<PAGE>

                                                                   EXHIBIT 10.13

                              DECLARATION OF TRUST
                                       OF
                      HINES-SUMISEI NY CORE OFFICE TRUST II

                                    ARTICLE I
                                  ORGANIZATION

         The Trust is a real estate investment trust within the meaning of Title
8 of the Corporations and Associations Article of the Annotated Code of Maryland
(the "Maryland REIT Law"). The Trust shall not be deemed to be a general
partnership, limited partnership, joint venture, joint stock company or a
corporation (but nothing herein shall preclude the Trust from being treated for
tax purposes as an association under the Internal Revenue Code of 1986, as
amended (the "Code")).

                                   ARTICLE II
                          NAME AND CERTAIN DEFINITIONS

         Section 2.1 Name. The name of the Trust is "Hines-Sumisei NY Core
Office Trust II." Under circumstances in which the Board of Trustees of the
Trust (the "Board of Trustees" or "Board") determines that the use of the name
of the Trust is not practicable, the Trust may, subject to Section 10.2(b), use
any other designation or name for the Trust.

         Section 2.2 Certain Definitions. As used in this Declaration of Trust,
the terms set forth below have the meanings indicated. Other capitalized terms
used in this Declaration of Trust are defined elsewhere herein.

                  "Affiliate": With respect to any Person, a Person which,
directly or indirectly, controls, is controlled by or is under common control
with such Person. As used in the immediately preceding sentence, "control" shall
mean the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.

                  "Appraised Value": As defined in the Investor Rights
Agreement.

                  "Bylaws": The Bylaws of the Trust, as the same may be amended
from time to time.

                  "Business Day": As defined in the Organization Agreement.

                  "Class B Dividend Rate": (i) If a Forced Sale Notice is given
with respect to the Property on or after the Lock Out Date, the Specified Rate,
and (ii) if a Forced Sale Notice is given with respect to the Property before
the Lock Out Date, eleven Percent (11%) per annum.

                  "Class B Notice Date": As defined in Section 6.7(a).

                  "Class B Preferred Capital Amount": As of any date, the sum of
(x) the product of (A) the REIT I Issue Price (as adjusted for stock, dividends,
stock splits, reverse stock splits, combinations, recapitalizations and other
similar changes in the capital structure of REIT I)

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multiplied by (B) the aggregate number of REIT I Class B Preferred Shares issued
and outstanding as of such date, plus (y) the product of (1) the Issue Price (as
adjusted for stock, dividends, stock splits, reverse stock splits, combinations,
recapitalizations and other similar changes in the capital structure of the
Trust) multiplied by (2) the aggregate number of Class B Preferred Shares (as
defined in Section 6.3) issued and outstanding as of such date. For all purposes
under this Declaration of Trust, as of any date, the Class B Preferred Capital
Amount will be deemed to have been distributed when the Trust and REIT I have,
together, distributed cash to the holders of the Class B Preferred Shares and
the holders of REIT I Class B Preferred Shares, pursuant to the applicable
provisions of this Declaration of Trust and the REIT I Declaration of Trust,
respectively, in an aggregate amount equal to the Class B Preferred Capital
Amount, taking into account all distributions of cash by the Trust to the
holders of Class B Preferred Shares and all distributions of cash by REIT I to
the holders of REIT I Class B Preferred Shares prior to and as of such date.

                  "Class B Redemption Amount": As of any time, the sum of (i)
the Class B Redemption Capital Component, plus (ii) the amount, if any, of the
accrued but unpaid Class B Redemption Interest Component.

                  "Class B Redemption Capital Component": The amount that would
have been distributed to the holders of the Class B Preferred Shares and the
Class B Common Shares had the Property been sold for its Appraised Value as of
the Class B Notice Date and the Projected Net Proceeds from such sale been
distributed in accordance with Section 6.6(b); provided, however, if the
Property is sold by the Trust after the Class B Notice Date and prior to the
Class B Redemption Date, to a Person that is not an Affiliate of HILP, Holding
Partnership or any holder of Class B Shares, then the "Class B Redemption
Capital Component" with respect to the Property shall be the amount which would
have been distributed to the holders of the Class B Preferred Shares and the
Class B Common Shares had the actual net proceeds to the Trust from the sale of
the Property been distributed to the Shareholders in accordance with Section
6.6(b).

                  "Class B Redemption Date": As defined in Section 6.7(a).

                  "Class B Redemption Interest Component": An amount equal to
the interest that would have accrued on the unpaid portion of the Class B
Redemption Amount had such amount accrued interest at the Default Rate,
compounded quarterly, from the Class B Redemption Date to the date such amount
is distributed to the holders of the Class B Preferred Shares and Class B Common
Shares, less any amounts previously distributed to such holders pursuant to
Section 6.6(d).

                  "Class B Unit": One Class B Preferred Share and a portion of a
Class B Common Share equal to a fraction the numerator of which is the number of
Class B Common Shares then outstanding and the denominator of which is the
number of Class B Preferred Shares then outstanding.

                  "Department": The State Department of Assessments and Taxation
of Maryland.

                  "Forced Sale Capital Component": The amount that would have
been distributed to the holders of Class B Preferred Shares and Class B Common
Shares had the Property been

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sold for its Appraised Value as of the date a Forced Sale Notice is delivered in
respect of the Property, and the Projected Net Proceeds to the Trust distributed
in accordance with Section 6.6(b).

                  "Forced Sale Interest Component": As of any date after the
Required Payment Date (if a Forced Sale Notice is delivered with respect to the
Property) but on or prior to the Class B Redemption Date, the amount of interest
that would have accrued as of such date on the Forced Sale Capital Component, if
such amount had accrued interest at an annual rate of interest equal to the
Class B Dividend Rate, compounded quarterly, from the Required Payment Date to
such date.

                  "Forced Sale Notice": As defined in the Investor Rights
Agreement.

                  "HILP": As defined in the Organization Agreement.

                  "Holding Partnership": As defined in the Organization
Agreement.

                  "Initial Date": The date as of which the Trust's election to
be taxed as a REIT becomes effective.

                  "Investor Rights Agreement": As defined in the Organization
Agreement.

                  "Issue Price": $1,000.00

                  "Lock-Out Date": As defined in the Investor Rights Agreement.

                  "Organization Agreement": The Amended and Restated
Organization Agreement, dated as of December 23, 2003, among REIT I and the
other parties thereto providing for, among other things, the organization of the
Trust and the contribution of capital to the Trust in connection with the
acquisition of the Property and the issuance of Shares in respect thereof, as
such agreement may be amended from time to time.

                  "Person": An individual, a partnership of any kind having a
separate legal status, a corporation (including a business trust), limited
liability company, a joint stock company, a trust, an unincorporated
organization or association, a mutual company, a joint venture, a sole
proprietorship or any other entity of any type whatsoever, or any government or
any agency or political subdivision thereof; provided, that for the purposes of
Article VII, the term "Person" shall have the meaning as set forth in Section
7.1.

                  "Projected Net Proceeds": As defined in the Investor Rights
Agreement.

                  "Property": As the term "Manhattan Tower" is defined in the
Organization Agreement.

                  "Quarterly Payment Date" Each March 31, June 30, October 31
and December 31; provided that if in any year any such date is not a Business
Day, then, for such year, such Quarterly Payment Date shall be the first
Business Day that precedes such date.

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                  "REIT": A "real estate investment trust" as defined in Section
856 of the Code and applicable Treasury Regulations.

                  "REIT I": Hines-Sumisei NY Core Office Trust, a Maryland real
estate investment trust.

                  "REIT I Class B Preferred Shares": As the term "Class B
Preferred Shares" is defined in the REIT I Declaration of Trust.

                  "REIT I Declaration of Trust": The Amended and Restated
Declaration of Trust of REIT I, attached as Exhibit A to the Articles of
Amendment and Restatement as filed by REIT I with the Department on December 30,
2003, and as amended from time to time thereafter.

                  "REIT I Issue Price": As the term "Issue Price" is defined in
the REIT I Declaration of Trust.

                  "Required Payment Date": The 272nd day following the date on
which a Forced Sale Notice in respect of the Property is delivered to the Trust
in accordance with the Investor Rights Agreement.

                  "Shareholder": A record holder of one or more Shares (as
defined in Section 6.1).

                  "Specified Rate": As defined in the Investor Rights Agreement.

                                   ARTICLE III
                               POWERS AND PURPOSE

         Section 3.1 Powers. The Trust is organized as a real estate investment
trust under the Maryland REIT Law for the purpose of engaging in any activity
permitted to real estate investment trusts generally by the Maryland REIT Law
and shall have all further powers consistent with law and appropriate to attain
its purposes, including, without limitation or obligation, qualifying as a REIT.

         Section 3.2 Purpose. The purpose of the Trust is to acquire, own, hold,
manage, operate, lease, mortgage, finance, alter, repair and sell or otherwise
dispose of, and in all other respects act as an owner of, whether directly or
indirectly through one or more subsidiaries, the Property. The Trust may engage
in any activities that the Board of Trustees deems necessary or advisable in
connection with this purpose. The Trust will not engage in any business that is
not related to this purpose.

         Section 3.3 Tax Classification. Prior to the Initial Date, the Trust
shall take such steps as are necessary for the Trust to be classified as a
partnership for U.S. federal income tax purposes. After the Initial Date, the
Trust promptly shall take such steps as are necessary in order for the Trust to
qualify as a REIT under the Code.

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                                   ARTICLE IV
                                 RESIDENT AGENT

         The name of the resident agent of the Trust in the State of Maryland is
The Corporation Trust Incorporated, whose address is 300 East Lombard Street,
Baltimore, Maryland 21202. The resident agent is a Maryland corporation. The
Trust may have such offices or places of business within or outside the State of
Maryland as the Board of Trustees may from time to time determine.

                                    ARTICLE V
                                BOARD OF TRUSTEES

         Section 5.1 Powers.

                  (a)      Subject to the limitations set forth in this
Declaration of Trust or in the Bylaws, (i) the business and affairs of the Trust
shall be managed under the direction of the Board of Trustees, (ii) the Board of
Trustees shall have the full, exclusive and absolute power, control and
authority over the property of the Trust and over the business of the Trust, and
(iii) the Board of Trustees may take any actions as in its sole judgment and
discretion are necessary or desirable to conduct the business of the Trust. This
Declaration of Trust shall be construed with a presumption in favor of the grant
of power and authority to the Board of Trustees. Any construction of this
Declaration of Trust or determination made in good faith by the Board of
Trustees concerning its powers and authority hereunder shall be conclusive. The
enumeration and definition of particular powers of the Board of Trustees
included in this Declaration of Trust or in the Bylaws shall in no way be
construed or deemed by inference or otherwise in any manner to exclude or limit
the powers conferred upon the Board of Trustees under the Maryland REIT Law, the
general laws of the State of Maryland or any other applicable laws.

                  (b)      Without limiting the foregoing general powers, except
as otherwise provided in this Declaration of Trust or in the Bylaws, the Board
of Trustees, without any action by the Shareholders, shall have and may
exercise, on behalf of the Trust, without limitation, the power to:

                           (i)      acquire (through one or more subsidiaries),
hold, sell, transfer and dispose of the Property, and exercise all rights,
powers, privileges and other incidents of ownership or possession with respect
thereto, including the institution and settlement or compromise of suits and
administrative proceedings and other similar matters;

                           (ii)     manage the Property generally, including,
but not limited to, owning, holding, financing, managing, servicing, operating,
maintaining, improving, developing, rehabilitating, leasing and otherwise
dealing with the Property; selling, exchanging, compromising, collecting,
mortgaging or otherwise disposing of all or any portion of the Property and, in
connection therewith, accepting, collecting, holding, selling, exchanging,
mortgaging, pledging or otherwise disposing of evidences of indebtedness or
other property received pursuant thereto;

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                           (iii)    open, maintain and close bank accounts and
draw checks or other orders for the payment of money and open, maintain and
close brokerage, money market fund and similar accounts;

                           (iv)     hire for usual and customary payments and
expenses consultants, brokers, appraisers, attorneys, accountants and such other
agents for the Trust as it may deem necessary or advisable, including, without
limitation, for any management, construction, leasing and other property
management services, and authorize any such agent to act for and on behalf of
the Trust;

                           (v)      enter into, execute, maintain and/or
terminate contracts, undertakings, agreements and any and all other documents
and instruments in the name of the Trust, and do or perform all such things as
may be necessary or advisable in furtherance of the Trust's powers, objects or
purposes or to the conduct of the Trust's activities, including entering into
agreements to dispose of the Property which may include such representations,
warranties, covenants, indemnities and guaranties as the Board of Trustees deems
necessary or advisable;

                           (vi)     incur indebtedness and provide indemnities
in connection therewith, on a recourse (only with respect to the assets of the
Trust or any of its subsidiaries) or non-recourse basis, on behalf of the Trust,
either by the Trust or by an entity in which the Trust has an interest and, in
its discretion, secure any and all of such Indebtedness with the assets of the
Trust or any Property or any entity in which the Trust holds an interest;

                           (vii)    make, in its sole discretion, any and all
elections for U.S. federal, state, local and foreign tax matters, including any
election to adjust the basis of Trust property pursuant to Sections 734(b),
743(b) and 754 of the Code or comparable provisions of state, local or foreign
law;

                           (viii)   adopt, amend and repeal Bylaws;

                           (ix)     elect officers in the manner prescribed in
the Bylaws;

                           (x)      solicit proxies from Shareholders;

                           (xi)     approve the financial statements of the
Trust;

                           (xii)    approve or modify any annual capital or
operating budget of the Trust; and

                           (xiii)   to do any other acts and deliver any other
documents necessary or appropriate to the foregoing powers.

