (included as Exhibit 10
                      (b) (6) of the Exhibits to the Company's Annual Report
                      on Form 10-K for the year ended December 31, 1995 and
                      incorporated herein by reference).

           10 (b)(7)  Assignment of the Agreement and the Lease form AAA Net
                      Realty Fund X, Ltd. to American Asset Advisers Trust,
                      Inc. (included as Exhibit 10 (b) (7) of the Exhibits to
                      the Company's Annual Report on Form 10-K for the year
                      ended December 31, 1995 and incorporated herein by
                      reference).

           10 (b)(8)  First Amendment to AFCC Lease, dated July 22, 1994
                      (included as Exhibit 10 (b) (8) of the Exhibits to the
                      Company's Annual Report on Form 10-K for the year
                      ended December 31, 1995 and incorporated herein by
                      reference).

           10 (b)(9)  Agreement for Purchase and Sale of Real Estate (the "KCBB
                      Contract") between KCBB, Inc. and AAA Net Realty Fund X,
                      Ltd., dated October 12, 1994 (included as Exhibit 10 (b)
                      (9) of the Exhibits to the Company's Annual Report on Form
                      10-K for the year ended December 31, 1995 and incorporated
                      herein by reference).

                                   -17-

           10 (b)(10) Lease (the "KCBB Lease") between KCBB, Inc., as landlord
                      and Sound Warehouse, Inc., as tenant, dated November 19,
                      1993 (included as Exhibit 10 (b) (10) of the Exhibits to
                      the Company's Annual Report on Form 10-K for the year
                      ended December 31, 1995 and incorporated herein by
                      reference).

           10 (b)(11) Guaranty of KCBB Lease by Blockbuster Entertainment
                      Corporation (included as Exhibit 10 (b) (11) of the
                      Exhibits to the Company's Annual Report on Form 10-K
                      for the year ended December 31, 1995 and incorporated
                      herein by reference).

           10 (b)(12) Amendment to the KCBB Contract (included as Exhibit 10
                      (b) (12) of the Exhibits to the Company's Annual Report
                      on Form 10-K for the year ended December 31, 1995
                      and incorporated herein by reference).

           10 (b)(13) Joint Venture Agreement between the Company and AAA Net
                      Realty Fund X, Ltd., dated October 27, 1994 (included
                      as Exhibit 10 (b) (3) of the Exhibits to the Company's
                      Annual Report on Form 10-K for the year ended December
                      31, 1994, and incorporated herein by reference).

           10 (b)(14) Assignment and Assumption of the Lease between KCBB,
                      Inc. and AAA Joint Venture 94-1, dated November 11, 1994
                      (included as Exhibit 10 (b) (4) of the Exhibits to the
                      Company's Annual Report on Form 10-K for the year ended
                      December 31, 1994, and incorporated herein by reference).

           10 (b)(15) Assignment from KCBB, Inc. to AAA Joint Venture 94-1,
                      dated November 11, 1994 (included as Exhibit 10 (b) (15)
                      of the Exhibits to the Company's Annual Report on Form
                      10-K for the year ended December 31, 1995 and incorporated
                      herein by reference).

           10 (b)(16) Assignment from KCBB, Inc., to AAA Joint Venture 94-1
                      of warranties, dated November 11, 1994 (included as
                      Exhibit 10 (b) (16) of the Exhibits to the Company's
                      Annual Report on Form 10-K for the year ended December
                      31, 1995 and incorporated herein by reference).

           10 (b)(17) Agreement for Purchase and Sale of Real Estate (the
                      KCBB Contract II") between KCBB, Inc. and the Company,
                      dated August 9, 1995 (included as Exhibit 10 (b) (17)
                      of the Exhibits to the Company's Annual Report on Form
                      10-K for the year ended December31, 1995 and incorporated
                      herein by reference).

           10 (b)(18) Lease (the "KCBB Lease II") between KCBB, Inc., as
                      landlord and Blockbuster Music Retail, Inc., as tenant,
                      dated August 9, 1995 (included as Exhibit 10 (b) (18) of
                      the Exhibits to the Company's Annual Report on Form 10-K
                      for the year ended December 31, 1995 and incorporated
                      herein by reference).

           10 (b)(19) Amendment to Agreement for Purchase and Sale of Real
                      Estate Assigning Agreement to AAA Joint Venture 95-2
                      (included as Exhibit 10 (b) (19) of the Exhibits to the
                      Company's Annual Report on Form 10-K for the year ended
                      December 31, 1995 and incorporated herein by reference).

                                 -18-

           10 (b)(20) Joint Venture Agreement between the Company and AAA Net
                      Realty Fund XI, Ltd., dated August 24, 1995 (included as
                      Exhibit 10 (b) (20) of the Exhibits to the Company's
                      Annual Report on Form 10-K for the year ended December
                      31, 1995 and incorporated herein by reference).

           10 (b)(21) Assignment and Assumption of the KCBB Lease II between
                      KCBB, Inc. and AAA Joint Venture 95-2, dated September
                      12, 1995 (included as Exhibit 10 (b) (21) of the Exhibits
                      to the Company's Annual Report on Form 10-K for the year
                      ended December 31, 1995 and incorporated herein by
                      reference).

           10 (b)(22) Assignment from KCBB, Inc. to AAA Joint Venture 95-2 of
                      Contracts and Warranties, dated September 12, 1995
                      (included as Exhibit 10 (b) (22) of the Exhibits to the
                      Company's Annual Report on Form 10-K for the year ended
                      December 31, 1995 and incorporated herein by reference).

           10 (b)(23) Agreement for the Purchase and Sale of Real Estate
                      between Turner Adreac, L.C. and the Company, dated
                      March 31, 1995 (included as Exhibit 10 (b) (23)
                      of the Exhibits to the Company's Annual Report on Form
                      10-K for the year ended December 31, 1995 and
                      incorporated herein by reference).

           10 (b)(24) Assignment of Rents, Leases and Profits from Turner
                      Adreac, L.C. to American Asset Advisers Trust, Inc.,
                      dated March 31, 1995 (included as Exhibit 10 (b) (24)
                      of the Exhibits to the Company's Annual Report on Form
                      10-K for the year ended December 31, 1995 and incorporated
                      herein by reference).

           10 (b)(25) Lease (the "OneCare Lease") between Turner Adreac, L.C.
                      and OneCare Health Industries, Inc., a Texas non-profit
                      corporation, dated February 17, 1995 (included as Exhibit
                      10 (b) (25) of the Exhibits to the Company's Annual
                      Report on Form 10-K for the year ended December 31, 1995
                      and incorporated herein by reference).

           10 (b)(26) Assignment and Assumption of the OneCare Lease between
                      Turner Adreac, L.C. and American Asset Advisers Trust,
                      Inc., dated September 26, 1995 (included as Exhibit 10
                      (b) (26) of the Exhibits to the Company's Annual Report
                      on Form 10-K for the year ended December 31, 1995 and
                      incorporated herein by reference).

           10 (b)(27) Assignment of Warranties from Turner Adreac, L.C. to the
                      Company, dated September 26, 1995 (included as Exhibit 10
                      (b) (27) of the Exhibits to the Company's Annual Report on
                      Form 10-K for the year ended December 31, 1995 and
                      incorporated herein by reference).

           10 (b)(28) Agreement for Purchase and Sale of Real Estate between
                      Company and Tucson Oracle Limited Partnership (AZ LP),
                      dated January 19, 1996 (included as Exhibit 10 (b) (28)
                      of the Exhibits to the Company's Annual Report on Form
                      10-K for the year ended December 31, 1995 and incorporated
                      herein by reference).

           10 (b)(29) First Amendment to Agreement for the Purchase and Sale
                      of Real Estate between Company and Tucson Oracle Limited
                      Partnership (AZ LP), dated June 10, 1996 (included as
                      Exhibit 10 (b) (29) of the Exhibits to the Company's
                      Annual Report on Form 10-K for the year ended December
                      31, 1996 and incorporated herein by reference).

                                   -19-

           10 (b)(30) Lease (the "Just For Feet Lease") between Cumberland
                      America Development Company, Inc. and Just for Feet,
                      Inc., dated August 10, 1995 (included as Exhibit 10 (b)
                      (30) of the Exhibits to the Company's Annual Report on
                      Form 10-K for the year ended December 31, 1996 and
                      incorporated herein by reference).

           10 (b)(31) First Amendment to Just For Feet Lease, dated February
                      29, 1996 (included as Exhibit 10 (b) (31) of the Exhibits
                      to the Company's Annual Report on Form 10-K for the year
                      ended December 31, 1996 and incorporated herein by
                      reference).

           10 (b)(32) Second Amendment to Just For Feet Lease, dated May 29,
                      1996 (included as Exhibit 10 (b) (32) of the Exhibits
                      to the Company's Annual Report on Form 10-K for the year
                      ended December 31, 1996 and incorporated herein by
                      reference).

           10 (b)(33) Third Amendment to Just For Feet Lease, dated January,
                      1997 (included as Exhibit 10 (b) (33) of the Exhibits
                      to the Company's Annual Report on Form 10-K for the year
                      ended December 31, 1996 and incorporated herein by
                      reference).

           10 (b)(34) Joint Venture Agreement between the Company and AAA Net
                      Realty Fund X, Ltd. and AAA Net Realty Fund XI, Ltd.,
                      dated April 5, 1996 (included as Exhibit 10 (b) (34) of
                      the Exhibits to the Company's Annual Report on Form
                      10-K for the year ended December 31, 1996 and incorporated
                      herein by reference).

           10 (b)(35) Bill of Sale and Assignment between Tucson Oracle Limited
                      Partnership and AAA Joint Venture 96-1, dated September
                      6, 1996 (included as Exhibit 10 (b) (35) of the Exhibits
                      to the Company's Annual Report on Form 10-K for the year
                      ended December 31, 1996 and incorporated herein by
                      reference).

           10 (b)(36) Joint Venture Agreement between the Company and AAA Net
                      Realty Fund XI, Ltd., dated August 8, 1996 (included as
                      Exhibit 10 (b) (36) of the Exhibits to the Company's
                      Annual Report on Form 10-K for the year ended December
                      31, 1996 and incorporated herein by reference).

           11         Computation of earnings per common share.

           27         Financial Data Schedule.

Items 5, 6 and 7 of Part II and Item 13 of Part IV of this Form 10-KSB
contain the financial statements, financial statement schedule
and other financial information.  No Annual Report or proxy
material has yet been provided to security holders with respect to
1998.

(d)                   Financial Statements Schedules

                      Schedule III - Real Estate Owned and Accumulated
                      Depreciation

                                    -20-


                                SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Issuer has duly caused this
report to be signed on its behalf on the 31st of March 1998 by the
undersigned, thereunto duly authorized.

                             American Asset Advisers Trust, Inc.

                             /s/ H. Kerr Taylor
                             H. Kerr Taylor, President and Chief Financial
                             Officer




Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the Issuer and in the capacities and on the dates
indicated.



/s/ H. Kerr Taylor                                          March 31, 1998
H. KERR TAYLOR
President, Chairman of the Board (Chief Executive
Officer and Chief Financial Officer) and Director


/s/ Robert S. Cartwright, Jr.                               March 31, 1998
ROBERT S. CARTWRIGHT, JR., Director


/s/ George A. McCanse, Jr.                                  March 31, 1998
GEORGE A. McCANSE, JR., Director


/s/ L. Larry Mangum                                         March 31, 1998
L. LARRY MANGUM, Vice President and
Treasurer (Principal Accounting Officer)



                                    -21-







                  ANNUAL REPORT ON FORM 10-KSB
               ITEMS 7, 13(a)(1) AND (2) AND 13(d)


                CONSOLIDATED FINANCIAL STATEMENTS
         FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996


                 AND FINANCIAL STATEMENT SCHEDULE
               FOR THE YEAR ENDED DECEMBER 31, 1997


               AMERICAN ASSET ADVISERS TRUST, INC.



                                   F-1



               AMERICAN ASSET ADVISERS TRUST, INC.
                  INDEX TO FINANCIAL STATEMENTS





                                                                         Page

FINANCIAL STATEMENTS:

Independent Auditors' Report                                               F-3
Consolidated Balance Sheet, December 31, 1997                              F-4
Consolidated Statements of Income for the Years Ended
    December 31, 1997 and 1996                                             F-5
Consolidated Statements of Shareholders' Equity
    for the Years Ended December 31, 1997 and 1996                         F-6
Consolidated Statements of Cash Flows for the Years Ended
    December 31, 1997 and 1996                                             F-7
Notes to Consolidated Financial Statements for the Years Ended
    December 31, 1997 and 1996                                     F-8 to F-15



FINANCIAL STATEMENT SCHEDULE:
Schedule III Consolidated Real Estate Owned and Accumulated
    Depreciation for the Year Ended December 31, 1997                     F-16


All other financial statement schedules are omitted as the
required information is either inapplicable or is included in the
financial statements or relates notes.


                                   F-2

INDEPENDENT AUDITORS' REPORT

To the Board of Directors
American Asset Advisers Trust, Inc.

We have audited the accompanying consolidated balance sheet of
American Asset Advisers Trust, Inc. (the  "Company") as of
December 31, 1997, and the related consolidated statements of
income, shareholders' equity and cash flows for each of the two
years in the period ended December 31, 1997.  Our audits also
included the financial statement schedule listed in the Index.
These financial statements and the financial statement schedule
are the responsibility of the Company's  management.  Our
responsibility is to express an opinion on the financial
statements and financial statement schedule based on our audits.

We conducted our audits in accordance with generally accepted
auditing standards.  Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement.   An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.   An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present
fairly, in all material respects, the financial position of the
Company as of December 31, 1997, and the results of their
operations and their cash flows for each of the two years in the
period ended December 31, 1997 in conformity with generally
accepted accounting principles.  Also, in our opinion, such
financial statement schedule, when considered in relation to the
basic financial statements taken as a whole, presents fairly in
all material respects the information set forth therein.





DELOITTE & TOUCHE LLP

Houston, Texas
March 10, 1998


                                   F-3


                   AMERICAN ASSET ADVISERS TRUST, INC.
                       CONSOLIDATED BALANCE SHEET
                            DECEMBER 31, 1997


ASSETS
 Cash and cash equivalents                                    $ 1,401,740
 Accounts receivable                                              124,600
 Property:
   Escrow deposits                                                 11,100
   Land                                                         6,379,675
   Land under development                                         750,000
   Buildings                                                    8,037,003
   Construction in progress                                     6,991,360
                                                               22,169,138
   Accumulated depreciation                                      (341,272)
     Total property                                            21,827,866
 Net investment in direct financing leases                      3,161,196
 Other assets:
   Prepaid acquisition costs                                      372,686
   Accrued rental income                                          168,179
   Organization costs, net of accumulated amortization
      OF $223,672                                                  90,096
     Total other assets                                           630,961
 TOTAL ASSETS                                                 $27,146,363

 LIABILITIES AND SHAREHOLDERS' EQUITY
 Liabilities:
   Notes payable                                              $ 6,131,489
   Accounts payable                                               108,823
   Security deposit                                                15,050
     TOTAL LIABILITIES                                          6,255,362
 Minority interest                                              5,260,795
 Commitments (Note 10)
 Shareholders' equity:
   Preferred stock, $.01 par value, 10,000,000 shares
      authorized, none issued
   Common stock, $.01 par value, 100,000,000 shares
      authorized, 1,868,213 shares issued and outstanding          18,682
   Capital in excess of par value                              16,665,300
   Accumulated distributions in excess of earnings             (1,053,776)
     TOTAL SHAREHOLDERS' EQUITY                                15,630,206
 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                   $27,146,363


See Notes to Consolidated Financial Statements.

                                     F-4


                     AMERICAN ASSET ADVISERS TRUST, INC.
                      CONSOLIDATED STATEMENTS OF INCOME


                                                For the Years Ended December 31,
                                                          1997          1996
Revenues:
  Rental income from operating leases                 $1,217,187    $ 780,768
  Earned income from direct financing leases             339,628      144,020
  Interest income                                        153,895      137,528

    Total revenues                                     1,710,710    1,062,316

Expenses:
  General operating and administrative                   112,464       84,414
  Reimbursements and fees to related party               106,504       37,910
  Interest                                                 6,000        5,000
  Depreciation and amortization                          208,769      175,533
  Potential acquisition costs                            282,890            -

    Total expenses                                       716,627      302,857

Income before minority interest in net income of
  consolidated joint ventures                            994,083      759,459

Minority interest in net income of consolidated
  joint ventures                                        (455,226)    (216,652)

Net income to common shareholders                     $  538,857    $ 542,807


Basic earnings per share                              $     0.34    $    0.51
Diluted earnings per share                            $     0.33    $    0.48

Weighted average number of common shares outstanding   1,563,048    1,066,353
Weighted average number of common shares outstanding
  plus dilutive potential common shares                1,624,217    1,127,832



See Notes to Consolidated Financial Statements.

                                     F-5

<TABLE>

                    AMERICAN ASSET ADVISERS TRUST, INC.
             CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
              FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996

<CAPTION>


                                                                            Accumulated
                                                            Capital in     distributions
                                         Common Stock        excess of     in excess of
                                       Number     Amount     par value       earnings         Total

<S>                                   <C>       <C>       <C>            <C>              <C>
Balance at December 31, 1995          827,876   $ 8,279   $ 7,438,368    $    (304,724)   $ 7,141,923

  Net income                                -         -             -          542,807        542,807

  Distributions ($.71 per share)            -         -             -         (737,277)      (737,277)

  Issuance of common stock            377,049     3,770     3,810,883                -      3,814,653

  Stock issuance costs                      -         -      (468,404)               -       (468,404)

Balance at December 31, 1996        1,204,925    12,049    10,780,847         (499,194)    10,293,702

  Net income                                -         -             -          538,857        538,857

  Distributions ($.72 per share)            -         -             -       (1,093,439)    (1,093,439)

  Issuance of common stock            663,288     6,633     6,783,642                -      6,790,275

  Stock issuance costs                      -         -      (899,189)               -       (899,189)

Balance at December 31, 1997        1,868,213   $18,682   $16,665,300    $  (1,053,776)   $15,630,206



See Notes to Consolidated Financial Statements.

