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                                                                   Exhibit 10.21

                              EMPLOYMENT AGREEMENT
                                     BETWEEN
                                GLENN BLUMENTHAL
                                       AND
                            FIRST STATES GROUP, L.P.

          This Employment Agreement (the "Agreement"), dated as of May 15, 2003
("Effective Date"), between First States Group, L.P., a Delaware limited
partnership (the "Company"), and Glenn Blumenthal (the "Executive"):

          WHEREAS, American Financial Realty Trust, a Maryland real estate
investment trust (the "REIT"), is a limited partner and the sole owner of the
general partner of the REIT;

          WHEREAS, this Agreement amends and restates the Employment Agreement
between the REIT (which was assigned to the Company) and the Executive, dated
September 10, 2002 (the "Original Agreement"); and

          WHEREAS, the Company wishes to continue to employ the Executive in the
capacities and on the terms and conditions set out below, and the Executive has
agreed to continue such employment, in the capacities and on the terms and
conditions set forth below.

          NOW, THEREFORE, the Company and the Executive, in consideration of the
respective covenants set out below, hereby agree as follows:

     1. EMPLOYMENT.

               (a) POSITIONS. The Executive shall be employed by the Company as
Senior Vice President - Asset Management and Chief Operating Officer. The
Executive shall also be an officer of the REIT as its Senior Vice President -
Asset Management and Chief Operating Officer.

               (b) DUTIES. The Executive shall report to the Chief Executive
Officer of the Company (the "Chief Executive Officer") and his principal
employment duties and responsibilities shall be those duties and
responsibilities customary for the position of Senior Vice President and Chief
Operating Officer.

               (c) EXTENT OF SERVICES. Except for illnesses and vacation
periods, the Executive shall devote all of his working time and attention and
his best efforts to the performance of his duties and responsibilities under
this Agreement. Notwithstanding the foregoing, the Executive may (i) make any
passive investment where he is not obligated or required to, and shall not in
fact, devote any managerial efforts, (ii) participate in charitable, academic or
community activities, and in trade or professional organizations, or (iii) hold
directorships in other companies consistent with the Company's conflict of
interest policies and corporate governance guidelines as in effect from time to
time.

               (d) RELOCATION REIMBURSEMENT. In the event the Company changes
the principal place of business at which the Executive performs his duties to a
location that is outside of a 50 mile radius of Jenkintown, Pennsylvania, the
Company shall reimburse the

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Executive for all reasonable relocation expenses, including but not limited to,
temporary housing for the Executive and his family.

     2. TERM. This Agreement shall become effective as of the Effective Date and
shall continue in full force and effect thereafter for a term of three (3) years
and shall be automatically extended for an additional one (1) year at the end of
the three (3) year term and on each one-year anniversary of the extended one (1)
year term thereafter (referred to herein as a "Term Date"), unless either party
terminates this Agreement not later than sixty (60) days prior to a Term Date by
providing written notice to the other party of such party's intent not to renew,
or it is sooner terminated pursuant to Section 7. For purposes of this
Agreement, "Term" shall mean the actual duration of the Executive's employment
hereunder, taking into account any extensions pursuant to this Section 2 or
early termination of employment pursuant to Section 7.

     3. BASE SALARY. The Company shall pay the Executive a base salary annually
(the "Base Salary"), which shall be payable in periodic installments according
to the Company's normal payroll practices. The initial Base Salary shall be
$125,000. The Board of Trustees of the REIT (the "Board") or the Compensation
and Human Resources Committee of the REIT (the "Compensation Committee") shall
review the Base Salary at least once a year to determine whether the Base Salary
should be increased effective January 1 of each year during the Term; provided,
however, that on January 1, 2004, the initial Base Salary shall be increased to
$132,500, and on each January 1 thereafter during the Term, the Base Salary
shall be increased by a minimum positive amount equal to the Base Salary in
effect on January 1 of the prior year multiplied by the increase in the Consumer
Price Index for such year. The amount of the increase shall be determined before
March 31 of each year and shall be retroactive to January 1. The Base Salary,
including any increases, shall not be decreased during the Term. For purposes of
this Agreement, the term "Base Salary" shall mean the amount established and
adjusted from time to time pursuant to this Section 3.

     4. ANNUAL CASH INCENTIVE AWARDS.

          (a) ANNUAL INCENTIVE BONUS. The Executive shall be entitled to receive
an annual cash incentive bonus for each fiscal year during the Term of this
Agreement consistent with a bonus policy adopted by the Compensation Committee
(the "Bonus Policy"). For the period beginning on the Effective Date and ending
on December 31, 2002, if the Executive or the Company, as the case may be,
satisfies the performance criteria contained in such Bonus Policy for the 2002
fiscal year, the Executive shall receive an annual incentive bonus in an amount
equal to two (2) times his Base Salary, with his Base Salary for this purpose
being pro rated and adjusted to reflect the short fiscal year. Beginning January
1, 2003, and for each year thereafter, if Executive or the Company, as the case
may be, satisfies the performance criteria contained in such Bonus Policy for a
fiscal year, he shall receive an annual incentive bonus of up to two (2) times
his Base Salary, as in effect for such fiscal year, as recommended by the Chief
Executive Officer and subject to approval by the Compensation Committee. If
Executive or the Company, as the case may be, fails to satisfy the performance
criteria contained in such Bonus Policy for a fiscal year, he may be eligible to
receive an incentive bonus for such fiscal year, in such amount as is
recommended by the Chief Executive Officer and subject to approval by the
Compensation Committee. Beginning January 1, 2004, the Bonus Policy shall
contain both individual and group goals established by the Compensation
Committee. Notwithstanding the foregoing, in no

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event shall the annual incentive bonus payable to Executive be less than a
guaranteed bonus amount, irrespective of whether the Executive satisfies the
performance criteria contained in the Bonus Policy as in effect for such fiscal
year (the "Guaranteed Bonus"), or exceed two (2) times his Base Salary as in
effect for such fiscal year. The initial Guaranteed Bonus shall be $7,500 per
month. The Board or the Compensation Committee shall review the Guaranteed Bonus
at least once a year to determine whether the Guaranteed Bonus should be
increased effective January 1 of each year during the Term; provided, however,
that on January 1, 2004, the Guaranteed Bonus shall be increased to $7,950 per
month. The Guaranteed Bonus portion of the annual incentive bonus shall be paid
during the fiscal year pursuant to the Company's normal payroll practices. The
balance of the annual incentive bonus (the incremental portion of the annual
incentive bonus in excess of the Guaranteed Bonus amount, if any) shall be paid
to the Executive no later than thirty (30) days after the date the Board
ratifies the annual incentive bonus payable to the Executive for such fiscal
year. For purposes of this Agreement, the term "Incentive Bonus" shall mean the
amount established pursuant to this Section 4(a).