                  (c)      After the Initial Date, it shall be the duty of the
Board of Trustees to ensure that the Trust, as promptly as practicable,
satisfies the requirements for qualification as a REIT under the Code,
including, but not limited to, the requirements relating to the ownership of
outstanding Shares (as defined in Section 6.1), the nature of its assets, the
sources of its income and the amount and timing of its distributions to its
Shareholders. After the Initial Date, the Board of Trustees shall take no action
to disqualify the Trust as a REIT or to otherwise revoke

                                       6
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the Trust's election to be taxed as a REIT without the affirmative vote or
consent of holders of Shares having at least two-thirds of the voting power of
the Shares entitled to vote on such matter at a meeting of the Shareholders;
provided that the Trust shall redeem the Class B Preferred Shares and the Class
B Common Shares in accordance with Section 6.7, notwithstanding any effect any
such redemption may have on the qualification or disqualification of the Trust
as a REIT.

                  (d)      ERISA. It shall be the duty of the Board of Trustees
to cause the Trust to use reasonable best efforts at all times to ensure that it
is a "real estate operating company" within the meaning of 29 CFR Section
2510.3-101.

                  (e)      Notwithstanding the foregoing, the Trust shall not
take any action which, pursuant to any provision of this Declaration of Trust,
cannot be taken unless approved or consented to by a majority or other specified
percentage of the voting power of the outstanding Shares or of a specified class
or classes of Shares, unless each such specified approval or consent has been
obtained.

         Section 5.2 Number and Classification.

                  (a)      Subject to the rights of any class of Preferred
Shares with respect to the election, removal and replacement of members of the
Board of Trustees, the Board of Trustees shall have a number of members (the
"Trustees") fixed by, or in the manner provided in, the Bylaws, and may be
increased or decreased from time to time in the manner prescribed in the Bylaws.
Shareholder votes to elect Trustees shall be conducted at each annual meeting of
Shareholders in the manner provided in the Bylaws. Each Trustee shall hold
office, until the next annual meeting of Shareholders, and until a successor has
been duly elected and qualified. Trustees may be elected to an unlimited number
of successive terms.

                  (b)      The Board of Trustees shall initially have nine
members, and the name and address of the Trustees who shall serve, subject to
the provisions of this Declaration of Trust, until the first annual meeting of
Shareholders and until their successors are duly elected and qualified are:

<TABLE>
<CAPTION>
      Name                                         Address
      ----                                         -------
<S>                                    <C>                        <C>
Gerald D. Hines                        2800 Post Oak Blvd., Suite 5000
                                       Houston, Texas 77056

Jeffrey C. Hines                       2800 Post Oak Blvd., Suite 5000
                                       Houston, Texas 77056

C. Hastings Johnson                    2800 Post Oak Blvd., Suite 5000
                                       Houston Texas 77056

Charles M. Baughn                      2800 Post Oak Blvd., Suite 5000
                                       Houston, Texas 77056

James A. Hime                          2800 Post Oak Blvd., Suite 5000
                                       Houston, Texas 77056

Norio Morimoto                         101 East 52nd Street, 2nd Floor
</TABLE>

                                       7
<PAGE>

<TABLE>
<S>                                    <C>
                                       New York, NY 10022

Shinichi Kawanishi                     101 East 52nd Street, 2nd Floor
                                       New York, NY 10022

Thomas E. Dobrowski                    767 Fifth Avenue, 16th Floor
                                       New York, NY 10153

Joseph D. Stecher                      767 Fifth Avenue, 16th Floor
                                       New York, NY 10153
</TABLE>

                  (c)      Subject to the rights of holders of any class or
series of Preferred Shares with respect to the election, removal or replacement
of Trustees, if a vacancy on the Board of Trustees shall occur or be created
(whether arising through death, retirement, resignation or removal or through an
increase in the number of Trustees), the vacancy shall be filled by the
affirmative vote of a majority of the remaining Trustees, at any regular meeting
or any special meeting called for that purpose, even though less than a quorum
of the Board of Trustees may exist.

         Section 5.3 Resignation or Removal. Any Trustee may resign by written
notice to the Board, effective upon execution and delivery to the Trust of such
written notice or upon any future date specified in the notice. Subject to the
rights of holders of any class or series of Preferred Shares with respect to the
election, removal or replacement of Trustees, a Trustee may be removed at any
time, with or without cause, by holders of a majority of the voting power of all
outstanding Shares entitled to be voted generally for the election of Trustees.

         Section 5.4 Determination of Best Interests of Trust. In determining
what is in the best interests of the Trust, a Trustee shall consider the
interests of the Shareholders and, in his sole and absolute discretion, may
consider any other factors or interests allowed by the Maryland REIT Law or
other applicable law.

                                   ARTICLE VI
                          SHARES OF BENEFICIAL INTEREST

         Section 6.1 Authorized Shares. The beneficial interest in the Trust
shall be divided into shares (the "Shares"). The total number of Shares which
the Trust has authority to issue is 200,000 Shares, consisting of (a) 100,000
common shares, $0.001 par value per share ("Common Shares"), and (b) 100,000
preferred shares, $0.001 par value per share ("Preferred Shares"). Subject to
Section 8.2, the Board of Trustees may amend this Declaration of Trust to
increase or decrease the aggregate number of Shares that the Trust is authorized
to issue. Pursuant to Section 8-203 of the Maryland REIT Law, the Board of
Trustees may, subject to Section 8.2, classify or reclassify any authorized but
unissued Shares from time to time by setting or changing the preferences,
conversion or other rights, voting powers, restrictions, limitations as to
dividends or distributions, qualifications or terms and conditions of redemption
of the Shares without amending this Declaration of Trust. All Shares shall be
personal property entitling the Shareholders only to those rights provided in
this Declaration of Trust or designated by the Board of Trustees in accordance
with this Declaration of Trust. The Shareholders shall have no interest in the
property of the Trust and shall have no right to compel any partition, division,

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dividend or distribution of the Trust or the Trust's assets except as
specifically set forth in this Declaration of Trust. The death or liquidation of
a Shareholder shall not terminate the Trust. All Shareholders are subject to the
provisions of this Declaration of Trust and the Bylaws.

         Section 6.2 Common Shares. 60,000 of the Common Shares shall be of a
class designated Class A Common (the "Class A Common Shares") and 40,000 of the
Common Shares shall be of a class designated Class B Common (the "Class B Common
Shares"). Each Class A Common Share and each Class B Common Share shall be
identical in all respects, except that each Class B Common Share shall be
subject to redemption pursuant to Section 6.7. Common Shares shall not entitle
the holder thereof to vote on any matter upon which holders of Shares are
entitled to vote. Subject to Section 8.2, the Board of Trustees may reclassify
any authorized but unissued Common Shares from time to time into one or more
classes or series of Shares. The holders of all Common Shares will participate
equally in (i) dividends payable to holders of Common Shares when and as
authorized and declared by the Board of Trustees and (ii) the Trust's net assets
available for distribution to holders of Common Shares upon liquidation or
dissolution. Neither the consolidation or merger of the Trust with or into any
other Person or Persons nor the sale, transfer or lease of all or substantially
all of the assets of the Trust shall itself be deemed to be a liquidation,
dissolution or winding up of the Trust within the meaning of this Section 6.2.

         Section 6.3 Preferred Shares. 60,000 of the Preferred Shares shall be
of a class designated Class A Preferred (the "Class A Preferred Shares"), and
40,000 of the Preferred Shares shall be of a class designated Class B Preferred
(the "Class B Preferred Shares"). The rights, preferences, privileges, and
restrictions granted to and imposed on the Class A Preferred Shares and the
Class B Preferred Shares are set forth below in this Section 6.3 and elsewhere
in this Declaration of Trust. Subject to Section 8.2, the Board of Trustees may
classify any authorized but unissued Preferred Shares and reclassify any
previously classified but unissued Preferred Shares of any class or series from
time to time, into one or more classes or series of Shares.

                  (a)      Voting.

                           (i)      Subject to the provisions of Article VII,
each Class A Preferred Share and each Class B Preferred Share shall entitle the
holder thereof to one vote on each matter upon which holders of such class of
Preferred Shares are entitled to vote. Except for the separate voting rights of
the holders of the specified classes of Preferred Shares provided below in this
Section 6.3(a) and elsewhere in this Declaration of Trust, and as may otherwise
be required by the laws of the State of Maryland, the holders of outstanding
Class A Preferred Shares and the holders of outstanding Class B Preferred Shares
entitled to vote thereon shall vote as one class with respect to the election of
Trustees and with respect to all other matters to be voted on by Shareholders of
the Trust, and no separate vote or consent of the holders of Class A Preferred
Shares or the holders of Class B Preferred Shares shall be required for the
approval of any such matter. Holders of Preferred Shares may not engage in
cumulative voting in the election of Trustees.

                           (ii)     So long as any Class A Preferred Shares are
outstanding, the Trust shall not, without first obtaining the approval (by vote
or written consent, as provided by law) of

                                       9
<PAGE>

the holders of at least a majority of the then outstanding Class A Preferred
Shares voting as a separate class, take any of the following actions:

                                    (A)      alter or change the rights,
preferences or privileges herein of the Class A Preferred Shares so as to affect
adversely such Shares, including without limitation making any amendment to
Section 10.2(b) of this Declaration of Trust, or

                                    (B)      authorize any other equity
security, including any other security convertible into or exercisable for any
equity security, having a preference over, or on a parity with, the Class A
Preferred Shares with respect to dividends, voting or upon liquidation.

                           (iii)    So long as any Class B Preferred Shares are
outstanding, the Trust shall not, without first obtaining the approval (by vote
or written consent, as provided by law) of the holders of at least a majority of
the then outstanding Class B Preferred Shares voting as a separate class, take
any of the following actions:

                                    (A)      alter or change the rights,
preferences or privileges herein of the Class B Preferred Shares so as to affect
adversely such Shares, including without limitation making any amendment to
Section 6.6, Section 6.7 or Section 10.2(b) of this Declaration of Trust,

                                    (B)      authorize any other equity
security, including any other security convertible into or exercisable for any
equity security, having a preference over, or on a parity with, the Class B
Preferred Shares with respect to dividends or upon liquidation, or

                                    (C)      sell or otherwise dispose of the
Property to HILP or any of its Affiliates or to Holding Partnership or any of
its Affiliates, unless such sale or disposition is being made to fund the
redemption of Class B Preferred Shares and Class B Common Shares pursuant to
Section 6.7 or to fund payments required under Article 3 or Article 4 of the
Investor Rights Agreement.

                  (b)      Liquidation and Dissolution. In the event of a
liquidation, dissolution or winding up of the Trust, whether voluntary or
involuntary, after payment or provision for payment of the debts and liabilities
of the Trust, the assets of the Trust remaining for distribution shall be
distributed in accordance with the provisions of subsections (b), (c) and (d) of
Section 6.6, as applicable. Neither the consolidation or merger of the Trust
with or into any other Person or Persons nor the sale, transfer or lease of all
or substantially all of the assets of the Trust shall itself be deemed to be a
liquidation, dissolution or winding up of the Trust within the meaning of this
Section 6.3(b).

         Section 6.4 Classified or Reclassified Shares. Prior to the issuance of
Shares classified or reclassified by the Board pursuant to Section 6.1, the
Board of Trustees by resolution shall, subject to Section 8.2, (a) designate
that class or series to distinguish it from all other classes and series of
Shares; (b) specify the number of Shares to be included in the class or series;
(c) set, subject to the provisions of Article VI and VII and subject to the
express terms, rights, powers and preferences of any class or series of Shares
outstanding at the time, the preferences, conversion or other rights, voting
powers, restrictions, limitations as to dividends or other distributions,
qualifications and terms and conditions of redemption for each class or series;

                                       10
<PAGE>

and (d) cause the Trust to file articles supplementary with the Department
pursuant to Section 8-203(b) of the Maryland REIT Law. Any of the terms of any
class or series of Shares established pursuant to clause (c) of this Section 6.4
or otherwise in this Declaration of Trust may be made dependent upon facts or
events ascertainable outside this Declaration of Trust (including determinations
or actions by the Board of Trustees) and may vary among holders thereof,
provided that the manner in which such facts, events or variations shall operate
upon the terms of such class or series of Shares is clearly and expressly set
forth in the Declaration of Trust.

         Section 6.5 Authorization by Board of Share Issuance.

                  (a)      Except for the limitations set forth in this Article
VI, the Board of Trustees may authorize the issuance from time to time of Shares
of any class or series, whether now or hereafter authorized, or securities or
rights convertible into Shares of any class or series, whether now or hereafter
authorized, for such consideration (whether in cash, property, past or future
services, obligation for future payment or otherwise) as the Board of Trustees
may deem advisable (or without consideration in the case of a share split, share
dividend or as otherwise allowed by the Maryland REIT Law in order to qualify as
a REIT), subject to such restrictions or limitations, if any, as may be set
forth in this Declaration of Trust or the Bylaws.

