LOAN AGREEMENT









by and between






ASSOCIATED ESTATES REALTY CORPORATION,



an Ohio corporation



("Borrower")









and















NATIONAL CITY BANK,



a national banking association



(the "Bank")















Dated As of November 15, 1999










































TABLE OF CONTENTS








	Section	Page





1.	Definitions





2.	Commitment and Note





3.	Interest





4.	Repayments and Prepayments of Principal





5.	Payments and Computations





6.	Conditions Precedent to Initial Advance





7.	Conditions Precedent to Subsequent Advances





8.	Representations





9.	Covenants





10.	Disbursement Procedures





11.	Default and Remedies





12.	Miscellaneous Provisions














		Exhibits to this Agreement





A=	Form of Payment Authorization


B=	Form of Request for Advance






LOAN AGREEMENT





	THIS LOAN AGREEMENT is made as of the 15th day of November,
1999, by and between ASSOCIATED ESTATES REALTY CORPORATION, an Ohio
corporation (hereinafter, "Borrower"), and NATIONAL CITY BANK, a
national banking association (the "Bank").





	1.	Definitions.  The terms set forth below shall have the
following meanings for the purposes of this Agreement:





		"Advance" shall have the meaning set forth in Section 2,
below.





		"Assignment" means each Assignment of Leases, Rents,
Contracts, Income and Proceeds executed and delivered by Borrower
in favor of the Bank, granting the Bank a present and perfected
assignment of all of Borrower's right, title and interest in and to
all rents, leases, contracts and similar rights in respect of each
Mortgaged Property.





		"Business Day" means any day other than a Saturday or
Sunday on which commercial banking institutions are open for
business in Cleveland, Ohio.





		"Closing Date" means the day on which the initial Loan is
made pursuant to this Agreement.





		"Default" means any event or occurrence which, with the
giving of notice or the passage of time, or both, would constitute
an Event of Default.





		"Default Interest Rate" means an annual rate of interest
equal to the lesser of (i) two and one-fourth percent (2-1/4%)
above the Prime Rate; or (ii) the maximum rate of interest which
may lawfully be charged in respect of the Obligations.





		"Draw Date" means, in relation to any Advance, the day on
which such Advance is made or to be made to Borrower pursuant to
this Agreement.





		"Environmental Indemnity Agreement" means each
Environmental Indemnity Agreement executed and delivered by
Borrower in favor of the Bank and indemnifying the Bank of and from
any and all liability, loss, cost, damage or expense which may be
incurred by or asserted against the Bank by reason of a violation
of applicable Environmental Laws (as therein defined) at or with
respect to any Mortgaged Property.





		"Event of Default" means any event or condition described
in Section 12 of this Agreement.





		"Generally Accepted Accounting Principles" or "GAAP"
means generally accepted accounting principles in effect from time
to time in the United States, applied consistently with Borrower's
past practices.





		"Head Office" means the head office of National City
Bank, located at 1900 East Ninth Street, Cleveland, Ohio  44101-0756 or such other office as may be designated as such by written
notice to Borrower by the Bank.





		"Indebtedness" means, with respect to Borrower, all
obligations of Borrower which would be classified as indebtedness
on a balance sheet (including the footnotes thereto) prepared in
accordance with GAAP.





		"Interest Period" means:  (a)  For each Libor Rate Loan,
the period commencing on the Draw Date and ending one or three
months thereafter; provided that





		(i)  any Interest Period which would otherwise end on a
day which is not a Business Day shall be extended to the
next Business Day unless such Business Day falls in
another calendar month, in which case such Interest
Period shall end on the Business Day immediately
preceding such day;





		(ii)	any Interest Period which begins on the last
Business Day of a calendar month (or on a day for which
there is no numerically corresponding day in the calendar
month at the end of such Interest Period) shall end on
the last Business Day of a calendar month; and





		(iii)  every Interest Period on or before the Termination
Date; and





		(b) For a Prime Rate Loan, the period ending on the
earliest of (i) the date on which such Prime Rate Loan is repaid by
Borrower; (ii) the date on which such Prime Rate Loan is converted
to a Libor Rate Loan as hereafter provided; or (iii) the
Termination Date.





		"Late Charge" means a fee equal to the greater of One
Hundred and 00/100 Dollars ($100.00) or five percent (5.0%) of the
delinquent payment, charged to Borrower or added to the unpaid
balance of the Note whenever any payment of principal or interest
is not paid when due.





		"Libor" means the rate (rounded upward to the next
highest 1/100 of 1%) obtained by dividing (x) the annual rate of
interest determined by the Bank equal to the offered rates for
deposits in U.S. Dollars of one or three-month periods (as the case
may be) commencing on the first date of the applicable Interest
Period for which such rate is determined, as such rate appears on
the Telerate system as of 11:00 a.m. (London, England time) on the
date which is two (2) Business Days preceding the first day of such
Interest Period, for a period comparable to the duration of such
Interest Period and in an amount comparable to the amount of the
Libor Rate Loan to be outstanding during such Interest Period, by
(y) a percentage equal to 100% minus the stated maximum rate of all
reserves required to be maintained against "Libor Rate liabilities"
as specified in Regulation D (or against any other category of
liabilities which includes deposits by reference to which the
interest rate on Libor Rate Loans or loans is determined or any
category of extensions of credit or other assets which includes
loans by a non-United States office of a bank to United States
residents) on such date to any member bank of the Federal Reserve
System.





		"Libor Break Funding Costs" means an amount sufficient to
reimburse the Bank for any and all loss, cost or expense actually
incurred by it as the result of the occurrence of any Libor Break
Funding Event, including, without limitation, (i) any loss incurred
in obtaining, liquidating or reemploying deposits from third
parties (excluding loss of margin for the period after any such
prepayment), and (ii) the excess, if any, of the amount of interest
that otherwise would have accrued on the principal amount so paid,
prepaid or repaid or not borrowed for the period, beginning with
the date of such payment, prepayment or repayment until the last
day of the Interest Period that would otherwise have been in effect
for such Libor Rate Loan, at the applicable rate of interest for
such Libor Rate Loan over the amount of interest that otherwise
would have accrued on such principal amount at a rate per annum
equal to the interest component of the amount the Bank would have
bid in the London interbank market for dollar deposits of leading
banks in amounts comparable to such principal amount and with
maturities comparable to such period, all as determined as of the
date of the occurrence of the Libor Break Funding Event.