          (b) OUTPERFORMANCE PLAN BONUS. The REIT has established the 2003
Outperformance Plan (the "OPP") as an incentive compensation plan for key
employees with awards determined based on the annual and the three-year total
return to shareholders of the REIT. The Executive shall be eligible to
participate in the OPP in an amount as determined by the Compensation Committee.

     5. STOCK BASED AWARDS.

          (a) 2002 EQUITY INCENTIVE PLAN OPTION GRANTS. The REIT has established
the 2002 Equity Incentive Plan ("Equity Incentive Plan"). Under the Original
Agreement, on the closing of the 144A Offering, the REIT granted the Executive
an initial grant of options (the "Initial Grant Options") to purchase 468,750
common shares of beneficial ownership of the Company, par value $.001 ("Common
Shares"). The Initial Grant Options have an exercise price of $10.00 per share
and a term of ten (10) years and will vest and become exercisable with respect
to 25% of the underlying Common Shares on the one-year anniversary of the date
of grant and 6.25% of the underlying Common Shares on the last day of each
fiscal quarter thereafter until fully vested; provided, however, that the
Executive will be 100% vested in the Initial Grant Options upon (i) a Change in
Control (as defined herein), (ii) a termination by the Company without Cause (as
defined herein), (iii) his death, (iv) his becoming Permanently Disabled (as
defined herein), or (v) the Company's failure to renew this Agreement. Executive
will forfeit all vested and unvested Initial Grant Options if he is terminated
at any time for Cause, and will forfeit all unvested Initial Grant Options if he
voluntarily terminates his employment with the Company for any reason. The
Executive shall be eligible to receive future option grants as recommended by
the Chief Executive Officer, subject to review and approval by the Compensation
Committee.

          (b) 2002 EQUITY INCENTIVE PLAN RESTRICTED SHARE AWARDS. The Equity
Incentive Plan provides for the issuance of Common Shares as restricted Common
Shares ("Restricted Share Grants") to the extent that such Common Shares are
available thereunder. The Executive shall be eligible to receive Restricted
Share Grants as recommended by the Chief Executive Officer, subject to
Compensation Committee review and approval. Awards of Restricted Share Grants
shall be on the following terms: vesting at the rate of 33.33% of the

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underlying Common Shares on the one-year anniversary of the effective date of
the grant of Common Shares as Restricted Share Grants and 8.33% of the
underlying Common Shares on the last day of each fiscal quarter thereafter until
fully vested; provided, however, that the Executive will be 100% vested and all
restrictions will lapse upon (i) a Change in Control (as defined herein), (ii) a
termination by the Company without Cause (as defined herein), (iii) his death,
(iv) his becoming Permanently Disabled (as defined herein), or (v) the Company's
failure to renew this Agreement. Executive will forfeit all vested and unvested
Restricted Share Grants if he is terminated for Cause and will forfeit all
unvested Restricted Share Grants if he voluntarily terminates his employment
with the Company for any reason. The Common Shares issued as Restricted Share
Grants will have voting and dividend rights.

     6. BENEFITS.

          (a) VACATION. The Executive shall be entitled to four (4) weeks paid
     vacation per full calendar year. The Executive shall be entitled to cash in
     lieu of any unused vacation time.

          (b) SICK AND PERSONAL DAYS. The Executive shall be entitled to sick
     and personal days pursuant to Company policy.

          (c) EMPLOYEE BENEFITS.

               (i)   PARTICIPATION IN EMPLOYEE BENEFIT PLANS. The Executive and
his spouse and eligible dependents, if any, and their respective designated
beneficiaries where applicable, will be eligible for and entitled to participate
in any Company sponsored employee benefit plans, including but not limited to
benefits such as group health, dental, accident, disability insurance, group
life insurance, and a 401(k) plan, as such benefits may be offered from time to
time, on a basis no less favorable than that applicable to other executives of
the Company.

               (ii)  DISABILITY INSURANCE. The Company shall maintain, at its
cost, supplemental renewable long-term disability insurance as agreed to by the
Company and the Executive.

          (d) OTHER BENEFITS.

               (i)   ANNUAL PHYSICAL. The Company shall provide, at its cost, a
medical examination for the Executive on an annual basis by a licensed physician
in the Philadelphia, Pennsylvania area selected by the Executive.

               (ii)  CAR ALLOWANCE. The Company shall pay Executive a monthly
car allowance as determined by the Chief Executive Officer provided such
allowance is consistent with amounts paid to other similarly situated executives
of the Company and is not less than $750.00 per month.

               (iii) DIRECTORS AND OFFICERS INSURANCE. During the Term and the
Severance Period, the Executive shall be entitled to directors and officers
insurance

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coverage for his acts and omissions while an officer and director of the Company
and the REIT on a basis no less favorable to him than the coverage provided to
current officers and directors.

               (iv) EXPENSES, OFFICE AND SECRETARIAL SUPPORT. The Executive
shall be entitled to reimbursement of all reasonable expenses, in accordance
with the Company's policy as in effect from time to time and on a basis no less
favorable than that applicable to other executives of the Company, including,
without limitation, telephone, reasonable travel and reasonable entertainment
expenses incurred by the Executive in connection with the business of the
Company, promptly upon the presentation by the Executive of appropriate
documentation. The Executive shall also be entitled to appropriate office space,
administrative support, and such other facilities and services as are suitable
to the Executive's positions and adequate for the performance of the Executive's
duties.