                  (b)      Notwithstanding any other provision in this
Declaration of Trust, no determination shall be made by the Board of Trustees
and no transaction shall be entered into by the Trust that would cause any
Shares or other beneficial interest in the Trust not to constitute "transferable
shares" or "transferable certificates of beneficial interest" under Section
856(a)(2) of the Code or which would cause any distribution to constitute a
preferential dividend as described in Section 562(c) of the Code. Additionally,
the Trust may, without the consent or approval of any Shareholder, issue
fractional Shares, eliminate a fraction of a Share by rounding up or down to a
full Share, arrange for the disposition of a fraction of a Share by the person
entitled to it, or pay cash for the fair value of a fraction of a Share. When
issued, all Shares shall be non-assessable.

                  (c)      The Trust shall not issue any Class B Preferred
Shares or Class B Common Shares other than as required or permitted under the
Organization Agreement and Section 8.2 hereof.

         Section 6.6 Dividends and Distributions.

                  (a)      Subject to the preferences and rights of any class or
series of Preferred Shares, the Board of Trustees may from time to time
authorize and declare to Shareholders such dividends and distributions, in cash
or, subject to Section 8.2, other assets of the Trust, or in securities of the
Trust or from any other source as the Board of Trustees in its discretion shall
determine. After the Initial Date, the Board of Trustees shall endeavor to
declare and pay promptly such dividends and distributions as shall be necessary
for the Trust to qualify as a REIT; provided, however, that Shareholders shall
have no right to any dividend or distribution unless and until authorized and
declared by the Board. The exercise of the powers and rights of the Board of
Trustees pursuant to this Section 6.6 shall be subject to the provisions of any
class or series of Shares at the time outstanding. Dividends shall be payable
only as and when declared by the Board of Trustees out of assets of the Trust
legally available therefor.

                                       11
<PAGE>

                  (b)      Prior to the Class B Redemption Date, but subject to
subsections (c) and (d) of this Section 6.6, any dividends authorized and
declared by the Board of Trustees, including liquidating dividends, but
excluding share dividends, shall be declared and paid as follows:

                           (i)      first, to the holders of Class A Preferred
Shares and Class B Preferred Shares, prior and in preference to any declaration
or payment of any dividends to the holders of Common Shares, pro rata based on
the number of such Preferred Shares held by each such holder, until the Class B
Preferred Capital Amount has been distributed; and

                           (ii)     thereafter, any remaining amount available
to be distributed and all subsequent dividends declared and paid by the Trust
shall be paid to the holders of Common Shares pro rata based on the number of
Common Shares held by each such holder.

                  (c)      If a Forced Sale Notice has been delivered with
respect to the Property in accordance with Section 3.01 of the Investor Rights
Agreement, then, for the period beginning on the Required Payment Date and
ending on the Class B Redemption Date, any dividends authorized and declared by
the Board of Trustees, including liquidating dividends, but excluding share
dividends, shall be declared and paid as follows:

                           (i)      first, prior and in preference to the
declaration or payment of any dividends to the holders of any other class of
Preferred Shares or Common Shares, the Forced Sale Interest Component to the
holders of Class B Preferred Shares, pro rata based on the number of Class B
Preferred Shares held by each such holder until the Class B Preferred Capital
Amount has been distributed, then, to the extent of any remaining portion of the
Forced Sale Interest Component, to the holders of Class B Common Shares, pro
rata based upon the number of Class B Common Shares held by each such holder;
and

                           (ii)     thereafter, any amounts then remaining
available for the payment of dividends, (A) if the Class B Preferred Capital
Amount has not been distributed, to the holders of Preferred Shares other than
Class B Preferred Shares pro rata based upon the number of such Preferred Shares
held by each such holder and (B) otherwise, to the holders of Common Shares
other than Class B Common Shares, pro rata based on the number of such Common
Shares held by each such holder.

                  (d)      After the Class B Redemption Date, so long as any
Class B Preferred Shares are outstanding, any dividends, including liquidating
dividends, but excluding share dividends, shall be declared and paid as follows:

                           (i)      first, prior and in preference to the
declaration or payment of any dividends to the holders of any other class of
Preferred Shares or Common Shares, the Class B Redemption Interest Component to
the holders of Class B Units pro rata, based on the number of Class B Units held
by each such holder;

                           (ii)     second, prior and in preference to the
declaration or payment of any dividends to the holders of any other class of
Preferred or Common Shares, to the holders of Class B Units until they have
received an amount equal to the Class B Redemption Capital Component, less any
amounts distributed to such holders prior to the Class B Redemption Date from
the proceeds of the sale or other disposition of the Property and any amounts
previously

                                       12
<PAGE>

distributed to such holders pursuant to this Section 6.6(d)(ii), pro rata based
on the number of Class B Units held by each such holder; and

                           (iii)    thereafter, any dividends authorized and
declared by the Board of Trustees, including liquidating dividends, but
excluding share dividends, shall be paid to the holders of Common Shares other
than Class B Common Shares, pro rata, based on the number of Common Shares held
by each such holder.

         Section 6.7 Mandatory Redemption of Class B Units.

                  (a)      On or prior to the tenth anniversary of the First
Closing Date (as defined in the Organization Agreement) (the date of such
anniversary, the "Scheduled Class B Redemption Date"), but no earlier than the
ninth anniversary of the First Closing Date (the date of such earlier
anniversary, the "Class B Notice Date"), the Trust shall redeem all outstanding
Class B Units, unless, prior to the Class B Notice Date, the holders of Class B
Preferred Shares elect, by a majority vote or consent of all such holders voting
as a separate class, to extend the Scheduled Class B Redemption Date and
evidence of such vote or consent is delivered to the Secretary of the Trust on
or before the Business Day first preceding the Class B Notice Date. Upon
delivery of such notice, the Scheduled Class B Redemption Date and the Class B
Notice Date shall each be extended by one year, and the provisions of this
Section 6.7 shall apply as such dates have been so extended. The Scheduled Class
B Redemption Date and the Class B Notice Date may be extended by any number of
one year periods by a new vote or consent of the holders of Class B Preferred
Shares pursuant to this Section 6.7(a) prior to each successive Class B Notice
Date and delivery of notice thereof as provided herein. If, in any year, the
Scheduled Class B Redemption Date is not extended as provided in this Section
6.7(a), then the Scheduled Class B Redemption Date for such year shall be deemed
the "Class B Redemption Date." Notwithstanding the foregoing, if a Forced Sale
Notice has been delivered with respect to the Property pursuant to Section 3.01
of the Investor Rights Agreement, then the "Class B Redemption Date" shall be
the date which is the later of the first anniversary of the date such Forced
Sale Notice was delivered to the Trust and the Lock Out Date, and the Trust
shall redeem all outstanding Class B Preferred Shares and all outstanding Class
B Common Shares on such Class B Redemption Date.

                  (b)      The redemption price to be paid for each outstanding
Class B Unit shall be determined by reference to the Class B Redemption Capital
Component which is allocable to such Share.

                  (c)      The Trust shall accomplish the redemption of all
outstanding Class B Preferred Shares and all outstanding Class B Common Shares
by paying the Class B Redemption Amount to the registered holders of the
outstanding Class B Preferred Shares pro rata based on the number of Class B
Preferred Shares held by each such holder by wire transfer of immediately
available funds to an account designated by such holders or to an escrow account
established by the Trust to receive such funds and distribute them to such
holders. Upon payment in full of the Class B Redemption Amount pursuant to the
preceding sentence, each outstanding Class B Preferred Share and each
outstanding Class B Common Share shall automatically be cancelled and retired
and shall cease to exist, and the holders of any certificate representing Class
B Preferred Shares or Class B Common Shares shall cease to have any rights with
respect thereto, except that holders of certificates representing Class B
Preferred Shares shall be entitled to

                                       13
<PAGE>

receive a pro rata portion of the Class B Redemption Amount based on the number
of such Shares represented by such certificates.

                                   ARTICLE VII
                     RESTRICTIONS ON TRANSFER AND OWNERSHIP

         Section 7.1 Definitions. For the purpose of this Article VII, the
following terms shall have the following meanings:

                  "Aggregate Share Ownership Limit": 9.9% in value of the
aggregate of the outstanding Shares. The value of the outstanding Shares shall
be determined by the Board of Trustees in good faith, which determination shall
be conclusive for all purposes hereof.

                  "Beneficial Ownership": Ownership of Shares by a Person,
whether the interest in Shares is held directly or indirectly (including by a
nominee), and shall include interests that would be treated as owned through the
application of Section 544 of the Code, as modified by Section 856(h)(1)(B) of
the Code. The terms "Beneficial Owner," "Beneficially Owns" and "Beneficially
Owned" shall have the correlative meanings.

                  "Charitable Beneficiary": One or more beneficiaries of a
Charitable Trust as determined pursuant to Section 7.3(g), provided that each
such organization must be described in Section 501(c)(3) of the Code and
contributions to each such organization must be eligible for deduction under
each of Sections 170(b)(1)(A), 2055 and 2522 of the Code.

                  "Charitable Trust": Any trust created by the Board for the
purposes of Section 7.3.

                  "Charitable Trust Trustee": The trustee of a Charitable Trust.
The Charitable Trust Trustee shall be appointed by the Trust and shall be a
Person unaffiliated with the Trust and any Prohibited Owner.

                  "Common Share Ownership Limit": 9.9% (in value or in number of
shares, whichever is more restrictive) of the aggregate number of the
outstanding Common Shares. The number and value of outstanding Common Shares
shall be determined by the Board of Trustees in good faith, which determination
shall be conclusive for all purposes hereof.

                  "Control": With respect to a Person, the possession (directly
or indirectly) of the power to direct or cause the direction of the management
and policies of such Person, whether through ownership of voting securities, by
contract or otherwise.

                  "Constructive Ownership": Ownership of Shares by a Person,
whether the interest in Shares is held directly or indirectly (including by a
nominee), and shall include interests that would be treated as owned through the
application of Section 318(a) of the Code, as modified by Section 856(d)(5) of
the Code. The terms "Constructive Owner," "Constructively Owns" and
"Constructively Owned" shall have the correlative meanings.

                  "Excepted Holder": A Shareholder of the Trust for whom an
Excepted Holder Limit is created by this Article VII or by the Board of Trustees
pursuant to Section 7.2(g).

                                       14
<PAGE>

                  "Excepted Holder Limit": Provided that the affected Excepted
Holder agrees to comply with the requirements established by the Board of
Trustees pursuant to Section 7.2(g), the percentage limit established by the
Board of Trustees for such Excepted Holder pursuant to Section 7.2(g).

                  "Market Price" With respect to any Share as of any date, the
amount that would be distributed to the holder of such Share if the Trust sold
or caused to be sold its interest in the Property as of such date for its fair
market value as of such date (as determined in good faith by the Board of
Trustees) and the net proceeds of such a sale (taking into account expected
closing and transaction costs, as determined in good faith by the Board of
Trustees) were distributed to the Shareholders in accordance with Section 6.6.

                  "Person": An individual, corporation, partnership, estate,
trust, a portion of a trust permanently set aside for or to be used exclusively
for the purposes described in Section 642(c) of the Code, association, private
foundation within the meaning of Section 509(a) of the Code, joint stock company
or other entity and also includes a group as that term is used for purposes of
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, and (for
purposes of Article VII) a group to which an Excepted Holder Limit applies.

                  "Prohibited Owner": With respect to any purported Transfer,
any Person who, but for the provisions of Section 7.2(a), would Beneficially Own
or Constructively Own Shares in violation of the provisions of Section
7.2(a)(i), and if appropriate in the context, shall also mean any Person who
would have been the record owner of Shares that the Prohibited Owner would have
so owned.

                  "Restriction Termination Date": The first day after the
Initial Date on which the Board of Trustees determines that it is no longer in
the best interests of the Trust to attempt to, or continue to, qualify as a REIT
or that compliance with the restrictions and limitations on Beneficial
Ownership, Constructive Ownership and Transfers of Shares set forth herein is no
longer required in order for the Trust to qualify as a REIT.

                  "Transfer": Any direct or indirect issuance, sale, transfer,
gift, assignment, devise or other disposition, as well as any other event that
causes any Person to acquire Beneficial Ownership or Constructive Ownership, or
any agreement to take any such actions or cause any such events, of Shares or
the right to vote or receive dividends on Shares, including (a) the granting or
exercise of any option (or any disposition of any option), (b) any disposition
of any securities or rights convertible into or exchangeable for Shares or any
interest in Shares or any exercise of any such conversion or exchange right and
(c) Transfers of interests in other entities that result in changes in
Beneficial or Constructive Ownership of Shares; in each case, whether voluntary
or involuntary, whether owned of record, Constructively Owned or Beneficially
Owned and whether by operation of law or otherwise. The terms "Transferring" and
"Transferred" shall have the correlative meanings.

         Section 7.2 Ownership and Transfer Restrictions.

                  (a)      Ownership Limitations. During the period commencing
on the Initial Date and prior to the Restriction Termination Date:

                                       15
<PAGE>

                           (i)      Basic Restrictions.

                                    (A)      (1) No Person, other than an
Excepted Holder, shall Beneficially Own or Constructively Own Shares in excess
of the Aggregate Share Ownership Limit, (2) no Person, other than an Excepted
Holder, shall Beneficially Own or Constructively Own Common Shares in excess of
the Common Share Ownership Limit and (3) no Excepted Holder shall Beneficially
Own or Constructively Own Shares in excess of the Excepted Holder Limit for such
Excepted Holder.