</TABLE>

                                   F-6


                     AMERICAN ASSET ADVISERS TRUST, INC.
                   CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                For the Years Ended December 31,
                                                         1997            1996
Cash flows from operating activities:
  Net income                                        $   538,857     $  542,807
  Adjustments to reconcile net income to net cash
    flows from operating activities:
      Amortization                                       62,754         61,789
      Depreciation                                      146,015        113,744
      Increase in accounts receivable                  (119,481)        (5,119)
      Increase (decrease)  in accounts payable           72,588        (31,246)
      Cash receipts from direct financing leases
        greater (less) than income recognized            (9,398)         1,017
      Decrease (increase) in escrow deposits, net of
        minority interest partners                        27,150       (38,250)
      Increase in accrued rental income                  (93,554)      (50,780)
      Increase in minority interest                      455,226       216,652
        Net cash provided by operating activities      1,080,157       810,614

Cash flows from investing activities:
  Acquisition of real estate:
    Accounted for under the operating lease method   (3,668,365)    (1,695,146)
    Accounted for under the direct financing lease            -     (1,342,805)
    Land under development                             (750,000)             -
    Construction in progress                         (6,991,360)             -
  Change in prepaid acquisition costs                  (298,350)         3,425
    Net cash used in investing activities           (11,708,075)    (3,034,526)

Cash flows from financing activities:
  Proceeds from issuance of stock, net                5,891,086      3,346,249
  Prepaid issuance costs                                101,399       (101,399)
  Proceeds from note payable                          5,981,489              -
  Distributions paid to shareholders                 (1,093,439)      (737,277)
  Distributions to minority interest partners          (467,188)      (232,311)
    Net cash provided by financing activities        10,413,347      2,275,262

Net (decrease) increase in cash and cash
  equivalents                                          (214,571)        51,350
Cash and cash equivalents at beginning of year        1,616,311      1,564,961
Cash and cash equivalents at end of year            $ 1,401,740     $1,616,311

Supplemental disclosure of non-cash financing
  activities:
  Real estate and escrow deposit contributed by
    partners of the consolidated joint ventures
      (minority interest)                           $ 1,677,659     $2,051,337


 See Notes to Consolidated Financial Statements.


                                    F-7


                   AMERICAN ASSET ADVISERS TRUST, INC.
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996


1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF BUSINESS AND NATURE OF OPERATIONS

American Asset Advisers Trust, Inc. ("the Company") was
incorporated on August 17, 1993 as a Maryland corporation. The
initial issuance of 20,001 shares of stock for $200,010 was to
American Asset Advisers Realty Corporation ("AAA"). Commencing
March 17, 1994, the Company offered up to 2,000,000 additional
shares of common stock together with 1,000,000 warrants.  The
warrants were exercisable at $9 per share between March 17,
1997 and March 15, 1998.  As of December 31, 1997, 501,583
warrants were outstanding.  The offering period of the initial
public offering terminated on March 15, 1996 with 1,008,252
shares being issued.  On June 18, 1996, the Company commenced a
follow-on offering of up to 2,853,659 additional shares of its
common stock.  The offering will terminate June 17, 1998 unless
terminated earlier. As of  December 31, 1997, 839,960 shares in
this second offering were issued, bringing the total shares
issued and outstanding to 1,868,213 shares.

The Company was formed to acquire commercial and industrial
real estate properties using invested and borrowed funds. The
selection, acquisition and supervision of the operation of the
properties are managed by AAA, a related party.

BASIS OF CONSOLIDATION

The consolidated financial statements include the accounts of
American Asset Advisers Trust, Inc. and its six joint ventures
with related parties.  The Company owns greater than 50% of
these joint ventures and exercises control over operations.

BASIS OF ACCOUNTING

The financial records of the Company are maintained on the
accrual basis of accounting whereby revenues are recognized
when earned and expenses are recorded when incurred.

CASH AND CASH EQUIVALENTS

For purposes of the statement of cash flows, the Company
considers all highly liquid debt instruments purchased with an
original maturity of three months or less to be cash
equivalents. Cash and cash equivalents consist of demand
deposits at commercial banks and money market funds.

REAL ESTATE

Real estate is leased to others on a net lease basis whereby
all operating expenses related to the properties, including
property taxes, insurance and common area maintenance are the
responsibility of the tenant. The leases are accounted for
under the operating lease method or the direct financing lease
method.

                                   F-8

Under the operating lease method, the properties are recorded
at cost. Rental income is recognized ratably over the life of
the lease and depreciation is charged based upon the estimated
useful life of the property. Under the direct financing lease
method, properties are recorded at their net investment (see
Note 3).  Unearned income is deferred and amortized to income
over the life of the lease so as to produce a constant periodic
rate of return.

Expenditures related to the development of real estate are
carried at cost plus capitalized carrying charges, acquisition
costs and development costs.  Carrying charges, primarily
interest and loan acquisition costs, and direct and indirect
development costs related to buildings under construction are
capitalized as part of construction in progress.  Interest of
$132,950 was capitalized on properties under construction
during 1997.

The Company obtains an appraisal on each property prior to a
property's acquisition and also performs an annual valuation
update to evaluate potential impairment for each property for
which an appraisal is older than twelve months.  This valuation
is based on capitalization of income for each property, a
review of current market conditions and any significant events
or factors which would indicate a potential impairment to the
value of a property.

DEPRECIATION

Buildings are depreciated using the straight-line method over
an estimated useful life of 39 years.

ORGANIZATION COSTS

Organization costs incurred in the formation of the Company are
amortized on a straight-line basis over five years.

STOCK ISSUANCE COSTS

Issuance costs incurred in the raising of capital through the
sale of common stock are treated as a reduction of
shareholders' equity.

STATEMENT OF CASH FLOWS - SUPPLEMENTAL INFORMATION

No cash was paid for interest during 1997 or 1996.

FEDERAL INCOME TAXES

The Company is qualified as a real estate investment trust
("REIT") under the Internal Revenue Code of 1986, and is,
therefore, not subject to Federal income taxes provided it
meets all conditions specified by the Internal Revenue Code for
retaining its REIT status, including the requirement that at
least 95% of its real estate investment trust taxable income is
distributed by March 15 of the following year.

                                   F-9

EARNINGS PER SHARE

Basic earnings per share has been computed by dividing net
income to common shareholders by the weighted average number of
common shares outstanding.  Diluted earnings per share has been
computed by dividing net income to common shareholders (as
adjusted) by the weighted average number of common shares
outstanding plus dilutive potential common shares.

The following table presents information necessary to calculate
basic and diluted earnings per share for the periods indicated,
with 1996 being restated to conform with the requirements of
the Statement of Financial Accounting Standards No. 128,
Earnings Per Share, described below:

<TABLE>
<CAPTION>

                                                           For the Year Ended December 31,
                                                                  1997            1996
<S>                                                          <C>              <C>
BASIC EARNINGS PER SHARE
  Weighted average common shares outstanding                   1,563,048        1,066,353
    Basic earnings per share                                 $       .34      $       .51

DILUTED EARNINGS PER SHARE
  Weighted average common shares outstanding                   1,563,048        1,066,353
  Shares issuable from assumed conversion of warrants             61,169           61,479
  Weighted average common shares outstanding, as adjusted      1,624,217        1,127,832
    Diluted earnings per share                               $       .33      $       .48

EARNINGS FOR BASIC AND DILUTED COMPUTATION
  Net income to common shareholders (basic and diluted
    earnings per share computation)                          $   538,857      $   542,807

</TABLE>

USE OF ESTIMATES

The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company believes the carrying value of financial
instruments consisting of cash, cash equivalents, accounts
receivable and accounts and notes payable approximate their
fair value.

NEW ACCOUNTING PRONOUNCEMENTS

In February 1997, the Financial Accounting Standards Board
("FASB") issued Statement of Financial Accounting Standards
("SFAS") No. 128, Earnings Per Share. SFAS No. 128, which was
effective for periods ending after December 15, 1997, specifies
the computation, presentation and disclosure requirements of
earnings per share and supercedes Accounting Principles Board
Opinion No. 15.  SFAS No. 128 requires a dual presentation of
basic and diluted earnings per share. Basic earnings per share,
which excludes the impact of common share equivalents, replaces
primary earnings per share. Diluted earnings per share, which
utilizes the average market price per share as opposed to the

                                   F-10

greater of the average market price per share or ending market
price per share when applying the treasury stock method in
determining common share equivalents, replaces fully diluted
earnings per share.

In February 1997, the FASB also issued SFAS No. 129, Disclosure
of Information about Capital Structure, which establishes
standards for disclosing information about an entity's capital
structure. SFAS No. 129 was effective for periods ending after
December 15, 1997. The adoption of SFAS No. 129 did not impact
the Company's capital structure disclosures as the Company was
already in compliance with this SFAS.

In June 1997, the FASB issued SFAS No. 130, Reporting
Comprehensive Income, and SFAS No. 131, Disclosures About
Segments of an Enterprise and Related Information. SFAS No. 130
establishes standards for reporting and displaying
comprehensive income and its components. SFAS No. 131
establishes standards for the way that public business
enterprises report information about operating segments and
related information in interim and annual financial statements.
SFAS No. 131 will not impact the Company's financial statements
as it reports as a single segment. SFAS Nos. 130 and 131 are
effective for periods beginning after December 15, 1997.
Management is evaluating what, if any, additional disclosures
or reporting may be required upon the implementation of SFAS
No. 130.

2. OPERATING LEASES

A summary of minimum future rentals, exclusive of any renewals,
under noncancellable operating leases in existence at December
31, 1997 is as follows:

               1998                          $     1,510,662
               1999                          $     1,536,879
               2000                          $     1,561,707
               2001                          $     1,570,744
               2002                          $     1,605,727
               2003-2016                     $    11,005,543

3. NET INVESTMENT IN DIRECT FINANCING LEASES

The Company's net investment in its direct financing leases at
December 31, 1997 included:


Minimum lease payments receivable            $     7,110,814
Unguaranteed residual value                        1,557,904
Less: Unearned income                              5,507,522
                                             $     3,161,196

A summary of minimum future rentals, exclusive of any renewals,
under the noncancellable direct financing leases are summarized
as follows:

               1998                          $      330,229
               1999                          $      333,165
               2000                          $      336,590
               2001                          $      343,251
               2002                          $      363,233
               2003-2016                     $    5,404,346

                                 F-11

4. CONSOLIDATED JOINT VENTURES

The Company consolidates all of its joint ventures due to its
ability to control operations.

On October 16, 1997, the Company entered into a joint venture
with AAA Net Realty XI, Ltd., an entity with common management.
The joint venture was formed for the purchase of a property,
which is being operated as a Hollywood Video store in
Lafayette, Louisiana. The property was purchased on October 31,
1997 after the construction was completed.  The Company's
interest in the joint venture is 74.58%.

On February 11, 1997, the Company entered into a joint venture
with AAA Net Realty XI, Ltd.  The joint venture was formed for
the purchase of a property, which is being operated as a Just
For Feet retail store in Baton Rouge, Louisiana. The property
was purchased on June 9, 1997 after the construction was
completed.  The Company's interest in the joint venture is 51%.

On September 23, 1996, the Company formed a joint venture, AAA
Joint Venture 96-2, with AAA Net Realty Fund XI, Ltd.  The
joint venture was formed for the purpose of acquiring a parcel
of land in The Woodlands, Texas upon which the tenant, Bank
United, constructed a branch bank building at its cost.  At the
termination of the lease the improvements will be owned by the
joint venture. The Company's interest in the joint venture is
51%.

On April 5, 1996, the Company formed a joint venture, AAA Joint
Venture 96-1, with AAA Net Realty Fund XI, Ltd. and AAA Net
Realty Fund X, Ltd., entities with common management, for the
purpose of acquiring a property which is being operated as a
Just For Feet retail store in Tucson, Arizona.  The property
was purchased on September 11, 1996 after construction was
completed.  The Company's interest in the joint venture is
51.9%.

On September 12, 1995, the Company formed a joint venture, AAA
Joint Venture 95-2, with AAA Net Realty Fund XI, Ltd. for the
purpose of acquiring a property in Wichita, Kansas on lease to
Blockbuster Music Retail, Inc.  The Company's interest in the
joint venture is 51%.

On October 27, 1994, the Company formed a joint venture, AAA
Joint Venture 94-1, with AAA Net Realty Fund X, Ltd. for the
purpose of acquiring a property in Independence, Missouri on
lease to Blockbuster Music Retail, Inc.  The Company's interest
in the joint venture is 54.84%.

5. NOTES PAYABLE

In December 1997, the Company entered into an amended and
restated unsecured revolving credit agreement (the "Amended
Credit Agreement") with a borrowing capacity up to $15,000,000
through February 1999. The actual amount available to the
Company is dependent on certain covenants such as the value of
unencumbered assets.  The Amended Credit Agreement currently
bears interest at 2.00% over varying London Interbank Offered
Rates and it is being used to acquire additional properties.
As of December 31, 1997, $5,981,489 was outstanding under the
Amended Credit Agreement.

In addition, the Company has a note payable to its president in
the amount of $150,000 plus accrued interest totaling $17,000
as of December 31, 1997. This note is unsecured, payable upon
demand and bears interest at 8%.  Interest incurred on this
note was $12,000 in 1997 (of which $6,000 was capitalized) and
$5,000 in 1996.

                                    F-12

6. MAJOR TENANTS

The Company's operations are related to the acquisition and
leasing of commercial real estate properties. The following
schedule summarizes rental income by lessee for 1997 and 1996
under both operating lease and direct financing lease methods
of accounting:
                                                             1997        1996
Tandy Corporation (Mesquite, Texas)                      $ 108,900   $ 108,900

America's Favorite Chicken Company (Smyrna, Georgia)        97,931      91,875

Blockbuster Music Retail, Inc. (Independence, Missouri
          and Wichita, Kansas)                             377,901     377,901

OneCare Health Industries, Inc. (Houston, Texas)           201,638     201,638

Just For Feet, Inc. (Tucson, Arizona and Baton Rouge,
          Louisiana)                                       590,192     123,244

Bank United (The Woodlands, Texas and Houston, Texas)      157,801      21,230

Hollywood Entertainment Corp. (Lafayette, Louisiana and
          Ridgeland, Mississippi)                           22,452           -

Total                                                   $1,556,815   $ 924,788

7. FEDERAL INCOME TAXES

The differences between net income for financial reporting
purposes and taxable income before distribution deductions
relate primarily to temporary differences and to certain
organization costs which are amortized for financial reporting
purposes only.

For income tax purposes, distributions paid to shareholders
consist of ordinary income, capital gains and return of capital
as follows:

                                       1997          1996
Ordinary Income                   $   795,918   $   545,967

Capital gains                               -             -

Return of capital                     297,521       191,310

                                  $ 1,093,439   $   737,277

8. RELATED PARTY TRANSACTIONS

AAA owns 20,001 shares of the Company's stock.  The common
stock of AAA is wholly owned by the president and director of
the Company.  In addition, the Company has entered into an
Omnibus Services Agreement with AAA whereby AAA provides
property acquisition, leasing, administrative and management
services for the Company. Reimbursements and fees of $106,504
and $37,910 were incurred and charged to expense in 1997 and
1996, respectively.

                                    F-13

AAA has incurred certain costs in connection with the
organization and syndication of the Company.  Reimbursement of
these costs become obligations of the Company in accordance
with the terms of the offering.  Costs of $164,985 and $98,494
were incurred by AAA in 1997 and 1996, respectively, in
connection with the issuance and marketing of the Company's
stock.  These costs are reflected as issuance costs and are
recorded as a reduction to capital in excess of par value.

Acquisition fees, including real estate commissions, finders
fees, consulting fees and any other non-recurring fees incurred
in connection with locating, evaluating and selecting
properties and structuring and negotiating the acquisition of
properties are included in the basis of the properties.
Acquisition fees of $1,059,805 and $222,785 were incurred and
paid to AAA during 1997 and 1996, respectively.  Acquisition
fees paid to AAA in 1997 included $372,686 that was earned
prior to purchasing certain properties.

On August 8, 1997, the Company entered into a loan agreement as
the lender with AmReit Development Corp., an entity with common
management, in the amount of $2,247,254 for the purpose of
developing a property in Lake Jackson, Texas that will be
acquired by the Company upon completion of the property.  As of
December 31, 1997, $1,928,974 was outstanding on the loan.  The
loan bears interest at the prime lending rate and matures on
May 1, 1998.

On September 18, 1997, the Company entered into a loan
agreement as the lender with Centurion Video, Ltd. in the
amount of $1,153,794 for the purpose of developing a property
in Ridgeland, Mississippi that was acquired by the Company upon
completion of the property.  AAA Net Developers, Ltd., an
entity with common management, was the limited partner in
Centurion Video, Ltd.  As of December 31, 1997, the loan was
repaid in full. The loan had interest at the prime lending rate
plus .5%.

See Note 4 for joint venture agreements with related parties.

9. PROPERTY ACQUISITIONS IN 1997

On December 30, 1997, the Company acquired a newly constructed
property on lease to Hollywood Entertainment Corporation for
the purchase price of $1,285,854.  The property is being
operated as a Hollywood Video store in Ridgeland, Mississippi.
The lease agreement extends for fifteen years, however the
tenant has the option to renew the lease for four additional
terms of five years each.  The lease has provisions for an
escalation in the rent after the fifth year of the lease.  The
Company did not record any income from Hollywood Entertainment
Corporation in 1997 related to this property.