     7. TERMINATION. The employment of the Executive by the Company pursuant to
this Agreement shall terminate upon the occurrence of any of the following:

          (a) DEATH OR PERMANENT DISABILITY. Immediately upon Death or Permanent
Disability of the Executive. As used in this Agreement, "Permanent Disability"
shall mean an inability due to a physical or mental impairment to perform the
material services contemplated under this Agreement for a period of six (6)
months, whether or not consecutive, during any 365-day period. A determination
of Permanent Disability shall be made by a physician satisfactory to both the
Executive and the Company, provided that if the Executive and the Company do not
agree on a physician, the Executive and the Company shall each select a
physician and these two together shall select a third physician, whose
determination as to Permanent Disability shall be binding on all parties. The
appointment of one or more individuals to carry out the offices or duties of the
Executive during a period of the Executive's inability to perform such duties
and pending a determination of Permanent Disability shall not be considered a
breach of this Agreement by the Company.

          (b) FOR CAUSE. At the election of the Company and subject to the
provisions of this Section 7(b), immediately upon written notice by the Company
to the Executive of his termination for Cause. For purposes of this Agreement,
"Cause" for termination shall be deemed to exist solely in the event of (i) the
conviction of the Executive of, or the entry of a plea of guilty or nolo
contendere by the Executive to, a felony (exclusive of any felony relating to
negligent operation of a motor vehicle and not including a conviction, plea of
guilty or nolo contendere arising solely under a statutory provision imposing
criminal liability upon the Executive on a per se basis due to the Company
offices held by the Executive, so long as any act or omission of the Executive
with respect to such matter was not taken or omitted in contravention of any
applicable policy or directive of the Board or the Chief Executive Officer),
(ii) a willful breach of his duty of loyalty which is materially detrimental to
the Company, (iii) a willful failure to perform or adhere to explicitly stated
duties that are consistent with the terms of this Agreement, or the Company's
reasonable and customary guidelines of employment or reasonable and customary
corporate governance guidelines or policies, including without limitation any
business code of ethics adopted by the Board, or to follow the lawful directives
of the Board (provided such directives are consistent with the terms of this
Agreement) which, in any such case, continues for thirty (30) days after written
notice from the Chief Executive Officer to the Executive, or (iv) gross
negligence or willful misconduct in the performance of the

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Executive's duties. For purposes of this Section 7(b), no act, or failure to
act, on the Executive's part will be deemed "gross negligence" or "willful
misconduct" unless done, or omitted to be done, by the Executive not in good
faith and without a reasonable belief that the Executive's act, or failure to
act, was in the best interest of the Company. The parties agree that in order to
terminate the Executive pursuant to Subsections (ii) and (iv) hereof, the
Company shall first be required to prove to the reasonable satisfaction of the
Executive that he engaged in improper conduct under these Subsections, and if
the Executive shall not agree with the Company's assessment of his conduct, then
the Executive shall not be terminated until an arbitrator, as provided for in
Section 13(b), has determined that the Executive's conduct constituted improper
conduct under the applicable Subsection.

          (c) WITHOUT CAUSE; VOLUNTARY RESIGNATION. At the election of the
Company without Cause, and at the election of the Executive for any reason, in
either case upon thirty (30) days prior written notice to the Executive or the
Company, as the case may be.

     8. EFFECTS OF TERMINATION.

          (a) TERMINATION ON PERMANENT DISABILITY OR BY THE COMPANY WITHOUT
CAUSE. If the employment of the Executive should terminate by reason of his
becoming Permanently Disabled or a termination by the Company for any reason
other than Cause, then the Company shall pay all compensation and benefits for
the Executive as follows:

               (i)   any Base Salary, Incentive Bonus, expense reimbursements
and all other compensation related payments that are payable as of his
termination of employment date that are related to his period of employment
preceding his termination date, and

               (ii)  any Incentive Bonus that has been allocated, awarded or
otherwise determined but unpaid as of the effective date of his termination, and

               (iii) the amount equal to his (A) Base Salary, plus (B) his
Guaranteed Bonus, at the rates in effect on the effective date of his
termination of employment, that would have been paid or payable for the duration
of the Term of this Agreement, or if greater, for 12 months (the "Severance
Period").

          The sum of the amount payable under subsections (ii) and (iii) hereof
is referred to herein as his "Severance Payment".

               (iv)  The Severance Payment shall be made in a single, lump sum
cash payment no later than thirty (30) days after the effective date of the
Executive's termination of employment. With respect to any Severance Payment
attributable to a period after the expiration of the Noncompete Period (as
defined herein), such payment shall be reduced for compensation earned from
other employment or self-employment after that date, and the Executive shall
refund to the Company any amount due as a result of such reduction.

               (v)   The Company shall allow the Executive to continue to
participate during the Severance Period in any and all of the employee benefit
and welfare plans and programs of the Company, excluding the 401(k) plan, in
which the Executive was entitled to

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participate immediately prior to his termination, to the same extent and upon
the same terms as the Executive participated in such plans prior to his
termination, provided that the Executive's continued participation is
permissible or otherwise practicable under the general terms and provisions of
such benefit plans and programs. During the Severance Period, the Company shall
pay for the Executive's continued participation in said employee benefit and
welfare plans, including but not limited to premiums for group health, dental,
accident, disability insurance, directors and officers insurance, group life
insurance, and his car allowance, but excluding the 401(k) plan. To the extent
that continued participation is neither permissible nor practicable, the Company
shall take such actions as may be necessary to provide the Executive with
substantially comparable benefits (without additional cost to the Executive)
outside the scope of such plans, including, without limitation, reimbursing the
Executive for his costs in obtaining such coverage, such as COBRA premiums paid
by the Executive and/or his eligible dependents. If the Executive engages in
regular employment after his termination of employment (whether as an executive
or as a self-employed person), any employee benefit and welfare benefits
received by the Executive in consideration of such employment which are similar
in nature to the employee benefit and welfare benefits provided by the Company
will relieve the Company of its obligation under this Section 8(a) to provide
comparable benefits to the extent of the benefits so received.

               (vi)   The Executive's stock options awarded under the Equity
Incentive Plan (or any other or successor plan) shall immediately become 100%
vested and he shall have the period specified in the option grant in which to
exercise his vested stock options, including those stock options that vested
upon his Termination of Employment.

               (vii)  The Executive's restricted Common Shares awarded under the
Equity Incentive Plan (or any other or successor plan) shall immediately become
100% vested and all restrictions shall lapse.