                                    (B)      No Person shall Beneficially or
Constructively Own Shares to the extent that such Beneficial or Constructive
Ownership of Shares would result in the Trust being "closely held" within the
meaning of Section 856(h) of the Code (without regard to whether the ownership
interest is held during the last half of a taxable year), or otherwise failing
to qualify as a REIT (including, but not limited to, Beneficial or Constructive
Ownership that would result in the Trust owning (actually or Constructively) an
interest in a tenant that is described in Section 856(d)(2)(B) of the Code if
the income derived by the Trust from such tenant would cause the Trust to fail
to satisfy any of the gross income requirements of Section 856(c) of the Code).

                                    (C)      No Person shall Beneficially or
Constructively Own Shares to the extent that such Beneficial or Constructive
Ownership of Shares would result in the Trust failing to qualify as a
"domestically-controlled REIT" as defined in Section 897(h)(4) of the Code.

                                    (D)      Notwithstanding any other
provisions contained herein, any Transfer of Shares that, if effective, would
result in Shares being beneficially owned by less than 100 Persons (determined
under the principles of Section 856(a)(5) of the Code) shall be void ab initio,
and the intended transferee shall acquire no rights in such Shares.

                           (ii)     Transfer in Trust. If any Transfer of Shares
occurs which, if effective, would result in any Person Beneficially Owning or
Constructively Owning Shares in violation of Section 7.2(a)(i)(A) - (C),

                                    (A)      then that number of Shares the
Beneficial or Constructive Ownership of which otherwise would cause such Person
to violate Section 7.2(a)(i)(A) - (C) (rounded to the nearest whole share) shall
be automatically transferred to a Charitable Trust for the benefit of a
Charitable Beneficiary, as described in Section 7.3, effective as of the close
of business on the Business Day prior to the date of such Transfer, and such
Person shall acquire no rights in such Shares, or

                                    (B)      if the transfer to the Charitable
Trust described in clause (A) of this sentence would not be effective for any
reason to prevent the violation of Section 7.2(a)(i)(A) - (C), then the Transfer
of that number of Shares that otherwise would cause any Person to violate
Section 7.2(a)(i)(A) - (C) shall be void ab initio, and the intended transferee
shall acquire no rights in such Shares.

                  (b)      Remedies for Breach. If the Board of Trustees or any
duly authorized committee thereof shall at any time determine in good faith that
a Transfer or other event has

                                       16
<PAGE>

taken place that results in a violation of Section 7.2(a) or that a Person
intends to acquire or has attempted to acquire Beneficial or Constructive
Ownership of any Shares in violation of Section 7.2(a) (whether or not such
violation is intended), the Board of Trustees or a committee thereof shall take
such action as it deems advisable to refuse to give effect to or to prevent such
Transfer or other event, including, without limitation, causing the Trust to
redeem Shares, refusing to give effect to such Transfer on the books of the
Trust or instituting proceedings to enjoin such Transfer or other event;
provided, however, that any Transfers or attempted Transfers or other events in
violation of Section 7.2(a) shall automatically result in the transfer to the
Charitable Trust described in Sections 7.2(a)(ii) and 7.3, and, where
applicable, such Transfer (or other event) shall be void ab initio as provided
above irrespective of any action (or non-action) by the Board of Trustees or a
committee thereof.

                  (c)      Notice of Restricted Transfer. Any Person who
acquires or attempts or intends to acquire Beneficial Ownership or Constructive
Ownership of Shares that will or may violate Section 7.2(a)(i), any Person that
is an entity whose stock or equity interests are being transferred, redeemed,
acquired or issued in a manner that will or may violate Section 7.2(a)(i), or
any Person who would have owned Shares that resulted in a transfer to the
Charitable Trust pursuant to the provisions of Section 7.2(a)(ii), shall
immediately give written notice to the Trust of such event, or in the case of
such a proposed or attempted transaction, give at least 15 days' prior written
notice, and shall provide to the Trust such other information as the Trust may
request in order to determine the effect, if any, of such Transfer on the
Trust's status as a REIT.

                  (d)      Owners Required To Provide Information. From the
Initial Date and prior to the Restriction Termination Date:

                           (i)      Every owner of more than one-half of one
percent (0.5%) (or such lower percentage as required by the Code or the Treasury
Regulations promulgated thereunder) of the outstanding Shares, within 30 days
after the end of each taxable year, shall give written notice to the Trust
stating the name and address of such owner, the number of Shares Beneficially
Owned by such owner and a description of the manner in which such Shares are
held. Each such owner shall provide to the Trust such additional information as
the Trust may request in order to determine the effect, if any, of such
Beneficial Ownership on the Trust's status as a REIT and to ensure compliance
with the Aggregate Share Ownership Limit. In cases where such owner holds Shares
on behalf of another Person (the "Actual Owner") who is required to include the
dividends or distributions received from such Shares in its tax return, the
foregoing information shall be furnished for, by or on behalf of each Actual
Owner.

                           (ii)     Each Person who is a Beneficial or
Constructive Owner of Shares and each Person (including the Shareholder of
record) who is holding Shares for a Beneficial or Constructive Owner shall
provide to the Trust such information as the Trust may request, in good faith,
in order to determine the Trust's status as a REIT and to comply with
requirements of any taxing authority or governmental authority or to determine
such compliance.

                  (e)      Remedies Not Limited. Subject to Section 5.1 of this
Declaration of Trust, nothing contained in this Section 7.2 shall limit the
authority of the Board of Trustees to take such other action as it deems
necessary or advisable to protect the Trust and the interests of its
Shareholders in preserving the Trust's status as a REIT.

                                       17
<PAGE>

                  (f)      Ambiguity. In the case of an ambiguity in the
application of any of the provisions of any sections of this Article VII, the
Board of Trustees shall have the power to determine the application of the
provisions of such sections with respect to any situation based on the facts
known to it. In the event any section of this Article VII requires an action by
the Board of Trustees and this Declaration of Trust fails to provide specific
guidance with respect to such action, the Board of Trustees shall have the power
to determine the action to be taken so long as such action is not contrary to
the provisions of this Article VII.

                  (g)      Exceptions.

                           (i)      Subject to Section 7.2(a)(i)(B), the Board
of Trustees, in its sole discretion, may exempt a Person from the Aggregate
Share Ownership Limit and/or the Common Share Ownership Limit, as the case may
be, and may establish or increase an Excepted Holder Limit for such Person if:

                                    (A)      the Board of Trustees obtains such
representations and undertakings from such Person as are reasonably necessary to
ascertain that no individual's Beneficial or Constructive Ownership of such
Shares will violate Section 7.2(a)(i)(B);

                                    (B)      such Person does not own, actually
or Constructively, an interest in a tenant of the Trust (or a tenant of any
entity owned or Controlled by the Trust) that would cause the Trust to own,
actually or Constructively, more than a 9.9% interest (as set forth in Section
856(d)(2)(B) of the Code) in such tenant, and the Board of Trustees obtains such
representations and undertakings from such Person as are reasonably necessary to
ascertain this fact and as the Board of Trustees otherwise determines to be
necessary or advisable (for this purpose, a tenant from whom the Trust (or an
entity owned or Controlled by the Trust) derives (and is expected to continue to
derive) a sufficiently small amount of revenue such that, in the opinion of the
Board of Trustees, rent from such tenant would not adversely affect the Trust's
ability to qualify as a REIT, shall not be treated as a tenant of the Trust);
and

                                    (C)      such Person agrees that any
violation or attempted violation of such representations or undertakings (or
other action which is contrary to the restrictions contained in Sections 7.2(a)
through 7.2(f)) will result in such Shares being automatically transferred to a
Charitable Trust in accordance with Sections 7.2(a)(ii) and 7.3.

                           (ii)     Prior to granting any exception pursuant to
Section 7.2(g)(i), the Board of Trustees may require a ruling from the Internal
Revenue Service, or an opinion of counsel, in either case in form and substance
satisfactory to the Board of Trustees in its sole discretion, as it may deem
necessary or advisable in order to determine or ensure the Trust's status as a
REIT. Notwithstanding receipt of any ruling or opinion, the Board of Trustees
may impose such conditions or restrictions as it deems appropriate in connection
with granting such exception.

                           (iii)    Subject to Section 7.2(a)(i)(B), an
underwriter which participates in a public offering or a private placement of
Shares (or securities convertible into or exchangeable for Shares) may
Beneficially Own or Constructively Own Shares (or securities convertible into or
exchangeable for Shares) in excess of the Aggregate Share Ownership Limit,

                                       18
<PAGE>

the Common Share Ownership Limit or both such limits, but only to the extent
necessary to facilitate such public offering or private placement.

                           (iv)     The Board of Trustees may only reduce the
Excepted Holder Limit for an Excepted Holder: (A) with the written consent of
such Excepted Holder at any time, or (B) pursuant to the terms and conditions of
the agreements and undertakings entered into with such Excepted Holder in
connection with the establishment of the Excepted Holder Limit for that Excepted
Holder. No Excepted Holder Limit shall be reduced to a percentage that is less
than the Common Share Ownership Limit.

                  (h)      Increase in Aggregate Share Ownership and Common
Share Ownership Limits. The Board of Trustees may from time to time, in its sole
discretion, increase the Common Share Ownership Limit and the Aggregate Share
Ownership Limit.

                  (i)      Legend. If the Trust issues certificates for Shares,
each certificate for Shares shall bear substantially the following legend:

                  "The shares represented by this certificate are subject to
                  restrictions on Beneficial and Constructive Ownership and
                  Transfer for the purpose of the Trust's maintenance of its
                  status as a Real Estate Investment Trust (a "REIT") under the
                  Internal Revenue Code of 1986, as amended (the "Code").
                  Subject to certain further restrictions and except as
                  expressly provided in the Trust's Declaration of Trust, (i) no
                  Person may Beneficially or Constructively Own Common Shares of
                  the Trust in excess of 9.9% (in value or number of shares) of
                  the outstanding Common Shares of the Trust unless such Person
                  is an Excepted Holder (in which case the Excepted Holder Limit
                  shall be applicable); (ii) no Person may Beneficially or
                  Constructively Own Shares of the Trust in excess of 9.9% of
                  the value of the total outstanding Shares of the Trust, unless
                  such Person is an Excepted Holder (in which case the Excepted
                  Holder Limit shall be applicable); (iii) no Person may
                  Beneficially or Constructively Own Shares that would result in
                  the Trust being "closely held" under Section 856(h) of the
                  Code or otherwise cause the Trust to fail to qualify as a
                  REIT; (vi) no Person shall Beneficially or Constructively Own
                  Shares to the extent that such Beneficial or Constructive
                  Ownership of Shares would result in the Trust failing to
                  qualify as a "domestically-controlled REIT" as defined in
                  Section 897(h)(4) of the Code; and (v) no Person may Transfer
                  Shares if such Transfer would result in Shares of the Trust
                  being owned by fewer than 100 Persons. Any Person who
                  Beneficially or Constructively Owns or attempts to
                  Beneficially or Constructively Own Shares which cause or will
                  cause a Person to Beneficially or Constructively Own Shares in
                  excess or in violation of the above limitations must
                  immediately notify the Trust. If any of the foregoing
                  restrictions on transfer or ownership are violated, the Shares
                  represented hereby will be

                                       19
<PAGE>

                  automatically transferred to a Trustee of a Charitable Trust
                  for the benefit of one or more Charitable Beneficiaries. In
                  addition, upon the occurrence of certain events, attempted
                  Transfers in violation of the restrictions described above may
                  be void ab initio. All capitalized terms in this legend have
                  the meanings defined in the Trust's Declaration of Trust, as
                  the same may be amended from time to time, a copy of which,
                  including the restrictions on transfer and ownership, will be
                  furnished to each holder of Shares of the Trust on request and
                  without charge. In addition, the Trust will furnish a full
                  statement of the designations, preferences, rights,
                  restrictions, limitations and other terms and conditions of
                  each class of Shares of the Trust, as required by Section
                  8-203(d) of the Maryland REIT Law, to any holder of Shares
                  upon request and without charge.

                  The Shares represented by this certificate have not been
                  registered under the Securities Act of 1933, as amended, and
                  may not be offered, sold, assigned, pledged, transferred or
                  otherwise disposed of except (a) pursuant to an effective
                  registration statement under said act or pursuant to an
                  available exemption from registration under said act and, if
                  requested, upon delivery of an opinion of counsel reasonably
                  satisfactory to the Trust that the proposed transfer is exempt
                  from registration under said act, and (b) in accordance with
                  the Declaration of Trust."

         Instead of the foregoing legend, the certificate may state that the
Trust will furnish a full statement about certain restrictions on
transferability to a Shareholder on request and without charge.

         Section 7.3 Transfer of Shares in Trust.

                  (a)      Ownership in Trust. Upon any purported Transfer or
other event described in Section 7.2(a)(ii) that would result in a transfer of
Shares to a Charitable Trust, such Shares shall be deemed to have been
transferred to the Charitable Trust Trustee for the exclusive benefit of one or
more Charitable Beneficiaries. Such transfer to the Charitable Trust Trustee
shall be deemed to be effective as of the close of business on the Business Day
prior to the purported Transfer or other event that results in the transfer to
the Charitable Trust pursuant to Section 7.2(a)(ii). Each Charitable Beneficiary
shall be designated by the Trust as provided in Section 7.3(g).

