<PAGE>
                       CONSOLIDATED, AMENDED AND RESTATED
                 MORTGAGE, DEED OF TRUST, DEED TO SECURE DEBT,
                    SECURITY AGREEMENT, FINANCING STATEMENT,
                    FIXTURE FILING AND ASSIGNMENT OF LEASES,
                          RENTS AND SECURITY DEPOSITS

                  THIS  CONSOLIDATED,  AMENDED AND  RESTATED  MORTGAGE,  DEED OF
TRUST, DEED TO SECURE DEBT, SECURITY  AGREEMENT,  FINANCING  STATEMENT,  FIXTURE
FILING AND ASSIGNMENT OF LEASES,  RENTS AND SECURITY DEPOSITS (herein,  together
with all amendments  and  supplements  thereto,  this  "Mortgage"),  dated as of
August 7, 1998, is made by HOMESTEAD  VILLAGE  LIMITED  PARTNERSHIP,  a Delaware
limited partnership having an address c/o Homestead Village  Incorporated,  2100
RiverEdge Parkway,  Atlanta,  Georgia  ("Borrower"),  to (i) (A) ALEXANDER TITLE
AGENCY,  INC.,  a Virginia  corporation,  having an address at 7921 Jones Branch
Drive, 6th Floor,  McLean,  VA 22102,  with respect to the Maryland and Virginia
properties;  (B) CHICAGO TITLE INSURANCE  COMPANY, a Missouri  corporation,  One
Exchange Plaza,  Suite 707, Raleigh,  North Carolina,  with respect to the North
Carolina properties; and (C) JOSEPH B. PITT, JR., a resident of Davidson County,
Tennessee,  having an address  of Chicago  Title  Insurance  Company,  414 Union
Street,  suite 1800,  Nashville,  Tennessee 37219, with respect to the Tennessee
properties  (Alexander Title Agency,  Inc.,  Chicago Title Insurance Company and
Joseph B. Pitt,  Jr.,  with respect to such  properties  and together with their
successors and assigns,  "Trustee"), as trustee for MIDLAND LOAN SERVICES, INC.,
a Delaware corporation,  having an address at 210 West 10th Street, Kansas City,
Missouri  64105,  together  with its  successors  and assigns,  "Lender"),  with
respect to the properties  located in Maryland,  North  Carolina,  Tennessee and
Virginia,  as more  particularly  described herein (the "Deed of Trust States"),
and (ii) Lender,  with respect to the properties  located in Florida and Georgia
(the "Mortgage and Security Deed States").

                              W I T N E S S E T H :

                  WHEREAS,  Borrower is the record and beneficial owner of a fee
simple interest in those certain  properties  located on and comprising the land
described (i) with respect to the Deed of Trust States, in Exhibit "A-1" through
"A-13" , and (ii) with  respect to the Mortgage  and  Security  Deed States,  in
Exhibit "A-14" through "A-26", attached hereto, (collectively, the "Land") which
properties  are  encumbered  by those  certain  mortgages,  deeds  of trust  and
security  deeds   described  on  Exhibit  "B"  attached  hereto  (the  "Original
Mortgages"),  which Original  Mortgages  secured those certain  promissory notes
<PAGE>
described on Exhibit "C" attached  hereto in the aggregate  principal  amount of
Ninety Eight  Million  Twenty Eight  Thousand Four Hundred  Seventy-One  Dollars
($98,028,471) (the "Original Notes");

                  WHEREAS,  Lender is making an  additional  loan to Borrower on
the date  hereof  in the  amount  of  $24,000,000  (the  "Advance")  so that the
combined  outstanding  principal  balance  on the Note (as  herein  defined)  is
$122,028,471.

                  WHEREAS,  the  Original  Notes  have been  superceded,  and in
renewal,  substitution  and replacement  therefor,  and  consolidation  with the
Advance,  Assignor and Assignee have executed that certain Consolidated Amended,
Renewed and Restated Promissory Note, dated as of the date hereof (together with
all amendments,  modifications,  supplements,  restatements,  substitutions  and
replacements  thereof  and  thereto,  the  "Note"),  which  Note  evidences  one
consolidated joint and several  indebtedness of Assignee in the principal amount
of ONE HUNDRED TWENTY-TWO MILLION TWENTY-EIGHT THOUSAND FOUR HUNDRED SEVENTY-ONE
DOLLARS  ($122,028,471)  (the  "Loan").  The Note shall be payable as  specified
therein,  with an initial  stated  maturity  date of June 30, 1999 (the "Initial
Maturity  Date").  The  Initial  Maturity  Date or such  earlier  date as may be
required under the terms of the Note or such later date that may be specified by
Lender  pursuant  to the  terms of the Note  (being  referred  to  herein as the
"Maturity Date"); and

                  WHEREAS,  in connection with the consolidation,  amendment and
restatement  of the Note,  Borrower,  Trustee and Lender hereby desire to renew,
consolidate,  amend and restate the Original Mortgages in their entirety to form
a single lien on the Mortgaged  Property in the amount equal to the Loan Amount,
securing the principal amount due and owing under the Note; and

                  WHEREAS,  this  Mortgage  shall be  construed so as to provide
that, (i) in the Deed of Trust States,  all conveyances  shall be to the Trustee
for the benefit of Lender,  and (ii) in the Mortgage  and Security  Deed States,
all conveyances shall be to Lender; and

                  WHEREAS, Borrower, Trustee and Lender intend these recitals to
be a material part of this Mortgage.

                  NOW,  THEREFORE,  in  consideration  of the  Loan to  Borrower
evidenced by the Note and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged,  Borrower,  Trustee and Lender
hereby agree that the  Original  Mortgage and  Additional  Mortgages  are hereby
renewed, consolidated, amended and restated as follows:




<PAGE>



        TO  SECURE:

              (1)  payment  and   performance  of  all  covenants,   conditions,
liabilities and  obligations of Borrower to Lender  contained in, and payment of
the indebtedness  evidenced by, the Note plus all interest  payable  thereunder;
and

             (ii)  paymen  and   performance  of  all   covenants,   conditions,
liabilities  and  obligations  contained in this  Mortgage  and any  extensions,
renewals or modifications hereof; and

            (iii)  payment  and   performance  of  all  covenants,   conditions,
liabilities  and  obligations of Borrower  contained in the Assignment of Leases
and Rents,  dated as of the date hereof (together with any extensions,  renewals
or modifications  thereof,  the "Assignment of Leases"),  between  Borrower,  as
assignor,  and Lender,  as assignee and the Cash Collateral  Account,  Security,
Pledge and Assignment Agreement,  dated as of the date hereof (together with any
extensions, renewals or modifications thereof, the "Cash Collateral Agreement"),
among Borrower, Lender and LaSalle National Bank; and

           (iv)  payment  and   performance   of  all   covenants,   conditions,
liabilities  and  obligations  of Borrower  contained  in each of the other Loan
Documents (as defined below); and

            (v) without  limiting the  foregoing,  payment of all  indebtedness,
liabilities,  and amounts from time to time  incurred by Lender  pursuant to the
Note, this Mortgage or such other Loan Documents,  even if the aggregate  amount
of the monetary  obligation  outstanding at any one time exceeds the face amount
of the  Note  (all  of the  foregoing  indebtedness,  monetary  liabilities  and
obligations   set  forth  in  clauses   (i)-(iv)  above  and  this  clause  (v),
collectively, the "Indebtedness"); and

           (vi)  payment  of the  Indebtedness  together  with the  payment  and
performance of all other  covenants,  conditions,  liabilities  and  obligations
described  and set  forth in  clauses  (i)-(v)  above and in this  clause  (vi),
collectively, the "Obligations."