               (viii) The Executive would be entitled to receive a percentage of
his OPP allocation equal to (x) the number of complete months the Executive had
participated in the OPP through the effective date of his termination of
employment, divided by (y) 36 (representing the total number of months in the
OPP term), in lieu of his scheduled vesting under the OPP. This OPP allocation
would be paid to the Executive after the OPP reward is determined at the end of
the OPP plan term.

               (ix)   All Severance Payments are contingent on Executive signing
a release of claims, substantially in the form attached hereto as Exhibit A.

          (b) TERMINATION ON DEATH. Upon a termination of employment due to the
Executive's death, the Executive shall become 100% vested in his stock options
and restricted Common Shares awarded under the Equity Incentive Plan. The
Executive's personal representative shall have the period specified in the
option grant in which to exercise his vested stock options, including those
stock options that vested on death. The Company shall pay to the Executive's
personal representative any Base Salary, Incentive Bonus, expense reimbursements
and all other compensation related payments that are payable as of his date of
death and that are related to his period of employment preceding his date of
death.

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          (c) BY THE COMPANY FOR CAUSE OR VOLUNTARILY BY THE EXECUTIVE. In the
event that the Executive's employment is terminated by the Company for Cause or
voluntarily by the Executive, the Company shall pay the Executive his Base
Salary, Incentive Bonus, expense reimbursements and all other compensation
related payments that are payable as of his termination of employment date and
that are related to his period of employment preceding his termination date.
Executive shall forfeit all vested and unvested options and restricted Common
Shares if he is terminated by the Company for Cause, and he shall forfeit only
his unvested options and restricted Common Shares if he voluntarily terminates
his employment with the Company.

          (d) TERMINATION OF AUTHORITY. Immediately upon the Executive
terminating or being terminated from his employment with the Company for any
reason, notwithstanding anything else appearing in this Agreement or otherwise,
the Executive will stop serving the functions of his terminated or expired
position(s) and shall be without any of the authority or responsibility for such
position(s). On request of the Board at any time following his termination of
employment for any reason, the Executive shall resign from the Board if then a
member.

     9. CHANGE OF CONTROL.

          (a) CHANGE OF CONTROL. For purposes of this Agreement, a "Change of
Control" will be deemed to have taken place upon the occurrence of any of the
following events:

               (i)   any person, entity or affiliated group, excluding the
Company or any employee benefit plan of the Company, acquiring more than 50% of
the then outstanding voting shares of the REIT,

               (ii)  the consummation of any merger or consolidation of the REIT
into another company, such that the holders of the voting shares of the REIT
immediately prior to such merger or consolidation is less than 50% of the voting
power of the securities of the surviving company or the parent of such surviving
company,

               (iii) the complete liquidation of the REIT or the sale or
disposition of all or substantially all of the REIT's assets, such that after
the transaction, the holders of the voting shares of the REIT immediately prior
to the transaction is less than 50% of the voting securities of the acquiror or
the parent of the acquiror, or

               (iv)  a majority of the Board votes in favor of a decision that a
Change of Control has occurred.

          (b) CERTAIN BENEFITS UPON A CHANGE OF CONTROL. In the event of a
Change of Control, the Executive shall become 100% vested in the stock options
and restricted Common Shares awarded under the Equity Incentive Plan (or any
other or successor plan).

          (c) EXCISE TAX.

               (i)   In the event that any payment or benefit received or to be
received by the Executive in connection with a change in control or a
termination of the Executive's

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employment (whether pursuant to the terms of this Agreement or any other plan,
arrangement or agreement with the Company, any person whose actions result in a
change in control or any person affiliated with the Company or such person) (all
such payments and benefits being hereinafter called "Total Payments"), such that
the Executive will be subject (in whole or in part) to the excise tax imposed
under Code Section 4999 ("Excise Tax") on such payments and benefits, then the
Company shall pay to the Executive an additional amount (the "Gross-Up Payment")
such that the net amount retained by the Executive, after deduction of the
Excise Tax and any federal, state and local income tax on the Gross-Up Payment,
will be equal to the total amount of payments required to be paid pursuant to
this Agreement. For purposes of determining the amount of the Gross-Up Payment,
the Executive shall be deemed to pay federal income taxes at the highest
marginal rate of federal income taxation in the calendar year in which the
Gross-Up Payment is to be made and state and local income taxes at the highest
marginal rate of taxation in the state and locality of the Executive's residence
on such date, net of the maximum deduction in federal income taxes which could
be obtained from deduction of such state and local taxes.

               (ii)  The Executive or the Company may request, prior to the time
any payments under this Agreement are made, a determination of whether any or
all of the Total Payments will be subject to the Excise Tax and, if so, the
amount of such Excise Tax and the federal, state and local income tax imposed on
the Gross-Up Payment. If such a determination is requested, it shall be made
promptly, at the Company's expense, by tax counsel selected by the Executive and
approved by the Company (with such approval not being unreasonably withheld),
and such determination shall be conclusive and binding on both parties. The
Company agrees to provide any information reasonably requested by such tax
counsel. Tax counsel may engage accountants or other experts, at the Company's
expense, to the extent deemed necessary or advisable for them to reach a
determination. For these purposes, the term "tax counsel" shall mean a law firm
with expertise in federal income tax matters.

               (iii) In the event that the Excise Tax is subsequently determined
to be less than the amount taken into account hereunder, the Executive will
repay to the Company, at the time that the amount of such reduction in Excise
Tax is finally determined, the portion of the Gross-Up Payment attributable to
such reduction plus that portion of the Gross-Up Payment attributable to the
Excise Tax and federal, state and local income tax imposed on the Gross-Up
Payment, without any interest thereon. In the event that the Excise Tax is
determined to exceed the amount taken into account hereunder, the Company will
make an additional Gross-Up Payment in respect of such excess and in respect of
any portion of the Excise Tax with respect to which the Company had not
previously made a Gross-Up Payment (plus any interest, penalties or additions
payable by the Executive with respect to such excess and such portion) at the
time that the amount of such excess is finally determined, without any interest
thereon.