                  (b)      Status of Shares Held by the Charitable Trust
Trustee. Shares held by the Charitable Trust Trustee shall be issued and
outstanding Shares of the Trust. The Prohibited Owner shall have no rights in
the shares held by the Charitable Trust Trustee. The Prohibited Owner shall not
benefit economically from ownership of any shares held in trust by the
Charitable Trust Trustee, shall have no rights to dividends or other
distributions and shall not possess any rights to vote or other rights
attributable to the Shares held in the Charitable Trust.

                                       20
<PAGE>

                  (c)      Dividend and Voting Rights. The Charitable Trust
Trustee shall have all voting rights and rights to dividends or other
distributions with respect to Shares held in the Charitable Trust, which rights
shall be exercised for the exclusive benefit of the Charitable Beneficiary. Any
dividend or other distribution paid to a Prohibited Owner prior to the discovery
by the Trust that Shares have been transferred to the Charitable Trust Trustee
shall be paid with respect to such Shares by the Prohibited Owner to the
Charitable Trust Trustee upon demand and any dividend or other distribution
authorized but unpaid shall be paid when due to the Charitable Trust Trustee.
Any dividends or distributions so paid over to the Charitable Trust Trustee
shall be held in trust for the Charitable Beneficiary. The Prohibited Owner
shall have no voting rights with respect to Shares held in the Charitable Trust
and, subject to Maryland law, effective as of the date that Shares have been
transferred to the Charitable Trust Trustee, the Charitable Trust Trustee shall
have the authority (at the Charitable Trust Trustee's sole discretion) (i) to
rescind as void any vote cast by a Prohibited Owner prior to the discovery by
the Trust that Shares have been transferred to the Charitable Trust Trustee and
(ii) to recast such vote in accordance with the desires of the Charitable Trust
Trustee acting for the benefit of the Charitable Beneficiary; provided, however,
that if the Trust has already taken irreversible trust action, then the
Charitable Trust Trustee shall not have the authority to rescind and recast such
vote. Notwithstanding the provisions of this Article VII, until the Trust has
received notification that Shares have been transferred into a Charitable Trust,
the Trust shall be entitled to rely on its share transfer and other Shareholder
records for purposes of preparing lists of Shareholders entitled to vote at
meetings, determining the validity and authority of proxies and otherwise
conducting votes of Shareholders.

                  (d)      Sale of Shares by Trustee. Within a reasonable time
after (but no earlier than 30 days) receiving notice from the Trust that Shares
have been transferred to the Charitable Trust, the Charitable Trust Trustee
shall sell the shares held in the Charitable Trust to a Person, designated by
the Charitable Trust Trustee, whose ownership of the Shares will not violate the
ownership limitations set forth in Section 7.2(a)(i). Upon such sale, the
interest of the Charitable Beneficiary in the Shares sold shall terminate and
the Charitable Trust Trustee shall distribute the net proceeds of the sale to
the Prohibited Owner and to the Charitable Beneficiary as provided in this
Section 7.3(d). The Prohibited Owner shall receive the lesser of (i) the price
paid by the Prohibited Owner for the Shares or, if the Prohibited Owner did not
give value for the shares in connection with the event causing the Shares to be
held in the Charitable Trust (e.g., in the case of a gift, devise or other such
transaction), the Market Price of the Shares effective on the day of the event
causing the Shares to be held in the Charitable Trust and (ii) the price
received by the Charitable Trust Trustee from the sale or other disposition of
the Shares held in the Charitable Trust. Any net sales proceeds in excess of the
amount payable to the Prohibited Owner shall be immediately paid to the
Charitable Beneficiary. If, prior to the discovery by the Trust that Shares have
been transferred to the Charitable Trust Trustee, such Shares are sold by a
Prohibited Owner, then (x) such Shares shall be deemed to have been sold on
behalf of the Charitable Trust and (y) to the extent that the Prohibited Owner
received an amount for such Shares that exceeds the amount that such Prohibited
Owner was entitled to receive pursuant to this Section 7.3(d), such excess shall
be paid to the Charitable Trust Trustee upon demand.

                  (e)      Purchase Right in Shares Transferred to the
Charitable Trust Trustee. Shares transferred to the Charitable Trust Trustee
shall be deemed to have been offered for sale to the Trust, or its designee, at
a price per share equal to the lesser of (i) the price per share in the

                                       21
<PAGE>

transaction that resulted in such transfer to the Charitable Trust (or, in the
case of a devise or gift, the Market Price at the time of such devise or gift)
and (ii) the Market Price on the date the Trust, or its designee, accepts such
offer. The Trust shall have the right to accept such offer until the Charitable
Trust Trustee has sold the Shares held in the Charitable Trust pursuant to
Section 7.3(d). Upon such a sale to the Trust, the proceeds therefrom shall be
distributed to the Charitable Beneficiary in the manner described in Section
7.3(d).

                  (f)      Rights Upon Liquidation. Upon any voluntary or
involuntary liquidation, dissolution or winding up (or any other distribution of
the assets) of the Trust, the Charitable Beneficiary shall be entitled to
receive, ratably with each other holder of Shares of the class or series of the
Shares that is held in the Charitable Trust, that portion of the assets of the
Trust available for distribution to the holders of such class or series
(determined based upon the ratio that the number of Shares held by the
Charitable Trustee bears to the total number of applicable Shares then
outstanding). The Charitable Trustee shall distribute any such assets received
in respect of the Shares held in the Charitable Trust pursuant to this Section
7.3(f) in the same manner as proceeds from the sale of Shares are distributed
pursuant to Section 7.3(d) above.

                  (g)      Designation of Charitable Beneficiaries. By written
notice to the Charitable Trust Trustee, the Trust shall designate one or more
nonprofit organizations to be the Charitable Beneficiary of the interest in the
Charitable Trust such that (i) Shares held in the Charitable Trust would not
violate the restrictions set forth in Section 7.2(a)(i) in the hands of such
Charitable Beneficiary and (ii) each such organization must be described in
Section 501(c)(3) of the Code and contributions to each such organization must
be eligible for deduction under each of Sections 170(b)(1)(A), 2055 and 2522 of
the Code.

         Section 7.4 Enforcement. The Trust is authorized specifically to seek
equitable relief, including injunctive relief, to enforce the provisions of this
Article VII. No delay or failure on the part of the Trust or the Board of
Trustees in exercising any right hereunder shall operate as a waiver of any
right of the Trust or the Board of Trustees, as the case may be, except to the
extent specifically waived in writing.

         Section 7.5 Redemption Excepted. Notwithstanding anything in this
Article VII or any other provision of this Declaration of Trust to the contrary,
the Trust shall redeem the Class B Preferred Shares and the Class B Common
Shares in accordance with Section 6.7, notwithstanding any effect any such
redemption may have on the qualification or disqualification of the Trust as a
REIT.

                                  ARTICLE VIII
                                  SHAREHOLDERS

         Section 8.1 Meetings. There shall be an annual meeting of Shareholders,
to be held upon written notice at such time (after the delivery of the annual
report) and convenient location as shall be determined in the manner prescribed
in the Bylaws, for the election of the Trustees, to review and discuss the
business and affairs of the Trust, and for the transaction of any other business
within the powers of the Trust that is properly brought before such meeting in
accordance with the Bylaws. Except as otherwise provided in this Declaration of
Trust, special meetings of Shareholders may be called in the manner provided in
the Bylaws. If there are no

                                       22
<PAGE>

Trustees, the officers of the Trust shall promptly call a special meeting of the
Shareholders entitled to vote for the election of successor Trustees. Any
meeting may be adjourned and reconvened as the Trustees determine or as provided
in the Bylaws.

         Section 8.2 Voting Rights. Subject to the rights and powers of any
class or series of Shares then outstanding, the Shareholders shall be entitled
to vote on (and only on) the following matters:

                  (a)      the election of Trustees as provided in Section 5.2
and the removal of Trustees as provided in Section 5.3;

                  (b)      an amendment of this Declaration of Trust as provided
in Article X;

                  (c)      the termination of the Trust as provided in Section
12.2;

                  (d)      a merger or consolidation of the Trust, or the sale
or disposition of substantially all of the Trust's assets, as provided in
Article XI;

                  (e)      the termination of the Trust's status as a REIT for
federal income tax purposes as provided by Section 5.1(c);

                  (f)      the authorization of any additional Shares and any
classification or reclassification of classes or series of Shares;

                  (g)      the issuance of any Shares, or securities of the
Trust that are convertible into, exchangeable for or evidence the right to
purchase Shares, other than the Shares required or permitted to be issued under
the terms of the Organization Agreement;

                  (h)      the making of any dividend or distribution to
Shareholders other than dividends or distributions paid only in cash; and

                  (i)      such other matters with respect to which the Board of
Trustees has adopted a resolution declaring that a proposed action is advisable
and directing that the matter be submitted to the Shareholders for approval or
ratification.

Except with respect to the foregoing matters, no action taken by the
Shareholders at any meeting shall in any way bind the Board of Trustees. Except
where this Declaration of Trust or the Bylaws require a higher percentage vote
or give separate voting rights to a specified class or classes of Shares, action
with respect to any of the foregoing matters may be taken only if such action is
approved by holders of a majority of the voting power of all Shares entitled to
vote on such matter; provided that action on the matters described in
subsections (b), (c), (d), (e), (f), (g) and (h) of this Section 8.2 shall
require the approval of two-thirds of the voting power of all Shares entitled to
vote on such matter.

         Section 8.3 Preemptive and Appraisal Rights. Except as may be provided
by the Board of Trustees in establishing the terms of any class of Shares
pursuant to Section 6.4, or as may otherwise be provided by contract, no holder
of Shares shall, as such holder, (a) have any preemptive right to purchase or
subscribe for any additional Shares of the Trust or any other

                                       23
<PAGE>

security of the Trust which it may issue or sell or (b) have any right to
require the Trust to pay such holder the fair value of such holder's Shares in
an appraisal or similar proceeding.

         Section 8.4 Extraordinary Actions. Except as otherwise expressly
provided in this Declaration of Trust and notwithstanding any provision of law
permitting or requiring any action to be taken or authorized by the affirmative
vote of the holders of a greater number of votes, any Shareholder action shall
be effective and valid if approved by the affirmative vote of holders of Shares
having a majority of the voting power of the Shares entitled to vote on the
matter.

         Section 8.5 Action By Shareholders Without a Meeting. Any action
required or permitted under this Declaration of Trust or the Bylaws to be taken
by the Shareholders at a meeting may be taken without a meeting by the written
consent of Shareholders entitled to vote on such matter having the number of
votes that would be required to approve the matter as required by statute, this
Declaration of Trust or the Bylaws, as the case may be, at a meeting at which
all Shares entitled to be voted on such matter were present, in person or by
proxy.

                                   ARTICLE IX
                      LIABILITY LIMITATION, INDEMNIFICATION
                         AND TRANSACTIONS WITH THE TRUST

         Section 9.1 Limitation of Shareholder Liability. No Shareholder shall
be liable for any debt, claim, demand, judgment or obligation of any kind of,
against or with respect to the Trust by reason of being a Shareholder, nor shall
any Shareholder be subject to any personal liability whatsoever, in tort,
contract or otherwise, to any person in connection with the property or the
affairs of the Trust by reason of being a Shareholder.

         Section 9.2 Limitation of Trustee and Officer Liability. To the maximum
extent that Maryland law in effect from time to time permits limitation of the
liability of trustees and officers of a real estate investment trust, no Trustee
or officer of the Trust shall be liable to the Trust or to any Shareholder for
money damages. Neither the amendment nor repeal of this Section 9.2, nor the
adoption or amendment of any other provision of this Declaration of Trust
inconsistent with this Section 9.2, 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. In the absence
of any Maryland statute limiting the liability of trustees and officers of a
Maryland real estate investment trust for money damages in a suit by or on
behalf of the Trust or by any Shareholder, no Trustee or officer of the Trust
shall be liable to the Trust or to any Shareholder for money damages except to
the extent that (a) the Trustee or officer actually received an improper benefit
or profit in money, property or services, for the amount of the benefit or
profit in money, property or services actually received; or (b) a judgment or
other final adjudication adverse to the Trustee or officer is entered in a
proceeding based on a finding in the proceeding that the Trustee's or officer's
action or failure to act was the result of active and deliberate dishonesty and
was material to the cause of action adjudicated in the proceeding.

         Section 9.3 Indemnification. The Trust, to the fullest extent permitted
by law, shall indemnify and hold harmless, each Indemnified Person from and
against any loss, liability, expense, judgment, settlement cost, fees and
related expenses (including reasonable attorneys'

                                       24
<PAGE>

fees and expenses), costs or damages arising out of or in connection with any
act taken or omitted to be taken in respect of the affairs of the Trust, unless
it is established that (i) such act or omission was material to the matter
giving rise to the claim, and was (A) committed in bad faith, or (B) the result
of active and deliberate dishonesty; (ii) the Indemnified Person actually
received an improper personal benefit in money, property, or services; or (iii)
in the case of any criminal proceeding, the Indemnified Person had reasonable
cause to believe that such act or omission was unlawful. The termination of any
action, suit or proceeding by settlement shall not, of itself, create a
presumption that an Indemnified Person did not act in good faith or in a manner
that was reasonably believed to be in, or not opposed to, the best interests of
the Trust, or was deliberately dishonest or had reasonable cause to believe that
such act or omission was unlawful. The Trust shall, to the extent permitted by
applicable law and without requiring a preliminary determination of the ultimate
entitlement to indemnification, advance to any Indemnified Person reasonable
attorneys' fees and other costs and expenses incurred in connection with the
defense of any action or proceeding which arises out of conduct which is the
subject of the indemnification provided hereunder; provided, however, that the
Indemnified Person shall agree as a condition to receiving any such advance,
that in the event such Indemnified Person receives any advance, the Indemnified
Person shall reimburse the Trust for the advance to the extent that it is
judicially determined, in a final, non-appealable judgment or binding
arbitration, that the Indemnified Person was not entitled to indemnification
under this Section 9.3. As used herein the term "Indemnified Person" means any
individual who (a) is a present or former Shareholder, Trustee or officer of the
Trust, or (b) while a Trustee or officer of the Trust and at the request of the
Trust, serves or has served as a director, officer, partner, manager, trustee,
employee or agent of another real estate investment trust, corporation, limited
liability company, partnership, joint venture, trust, employee benefit plan or
any other entity.