On October 31, 1997, the Company acquired a 74.58% interest in
a newly constructed property on lease to Hollywood
Entertainment Corporation through a joint venture with an
entity with common management for the purchase price of
$863,407.  The property is being operated as a Hollywood Video
store in Lafayette, Louisiana.  The lease agreement extends for
fifteen years, however the tenant has the option to renew the
lease for four additional terms of five years each.  The lease
has provisions for an escalation in the rent after the fifth
year of the lease. The Company recorded $22,452 of income from
Hollywood Entertainment Corporation in 1997.

On June 9, 1997, the Company acquired a 51% interest in a newly
constructed property on lease to Just For Feet, Inc. through a
joint venture with an entity with common management for the
purchase price of $1,517,005.  The property is being operated
as a Just For Feet retail store in Baton Rouge, Louisiana.  The

                                    F-14

lease agreement extends for fifteen years, however the tenant
has the option to renew the lease for two additional terms of
five years each. The lease has provisions for an escalation in
the rent after the fifth and tenth years of the lease.  The
Company recorded $184,296 of income from this Just For Feet
location in 1997.

As no buildings had previously been constructed on any of the
properties acquired by the Company during 1997, the rental
income received by the Company from these properties represents
the initial results of operations.  Consequently, no pro-forma
information is presented.

10. COMMITMENTS

At December 31, 1997, the Company is committed to incur
additional costs of approximately $3,880,000 in connection with
properties under development.

At a special meeting of the Company's Board of Directors held
on December 31, 1997, the Board of Directors, other than Mr. H.
Kerr Taylor, who abstained from the vote due to his interest in
the transaction, approved the Company's becoming a self-managed
REIT through the acquisition of AAA.  In pursuing this
acquisition, the Company will incur additional costs of
approximately $100,000.  Such costs incurred in 1997 of
$282,890 were charged to expense.  If approved by the
shareholders and consummated, the Company will initially issue
213,260 shares.  The fair market value of the shares paid in
consideration will be charged to expense.  In addition, the
Company may issue 686,740 additional shares upon the
achievement of certain goals. The fair market value of such
shares will be charged to expense.


                                   F-15

<TABLE>

                     AMERICAN ASSET ADVISERS TRUST, INC.
SCHEDULE III - CONSOLIDATED REAL ESTATE OWNED AND ACCUMULATED DEPRECIATION
                    FOR THE YEAR ENDED DECEMBER 31, 1997

<CAPTION>

                                                                                                                      LIFE ON WHICH
                                                                                                                      DEPRECIATION
                                                                         COST AT                                        IN LATEST
           PROPERTY      ENCUM-                        IMPROVE-      CLOSE OF YEAR     ACCUMULATED  DATE OF    DATE    INCOME STMT.
          DESCRIPTION    BRANCES  BUILDING     LAND      MENTS   BUILDING       LAND  DEPRECIATION  CONSTR.  ACQUIRED  IS COMPUTED

PROPERTIES INVESTED IN
UNDER OPERATING LEASES

<S>                        <C>    <C>        <C>        <C>    <C>          <C>        <C>         <C>      <C>        <C>
Radio Shack Retail
   Store, Texas            $0    $788,330    $337,856    $0     $788,330    $337,856    $71,538    N/A      06-15-94    39 Years

Church's Chicken
   Restaurant, Georgia     $0          $0    $251,071    $0           $0    $251,071       N/A     N/A      07-22-94       N/A
Blockbuster Music Store,
   Missouri                $0  $1,145,410    $490,747    $0   $1,145,410    $490,747    $91,758    N/A      11-14-94    39 Years
OneCare Health Industries,
   Inc., Texas             $0  $1,246,199    $534,086    $0   $1,246,199    $534,086    $71,918    N/A      09-26-95    39 Years
Blockbuster Music Store,
   Kansas                  $0  $1,255,774    $538,189    $0   $1,255,774    $538,189    $73,792    N/A      09-12-95    39 Years
Just For Feet Store,
   Arizona                 $0          $0  $1,101,425    $0           $0  $1,101,425       N/A     N/A      09-11-96       N/A
Bank United, Woodlands,
   Texas                   $0          $0    $531,693    $0           $0    $531,693       N/A     N/A      09-23-96       N/A
Bank United, Houston,
   Texas                   $0          $0    $851,973    $0           $0    $851,973       N/A     N/A      12-11-96       N/A
Just For Feet Store,
   Louisiana               $0  $2,036,150    $872,635    $0   $2,036,150    $872,635    $29,150    N/A      06-09-97    39 Years
Hollywood Video Store,
   Louisiana               $0    $729,286    $420,000    $0     $729,286    $420,000     $3,116    N/A      10-31-97    39 Years
Hollywood Video Store,
   Mississippi             $0    $835,854    $450,000    $0     $835,854    $450,000         $0    N/A      12-30-97    39 Years

      Total                $0  $8,037,003  $6,379,675    $0   $8,037,003  $6,379,675   $341,272


PROPERTY INVESTED IN UNDER
DIRECT FINANCING LEASE

Church's Chicken
   Restaurant, Georgia     $0    $582,238          $0    $0     $582,238          $0         (2)   N/A      07-22-94       N/A

Just For Feet Store,
   Arizona                 $0  $2,578,958          $0    $0   $2,578,958          $0         (2)   N/A      09-11-96       N/A

      Total                $0  $3,161,196          $0    $0   $3,161,196          $0         (2)

(1)  Transactions in real estate and accumulated depreciation during 1997, 1996 and 1995 for operating lease properties are
     summarized as follows:

                                                          Accumulated
                                                Cost      Depreciation
Balance at December 31, 1994                  $2,997,803       $14,546
Acquisitions                                  $3,590,374            $0
Depreciation expense                                  $0       $66,966
Balance at December 31, 1995                  $6,588,177       $81,512
Acquisitions                                  $2,482,477            $0
Depreciation expense                                  $0      $113,744
Balance at December 31, 1996                  $9,070,654      $195,256
Acquisitions                                  $5,346,024            $0
Depreciation expense                                  $0      $146,016
Balance at December 31, 1997                 $14,416,678      $341,272

(2)  The portion of the lease relating to the building of this property has been recorded as a direct financing lease for
     financial reporting purposes.  Consequently, depreciation is not applicable.

(3)  The aggregate cost of all properties for Federal Income Tax purposes is $17,577,874 at December 31, 1997.



                                       F-16

</TABLE>


                                                                Exhibit 3 (v)


              ARTICLES OF AMENDMENT AND RESTATEMENT
                TO THE ARTICLES OF INCORPORATION
                                OF
               AMERICAN ASSET ADVISERS TRUST, INC.


THIS IS TO CERTIFY THAT:

     FIRST:  American Asset Advisers Trust, Inc., a Maryland
corporation (the "Corporation"), desires to amend and restate its
charter as currently in effect and as hereinafter amended.

     SECOND:  The following provisions are all the provisions  of
the charter currently in effect and as hereinafter amended.

                            ARTICLE I

                              Name

     The name of the corporation is American Asset Advisers
Trust, Inc. (hereinafter called the "Corporation").

                           ARTICLE II

                            Purposes

     The purposes for which the Corporation is organized are:

     A.    To engage in the business of acquiring, developing and
redeveloping income-producing commercial real estate properties;

     B.    To transact any and all lawful business for which
corporations may be incorporated under the laws of the State of
Maryland, as now or hereafter in force; and

     C.    To do everything necessary, proper, advisable and
convenient for the accomplishment of the purposes hereinabove set
forth, and to do all other things incidental thereto or connected
therewith which are not forbidden by the laws of the State of
Maryland, as now or hereafter in force, or by these Articles of
Incorporation.

                           ARTICLE III

                        Principal Office

     The address of the principal office of the Corporation in
this state is c/o The Corporation Trust Incorporated, 300 East
Lombard St., Baltimore, Maryland 21202.

                           ARTICLE IV

                     Initial Resident Agent

     The name and street address of the initial resident agent of
the Corporation is The Corporation Trust Incorporated, 300 East
Lombard St., Baltimore, Maryland 21202.  Said resident agent is a
Maryland corporation.

                            ARTICLE V

                              Stock

          Section  1.  Authorized Shares.  The total number of
shares of all classes of stock which the Corporation was
heretofore authorized to issue is 25,000,000 shares of Common
Stock of the par value of $.01 par value per share and of the
aggregate par value of $250,000.  The total number of shares  of
stock which the Corporation now has authority to issue is
110,000,000 shares, of which 100,000,000 are shares of Common
Stock, $.01 par value per share ("Common Stock"), and 10,000,000
shares are shares of Preferred Stock ("Preferred Stock"), $.01
par value per share. The aggregate par value of all authorized
shares of stock having par value is $1,100,000.00.  The par value
of the stock is unchanged.

          Section 2.  Voting Rights.  Each share of Common Stock
shall entitle the holder thereof to one vote.

          Section 3.  Issuance of Preferred Stock.  The Preferred
Stock may be issued, from time to time, in one or more series as
authorized by the Board of Directors (the "Board of Directors" or
the "Board").  Prior to issuance of shares of each  series, the
Board of Directors by resolution shall designate that series to
distinguish it from all other series and classes of stock of the
Corporation, shall specify the number of shares to be included in
the series and shall set the terms, preferences, conversion or
other rights, voting powers, restrictions, limitations  as to
dividends or other distributions, qualifications and terms or
conditions of redemption.  Subject to the express terms of any
other series of Preferred Stock outstanding at the time and
notwithstanding any other provision of the Charter, the Board may
increase or decrease the number of shares of, or alter the
designation or classify or reclassify, any unissued shares of any
series of Preferred Stock by setting or changing, in any one or
more respects, from time to time before issuing the shares, and
the terms, preferences, conversion or other rights, voting
powers, restrictions, limitations as to dividends or other
distributions, qualifications or terms or conditions of
redemption of the shares of any series of Preferred Stock.

          Section 4.  Charter and Bylaws.  All persons who shall
acquire stock in the Corporation shall acquire the same subject
to the provisions of the Charter and the Bylaws of the
Corporation.

                                   -2-


                           ARTICLE VI

                       Board of Directors

     The number of Directors of the Corporation shall not be less
than three nor more than nine, which number may be increased or
decreased pursuant to the Bylaws of the Corporation, but shall
never be less than three, or, if more, then the minimum number
permitted by the General Laws of the State of Maryland now or
hereafter in force.

     The number of persons who shall constitute the initial Board
of Directors shall be three.  The names of the persons who will
serve as directors of the Corporation until the first annual
meeting and until their successors are elected and qualified are
as follows:

                    H. Kerr Taylor
                    Robert S. Cartwright, Jr.
                    George A. McCanse, Jr.

These persons currently serve as directors as of December 16, 1997.

                           ARTICLE VII

                Restriction on Transfer of Shares
          Acquisition Restriction and Redemption Right

          Section 1.  Whenever it is deemed by the Board of
Directors to be prudent in protecting the tax status of the
Corporation, the Board of Directors may require to be filed with
the Corporation a statement or affidavit from each proposed
transferee of shares of capital stock of the Corporation setting
forth the number of such shares already owned by the transferee
and any related person(s) specified in the form prescribed by the
Board of Directors for that purpose.  Any contract for the sale
or other transfer of shares of capital stock of the Corporation
shall be subject to this provision.

          Section 2.  Prior to any transfer or transaction which
would cause a stockholder to own, directly or indirectly, shares
in excess of the "Limit" as defined in Section 4 of this Article
VII, and in any event upon demand of the Board of Directors, such
stockholder shall file with the Corporation an affidavit setting
forth the number of shares of capital stock of the Corporation
(A) owned directly and (B) owned indirectly (for purposes of this
Section, shares of capital stock not owned directly shall be
deemed to be owned indirectly by a person if that person would be
the beneficial owner of such shares for purposes of Rule 13d-3,
or any successor rule thereto, promulgated under the Securities
and Exchange Act of 1934, as amended (the "Exchange Act"), and/or
would be considered to own such shares by reason of the attribution
rules in Section 544 of the Internal Revenue Code of 1954,  as amended,
or any successor statute (the "Code") or the regulations issued thereunder)
by the person filing the affidavit.  The affidavit to be filed with the

                                    -3-

Corporation shall set forth all information required to be reported in
returns filed by stockholders under Treasury Regulation  1.857-9  issued
under the Code or similar provisions of any successor regulation,
and in reports to be filed under Section 13(d) of the Exchange
Act.  The affidavit, or an amendment thereto, shall be filed with
the Corporation within 10 days after demand therefor and at least
15 days prior to any transfer or transaction which, if consummated, would
cause the filing person to hold a number of shares of capital stock of the
Corporation in excess of the "Limit," as defined in Section 4 of this Article
VII.  The Board of Directors shall have the right, but shall not be required,
to refuse to transfer any shares of capital stock of the Corporation
purportedly transferred other than in compliance with the provisions of this
Section.

          Section 3.  Any acquisition of shares of capital stock
of the Corporation that could or would result in the disqualification
of the Corporation as a real estate investment trust under the Code shall
be void ab initio to the fullest extent permitted under applicable law and
the intended transferee of such shares shall be deemed never to have had
an interest therein.  If the foregoing provision is determined to be void
or invalid by virtue of any legal decision, statute, rule or regulation,
then the transferee of such shares shall be deemed at the option of the
Corporation, to have acted as agent on behalf of the Corporation in
acquiring such shares and to hold such shares on behalf of the Corporation.

          Section 4.  Notwithstanding any other provision hereof
to the contrary and subject to the provisions of Section 5 of
this Article VII, no person or persons acting as a group shall at
any time directly or indirectly own in the aggregate more than
9.8% of the outstanding shares of capital stock of the
Corporation (the "Limit").  Shares which but for this Article VII
would be owned by a person or persons acting as a group and
would, at any time, be in excess of the Limit shall be deemed
"Excess Shares."   For the purpose of determining ownership of
Excess Shares, "ownership" of shares shall be deemed to include
shares constructively owned by a person under the provisions of
Section 544 of the Code and also shall include shares beneficially
owned under the provisions of Rule 13d-3 promulgated under the Exchange
Act.  For purposes of determining persons acting as a group, "group"
shall have the same meaning as such term has for purposes of
Section 13(d)(3) of the Exchange Act.  All shares of capital stock of
the Corporation which any person or persons acting as a group have the
right to acquire upon exercise of outstanding rights, options and warrants,
and upon conversion of any securities convertible into such shares, if
any, shall be considered outstanding for purposes of determining
the applicable Limit if such inclusion will cause such person or
persons acting as a group to own more than the Limit.  The Board
of Directors shall have the right, but shall not be required, to
refuse to transfer shares of capital stock of the Corporation if,
as a result of the proposed transfer, any person or persons
acting as a group would hold or be deemed to hold Excess Shares.

          Section  5.  The Limit set forth in Section 4 of this
Article VII shall not apply to the acquisition of shares of
capital stock of the Corporation by an underwriter in a public
offering of such shares or in any transaction involving the
issuance of shares of capital stock by the Corporation in which
the Board of Directors determines that the underwriter or other
person or party initially acquiring such shares will timely
distribute such shares to or among others such that, following

                                    -4-

such distribution, none of such shares will be deemed to be
Excess Shares.  The Board of Directors in its discretion may
exempt from the Limit and from the filing requirements of Section
2 of this Article VII ownership or transfers of certain
designated shares of capital stock of the Corporation while owned
by or transferred to a person who has provided the Board of
Directors with evidence and assurances acceptable to the Board of
Directors that the qualification of the Corporation as a real
estate investment trust under the Code and the regulations issued
under the Code would not be jeopardized thereby.

          Section 6.  At the discretion of the Board of Directors,
all Excess Shares may be redeemed by the Corporation.  Written notice
of redemption shall be provided to the holder of the Excess Shares not
less than one week prior to the date designated by the Board of Directors
for redemption (the "Redemption  Date") determined by the Board of Directors
and included in the notice of redemption.  The redemption price to be paid
for Excess Shares shall be equal to (A) the closing price of such shares on
the principal national securities exchange on which such shares are listed
or admitted to trading on the last business day prior to the Redemption Date,
or (B) if such shares are not so listed or admitted to trading, the closing
price on such last business day as reported on the NASDAQ System, if
quoted thereon, or (C) if the redemption price is not determinable in
accordance with clause (A) or (B) of this sentence, the net asset value of
such shares determined in good faith  by the Board of Directors.
Notwithstanding the foregoing, in no event shall the redemption price of
any shares of capital stock of the Corporation be greater than the net asset
value of such shares determined in good faith by the Board of Directors.
The redemption price for any shares of capital stock of the Corporation so
redeemed shall be paid on the Redemption Date.  From and after the Redemption
Date, the holder of any shares of capital stock of the Corporation called for
redemption shall cease to be entitled to any distributions and other benefits
with respect to such shares, except the right to payment of the redemption
price fixed as aforesaid.

          Section 7.  Nothing contained in this Article VII or in
any other provision hereof shall limit the authority of the Board
of Directors to take such other action as it in its sole discretion
deems necessary or advisable to protect the Corporation and the interests
of its stockholders by maintaining the Corporation's eligibility to be,
and preserving the Corporation's status as, a qualified real estate
investment trust under the Code.

          Section 8.  For purposes of this Article VII only,  the
term "person" shall include individuals, corporations, limited
partnerships,  general  partnerships, joint  stock companies or
associations, joint ventures, associations, consortia, companies,
trusts, banks, trust companies, land trusts, common law trusts,
business trusts, or other entities and governments and agencies
and political subdivisions thereof.

          Section 9.  If any provision of this Article VII or any
application of any such provision is determined to be invalid by
any federal or state court having jurisdiction over the issue,
the validity of the remaining provisions shall not be affected
only to the extent necessary to comply with the determination of
such court.

                                   -5-

                          ARTICLE VIII

                      Removal of Directors

     Directors of the Corporation may be removed by the stockholders,
with or without cause, by the affirmative vote of a majority of all the
votes entitled to be cast for the election of directors at any annual
meeting or special meeting of the stockholders for which notice of such
proposed removal was included in the notice of such meeting.

