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                                                                   Exhibit 10.18


                    AGREEMENT OF SEVERANCE AND MUTUAL RELEASE
                    -----------------------------------------

         This Agreement of Severance and Mutual Release ("Agreement") is made
effective as of the 1st day of January, 1999 between Peggy Crow Smith ("Smith")
and Lexford Residential Trust, a Maryland real estate investment trust (together
with its predecessor by merger, Lexford, Inc., formerly known as Cardinal Realty
Services, Inc., "Lexford Trust").

                                   WITNESSETH:
                                   -----------

         WHEREAS, Smith and Lexford each desire to amicably agree to the terms
of Smith's resignation from all positions including, without limitation, as an
employee or officer with Lexford Trust or any of its subsidiaries, affiliates or
partnerships (collectively with Lexford Trust, "Lexford"); subject, however, to
the provisions for Smith's continuing services for Lexford's benefit as set
forth in this Agreement.

         NOW, THEREFORE, in consideration of the covenants and agreements set
forth in this Agreement, and other good and valuable consideration exchanged by
the parties hereto, the sufficiency of which to support each and every covenant
herein is expressly acknowledged by the parties hereto, the parties agree as
follows:

1.       Resignation.
         ------------
         Smith, simultaneous with, and by means of the execution and delivery
hereof, hereby tenders her resignations, to become effective on the Termination
Date (as defined below), as Vice President of Human Resources of Lexford Trust
and as Vice President and Assistant Secretary of Lexford Properties, Inc.
("LPI") in which status she has heretofore served pursuant to that certain
Employment Agreement between Smith and LPI dated August 1, 1996 (the "Employment
Agreement"). Lexford and LPI hereby accept such resignations, to be effective on
the Termination Date. To the extent not covered by the aforementioned
resignations, this Agreement shall serve as Smith's resignation from all
positions with Lexford. For purposes of this Agreement the "Termination Date"
means the date on which Lexford Trust completes its planned relocation of its
Human Resources department and employees from its current location in Irving,
Texas to its proposed new location in Reynoldsburg, Ohio. At the time this
Agreement is being executed by Smith and Lexford Trust, the parties intend that
the Termination Date will occur on, or about, January 31, 1999. Between the date
of this Agreement and the Termination Date, Smith will continue as an employee
of Lexford Trust and LPI pursuant to the terms of the Employment Agreement at
the compensation provided for therein. Lexford Trust covenants to use its
reasonably commercial efforts to effect the events prerequisite to the
Termination Date as soon as reasonably practicable. Smith will cooperate with
Lexford Trust in assisting Lexford Trust to attain this stated objective
prerequisite to the occurrence of the Termination Date. Accordingly, the term of
the Employment Agreement will, upon the Termination Date, be deemed terminated



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without further action by Smith or Lexford and the terms and provisions thereof,
solely except those contained in Paragraph 8 (with the exception of subparagraph
(a)(i) of said Paragraph 8 which is subject to the release set forth herein)
which will remain in full force and effect, will be of no further force and
effect.

2.       Continuing Service Following Termination Date.
         ----------------------------------------------
         From and after the Termination Date, Smith will continue to provide
services for the benefit of Lexford Trust in the capacity of Human Resources
Director of Brentwood-Lexford Partners, LLC ("BLP"). Smith acknowledges and
agrees that she has been providing human resource support services through her
own efforts and those of the staff she currently supervises in her current
employment capacity with Lexford Trust and LPI. Smith and her staff have been
providing these services in furtherance of the terms of that certain Stock
Purchase Agreement dated as of April 1, 1998, by and between LPI and BLP (the
"Stock Purchase Agreement"). Smith acknowledges and agrees that she is familiar
with the relevant terms and provisions (specifically, Sections 5.3 and 5.4) of
the Agreement. Smith further acknowledges and understands that from and after
the Termination Date through and including the Service Completion Date (as
defined below) her personal duties to BLP will increase from a limited time
basis to a full-time basis as its Human Resources Director. Smith will provide
the services contemplated by this Paragraph 2 beginning on the first business
day following the Termination Date through, and including, the earlier of (i)
November 30, 1999; or (ii) the date upon which Smith shall obtain a full release
for her benefit and the benefit of LPI, duly executed and delivered by BLP,
stating that BLP has released Smith, LPI and each of their respective
affiliates, successors and legal representatives from any and all duties for
provision of human resource services which might otherwise be devoted by one
full-time employee for the benefit of BLP pursuant to the terms of the Stock
Purchase Agreement (the "Service Completion Date"). Any such release will be, in
form and substance, reasonably satisfactory to LPI and will be obtained at no
cost or expense to LPI (it being understood that, for purposes of this Paragraph
2, "cost" will be deemed to include, without limitation, any incremental
increase to LPI in continuing to discharge its obligations to BLP under the
Stock Purchase Agreement which would result following a proposed release of
Smith). The period of time which will transpire between the Termination Date and
the Service Completion Date is hereinafter referred to as the "Service
Continuation Period". Smith agrees to devote her full-time and best efforts to
the diligent performance of her duties as the Human Resources Director, of BLP
during the Service Continuation Period.