         Section 9.4 Transactions Between the Trust and its Trustees, Officers,
Employees and Agents. Subject to any express restrictions in this Declaration of
Trust or the Bylaws, or an express restriction adopted by the Trustees by
resolution, the Trust may enter into any contract or transaction of any kind
with any person, including any Trustee, officer, employee or agent of the Trust
or any person affiliated with a Trustee, officer, employee or agent of the
Trust, whether or not any of them has a financial interest in such transaction;
provided that the terms of the transaction are no less favorable to the Trust
than would be obtained in a transaction with an unaffiliated party.

                                    ARTICLE X
                                   AMENDMENTS

         Section 10.1 General. Subject to the terms of this Declaration of
Trust, the Trust reserves the right from time to time to make any amendment to
this Declaration of Trust, now or hereafter authorized by law. All rights and
powers conferred by this Declaration of Trust on Shareholders, Trustees and
officers are granted subject to this reservation. An amendment to this
Declaration of Trust (a) shall be signed and acknowledged by at least a majority
of the Trustees, an officer duly authorized by at least a majority of the
Trustees, or signed and acknowledged by the Chairman of the Board of Trustees,
and witnessed by the Secretary, (b) shall be filed for record as provided in
Section 13.6 and (c) shall become effective as of the later of the time the
Department accepts the amendment for record or the time established in the
amendment, not to

                                       25
<PAGE>

exceed 30 days after the amendment is accepted for record. All references to
this Declaration of Trust shall include all effective amendments thereto.

         Section 10.2 By Trustees. The Board of Trustees may:

                  (a)      with the approval of two-thirds of its members, and
without any action by the Shareholders, amend this Declaration of Trust from
time to time as may be necessary to qualify the Trust as a REIT under the Code
or as a real estate investment trust under the Maryland REIT Law; and

                  (b)      with the approval of a majority of the entire Board
of Trustees, change the name of the Trust; provided that any such name change
must be approved by (i) holders of a majority of the voting power of the
outstanding Class A Preferred Shares voting as a separate class and (ii) holders
of a majority of the outstanding Class B Preferred Shares voting as a separate
class.

         Section 10.3 By Shareholders. Except as otherwise provided in this
Declaration of Trust, and subject to the separate class voting rights of any
class or series of Preferred Shares, any amendment to this Declaration of Trust
shall be valid only if approved by the affirmative vote of Shareholders
representing at least two-thirds of the voting power of all Shares entitled to
vote on the matter. Notwithstanding anything to the contrary in this Declaration
of Trust, any separate class voting rights of any class or series of Preferred
Shares (including, without limitation, the voting rights in Section 6.3(a)
hereof) may be amended only with the consent of the holders of at least a
majority of such class or series of Preferred Shares, as applicable.

                                   ARTICLE XI
                 MERGER, CONSOLIDATION OR SALE OF TRUST PROPERTY

         Subject to the rights, powers or privileges of any class or series of
Shares at the time outstanding, the Board of Trustees may (a) merge the Trust
into another entity, (b) consolidate the Trust with one or more other entities
into a new entity or (c) sell, lease, exchange or otherwise transfer all or
substantially all of the Trust's assets. Any such action must be approved by the
Board of Trustees and, after notice to all Shareholders entitled to vote on the
matter, by the affirmative vote of holders of Shares representing two-thirds of
the voting power of all the Shares entitled to vote on the matter.

                                   ARTICLE XII
                        DURATION AND TERMINATION OF TRUST

         Section 12.1 Duration. The Trust shall continue perpetually unless
terminated pursuant to Section 12.2 or pursuant to any applicable provision of
the Maryland REIT Law.

         Section 12.2 Termination.

                  (a)      Subject to the provisions of any class or series of
Shares at the time outstanding, after approval by a majority of the Board of
Trustees, the Trust may be terminated if holders of Shares representing
two-thirds of the outstanding voting power of all outstanding Shares vote to
terminate the Trust. Upon the termination of the Trust:

                                       26
<PAGE>

                           (i)      The Trust shall carry on no business except
for the purpose of winding up its affairs.

                           (ii)     The Trustees shall proceed to wind up the
affairs of the Trust and all of the powers of the Trustees under this
Declaration of Trust shall continue, including the powers to fulfill or
discharge the Trust's contracts, collect its assets, sell, convey, assign,
exchange, transfer or otherwise dispose of all or any part of the remaining
property of the Trust to one or more persons at public or private sale for
consideration which may consist in whole or in part of cash, securities or other
property of any kind, discharge or pay its liabilities and do all other acts
appropriate to liquidate its business.

After paying or adequately providing for the payment of all liabilities, and
upon receipt of such releases, indemnities and agreements as they deem necessary
for their protection, the Trust may distribute the remaining property of the
Trust among the Shareholders so that after payment in full or the setting apart
for payment of such preferential amounts, if any, to which the holders of any
Shares at the time outstanding shall be entitled, the remaining property of the
Trust shall, subject to any participating or similar rights of Shares at the
time outstanding, be distributed ratably among the holders of Common Shares at
the time outstanding.

                  (b)      If the liquidation of the Trust occurs prior to the
Initial Date, the property of the Trust shall be distributed among the
Shareholders in accordance with their respective capital accounts maintained in
accordance with Section 13.7.

                  (c)      After termination of the Trust, the liquidation of
its business and the distribution to the Shareholders as herein provided, a
majority of the Trustees shall execute and file with the Trust's records a
document certifying that the Trust has been duly terminated, and the Trustees
shall be discharged from all liabilities and duties hereunder, and the rights
and interests of all Shareholders shall cease.

                                  ARTICLE XIII
                                  MISCELLANEOUS

         Section 13.1 Governing Law. This Declaration of Trust is executed by
the undersigned Trustees and delivered in the State of Maryland with reference
to the laws thereof, and the rights of all parties and the validity,
construction and effect of every provision hereof shall be subject to and
construed according to the laws of the State of Maryland without regard to
conflicts of laws provisions thereof.

         Section 13.2 Reports to Shareholders.

                  (a)      After the end of each fiscal year, the Trust shall
have an independent certified public accountant prepare audited financial
statements of the Trust as of the close of the fiscal year, including a balance
sheet, a statement of income or loss and a statement of cash flows. A copy of
such audited financial statements for each fiscal year shall be furnished to
each person who was a Shareholder at the end of such fiscal year not later than
90 days after the end of the fiscal year. The financial statements shall also
contain a cash flow statement for such year and a summary of all payments made
to the Holding Partnership, HILP or either of their

                                       27
<PAGE>

Affiliates during such fiscal year. The annual report shall be prepared in
accordance with generally accepted accounting principles consistently applied.

                  (b)      Within 45 days after the end of each fiscal quarter
(excluding the fourth quarter), the Trust will send to each Shareholder (i) an
unaudited current value balance sheet as of the end of the fiscal quarter and
related unaudited statements of income or loss and changes in assets,
liabilities and Shareholders' equity for the fiscal quarter just ended, and (ii)
a status report relating to the Trust's investments, activities and asset
valuations.

         Section 13.3 Reliance by Third Parties. Any certificate shall be final
and conclusive as to any person dealing with the Trust if executed by the
Secretary or an Assistant Secretary of the Trust or a Trustee, and if certifying
to: (a) the number or identity of Trustees, officers of the Trust or
Shareholders; (b) the due authorization of the execution of any document; (c)
the action or vote taken, and the existence of a quorum, at a meeting of the
Board of Trustees or Shareholders; (d) a copy of this Declaration of Trust or of
the Bylaws as a true and complete copy as then in force; (e) an amendment to
this Declaration of Trust; (f) the termination of the Trust; or (g) the
existence of any fact relating to the affairs of the Trust. No purchaser,
lender, transfer agent or other person shall be bound to make any inquiry
concerning the validity of any transaction purporting to be made by the Trust on
its behalf or by any officer, employee or agent of the Trust.

         Section 13.4 Severability.

                  (a)      The provisions of this Declaration of Trust are
severable, and if the Board of Trustees shall determine, with the advice of
counsel, that any one or more of such provisions (the "Conflicting Provisions")
are in conflict with the Code, Maryland REIT Law or other applicable federal or
state laws, the Conflicting Provisions, to the extent of the conflict, shall be
deemed never to have constituted a part of this Declaration of Trust, even
without any amendment of this Declaration of Trust pursuant to Article X and
without affecting or impairing any of the remaining provisions of this
Declaration of Trust or rendering invalid or improper any action taken or
omitted prior to such determination. No Trustee shall be liable for making or
failing to make such a determination. In the event of any such determination by
the Board of Trustees, the Board shall amend this Declaration of Trust in the
manner provided in Section 10.2.

                  (b)      If any provision of this Declaration of Trust shall
be held invalid or unenforceable in any jurisdiction, such holding shall apply
only to the extent of any such invalidity or unenforceability and shall not in
any manner affect, impair or render invalid or unenforceable such provision in
any other jurisdiction or any other provision of this Declaration of Trust in
any jurisdiction.

         Section 13.5 Construction. In this Declaration of Trust, unless the
context otherwise requires, words used in the singular or in the plural include
both the plural and singular and words denoting any gender include all genders.
The title and headings of different parts are inserted for convenience and shall
not affect the meaning, construction or effect of this Declaration of Trust.
Unless otherwise specified, references in this Declaration of Trust to
`Sections" or the `Appendix" are to Sections of and the Appendix to this
Declaration of Trust. In defining or interpreting the powers and duties of the
Trust and its Trustees and officers,

                                       28
<PAGE>

reference may be made by the Trustees or officers, to the extent appropriate and
not inconsistent with the Code or the Maryland REIT Law, to Titles 1 through 3
of the Corporations and Associations Article of the Annotated Code of Maryland.
In furtherance and not in limitation of the foregoing, in accordance with the
provisions of Title 3, Subtitles 6 and 7, of the Corporations and Associations
Article of the Annotated Code of Maryland, the Trust shall be included within
the definition of "corporation" for purposes of such provisions; provided,
however, that the Trust shall not be subject to Section 3-602 thereof to the
extent the Board of Trustees adopts a resolution exempting the Trust therefrom,
as permitted by Section 3-603 thereof.

         Section 13.6 Recordation. This Declaration of Trust and any amendment
hereto shall be filed for record with the Department and may also be filed or
recorded in such other places as the Trustees deem appropriate, but failure to
file for record this Declaration of Trust or any amendment hereto in any office
other than the Department shall not affect or impair the validity or
effectiveness of this Declaration of Trust or any amendment hereto. A restated
Declaration of Trust shall, upon filing, be conclusive evidence of all
amendments contained therein and may thereafter be referred to in lieu of the
original Declaration of Trust and the various amendments thereto.

         Section 13.7 Tax Matters Prior to Initial Date. The provisions of
Appendix A shall apply during those taxable periods, if any, in which the Trust
is classified as a partnership rather than as a REIT for U.S. federal income tax
purposes.

         Section 13.8 Counterparts. This Declaration of Trust may be signed in
multiple counterparts which, taken together, shall constitute one and the same
instrument.

                  [Remainder of Page Intentionally Left Blank]

                                       29
<PAGE>

         IN WITNESS WHEREOF, this Declaration of Trust has been signed as of the
12th day of January, 2004, by all of the Trustees of the Trust, each of whom
acknowledges that this document is his free act and deed, that, to the best of
his knowledge, information and belief, the matters and facts set forth herein
are true in all material respects and that this statement is made under penalty
of perjury.

                                                /s/ GERALD D. HINES
                                                --------------------------------
                                                Gerald D. Hines

                                                /s/ JEFFREY C. HINES
                                                --------------------------------
                                                Jeffrey C. Hines

                                                /s/ C. HASTINGS JOHNSON
                                                --------------------------------
                                                C. Hastings Johnson

                                                /s/ CHARLES M. BAUGHN
                                                --------------------------------
                                                Charles M. Baughn

                                                /s/ JAMES A. HIME
                                                --------------------------------
                                                James A. Hime

                                                /s/ NORIO MORIMOTO
                                                --------------------------------
                                                Norio Morimoto

                                                /s/ SHINICHI KAWANISHI
                                                --------------------------------
                                                Shinichi Kawanishi

                                                /s/ THOMAS E. DOBROWSKI
                                                --------------------------------
                                                Thomas E. Dobrowski

                                                /s/ JOSEPH D. STECHER
                                                --------------------------------
                                                Joseph D. Stecher

<PAGE>

                                                                      APPENDIX A

                                   APPENDIX A
                                       TO
                              DECLARATION OF TRUST
                                       OF
                      HINES-SUMISEI NY CORE OFFICE TRUST II

                                   ALLOCATIONS

         The provisions of this Appendix A shall apply only during those taxable
periods (if any) in which the Trust is classified as a partnership, rather than
as a REIT, for federal income tax purposes.