		"Libor Break Funding Event" means the prepayment (whether
by acceleration or otherwise) of any LIBOR Rate Loan other than
upon the final day of the Interest Period therefor.





		"Libor Rate" means for each Interest Period, the sum of
Libor plus two percent (2.00%) per annum.





		"Libor Rate Loan" means a Loan which bears interest at
the Libor Rate.





		"Loan" means each Advance or multiple Advances designated
by Borrower as such for purposes of the Rate Option and Interest
Period elections available to Borrower pursuant to this Agreement.





		"Loan Documents" mean this Agreement, the Note, the
Mortgages, the Environmental Indemnity Agreement and any other
agreement, instrument, certificate or document now or hereafter
executed in connection with or pursuant to this Agreement.





		"Mortgage" means each Open End Mortgage, Security
Agreement and Assignment of Rents and Leases executed and delivered
by Borrower in favor of the Bank and securing the Obligations.





		"Mortgaged Property" means each tract or parcel of
improved real property owned by Borrower and subject to the lien of
a Mortgage.





		"Note means that certain Promissory Note, executed and
delivered by Borrower to the Bank, evidencing Borrower's
indebtedness to the Bank in the principal amount not to exceed
Twelve Million Dollars ($12,000,000).





		"Obligations" means, collectively, all of the
indebtedness, obligations and liabilities of Borrower to the Bank
(i) in respect of the Loans made pursuant to this Agreement, or
(ii) under or in respect of any one or more of the Loan Documents;
including, without limitation, all interest, charges and other fees
payable hereunder (or under any of the Loan Documents) by Borrower,
or due hereunder (or under any of the Loan Documents) from Borrower
to the Bank from time to time, together with all costs and expenses
payable by Borrower as provided herein or in any Loan Document.





		"Payment Authorization" means the form substantially in
the form of attached Exhibit A, executed by Borrower and delivered
to the Bank, notifying the Bank of any payment by Borrower
hereunder or under the Note, and if appropriate authorizing the
Bank to debit one or more accounts of Borrower for such payment. 





		"Prime Rate" means the fluctuating rate of interest which
is publicly announced from time to time by the Bank at its Head
Office as being its "prime rate" or "base rate" thereafter in
effect, with each change in the Prime Rate automatically,
immediately and without notice changing the fluctuating rate of
interest thereafter applicable to any sum bearing interest at the
Prime Rate hereunder; the Prime Rate is not necessarily the lowest
rate of interest which may be available at any time from the Bank
on fluctuating rate loans.





		"Prime Rate Loan" means a Loan which bears interest at
the Prime Rate.





		"Rate Option" means Borrower's right, on the terms and
subject to the conditions set forth in this Agreement, to elect the
Prime Rate or the Libor Rate as the applicable rate of interest
with respect to the Loans.





		"Request For Advance" means the form, substantially in
the form of attached Exhibit B, to be executed by Borrower and
delivered to the Bank, requesting an Advance hereunder, and
notifying the Bank of Borrower's intended use of such Loan
proceeds.





		"Termination Date" means the earlier of (i)
October 31, 2000; or (ii) the date on which the entire principal
balance of the indebtedness evidenced by the Note shall become due
pursuant to the provisions hereof (whether by acceleration or
otherwise).





		"Title Policy" means each loan policy of title insurance
(ALTA Form B, as amended 10/17/70) issued to the Bank by a title
insurance company acceptable to the Bank (a "Title Company") and
confirming (in amounts, on terms, and with such endorsements and
affirmative coverages as the Bank may require) that each Mortgage
is the first and paramount lien and security interest in respect of
the Mortgaged Property described therein.





	2.	Commitment and Note.   On the terms and subject to the
conditions set forth herein, the Borrower may from time to time
until the Termination Date, obtain multiple advances from the Bank
(each, an "Advance") under this Agreement.  Each Advance shall be
in a principal amount equal to or greater than One Million Dollars
($1,000,000); the aggregate principal amount of all advances shall
not, under any circumstances, exceed Twelve Million Dollars
($12,000,000).  Notwithstanding the foregoing to the contrary,
Borrower shall not be entitled to request or receive any Advance
hereunder if the making of such Advance would result in the
existence of more than three (3) Loans hereunder.  All advances
shall be evidenced by the Note, which shall be executed and
delivered to the Bank prior to the initial Advance.
Notwithstanding the stated principal amount of the Note, the
Borrower shall in no event be obligated to repay more than the
aggregate unpaid balance of advances made to or for the benefit of
the Borrower by the Bank, together with interest at the rate
specified in the Note (defined below) on each advance from the date
it is made by the Bank.





	3.	Interest.





		(a)	Rate Options and Interest Periods.  Subject to the
terms and conditions set forth in this Agreement, Borrower may
specify the Rate Option for each Loan and the Interest Period for
each LIBOR Rate Loan, provided that Borrower may not at any time
aggregate Advances into more than three (3) Loans for the purpose
of determining the Rate Option or the Interest Period applicable to
Advances made by Borrower hereunder.  Borrower shall give the Bank
its irrevocable Request For Advance not later than 1:00 p.m.
Cleveland time at least one (1) Business Day before the Draw Date
of each Prime Rate Loan and three (3) Business Days before the Draw
Date for each Libor Rate Loan.  Each Request for Advance shall
specify:





		(i)  the Draw Date (which shall be a Business Day) for
such Loan;





		(ii)  the aggregate amount of such Loan;





		(iii)  the Rate Option selected for such Loan; and





		(iv) in the case of each Libor Rate Loan, the Interest
Period applicable thereto.