                           ARTICLE IX

                 No Special Voting Requirements

     The provisions of Subtitle 6, 3-601,3-602 and 3-603, of
the MD. CORPS & ASSN'S CODE ANN. (1985 and 1986 Suppl.) ("Special
Voting Requirements") shall not apply to the Corporation.

                            ARTICLE X

                      No Preemptive Rights

     No holder of any stock or any other securities of the
Corporation, whether now or hereafter authorized, shall have any
preemptive right to subscribe for or purchase any stock or any
other securities of the Corporation other than such, if any, as
the Board of Directors, in its sole discretion, may determine and
at such price or prices and upon such other terms as the Board of
Directors, in its sole discretion, may fix; and any stock or
other securities which the Board of Directors may  determine to
offer for subscription may, as the Board of Directors in its sole
discretion shall determine, be offered to the holders of any
class, series or type of stock or other securities at the time
outstanding.

                           ARTICLE XI

    Provisions of Defining, Limiting and Regulating Certain Powers of
          the Corporation,its Shareholders, Directors and Agents

     Section 1.   Indemnification.  To the maximum extent permitted by
Maryland law in effect from time to time, the Corporation, without requiring
a preliminary determination of the ultimate entitlement to indemnification,
shall indemnify and may pay or reimburse reasonable expenses in advance of
final disposition of a proceeding to (i) any individual who is a present or
former director or officer of the Corporation or (ii) any individual who,
while a director of the Corporation and at the request of the Corporation,
serves or has served another corporation, partnership, joint venture, trust,
employee benefit plan or any other enterprise as a director, officer, partner
or trustee of such corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise.  The Corporation may, with the approval of

                                    -6-

its Board of Directors, provide such indemnification and advancement of
expenses to a person who served as a predecessor of the Corporation in any
of the capacities described in (i) or (ii) above and to any employee or
agent of the Corporation or a predecessor of the Corporation.

     Section 2.  Limitation of Liability.  To the maximum extent
that Maryland law in effect from time to time permits limitation
of the liability of directors and officers, no director or
officer of the Corporation shall be liable to the Corporation or
its stockholders for money damages.  Neither the amendment nor
repeal of this Article  XI, Section 2,  nor the adoption or
amendment of any other provision of the Charter or Bylaws of the
Corporation inconsistent with this Article XI, Section  2, shall
apply to or affect in any respect the applicability of the
preceding sentence with respect to any act or failure to act
which occurred prior to such amendment, repeal or adoption.

     Section 3.  REIT Qualification.  The Board of Directors
shall use its reasonable best efforts to cause the Corporation
and its stockholders to qualify for U.S. Federal income tax
treatment in accordance with the provisions of the Code
applicable to a real estate investment trust ("REIT").  In
furtherance of the foregoing, the Board of Directors shall use
its reasonable best efforts to take such actions as are necessary,
and may take such actions as in its sole judgment and discretion  are
desirable, to preserve the status of the Corporation as a REIT;
provided, however, that if the Board of Directors determines that it is
no longer in the best interest of the Corporation to continue to have
the Corporation qualify as a REIT, the Board of Directors may revoke
or otherwise terminate the Corporation's REIT election pursuant to
Section 856(g) of the Code.

     Section 4.  Related Party Transactions.  Without limiting
any other procedures available by law or otherwise to the
Corporation, the Board of Directors may authorize any agreement,
contract, arrangement or transaction with any person, corporation,
association, company, trust, partnership (limited or general) or other
organization, although one or more of the directors or officers of the
Corporation may be a party to any such agreement or an officer, director,
stockholder or member of such other party, and no such agreement or
transaction shall be invalidated or rendered void or voidable solely
by reason of the existence of any such relationship if the existence is
disclosed or known to the Board of Directors, and the contract or
transaction is approved by the affirmative vote of a majority of
the disinterested directors, even if they constitute less than a
quorum of the Board. Any director of the Corporation who is also
a director, officer, stockholder or member of such other entity
may be counted in determining the existence of a quorum at any
meeting of the Board of Directors considering such matter.

     Section 5.  Authorization by Board of Stock Issuance.   The
Board of Directors of the Corporation may authorize the issuance
from time to time of shares of its stock of any class, whether
now or hereafter authorized, or securities convertible into
shares of its stock of any class, whether now or hereafter
authorized, for such consideration as the Board of Directors may
deem advisable, subject to such restrictions or limitations, if
any, as may be set forth in the Charter or the Bylaws of the
Corporation or in the general laws of the state of Maryland.

                                    -7-

     Section 6.  Determinations by Board.  The determination as
to any of the following matters, made in good faith by or
pursuant to the direction of the Board of Directors consistent
with the Charter of the Corporation and in the absence of actual
receipt of an improper benefit in money, property or services or
active and deliberate dishonesty established by a court, shall be
final and conclusive and shall be binding upon the Corporation
and every holder of shares of its stock: the amount of the net
income of the Corporation for any period and the amount of assets
at any time legally available for the payment of dividends,
redemption of its stock or the payment of other distributions on
its  stock;  the amount of paid-in surplus, net  assets, other
surplus, annual or other net profit, net assets in excess of
capital, undivided profits or excess of profits over  losses  on
sales of assets; the amount, purpose, time of creation, increase
or decrease, alteration or cancellation of any reserves or
charges and the propriety thereof (whether or not any obligation
or liability for which such reserves or charges shall have been
created shall have been paid or discharged); the fair value, or
any sale, bid or asked price to be applied in determining the
fair value, of any asset owned or held by the Corporation; and
any matters relating to the acquisition, holding and disposition
of any assets by the Corporation.

     Section 7.  Reserved Powers of Board.  The enumeration and
definition of particular powers of the Board of Directors
included in this Article XI, shall in no way be limited or
restricted by reference to or inference from the terms of any
other clause of this or any other provision of the Charter of the
Corporation, or construed or deemed by inference or otherwise in
any manner to exclude or limit the powers conferred upon the
Board of Directors under the general laws of the State of
Maryland as now or hereafter in force.

     Section 8.  Stockholder Approval.   Notwithstanding any
provision of law to the contrary, the affirmative vote of a
majority of all votes entitled to be cast on any matter or act
requiring approval of the stockholders of the Corporation,
including, but not limited to, any amendment of the Charter of
the Corporation, and any consolidation, merger, share  exchange,
transfer of assets or dissolution, shall be sufficient, valid and
effective, after due authorization, approval or advice by the
Board of Directors, to approve and authorize such matter or act
except as otherwise provided herein.

     Neither the amendment nor repeal of this Article, nor the
adoption or amendment of any other provision of the Bylaws or
Charter of the Corporation inconsistent with this Article, shall
apply to or effect in any respect the applicability of the
preceding paragraph with respect to any act or failure to act
which occurred prior to such amendment, repeal or adoption.

                           ARTICLE XII

                           Amendments

     The Corporation reserves the right from time to time to make
any amendments to its charter which may be now or hereafter
authorized by law, including any amendments changing the terms or
contract rights of any of its outstanding capital stock by
classification, reclassification or otherwise.  No amendment
which changes the terms  or contract rights of any of its

                                   -8-

outstanding capital stock shall be valid unless such amendment
shall have been authorized by not less than two-thirds of the
aggregate number of votes entitled to be cast thereon by a vote
at a meeting.  Any other amendment to the Corporation's charter
shall be valid of such amendment shall have been authorized by
not less than a majority of the aggregate number of votes
entitled to be cast thereon by a vote at a meeting.  All rights
and powers conferred by the charter of the Corporation upon
stockholders, directors and officers are granted herein subject
to this reservation.

     THIRD:  The Amendments to the Articles of Incorporation of
the Corporation incorporated in the foregoing Amendments and
restated Articles of Incorporation were adopted by the Shareholders
of the Corporation at a duly noticed special meeting of Shareholders
held on November 12, 1997.

     FOURTH:  At a special meeting duly noticed and held on
September 17, 1997, the Board of Directors of the Corporation
adopted a resolution setting forth the proposed amendments to the
Articles of Incorporation in the foregoing Amended and Restated
Articles of Incorporation and directed that this Amendment and
Restatement of the Articles be submitted to a vote of the
shareholders.

     IN WITNESS WHEREOF, Timothy W. Kelley, Vice President of the
Corporation, has caused this Articles of Amendment and Restatement
to the Articles of Incorporation to be executed this 16th day of December,
1997, and acknowledges that such execution is his act, and further
acknowledges that, to the best of his knowledge, information and belief
the matters and facts set forth therein are true in all material respects
under penalty of perjury.

                         AMERICAN ASSET ADVISERS TRUST, INC.



                         By:  /s/ Timothy W. Kelley
                              Timothy W. Kelley, Vice President
WITNESS:


/s/ H. Kerr Taylor
H. Kerr Taylor, Secretary





                                    -9-

                                                                Exhibit 3 (vi)


                 AMERICAN ASSET ADVISERS TRUST, INC.

                    AMENDED AND RESTATED BYLAWS


     This restatement of the Bylaws constitutes the Bylaws of
American Asset Advisers Trust, Inc., a Maryland corporation (the
"Company", as adopted effective March 18, 1994 and as amended,
effective November 12, 1997.

                           ARTICLE I

                            Offices

     Section 1.01  Principal Office.  The Company's principal
office in the State of Maryland shall be in the City of
Baltimore, State of Maryland.

     Section 1.02  Principal Executive Office.  Unless otherwise
determined from time to time by the Board of Directors, the
principal executive office of the Company shall be in the City of
Houston, State of Texas.

     Section 1.03  Other Offices.  The Company may also have
offices at such other places both in and out of the State of
Maryland as the Board of Directors may from time to time
determine or the business of the Company may require.

                           ARTICLE II

                    Meetings of Stockholders

     Section 2.01  Place of Meetings.  Meetings of the
stockholders shall be held at the office of the Company in the
City of Houston and State of Texas, or at any other place within
the United States as shall be designated from time to time by the
Board of Directors and stated in the notice of meeting or in a
duly executed waiver of notice hereof.

     Section 2.02  Annual Meetings.   Annual meetings of
Stockholders shall be held on such date and time as shall be
fixed by the Board of Directors and stated in the notice of
meeting, but in no event less than thirty (30) days nor more than
sixty-one (61) days following the distribution of the Annual
Report to the Stockholders of the Company pursuant to Section
7.03 hereof, at which the Stockholders shall elect a Board of
Directors and may transact any business within the powers of the
Company.  Any business of the Company may be transacted at the
annual meeting without being specially designated in the notice,
except such business as is specifically required by law to be
stated in the notice.

     Section 2.03  Special Meetings.  At any time in the interval
between annual meetings, special meetings of the Stockholders,
unless otherwise provided by law or by the Charter, may be called
by a majority of the Board of Directors, a majority of the
Independent Directors (as defined in Section 3.01 hereof), or the

                                   -1-

President or upon the written request of the holders of shares
representing not less than ten percent (10%) of the outstanding
shares entitled to vote at the meeting.  Such written request
shall be given in person or by mail and state the purpose or
purposes of the proposed meeting, and the matters proposed to be
acted upon at such meeting.  No special meeting need be called
upon the request of the holders of less than a majority of all
votes entitled to be cast at such meeting to consider any matter
which is substantially the same as a matter voted upon at any
special meeting of the Stockholders held during the preceding
twelve (12) months.  Business transacted at any special meeting
of Stockholders shall be limited to the purposes stated in the
notice.

     Section 2.04  Notice of Meetings.  Not less than ten (10)
nor more than ninety (90) days before the date of every meeting
of Stockholders, the Secretary shall give to each Stockholder
entitled to vote at such meeting, and to each Stockholder not
entitled to vote who is entitled by law to notice, written or
printed notice stating the time and place of the meeting and, in
the case of a special meeting, the purpose or purposes for which
the meeting is called, either by mail or by delivering it to him
personally or by leaving it at his residence or usual place of
business.  If mailed, such notice shall be deemed to be given
when deposited in the United States mail, postage prepaid,
addressed to the Stockholder at his post office address as it
appears on the records of the Company.

     In the case of a special meeting of Stockholders convened at
the request of Stockholders, as provided for in Section 2.03
above, the notice herein provided for shall be given by the
Secretary, in the manner herein provided, within ten (10) days
after receipt of such request of Stockholders.  Such a special
meeting shall be held not less than fifteen (15) nor more than
sixty (60) days after receipt of the request of Stockholders.
Such meeting shall be held at the place and time specified in the
request or, if none is specified, at a place and time reasonably
believed by the Directors to be convenient to a majority of the
Stockholders.

     Section 2.05  Quorum.  At any meeting of Stockholders, the
presence in person or by proxy of Stockholders entitled to cast a
majority of the votes shall constitute a quorum; but this Section
shall not affect any requirement of law or under the Company's
Charter for the vote necessary for the adoption of any measure.
If, however, such quorum shall not be present or represented at
any meeting of the Stockholders, a majority of the Stockholders
entitled to vote thereat, present in person or represented by
proxy, shall have the power to adjourn the meeting from time to
time, without notice other than announcement at the meeting,
until a quorum shall be present or represented.  At such
adjourned meeting at which a quorum shall be present or
represented any business may be transacted which might have been
transacted at the meeting as originally notified.

     Section 2.06  Voting.  A majority of the votes cast at a
meeting of Stockholders, duly called and in which a quorum is
present, shall be sufficient to take or authorize action upon any
matter which may properly come before the meeting, unless more
than a majority of the votes cast is required by law or by the
Company's Charter or by these By-Laws.  Except in the election of
Directors, which shall be by written ballot, or unless required
by statute or by these Bylaws or demanded by Stockholders present
in person or represented by proxy entitled to cast twenty-five
percent (25%) of the votes entitled to be cast at a meeting, any
vote of Stockholders need not be by written ballot.  On a vote by

                                   -2-

written ballot, each ballot shall be signed by the Stockholder or
his proxy and shall state the number of shares voted.

     Unless any statute or the Company's Charter provide
otherwise, each outstanding share of stock having voting power
shall be entitled to one vote on each matter submitted to a vote
at a meeting of Stockholders and will be fully paid and non-
assessable by the Company when the share is issued and paid for.
A Stockholder may vote only the shares owned by him as shown on
the record of Stockholders of the Company as of the record date
determined pursuant to Section 6.05 hereof or pursuant to
applicable law.  All persons who were holders of record of shares
at such time, and no others, shall be entitled to vote at such
meeting and any adjournment thereof.  A Stockholder may vote the
shares owned of record by him either in person or by proxy
executed in writing by the Stockholder or by his duly authorized
attorney-in-fact.  No proxy shall be valid after eleven (11)
months from its date, unless otherwise provided in the proxy.  At
all meetings of Stockholders, unless the voting is conducted by
inspectors, all questions relating to the qualification of voters
and the validity of proxies and the acceptance or rejection of
votes shall be decided by the Chairman of the meeting.

     A majority of the then outstanding shares may, without the
necessity for concurrence by the Directors, vote to:

     (a)  amend the Bylaws;

     (b)  terminate the Company;

     (c)  remove the Directors.

     With respect to shares owned by the Advisor, the Directors,
or any Affiliates, neither the Advisor, nor the Directors, nor
any Affiliate may vote or consent on matters submitted to the
Stockholders regarding the removal of the Advisor, Directors, or
any Affiliate or any transaction between the Company and any of
them.  In determining the requisite percentage in interest of
Shares necessary to approve a matter on which the Advisor,
Director and any Affiliate may not vote or consent, any Shares
owned by any of them shall not be included.

     Section 2.07  Organization and Order of Business.  At each
meeting of the Stockholders, the Chairman of the Board of
Directors, or in his absence or inability to act, the President,
or in the absence or inability to act of the Chairman of the
Board and the President, a Vice President, shall act as Chairman
of the meeting.  The Secretary, or in his absence or inability to
act, any person appointed by the Chairman of the meeting, shall
act as Secretary of the meeting and keep the minutes thereof.
The order of business at all meetings of the Stockholders shall
be as determined by the Chairman of the meeting.

     Section 2.08  Inspectors.  The Board of Directors may, in
advance of any meeting of Stockholders, appoint one or more
inspectors to act at such meeting or any adjournment thereof.  If
the inspectors shall not be so appointed or if any of them shall
fail to appear or act, the Chairman of the meeting may, and at

                                    -3-

the request of any Stockholder entitled to vote thereat shall,
appoint inspectors.  Each inspector, before entering upon the
discharge of his duties, shall take and sign an oath to execute
faithfully the duties of inspector at such meeting with strict
impartiality and according to the best of his ability.  The
inspectors shall determine the number of shares represented at
the meeting, the existence of a quorum, the validity and effect
of proxies, and shall receive votes, ballots or consents, hear
and determine all challenges and questions arising in connection
with the right to vote, count and tabulate all votes, ballots or
consents, determine the result, and do such acts as are proper to
conduct the election of a vote with fairness to all Stockholders.
On request of the Chairman of the meeting, any Stockholder
entitled to vote thereat, the inspectors shall make a report in
writing of any challenge, request or matter determined by them
and shall execute a certificate of any fact found by them.  No
Director or candidate for the office of Director shall act as
inspector of an election of Directors.  Inspectors need not be
Stockholders.

     Section 2.09  Action Without Meeting.  Except as otherwise
provided by statute or the Charter, any action required or
permitted to be taken at any meeting of Stockholders may be taken
without a meeting, without prior notice and without a vote, if a
consent in writing, setting forth such action, is signed by all
the Stockholders entitled to notice of a meeting of Stockholders
but not to vote thereat have waived in writing any rights which
they may have to dissent from such action, and such consent and
waiver are filed with the records of Stockholders' meetings.