                                GRANTING CLAUSES

                  NOW, THEREFORE,  THIS MORTGAGE WITNESSETH:  that Borrower,  in
consideration of the premises,  the Indebtedness  secured by the Note, and other
good and valuable consideration,  the receipt and sufficiency of which is hereby
acknowledged (a) has mortgaged,  warranted, granted, bargained, sold, alienated,
<PAGE>
released,  confirmed,  conveyed,  pledged and assigned and (b) by these presents
does  hereby  irrevocably  grant and create a first  priority  Lien (as  defined
below),  subject to the Permitted  Encumbrances and the provisions hereof and of
the other Loan Documents, on and security interest in, and does hereby MORTGAGE,
WARRANT, GRANT A SECURITY INTEREST IN, GRANT, BARGAIN, SELL, ALIENATE,  RELEASE,
CONFIRM, CONVEY, PLEDGE, ASSIGN, TRANSFER AND SET OVER TO LENDER (OR TRUSTEE, IF
APPLICABLE),  WITH  POWER OF SALE AND  RIGHT OF ENTRY  AND  POSSESSION,  for the
benefit and use of Lender and its successors and assigns  forever,  and TRUSTEE,
ITS SUCCESSORS AND ASSIGNS, all its estate,  right, title and interest now owned
or hereafter  acquired in, to and under any and all the property  (collectively,
the "Mortgaged Property") described in the following Granting Clauses:

               (A)   the Land;

               (B) all of  Borrower's  right,  title and  interest in and to the
     buildings,  foundations,  structures,  improvements  and  fixtures  now  or
     hereafter located or erected on the Land (the "Improvements");

               (C) all of Borrower's right,  title and interest,  if any, in and
     to (i) al streets,  avenues, roads, alleys,  passages,  places,  sidewalks,
     strips and gores of land and ways, existing or proposed, public or private,
     adjacent  to the Land,  and all  reversionary  rights  with  respect to the
     vacation  of  said  streets,  avenues,  roads,  alleys,  passages,  places,
     sidewalks  and ways in the land  lying  thereunder,  (ii) all air,  lateral
     support,  drainage,  oil,  gas and mineral  rights,  options to purchase or
     lease,   waters,  water  courses  and  riparian  rights  now  or  hereafter
     pertaining  to or used in  connection  with the Land  and/or  Improvements,
     (iii)  all and  singular,  the  tenements,  hereditaments,  rights  of way,
     easements,  appendages  and  appurtenances  and  property  now or hereafter
     belonging  or in any way  appertaining  to the Land,  and (iv) all  estate,
     right,  title, claim or demand  whatsoever,  either at law or in equity, in
     possession  or  expectancy,  of,  in  and to the  Land  (collectively,  the
     "Appurtenances");

               (D) all of Borrower's  right,  title and interes in and to all of
     the  machinery,ppliances,   apparatus,   equipment,   fittings,   fixtures,
     materials, articles of personal property and goods of every kind and nature
     whatsoever, and all additions to and renewals and replacements thereof, and
     all  substitutions  therefor,  now or  hereafter  affixed to,  attached to,
     placed upon or located upon or in the Land, or any part  thereof,  and used
     in connection with the use, ownership, management,  maintenance,  enjoyment
     or operation of the Land in and present or future  occupancy or use thereof
     and now  owned or  leased  or  hereafter  owned or  leased  (to the  extent
     permitted  by the  applicable  Lease) by  Borrower  including,  but without
     limiting the generality of the foregoing, all heating,  lighting,  laundry,
     cooking,  incinerating,  loading,  unloading and power equipment,  boilers,
<PAGE>
     dynamos,   stokers,   engines,  pipes,  pumps,  tanks,  motors,   conduits,
     switchboards,   plumbing,   lifting,   cleaning,   fire  prevention,   fire
     extinguishing,  refrigerating,  ventilating,  and communications apparatus,
     air  cooling  and  air  conditioning  apparatus,   building  materials  and
     equipment,  elevators,  escalators,  carpeting, shades, draperies, awnings,
     screens,  doors  and  windows,   blinds,  stoves,  ranges,   refrigerators,
     dishwashers,   cabinets,  office  equipment,   furniture  and  furnishings,
     partitions,  ducts and  compressors  (other  than  equipment  and  personal
     property of tenants of the Land or the  Improvements,  or any part thereof)
     hereinafter collectively called "Building Equipment"),  and Borrower agrees
     to  execute  and  deliver,  from  time to time,  such  further  instruments
     (including,  without limitation,  Uniform Commercial Code of the applicable
     State in which a Property  is  located  (the  "UCC")) as may be  reasonably
     requested  by Lender to confirm the lien of this  Mortgage on any  Building
     Equipment or any Intangible;

               (E) Without  limiting the  generality  of the  provisions  of any
     other  Granting  Clause,  all  of  Borrower's  rights,   title,   interest,
     privileges and  franchises in and to the following,  now owned or hereafter
     acquired by  Borrower,  to the extent of  Borrower's  interest  therein and
     thereto and to the extent assignable (collectively, "Operating Assets"):

               (i)  bookings for the use of guest  rooms,  meeting  rooms at the
          extended  stay hotels or at any other  improvements  now or  hereafter
          located on any of the Land;

              (ii)  all  contracts  respecting  utility  services  for,  and the
          maintenance,  operations,  or equipping  of, the  Property,  including
          guaranties and warranties relating thereto;

             (iii) the  permits  and  licenses  held by Lender  or  required  to
          operate the hotels located on the Land;

              (iv) all contract  rights,  leases  (whether  with respect to real
          property,  personal  property  or both  real and  personal  property),
          concessions,   trademarks,   trade  names,   service   marks,   logos,
          copyrights,   warranties  and  other  items  of  intangible   personal
          property,  and any and all good will associated with the same relating
          to the  ownership or  operation of the extended  stay hotels or of any
          other  improvements  now or  hereafter  located  on  any of the  Land,
          including,  without limitation,  (i) telephone and other communication
<PAGE>
          numbers,  (ii) all software  licensing  agreements  as are required to
          operate  computer  software  systems at the extended stay hotels or at
          any other improvements now or hereafter located on any of the Land and
          books and records relating to the software programs, and (iii)lessee's
          interest under leases of Tangible  Personal  Property (as  hereinafter
          defined);