Each Libor Rate Loan shall bear interest from and including the
first day of the Interest Period applicable thereto until (but not
including) the last day of such Interest Period at the interest
rate determined as applicable to such Libor Rate Loan.  Borrower
shall select Interest Periods with respect to Libor Rate Loans so
that it is not necessary to pay a Libor Rate Loan prior to the last
day of the applicable Interest Period in order to repay all of the
Loans on the Termination Date.  Provided that no Default or Event
of Default shall have occurred and be continuing, Borrower may
elect to continue a Loan as a Libor Rate Loan by giving irrevocable
written, telephonic or telegraphic notice thereof to the Bank not
less than three (3) Business Days prior to the last day of the
then-current Interest Period applicable to such Libor Rate Loan,
specifying the duration of the succeeding Interest Period therefor.
If the Bank does not receive timely notice of such election,
Borrower shall be deemed to have elected to convert such Libor Rate
Loan to a Prime Rate Loan at the end of the then-current Interest
Period.  Provided that no Default or Event of Default shall have
occurred and be continuing, Borrower may convert any outstanding
Prime Rate Loan, or portion thereof, into a Libor Rate Loan in the
same aggregate principal amount.  If Borrower desires so to convert
a Prime Rate Loan, it shall give the Bank prior written, telephonic
or telegraphic notice at least three (3) Business Days prior to the
requested conversion date, which notice shall specify the duration
of the Interest Period therefor.





		(b)	Monthly Installments.  





		(i)  Borrower shall pay to the Bank, monthly in arrears
on the last Business Day of each month beginning with the
month following the month in which the Closing Date
occurs, interest on the outstanding principal amount of
the Prime Rate Loans at the annual rate equal to the
Prime Rate; provided, however, that if Borrower elects to
convert a Prime Rate Loan to a Libor Rate Loan pursuant
to Section 3(a), above, Borrower shall pay to the Bank
all accrued but unpaid interest on the Prime Rate Loan
being so converted, for the period commencing on the date
of the last payment date under this Section 3(b) and
concluding on the day immediately preceding the first day
of the Interest Period for the Libor Rate Loan into which
the Prime Rate Loan is converted.





		(ii)  Borrower shall pay to the Bank, in arrears,
interest on the outstanding principal amount of the Libor
Rate Loans at the annual rate equal to the Libor Rate.
Such interest shall be due and payable on the last
Business Day of the applicable Interest Period for each
Libor Rate Loan.





		(d)	Interest on Overdue Payments; Default Interest Rate.
If any payment of principal or interest is not paid when due, or
prior to the expiration of the applicable period of grace (if any)
therefor, the Bank may charge and collect from Borrower a Late
Charge.  The Bank may charge interest on the Late Charge at the
Default Interest Rate until such time as the required payment of
principal and interest (together with the Late Charge) is paid
hereunder.  No failure by the Bank to charge or collect any Late
Charge in respect of any delinquent payment shall constitute a
waiver by the Bank of any rights it may have hereunder, including
without limitation the right subsequently to impose a Late Charge
for such delinquent payment or to take such other actions as may
then be available to it hereunder, under any other Loan Document,
at law or in equity.  If the Bank shall accelerate the indebtedness
evidenced by the Note pursuant to any provision hereof or of any
other Loan Document, or if an Event of Default hereunder or under
any other Loan Document shall have occurred and be continuing, the
outstanding principal balance of the indebtedness advanced under
this Agreement, together with all accrued interest thereon, shall
bear interest from the date on which such amount shall have first
become due and payable to the date on which such amount shall be
paid (whether before or after judgment) at the Default Interest
Rate.  Interest at the Default Interest Rate will continue to
accrue and will (to the extent permitted by applicable law) be
compounded daily until the Obligations in respect of such payment
are discharged (whether before or after judgment).





	4.	Repayments and Prepayments of Principal.





		(a)	Optional Prepayments.  Borrower shall have the right
to prepay the principal of the Loans in full or in part at any time
and from time to time upon payment to the Bank of all accrued
interest to the date of payment; provided, however, that (i) all
partial payments of principal shall be in an amount equal to or
greater than One Million Dollars ($1,000,000.00); and (ii) all
Loans may be prepaid without penalty or premium.  If Borrower shall
prepay any Libor Rate Loan on a day other than the final day of the
Interest Period therefor, such prepayment must include an amount
equal to the Bank's Libor Break Funding Costs applicable to or
resulting from such prepayment.  





		(b)  Application of Prepayments.  Any prepayment of the
Note shall be applied by the Bank as set forth in Section 5(b)
hereof.  To the extent that such payment, repayment or prepayment
shall be applied to a Libor Rate Loan, the Bank (except as
otherwise instructed by Borrower, in writing, and except in the
event of prepayment resulting from the acceleration of the
indebtedness evidenced by the Note following the occurrence of an
Event of Default) shall retain such amount until the expiration of
the Interest Period applicable to such Libor Rate Loan, and shall
apply such payment at such time so as to minimize the Libor Break
Funding Costs which would otherwise be payable in consequence of
such prepayment.





		(c)  Maturity.  All of the indebtedness evidenced by the
Note shall, if not sooner paid, be in any event absolutely and
unconditionally due and payable in full by Borrower on the
Termination Date.





		(d)  Notice of Prepayments of Principal.  Borrower will
provide the Bank at least (1) one Business Day's advance, written
notice of Borrower's intention to make any voluntary prepayment of
principal.  Such notice shall be irrevocable and shall specify the
date of prepayment and the aggregate amount to be paid.  





	5.	Payments and Computations.





		(a)	Time and Place of Payments.  Each payment to be made
by Borrower under this Agreement shall be made directly to the Bank
at its Head Office, not later than noon, Cleveland time, on the due
date of each such payment, in immediately available and freely
transferrable funds.  Any payment received after such time will be
deemed to have been received on the next Business Day.  All
payments of interest, principal and all other amounts owing
hereunder or under the Note shall be documented by Borrower's
transmitting to the Bank, via telecopy, a Payment Authorization;
the funds representing such payment shall be transferred to the
Bank as specified in such Payment Authorization.  





		(b)  Application of Funds.  All funds received by the
Bank with respect to the Obligations shall be applied as follows:





		(i)  Provided that the indebtedness evidenced by the Note
has not been accelerated, and provided further that no
Event of Default shall have occurred and be continuing at
the time that the Bank receives such funds, in the
following manner: (a) first, to the payment of all fees,
charges, and other sums (other than principal and
interest) then due and payable to the Bank under the
Note, this Agreement or the other Loan Documents; (b)
second, to the payment of all accrued but unpaid interest
at the time of such payment; and (c) third, to the
payment of principal of the Note.