                          ARTICLE III

                           Directors

     Section 3.01  Number, Election and Term.  The number of
Directors of the Company shall be three (3).  By vote of a
majority of the entire Board of Directors, the number of
Directors fixed by the Company's Charter or by these Bylaws may
from time to time be increased or decreased, but may not at any
time exceed nine (9) nor be less than three (3); provided,
however, that the tenure of office of a Director shall not be
affected by any decrease or increase in the number of Directors
so made by the Board.  At all times that the Company intends to
be qualified as a real estate investment trust under the Internal
Revenue Code, a majority of the Board of Directors shall be
Independent Directors (as hereinafter defined).  Each Director
shall have had at least three (3) years of relevant experience
demonstrating the knowledge and expedience required to acquire
and manage the Company's properties.  At least one (1) of the
Independent Directors shall have three (3) years actual direct
experience in acquiring or managing properties similar to those
acquired by the Company for his own account or as an agent.  For
purposes of these Bylaws, "Independent Director" shall mean a
Director of the Company who is not employed by, or receiving any
compensation (other than Director's fees and reimbursed expenses)
from or otherwise affiliated with, the Company and any affiliate,
and who is not affiliated, directly or indirectly, with any
person(s) or entity, if any, responsible for directing and
performing the day-to-day business affairs of the Company (the
"Advisor"), whether by ownership of, ownership interest in,
employment by, any material business or professional relationship
with, or by serving as an officer or Director of, such Advisor or
an affiliated business entity of such Advisor.  A Director shall

                                   -4-

not be considered independent who serves as a Director of more
than three (3) real estate investment trusts organized by the
Company or its affiliates or has been associated with the Company
or its Advisor or Affiliates directly or indirectly, within the
previous two (2) years.  Until the first annual meeting of
Stockholders or until successors are duly elected and qualified,
the Board shall consist of the persons named as such in the
Company's Charter.  At the first annual meeting of Stockholders
and at each annual meeting thereafter, the Stockholders shall
elect Directors to hold office until the next annual meeting or
until their successors are elected and qualify.  Directors may be
re-elected by the Stockholders.  Directors need not be
Stockholders in the Company.  Stockholders wanting to nominate a
person for election as a Director shall deliver written notice of
such nomination at least ninety (90) days prior to an annual
meeting of Stockholders and within seven (7) days following the
date on which notice of a special meeting of Stockholders to
elect Directors is first given to Stockholders.

     Section 3.02  Powers.  The business and affairs of the
Company shall be managed in accordance with the Charter and these
Bylaws under the direction of its Board of Directors and where
applicable, the Independent Directors, which may exercise all of
the powers of the Company, except such as are by law or by the
Company's Charter or by these Bylaws conferred upon or reserved
to the Stockholders.  At, or before, the first meeting of
Directors, the Bylaws of the Company shall be reviewed and
ratified by a majority of the Directors and Independent
Directors.

     Section 3.03  Vacancies.  Any vacancy occurring in the Board
of Directors for any cause other than by reason of an increase in
the number of Directors, may subject to the provisions of Section
3.08, be filled by a majority of the remaining members of the
Board of Directors, although such majority is less than a quorum;
provided, however, that if the Company has sought to qualify as a
real estate investment trust and in accordance with Section 3.01,
a majority of the Board of Directors are required to be
Independent Directors, then Independent Directors shall nominate
replacements for vacancies among the Independent Directors.  Any
vacancy occurring by reason of the removal of a Director by the
Stockholders may be filled by a vote of the holders of a majority
of the shares entitled to vote for the election of Directors.
Any vacancy occurring by reason of an increase in the number of
Directors may be filled by action of a majority of the entire
Board of Directors.  If the Stockholders of any class or series
are entitled separately to elect one or more Directors, a
majority of the remaining Directors elected by that class or
series or the sole remaining Director elected by that class or
series may fill any vacancy among the number of Directors elected
by that class or series.  A Director elected by the Board of
Directors to fill a vacancy shall be elected to hold office until
the next annual meeting of Stockholders or until his successor is
elected and qualifies.

     Section 3.04  Resignations.  Any Director or member of a
committee may resign at any time.  Such resignation shall be made
in writing and shall take effect at the time specified therein,
or if no time is specified, at the time of the receipt by the
Chairman of the Board, the President or the Secretary.  The
acceptance of a resignation shall not be necessary to make it
effective.

     Section 3.05  Fiduciary Duty of the Directors.  The
Directors shall be charged with a fiduciary duty to the Company
and Stockholders and shall also have a fiduciary duty to the

                                   -5-

Stockholders to supervise the relationship of the Company with
the Advisor.  The Directors shall devote such time to the affairs
of the Company as they, within their sole discretion, exercised
in good faith, determine to be necessary for the benefit of the
Company and the Stockholders of the Company.

     Section 3.06 The Board of Directors may appoint from among
its members an Executive Committee, an Audit Committee and other
committees comprised of one (1) or more Directors.  In the case
of any committee comprised of less than three (3) individuals,
such individuals must all be Independent Directors (as defined in
Section 3.01).  In the case of any committee comprised of three
or more individuals, a majority of the members of any committees
so appointed shall be Independent Directors.  The Board of
Directors may delegate to any committee of the powers of the
Board of Directors except the power to declare dividends or
distributions on stock, recommend to the Stockholders any action
which requires Stockholder approval, amend the By-Laws, approve
any merger or share exchange or issue stock.  However, if the
Board of Directors is given general authorization for the
issuance of stock, a committee of the Board, in accordance with
the general formula or method specified by the Board of Directors
by resolution or by adoption of stock option plan, may fix the
terms of stock subject to classification or reclassification and
the terms on which any stock may be issued.  Notice of committee
meetings shall be given in the same manner as notice for special
meetings of Board of Directors.

For any committee comprised of less than three (3) individuals,
all of the members of any such committee shall be present in
person at any meeting of such committee in order to constitute a
quorum for the transaction of business at such meeting, and the
unanimous act of those present shall be the act of such
committee.  For any committee comprised of three or more
individuals, one-third (1/3), but not less than two (2), of the
members of any committee shall be present in person at any
meeting of such committee in order to constitute a quorum for the
transaction of business at such meeting, and the act of a
majority of those present shall be the act of such committee.
The Board of Directors may designate a Chairman of any committee
and such Chairman, or, in the case of a committee with two or
more members, any two (2) members of any such committee may fix
the time and place of its meetings unless the Board shall
otherwise provide.  In the absence or disqualification of any
member of any such committee, the members thereof present at any
meeting any not disqualified from voting, whether or not they
constitute a quorum, may unanimously appoint another Director to
act at the meeting in the place of such absent or disqualified
member; provided, however, that in the event of the absence or
disqualification of an Independent Director, such appointee shall
be an Independent Director.

Each committee shall keep minutes of its proceedings and shall
report the same to the Board of Directors at the meeting next
succeeding and any action taken by the committees shall be
subject to revision and alteration by the Board of Directors,
provided that no rights of third persons shall be affected by any
such revision or alteration.

                                   -6-

Subject to the provisions hereof, the Board of Directors shall
have the power at any time to change the membership of any
committee, to fill all vacancies, to designate alternate members,
to replace any absent or disqualified member, or to dissolve any
committee.

     Section 3.07  Meetings of the Board of Directors.  Meetings
of the Board of Directors, regular or special, may be held at any
place in or out of the State of Maryland as the Board may from
time to time determine or shall be specified in the notice of
such meeting.

     The initial meeting of the Board of Directors shall be held
as soon as practicable after the Company has been duly formed in
accordance with Maryland law.  The first meeting of each newly
elected Board of Directors shall be held as soon as practicable
after the annual meeting of the Stockholders at which the
Directors were elected.  The meeting may be held at such time and
place as shall be specified in a notice given as hereinafter
provided for special meetings of the Board of Directors, or as
shall be specified in a written waiver signed by all of the
Directors as provided in Article IV, except that no notice shall
be necessary if such meeting is held immediately after the
adjournment and at the site of the annual meeting of
Stockholders.

     Regular meetings of the Board of Directors may be held
without notice at such time and place as shall from time to time
be determined by the Board of Directors.

     Special meetings of the Board of Directors may be called at
any time by two (2) or more Directors or by a majority of the
members of the executive committee, if one be constituted, in
writing with or without a meeting of such committee or by the
Chairman of the Board or the President.

     Notice of the place and time of every special meeting of the
Board of Directors shall be delivered by the Secretary to each
Director either personally or by telephone, telegram or
telegraph, or by leaving the same at his residence or usual place
of business at least forty-eight (48) hours before the time at
which such meeting is to be held, or by first class mail, at
least three (3) days before the day on which such meeting is to
be held.  If mailed, such notice shall be deemed to be given when
deposited in the United States mail addressed to the Director at
his post office address as it appears on the records of the
Company, with postage thereon prepaid.  For purposes of the
Notice requirements provided for herein, the initial meeting of
the Board of Directors following the formation of the Company
shall be deemed to be a special meeting of the Board of
Directors.

     Section 3.08  Quorum and Voting.  At all meetings of the
Board, a majority of the entire Board of Directors shall
constitute a quorum for the transaction of business and the
action of a majority of the Directors present at any meeting at
which a quorum is present shall be the action of the Board of
Directors unless the concurrence of a greater proportion, or the
concurrence of a majority of the Independent Directors is
required for such action by law, the Company's Charter or these
Bylaws.  If a quorum shall not be present at any meeting of
Directors, the Directors present may, by a majority vote, adjourn
the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.

                                    -7-

     Without concurrence of a majority of the outstanding Shares
entitled to vote, the Directors may not:

     (a)  amend the Bylaws, except for amendments which do not
          adversely affect the rights, preferences and privileges
          of Stockholders including amendments to provisions
          relating to, Director qualifications, fiduciary duty,
          liability and indemnification, conflicts of interest,
          investment policies or investment restrictions;

     (b)  sell all or substantially all of the Company's assets
          other than in the ordinary course of the Company's
          business or in connection with liquidation and
          dissolution;

     (c)  cause the merger or other reorganization of the
          Company; or

     (d)  dissolve or liquidate the Company, other than before
          the initial investment in property.

     Notwithstanding the first paragraph of this Section 3.08,
any action pertaining to a transaction involving the Company in
which any Advisor, any Director or officer of the Company or any
affiliate or any of the foregoing persons has an interest
("Inside Transaction") shall specifically be approved with
respect to any isolated transactions or generally be approved
with respect to any series of similar transactions, by a majority
of the members of the Board of Directors, including a majority of
the Independent Directors who are not parties to and have no
financial interest in such Inside Transaction and who are not
affiliates of such interested party, even if such Directors
constitute less than a quorum.  Any deadlock in voting by the
Independent Directors shall result in disapproval of the Inside
Transaction with respect to which the voting was conducted.

     Subject to the provisions contained in Section 3.13(o), in
approving any contract, joint venture or other transaction or
series of transactions between the Company and the Advisor, any
Director or officer of the Company or any affiliate of such
persons, a majority of the Directors including a majority of the
Independent Directors must determine that:

     (a)  the contract, joint venture or other transaction as
          contemplated is fair and reasonable to the Company and
          its Stockholders and on terms and conditions no less
          favorable to the Company than those available from
          unaffiliated third parties;

     (b)  if an acquisition of property other than mortgage loans
          is involved, the total consideration for the property
          being acquired is not in excess of the appraised value
          of such property as stated in an appraisal by a
          qualified independent real estate appraiser selected by
          the Independent Directors, which shall be obtained by
          the Company prior to any such acquisition, and if the
          price is in excess of the cost of the asset to such
          seller thereof, the Independent Directors shall
          determine that substantial justification for such
          excess exists and that such excess is not unreasonable;

                                    -8-

     (c)  if the transaction involves compensation to any Advisor
          or its affiliates for services rendered in a capacity
          other than contemplated by the Advisory arrangements,
          such compensation, to the knowledge of the Directors,
          is not greater than the customary charges for
          comparable services between unaffiliated persons; and

     (d)  if the transaction involves the making of loans or the
          borrowing of money, the transaction is fair,
          competitive, and commercially reasonable and no less
          favorable to the Company than loans between
          unaffiliated lenders and borrowers under the same
          circumstances.

     The foregoing voting provisions shall not be changed without
the approval of the holders of a majority of outstanding shares.

     Section 3.09  Organization.  The Chairman of the Board shall
preside at each meeting of the Board of Directors, or in the
absence or inability of the Chairman of the Board to preside at a
meeting, the Vice-Chairman, or in his absence or inability to
act, another Director chosen by a majority of the Directors
present, shall act as Chairman of the meeting and preside
thereat.  The Secretary (or, in his absence or inability to act,
any person appointed by the Chairman of the meeting) shall act as
Secretary of the meeting and keep the minutes thereof.

     Section 3.10  Meeting by Conference Telephone.  Members of
the Board of Directors may participate in a meeting by means of a
conference telephone or similar communications equipment if all
persons participating in the meeting can hear each other at the
same time.  Participation in a meeting by these means constitutes
presence in person at a meeting.

     Section 3.11  Action Without Meeting.  Any action required
or permitted to be taken at any meeting of the Board of Directors
or of any committee thereof may be taken without a meeting, if a
written consent to such action is signed by all members of the
Board of Directors or of such committee, as the case may be, and
such written consent is filed with the minutes of proceedings of
the Board or committee.

     Section 3.12  Compensation of Directors.  Directors shall
not receive any stated salary for their services as directors
but, by resolution of the Board of Directors, may receive fixed
sums per year, per meeting and/or for specified event or service
to the Board of Directors.  Expenses of attendance and specified
service, if any, may be allowed so directors for attendance at
each annual, regular or special meeting of the Board of Directors
or of any committee thereof; but nothing herein contained shall
be construed to preclude any directors from serving the Company
in any other capacity and receiving compensation therefor.

     Section 3.13  Investment Policies and Restrictions.  It
shall be the duty of the Board of Directors to ensure that the
purchase, sale, retention and disposal of the Company's assets,

                                    -9-

and the investment policies of the Company and the limitations
thereon or amendments thereto are at all times:

     (a)  consistent with such policies, limitations and
          restrictions as are contained in this Section 3.13, or
          recited in the Registration Statement on Form S-11 (the
          "Registration Statement") filed with the Securities and
          Exchange Commission in connection with this Company's
          initial offering of common stock (the "Initial
          Offering"); and

     (b)  in compliance with the restrictions applicable to real
          estate investment trusts pursuant to the Internal
          Revenue Code of 1954, as amended.

     The Company shall not:

     (a)  Invest more than ten percent (10%) of its total assets
          in unimproved real property or mortgage loans on
          unimproved real property.

     (b)  Invest in commodities or commodity future contracts.
          Such limitation is not intended to apply to future
          contracts, when used solely for hedging purposes.

     (c)  Make or invest in loans to the Sponsor, Advisor,
          Director, or any affiliate thereof, except to wholly
          owned subsidiaries of the Company or except as provided
          for as follows:  The Company may not make or invest in
          mortgage loans unless an appraisal is obtained
          concerning the underlying property except for
          construction loans for the construction of improvements
          on properties acquired by the Company that are already
          leased to qualifying tenants and those loans insured or
          guaranteed by a government or government agency.  In
          cases in which a majority of the Independent Directors
          so determine, and in all cases in which the transaction
          is with the Advisor, Directors or affiliates thereof,
          such an appraisal must be obtained from an independent
          expert concerning the underlying property.  This
          appraisal shall be maintained in the Company's records
          for at least five years, and shall be available for
          inspection and duplication by any Stockholder.  In
          addition to the appraisal, a mortgagee's or owner's
          title insurance policy or commitment as to the priority
          of the mortgage or the condition of the title must be
          obtained.  Further, the Advisor and Stockholders shall
          observe the following policies in connection with
          investing in or making mortgage loans:

          (1)  The Company shall not invest in real estate
               contracts of sale, otherwise known as land sale
               contracts, unless such contracts of sale are in
               recordable form and appropriately recorded in the
               chain of title.

          (2)  The Company shall not make or invest in mortgage
               loans, including construction loans, on any one
               property if the aggregate amount of all mortgage
               loans outstanding on the property, including the
               loans of the Company, would exceed an amount equal

                                    -10-

               to eighty-five percent (85%) of the appraised
               value of the property as determined by appraisal
               unless substantial justification exists because of
               the presence of other underwriting criteria.  For
               purposes of this subsection, the "aggregate amount
               of all mortgage loans outstanding on the property,
               including the loans of the Company," shall include
               all interest (excluding contingent participation
               in income and/or appreciation in value of the
               mortgaged property), the current payment of which
               may be deferred pursuant to the terms of such
               loans, to the extent that deferred interest on
               each loan exceeds five percent (5%) per annum of
               the principal balance of the loan.

          (3)  The Company shall not make or invest in any
               mortgage loans that are subordinate to any
               mortgage or equity interest of an Advisor,
               Directors or any affiliate of the Company.

          (4)  The Company shall not invest in real estate
               mortgages, other than purchase money mortgages
               acquired by the Company in connection with one or
               more of its properties.

     (d)  Issue equity securities wich are redeemable at the
          election of the holder of such securities

     (e)  Issue debt securities unless the historical debt
          service coverage (in the most recently completed fiscal
          year) as adjusted for known changes is sufficient to
          properly service that higher level of debt.

     (f)  Issue warrants options, or similar evidences of a right
          to buy its securities, unless (i) issued to all of its
          security holders ratably, (ii) as part of a financing
          arrangement, or (iii) as part of a stock option plan to
          directors, officers or employees of the Company which
          meets the conditions of Section 260.140.41, Title 10,
          California Code of Regulations.

     (g)  Issue of its shares on a deferred payment basis or
          other similar arrangement.

     (h)  Invest in any mortgage loans that are subordinate to
          any liens or other indebtedness on a property if the
          effect of such mortgage loans would be to cause the
          aggregate value of all such subordinated indebtedness
          to exceed twenty-five percent (25%) of the Company's
          tangible assets.

     (i)  Invest in the equity securities of any non-governmental
          issue, including other real estate investment trusts or
          limited partnerships for a period in excess of eighteen
          (18) months, unless approved by a majority of the
          Directors, including a majority of the Independent
          Directors.