               (iv)  Each party agrees to notify the other party, in writing, of
any claim that, if successful, would require the payment by the Company of a
Gross-Up Payment or might entitle the Company to a refund of all or part of any
previous Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten (10) business days after the Executive or
Company is informed in writing of such claim or otherwise becomes aware of such
claim. If notice of the claim arose as a result of a claim made against the
Executive by a taxing authority, Executive shall not pay such claim prior to the
expiration of the thirty (30) day period

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following the date on which he gives notice to the Company. If the Company
notifies the Executive in writing prior to the expiration of such period that it
desires to contest such claim, the Executive shall: (A) give the Company any
information reasonably requested by the Company relating to such claim, (B) take
such action in connection with contesting such claim as the Company shall
reasonably request in writing from time to time, including, without limitation,
accepting legal representation with respect to such claim by an attorney
selected by the Executive and approved by the Company (with such approval not
being unreasonably withheld), (C) cooperate with the Company in good faith in
order to effectively contest such claim, and (D) permit the Company to
reasonably participate in any proceedings relating to such claim. The Company
shall bear and pay directly all costs and expenses (including legal fees and
additional interest and penalties) incurred in connection with such contest and
shall indemnify and hold the Executive harmless, on an after-tax basis, for any
Excise Tax (including interest and penalties with respect thereto) imposed as a
result of such representation and payment of costs and expenses.

               (v)  Notwithstanding the foregoing, the Company shall control all
audits and proceedings taken in connection with any claim, audit or proceeding
involving Excise Taxes or Gross-Up Payments and, at its sole option, may pursue
or forego any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of any such claim, audit or
proceeding and may, at its sole option, either direct the Executive to pay the
tax claimed and sue for a refund or contest the tax in any permissible manner,
and the Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided, however, that if the
Company directs the Executive to pay such tax and sue for a refund, the Company
shall advance the amount of such payment to the Executive, on an interest-free
basis (including interest or penalties with respect thereto) and shall indemnify
and hold the Executive harmless, on an after-tax basis, for any Excise Tax or
income tax (including interest or penalties with respect thereto) imposed with
respect to such advance or with respect to any imputed income with respect to
such advance. The Company shall be required to consult with and keep the
Executive fully apprised of developments and actions being considered or taken
with respect to such claim, audit or proceeding. The Company's control of the
contest shall be limited to issues with respect to which such a Gross-Up Payment
would be payable or refundable hereunder and the Executive shall be entitled to
settle or contest, as the case may be, any other issue. Each party agrees to
keep the other party fully apprised of developments concerning such claim, audit
or proceeding and to cooperate with the other in good faith in order to
effectively resolve such claim, audit or proceeding.

               (vi) For purposes of this Subsection (c), a determination of
whether a payment is subject to Excise Taxes, including but not limited to, a
determination of change in control, shall be made pursuant to Code Section 280G.

     10. CONFIDENTIAL INFORMATION. The Executive recognizes and acknowledges
that certain assets of the Company constitute Confidential Information. The term
"Confidential Information" as used in this Agreement shall mean all information
which is known only to the Executive or the Company, other employees of the
Company, or others in a confidential relationship with the Company, and relating
to the Company's business including, without limitation, information regarding
clients, customers, pricing policies, methods of operation,

                                      -10-

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proprietary Company programs, sales products, profits, costs, markets, key
personnel, formulae, product applications, technical processes, and trade
secrets, as such information may exist from time to time, which the Executive
acquired or obtained by virtue of work performed for the Company, or which the
Executive may acquire or may have acquired knowledge of during the performance
of said work. The Executive shall not, during or after the Term, disclose all or
any part of the Confidential Information to any person, firm, corporation,
association, or any other entity for any reason or purpose whatsoever, directly
or indirectly, except as may be required pursuant to his employment hereunder,
unless and until such Confidential Information becomes publicly available other
than as a consequence of the breach by the Executive of his confidentiality
obligations hereunder. In the event of the termination of his employment,
whether voluntary or involuntary and whether by the Company or the Executive,
the Executive shall deliver to the Company all documents and data pertaining to
the Confidential Information and shall not take with him any documents or data
of any kind or any reproductions (in whole or in part) or extracts of any items
relating to the Confidential Information. The Company acknowledges that prior to
his employment with the Company, the Executive has lawfully acquired extensive
knowledge of the industries and businesses in which the Company engages in
business, and that the provisions of this Section 10 are not intended to
restrict the Executive's use of such previously acquired knowledge.

          In the event that the Executive receives a request or is required (by
deposition, interrogatory, request for documents, subpoena, civil investigative
demand or similar process) to disclose all or any part of the Confidential
Information, the Executive agrees to (a) promptly notify the Company in writing
of the existence, terms and circumstances surrounding such request or
requirement, (b) consult with the Company on the advisability of taking legally
available steps to resist or narrow such request or requirement, and (c) assist
the Company in seeking a protective order or other appropriate remedy. In the
event that such protective order or other remedy is not obtained or that the
Company waives compliance with the provisions hereof, the Executive shall not be
liable for such disclosure unless disclosure to any such tribunal was caused by
or resulted from a previous disclosure by the Executive not permitted by this
Agreement.

     11. NON-COMPETITION AND NONSOLICITATION. During the Term and for a period
of 24 calendar months after the termination of the Executive's employment (the
"Noncompete Period"), the Executive shall not, directly or indirectly, either as
a principal, agent, employee, employer, stockholder, partner or in any other
capacity whatsoever: (a) engage or assist others engaged, in whole or in part,
in any business which is engaged in a business or enterprise that is
substantially similar to the business of the Company that the Company was
engaged in during the period of the Executive's employment with the Company, or
(b) without the prior consent of the Board, employ or solicit the employment of,
or assist others in employing or soliciting the employment of, any individual
employed by the Company at any time while the Executive was also so employed.
Notwithstanding anything else herein to the contrary, the provisions of this
Section 11 shall not apply in the event the Executive's employment is terminated
for any reason other than a termination by the Company for Cause.

          Nothing in this Section 11 shall prohibit Executive from making any
passive investment in a public company, or where he is the owner of five percent
(5%) or less of the

                                      -11-

<PAGE>

issued and outstanding voting securities of any entity, provided such ownership
does not result in his being obligated or required to devote any managerial
efforts.