		(ii)  If the indebtedness evidenced by the Note has been
accelerated, or if an Event of Default shall have
occurred and be continuing at the time the Bank receives
such funds, in the following manner: (a) first to the
payment or reimbursement of the Bank for all costs,
expenses, disbursements and losses which it shall have
incurred or sustained by reason of such Event of Default
or in connection with the exercise by the Bank of its
rights, remedies, powers and privileges under this
Agreement or any of the other Loan Documents; and (b)
second to the payment of all of the indebtedness
evidenced by the Note in accordance with Section 5(b)(i),
above.





		(c)  Payments on Business Days.  If any payment would
(but for the provisions of this Section 5(c)) be due and payable on
any day which is not a Business Day, then such sum shall become due
and payable on the next succeeding Business Day, and interest
payable on such sum shall continue to accrue and shall be adjusted
by the Bank accordingly.





		(d)  Computation of Interest.  The Bank shall compute
interest payable in respect of the indebtedness evidenced by the
Note shall on the basis of the actual principal amount outstanding
on each day during the payment period, on the basis of the actual
number of days elapsed during such period and of a year consisting
of three hundred and sixty (360) days.  The daily interest charge
shall be one three-hundred-sixtieth (1/360th) of the annual
interest amount.  Each determination of any interest rate by the
Bank shall be conclusive and binding on Borrower in the absence of
manifest error.





		(e)	Payments to be Free of Deductions.  Each payment
required of Borrower under this Agreement, the Note, or any of the
other Loan Documents shall be made without set-off, deduction or
counterclaim whatsoever, and shall be free of taxes, levies,
imposts, duties, charges, fees, deductions, withholdings,
compulsory loans, restrictions or conditions of any nature now or
hereafter imposed or levied by any governmental or taxing
authority, unless Borrower is compelled by law to make any such
deduction or withholding.  If any such obligation to deduct or
withhold is imposed upon Borrower with respect to any such payment:
(i) Borrower may make the deduction or withholding required by law
in respect of the said payment, and (ii) there shall become and be
absolutely due and payable by Borrower to the Bank on the date on
which such payment shall become due and payable, and Borrower
hereby promises to pay to the Bank on such date, such additional
amount as shall be necessary to enable the Bank to receive the same
net amount as the Bank would have received had no such obligation
been imposed by law.  Notwithstanding the foregoing to the
contrary, this Section 5(e) shall not apply in the case of any
deductions or withholdings made in respect of taxes charged upon or
by reference to the overall net income, profits or gains of the
Bank.


	


	6.	Conditions Precedent to Initial Advance.  On or prior to
the Closing Date, each of the following conditions precedent shall
have been satisfied:





		(a)	The Bank shall have received from Borrower (i) a
copy, certified by a duly authorized officer of Borrower to be true
and complete on and as of the Closing Date, of Borrower's Articles
of Incorporation, and by-laws or code of regulations as in effect
on the Closing Date (together with any an all amendments thereto);
(ii) the charter or other organizational documents of Borrower,
certified by the Ohio Secretary of State; and (iii) a Certificate
of Good Standing for Borrower, each issued by the Ohio Secretary of
State not more than thirty (30) days before the Closing Date.





		(b)	The Bank shall have received from Borrower copies,
certified by a duly authorized officer of Borrower to be true and
complete on and as of the Closing Date, of records of all corporate
action taken by Borrower to authorize (i) the execution and
delivery of this Agreement and the other Loan Documents and to
which it is a party; (ii) its performance of all of its obligations
under each of such documents; and (iii) the making by Borrower of
the borrowings contemplated hereby.





		(c)  The Bank shall have received from Borrower an
incumbency certificate, dated as of the Closing Date, signed by a
duly authorized officer and giving the name and bearing a specimen
signature of each individual who shall be authorized (i) to sign,
in the name and on behalf of Borrower, each of the Loan Documents
to which Borrower is or is to become a party on the Closing Date;
and (ii) to give notices and to take other action on behalf of
Borrower under the Loan Documents.





		(d)	Borrower shall have executed and delivered to the
Bank the Note, the Assignments, the Environmental Indemnity
Agreement, the Mortgages, Uniform Commercial Code Financing
Statements (the "Financing Statements") such additional documents,
instruments and agreements as the Bank may reasonably require to
evidence or to secure the Loan or as may be necessary or reasonable
or reasonably appropriate to enable the Title Company Title
Policies as required by this Agreement.  





		(e)	Borrower shall have: 





		(i)  Filed the respective Mortgages for record in the
real property records of the counties in which the
respective Mortgaged Properties are located;





		(ii)	Filed the Financing Statements for record in the
appropriate public records of each county in which a
Mortgaged Property is located and in the Uniform
Commercial Code indices maintained by the Ohio Secretary
of State;





		(iii)  Furnished a Title Policy insuring that each
Mortgage is the first and paramount lien upon the
Mortgaged Property encumbered thereby;





		(iv)  Furnished to the Bank a survey with respect to each
Mortgaged Property showing such matters as may be
required by the Bank, which survey shall be:
(x) acceptable in form and content to the Agent; (y)
certified to the Bank and the Title Company; and
(z) shall have been prepared by a registered surveyor
acceptable to the Agent in accordance with the minimum
standard detail requirements for ALTA/ACSM Title Surveys,
so as to eliminate any and all "survey exceptions" from
the Title Insurance Policy with respect to the Mortgaged
Property, and containing (A) a note as to the zoning
classification of the subject property; and (B) if
applicable, the Flood Map panel number, suffix, map date
and zone for the subject Mortgaged Property; and





		(iv)  Furnished to the Bank environmental site
assessments, satisfactory in form and content to the Bank
and showing that each Mortgaged Property is free from any
and all Hazardous Substances and from any and all other
environmental hazards or adverse environmental
conditions; and





		(v)  Furnished to the Bank an appraisal, satisfactory in
form and content to the Bank and complying with all
applicable standards for such appraisals (including,
without limitation, the standards established with
respect to appraisals by Federal laws and regulations
applicable to national banking associations), prepared by
an appraiser belonging to the American Institute of Real
Estate Appraisers (or having a corresponding professional
designation acceptable to the Bank) and showing such
appraiser's evaluation of the fair market value of each
Mortgaged Property.