         1.       Definitions. Terms defined in the Declaration of Trust of
Hines-Sumisei NY Core Office Trust II will have the same meaning in this
Appendix A. In addition, the following terms will have the meanings set forth
below:

                  "Adjusted Capital Account Deficit": With respect to any
Shareholder, the deficit balance, if any, in such Shareholder's Capital Account
as of the end of the relevant fiscal year, after giving effect to the following
adjustments:

                  (a)      Crediting to such Capital Account (i) any amount
         which such Shareholder is obligated to restore following pursuant to
         any provision of this Declaration of Trust or otherwise; (ii) the
         amount of such Shareholder's share of the Trust Minimum Gain (which
         share will be determined in accordance with Regulations Section
         1.704-2(g); and (iii) the amount of such Shareholder's share of
         Shareholder Nonrecourse Debt Minimum Gain (which share will be
         determined in accordance with Regulations Section 1.704-2(i)(5)); and

                  (b)      Debiting to such Capital Account the items described
         in Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5), and (6).

This definition is intended to comply with the provisions of Regulations Section
1.704-1(b)(2)(ii)(d), and will be interpreted consistently therewith.

                  "Book Depreciation": For each fiscal year or other period, an
amount equal to the depreciation, amortization or other cost recovery deduction
allowable with respect to the Trust's assets for such year or other period for
federal income tax purposes, except that if the Gross Asset Value of any asset
differs from its adjusted basis for federal income tax purposes at the beginning
of such year or other period, Book Depreciation with respect to such asset will
be an amount which bears the same ratio to such beginning Gross Asset Value as
the federal income tax depreciation, amortization or other cost recovery
deduction with respect to such asset for such year or other period bears to such
beginning adjusted tax basis; provided, however, that if the federal income tax
depreciation, amortization or other cost recovery deduction with respect to such
asset for such year is zero, Book Depreciation will be determined with reference
to such beginning Gross Asset value using any reasonable method selected by the
Board of Trustees.

                  "Code": The Internal Revenue Code of 1986, as amended as of
the date hereof and as the same may be amended from time to time, and any
successor statute.

                                    App. A-1
<PAGE>

                  "Gross Asset Value": With respect to any asset the asset's
adjusted basis for federal income taxes, subject to the following exceptions and
adjustments:

                  (a)      The initial Gross Asset Value of any asset
         contributed by a Shareholder to the Trust will be the gross fair market
         value of such asset, as agreed to by the contributing Shareholder and
         the Board of Trustees;

                  (b)      The Gross Asset Value of all Trust assets will be
         adjusted to equal their respective gross fair market values, as
         determined by the Board of Trustees, immediately preceding the
         occurrence of any of the following events: (i) the acquisition of an
         additional interest in the Trust by any new or existing Shareholder in
         exchange for more than a de minimis capital contribution to the Trust
         if the Board of Trustees determines that such adjustment is necessary
         or appropriate to reflect the relative economic interests of the
         Shareholders in the Trust; (ii) the distribution by the Trust to a
         Shareholder of more than a de minimis amount of property as
         consideration for an interest in the Trust if the Board of Trustees
         determines that such adjustment is necessary or appropriate to reflect
         the relative economic interests of the Shareholders in the Trust; (iii)
         the liquidation of the Trust within the meaning of Regulations Section
         1.704-1(b)(2)(ii)(g) (which for this purpose will include the
         termination of the Trust for federal income tax purposes pursuant to
         Code Section 708(b)(1)(B)); and (iv) upon the occurrence of any other
         event for which such an adjustment is permitted under the Regulations
         if the Board of Trustees determines that such adjustment is necessary
         or appropriate to reflect the relative economic interests of the
         Shareholders in the Trust;

                  (c)      The Gross Asset Value of any Trust asset distributed
         to any Shareholder will be the gross fair market value of such asset on
         the date of distribution as determined by the Board of Trustees;

                  (d)      The Gross Asset Values of Trust assets will be
         increased (or decreased) to reflect any adjustment to the adjusted
         basis of such assets pursuant to Code Section 734(b) or Code Section
         743(b), but only to the extent that such adjustments are taken into
         account in determining Capital Accounts pursuant to Regulations Section
         1.704-1(b)(2)(iv)(m); provided, however, that Gross Asset Values will
         not be adjusted pursuant to this subsection (d) to the extent the Board
         of Trustees determines that an adjustment pursuant to subsection (b)
         above is necessary or appropriate in connection with a transaction that
         would otherwise result in an adjustment pursuant to this subsection
         (d); and

                  (e)      If the Gross Asset Value of an asset has been
         determined or adjusted pursuant to subsection (a), (b) or (d) above,
         such Gross Asset Value will thereafter be adjusted by the Book
         Depreciation (calculated in accordance with Regulations Section
         1.704-1(b)(2)(iv)(g)) taken into account with respect to such asset for
         purposes of computing Net Income and Net Loss.

                  "Hines Controlled Entity": As defined in the Organization
Agreement.

                                    App. A-2
<PAGE>

                  "Net Income" or "Net Loss," as the case may be: For any
period, an amount equal to the Trust's Taxable Income or Taxable Loss for such
period, with the following adjustments:

                  (a)      Any income of the Trust that is exempt from federal
         income tax and not otherwise taken into account in computing Net Income
         and Net Loss pursuant to this definition will be added to such Taxable
         Income or will reduce such Taxable Loss;

                  (b)      Any expenditure of the Trust described in Code
         Section 705(a)(2)(B) or treated as a Code Section 705(a)(2)(B)
         expenditure pursuant to Regulations Section 1.704-1(b)(2)(iv)(i), and
         not otherwise taken into account in computing Net Income or Net Loss
         pursuant to this definition, will be subtracted from such Taxable
         Income or Loss;

                  (c)      If the Gross Asset Value of any Trust asset is
         adjusted pursuant to subsection (b) or (c) of the definition of Gross
         Asset Value, the amount of such adjustment will be taken into account
         as gain or loss from the disposition of such asset for purposes of
         computing Net Income or Net Loss;

                  (d)      Gain or loss resulting from the disposition of any
         Trust asset with respect to which gain or loss is recognized for
         federal income tax purposes will be computed by reference to the Gross
         Asset Value of the asset disposed of, notwithstanding that the adjusted
         tax basis of such property differs from its Gross Asset Value;

                  (e)      In lieu of the depreciation, amortization and other
         cost recovery deductions taken into account in computing such Taxable
         Income or Loss, there will be taken into account Book Depreciation for
         such fiscal year or other period;

                  (f)      To the extent an adjustment to the adjusted tax basis
         of any Trust asset pursuant to Code Section 734(b) or Code Section
         743(b) is required pursuant to Regulations Section
         1.704-1(b)(2)(iv)(m)(4) to be taken into account in determining Capital
         Accounts as a result of a distribution other than in complete
         liquidation of a Shareholder's interest in the Trust, or is required
         pursuant to the last sentence of Regulations Section
         1.704-1(b)(2)(iv)(m)(2) to be taken into account in determining Capital
         Accounts, the amount of such adjustment shall be treated as an item of
         gain (if the adjustment increases the basis of the asset) or loss (if
         the adjustment decreases the basis of the asset) from the disposition
         of the asset and shall be taken into account for purposes of computing
         Net Income or Net Loss; and

                  (g)      Notwithstanding any other provision of this
         definition, any item that is specially allocated pursuant to Section 4
         will not be taken into account in computing Net Income or Net Loss.

                                    App. A-3
<PAGE>

                  "Nonrecourse Deduction": Any item of Trust loss, deduction or
expense that is attributable to a Nonrecourse Liability, and the amount thereof
will be determined in accordance with the rules set forth in Regulations
Sections 1.704-2(c) and 1.704-2(j)(1).

                  "Nonrecourse Liability": Any Trust liability (or portion
thereof) for which no Shareholder bears the economic risk of loss (within the
meaning of Regulations Section 1.752-2).

                  "Regulations": The Income Tax Regulations, including Temporary
Regulations, promulgated under the Code, as such regulations may be amended from
time to time (including corresponding provisions of succeeding regulations).

                  "Shareholder Nonrecourse Debt Minimum Gain": The minimum gain
attributable to Shareholder Nonrecourse Debt and the amount thereof will be
determined in accordance with the rules set forth in Regulations Section
1.704-2(i)(3).

                  "Shareholder Nonrecourse Debt": Any nonrecourse debt of the
Trust for which any Shareholder bears the economic risk of loss (within the
meaning of Regulations Section 1.752-2), and includes, for example, nonrecourse
debt with respect to which a Shareholder or a Person related thereto (within the
meaning of Regulations Section 1.752-4(b)) is the lender.

                  "Shareholder Nonrecourse Deduction": Any item of Trust loss,
deduction or expense that is attributable to a Shareholder Nonrecourse Debt, and
the amount thereof will be determined in accordance with the rules set forth in
Regulations Section 1.704-2(i)(2).

                  "Trust Minimum Gain": The sum, for all Trust assets that are
subject to any Nonrecourse Liability, of the amounts of taxable income or gain
that would be recognized if each such asset were disposed of in full
satisfaction of all Nonrecourse Liabilities secured by such asset (and for no
other consideration), and the amount thereof will be determined in accordance
with the principles set forth in Regulations Section 1.704-2(d).

                  "Taxable Income" or "Taxable Loss," as the case may be: For
any period, the taxable income or taxable loss of the Trust for such period,
determined in accordance with Code Section 703(a), including all items of
income, gain, loss or deduction required to be stated separately pursuant to
Code Section 703(a)(1).

         2.       Capital Accounts. A separate capital account ("Capital
Account") shall be maintained for each Shareholder.

                  (a)      To each Shareholder's Capital Account there shall be
         added such Shareholder's capital contributions to the Trust, such
         Shareholder's distributive share of Net Income and any items in the
         nature of income or gain which are specially allocated pursuant to
         Section 4, and the amount of any Trust liabilities assumed by such
         Shareholder or which are secured by any Trust property distributed to
         such Shareholder.

                  (b)      From each Shareholder's Capital Account there shall
         be subtracted the amount of cash and the Gross Asset Value of any Trust
         property distributed to

                                    App. A-4
<PAGE>

         such Shareholder, such Shareholder's distributive share of Net Loss and
         any items in the nature of expenses or losses which are specially
         allocated pursuant to Section 4, and the amount of any liabilities of
         such Shareholder assumed by the Trust or which are secured by any
         property contributed by such Shareholder to the Trust.

                  (c)      In the event all or a portion of a Shareholder's
         Shares are Transferred in accordance with the terms of the Declaration
         of Trust, the Transferee shall succeed to the Capital Account of the
         Transferor to the extent it relates to the Transferred Shares.

                  (d)      In determining the amount of any liability for
         purposes of subsections (a) and (b) of this Section 2, there shall be
         taken into account Code Section 752(c) and any other applicable
         provisions of the Code and Regulations.

This Section 2 and the other provisions of this Appendix A relating to the
maintenance of Capital Accounts are intended to comply with Regulations Section
1.704-1(b), and shall be interpreted and applied in a manner consistent with
such Regulations. In the event the Board of Trustees shall determine that it is
prudent to modify the manner in which the Capital Accounts, or any debits or
credits thereto (including, without limitation, debits or credits relating to
liabilities which are secured by contributed or distributed property or which
are assumed by the Trust, or the Shareholders) are computed in order to comply
with such Regulations, the Board of Trustees may make such modification,
provided that it is not likely to have a material effect on the amounts
distributed to any Shareholder pursuant to the Declaration of Trust upon the
liquidation of the Trust. The Board of Trustees also shall (i) make any
adjustments that are necessary or appropriate to maintain equality between the
Capital Accounts of the Shareholders and the amount of Trust capital reflected
on the Trust's balance sheet, as computed for book purposes, in accordance with
Regulations Section 1.704-1(b)(2)(iv)(g), and (ii) make any appropriate
modifications in the event unanticipated events might otherwise cause this
Declaration of Trust not to comply with Regulations Section 1.704-1(b).

         3.       Allocations of Net Income and Net Loss.

                  (a)      Pre-Payout Allocations of Net Income and Net Loss.
         Net Income and Net Loss for any taxable period ending prior to the
         first taxable period in which the Class B Preferred Capital Amount has
         been distributed to the holders of Class B Preferred Shares shall be
         allocated among the Shareholders owning Preferred Shares in proportion
         to the number of Preferred Shares owned by each of them.

                  (b)      Allocations of All Other Net Income and Net Loss. Net
         Income and Net Loss for the first taxable period in which the Class B
         Preferred Capital Amount has been distributed to the holders of Class B
         Preferred Shares, and Net Income and Net Loss for all taxable periods
         thereafter, shall be allocated as follows:

                           (i)      All such Net Income shall be allocated:

                                    App. A-5
<PAGE>

                                    (A)      First, among the Shareholders in
                  proportion to, and until each such Shareholder has been
                  allocated cumulative Net Income pursuant to this Section
                  3(b)(i)(A) in an amount equal to, the excess (if any) of the
                  cumulative amount of Net Loss previously allocated to each
                  such Shareholder pursuant to Section 3(a), over the cumulative
                  amount of Net Income previously allocated to each such
                  Shareholder pursuant to Section 3(a).