              (v) all contracts,  purchase  orders,  requisitions and agreements
          entered  into by or on behalf of Borrower or which have been  assigned
          to  Borrower,  for the design,  construction,  and  furnishing  of the
          extended  stay hotels or of any other  improvements  now or  hereafter
          located on any of the Land, including, without limitation, architect's
          agreements, engineering agreements, construction contracts, consulting
          agreements and agreements or purchase orders for all items of Tangible
          Personal  Property  and any payment or  performance  bonds in favor of
          Borrower (and all warranties and guarantees  thereunder and warranties
          and  guarantees  of any  subcontractor  and bonds issued in connection
          with the work to be performed by any subcontractor);

             (vi)  the  following  personal  property  (the  "Tangible  Personal
          Property") now or hereafter  acquired by Borrower  (directly or by way
          of lease) which is located on, or to be located on, or which is in use
          or held in  reserve  storage  for future  use in  connection  with the
          operations  of, the extended stay hotels or of any other  improvements
          now or hereafter  located on any of the Land,  which are on hand or on
          order whether stored on-site or off-site:

                    1.   all  furniture,  furnishings,   equipment,   machinery,
               apparatus, appliances fixtures  and fittings  and other  articles
               of  tangible personal property;

                    2.  all  china,   glassware,   linens,   kitchen   utensils,
               silverware and uniforms;

                    3. all consumables and operating  supplies of every kind and
               nature, including, without limitation, accounting supplies, guest
               supplies, forms, printing,  stationery,  food and beverage stock,
               bar supplies, laundry supplies and brochures to existing purchase
               orders;

                    4. all upholstery material, carpets and rugs, beds, bureaus,
               chiffonniers, chairs, chests, desks, bookcases, tables, curtains,
               hangings,   pictures,  divans,  couches,   ornaments,  bars,  bar
               fixtures,   safes,   stoves,   ranges,   refrigerators,   radios,
<PAGE>
               televisions, clocks electrical equipment, lamps, mirrors, heating
               and  lighting   fixtures  and   equipment,   ice  machines,   air
               conditioning   machines,   fire   prevention  and   extinguishing
               apparatus, laundry machines, and all similar and related articles
               used in bedrooms,  sitting  rooms,  bathrooms,  boudoirs,  halls,
               closets,  kitchens, dining rooms, offices, lobbies, basements and
               cellars in the extended stay hotel and in any other  improvements
               now or hereafter located on any of the Land;

                    (5) all cars, vans, buses,  trucks, and other vehicles owned
               or leased by Borrower for use in connection with the operation of
               the  Property,  together with all  equipment,  parts and supplies
               used to service, repair, maintain and equip the foregoing;

                    (6) all drawings, designs, plans and specifications prepared
               by architects, engineers, interior designers, landscape designers
               and any  other  professionals  or  consultants  for  the  design,
               development, construction and/or improvement of the extended stay
               hotels, or for any other development of the Land, as amended from
               time to time;

                    (7) any administrative and judicial proceedings initiated by
               Borrower,  or in which  Borrower has  intervened,  concerning the
               extended stay hotels or the Land, and  agreements,  if any, which
               are the subject matter of such proceedings;

                    (8) any customer lists utilized by Borrower  including lists
               of transient guests and restaurant and bar patrons; and

                    (9) all of the  good  will in  connection  with  the  assets
               listed in this  Granting  Clause (E) and in  connection  with the
               operation of the hotel.

                  Except as  otherwise  set forth  herein  and in the other Loan
Documents,  the assignment  made by this Granting Clause (E) shall not impair or
diminish any right,  privilege  or  obligation  of Borrower  with respect to the
Operating Assets, nor shall any such obligation be imposed on Lender.

                  All such right,  title and interest of Borrower in and to each
of the  twenty-six  (26)  distinct  parcels  or sets of  parcels of the Land and
Borrower's interest in and to the Improvements, Building Equipment and Operating
Assets located thereon and such other property with respect thereto described in
the  foregoing  Granting  Clauses  is herein  called a  "Property"  and all such
Properties are herein collectively called the "Properties".
<PAGE>

          (F) all of Borrower's right, title and interest as lessor or licensor,
     as the case may be, in, to and under all leases, underlettings,  concession
     agreements  and  licenses  of the  Properties,  or any  part  thereof,  now
     existing  or  hereafter  entered  into  by  Borrower   including,   without
     limitation, any cash and securities deposited thereunder (collectively, the
     "Leases"),  the grant of such cash and securities hereunder being expressly
     subject to the provisions of the applicable  Leases,  and all of Borrower's
     right,  title and interest,  subject to the provisions of Section 9, in the
     right to receive and collect the revenues,  income, rents, issues, profits,
     royalties and other  benefits  payable under any of the Leases or otherwise
     arising from the use or  enjoyment of all or any portion of the  Properties
     including,  without limitation,  transient and other hotel room rentals and
     rentals of other portions of the Improvements (collectively, the "Rents");

          (G) subject to the  provisions of Section 6 hereof,  all of Borrower's
     right,  title  and  interest  in and to all  proceeds,  judgments,  claims,
     compensation, awards or payments hereafter made to Borrower for the taking,
     whether permanent or temporary, by condemnation, eminent domain, or for any
     conveyance  made in lieu of such  taking,  of the  whole or any part of the
     Properties, including, without limitation, all proceeds, judgments, claims,
     compensation  awards or  payments  for  changes  of grade of streets or any
     other injury to or decrease in the value of the Properties,  whether direct
     or  consequential,  which said awards and payments  are hereby  assigned to
     Lender,  who is hereby  authorized  to collect  and  receive  the  proceeds
     thereof and to give proper receipts and acquittances therefor, and to apply
     the same toward the payment of the Indebtedness in such order as Lender may
     determine in accordance with the provisions of this Mortgage without regard
     to the adequacy of Lender's security hereunder and notwithstanding the fact
     that the amount  thereof  may not then be due and  payable,  and toward the
     payment of reasonable  counsel fees,  costs and  disbursements  incurred by
     Lender in connection  with the  collection of such awards or payments;  and
     Borrower hereby agrees,  upon request, to make, execute and deliver any and
     all further assignments and other instruments sufficient for the purpose of
     confirming   this   assignment  of  said   proceeds,   judgments,   claims,
     compensation  awards or  payments  to Lender,  subject to Section 6 hereof,
     free,  clear  and  discharged  of any  encumbrances  of any kind or  nature
     whatsoever other than the Permitted Encumbrances;

          (H) subject to the  provisions of Section 6 hereof,  all of Borrower's
     right,  title and  interest  in and to all  unearned  premiums  paid  under
     insurance  policies now or hereafter obtained by Borrower to the extent the
     same insure the Properties and any other insurance  policies required to be
     maintained  pursuant  to Section  hereof to the extent the same  insure the
     Properties including, without limitation,  liability insurance policies and
     Borrower's  interest  in and to all  proceeds  of the  conversion  and  the
<PAGE>
     interest  payable  thereon,  voluntary  or  involuntary,  of the  Mortgaged
     Property,  or any part thereof,  into cash or liquidated  claims including,
     without limitation,  proceeds of casualty insurance, title insurance (other
     than  liability  insurance)  or any other  insurance  maintained on or with
     respect to the Properties;