In addition, Borrower shall have paid all costs and expenses
payable in connection with all of the foregoing, including but not
limited to all expenses and premiums with respect to the Title
Policies or otherwise payable to the Title Company.





		(f)  No change in applicable law shall have occurred
which would make it unlawful (i) for the Bank to perform any of its
agreements or obligations under any of the Loan Documents to which
it is a party on the Closing Date; or (ii) for Borrower to perform
any of its agreements or obligations under any of the Loan
Documents.





		(g)	Borrower shall have duly and properly performed,
complied with and observed, in all material respects, each of its
covenants, agreements and obligations contained in each of the Loan
Documents to which Borrower is a party or by which Borrower is
bound on the Closing Date.  No event shall have occurred on or
prior to the Closing Date, and no condition shall exist on the
Closing Date, which constitutes or would constitute a Default or an
Event of Default.





		(h)	Borrower shall have reimbursed the Bank for all
reasonable out-of-pocket costs and expenses, including without
limitation, all attorney's, appraisal, environmental and other fees
incurred by the Bank.





		(i)	Borrower shall have paid a loan fee to the Bank in
the amount of Thirty Thousand Dollars ($30,000).





		(j)	The Bank shall have received such other approvals,
opinions, certificates, instruments and documents with respect to
the transactions described herein as it may reasonably request.





		(k)  Each of the representations and warranties made by
or on behalf of Borrower in this Agreement or in any other Loan
Document shall be true, correct and complete in all material
respects.





		7.  Conditions Precedent to Subsequent Advances.  The
obligation of the Bank to make or disburse any one or more Advances
from time to time after the Closing Date shall be subject to the
satisfaction, prior thereto or concurrently therewith, of each of
the following conditions precedent:





		(a)	It shall not be unlawful (a) for the Bank to perform
any of its agreements or obligations under any of the Loan
Documents to which it is a party on the Draw Date of such Advance;
or (b) for Borrower to perform any of its agreements or obligations
under any of the Loan Documents.





		(b)  Each of the representations and warranties made by
or on behalf of Borrower in this Agreement or any other Loan
Document (a) shall be true and correct when made and (b) shall, for
all purposes of this Agreement, be deemed to be repeated on and as
of the date of the Borrower's Request for Advance for such Advance,
and shall be true and correct in all material respects as of such
date.





		(c)  Borrower shall have performed, complied with and
observed, in all material respects, each of its covenants,
agreements and obligations contained in this Agreement and/or in
all of the other Loan Documents.





		(d)	No event shall have occurred on or prior to such
date and be continuing on such date, and no condition shall exist
on such date which constitutes a Default or Event of Default; the
making of such Loan shall not result in a Default or an Event of
Default.





		(e)	The Bank shall have received such other approvals,
opinions, certificates, instruments and documents as it may
reasonably request.





	8.	Representations and Warranties.  Borrower warrants and
represents to the Bank that:





		(a)	Borrower:  (i) is duly organized, validly existing
and in good standing as a corporation under the laws of the State
of Ohio; (ii) has full corporate power and authority and full legal
right to own or to hold under lease its property and to carry on
its businesses; and (iii) Borrower is a self-administered REIT.
Borrower is qualified and licensed, admitted or approved to do
business in each jurisdiction in which the character of its
Property or the nature of its business make such qualification
necessary or advisable and where the failure to so qualify would
have a materially adverse effect on Borrower.





		(b)	Borrower has appropriate corporate power and
authority, and full legal right, to enter into this Agreement and
each of the other Loan Documents, and to perform, observe and
comply with all of its agreements and obligations hereunder and
thereunder. 





		(c)	The execution and delivery by Borrower of this
Agreement and each of the other Loan Documents, the performance by
Borrower of all of its agreements and obligations under such
documents, and the making by Borrower of the borrowings
contemplated by this Agreement have been duly authorized by all
necessary corporate action on the part of Borrower and do not and
will not (i) contravene any provision of its charter documents or
by-laws or code of regulations (each as in effect from time to
time); (ii) conflict with, or result in a breach of the terms,
conditions or provisions of, or constitute a default under, or
(except as expressly contemplated by the terms of this Agreement)
result in the creation of any lien upon any of the Property of
Borrower under any agreement, trust deed, indenture, mortgage or
other instrument to which Borrower is a party or by which Borrower
or any other property of Borrower is bound or affected; (iii)
violate or contravene any provision of any law, rule or regulation
(including, without limitation, any application Regulations of the
Board of Governors of the Federal Reserve System) or any order,
ruling or interpretation thereunder or any decree, order or
judgment of any court or governmental or regulatory authority,
bureau, agency or official (all as from time to time in effect and
applicable to Borrower); or (iv) require any waivers, consents or
approvals by any of the creditors or trustees for creditors of
Borrower or any other Person.





		(d)	Except as to matters which Borrower has procured,
obtained or performed prior to or concurrently with its execution
and delivery of this Agreement, no approval, consent, order,
authorization or license by, giving notice to or taking any other
action with respect to, any governmental or regulatory authority or
agency is required under any provision of any applicable law:





		(i)  for Borrower's execution and delivery of this
Agreement and the other Loan Documents, its performance
of its obligations hereunder or thereunder, or for
Borrower's making the borrowings contemplated by this
Agreement; or





		(ii)	to ensure the continuing legality, validity, binding
effect, enforceability or admissibility in evidence of
this Agreement and the other Loan Documents.





		(e)	There are no actions, suits or proceedings pending
or, to the knowledge of Borrower, threatened against it, at law or
in equity or before any governmental department, commission, board,
bureau, agency or instrumentality which challenge the validity or
enforceability of this Agreement or any of the other Loan Documents
or which, if determined adversely to Borrower, could reasonably be
expected to result in any material, adverse effect upon Borrower.





		(f)	This Agreement and the other Loan Documents shall,
when executed and delivered by Borrower, constitute Borrower's
valid and binding obligation, and will be enforceable against
Borrower in accordance with their respective terms (subject, as to
such enforceability, to limitations imposed by general equitable
principles and by bankruptcy and insolvency laws and judicial
principles).