3.       Final Compensation.
         -------------------
         Following the Termination Date, Lexford will pay to Smith, as ongoing
compensation, severance compensation and in full consideration of Smith's
release and covenants contained herein:

         (a)  During the Service Continuation Period and in consideration of
              the services Smith will provide to BLP for the account and
              benefit of Lexford Trust and LPI, compensation of One Hundred
              Twenty-five Thousand 



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              Dollars ($125,000) per annum, payable in regular bi-monthly
              installments, subject to all applicable employee payroll,
              withholding and other employment taxes. In addition, during the
              Service Continuation Period, Lexford Trust will provide
              continuation of healthcare, dental, life and disability insurance
              coverage in accordance with the terms of Lexford Trust's group
              insurance programs and Smith may remain an active participant in
              Lexford Trust's 401(k) Savings Plan.

         (b)  Not later than seven days following the Service Completion Date,
              a lump sum payment to Smith in an amount determined by
              multiplying the sum of One Hundred Twenty-five Thousand Dollars
              ($125,000) by a fraction, the numerator of which will equal the
              number of days which will transpire from the first business day
              following the Service Completion Date, through and including July
              31, 2000, and the denominator of which will equal 365. Smith
              acknowledges that such payment to be made to her in accordance
              with this Paragraph 3(b) will be made net of applicable employee
              payroll withholding and other employment taxes.

         (c)  Ownership, possession and use of that certain desktop computer
              terminal which Smith has used during her employment with Lexford.

         (d)  Payment of attorneys' fees and disbursements incurred by Smith,
              as well as Annette Hoover, in the negotiation, preparation,
              review and execution of this Agreement, as well as that certain
              Agreement of Severance and Mutual Release of even date herewith
              between Lexford Trust and Annette Hoover, in an aggregate amount
              not to exceed $2,500. Lexford's obligations under this Paragraph
              2(d) will be satisfied by direct payment of such attorneys' fees
              and disbursements in an aggregate amount not to exceed $2,500 to
              the law firm of Michener, Larimore et. al., of Fort Worth, Texas.

         (e)  Any vested benefits, pursuant to the provisions of the Company's
              401(k) Savings Plan.

         (f)  Commencing on the first business day following the Service
              Completion Date, three (3) months outplacement services through
              Right Associates. Such services will include, but are not limited
              to, career assessment, determination of career objectives, career
              transition campaign design, career transition campaign execution,
              financial consulting, and support services.

         (g)  Smith acknowledges and agrees that the considerations to be given
              to her pursuant to this Paragraph 3 will be made in full
              satisfaction of any and all obligations and liabilities which
              Lexford, LPI or any of their respective affiliates owes, or may
              owe, to Smith in respect of the Employment 



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              Agreement or any other agreements, documents, instruments or
              arrangements (whether written or verbal) existing between Smith
              and any of them. Such obligations satisfied hereby include, by way
              of example and not by way of limitation: (i) Lexford's prior
              obligations under the Employment Agreement to furnish Smith with
              any health and dental insurance, life insurance, disability
              insurance, retirement or other employee benefits of any kind,
              nature or description, it being understood and agreed that, from
              and after the Service Completion Date, all such obligations shall
              cease immediately and be of no further force and effect; provided,
              however, that nothing herein shall impact statutory obligations
              imposed by the Comprehensive Omnibus Budget Reconciliation Act;
              and (ii) the obligations of Lexford Trust and LPI (as successor by
              merger to Rexflor Acquisition Corporation), if any, remaining
              under that certain Merger Agreement dated August 1, 1996, by and
              among Lexford Trust, Rexflor Acquisition Corporation, LPI and
              LPI's former shareholders, including Smith (the "Merger
              Agreement").