          (I)  all  right,  title  and  interest  of  Borrower  in  and  to  all
     extensions,   improvements,    betterments,   renewals,   substitutes   and
     replacements  of, and all additions and  Appurtenances  to, the Properties,
     hereafter acquired by or released to Borrower or constructed,  assembled or
     placed by Borrower on the  Properties,  and all conversions of the security
     constituted   thereby;   immediately   upon  such   acquisition,   release,
     construction,  assembling, placement or conversion, as the case may be, and
     in each such case,  to the extent  permitted  by law,  without  any further
     mortgage,  conveyance,  assignment  or other act by  Borrower,  any of such
     extensions,   improvements,    betterments,   renewals,   substitutes   and
     replacements shall become subject to the Lien of this Mortgage as fully and
     completely,  and with the same effect,  as though now owned by Borrower and
     specifically described herein;

          (J) all of Borrower's  right,  title and interest in, to and under, to
     the extent the same may be encumbered  or assigned by Borrower  pursuant to
     the terms thereof without occurrence of a breach of default thereunder or a
     violation under  applicable law, and without  impairment of the validity or
     enforceability thereof, (i) any Operating Agreements (as defined below) and
     all contracts and  agreements  relating to the  Properties  (other than the
     Leases),  and other  documents,  books and records related to the ownership
     and operation of the Properties;  (ii) to the extent  permitted by law, all
     consents, licenses (including, to the extent permitted by law, any licenses
     held by  Borrower  permitting  the sale of  liquor  at the  Properties  the
     transfer  and/or  assignment of which is permitted by law without filing or
     other  qualification),   warranties,   guaranties,   building  permits  and
     government   approvals  relating  to  or  required  for  the  construction,
     completion,  occupancy and operation of the Properties; (iii) all plans and
     specifications for the construction of the Improvements, including, without
     limitation,   installations  of  curbs,  sidewalks,  gutters,  landscaping,
     utility  connections  and all  fixtures  and  equipment  necessary  for the
     construction,  operation and occupancy of the  Improvements;  (iv) all such
     other  contracts and  agreements  (other than the Leases) from time to time
     executed by  Borrower  relating to the  ownership,  leasing,  construction,
     maintenance,  operation, occupancy or sale of the Properties, together with
     all rights of Borrower to compel performance of the terms of such contracts
     and  agreements;  and (v)  subject  to the  terms  of the  Cash  Collateral
     Agreement,  the Accounts (as defined  below) and any funds in such Accounts
<PAGE>
     from time to time (it being  understood that at such time as Borrower shall
     withdraw any amounts from any Accounts in accordance with the provisions of
     the Cash Collateral  Agreement,  the same shall cease to constitute part of
     the Mortgaged Property);

          (K) to the extent the same may be  encumbered  or assigned by Borrower
     pursuant to the terms  thereof and to the extent  permitted  by law, all of
     Borrower's right,  title and interest in, to and under escrows,  documents,
     instruments, and general intangibles, as the foregoing terms are defined in
     the UCC, in any case which now or hereafter relate to, are derived from, or
     are  used in  connection  with the  Properties,  and all  contract  rights,
     franchises,  books,  records,  plans,  specifications,  permits,  licenses,
     approvals,  actions and causes of action which now or hereafter  relate to,
     are derived  from or used in  connection  with the  Properties  or the use,
     operation,  maintenance,  occupancy or enjoyment  thereof or the conduct of
     any business or activities thereon (collectively, the property described in
     the foregoing  paragraphs  (F), (G), (H), (I), (J) and this  paragraph (K),
     the "Intangibles"); and

          (L) All of Borrower's right, title and interest in all proceeds,  both
     cash and  noncash,  of the  foregoing  which  may be sold or  otherwise  be
     disposed of pursuant to the terms hereof.

                  TO HAVE AND TO HOLD the Mortgaged Property hereby conveyed, or
mentioned  and  intended  so to be,  whether  now  owned  or held  or  hereafter
acquired, subject only to the Permitted Encumbrances,  unto Lender (with respect
to the Mortgage and Security Deed States),  or Trustee (with respect to the Deed
of Trust States), its successors and assigns, in fee simple,  forever,  upon the
terms and  conditions  set forth  herein and to secure the  performance  of, and
compliance with, the obligations,  covenants and conditions of this Mortgage and
the other Loan Documents all as herein set forth.



               1 .  Definitions.  Wherever used in this Mortgage,  the following
          terms,  and the singular and plural thereof,  shall have the following
          meanings.  All capitalized terms used but not otherwise defined herein
          shall have the meanings assigned to them in the Note:

               Accounts:   Shall  mean,   collectively,   the  Interest   Escrow
          Subaccount,   the  Mortgage   Escrow   Subaccount,   the  FF&E  Escrow
          Subaccount, the Construction Completion Subaccount, the Operations and
          Maintenance  Subaccount,  the Borrower  Remainder  Subaccount  and the
          Curtailment Reserve Subaccount (each as defined in the Cash Collateral
          Agreement),  and any and all of  Borrower's  other  accounts,  general
          intangibles,  chattel paper, cash or monies, wherever located, whether
          in the form of cash or checks, and all cash equivalents  including all
          deposits and certificates of deposit, instruments,  whether negotiable
          or  non-negotiable,  debt notes both certificated and  uncertificated,
          repurchase  obligations  for underlying  notes of the types  described
<PAGE>
          herein,  and  commercial  paper  (it  being  agreed  that  all  of the
          foregoing  must at all  times  qualify  as  Eligible  Investments  (as
          defined in the Cash Collateral Agreement)), (a) received in connection
          with the sale or other  disposition of the Properties,  (b) maintained
          by  Borrower  in a  segregated  account  in trust for the  benefit  of
          Lender,  or (c) held by  Lender,  but not any  account  maintained  by
          Borrower or an Affiliate of Borrower or cash or cash  equivalents that
          have been disbursed to Borrower in accordance with the Cash Collateral
          Agreement.

               Affiliate:  Shall mean, with respect to any specified Person, any
          other Person  directly or indirectly  controlling  or controlled by or
          under direct or indirect  common control with, or any general  partner
          in,  such  specified  Person.  For the  purposes  of this  definition,
          "control"  when used with  respect to any  specified  Person means the
          power to direct the management  and policies of such Person,  directly
          or indirectly,  whether through the ownership of voting  securities or
          other  beneficial  interest,  by contract or otherwise;  and the terms
          "controlling"  and "controlled"  have the meanings  correlative to the
          foregoing.

               Agent:  As  defined  in the Cash  Collateral  Agreement.

               Aggregate  Alteration  Threshold Amount:  Shall mean five percent
          (5%) of the Loan  Amount  on the date  hereof.