                                   -11-

     (j)       (i) The Company shall not purchase property
               from the Adviser, a Director, or any Affiliate of
               such person, unless a majority of Directors
               (including a majority of Independent Directors)
               not otherwise interested in such transaction
               approve the transaction approve the transaction as
               being fair and reasonable to the Company and at a
               price to the Company no greater than the cost of
               the asset to such Sponsor, Advisor, Director or
               any Affiliate thereof, or if the price to the
               Company is in excess of such cost, that
               substantial justification for such excess exists
               and such excess is reasonable.  In no event shall
               the cost of such asset to the Company exceed its
               current appraised value.  The foregoing
               restrictions notwithstanding, the Company may
               acquire a property from an Adviser or its
               Affiliate where such person is acting only to
               facilitate the Company's purchase of the Property
               and such person does not receive a profit from the
               transaction except for the receipt of fees not
               otherwise prohibited under these Bylaws.

               (ii) (a) The Advisor, Director or any Affiliate
                    thereof shall not acquire assets from the
                    REIT unless approved by a majority of
                    Directors (including a majority of
                    Independent Directors), not otherwise
                    interested in such transaction, as being fair
                    and reasonable to the REIT.

                    (b) A REIT may lease assets to the Advisor, a
                    Director or any Affiliate thereof only if
                    approved by a majority of Directors
                    (including a majority of Independent
                    Directors), not otherwise interested in such
                    transaction, as being fair and reasonable to
                    the REIT.

     (k)  Engage in any short sales of securities or trading, as
          distinguished from investment activities.

     (l)  Engage in underwriting or the agency distribution of
          securities issued by others.

     (m)  Invest more than ten percent (10%) of its total assets
          in second mortgages, excluding wrap-around type second
          mortgage loans.

     (n)  Without the approval of a majority of the Directors,
          including a majority of the Independent Directors,
          enter into joint contracts with third parties.  If a
          joint venture is entered into with another publicly
          registered entity sponsored by the Advisor or
          affiliates of the Advisor, the following conditions
          must be satisfied:

          (i)  The Company will invest only in a joint venture
               having investment objectives comparable to the
               Company's and the investment by each party to the

                                   -12-

               joint venture must be on substantially the same
               terms and conditions; provided, however, the
               Company shall own more than fifty percent (50%) of
               any joint venture between it and its Sponsor or
               Affiliate;

          (ii) The Company may not pay more than once, directly
               or indirectly, for the same services and may not
               act indirectly through any such joint venture if
               the Company would be prohibited from doing so
               directly because of restrictions contained herein;
               and

         (iii) In the event of a proposed sale of the
               property initiated by the other joint venture
               partner, the Company must have a right of first
               refusal to purchase the other party's interest.

     (o)  Invest in equity securities unless a majority of
          Directors, including a majority of Independent
          Directors, not otherwise interested in such transaction
          approve the transaction as being fair, competitive and
          commercially reasonable.

     The Company does not intend to invest in the securities of
other issuers for the purposes of exercising control, to offer
securities in exchange for property unless deemed prudent by a
majority of the Directors, or to repurchase or otherwise
reacquire shares of the Company except as may be necessary to
maintain qualification as a real estate investment trust.

     The Directors shall review the borrowings of the Company
quarterly for reasonableness in relation to the Company's net
assets.  The Company shall not incur indebtedness if, after
giving effect to the incurrence thereof, aggregate indebtedness,
secured and unsecured, would exceed three hundred percent (300%)
of the Company's Net Assets on a consolidated basis.  For this
purpose, the term "Net Assets" means the total assets (less
intangibles) of the Company at cost, before deducting
depreciation or other non-cash reserves, less total liabilities,
as calculated at the end of each quarter on a basis consistently
applied.

     The Directors, including the Independent Directors, shall
establish written policies on investments and borrowing which are
not inconsistent with the Bylaws and shall monitor and review at
least annually, the administrative procedures, investment
operations and performance of the Company and the Advisor to
assure and determine that such policies are carried out and are
in the best interests of the Stockholders.  Each such
determination and the basis therefore shall be set forth in the
minutes of the Board of Directors.  No material change in the
investment policies prohibitions or restrictions of the Company
shall be made without the written consent or approval  of
Stockholders owning in the aggregate more than 50% of the then
outstanding Shares, excluding Shares held by officers, Directors
and their affiliates.

     The Company may not borrow money from the Advisor, any
Directors, or any Affiliate thereof, unless a majority of the
Directors, including a majority of the Independent Directors, not
otherwise interested in such transaction approve the transaction
as being fair, competitive, and commercially reasonable and no
less favorable to the Company than loans between unaffiliated
parties under the same circumstances.

                                   -13-

     In the event the Advisor may recommend acquisition of the
same property to the Company and one or more Affiliates of the
Advisor, it shall be required to review the investment portfolio
of each program and will make decisions as to which program will
acquire a particular property on the basis of several factors,
including each program's investment objectives, each program's
cash flow requirements, the affect of the acquisition on the
diversification of each program's real estate portfolio, the
projected cash flow and economic affects of the investment, the
estimated tax consequences of the acquisition on the respective
programs, and the amount of each program's available funds.  If
the Company and one or more of such programs have funds available
to purchase the specific property and, after evaluation of the
factors enumerated above, investment is deemed equally
appropriate for each program, the Advisor will offer the
investment opportunity to the program which has had uncommitted
funds available for the longest period of time.  In any event, it
shall be the duty of the Directors to determine independently
that the Advisor is applying the foregoing conditions and
standards fairly with respect to the Company.

     All other transactions between the Company and the Sponsor,
Advisor, a Director, or any Affiliate thereof, shall require
approval by a majority of the Directors (including a majority of
the Independent Directors) not otherwise interested in such
transactions as being fair and reasonable to the Company and on
terms and conditions not less favorable to the Company than those
available from unaffiliated third parties.

     The consideration paid for real property acquired by the
Company shall ordinarily be based on the fair market value of the
property as determined by a majority of the Directors.  In cases
in which a majority of the Independent Directors so determine,
and in all cases in which assets are acquired from the Advisor,
Trust or Directors, Sponsors or Affiliates thereof, such fair
market values shall be as determined by an Independent Expert
selected by the Independent Directors.  Neither the Sponsor,
Advisor, nor Affiliates thereof shall originate loans or provide
loan security.

     Section 3.14  Advisory Arrangements.  The Board of Directors
may cause the Company to engage an Advisor to furnish advice and
recommendations concerning the affairs of the Company, provide
administrative services to the Company and manage the Company's
day-to-day affairs pursuant to a written contract or contracts,
or any renewal thereof, which have obtained the requisite
approvals of the Board of Directors, including a majority of the
Independent Directors.  In the event of the termination of such
contract, the Advisor shall be required to cooperate with the
Company and take all reasonable steps requested to assist the
Directors in making an orderly transition of the Advisory
function.

     If such an Advisor is engaged, the Board of Directors shall
evaluate the performance of the Advisor and its key personnel
before entering into or renewing an Advisory arrangement.  The
minutes of meetings with respect to such evaluation shall reflect
the criteria used by the Board of Directors in making such
evaluation.  Prior to entering into a contract with any Advisor
or any successor Advisor, the Board of Directors shall determine
that such Advisor possesses sufficient qualifications (a) to
perform the Advisory function for the Company and (b) to justify
the compensation provided for in its contract with the Company.
Each contract for the services of an Advisor entered into by the
Board of Directors shall have a term of no more than one (1)
year, but may be renewed annually at or prior to the expiration
of the contract.  Each contract shall be terminable by a majority

                                   -14-

of the Independent Directors or the Advisor on sixty (60) days
written notice without cause or immediately by mutual consent of
the parties thereto.

     If an Advisor is engaged, the Independent Directors shall
determine at least annually that the compensation which the
Company contracts to pay the Advisor is reasonable in relation to
the nature and quality of services performed and also shall
supervise the performance of the Advisor and the compensation
paid to it by the Company to determine that the provisions of
such contract are being carried out.  Each such determination
shall be based upon the following factors and all other factors
the Independent Directors may deem relevant and the findings of
the Independent Directors on each of such factors shall be
recorded in the minutes of the Board of Directors:

     (a)  the size of the Advisory fee and expense reimbursement
          in relation to the size, composition and profitability
          of the investment portfolio of the Company;

     (b)  the success of the Advisor in generating opportunities
          that meet the investment objectives of the Company;

     (c)  the rates charged to other companies similar to the
          Company and to other investors by advisors performing
          comparable services in the same geographical location;

     (d)  additional revenues realized by the Advisor and its
          affiliates through their relationship with the Company
          or by others with whom the Company does business;

     (e)  the quality and extent of service and advice furnished
          to the Company, including the frequency of problem
          investments and competence in dealing with distress
          situations;

     (f)  the performance of the investment portfolio of the
          Company, including income, conservation or appreciation
          of capital; and

     (g)  the quality of the investment portfolio of the Company
          in relationship to the investments generated by the
          Advisor for its own account.

     The qualifications of the Advisor shall be set forth in the
Prospectus relating to the initial public offering of the Shares
of the Company.

     Section 3.15  Property Management Arrangements.  The Board
of Directors shall cause the Company to engage a property manager
who will be responsible for the day-to-day operations of the
Company's properties, including leasing, rent collection and
maintenance pursuant to a written contract or contracts, or any
renewal thereof subject to overall review and supervision by the
Board of Directors.  The Board of Directors shall evaluate the
performance of the management company before entering into or
renewing any management arrangement.

     Section 3.16  Total Expenses.  The Independent Directors
shall determine, from time to time but at least annually, that
the total fees and expenses of the Company are reasonable in
light of the Company's investment experience, net assets, net
income and all other relevant factors, and each such
determination and the factors in support thereof shall be
recorded in the minutes of the next meeting of the Board of

                                   -15-

Directors.  The Independent Directors shall have a fiduciary duty
to limit the "Total Operating Expenses" to amounts that do not
exceed (for the twelve (12) months ending with the end of each
fiscal quarter of the Company) the greater of (a) two percent
(2%) of the "Average Invested Assets" or (b) twenty five percent
(25%) of the Company's Net Income (the "Limitation").

     Within sixty (60) days after the end of any fiscal quarter
of the Company for which Total Operating Expenses (for the twelve
(12) months then ended) exceed 2% of the Average Invested Assets
or 25% of Net Income, whichever is greater, there shall be sent
to the Stockholders of the Company a written disclosure of such
fact, together with an explanation of the factors the Independent
Directors considered in arriving at the conclusion that such
higher operating expenses were justified.  In the event the
Independent Directors do not determine such expenses are
justified, the Independent Directors shall cause all Company
personnel performing Advisor activities to reduce immediately
their compensation by the amount by which the aggregate annual
expenses paid for Advisor activities exceed the limitations
herein provided.

     The foregoing provisions shall not be changed without the
approval of the holders of a majority of the outstanding shares.

     Section 3.17  Real Estate Commissions on Resale of Property.
If an Advisor, Director, or any Affiliate provides a substantial
amount of the services in the effort to sell the property of the
Company, then that Person may receive up to one-half of the
brokerage commission paid but in no event to exceed an amount
equal to 3% of the Contract Price for the Property.  In addition,
the amount paid when added to the sums paid to unaffiliated
parties in such a capacity shall not exceed the lesser of the
Competitive Real Estate Commission or an amount equal to 6% of
the Contract Price for the Property.  As used herein, the term
Competitive Real Estate Commission shall mean the real estate or
brokerage commission paid for the purchase or sale of a property
which is reasonable, customary and competitive in light of the
size, type and location of such property.  The term Contract
Price for the Property shall mean the amount actually paid or
allocated to the purchase, development, or construction or
improvement of a property exclusive of the Acquisition Fees and
Acquisition Expenses.

     Section 3.18  Business Activities.  Each Director may engage
in other business activities of types conducted by the Company
and, except as otherwise provided herein, is not required to
present to the Company any investment opportunities which becomes
available to him regardless of whether the opportunities are
within the Company's permissible investment policies.

     Section 3.19  Acquisition Fees and Acquisition Expenses.
The Independent Directors shall ensure that the total of all
"Acquisition Fees" and "Acquisition Expenses" shall be
reasonable, and shall not exceed an amount equal to 6% of the
Contract Price of the Property, or in the case of a mortgage
loan, 6% of the funds advanced.  Notwithstanding the foregoing, a
majority of the Directors, including a majority of the
Independent Directors, not otherwise interested in the
transaction may approve fees in excess of these limits if they
determine the transaction to be commercially competitive, fair
and reasonable to the Company.

                                    -16-

     Section 3.20  Roll-Up Transactions.  In connection with a
proposed Roll-Up, the Company shall obtain an appraisal of all of
its assets from a competent Independent Expert.  If the appraisal
will be included in a prospectus used to offer the securities of
a Roll-Up Entity, the appraisal shall be filed with the
Securities Exchange Commission ("SECURITIES AND EXCHANGE
COMMISSION") and the states as an Exhibit to the Registration
Statement for the offering.  Accordingly, an issuer using the
appraisal shall be subject to liability for violation of Section
11 of the Securities Act of 1933 and comparable provisions under
state laws for any material misrepresentations or material
omissions in the appraisal.  Company assets shall be appraised on
a consistent basis.  The appraisal shall be based on an
evaluation of all relevant information, and shall indicate the
value of the Company's assets as of a date immediately prior to
the announcement of the proposed Roll-Up transaction.  The
appraisal shall assume an orderly liquidation of Company assets
over a 12-month period.  The terms of the engagement of the
Independent Expert shall clearly state that the engagement is for
the benefit of the Company and its investors.  A summary of the
independent appraisal, indicating all material assumptions
underlying the appraisal, shall be included in a report to the
investors in connection with a proposed Roll-Up.

     In connection with a proposed Roll-Up, the Person sponsoring
the Roll-Up shall offer to Stockholders who vote "no" on the
proposal the choice of:

     (a)  accepting the securities of the Roll-Up Entity offered
          in the proposed Roll-Up; or

     (b)  one of the following:

          (i)  remaining as Stockholders of the Company and
               preserving their interests on the same terms and
               conditions as existed previously; or

          (ii) receiving cash in an amount equal to the
               Stockholders' pro rata share of the appraised
               value of the net assets of the Company.

     The Company shall not participate in any proposed Roll-Up
which would result in Stockholders having democracy rights in the
Roll-Up Entity that are less than those provided for under the
Company's Bylaws.

     The Company shall not participate in any proposed Roll-Up
which includes provisions which would operate to materially
impede or frustrate the accumulation of shares by any purchaser
of the securities of the Roll-Up Entity (except to the minimum
extent necessary to preserve the tax status of the Roll-Up
Entity).  The Company shall not participate in any proposed Roll-
Up which would limit the ability of an investor to exercise the
voting rights of its securities of the Roll-Up Entity on the
basis of the number of Company Shares held by that investor.

     The Company shall not participate in any proposed Roll-Up in
which investors' rights of access to the records of the Roll-Up
Entity will be less than those provided for under the Company's
Bylaws.

                                   -17-

     The Company shall not participate in any proposed Roll-Up in
which any of the costs of the transaction would be borne by the
Company if the Roll-Up is not approved by the Stockholders.

     Section 3.21 - Certain Rights of Directors, Officers,
Employees and Agents.  The directors shall have no responsibility
to devote their full time to the affairs of the Company.  Any
director or officer, employee or agent of the Company, in his
personal capacity or in a capacity as an affiliate, employee or
agent of any other person, or otherwise, may have business
interests and engage in business activities similar to or in
addition to those of or relating to the Company."

                           ARTICLE IV

                       Waivers of Notice

     Section 4.01  Whenever any notice of the time, place or
purpose of any meeting of Stockholders, Directors or committee is
required to be given under law or under the provisions of the
Company's Charter or these Bylaws, a waiver thereof in writing,
signed by the person or persons entitled to such notice and filed
with the records of the meeting, whether before or after the
holding thereof, or actual attendance at the meeting of
Stockholders in person or by proxy, or at the meeting of
Directors or committee in person, shall be deemed equivalent to
the giving of such notice to such persons.  When a meeting of
Stockholders is adjourned to another time and place, unless the
Board of Directors after the adjournment is for more than thirty
(30) days, notice of such adjourned meeting need not be given if
the time and place to which the meeting shall be adjourned were
announced at the meeting at which the adjournment was taken.

                           ARTICLE V

                            Officers

     Section 5.01  Officers.  The officers of the Company shall
be chosen by the Board of Directors and shall be a President, a
Secretary and a Treasurer.  The Board of Directors may also
choose a Chairman of the Board, one (1) or more Vice Presidents,
and one or more Assistant Secretaries and Treasurers (also from
time to time referred to by the Company as Financial Officers).
Two (2) or more offices, except those of President and Vice
President may be held by the same person but no officer shall
execute, acknowledge or verify any instrument in more than one
(1) capacity, if such instrument is required by law, the
Company's Charter or these Bylaws to be executed, acknowledged or
verified by two (2) or more officers.

     The Board of Directors at its first meeting after each
annual meeting of Stockholders shall choose a President, a
Secretary and a Treasurer, none of whom need to be a member of
the Board.

     Section 5.02  Other Officers and Agents.  The Board of
Directors may appoint such other officers and agents as it shall
deem necessary, who shall hold their offices for such terms and
shall exercise such powers and perform such duties as shall be
determined from time to time by the Board of Directors.

                                    -18-

     Section 5.03  Compensation.  The salaries of all officers
and agents of the Company shall be fixed by the Board of
Directors.

     Section 5.04  Removal; Resignation.  The officers of the
Company shall serve at the pleasure of the Board of Directors,
and until their successors are chosen and qualified.  Any officer
or agent may be removed by the Board of Directors whenever, in
its judgment, the best interests of the Company will be served
thereby, but such removal shall be without prejudice to the
contractual rights, if any, of the person so removed.  Any
officer may resign at any time.  Such resignation shall be made
in writing, and shall take effect at the time specified therein,
and if time not be specified, at the time of its receipt by the
Chairman of the Board, the President or the Secretary.  The
acceptance of a resignation shall not be necessary to make it
effective.  If the office of any officer becomes vacant for any
reason, the vacancy shall be filled by the Board of Directors.