4.       Return of Equipment.
         --------------------
         As provided in Paragraph 3(b) above, Smith may keep the desktop
personal computer terminal she used during her employment with Lexford; however,
promptly following the Service Completion Date she must return all other
equipment owned by Lexford, including, but not limited to, dictation equipment,
and will remove such retained computer terminal as well as all personal effects
from the office space she has occupied at Lexford's offices in Irving, Texas.

5.       Release by Employee.
         --------------------

         (a)  Smith, for herself and her dependents, successors, assigns,
              heirs, representatives, attorneys, executors and administrators
              (and her and their legal representatives of every kind), hereby
              completely and irrevocably discharges and releases Lexford and
              LPI, their respective officers, trustees, directors, employees,
              agents, shareholders, affiliates, subsidiaries, related entities,
              successors and assigns from any and all claims, demands, actions,
              causes of action and/or liability whatsoever involving any matter
              arising out of or in any way related, directly or indirectly, to
              (i) Smith's employment with Lexford and LPI, including any
              positions with subsidiary or affiliate entities, compensation
              therefor, or the termination thereof, including, but not limited
              to, any claim for employment discrimination in violation of Title
              VII of the Civil Rights Act of 1964, 42 U.S.C. Section 2000e, et
              seq., the Age Discrimination in Employment Act, 29 U.S.C. Section
              621, et seq., the Americans with Disabilities Act, 42 U.S.C.
              Section 12101, et seq., Ohio Revised Code Section 4112, Ohio
              Revised Code Section 4101 and any other federal, state or
              municipal fair employment practice or discrimination laws,
              statutes or ordinances, (ii) the Merger Agreement; and (iii) any
              and all other matters, rights, claims, actions, suits, liens,



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              debts, dues, damages or demands of every kind, whether or not
              referred to in this Agreement, arising, occurring, accruing or in
              existence on, or prior to, the date hereof. Smith agrees that she
              will not seek reinstatement or reemployment with Lexford or any
              affiliate thereof at any time in the future.

         (b)  Smith further agrees and acknowledges that she (i) has been
              advised by Lexford to consult with legal counsel prior to
              executing this Agreement and the release provided for in this
              Paragraph 4; (ii) has had an opportunity to consult with and has
              been advised by legal counsel of her choice; (iii) fully
              understands the terms of this Agreement; and (iv) enters into
              this Agreement freely and voluntarily and intending to be bound.

6.       Release by Lexford.
         -------------------
         Except as provided in the immediately succeeding sentence Lexford
Trust, on behalf of itself and its affiliated, related and subsidiary entities,
successors and assigns (herein the "Lexford Releasors"), hereby completely and
irrevocably releases and forever discharges Smith, her successors, assigns,
heirs, representatives, attorneys, executors and administrators from any and all
claims, demands, damages, actions and/or causes of action of any kind and every
description, which the Lexford Releasors now have or may have had for, upon, or
by reasons of any cause whatsoever, against Smith. This release shall not,
however, apply to the obligations of Smith, arising under or evidenced by this
Agreement or under Paragraph 8 of the Employment Agreement (with the exception
of subparagraph (a)(i) of said Paragraph 8 which is subject to the release set
forth herein).

7.       Continued Availability and Cooperation.
         ---------------------------------------

         (a)  From and after the Termination Date, Smith shall cooperate fully
              with Lexford and with Lexford's counsel in connection with any
              future actual or threatened litigation or administrative
              proceeding involving Lexford, its affiliated, related or
              subsidiary entities, its officers, directors, shareholders,
              employees, agents and representatives, and its successors or
              assigns that relates to events, occurrences or conduct occurring
              (or claimed to have occurred) during the period of Smith's
              employment by Lexford and LPI (or any of its
              predecessors-in-interest).