               Allocated  Loan Amount:  Shall mean the portion of the  Principal
          Indebtedness allocated,  solely for the purposes of performing certain
          calculations  hereunder,  to each  Property as set forth in Schedule 1
          annexed  hereto  and  made a part  hereof,  as such  amounts  shall be
          adjusted from time to time as hereinafter  set forth. In the case of a
          Total Loss in accordance with Section 6(i) where the Proceeds are less
          than 125% of the Allocated Loan Amount, each Allocated Loan Amount for
          each of the remaining Properties shall be increased by an amount equal
          to the product of (a) the  difference  between 125% of the  applicable
          Allocated  Loan  Amount  and the  Proceeds,  and (b) a  fraction,  the
          numerator of which is the  applicable  Allocated Loan Amount (prior to
          the  adjustment  in  question)  and the  denominator  of  which is the
          aggregate of the Allocated  Loan Amounts for the remaining  Properties
          (prior to the adjustment in question).  All calculations made pursuant
          to this Mortgage with respect to an Allocated  Loan Amount  (including
          Premium or scheduled  interest  payments on an Allocated  Loan Amount)
          shall be  certified  to Lender by Borrower  pursuant  to an  Officer's
          Certificate.

               Alteration:  As defined in Section hereof.

 <PAGE>
              Approved Banks: Shall mean banks or other financial  institutions
          which have a minimum long-term  unsecured debt rating of at least "AA"
          by each of the Rating Agencies, or if any such bank or other financial
          institution  is not rated by all the Rating  Agencies,  then a minimum
          long-term  rating of at least  "AA" or its  equivalent  by the  Rating
          Agencies involved in the Securitization.

               Appurtenances:  As defined in Granting  Clause (C) hereof.

               Assignee:  As defined in Section 57 hereof.

               Assignment of Leases:  As defined in the recitals  hereof.

               Best: As defined in Section 5(b).

               Building Equipment:  As defined in Granting Clause (D) hereof.

               Business Day:  Shall mean any day except a Saturday,  a Sunday or
          any other day on which  commercial  banks in the State of New York are
          authorized or obligated by law, governmental decree or executive order
          to be closed.

               Cash:  Coin or currency of the government of the United States of
          America.


               Cash and Cash Equivalents: Shall mean any or a combination of the
          following: (i) Cash, and (ii) U.S. Government Obligations.

               Cash Collateral Agreement:  As defined in the recitals hereof.

               Closing Date:  Shall mean the date the Loan and the  transactions
          contemplated hereby are consummated.

               Code:  Shall mean the Internal  Revenue Code of 1986, as amended,
          and any  successor  thereto,  and any  temporary or final  regulations
          promulgated thereunder.

               Construction   Properties:   Shall  mean  the   Reston   property
          identified on Exhibit A-20, and the Merrifield  property identified on
          Exhibit A-21.

               Construction  Completion  Subaccount:  Shall have the meaning set
          forth in the Cash Collateral  Agreement.

               Debt:  Shall mean,  with  respect to any Person at any time,  (a)
          indebtedness or liability of such Person for borrowed money whether or
          not evidenced by bonds, debentures, notes or other instruments, or for
          the deferred  purchase price of property or services  (excluding trade
<PAGE>
          obligations);  (b)  obligations  of such Person as lessee under leases
          which should have been or should be, in accordance with GAAP, recorded
          as capital leases;  (c) current  liabilities of such Person in respect
          of unfunded  vested benefits under plans covered by Title IV of ERISA;
          (d) obligations issued for, or liabilities incurred on the account of,
          such Person;  (e)  obligations  or  liabilities of such Person arising
          under acceptance facilities;  (f) obligations of such Person under any
          guarantees  or other  agreement to become  secondarily  liable for any
          obligation  of  any  other  Person,   endorsements   (other  than  for
          collection  or deposit in the ordinary  course of business)  and other
          contingent  obligations to purchase,  to provide funds for payment, to
          supply funds to invest in any Person or otherwise to assure a creditor
          against loss;  (g)  obligations  of such Person secured by any Lien on
          any property of such Person,  whether or not the obligations have been
          assumed by such Person;  or (h)  obligations  of such Person under any
          interest rate or currency exchange agreement.

               Debt Service: Shall mean the amount of interest and principal due
          and payable in accordance with the Note, during any month,  multiplied
          by the number of months with respect to the applicable period.

               Debt Service Coverage Ratio:  Shall mean (i) with respect to each
          Property,  the  ratio,  as  determined  by  Lender  in its  reasonable
          discretion,  of the Net Operating Income from the applicable  Property
          adjusted  pursuant  to  Lender's  customary   underwriting   standards
          (including  adjustment  for an assumed 4%  management  fee and 4% FF&E
          reserve) based either on (A) the actual Net Operating  Income from the
          applicable  Property  during the prior twelve (12) months,  or, if the
          applicable  Property  has not  been  open for at  least  fifteen  (15)
          months,  (B) a forecasted twelve (12) month period based on annualized
          actual Net  Operating  Income  received  from the Property  during the
          period  commencing  three (3) months after the opening of the Property
          for  business and ending on the last day of the month  preceding  such
          calculation, divided by an amount equal to the annualized Debt Service
          allocable  to  such  Property  and  (ii)  with  respect  to all of the
          Properties,  the  ratio,  as  determined  by Lender in its  reasonable
          discretion, of the Net Operating Income all of the Properties adjusted
          pursuant  to  Lender's  customary  underwriting  standards  (including
          adjustment for an assumed 4% management fee and 4% FF&E reserve) based
          either on (A) the  actual Net  Operating  Income  from the  Properties
          during the prior twelve (12) months,  or, if any Property has not been
          open for at least  fifteen (15) months,  (B) a forecasted  twelve (12)
          month period based on annualized  actual Net Operating Income received
          from such Property during the period commencing three (3) months after
          the opening of such  Property  for business and ending on the last day
          of the month preceding such calculation, divided by an amount equal to
          the annualized Debt Service.

 <PAGE>
               Default:  Shall mean the  occurrence or existence of any event or
          condition which,  with the giving of notice or the passage of time, or
          both, would constitute an Event of Default hereunder.

               Default Rate: Shall have the meaning set forth in the Note.

               Defeasance:  As defined in  Section 46 hereof.

               Defeasance Collateral: Shall mean Defeasance Eligible Investments
          included in the Mortgaged Property as collateral  pursuant to Sections
          38, 45 and 46 hereof (including,  without limitation, all amounts then
          on deposit in the Defeasance Collateral Account).

               Defeasance  Collateral  Account: As defined in Section 47 hereof.

               Defeasance  Eligible  Investments:   Shall  mean  obligations  or
          securities not subject to prepayment,  call or early  redemption which
          are direct  obligations  of, or  obligations  fully  guaranteed  as to
          timely  payment  by,  the  United  States of  America or any agency or
          instrumentality of the United States of America, or the obligations of
          which are backed by the full faith and credit of the United  States of
          America,  the  ownership  of which  will  not  cause  Lender  to be an
          "investment  company"  under the  Investment  Company Act of 1940,  as
          amended,  as evidenced by an Opinion of Counsel  acceptable to Lender,
          and  which   qualify   under  ss.   1.860G-2(a)(8)   of  the  Treasury
          regulations.  All such  obligations  or securities  shall mature or be
          redeemable,  or provide for payments of interest thereon,  on or prior
          to the Business Day preceding the date such amounts are required to be
          applied under this Mortgage.

               Direct  Beneficial  Owner:  Shall mean such  Persons  who own any
          direct   ownership   interest  in   Borrower.

               Environmental Certificate: As defined in Section 40(b) hereof.