          The Executive agrees that the restraints imposed upon him pursuant to
this Section 11 are necessary for the reasonable and proper protection of the
Company and its subsidiaries and affiliates, and that each and every one of the
restraints is reasonable in respect to subject matter, length of time and
geographic area. The parties further agree that, in the event that any provision
of this Section 11 shall be determined by any court of competent jurisdiction to
be unenforceable by reason of its being extended over too great a time, too
large a geographic area or too great a range of activities, such provision shall
be deemed to be modified to permit its enforcement to the maximum extent
permitted by law.

     12. INTELLECTUAL PROPERTY. During the Term, the Executive shall promptly
disclose to the Company or any successor or assign, and grant to the Company and
its successors and assigns without any separate remuneration or compensation
other than that received by him in the course of his employment, his entire
right, title and interest in and to any and all inventions, developments,
discoveries, models, or any other intellectual property of any type or nature
whatsoever ("Intellectual Property"), whether developed by him during or after
business hours, or alone or in connection with others, that is in any way
related to the business of the Company, its successors or assigns. This
provision shall not apply to books or articles authored by the Executive during
non-work hours, consistent with his obligations under this Agreement, so long as
such books or articles (a) are not funded in whole or in part by the Company,
and (b) do not contain any Confidential Information or Intellectual Property of
the Company. The Executive agrees, at the Company's expense, to take all steps
necessary or proper to vest title to all such Intellectual Property in the
Company, and cooperate fully and assist the Company in any litigation or other
proceedings involving any such Intellectual Property.

     13. DISPUTES.

          (a) EQUITABLE RELIEF. The Executive acknowledges and agrees that upon
any breach by the Executive of his obligations under Sections 10, 11, or 12
hereof, the Company will have no adequate remedy at law, and accordingly will be
entitled to specific performance and other appropriate injunctive and equitable
relief.

          (b) ARBITRATION. Excluding only requests for equitable relief by the
Company under Section 13(a), in the event that there is any claim or dispute
arising out of or relating to this Agreement or the breach hereof, and the
parties hereto shall not have resolved such claim or dispute within 60 days
after written notice from one party to the other setting forth the nature of
such claim or dispute, then such claim or dispute shall be settled exclusively
by binding arbitration in Montgomery county, Pennsylvania, in accordance with
the Employment Dispute Resolution Rules of the American Arbitration Association
("Rules"), by an arbitrator mutually agreed upon by the parties hereto or, in
the absence of such agreement, by an arbitrator selected according to such
Rules. Notwithstanding the foregoing, if either the Company or the Executive
shall request, such arbitration shall be conducted by a panel of three (3)
arbitrators, one selected by the Company, one selected by the Executive and the
third selected by agreement of the first two arbitrators, or, in the absence of
such agreement, in accordance with such Rules. Judgment upon the award rendered
by such arbitrator(s) shall be entered in any Court having

                                      -12-

<PAGE>

jurisdiction thereof upon the application of either party. The parties agree to
use their reasonable best efforts to have such arbitration completed as soon as
is reasonably practicable. Notwithstanding anything herein to the contrary, the
losing party shall pay the reasonable costs and expenses (including reasonable
attorney fees and expenses) of the prevailing party with respect to such
arbitration, except the Executive, if he is the losing party, shall not be
required to pay such expenses and costs if the claim relates to statutory
discrimination claims that he would not otherwise be required to pay if such
claim had been brought in a court of competent jurisdiction.

          (c) LEGAL FEES. The Company shall pay or promptly reimburse the
Executive for the reasonable legal fees and expenses incurred by the Executive
in successfully enforcing or defending any right of the Executive pursuant to
this Agreement.

     14. INDEMNIFICATION. The Company shall indemnify the Executive, to the
maximum extent permitted by applicable law, against all costs, charges and
expenses incurred or sustained by the Executive, including the cost of legal
counsel selected and retained by the Executive in connection with any action,
suit or proceeding to which the Executive may be made a party by reason of the
Executive being or having been an officer, director, or employee of the Company.

     15. COOPERATION IN FUTURE MATTERS. The Executive hereby agrees that for a
period of 18 months following his termination of employment he shall cooperate
with the Company's reasonable requests relating to matters that pertain to the
Executive's employment by the Company, including, without limitation, providing
information or limited consultation as to such matters, participating in legal
proceedings, investigations or audits on behalf of the Company, or otherwise
making himself reasonably available to the Company for other related purposes.
Any such cooperation shall be performed at scheduled times taking into
consideration the Executive's other commitments, and the Executive shall be
compensated at a reasonable hourly or per diem rate to be agreed upon by the
parties to the extent such cooperation is required on more than an occasional
and limited basis. The Executive shall not be required to perform such
cooperation to the extent it conflicts with any requirements of exclusivity of
services for another employer or otherwise, nor in any manner that in the good
faith belief of the Executive would conflict with his rights under or ability to
enforce this Agreement.

     16. GENERAL.

          (a) NOTICES. All notices and other communications hereunder shall be
in writing or by written telecommunication, and shall be deemed to have been
duly given if delivered personally or if sent by overnight courier or by
certified mail, return receipt requested, postage prepaid or sent by written
telecommunication or telecopy, to the relevant address set forth below, or to
such other address as the recipient of such notice or communication shall have
specified in writing to the other party hereto, in accordance with this Section
16(a).

     If to the Company, to:         First States Group, L.P.
                                    c/o American Financial Realty Trust
                                    1725 The Fairway
                                    Jenkintown, PA 19046

                                      -13-

<PAGE>

                                    Attn: Nicholas S. Schorsch, President and
                                          Chief Executive Officer
                                    Facsimile:  215-887-2585

     If to Executive, at his last residence shown on the records of the Company.

Any such notice shall be effective (i) if delivered personally, when received,
(ii) if sent by overnight courier, when receipted for, (iii) if mailed, five (5)
days after being mailed, and (iv) on confirmed receipt if sent by written
telecommunication or telecopy, provided a copy of such communication is sent by
regular mail, as described above.

          (b) SEVERABILITY. If any provision of this Agreement is or becomes
invalid, illegal or unenforceable in any respect under any law, the validity,
legality and enforceability of the remaining provisions hereof shall not in any
way be affected or impaired.