         (b)  Smith shall be reimbursed by Lexford for reasonable travel,
              lodging, telephone and similar expenses incurred in connection
              with any such cooperation required under Paragraph 7(a) above,
              which Lexford shall reasonably endeavor to schedule at times not
              conflicting with the reasonable requirements of any third party
              with whom Smith has a business relationship that provides
              remuneration to Smith. Smith shall not unreasonably withhold her
              availability for such cooperation.



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8.       Successors and Binding Agreement.
         ---------------------------------

         (a)  This Agreement shall be binding upon and inure to the benefit of
              Lexford and any successor of or to Lexford, including, without
              limitation, any persons acquiring directly or indirectly all or
              substantially all of the business and/or assets of Lexford
              whether by purchase, merger, consolidation, reorganization or
              otherwise be assignable or delegable by Lexford.

         (b)  This Agreement shall inure to the benefit of and be enforceable
              by Smith, her personal or legal representatives, executors,
              administrators, successors, heirs, distributees and/or legatees.

         (c)  This Agreement is personal in nature and none of the parties
              hereto shall, without the consent of the other parties, assign,
              transfer or delegate this Agreement or any rights or obligations
              hereunder except as expressly provided in Paragraphs 8(a) and
              8(b) of this Agreement.

         (d)  This Agreement is intended to be for the exclusive benefit of the
              parties hereto, and except as provided in Paragraph 8(a) of this
              Agreement, no third party shall have any rights hereunder.

9.       Confidentiality and Statements to Third Parties.
         ------------------------------------------------

         (a)  Except as otherwise required by law and except to the extent, and
              only to the extent, that Lexford has, publicly disclosed, or will
              publicly disclose the terms of this Agreement due to its status
              as a reporting company under the Securities Exchange Act of 1934
              and Smith's prior affiliate status, Smith will not disclose the
              terms of this Agreement to anyone other than members of her
              immediate family, her accountants, or her legal advisors, as
              necessary, and Smith will require that they and their agents take
              all reasonable steps to maintain the confidentiality hereof,
              except as otherwise required by law, and Lexford will further
              disclose the terms of this Agreement only to those persons
              (including employees of Lexford) with a genuine business interest
              in learning such information.

         (b)  Neither Smith nor Lexford shall, directly or indirectly, make or
              cause to be made any statements to any third parties criticizing
              or disparaging the other or commenting adversely on the character
              or business reputation of the other, but this provision shall not
              limit the ability or responsibility of either party to respond to
              the best of its knowledge to administrative or regulatory
              inquiries or to testify to the best of its knowledge in legal
              proceedings.


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         (c)  Smith agrees not to disclose, divulge, discuss, copy or otherwise
              use or suffer to be used in any manner, in competition with, or
              contrary to the interests of, Lexford or any of Lexford's
              subsidiaries, affiliates or related entities, customer lists,
              product research, pricing information, Lexford's trade secrets or
              any other information that would provide Lexford's competitors
              with information about Lexford's methods, goals, or customers, it
              being acknowledged by Smith that all such information regarding
              Lexford's business and Lexford's subsidiaries, affiliates and
              related entities compiled or obtained by, or furnished to, Smith
              while Smith was employed by or associated with Lexford is
              confidential information and Lexford's exclusive property.

10.      Notices.
         --------
         For all purposes of this Agreement, all communications provided for
herein shall be in writing and shall be deemed to have been duly given when
delivered, addressed (a) to Lexford (to the attention of its General Counsel) at
its principal executive offices located at The Huntington Center, 41 South High
Street, Suite 2410, Columbus, Ohio 43215, and (b) to Smith at her principal
residence, or to such other address as either party may have furnished to the
other in writing and in accordance herewith. Notices of change of address shall
be effective only upon receipt.

11.      Governing Law.
         --------------
         The validity, interpretation, construction and performance of this
Agreement (and every other issue arising hereunder) shall be governed by the
laws of the State of Ohio, without giving effect to the principles of conflict
of laws of such state.