               Environmental  Claim:  Shall  mean any  claim,  action,  cause of
          action,  investigation  or  written  notice  by  any  Person  alleging
          potential liability  (including  potential liability for investigatory
          costs,  cleanup costs,  natural resource  damages,  property  damages,
          personal  injuries  or  penalties)  arising  out  of,  based  upon  or
          resulting  from (a) the  presence,  threatened  presence,  release  or
          threatened  release into the  environment of any Hazardous  Substances
          from or at any of the  Properties,  or (b) the  violation,  or alleged
          violation, of any Environmental Law, relating to the Properties.

               Environmental  Event:  As  defined  in  Section  (b)  hereof.
<PAGE>
               Environmental  Laws:  Shall mean all  present or future  federal,
          state and local laws,  statutes,  rules,  ordinances,  and regulations
          relating to pollution or protection of human health or the environment
          (including,  without  limitation,  ambient air, surface water,  ground
          water,  land  surface  or  subsurface  strata),   including,   without
          limitation laws, statutes,  rules, ordinances and regulations relating
          to  emissions,   discharges,  releases  of  Hazardous  Substances,  or
          otherwise relating to the manufacture,  processing, distribution, use,
          treatment,  storage,  disposal,  transport  or handling  of  Hazardous
          Substances   including,    without   limitation,   the   Comprehensive
          Environmental  Response,  Compensation  and  Liability Act of 1980, 42
          U.S.C. ss.ss. 9601 et seq.; the Resource Conservation and Recovery Act
          of 1976, 42 U.S.C.  ss.ss.  6901 et seq.; the Toxic Substance  Control
          Act, 15 U.S.C.  ss.ss.  2601 et seq.; the Water Pollution  Control Act
          (also known as the Clean Water Act), 33 U.S.C.  ss. 1251 et seq.;  the
          Clean Air Act, 42 U.S.C. ss. 7401 et seq.; and the Hazardous Materials
          Transportation  Act, 49 U.S.C.  ss.  1801 et seq.,  as the same may be
          hereafter  amended or modified.

               ERISA: Shall mean the Employee  Retirement Income Security Act of
          1974, as amended from time to time,  and the  regulations  promulgated
          thereunder.

               Events  of  Default:  Shall  mean  the  occurrence  of any of the
          following,  each of which shall  constitute  an Event of Default under
          this Mortgage:

               (a) (i) Failure to make any payment of interest or  principal  on
          the Note when due;  provided,  however,  that in the event of any such
          failure   occurring  prior  to  the  Initial  Maturity  Date,  or  the
          Anticipated  Securitization  Maturity Date, if applicable  pursuant to
          the terms of the Note after the delivery of a Securitization Extension
          Notice,  the same shall  constitute  a default if it  continues  for a
          period of five (5) days after the same is due (with  Default  Interest
          payable  as set  forth  in the  Note),  or  (ii)  failure  to pay  the
          principal balance of the Note when due and the same shall continue for
          a period of five (5) days after the same is due; or

               (b) Borrower  fails to pay any other amount  payable  pursuant to
          this Mortgage or the Note when due and payable in accordance  with the
          provisions  hereof,  with such  failure  continuing  for ten (10) days
          after Lender delivers written notice thereof to Borrower; or

               (c) (i)  Failure  to keep in  force  the  insurance  required  by
          Section 5 of this  Mortgage,  or (ii) failure to comply with any other
          covenants set forth in Section 5 with such failure in this clause (ii)
          continuing  for five (5) Business Days after Lender  delivers  written
          notice thereof to Borrower; or

               (d) Any  default  under the terms of Section 7b  (subject  to the
          terms of Section  7(c)) beyond any  applicable  time periods set forth
<PAGE>
          therein,  with such default  continuing for five (5) days after Lender
          delivers written notice thereof to Borrower,  or the incurrence of any
          Debt in violation of Section 11(c) of this Mortgage or the  occurrence
          of any Transfer in violation of Sections 11(a) or 11(b)(but subject to
          the terms of Section 11(d)) of this Mortgage; or

               (e) Any  attempt by  Borrower  to assign  its  rights  under this
          Mortgage in violation of the terms hereof; or

               (f) Any other default in the  performance or payment,  or breach,
          of any material  covenant,  warranty,  representation  or agreement of
          Borrower  contained herein or in any other Loan Document (other than a
          covenant, representation or agreement, a default in the performance or
          payment of or the breach of which is specifically  addressed elsewhere
          in this  definition),  which  default is not cured within  thirty (30)
          Business  Days after  receipt by  Borrower  of notice  from  Lender in
          writing of such  breach.  If cure of such  default  (a) would  require
          performance  of an Obligation  other than payment of  Indebtedness  to
          Borrower and (b) cannot be effected  within said thirty (30)  Business
          Day period  despite  Borrower's  diligence in  prosecuting  such cure,
          then,  provided  Borrower  commences  to cure  within said thirty (30)
          Business Day period and diligently prosecutes said cure to completion,
          subject only to Excusable Delays,  the cure period provided  hereunder
          shall be extended to such time as may be reasonably  necessary to cure
          the default; provided,  however, that such extended period shall in no
          event exceed one  hundred-twenty  (120) days plus time  permitted  for
          Excusable Delays; and provided,  further,  that Borrower shall provide
          Lender  with  a  written  report  and  evidence  of  the  progress  of
          Borrower's  cure  efforts  (90) days  after  commencement  of such one
          hundred-twenty  (120) day cure period.  Notwithstanding  the foregoing
          sentence,  the cure period provided  hereunder may be extended for one
          (1)  additional  one  hundred-twenty  (120)  day  period,  subject  to
          Excusable Delays, if and only if (x) such default involves breach of a
          covenant (as distinct from a representation)  and cure of such default
          would require  physical  construction  or remedial  work, and (y) such
          cure  cannot  with  diligence  be  completed  within the  initial  one
          hundred-twenty (120) day period. Borrower shall provide Lender with an
          additional  written  report and evidence of the progress of Borrower's
          cure efforts ninety (90) days after  commencement  of such  additional
          one hundred-twenty (120) day cure period.

