PaineWebber Incorporated
1285 Avenue of the Americas
New York, NY 10019-6028

                                                                     PaineWebber

                                                      October 25, 1996

COMMERCIAL  ASSETS, INC.
3600 S. Yosemite, Suite 900
Denver, Colorado 80237

RE:  Amendment to Loan and Security  Agreement

Ladies and Gentleman:

        This letter is to confirm the  understanding  and agreement  between you
and Pain Webber Real Estate Securities Inc.  ("Lender") relating to that certain
Loan and  Security  Agreement  dated as of  November  29,  1994,  by and between
Commercial  Assets,  Inc.  ("Borrowers")  and  Lender  (the  "Agreement").  Each
initially  capitalized  term used and not defined  herein shall have the meaning
specified therefor in the Agreement.

        In  consideration  of Lender agreeing to extend the Termination  Date on
the terms and  conditions  specified  herein,  and for other  good and  valuable
consideration,  Borrower  and  Lender  hereby  agree to amend the  Agreement  as
follows:

        1. Section 1.1 of the Agreement is amended by deleting the definition of
the "Initial Committed Amount" and replacing it with the following:

        "Initial  Committed Amount" means $4,000,000;  provided,  however,  that
effective as of November 29, 1995, the Initial Committed Amount shall be $0."

        2.  Section 1.1 of the  Agreement  is further  amended by  deleting  the
definition of the term "Termination Date" and replacing it with the following:

        "Termination  Date" means November 28, 1997 or such later date as may be
set pursuant to the terms of Section 3.5."

        3.  Section  3.1 of the  Agreement  is  amended  by  deleting  the third
sentence in its entirety and by replacing it with the following:

        "Effective as of November 29, 1996, Lender's Commitment shall equal $O.,
and Lender shall have no obligation to make any Advance to or for the account of
Borrower."

<PAGE>

PaineWebber



4.      Section 3.5 of the Agreement is amended by deleting the date "August 29,
1995" on the second line  thereof  and by  replacing  such date with "August 28,
1997".

        Please   acknowledge   your  agreement  with  the  foregoing  terms  and
conditions by signing and returning a signed copy of this letter to PAINE WEBBER
REAL ESTATE SECURITIES INC., 1285 Avenue of the Americas,  New York, N.Y. 10019,
attention: George Mangiaracina, First Vice President

                                          Very truly yours,



                                          PAINE WEBBER REAL
                                          ESTATE SECURITIES INC.

                                          By:  /s/George Mangiaracina
                                             ------------------------------
                                          Name:  George Mangiaracina
                                               ----------------------------
                                          Title:  First Vice President
                                                ---------------------------

Accepted and agreed to
this ____day of _______, 1996:

COMMERCIAL ASSETS, INC.

By:  /s/Kevin Nystrom
   ------------------------------

Name:  Kevin Nystrom
     ----------------------------
Title:  Senior Vice President and
      ---------------------------
        Chief Financial Officer