          (c) WAIVERS. No delay or omission by either party hereto in exercising
any right, power or privilege hereunder shall impair such right, power or
privilege, nor shall any single or partial exercise of any such right, power or
privilege preclude any further exercise thereof or the exercise of any other
right, power or privilege.

          (d) COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. In making proof of this
Agreement, it shall not be necessary to produce or account for more than one
such counterpart.

          (e) ASSIGNS. This Agreement shall be binding upon and inure to the
benefit of the Company's successors and the Executive's personal or legal
representatives, executors, administrators, heirs, distributees, devisees and
legatees. This Agreement shall not be assignable by the Executive, it being
understood and agreed that this is a contract for the Executive's personal
services. Otherwise, this Agreement shall not be assignable by the Company
except that the Company may assign it in connection with a transaction involving
the succession by a third party to all or substantially all of the Company's
business and/or assets (whether direct or indirect and whether by purchase,
merger, consolidation, liquidation or otherwise). When assigned to a successor,
the assignee shall assume this Agreement and expressly agree to perform this
Agreement in the same manner and to the same extent as the Company would be
required to perform it in the absence of such an assignment. For all purposes
under this Agreement, the term "Company" shall include any successor to the
Company's business and/or assets that executes and delivers the assumption
agreement described in the immediately preceding sentence or that becomes bound
by this Agreement by operation of law.

          (f) ENTIRE AGREEMENT. This Agreement contains the entire understanding
of the parties, supersedes all prior agreements and understandings, including
the Original Agreement, whether written or oral, relating to the subject matter
hereof and may not be amended except by a written instrument hereafter signed by
the Executive and the Chief Executive Officer or a duly authorized
representative of the Board (other than the Executive).

                                      -14-

<PAGE>

          (g) GOVERNING LAW. This Agreement and the performance hereof shall be
construed and governed in accordance with the laws of the Commonwealth of
Pennsylvania, without giving effect to principles of conflicts of law.

          (h) CONSTRUCTION. The language used in this Agreement shall be deemed
to be the language chosen by the parties to express their mutual intent, and no
rule of strict construction shall be applied against any party. The headings of
sections of this Agreement are for convenience of reference only and shall not
affect its meaning or construction. Whenever any word is used herein in one
gender, it shall be construed to include the other gender, and any word used in
the singular shall be construed to include the plural in any case in which it
would apply and vice versa.

          (i) PAYMENTS AND EXERCISE OF RIGHTS AFTER DEATH. Any amounts payable
hereunder after the Executive's death shall be paid to the Executive's
designated beneficiary or beneficiaries, whether received as a designated
beneficiary or by will or the laws of descent and distribution. The Executive
may designate a beneficiary or beneficiaries for all purposes of this Agreement,
and may change at any time such designation, by notice to the Company making
specific reference to this Agreement. If no designated beneficiary survives the
Executive or the Executive fails to designate a beneficiary for purposes of this
Agreement prior to his death, all amounts thereafter due hereunder shall be
paid, as and when payable, to his spouse, if she survives the Executive, and
otherwise to his estate.

          (j) CONSULTATION WITH COUNSEL. The Executive acknowledges that he has
had a full and complete opportunity to consult with counsel or other advisers of
his own choosing concerning the terms, enforceability and implications of this
Agreement, and that the Company has not made any representations or warranties
to the Executive concerning the terms, enforceability and implications of this
Agreement other than as are reflected in this Agreement.

          (k) WITHHOLDING. Any payments provided for in this Agreement shall be
paid net of any applicable income tax withholding required under federal, state
or local law.

          (l) CONSUMER PRICE INDEX. For purposes of this Agreement, the term
"CPI" refers to the Consumer Price Index as published by the Bureau of Labor
Statistics of the United States Department of Labor, U.S. City Average, All
Items for Urban Wage Earners and Clerical Workers (1982-1984=100). If the CPI is
hereafter converted to a different standard reference base or otherwise revised,
the determination of the CPI adjustment shall be made with the use of such
conversion factor, formula or table for converting the CPI, as may be published
by the Bureau of Labor Statistics, or, if the bureau shall no longer publish the
same, then with the use of such conversion factor, formula or table as may be
published by an agency of the United States, or failing such publication, by a
nationally recognized publisher of similar statistical information.

          (m) SURVIVAL. The provisions of Sections 10, 11, 12, 13, 14 and 15
shall survive the termination of this Agreement.

                                      -15-

<PAGE>

      IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties
hereto have caused this Agreement to be duly executed as of the date first
above written.

FIRST STATES GROUP, L.P.                    GLENN BLUMENTHAL
By:   First States Group, LLC
      Its general partner

     By: ___________________________        ______________________________
         Name:
         Title:

Dated: May __, 2003                         Dated: May __, 2003


GUARANTEE:

The obligations of First States Group, L.P. under this Employment Agreement,
dated May 15, 2003, with Glenn Blumenthal, shall be guaranteed by American
Financial Realty Trust.

AMERICAN FINANCIAL REALTY TRUST


By:      ___________________________
         Name:
         Title:

Dated: May __, 2003

                                      -16-

<PAGE>

                                    EXHIBIT A

                               RELEASE AND WAIVER

          This release and waiver (the "Termination Release") is made as of the
___ day of __________, 200__by ______________________ (the "Executive").

          WHEREAS, the Executive and First States Group, L.P. (the "Company")
have entered into an Employment Agreement (the "Agreement") dated as of May 15,
2003 that provides for certain compensation and severance amounts upon his
termination of employment; and

          WHEREAS, the Executive has agreed, pursuant to the terms of the
Agreement, to execute a release and waiver in the form set forth in this Release
and Waiver ("Termination Release") in consideration of the Company's agreement
to provide the compensation and severance amounts upon his termination of
employment set out in the Agreement; and

          WHEREAS, the Executive has incurred a termination of employment
effective as of _________, 20__; and

          WHEREAS, the Company and the Executive desire to settle all rights,
duties and obligations between them, including without limitation all such
rights, duties, and obligations arising under the Agreement or otherwise out of
the Executive's employment by the Company.