               (g) The entry by a court of (A) a decree  or order for  relief in
          respect of Borrower or its General  Partner (as herein  defined) in an
          involuntary case or proceeding  under any applicable  Federal or state
          bankruptcy,  insolvency,  reorganization or other similar law or (B) a
          decree  or  order  adjudging  Borrower  or  its  General  Partner,  if
          applicable,  a bankrupt or insolvent, or approving as properly filed a
          petition   seeking   reorganization,    arrangement,   adjustment   or
          composition of or in respect of Borrower or its General  Partner under
          any applicable Federal or state bankruptcy, insolvency, reorganization
<PAGE>
          or other similar law, or appointing a custodian, receiver, liquidator,
          assignee, trustee,  sequestrator or other similar official of Borrower
          or its General Partner,  if applicable,  or of any substantial part of
          either of their  respective  property,  or ordering  the winding up or
          liquidation of either of their respective affairs, and the continuance
          of any such  decree or order for  relief or any such  other  decree or
          order  unstayed  and in effect for a period of more than  ninety  (90)
          consecutive days; or

               (h)  The  commencement  by  Borrower  or  General   Partner,   if
          applicable,  of a voluntary  case or proceeding  under any  applicable
          Federal  or  state  bankruptcy,  insolvency,  reorganization  or other
          similar law or of any other case or  proceeding  to be  adjudicated  a
          bankrupt or  insolvent,  or the consent by it to the entry of a decree
          or  order  for  relief  in  respect  of it in an  involuntary  case or
          proceeding   under  any  applicable   Federal  or  state   bankruptcy,
          insolvency, reorganization or other similar law or to the commencement
          of any bankruptcy or insolvency case or proceeding  against it, or the
          filing  by  Borrower  or its  General  Partner,  if  applicable,  of a
          petition or answer or consent seeking  reorganization  or relief under
          any applicable Federal or state bankruptcy, insolvency, reorganization
          or other  similar  law,  or the  consent by  Borrower  or its  General
          Partner,  if  applicable,  to the  filing of such  petition  or to the
          appointment  of  or  taking  possession  by  a  custodian,   receiver,
          liquidator,  assignee,  trustee,  sequestrator or similar  official of
          Borrower or its General Partner, if applicable,  or of any substantial
          part of any of either of their respective  property,  or the making by
          Borrower or its General Partner,  if applicable,  of an assignment for
          the benefit of creditors,  or the admission by Borrower or its General
          Partner,  if applicable,  in writing of its inability to pay its debts
          generally  as they become  due, or the taking of official  partnership
          action of Borrower or  corporate  action of its  General  Partner,  if
          applicable  (or  if,  at any  time,  Borrower  shall  no  longer  be a
          partnership  or the General  Partner shall no longer be a corporation)
          in furtherance of any such action; or

               (i) This  Mortgage or any other Loan Document or any Lien granted
          hereunder or thereunder shall, in whole or in part,  terminate,  cease
          to  be  effective  or  cease  to  be  a  legally  valid,  binding  and
          enforceable   obligation  of  Borrower,   or  any  Lien  securing  the
          Indebtedness shall, in whole or in part, cease to be a perfected first
          priority Lien, subject to the Permitted Encumbrances (except in any of
          the foregoing  cases in accordance  with the terms hereof or under any
          other Loan Document); or

               (j) The Debt Service  Coverage Ratio, at any time, for all of the
          Properties is less than 1.10 to 1; or

               (k) The  failure  of  Borrower  to (i) open the  Reston  property
          identified  on and A-25 and (ii)  deliver  a final  and  unconditional
          certificate  of occupancy  for said  property to Lender,  on or before
          September 30, 1998; or
<PAGE>
               (l) The failure of Borrower to (i) open the  Merrifield  property
          identified  on Exhibit A-26 and (ii) deliver  final and  unconditional
          certificate of occupancy for said  properties to Lender,  on or before
          November 30, 1998; or

               (m) Any "Event of Default" as defined in any Loan Document  other
          than this Mortgage occurs.

               Exculpated  Parties:  As defined  in  Section 33 hereof.

               Excusable  Delay:  Shall  mean  a  delay  due  to  acts  of  God,
          governmental  restrictions,  stays, judgments,  orders, decrees, enemy
          actions,  civil commotion,  fire, casualty,  strikes,  work stoppages,
          shortages of labor or materials or other causes beyond the  reasonable
          control of  Borrower,  but lack of funds in and of itself shall not be
          deemed a cause beyond the control of Borrower.

               FF&E Escrow  Subaccount:  Shall have the meaning set forth in the
          Cash  Collateral  Agreement.

               First Class:  Shall mean, with respect to each of the Properties,
          a standard of operation and maintenance  consistent  with  first-class
          properties  comparable  to and  in the  same  metropolitan  area  as a
          Property.

               GAAP: Shall mean the generally accepted accounting principles set
          forth in the opinions and pronouncements of the Accounting  Principles
          Board and the American  Institute of Certified Public  Accountants and
          statements and  pronouncements of the Financial  Accounting  Standards
          Board (or agencies with similar  functions of  comparable  stature and
          authority  within  the  accounting  profession),   or  in  such  other
          statements  by such  entity as may be in  general  use by  significant
          segments of the United  States  accounting  profession,  to the extent
          such principles are applicable to the facts and  circumstances  on the
          date of determination.

               General  Partner:   Shall  mean  HVI  Incorporated,   a  Delaware
          corporation.

               Governmental  Authority:  Shall mean any Federal,  state or local
          government  or any  other  political  subdivision  thereof  exercising
          executive,   legislative,   judicial,   regulatory  or  administrative
          functions.

               Hazardous  Substance:  Shall mean any material  waste or material
          substance  which is:
<PAGE>

               (a) included  within the  definition of  "hazardous  substances,"
          "hazardous  materials,"  "toxic  substances,"  or "solid  waste" in or
          pursuant to any Environmental  Law, or subject to regulation under any
          Environmental Law;

               (b)  listed in the United  States  Department  of  Transportation
          Optional  Hazardous  Materials Table, 49 C.F.R. ss. 172.101 enacted as
          of the date  hereof or  hereafter  amended,  or in the  United  States
          Environmental  Protection  Agency  List of  Hazardous  Substances  and
          Reportable  Quantities,  40 C.F.R. Part 302, as enacted as of the date
          hereof or as hereafter amended; or

               (c)  an   explosive,   radioactive,   asbestos,   polychlorinated
          biphenyl, oil or petroleum product.

               Impositions:  Shall  mean all taxes  (including  all ad  valorem,
          sales  (including  those  imposed  on  lease  rentals),   use,  single
          business,   gross  receipts,   value  added,  intangible  transaction,
          privilege  or  license  or similar  taxes),  governmental  assessments
          (including  all  assessments  for  public  improvements  or  benefits,
          whether or not  commenced  or  completed  prior to the date hereof and
          whether  or not  commenced  or  completed  within  the  term  of  this
          Mortgage),  water, sewer or other rents and charges,  excises, levies,
          fees (including license, permit, inspection, authorization and similar
          fees),  and all  other  governmental  charges,  in each  case  whether
          general  or  special,  ordinary  or  extraordinary,   or  foreseen  or
          unforeseen,  of every  character in respect of the Mortgaged  Property
          and/or any Rents (including all interest and penalties thereon), which
          at any time prior to,  during or in respect of the term  hereof may be
          assessed or imposed on or in respect of or be a Lien upon (a) Borrower
          (including  all  income,  franchise,  single  business  or other taxes
          imposed  on  Borrower  for the  privilege  of  doing  business  in the
          jurisdiction  in which the  Mortgaged  Property is  located),  (b) the
          Mortgaged  Property,  or any other collateral  delivered or pledged to
          Lender in connection with the Loan, or any part thereof,  or any Rents
          therefrom or any estate,  right, title or interest therein, or (c) any
          occupancy, operation, use or possession of, or sales from, or activity
          conducted  on, or in  connection  with the  Mortgaged  Property or the
          leasing or use of all or any part thereof.  Nothing  contained in this
          Mortgage  shall  be  construed  to  require  Borrower  to pay any tax,
          assessment,  levy or charge  imposed on (i) any tenant  occupying  any
          portion of a  Property  or (ii)  Lender in the nature of a  franchise,
          capital levy, estate, inheritance,  succession,  income or net revenue
          tax.