		(g)	All financial information submitted with respect to
Borrower in connection with the application for the Loan accurately
reflects the financial condition of Borrower as of the date thereof
and has been prepared in accordance with generally accepted
accounting principles consistently applied for all periods
described therein; there has been no materially adverse change in
the financial condition of such Borrower since the date of such
information that has not been disclosed to the Bank, and there are
no known contingent liabilities of Borrower, including without
limitation any estimated possible liabilities in pending or
threatened litigation, required to be disclosed in connection with
such financial information but not reflected therein.  





		(h) This Agreement and all financial statements,
certificates, and other materials submitted to the Bank in
connection with or in furtherance of this Agreement by or on behalf
of Borrower fully and fairly state the matters with which they
purport to deal, do not misstate any material fact, nor, separately
or in the aggregate, do they fail to state any material fact
necessary to make the statements therein made not misleading.





		(i)	Borrower has filed all federal, state and other tax
returns required to be filed by it and has made reasonable
provisions, in accordance with generally accepted accounting
principles as in effect as of the date hereof, for the payment of
all taxes (if any) which have or may become due and payable
pursuant to such returns or pursuant to any matters raised by
audits or for other reasons.  In addition, Borrower has paid or
caused to be paid all real and personal property taxes and
assessments and other governmental charges lawfully levied or
imposed on or against it or its property, other than those
presently payable without payment of interest or penalty and those
which are subject to contests initiated by Borrower in good faith
and diligently prosecuted.





		(j)	Borrower is not engaged in the business of extending
credit for the purpose of purchasing or carrying any "margin
security" or "margin stock" as such terms are used in the
applicable Regulation the Board of Governors of the Federal Reserve
System.





		(k)	Borrower is not in default under any order, writ,
judgment, injunction, decree, statute or governmental rule,
indenture, agreement, contract, lease or other instrument or
contract applicable to it, which default would have a material
adverse effect on the business, assets, Properties or conditions,
financial or otherwise, of Borrower or in the performance of any
covenants or conditions respecting any of its material
Indebtedness, and no holder of any material Indebtedness of
Borrower (which, for the purposes of this Section, shall mean any
discrete Indebtedness having an outstanding principal balance, as
of the date of determination, in excess of Three Million Dollars
($3,000,000)) has given notice of any asserted default thereunder,
and no liquidation or dissolution of Borrower and no receivership,
insolvency, bankruptcy, reorganization or other similar proceedings
relative to Borrower or its Property is pending threatened.





	(l) Immediately after the date hereof and immediately
following the making of each Loan and after giving effect to the
application of the proceeds of such Loans:  (i) the fair value of
Borrower's assets, at a fair valuation, exceeds and will exceed
Borrower's debts and liabilities (subordinated, contingent or
otherwise); (ii) the present fair saleable value of Borrower's
Property will be greater than the amount that would be required to
pay Borrower's probable liability on its debts and other
liabilities, subordinated, contingent or otherwise, as the same
become absolute and matured; (iii) Borrower will be able to pay its
debts and liabilities, subordinated, contingent or otherwise, as
such debts and liabilities become absolute and matured; and (iv)
Borrower will not have unreasonably small capital with which to
conduct the businesses in which it is engaged as such businesses
are now conducted and are proposed to be conducted after the date
hereof.  Borrower does not intend to, and does not believe that it
will, incur debts beyond its ability to pay such debts as they
mature, taking into account the timing of and amounts of cash to be
received by it and the timing of the amounts to be payable in
respect of Borrower's liabilities.





	(m)	Borrower is in good standing on the New York Stock
Exchange and is qualified and in compliance in all material
respects with all provisions of the Code applicable to the
qualification of Borrower as a REIT.





	(n)	Borrower has conducted a comprehensive review and
assessment of its computer applications and has made inquiry of its
key suppliers, vendors and customers with respect to the "year 2000
problem" (that is, the risk that computer applications may not be
able properly to perform date-sensitive functions after December
31, 1999) and, based on that review and inquiry, Borrower does not
believe the "year 2000 problem" will result in a material adverse
change in Borrower's business, financial condition or ability to
repay the Obligations as and when required by this Agreement.





	9.	Covenants.  While this Agreement is in effect, and until
the Bank has been repaid in full for the principal of and interest
on all advances made hereunder by the Bank:





		(a)	Within fifty (50) days after the close of each of
the first three quarters of each fiscal year of Borrower, Borrower
shall furnish the Bank with balance sheets of Borrower as of the
end of such quarter and statements of income and statements of cash
flow of Borrower for the period commencing at the end of the
previous fiscal year and ending with the end of such quarter,
certified by the chief financial officer, principal accounting
officer or chief executive officer of Borrower.  Borrower shall
provide the Bank with copies of all reports sent by Borrower to its
shareholders, and copies of all reports and registration statements
Borrower files with the United States Securities and Exchange
Commission promptly after it sends or files such materials.
Borrower shall also furnish to the Bank such additional information
concerning such Borrower's financial condition and operations as
the Bank may reasonably request from time to time; and





		(b)  Within ninety (90) days after the end of each fiscal
year of Borrower, Borrower shall furnish the Bank with a copy of
Borrower's annual financial statements for such year, including
therein a copy of the balance sheet of Borrower as of the end of
such fiscal year and statements of income, cash flow and
Shareholders' Equity of Borrower, certified without qualification
by Price, Waterhouse, Coopers & Co. or such other nationally
recognized firm of certified public accountants as shall be
selected by Borrower and acceptable to the Bank.





		(c)	Borrower will duly and punctually pay, observe and
perform all of its obligations under the Loan Documents.





		(d)  Borrower shall make all governmental filings and
take all other action necessary to preserve and maintain (i) its
qualifications as a REIT under the Internal Revenue Code of 1986,
as amended (the "Code") and (ii) the applicability to Borrower and
its shareholders of the method of taxation provided for in Section
857(b) of the Code (and any successor provision thereto).





		(e)  Borrower shall preserve and maintain (i) its
existence and all of its rights, franchises and privileges as an
Ohio corporation; and (ii) the listing of Borrower's common stock
on the New York Stock Exchange.