     Section 5.05  Chairman.  The Chairman of the Board, if one
shall be elected, shall, if present, preside at all meetings of
the Board of Directors and Stockholders and exercise and perform
such other powers and duties as may be from time to time assigned
to him by the Board of Directors or prescribed by these Bylaws
and as may be set forth herein.

     Section 5.06  President.  The President shall be the chief
executive officer of the Company.  The President shall have
general and active control of the business, finances and affairs,
subject to the control of the Board of Directors.  Except as may
otherwise be provided by the Board of Directors from time to
time, the President shall have general power to execute bonds,
deeds, contracts, conveyances and other instruments in the name
of the Company and to affix the corporate seal, to appoint all
employees and agents of the Company whose appointment is not
otherwise provided for and to fix the compensation thereof
subject to the provisions of these Bylaws and subject to the
approval of the Board of Directors; to remove or suspend any
employee or agent who shall not have been appointed by the Board
of Directors to suspend for cause, pending final action by the
body which shall have appointed him, any officer other than an
elected officer, or any employee or agent who shall have been
appointed by the Board of Directors.  In the absence of the
Chairman of the Board to act, the President shall have authority
to exercise the power and perform the duties of the Chairman of
the Board.  He shall have such further powers and duties as may
be conferred on him by the Board of Directors.

     Section 5.07  Vice President.  The Vice President, or if
there shall be more than one, the Vice Presidents in the order
determined by the Board of Directors, shall, in the absence or
disability of the President, perform the duties and exercise the
powers of the President, and shall perform such other duties and
have such other powers as the Board of Directors may from time to
time prescribe.

     Section 5.08  Secretary.  The Secretary shall attend all
meetings of the Board of Directors and all meetings of the
Stockholders and record all the proceedings of the meetings of
the Stockholders and record all the proceedings of the meetings
of the Company and of the Board of Directors in a book to be kept
for that purpose and shall perform like duties for the standing
committees when required.  The Secretary shall give, or cause to
be given, notice of all meetings of the Stockholders and special
meetings of the Board of Directors, and shall perform such other
duties as may be prescribed by the Board of Directors or
President, under whose supervision the Secretary shall be.  The
Secretary shall keep in safe custody the seal of the Company,
and, when authorized by the Board of Directors, affix the same to

                                   -19-

any instrument requiring it and, when so affixed, it shall be
attested by the Secretary's signature or by the signature of an
Assistant Secretary.

     Section 5.09  Assistant Secretary.  The Assistant Secretary
or if there be more than one, the Assistant Secretaries in the
order determined by the Board of Directors, shall, in the absence
or disability of the Secretary, perform the duties and exercise
the powers of the Secretary and shall perform such other duties
and have such other powers as the Board of Directors may from
time to time prescribe.

     Section 5.10  Treasurer and Assistant Treasurer.  The
Treasurer shall have the custody of the corporate funds and
securities and shall keep full and accurate accounts of receipts
and disbursements in books belonging to the Company and shall
deposit all monies and other valuable effects in the name and to
the credit of the Company in such depositories as may be
designated by the Board of Directors.  The Treasurer shall
disburse the funds of the Company as may be ordered by the Board
of Directors, taking proper vouchers for such disbursements, and
shall render to the President and the Board of Directors at its
regular meetings, or when the Board of Directors so requires, an
account of all his transactions as Treasurer and of the financial
condition of the Company.  If required by the Board of Directors,
the Treasurer shall give the Company a bond in such sum and with
such surety or sureties as shall be satisfactory to the Board of
Directors for the faithful performance of the duties of his
office and for the restoration to the Company, in case of his
death, resignation, retirement or removal from office, of all
books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the
Company.

     The Assistant Treasurer, or if there shall be more than one,
the Assistant Treasurers in the order determined by the Board of
Directors, shall, in the absence or disability of the Treasurer,
perform the duties and exercise the powers of the Treasurer and
shall perform such other duties and have such other powers as the
Board of Directors may from time to time prescribe.

     Section 5.11  Delegation of Duties.  In the case of the
absence of any officer of the Company, or for any other reason
that the Board of Directors may deem sufficient, the Board of
Directors may confer for the time being the powers or duties, or
any of them, of such officer upon any other officer or upon any
director.

     Section 5.12  Liability and Indemnification.  No
indemnification of Directors, Advisors or Affiliates shall be
allowed for any liability or loss suffered by the Directors,
Advisors or Affiliates, nor shall the Directors, Advisors or
Affiliates be held harmless for any loss or liability suffered by
the Company, unless all of the following conditions are met:

     (a)  The Directors, Advisors or Affiliates have determined,
          in good faith, that the course of conduct which caused
          the loss or liability was in the best interests of the
          Company.

     (b)  The Directors, Advisors or Affiliates were acting on
          behalf of or performing services for the Company.

                                  -20-

     (c)  Such liability or loss was not the result of:

          (1)  negligence or misconduct by the Directors,
               excluding the Independent Directors, Advisors or
               Affiliates; or

          (2)  gross negligence or willful misconduct by the
               Independent Directors.

     (d)  Such indemnification or agreement to hold harmless is
          recoverable only out of Company net assets and not from
          Stockholders.

     Notwithstanding anything to the contrary contained in this
Section 5.12, the Directors, Advisors or Affiliates and any
persons acting as a broker-dealer shall not be indemnified by the
Company for any losses, liabilities or expenses arising from or
out of an alleged violation of federal or state securities laws
by such party unless one or more of the following conditions are
met:

     (a)  There has been a successful adjudication on the merits
          of each count involving alleged securities law
          violations as to the particular indemnitee.

     (b)  Such claims have been dismissed with prejudice on the
          merits by a court of competent jurisdiction as to the
          particular indemnitee.

     (c)  A court of competent jurisdiction approves a settlement
          of the claims against a particular indemnitee and finds
          that indemnification of the settlement and the related
          costs should be made, and the court considering the
          request for indemnification has been advised of the
          position of the Securities and Exchange Commission and
          of the published position of any state securities
          regulatory authority in which securities of the Company
          were offered or sold as to indemnification for
          violations of securities laws.

     The advancement of Company funds to the Directors, Advisors
or Affiliates for legal expenses and other costs incurred as a
result of any legal action for which indemnification is being
sought is permissible only if all of the following conditions are
satisfied:

     (a)  The legal action relates to acts or omissions with
          respect to the performance of duties or services on
          behalf of the Company.

     (b)  The legal action is initiated by a third party who is
          not a Stockholder or the legal action is initiated by a
          Stockholder acting in his or her capacity as such and a
          court of competent jurisdiction specifically approves
          such advancement.

     (c)  The Directors, Advisors or Affiliates undertake to
          repay the advanced funds to the Company, together with
          the applicable legal rate of interest thereon, in cases
          in which such Directors, Advisors or Affiliates are
          found not to be entitled to indemnification.

                                   -21-

     Subject to the foregoing limitations and restrictions, each
Director or employee of the Company shall be indemnified by the
Company to the full extent permitted under the General Laws of
the State of Maryland and other applicable law, provided that
such person determined in good faith, that the course of conduct
which caused the loss or liability was in the best interests of
the Company and such liability or loss was not the result of
negligence or misconduct by such person, or, as provided in the
first subparagraph (c) of this Section 5.12 above with respect to
an Independent Director, was not the result of such person's
gross negligence or willful misconduct."

     Section 5.13  Business Activities.  Each officer may engage
in other business activities of types conducted by the Company
and, except as otherwise provided herein, is not required to
present to the Company any investment opportunities which becomes
available to him regardless of whether the opportunities are
within the Company's permissible investment policies.  The
Officers shall devote such time to the affairs of the Company as
they, within their sole discretion, exercised in good faith,
determine to be necessary for the benefit of the Company and the
Stockholders of the Company.

                           ARTICLE VI

                     Certificates of Stock

     Section 6.01  Certificates.  Actual issuance of a
certificate or certificates evidencing the number and kind and
class of shares owned by a Stockholder is optional.  The Company
may not issue certificates unless it receives a request in
writing to do so (together with payment of a Five Dollar ($5.00)
administrative charge, to the extent permitted by law).  The
Company may not issue certificates unless it receives a request
in writing to do so together with payment of a Five Dollar
($5.00) administrative charge.  Stockholders who do not elect to
receive certificates will own stock in "uncertificated" or "book
entry" form and will be treated in a like manner as those who do
receive a certificate.

     Although stock certificates may not be issued by the Company
without an affirmative election by a Stockholder, each
Stockholder shall be entitled to elect to receive a certificate
or certificates which shall represent and certify the number and
kind and class of shares owned by him in the Company.  Each
certificate shall be signed by the Chairman of the Board or the
President or a Vice President and countersigned by the Secretary
or the Treasurer or an Assistant Treasurer and may be sealed with
the corporate seal.

     The signatures may be either manual or facsimile signatures
and the seal may be either facsimile or any other form of seal.
In cases any officer who has signed any certificate ceases to be
an officer of the Company before the certificate is issued, the
certificate may nevertheless be issued by the Company with the
same effect as if the officer has not ceased to be such officer
as of the date of its issue.  Each stock certificate shall
include on its face the name of the Company, the name of the
Stockholder and the class of stock and number of shares
represented by the certificate.  If the Company has authority to
issue stock of more than one class, the stock certificate shall
contain on its face or back a full statement or summary of the
designations and any preferences, conversion and other rights,
voting powers, restrictions, limitations as to dividends,
qualifications, and terms and conditions or redemption of the

                                   -22-

stock of each class which the Company is authorized to issue and,
if the Company is authorized to issue any preferred or special
class in series, the differences in the relative rights and
preferences between the shares of each series to the extent they
have been set, and the authority of the Board of Directors to set
the relative rights and preferences of subsequent series.  In
lieu of such full statement or summary, there may be set forth
upon the face or back of the certificate a statement that the
Company will furnish to any Stockholder upon request and without
charge, a full statement of such information.  A summary of such
information included in a registration statement permitted to
become effective under the Federal Securities Act of 1933, as now
or hereafter amended, shall be an acceptable summary for purposes
of this Section.  Every stock certificate representing shares of
stock which are restricted as to the transferability by the
Company shall contain a full statement of the restriction or
state that the Company will furnish information about the
restriction to the Stockholder on request and without charge.  A
stock certificate may not be issued until the stock represented
by it is fully paid, except in the case of stock purchased under
an option plan as permitted by law.

     Section 6.02  Lost Certificates.  The Board of Directors may
direct a new certificate or certificates to be issued in place of
any certificate or certificates theretofore issued by the Company
alleged to have been stolen, lost or destroyed, upon the making
of an affidavit of that fact by the person claiming the
certificate of stock to be stolen, lost or destroyed.  When
authorizing such issue of a new certificate or certificates, the
Board of Directors may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such
stolen, lost or destroyed certificate or certificates, or his
legal representative, to advertise the same in such manner as it
shall require and to give the Company a bond, with sufficient
surety, to the Company to indemnify it against any loss or claim
which may arise by reason of the issuance of a new certificate.

     Section 6.03  Transfer Agents and Registrars.  The Board of
Directors may in its discretion, appoint one or more banks or
trust companies in such city or cities as the Board of Directors
may deem advisable, from time to time, to act as transfer agents
and/or registrars of the shares of stock of the Company; and upon
such appointments being made, no certificate representing shares
shall be valid until countersigned by one of such transfer agents
and/or registered by one of such registrars.

     Section 6.04  Transfer of Stock.  No transfers of shares of
stock of the Company shall be made if (i) void ab initio pursuant
to Article VII of the Company's Charter, or (ii) the Board of
Directors, pursuant to such Article VII, shall have refused to
transfer such shares.  The Board of Directors of the Company may:

     (a)  Redeem the outstanding shares of stock of the Company
          or restrict the transfer of such shares to the extent
          necessary to prevent the concentration of ownership of
          more than fifty percent (50%) of the outstanding shares
          of the Company in the hands of five (5) or fewer
          individuals or entities and to ensure that the Company
          always has at least one hundred (100) Stockholders;

     (b)  Refuse to effect a transfer of shares of stock of the
          Company to any person who as a result would
          beneficially own shares in excess of nine and eight
          tenths percent (9.8%) of the outstanding shares of the
          Company ("Excess Shares"); and

                                  -23-

     (c)  Redeem Excess Shares held by any Stockholder of the
          Company.

     Permitted transfers of shares of stock of the Company shall
be made on the stock records of the Company only upon the
instruction of the registered holder thereof, or by his attorney
thereunto authorized by power of attorney duly executed and filed
with the Secretary or with a transfer agent or transfer clerk,
and upon surrender of the certificate or certificates, if issued
for such shares properly endorsed or accompanied by a duly
executed stock transfer power and the payment of all taxes
thereon.  Upon surrender to the Company or the transfer agent of
the Company of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or
authority to transfer, as to any transfers not prohibited by the
Company's Charter, these Bylaws, or by action of the Board of
Directors thereunder, it shall be the duty of the Company to
issue a new certificate to the person entitled thereto, cancel
the old certificate and record the transaction upon its books.

     Section 6.05  Fixing of Record Dates; Closing of Transfer
Books.  The Board of Directors may fix, in advance, a date as the
record date for the purpose of determining Stockholders entitled
to notice of, or to vote at, any meeting of Stockholders, or
Stockholders entitled to receive payment of any dividend or the
allotment of any rights, or in order to make a determination of
Stockholders for any other proper purpose.  Such date, in any
case, shall be not more than ninety (90) days, and in case of
meeting of Stockholders not less than ten (10) days, prior to the
date on which the particular action requiring such determination
of Stockholders is to be taken.

     Section 6.06  Registered Stockholders.  The Company shall be
entitled to recognize the exclusive right of a person registered
on its books as the owner of shares to receive dividends and to
vote as such owner, and to hold liable for calls, if any, a
person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person,
whether or not it shall have express or other notice thereof,
except as otherwise provided by law.

     Section 6.07  Regulations.  The Board of Directors may make
such additional rules and regulations, not inconsistent with
these Bylaws, as it may deem expedient concerning the issue,
transfer and registration of certificates for shares of stock of
the Company.

                                  -24-

                          ARTICLE VII

                       General Provisions

     Section 7.01  Dividends.  Subject to the provisions of the
Company's Charter and any requirements of applicable law,
quarterly dividends of substantially all of the Company's
available cash flow from operation of its properties, may be
declared by the Board of Directors at any regular or special
meeting.  Dividends may be paid in cash, in its own shares, or in
other marketable securities, subject to the provisions of law and
of the Company's Charter.  Before payment of any dividend, there
may be set aside out of any funds of the Company available for
dividends such sums as the Directors from time to time, in their
absolute discretion, think proper as a reserve fund to meet
contingencies, or for equalizing dividends, or for repairing or
maintaining any property of the Company, or for such other
purpose as the Board of Directors shall deem conducive to the
interests of the Company, and the Board of Directors may modify
or abolish any such reserve in the manner in which it was
created.  The Company shall disclose in a written statement
accompanying each payment the source or sources of such payment
to the extent such source or sources is or are other than from
current operations.

     In no event shall dividends be made from any source of funds
borrowed by Company.  No dividends shall be made in kind.

     Section 7.02   Minimum Capitalization Requirement.  Prior to
any initial public offering by the Company, the Company's
Advisors shall contribute to the Company an amount not less than
the lesser of:

     (a)  ten percent (10%) of the total net assets upon
          completion of the offering; or

     (b)  $200,000 as an Initial Investment.

The Advisors shall not sell said Initial Investment while the
Company operates the REIT but may transfer its shares to other
affiliates.

     Section 7.03  Annual Report.  The President or a Vice
President or the Treasurer shall prepare or cause to be prepared
annually a full and correct report of the affairs of the Company,
including financial statements for the preceding fiscal year,
which shall be prepared in accordance with generally accepted
accounting principles, audited and certified by independent
certified public accountants and distributed to Stockholders
within one hundred twenty (120) days after the close of the
Company's fiscal year and a reasonable period of time (not less
than thirty (30) days) prior to the annual meeting of
Stockholders.  Such report shall also be submitted at the annual
meeting and shall be filed within twenty (20) days thereafter at
the principal office of the Company in the State of Maryland.
The annual report shall also include a separately stated, full
disclosure of all material terms, factors and circumstances
surrounding any transactions between the Company and the Advisor,
any Director, or any affiliates of the Advisor or such Director
occurring during the year for which the annual report is made.
The Independent Directors will comment on the fairness of such
transactions in the annual report.

                                    -25-

     The Company shall also publish in the annual report (i) the
ratio of the cost of raising capital during the year to the
capital raised; (ii) the aggregate amount of Advisory fees and
the aggregate amount of other fees paid to the Advisor and all
affiliates of the Advisor by the Company, including fees or
charges paid to such Advisor and all affiliates of the Advisor by
third parties doing business with the Company; (iii) the total
operating expenses of the Company stated as a percentage of
average invested assets and as a percentage of its net income;
(iv) a report from the Independent Directors that the policies
being followed by the Company are in the best interests of its
Stockholders and the basis for such determination; (v) separately
stated, full disclosure of all material items, factors, and
circumstances surrounding any and all transactions involving the
Company, Directors, Advisors, Sponsors and any Affiliates thereof
occurring in the year for which the annual report is made.  The
Independent Directors shall be specifically charged with a duty
to examine and comment in the report on the fairness of such
transactions.

     Section 7.04  Quarterly Report.  The President or a Vice
President or the Treasurer shall also prepare or cause to be
prepared quarterly for each of the first three (3) quarters of
each fiscal year, a full and correct report of the affairs of the
Company, including a balance sheet and financial statement of
operations for the preceding fiscal quarter, which need not be
certified by independent certified public accountants and shall
be distributed to Stockholders within forty-five (45) days after
the close of the Company's preceding fiscal quarter.