12.      Miscellaneous.
         --------------
         Lexford and Smith hereby acknowledge and understand that:

         (a)  Each has been afforded the opportunity to review and consider the
              terms of this Agreement for a period of forty-five (45) days and
              any waiver of such opportunity has been effected knowingly and
              voluntarily with the benefit of legal counsel;

         (b)  Each has availed herself or itself of the opportunity to receive
              counsel regarding their respective rights, obligations and
              liabilities;

         (c)  Nothing in this Agreement is or shall be construed as an
              admission by Lexford of any breach of any agreement or any
              intentional or unintentional wrongdoing of any nature;

         (d)  Neither Smith nor Lexford have made any representations
              concerning the terms or effects of this Agreement other than
              those contained in this Agreement and this Agreement may not be
              modified or terminated orally;



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         (e)  The terms of this Agreement are not effective or enforceable
              until seven (7) days after its execution, during which period
              Smith may revoke this Agreement;

         (f)  The benefits provided Smith herein are in excess of the benefits
              as to which she would otherwise be entitled;

         (g)  The death or disability of Smith following the Service Completion
              Date Agreement shall not affect or revoke this Agreement or any
              of the obligations of the parties hereto. No provision of this
              Agreement may be modified, waived or discharged unless such
              waiver, modification or discharge is agreed to in writing signed
              by Smith and Lexford. No waiver by either party hereto at any
              time of any breach by the other party hereto or compliance with
              any condition or provision of this Agreement to be performed by
              such other party shall deemed a waiver of similar or dissimilar
              provisions or conditions at the same or at any prior or
              subsequent time. No agreements or representations, oral or
              otherwise, expressed or implied, with respect to the subject
              matter hereof have been made by any of the parties that are not
              set forth expressly in this Agreement and every one of them (if,
              in fact, there have been any) is hereby terminated without
              liability or any other legal effect whatsoever; and

         (h)  Except as provided for in this Agreement, all compensation and
              other payments due Smith as a result of her employment with
              Lexford have been paid in full and Smith is not entitled to any
              additional salary, bonus or other payments whatsoever.

         (i)  Smith hereby represents and warrants to Lexford that she is an
              unmarried individual.

13.      Entire Agreement.
         -----------------
         This Agreement (together with the other documents and supporting
information delivered simultaneously herewith) shall constitute the entire
agreement among the parties hereto with respect to the subject matter hereof and
shall supercede all prior verbal or written agreements, covenants,
communications, understandings, commitments, representations or warranties,
whether oral or written, by any party hereto or any of its representatives
pertaining to such subject matter.

14.      Validity.
         ---------
         The validity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement which shall nevertheless remain in full force and effect.



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15.      Counterparts.
         -------------
         This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original, but all of which together shall
constitute one and the same Agreement.

16.      Captions and Sections Headings.
         -------------------------------
         Captions and section headings used herein are for convenience and are
not part of this Agreement and shall not be used in construing it.

17.      Further Assurances.
         -------------------
         Each party hereto shall execute such additional documents and do such
additional things, as may reasonably be requested by the other party to
effectuate the purposes and provisions of the Agreement.


         IN WITNESS WHEREOF, the undersigned parties have hereunto executed this
Severance Agreement and Mutual Release as of the day and date first above
written.


WITNESSES:                                  LEXFORD RESIDENTIAL TRUST

/s/ Susan D. Krumlauf                       By: /s/ BRADLEY A. VAN AUKEN
------------------------                        ------------------------
                                                Bradley A. Van Auken
/s/ Christine Gallion                           Senior Vice President
------------------------

/s/ Teresa Johnson                              /s/ PEGGY CROW SMITH
------------------------                        ------------------------
                                                Peggy Crow Smith
/s/ Lauri Danlizo                               
------------------------



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STATE OF OHIO              )
                           )       SS:
COUNTY OF FRANKLIN         )

         BEFORE ME, a Notary Public in and for said County and State, personally
appeared Bradley A. Van Auken, known to me to be the Senior Vice President of
Lexford Residential Trust; he did acknowledge that he executed the foregoing
Agreement of said Maryland real estate investment trust and that the same was
his free act and deed and the free act and deed of said Maryland real estate
investment trust.


                                                 /s/ Mark D. Thompson
                                                 -------------------------
                                                 Notary Public


STATE OF TEXAS             )
                           )       SS:
COUNTY OF DALLAS           )

         BEFORE ME, a Notary Public in and for said County and State, personally
appeared Peggy Crow Smith, and she did acknowledge that she executed the
foregoing Agreement and that the same was her free act and deed.


                                                 /s/ Barbara L. Lewis
                                                 -------------------------
                                                 Notary Public




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