		(f)	Borrower shall comply with all statutes, ordinances,
governmental regulations and judicial decisions and orders
applicable to any Mortgaged Property, or applicable to Borrower or
its business (except, as to the latter, to the extent that the
failure so to comply could not reasonably be expected to have a
material, adverse effect upon Borrower's financial condition or
operations or to affect Borrower's right or ability to comply with
its obligations hereunder or under any other Loan Document), and
shall promptly notify the Bank in the event that Borrower receives
any written notice, claim or demand from any governmental agency
which alleges that Borrower is in violation of any of the same.





		(g)	Borrower will notify the Bank, in writing, promptly
after Borrower shall become aware of the same, of any final
judgment in an amount exceeding Five Hundred Thousand Dollars
($500,000) rendered against Borrower or any affiliate of Borrower;
(b) the commencement or institution of any legal or administrative
action, suit, proceeding or investigation by or against Borrower in
or before any court, governmental or regulatory body, agency,
commission or official, board of arbitration or arbitrator, the
outcome of which could materially and adversely affect Borrower's
current or future financial position, assets, business, operations
or prospects, or could prevent or impede the implementation or
completion, observance or performance of any of the arrangements or
transactions contemplated by any of the Loan Documents; or (c) the
occurrence of any adverse development, not previously disclosed by
Borrower to the Bank in writing, in any such action, suit,
proceeding or investigation.





		(h)	Borrower will duly and punctually pay or cause to be
paid the principal and interest on the Loans and all fees and other
amounts payable hereunder or under the Loan Documents, as and when
required by this Agreement and/or the other Loan Documents.
Borrower shall pay all other Indebtedness (whether existing on the
date hereof or arising at any time thereafter) as and when the same
is due and payable.





		(i)	Borrower shall pay and discharge promptly all taxes,
assessments and other governmental charges or levies at any time
imposed upon it or upon its income, revenues or Property, as well
as all claims of any kind (including claims for labor, material or
supplies) which, if unpaid, might by law become a Lien or charge
upon all or any part of its income, revenues or Property.
Notwithstanding the foregoing to the contrary, Borrower may,
provided that there is not then an Event of Default hereunder,
contest the propriety or amount of any such taxes, assessments or
governmental charges, or of any such claims, if (a) such contest is
instituted in good faith and prosecuted with reasonable diligence;
(b) such contest shall preclude the sale or forfeiture of the
affected Property (or Borrower shall provide the Bank with such
reasonable security or other assurances as may be requested by the
Bank in connection with such contest); and (c) Borrower shall
indemnify the Bank of and from any and all liability, loss, cost or
expense incurred by or asserted against any such party in
connection with, or in consequence of, any such contest.





		(j)	Borrower will obtain all approvals, consents,
orders, authorizations and licenses necessary for the proper and
lawful performance by Borrower of any of its agreements or
obligations under the Note, this Agreement or any of the other Loan
Documents or for the payment by Borrower of any sums which shall
become due and payable by Borrower to the Bank hereunder or
thereunder, or to ensure the continuing legality, validity, binding
effect or enforceability of this Agreement, the Note or any of the
other Loan Documents or, to continue the proper operation of the
business and operations of Borrower.





		(k)	Borrower will execute, acknowledge and deliver, or
cause to be executed, acknowledged and delivered, any and all such
further assurances and other agreements or instruments, and take or
cause to be taken all such other action, as shall be reasonably
requested by the Bank from time to time in order to give full
effect to this Agreement or any of the other Loan Documents.





		(l)	Borrower shall use all funds advanced to or for its
account pursuant to this Agreement only for its general corporate
purposes, and for no other purpose whatsoever without the prior,
written consent of the Bank.





		(m)	Borrower will not make any material alterations in
the nature or character of its business as carried on at the date
hereof, or undertake, conduct or transact any business in a manner
prohibited by applicable law.





		(n)	Borrower shall not at any time consolidate with or
merge into or with any Person, or Persons or enter into or
undertake any plan or agreement of consolidation or merger with any
Person, provided, however, that this Section 9(n) shall not
prohibit Borrower from merging any one or more of Borrower's
subsidiaries with or into Borrower.





		(o)	Borrower shall not own, purchase or acquire (or
enter into any contract to purchase or acquire) any "margin
security" as defined by any regulation of the Federal Reserve Board
unless, prior to any such purchase or acquisition or entering into
any such contract, the Bank shall have received an opinion of
counsel satisfactory to the Bank to the effect that such purchase
or acquisition will not cause this Agreement or the Note to be in
violation of any regulation of the Federal Reserve Board applicable
to the transactions described in this Agreement.





	10.	Disbursement Procedures.  Advances shall be disbursed
pursuant to the procedures set forth in this Section 10.  All
requests for disbursements of Advances shall be made by Borrower,
in writing, on a Request for Advance.  Such Request for Advance may
be transmitted to the Bank at its Head Office via fax or telecopy,
provided that Borrower immediately notify the Bank by telephone of
such transmission.  All Requests for Advance shall be transmitted
to and received by the Bank not later than 11:00 a.m., Cleveland
Time, on a business day which is not less than three (3) business
days prior to the Draw Date specified on such Request for Advance.





		(b)  The Bank shall disburse the proceeds of each Advance
to Borrower, in immediately available funds, not later than Noon,
Cleveland time, on the Draw Date therefor, provided that:
(x) Borrower shall have provided the Bank with a Request for
Advance for such Advance as and when provided above; (y) all of the
conditions precedent applicable to such Advance shall be satisfied
as at the Closing Date or such later Draw Date as may be applicable
to such Advance; and (z) there shall be no uncured Default or Event
of Default.