     Section 7.05  Checks.  All checks, drafts and orders for the
payment of money, notes and other evidences of indebtedness,
issued in the name of the Company shall be signed by the
President or the Treasurer or by such officer or officers as the
Board of Directors may from time to time designate.

     Section 7.06  Depositories and Custodians.  The funds of the
Company shall be deposited with such banks or other depositories
as the Board of Directors of the Company may from time to time
determine.  All securities and other investments shall be
deposited in the safekeeping of such banks or other companies as
the Board of Directors of the Company may from time to time
determine.

     Section 7.07  Books of Account and Records.  The Company
shall maintain at its office in the City of Houston and State of
Texas correct and complete books and records of account of all
the business and transactions of the Company.  Upon request of
any Stockholder; there shall be made available in accordance with
the provisions of Maryland law, a record containing the number of
shares of stock issued during a specified period not to exceed
twelve (12) months and the consideration received by the Company
for each such share.

     Section 7.08  Information for Inspection.  Any Stockholder
and any designated representative thereof shall be permitted
access to all records of the Company at all reasonable times, and
may inspect and copy any of them.  Inspection of the Company
books and records by the Administrator shall be provided upon
reasonable notice and during normal business hours.  Any
Stockholder shall have access to shareholder information as
follows:

                                   -26-

     (a)  An alphabetical list of the names, addresses and
          telephone numbers of the Stockholders of the Company
          along with the number of shares held by each of them
          (the "Stockholder List") shall be maintained as part of
          the books and records of the Company and shall be
          available for inspection by any Stockholder or the
          Stockholder's designated agent at the home office of
          the Company upon the request of the Stockholder.

     (b)  The Stockholder List shall be updated at least
          quarterly to reflect changes in the information
          contained therein.

     (c)  A copy of the Stockholder List shall be mailed to any
          Stockholder requesting the Stockholder List within ten
          (10) days of the request.  The copy of the Stockholder
          List shall be printed in alphabetical order, on white
          paper, and in a readily readable type size (in no event
          smaller than 10-point type).  A reasonable charge for
          copy work may be charged by the Company.

     (d)  The purposes for which a Stockholder may request a copy
          of the Stockholder List include, without limitation,
          matters relating to Stockholders' voting rights under
          the Company agreement, and the exercise of
          Stockholders' rights under federal proxy laws.

     (e)  If the Advisor or Directors of the Company neglect or
          refuse to exhibit, produce or mail a copy of the
          Stockholder List as requested, the Advisor and the
          Directors shall be liable to any Stockholder requesting
          the list for the costs, including attorneys' fees,
          incurred by that Stockholder for compelling the
          production of the Stockholder List, and for actual
          damages suffered by any Stockholder by reason of such
          refusal or neglect.  It shall be a defense that the
          actual purpose and reason for the requests for
          inspection or for a copy of the Stockholder List is to
          secure such list of Stockholders or other information
          for the purpose of selling such list or copies thereof,
          or of using the same for a commercial purpose other
          than in the interest of the applicant as a Stockholder
          relative to the affairs of the Company.  The Company
          may require the Stockholder requesting the Stockholder
          List to represent that the list is not requested for a
          commercial purpose unrelated to the Stockholder's
          interest in the Company.  The remedies provided
          hereunder to Stockholders requesting copies of the
          Stockholder List are in addition to, and shall not in
          any way limit, other remedies available to Stockholders
          under federal law, or the laws of any state.

     Section 7.09  Fiscal Year.  The fiscal year of the Company
shall be the calendar year.

     Section 7.10  Seal.  The corporate seal shall have inscribed
thereon the name of the Company and the year and state of its
organization.  The seal may be used by causing it or a facsimile
thereof to be impressed or affixed or reproduced or otherwise.

     Section 7.11  Stock Ledger.  The Company shall maintain at
its office in the City of Houston and State of Texas an original
stock ledger containing the names and addresses of all
Stockholders and the number of shares of each class held by each

                                    -27-

Stockholder.  Such stock ledger may be in written form or any
other form capable of being converted into written form within a
reasonable time for visual inspection.

                          ARTICLE VIII

                           Amendments

     Section 8.01  Stockholders.  The Stockholders shall have the
power, at any annual meeting or at any special meeting if notice
thereof be included in the notice of such special meeting, to
alter, modify or repeal any Bylaws of the Company and to adopt
new Bylaws by a vote of a majority of the Stockholder votes
entitled to be cast thereon.  Notwithstanding the foregoing, any
amendment, alteration, modification or repeal of the provisions
in Section 6.04 hereof, or which would change any rights of a
Stockholder by reducing the amount payable on the class of stock
or other securities of the Company held by such Stockholder upon
liquidation of the Company, or by diminishing or eliminating any
voting rights of that class, shall require an affirmative vote of
not less than sixty six and two-thirds percent (66 2/3%) of the
Stockholder votes entitled to be cast thereon.

                           ARTICLE IX

                          Definitions

     As used herein, the following terms shall have the following
meanings and, to the extent of inconsistencies, if any, contained
within the Bylaws, the definitions contained in this Article IX
shall be controlling.

     (a)  "Administrator" shall mean the official or agency
          administering the Securities laws of a jurisdiction.

     (b)  "Acquisition Expenses" shall mean expenses including
          but not limited to legal fees and expenses, travel and
          communications expenses, costs of appraisals,
          nonrefundable option payments on property not acquired,
          accounting fees and expenses, title insurance, and
          miscellaneous expenses related to selection and
          acquisition of properties, whether or not acquired.

     (c)  "Acquisition Fee" shall mean the total of all fees and
          commissions paid by any party to any party in
          connection with making or investing in mortgage loans
          or the purchase, development or construction of
          property by the Company.  Included in the computation
          of such fees or commissions shall be any real estate
          commission, selection fee, Development Fee,
          Construction Fees, nonrecurring management fee, loan
          fees or points or any fee of a similar nature, however
          designated.  Excluded shall be Development Fees and
          Construction Fees paid to Persons not affiliated with
          the Sponsor in connection with the actual development
          and construction of a project.

                                   -28-

     (d)  "Advisor" shall mean the Person responsible for
          directing or performing the day-to-day business affairs
          of the Company, including a Person to which an Advisor
          subcontracts substantially all such functions.

     (e)  "Affiliate" shall mean an Affiliate of another Person
          includes any of the following:

          (i)  any Person directly or indirectly owning,
               controlling, or holding, with power to vote ten
               percent or more of the outstanding voting
               securities of such other Person.

          (ii) any Person ten percent or more of whose
               outstanding voting securities are directly or
               indirectly owned, controlled, or held, with power
               to vote, by such other Person.

         (iii) any Person directly or indirectly
               controlling, controlled by, or under common
               control with such other Person.

          (iv) any executive officer, director, or general
               partner of such other Person.

          (v)  any legal entity for which such Person acts as an
               executive officer, director or general partner.

     (f)  "Average Invested Assets" shall mean for any period the
          average of the aggregate book value of the assets of
          the Company invested, directly or indirectly, in equity
          interests in and loans secured by real estate, before
          reserves for depreciation or bad debts or other similar
          non-cash reserves computed by taking the average of
          such values at the end of each month during such
          period.

     (g)  "Competitive Real Estate Commission" shall mean real
          estate or brokerage commission paid for the purchase or
          sale of a property which is reasonable, customary and
          competitive in light of the size, type and location of
          such property.

     (h)  "Contract Price for the Property" shall mean the amount
          actually paid or allocated to the purchase,
          development, construction or improvement of a property
          exclusive of Acquisition Fees and Acquisition Expenses.

     (i)  "Construction Fee" shall mean a fee or other
          remuneration for acting as general contractor and/or
          construction manager to construct improvements,
          supervise and coordinate projects or to provide Major
          Repairs or Rehabilitation on a Company property.

     (j)  "Declaration of Trust" shall mean the declaration of
          trust, bylaws, certificate, articles of incorporation
          or other governing instrument pursuant to which the
          Company is organized.

                                   -29-

     (k)  "Development Fee" shall mean a fee for the packaging of
          the Company's property, including negotiating and
          approving plans, and undertaking to assist in obtaining
          zoning and necessary variances and necessary financing
          for the specific property, either initially or at a
          later date.

     (l)  "Director" shall mean the members of the Board of
          trustees or directors or other body which manages the
          Company.

     (m)  "Independent Director" shall mean the Directors of the
          Company who are not associated and have not been
          associated within the last two years, directly or
          indirectly, with the Sponsor or Advisor of the Company.

          (i)  a Director shall be deemed to be associated with
               the Sponsor or Advisor is he or she:

               (1)  owns an interest in the Sponsor, Advisor, or
                    any of their Affiliates; or

               (2)  is employed by the Sponsor, Advisor, or any
                    of their Affiliates; or

               (3)  is an officer or director of the Sponsor,
                    Advisor, or any of their Affiliates; or

               (4)  performs services, other than as a Director,
                    for the Company; or

               (5)  is a Director for more than three Companies
                    organized by the Sponsor or advised by the
                    Advisor; or

               (6)  has any material business or professional
                    relationship with the Sponsor, Advisor, or
                    any of their Affiliates.

          (ii) for purposes of determining whether or not the
               business or professional relationship is material,
               the gross revenue derived by the prospective
               Independent Director from the Sponsor and Advisor
               and Affiliates shall be deemed material per se if
               it exceeds 5% of the prospective Independent
               Director:

               (1)  annual gross revenue, derived from all
                    sources, during either of the last two years;
                    or

               (2)  net worth, on a fair market value basis.

         (iii) an indirect relationship shall include
               circumstances in which a Director's spouse,
               parents, children, siblings, mothers- or fathers-
               in-law, sons- or daughters-in-law, or brothers- or
               sisters-in-law is or has been associated with the
               Sponsor, Advisor, any of their Affiliates, or the
               Company.

                                   -30-

     (n)  "Independent Expert" shall mean a person with no
          material current or prior business or personal
          relationship with the Advisor or Director who is
          engaged to a substantial extent in the business of
          rendering opinions regarding the value of the assets of
          the type held by the Company.

     (o)  "Initial Investment" shall mean that portion of the
          initial capitalization of the Company contributed by
          the Sponsor or its Affiliates pursuant to Section II.A
          of the NASAA Statement of Policy Regarding Real Estate
          Investment Trusts, as amended from time to time ("NASAA
          Policy").

     (p)  "Leverage" shall mean the aggregate amount of
          indebtedness of the Company for money borrowed
          (including purchase money mortgage loans) outstanding
          at any time, both secured and unsecured.

     (q)  "Net Assets" shall mean the total assets (other than
          intangibles) at cost before deducting depreciation or
          other non-cash reserves less total liabilities,
          calculated at least quarterly on a basis consistently
          applied.

     (r)  "Net Income" shall mean for any period total revenues
          applicable to such period, less the expenses applicable
          to such period other than additions to reserves for
          depreciation or bad debts or other similar non-cash
          reserves.

     (s)  "Organization and Offering Expenses" shall mean all
          expenses incurred by and to be paid from the assets of
          the Company in connection with and in preparing the
          Company for registration and subsequently offering and
          distributing it to the public, including, but not
          limited to, total underwriting and brokerage discounts
          and commissions (including fees of the underwriters'
          attorneys), expenses for printing, engraving, mailing,
          salaries of employees while engaged in sales activity,
          charges of transfer agents, registrars, trustees,
          escrow holders, depositories, experts, expenses of
          qualification of the sale of the securities under
          Federal and State laws, including taxes and fees,
          accountants' and attorneys' fees.

     (t)  "Person" shall mean any natural persons, partnership,
          corporation, association, trust, limited liability
          company or other legal entity.

     (u)  "Prospectus" shall have the meaning given to that term
          by Section 2(10) of the Securities Act of 1933,
          including a preliminary Prospectus; provided, however,
          that such term as used herein shall also include an
          offering circular as described in Rule 256 of the
          General Rules and Regulations under the Securities Act
          of 1933, or, in the case of an intrastate offering, any
          document by whatever name known, utilized for the
          purpose of offering and selling securities to the
          public.

     (v)  "Real Estate Investment Trust (REIT)" shall mean a
          corporation, trust, association or other legal entity
          (other than a real estate syndication) which is engaged

                                  -31-

          primarily in investing in equity interests in real
          estate (including fee ownership and leasehold
          interests) or in loans secured by real estate or both.

     (w)  "Roll-Up" shall mean a transaction involving the
          acquisition, merger, conversion, or consolidation
          either directly or indirectly of the Company and the
          issuance of securities of a Roll-Up Entity.  Such term
          does not include:

          (i)  a transaction involving securities of the Company
               that have been for at least 12 months listed on a
               national securities exchange or traded through the
               National Association of Securities Dealers
               Automated Quotation National Market System; or

          (ii) a transaction involving the conversion to
               corporate, trust, or association form of only the
               Company if, as a consequence of the transaction
               there will be no significant adverse change in any
               of the following:

               (1)  Stockholders' voting rights;

               (2)  the term of existence of the Company;

               (3)  Sponsor or Advisor compensation; or

               (4)  the Company investment objectives.

     (x)  "Roll-Up Entity" shall mean a partnership, real estate
          investment rust, corporation, trust, or other entity
          that would be created or would survive after the
          successful completion of a proposed Roll-Up
          transaction.

     (y)  "Shares" shall mean shares of beneficial interest or of
          common stock of the Company of the class that has the
          right to elect the Directors of such Company.

     (z)  "Specified Asset REIT" shall mean a Program where, at
          the time a securities registration is ordered
          effective, at least 75% of the net proceeds from the
          sale of Shares are allocable to the purchase,
          construction, renovation, or improvement of
          individually identified assets.  Reserves shall not be
          included in the 75%.

     (aa) "Sponsor" shall mean any Person directly or indirectly
          instrumental in organizing, wholly or in part, the
          Company or any Person who will control, manage or
          participate in the management of the Company, and any
          Affiliate of such Person.  Not included in any Person
          whose only relationship with the Company is as that of
          an independent property manager of Company assets, and
          whose only compensation is as such.  Sponsor does not
          include wholly independent third parties such as
          attorneys, accountants and underwriters whose only
          compensation is for professional services.  A Person
          may also be deemed a Sponsor of the Company by:

                                  -32-

          (i)  taking the initiative, directly or indirectly, in
               founding or organizing the business or enterprise
               of the Company; either alone or in conjunction
               with one or more other Persons;

          (ii) receiving a material participation in the Company
               in connection with the founding or organizing of
               the business of the Company, in consideration of
               services or property, or both services and
               property;

         (iii) having a substantial number of relationships
               and contacts with the Company;

          (iv) possessing significant rights to control Company
               properties;

          (v)  receiving fees for providing services to the
               Company which are paid on a basis that is not
               customary in the industry; or

          (vi) providing goods or services to the Company on a
               basis which was not negotiated at arms length with
               the Company.

     (bb) "Stockholder" shall mean the registered holders of the
          Company Shares.

     (cc) "Total Operating Expenses" shall mean aggregate
          expenses of every character paid or incurred by the
          Company as determined under Generally Accepted
          Accounting Principles, including Advisors' fees, but
          excluding:

          (i)  the expenses of raising capital such as
               Organization and Offering Expenses, legal, audit,
               accounting, underwriting, brokerage, listing,
               registration and other fees, printing and other
               such expenses, and tax incurred in connection with
               the issuance, distribution, transfer,
               registration, and stock exchange listing of the
               Company's shares;

          (ii) interest payments;

         (iii) taxes;

          (iv) non-cash expenditures such as depreciation,
               amortization and bad debt reserves;

          (v)  incentive fees paid in compliance with Section
               IV.F. of NASAA Policy, notwithstanding Section
               I.B.29(i) of NASAA Policy;

          (vi) Acquisition Fees, Acquisition Expenses, real
               estate commissions on resale of property and other
               expenses connected with the acquisition,
               disposition, and ownership of real estate
               interests, mortgage loans, or other property,
               (such as the costs of foreclosure, insurance
               premiums, legal services, maintenance, repair, and
               improvement of property).

                                  -33-

     (dd) "Unimproved Real Property" shall mean the real property
          of the Company which has the following three
          characteristics:

          (i)  an equity interest in real property which was not
               acquired for the purpose of producing rental or
               other operating income;

          (ii) has no development or construction in process on
               such land; and

         (iii) no development or construction on such land
               is planned in good faith to commerce on such land
               within one year.

     These Bylaws were adopted by a duly authorized vote of the
Board of Directors of the Company at a regular meeting of the
Directors on September 17, 1997, and are hereby certified as true
and correct.


                                   /s/ H. Kerr Taylor
                                   H. Kerr Taylor, President






                                   -34-


                                                              EXHIBIT 11

                     AMERICAN ASSET ADVISERS TRUST, INC.
                  COMPUTATION OF EARNINGS PER COMMON SHARE




                                           For the Year Ended December 31,
                                                1997            1996
BASIC EARNINGS PER SHARE:

WEIGHTED AVERAGE NUMBER OF
   COMMON SHARES OUTSTANDING                 1,563,048        1,066,353

NET INCOME TO COMMON SHAREHOLDERS             $538,857         $542,807


BASIC EARNINGS PER SHARE                         $0.34            $0.51


DILUTED EARNINGS PER SHARE:

WEIGHTED AVERAGE NUMBER OF
   COMMON SHARES OUTSTANDING                 1,563,048        1,066,353

SHARES ISSUABLE FROM ASSUMED
   CONVERSION OF STOCK WARRANTS                 61,169           61,479

TOTAL WEIGHTED AVERAGE NUMBER OF COMMON
   SHARES OUTSTANDING, AS ADJUSTED           1,624,217        1,127,832


NET INCOME TO COMMON SHAREHOLDERS             $538,857         $542,807

DILUTED EARNINGS PER SHARE                       $0.33            $0.48