                                    (B)      Second, among the Shareholders in
                  proportion to, and until each such Shareholder has been
                  allocated cumulative Net Income pursuant to this Section
                  3(b)(i)(B) in an amount equal to, the cumulative amount of Net
                  Loss previously allocated to each such Shareholder pursuant to
                  Section 3(b)(ii)(D).

                                    (C)      Third, among the Shareholders
                  owning Common Shares in proportion to, and until each such
                  Shareholder has been allocated cumulative Net Income pursuant
                  to this Section 3(b)(i)(C) in an amount equal to, the minimum
                  amount necessary so as to cause the amount of "Cumulative
                  Share Income Allocations" to each such Shareholder to be in
                  proportion to the number of Common Shares owned by each such
                  Shareholder. The amount of "Cumulative Share Income
                  Allocations" to a Shareholder is the cumulative amount of Net
                  Income allocated to such Shareholder pursuant to this Section
                  3(b)(i)(C), plus the amount (if any) by which the cumulative
                  amount of Net Income previously allocated to such Shareholder
                  pursuant to Section 3(a) exceeds the cumulative amount of Net
                  Loss previously allocated to each such Shareholder pursuant to
                  Sections 3(a) and 3(b)(ii)(A).

                                    (D)      Thereafter, among the Shareholders
                  owning Common Shares in proportion to the number of Common
                  Shares owned by each such Shareholder.

                           (ii)     All such Net Loss shall be allocated:

                                    (A)      First, among the Shareholders in
                  proportion to, and until each such Shareholder has been
                  allocated cumulative Net Loss pursuant to this Section
                  3(b)(ii)(A) in an amount equal to, the excess (if any) of the
                  cumulative amount of Net Income previously allocated to each
                  such Shareholder pursuant to Section 3(a), over the cumulative
                  amount of Net Loss previously allocated to each such
                  Shareholder pursuant to Section 3(a).

                                    (B)      Second, among the Shareholders in
                  proportion to, and until each such Shareholder has been
                  allocated cumulative Net Loss pursuant to this Section
                  3(b)(ii)(B) in an amount equal to, the excess (if any) of (x)
                  the cumulative amount of Net Income previously allocated to
                  each such Shareholder pursuant to Section 3(b)(i)(D), over (y)
                  the

                                    App. A-6
<PAGE>

                  cumulative amount of distributions made to such Shareholder
                  pursuant to Section 6.6(b)(ii) of the Declaration of Trust.

                                    (C)      Third, among the Shareholders in
                  proportion to, and until each such Shareholder has been
                  allocated cumulative Net Loss pursuant to this Section
                  3(b)(ii)(C) in an amount equal to, the cumulative amount of
                  Net Income previously allocated to each such Shareholder
                  pursuant to Section 3(b)(i)(C).

                                    (D)      Thereafter, among the Shareholders
                  owning Preferred Shares in proportion to the number of
                  Preferred Shares owned by each such Shareholder.

         4.       Regulatory Allocations.

                  (a)      Trust Minimum Gain. Except as otherwise provided in
         Regulations Section 1.704-2(f), and notwithstanding any other provision
         of this Section 4, if there is a net decrease in Trust Minimum Gain
         during any taxable period of the Trust, each Shareholder shall be
         specially allocated items of Trust income and gain for such taxable
         period (and, if necessary, subsequent taxable periods) in an amount
         equal to such Shareholder's share of the net decrease in Trust Minimum
         Gain, determined in accordance with Regulations Section 1.704-2(g). The
         items to be so allocated shall be determined in accordance with
         Regulations Sections 1.704-2(f)(6) and 1.704-2(j)(2). This Section 4(a)
         is intended to comply with the minimum gain chargeback requirement in
         Regulations Section 1.704-2(f) and shall be interpreted consistently
         therewith.

                  (b)      Shareholder Nonrecourse Debt Minimum Gain. Except as
         otherwise provided in Regulations Section 1.704-2(i)(4), and
         notwithstanding any other provision of this Section 4, if there is a
         net decrease in Shareholder Nonrecourse Debt Minimum Gain attributable
         to a Shareholder Nonrecourse Debt during any Trust taxable period, each
         Shareholder who has a share of the Shareholder Nonrecourse Debt Minimum
         Gain attributable to such Shareholder Nonrecourse Debt, determined in
         accordance with Regulations Section 1.704-2(i)(5), shall be specially
         allocated items of Trust income and gain for such taxable period (and,
         if necessary, subsequent taxable periods) in an amount equal to such
         Shareholder's share of the net decrease in Shareholder Nonrecourse Debt
         Minimum Gain attributable to such Shareholder Nonrecourse Debt,
         determined in accordance with Regulations Section 1.704-2(i)(4). The
         items to be so allocated shall be determined in accordance with
         Regulations Sections 1.704-2(i)(4) and 1.704-2(i)(2). This Section 4(b)
         is intended to comply with the minimum gain chargeback requirement in
         Regulations Section 1.704-2(i)(4) and shall be interpreted consistently
         therewith.

                  (c)      Qualified Income Offset. In the event any Shareholder
         unexpectedly receives any adjustments, allocations, or distributions
         described in Regulations Sections 1.704-1(b)(2)(ii)(d)(4),
         1.704-1(b)(2)(ii)(d)(5), or 1.704-

                                    App. A-7
<PAGE>

         1(b)(2)(ii)(d)(6), items of Trust income and gain shall be specially
         allocated to each such Shareholder in an amount and manner sufficient
         to eliminate, to the extent required by the Regulations, the Adjusted
         Capital Account Deficit of such Shareholder as quickly as possible,
         provided that an allocation pursuant to this Section 4(c) shall be made
         only if and to the extent that such Shareholder would have an Adjusted
         Capital Account Deficit after all other allocations provided for in
         Section 3 and this Section 4 have been tentatively made, as if this
         Section 4(c) were not in this Agreement.

                  (d)      Preventive Allocation. In the event any Shareholder
         has an Adjusted Capital Account Deficit at the end of any Trust taxable
         period, each such Shareholder shall be specially allocated items of
         Trust income and gain in the amount of such excess as quickly as
         possible, provided that an allocation pursuant to this Section 4(d)
         shall be made only if and to the extent that such Shareholder would
         have a deficit Capital Account after all other allocations provided for
         in Section 3 and this Section 4 have been made as if Section 4(c)
         hereof and this Section 4(d) were not in this Agreement.

                  (e)      Overall Limitation on Allocation of Net Loss. The Net
         Loss allocated pursuant to Section 3 shall not exceed the maximum
         amount of Net Loss that can be so allocated without causing any
         Shareholder to have an Adjusted Capital Account Deficit at the end of
         any taxable period. Subject to the limitations in the preceding
         sentence, all Net Loss in excess of the limitations set forth in this
         Section 4(e) shall be allocated to the other Shareholders holding
         Preferred Shares in proportion to the number of Preferred Shares owned
         by each of them.

                  (f)      Allocation of Nonrecourse Deductions and Shareholder
         Nonrecourse Deductions. Nonrecourse Deductions for any taxable period
         shall be allocated among the Shareholders holding Preferred Shares in
         proportion to the number of Preferred Shares owned by each of them. Any
         Shareholder Nonrecourse Deductions for any taxable period shall be
         specially allocated to the Shareholder who bears the economic risk of
         loss with respect to the Shareholder Nonrecourse Debt to which such
         Shareholder Nonrecourse Deductions are attributable, in accordance with
         Regulations Section 1.704-2(i)(1).

                  (g)      Optional Adjustments to Basis under Code Section 754.
         To the extent an adjustment to the adjusted tax basis of any Trust
         asset pursuant to Code Section 734(b) is required, pursuant to
         Regulations Section 1.704-1(b)(2)(iv)(m)(4), to be taken into account
         in determining Capital Accounts as the result of a distribution to a
         Shareholder in complete liquidation of its interest in the Trust, the
         amount of such adjustment to Capital Accounts shall be treated as an
         item of gain (if the adjustment increases the basis of the asset) or
         loss (if the adjustment decreases such basis) and such gain or loss
         shall be specifically allocated to the Shareholder to whom such
         distribution was made.

                                    App. A-8
<PAGE>

                  (h)      Curative Allocations. The allocations set forth in
         Sections 4(a)-(f) (the "Regulatory Allocations") are intended to comply
         with certain requirements of the Regulations under Code Section 704(b)
         and Code Section 514(c)(9)(E). It is the intent of the Shareholders
         that, to the extent possible, all Regulatory Allocations shall be
         offset either with other Regulatory Allocations or with special
         allocations of other items of Trust income, gain, loss, or deduction
         pursuant to this Section 4(h). Therefore, notwithstanding any other
         provision of this Appendix A (other than the Regulatory Allocations),
         the Board of Trustees shall make such offsetting special allocations of
         Trust income, gain, loss, or deduction in whatever manner it determines
         appropriate so that, after such offsetting allocations are made, each
         Shareholder's Capital Account balance is, to the extent possible, equal
         to the Capital Account balance such Shareholder would have had if the
         Regulatory Allocations were not part of the Agreement and all Trust
         items were allocated pursuant to Section 3.

                  (i)      Additional Revisions to Allocations. In the event
         that the distribution provisions of Section 6.6(c) or Section 6.6(d) of
         the Declaration of Trust become applicable, the allocation provisions
         of Section 3 shall be revised by the Board of Trustees in a manner that
         (A) reflects the economic interests of the Shareholders as modified by
         such Section 6.6(c) or such Section 6.6(d), as the case may be, (B)
         complies with Code Section 514(c)(9)(E).

         5.       Tax Allocations: Code Section 704(c).

                  (a)      Income, gain, loss, and deduction with respect to any
         property contributed to the capital of the Trust shall, solely for tax
         purposes, be allocated among the Shareholders so as to take account of
         any variation between the adjusted basis of such property to the Trust
         for federal income tax purposes and its initial Gross Asset Value in
         accordance with any permissible method or methods under Code Section
         704(c) and the Regulations thereunder.

                  (b)      In the event the Gross Asset Value of any Trust asset
         is adjusted pursuant to the definition of "Gross Asset Value",
         subsequent allocations of income, gain, loss and deduction with respect
         to such asset shall take account of any variation between the adjusted
         basis of such asset for federal income tax purposes and its Gross Asset
         Value in the same manner or manners permitted under Code Section 704(c)
         and the Regulations thereunder.

                  (c)      Any elections or other decisions relating to such
         allocations shall be made by the Board of Trustees using any
         permissible manner under the Code or the Regulations that the Board of
         Trustees may elect in their sole discretion. Allocations pursuant to
         this Section 5 are solely for purposes of federal, state, and local
         taxes and shall not affect, or in any way be taken into account in
         computing, any Shareholder's Capital Account or share of Net Income,
         Net Loss, other items, or distributions pursuant to any provision in
         this Agreement.

         6.       Other Tax Matters.

                                    App. A-9
<PAGE>

                  (a)      HILP shall designate a Hines Controlled Entity that
         shall be the "tax matters partner" of the Trust within the meaning of
         Section 6231(a)(7) of the Code. If the Trust is the subject of an
         income tax audit by any federal, state, local or foreign authority,
         then to the extent the Trust is treated as an entity for purposes of
         the audit, including administrative settlement and judicial review,
         such designated Hines Controlled Entity shall be authorized to act for,
         and its decision shall be final and binding upon, the Trust and each
         Shareholder. All expenses incurred in connection with any audit,
         investigation, settlement or review shall be borne by the Trust.

                  (b)      The Board of Trustees shall take such steps as are
         necessary to ensure that the Trust is taxed as a partnership under the
         Code. Subject to the preceding sentence, the Board of Trustees shall
         have the exclusive right to make any determination whether the Trust
         shall make available elections (including any election pursuant to Code
         Section 754 to adjust the tax basis of Trust assets) for federal,
         state, or local tax purposes, and the Board of Trustees shall be
         absolved from all liability and other consequences from its making or
         failing to make any such election. All decisions and other matters
         concerning the computation and allocation or tax items and attributes
         which are not otherwise specifically provided for by the terms of this
         Appendix A shall be determined by the Board of Trustees, and the Board
         of Trustees shall be absolved from all liability and other consequences
         from any such decisions which are made in good faith.

                  (c)      The Board of Trustees shall take all such actions as
         are reasonably necessary for the Trust to comply with any withholding
         or comparable requirements under federal, state, local and foreign law
         and shall remit any amounts withheld to, and file required forms with,
         the applicable taxing jurisdictions. All amounts withheld from
         distributions shall be treated as having been distributed to the
         Shareholder with respect to whom the withholding was made. Any amounts
         that are required to be withheld by the Trust with respect to a
         Shareholder which are in excess or in advance of distributions to such
         Trust shall be paid over by such Shareholder to the Trust. Each
         Shareholder agrees to furnish the Trust with such representations and
         forms as the Board of Trustees shall reasonably request to assist in
         complying with the Trust's withholding obligations. A Shareholder
         subject to withholding shall pay to or reimburse the Trust for taxes,
         related interest and penalties, and all other costs and expenses
         incurred by the Trust in connection with such withholding obligation,
         except for interest, penalties or costs (but not taxes) that are
         incurred as a result of the gross negligence or willful misconduct of
         the Trust or the Board of Trustees.

                                   App. A-10