	11.	Default and Remedies.  (a)  Any of the following events
shall constitute an "Event of Default" under this Agreement:





		(i)	Borrower shall default in the payment of any sum due
to the Bank hereunder or under the Note, and such default
shall continue for a period of five (5) days following the due
date of such payment;





		(ii)	Borrower shall default in the performance or
observance of any agreements or conditions required to be
performed or observed by it under this Agreement, other than
those described in clause (a), above, and such default shall
continue for a period of thirty (30) days or more after
written notice specifying such default (provided that if such
default cannot be cured by the payment of monies and cannot
reasonably be cured within thirty (30) days, Borrower shall
have a reasonable time to effect a cure, if curative action is
commenced within said thirty (30) day period and is thereafter
pursued diligently and in good faith by Borrower to
completion);





		(iii)  Any representation or warranty made by Borrower in
this Agreement, any Loan or in any certificate or document
furnished under the terms of this Agreement shall prove to be
untrue in any material respect;





		(iv)	Borrower shall admit in writing its inability to pay
its debts as they become due and payable, or shall make an
assignment for the benefit of creditors, or shall be
adjudicated a bankrupt, or shall file a voluntary petition in
bankruptcy, or effect a plan or other arrangement with
creditors, or shall have applied for or permitted the
appointment of a receiver or trustee or custodian for any of
his or its property or assets, or a trustee, receiver or
custodian shall have been appointed for any property or assets
of Borrower who shall not have been discharged within sixty
(60) days after the date of his appointment; or 





		(v)	an Event of Default shall have occurred under any
Loan Document and shall remain uncured beyond the expiration
of any period of notice and/or grace applicable to the same
under such instrument.





		(b)	Upon the occurrence and at any time during the
pendency of a Default, the Bank may, at its option, exercise any or
all of the following rights and remedies:





		(i)	The Bank may terminate its obligation to make
Advances under this Agreement, and may declare the entire
unpaid principal balance of the advances made under this
Agreement to be immediately due and payable, together with
accrued and unpaid interest on such advances at the rate set
forth in the Note, without further notice to or demand on the
Borrowers.





		(ii)	The Bank may accelerate the maturity of the
indebtedness evidenced by the Note and avail itself of any and
all other rights and remedies which may then be available to
it hereunder, under any of the other Loan Documents, at law or
in equity.  All such remedies shall be cumulative, and not
exclusive; the Bank's exercise of any one or more of such
rights or remedies shall neither constitute an election of
remedies nor operate as a waiver of any other rights or
remedies which may be or become available to the Bank.





	12.	Miscellaneous Provisions.  (a)  This Agreement shall
inure to the benefit of and be binding upon Borrower and the Bank
and their respective successors and assigns; provided, however,
that this Agreement may not be assigned by Borrower without the
prior, written consent of the Bank.  No delay on the part of the
Bank in exercising any right, power or privilege shall operate as
a waiver thereof, nor shall any single or partial exercise of any
right, power or privilege constitute such waiver nor exhaust the
same, which shall be continuing.  The rights and remedies of the
Bank specified in this Agreement shall be in addition to and not
exclusive of any other rights and remedies which the Bank, by
operation of law, would otherwise have.





		(b)	All agreements, representations and warranties made
in this Agreement shall survive its execution, the making of the
advances by the Bank, and the execution of the Note and the other
Loan Documents, and shall continue until the Bank receives payment
in full for all indebtedness of the Borrower incurred under this
Agreement.





		(c)	This Agreement may be executed in any number of
counterparts, all of which shall constitute a single agreement.





		(d)	All notices, requests, demands and other
communications in connection with this Agreement shall be in
writing and shall be sent by certified mail, postage prepaid,
return receipt requested and addressed as set forth below:





				(i)  if to the Bank:





				National City Bank


				1900 East Ninth Street


				Cleveland, Ohio  44114


				Attn:  Gary L. Wimer, Senior Vice-President


				Location No. 2079





				with a copy concurrently to:





				Taft, Stettinius & Hollister LLP


				1300 East Ninth Street


				Suite 600


				Cleveland, Ohio  44114


				Attn:  William K. Smith, Esq.


				


				(ii)  if to Borrower:





				Associated Estates Realty Corporation


				5025 Swetland Court


				Cleveland, Ohio  44143


				Attn:  Greg Golz, Vice-President





				with a copy concurrently to:





				Associated Estates Realty Corporation


				5025 Swetland Court


				Cleveland, Ohio  44143


				Attn:  Martin A. Fishman, Esq., General Counsel








All notices furnished in compliance with the foregoing shall be
deemed effective when received by the party to whom it is
addressed.  





		(f)	This Agreement shall be governed by the laws of the
State of Ohio.





		(g)	AS A MATERIAL INDUCEMENT FOR THE BANK TO EXTEND
CREDIT TO BORROWER, AND AFTER HAVING THE OPPORTUNITY TO CONSULT
WITH COUNSEL OF ITS OWN SELECTION, BORROWER HEREBY EXPRESSLY WAIVES
THE RIGHT TO TRIAL BY JURY IN ANY LAWSUIT OR PROCEEDING RELATING TO
THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR ARISING IN ANY
WAY FROM THE OBLIGATIONS ARISING HEREUNDER.





		(h)	The headings of the Sections and paragraphs of this
Agreement have been inserted for convenience of reference only and
shall not be deemed to alter, limit or affect the scope, meaning or
interpretation of any provision of this Agreement.





		(i)  If any provision of this Agreement or the
application thereof to any person or circumstance shall be invalid
or unenforceable to any extent, the balance of this Agreement and
the application of all provisions of this Agreement to all other
persons and circumstances shall not be affected thereby; each
provision of this Agreement shall remain valid and enforceable to
the fullest extent permitted by law.





		(j)	All Advances and all Loans under this Agreement
constitute one loan, and all Obligations of Borrower under this
Agreement and all of the other Loan Documents constitute one
general obligation.  All of the rights of the Bank contained in
this Agreement shall likewise apply insofar as applicable to any
modification of or supplement to this Agreement. No officers,
directors, shareholders or employees of Borrower shall have any
personal liability for any obligations under this Agreement or as
a result of any documents or certificates delivered pursuant to
this Agreement, except in cases of actual fraud or willful
misconduct; provided, however, that nothing in this sentence shall
be deemed in any way to limit the absolute and unconditional
liability of Borrower for the full and timely payment, observance
and performance of all of its obligations hereunder.






[signatures on next page]


	IN WITNESS WHEREOF, Borrower and the Bank have executed this
Agreement as of the date first set forth above.











						NATIONAL CITY BANK





						By:/s/ Gary L. Wimer


							Gary L. Wimer, 


							Senior Vice-President








						ASSOCIATED ESTATES REALTY


						CORPORATION





						By:/s/ Jeffrey I. Friedman


						   	Jeffrey I. Friedman, President