          NOW THEREFORE, intending to be legally bound and for good and valid
consideration the sufficiency of which is hereby acknowledged, the Executive
agrees as follows:

          1. RELEASE. In consideration for the payments to be made pursuant to
the Agreement:

          (a)  Executive knowingly and voluntarily releases, acquits and forever
discharges the Company, and its respective owners, parents, stockholders,
predecessors, successors, assigns, agents, directors, officers, employees,
representatives, divisions and subsidiaries (collectively, the "Releasees") from
any and all charges, complaints, claims, liabilities, obligations, promises,
agreements, damages, causes of action, suits, rights, costs, losses, debts and
expenses of any nature whatsoever, known or unknown, suspected or unsuspected,
foreseen or unforeseen, matured or unmatured, against them which the Executive
or any of his heirs, executors, administrators, successors and assigns
("Executive Persons") ever had, now has or at any time hereafter may have, own
or hold by reason of any matter, fact, or cause whatsoever from the beginning of
time up to and including the date of this Termination Release, including without
limitation all claims for salary, bonuses, severance pay, vacation pay or any
benefits arising under the Employee Retirement Income Security Act of 1974, as
amended; any claims of sexual harassment, or discrimination based upon race,
color, national origin, ancestry, religion, marital status, sexual orientation,
citizenship status, medical condition or disability under Title VII of the Civil
Rights Act of 1964, the Civil Rights Act of 1991, the American with Disabilities
Act, Section 1981 of the Civil Rights Acts of 1866 and 1871, the Equal Pay Act,
The Rehabilitation Act, The Consolidated Omnibus Budget Reconciliation Act, as
amended, The Fair Labor Standards Act, as amended, and any other federal, state
or local law prohibiting discrimination in

                                      -17-

<PAGE>

employment; any claims of age discrimination under the Age Discrimination in
Employment Act, as amended by the Older Workers Benefit Protection Act, or under
any other federal, state or local law prohibiting age discrimination; claims of
breach of implied or express contract, breach of promise, misrepresentation,
negligence, fraud, estoppel, defamation, infliction of emotional distress,
violation of public policy, wrongful or constructive discharge, or any other
employment-related tort; any claim for costs, fees, or other expenses, including
attorneys fees; and all claims under any other federal, state or local laws
relating to employment, except in any case to the extent such release is
prohibited by applicable federal, state and/or local law.

          (b) Executive represents that he has not filed or permitted to be
filed against the Releasees, any complaints, charges or lawsuits and covenants
and agrees that he will not seek or be entitled to any personal recovery in any
court or before any governmental agency, arbitrator or self-regulatory body
against any of the Releasees arising out of any matters set forth in Section
1(a) hereof. If Executive has filed a complaint, charge, grievance, lawsuit or
similar action, he agrees to remove, dismiss or take similar action to eliminate
such complaint, charge, grievance, lawsuit or similar action within five (5)
days of signing this Termination Release.

          (c) Notwithstanding the foregoing, this Termination Release is not
intended to interfere with Executive's right to file a charge with the Equal
Employment Opportunity Commission (hereinafter referred to as the "EEOC") in
connection with any claim he believes he may have against the Company. However,
Executive hereby agrees to waive the right to recover money damages in any
proceeding he may bring before the EEOC or any other similar body or in any
proceeding brought by the EEOC or any other similar body on his behalf. This
Termination Release does not release, waive or give up any claim for workers'
compensation benefits, vested retirement or welfare benefits he is entitled to
under the terms of the Company's retirement and welfare benefit plans, as in
effect from time to time, any right to unemployment compensation that Executive
may have, or his right to enforce his rights under the Agreement.

          2.  CONFIRMATION OF OBLIGATIONS. Executive hereby confirms and agrees
to his continuing obligation under the Agreement after termination of employment
not to directly or indirectly disclose to third parties or use any Confidential
Information (as defined in the Agreement) that he may have acquired, learned,
developed, or created by reason of his employment with the Company.

          3.  NO COMPETITION; NONSOLICITATION. Executive hereby confirms and
agrees to his nonsolicitation and non-competition obligations under the
Agreement, which include an obligation not to engage in a business or activity
that is substantially similar to the business of the Company or, generally,
without the prior consent of the Company, employ or solicit any individual
employed by the Company during the time he was employed by the Company for a
period of 24 months after his termination of employment date, as provided for in
the Agreement.

          4.  NO DISPARAGEMENT. Each of the Executive and the Company agree not
to disparage the other, including making any statement or comments or engaging
in any conduct that is disparaging or derogatory toward the Executive or the
Company, as the case may be, whether directly or indirectly, by name or
innuendo; provided, however, that nothing in this Termination Release shall
restrict communications protected as privileged under federal or state

                                      -18-

<PAGE>

law to testimony or communications ordered and required by a court or an
administrative agency of competent jurisdiction.

          5. CONFIDENTIALITY. Each of the Executive and the Company agree to
keep the terms of this Termination Release confidential and shall not disclose
the fact or terms to third parties, except as required by applicable law or
regulation or by court order; provided, however, that Executive may disclose the
terms of this Termination Release to members of his immediate family, his
attorney or counselor, and persons assisting him in financial planning or tax
preparation, provided these people agree to keep such information confidential;
provided, further, however, that the Company may disclose the terms of this
Termination Release to its certified public accounts, outside counsel or others
on a need to know basis, provided these people agree to keep such information
confidential.

          6. ACKNOWLEDGMENT. The Company has advised the Executive to consult
with an attorney of his choosing prior to signing this Termination Release and
the Executive hereby represents to the Company that he has been offered an
opportunity to consult with an attorney prior to signing this Termination
Release. The Executive shall have twenty-one (21) days to consider the waiver of
his rights in this Termination Release, although he may sign this Termination
Release sooner if he chooses. Once he has signed this Termination Release, the
Executive shall have seven (7) additional days from the date of execution to
revoke his consent to the waiver of his rights. If no such revocation occurs,
the Executive's waiver of rights in this Termination Release shall become
effective seven (7) days from the date of execution by the Executive. In the
event that the Executive revokes his waiver of rights in this Termination
Release, this Termination Release will have no force and effect and no Severance
Payments (as defined in the Agreement) shall be due or payable.

          7. GOVERNING LAW. This Termination Release shall be governed and
construed in accordance with the laws of Commonwealth of Pennsylvania, without
giving effect to principles of conflicts law.

          IN WITNESS WHEREOF, the Executive has executed this Termination
Release as of the day and year first above written.

                                      -19-