               Improvements:  As defined in Granting Clause (B) hereof.

               Indebtedness:   As  defined  in  the  recitals  hereof.

               Indemnified  Environmental Parties: As defined in Section hereof.

               Indemnified  Parties:  As  defined  in  Section 37 hereof.
<PAGE>

               Independent  Accountant:  Shall  mean  Arthur  Andersen  LLP,  or
          another firm of nationally  recognized,  independent  certified public
          accountants  selected by Borrower  which is  reasonably  acceptable to
          Lender.

               Independent Appraiser:  Shall mean an independent appraiser which
          is a  member  of the  American  Institute  of Real  Estate  Appraisers
          selected by Borrower and having at least five (5) years of  experience
          in the  applicable  real estate  market where a Property is located in
          the valuation of properties of the type being appraised.

               Independent  Architect:  Shall  mean  an  independent  architect,
          engineer or construction consultant selected by Borrower,  licensed to
          practice  in the State where a Property is located and having at least
          five (5) years of  experience  and that is acceptable to Lender in its
          sole and absolute discretion.

               Independent   Director:   Shall  mean  an  individual  reasonably
          satisfactory  to  Lender  who  shall not have been at the time of such
          individual's appointment, and may not have been at any time during the
          preceding  two (2)  years  (i) a  shareholder  of,  or an  officer  or
          employee  of,  Borrower or any of its  shareholders,  subsidiaries  or
          affiliates, (ii) a customer of, or supplier to, Borrower or any of its
          shareholders,  subsidiaries  or  affiliates,  (iii) a person  or other
          entity controlling any such shareholder, supplier or customer, or (iv)
          a member of the  immediate  family of any such  shareholder,  officer,
          employee,  supplier or customer of any other director of Borrower.  As
          used herein,  the term  "control"  means the  possession,  directly or
          indirectly,  of the  power to direct  or cause  the  direction  of the
          management  and  policies  of a  person  or  entity,  whether  through
          ownership of voting securities, by contract or otherwise.

               Initial  Land:  As  defined  in  the  recitals  hereof.

               Insurance  Requirements:  Shall  mean all terms of any  insurance
          policy  required  hereunder  covering or applicable to any Property or
          any part thereof,  all  requirements of the issuer of any such policy,
          and all orders,  rules,  regulations  and other  requirements of which
          Borrower has notice of the national board of fire underwriters (or any
          other body exercising  similar  functions)  applicable to or affecting
          any  Property  or any part  thereof or any use of any  Property or any
          part thereof.

               Intangibles:  As defined in Granting  Clause (K) hereof.

               Land: As defined in the recitals hereof.
<PAGE>
               Leases:  As defined in Granting Clause (F) hereof.

               Legal  Requirements:  As defined in Section 13(a) hereof.

               Letter  of  Credit:  Shall  mean an  irrevocable,  unconditional,
          transferable,  clean sight  draft  letter of credit in favor of Lender
          and entitling Lender to draw thereon in New York, New York,  issued by
          a domestic  Approved  Bank or the United  States agency or branch of a
          foreign  Approved Bank, or if there are no domestic  Approved Banks or
          U.S.  agencies  or branches of a foreign  Approved  Bank then  issuing
          letters  of  credit,  then such  letter  of credit  may be issued by a
          domestic  bank,  the long term  unsecured  debt rating of which is the
          highest  such rating  then given by the Rating  Agencies to a domestic
          commercial  bank.  If at any time the bank  issuing any such Letter of
          Credit shall cease to be an Approved Bank, Lender shall have the right
          immediately  to draw  down the same in full and hold the  proceeds  of
          such draw in accordance with the applicable  provisions hereof, unless
          Borrower  shall deliver a  replacement  Letter of Credit within thirty
          (30) days after Lender  delivers  written notice to Borrower that such
          bank shall have ceased to be an Approved Bank.

               Liabilities:  As defined in Section  59(D)(ii)(B) hereof.

               Lien:  Shall  mean any  mortgage,  deed of trust,  deed to secure
          debt, lien,  pledge,  hypothecation,  assignment,  security  interest,
          security  title,  or any other  encumbrance  of, on or  affecting  the
          Mortgaged  Property or any portion  thereof or any  interest  therein,
          including,  without  limitation,  any conditional  sale or other title
          retention agreement, any financing lease having substantially the same
          economic  effect as any of the foregoing,  the filing of any financing
          statement,  and mechanic's,  materialmen's and other similar liens and
          encumbrances.

               Loan: As defined in the recitals hereof.

               Loan Amount: Shall mean the Principal Amount from time to time of
          the Loan, which initially shall be$122,028,471.

               Loan  Documents:  Shall mean this  Mortgage,  the  Assignment  of
          Leases,  Rents and Security Deposits,  the Cash Collateral  Agreement,
          the Note, and any and all other  agreements,  instruments or documents
          executed by Borrower  evidencing,  securing or delivered in connection
          with the Loan and the transactions contemplated hereby.

               Loan  to  Value  Ratio:  Shall  mean  (i)  with  respect  to each
          Property,  the  ratio,  as  determined  by  Lender  in its  reasonable
          discretion, of the Allocated Loan Amount with respect to any Property,
          divided  by the  fair  market  value  of the  applicable  Property  as
<PAGE>
          determined by an Independent  Appraiser  acceptable to Lender and (ii)
          with respect to all of the  Properties,  the ratio,  as  determined by
          Lender in its reasonable discretion,  of the Principal Amount, divided
          by  the  aggregate  value  of  the  Properties  as  determined  by  an
          Independent Appraiser acceptable to Lender.

               Material  Adverse Effect:  Shall mean any event or condition that
          has a material  adverse effect on (i) all of the Properties taken as a
          whole, (ii) the business,  prospects, profits, operations or condition
          (financial or otherwise) of Borrower, or (iii) the ability of Borrower
          to repay the principal and interest of the  Indebtedness as it becomes
          due.

               Material  Alteration:  Shall  mean  any  Alteration  which,  when
          aggregated with all related Alterations constituting a single project,
          involves an estimated cost exceeding the Threshold Amount with respect
          to Alterations (including the Alteration in question) being undertaken
          at a  single  Property  at  such  time  or  the  Aggregate  Alteration
          Threshold Amount with respect to Alterations (including the Alteration
          in question) being undertaken at all the Properties at such time.

               Maturity Date: As defined in the recitals hereof.

               Maximum Foreseeable Casualty Loss: As defined in Section hereof.

               Minimum  Defeasance  Collateral  Requirement:  Shall  mean,  with
          respect to a Property  Release  resulting in a Defeasance,  Defeasance
          Collateral  in an amount  equal to 125% of the  Allocated  Loan Amount
          applicable  to the  Property  which  is the  subject  of the  Property
          Release,  and  sufficient  to pay  scheduled  interest  and  principal
          payments (such payments,  the "Defeasance  Debt Service  Payments") on
          the  portion of the Loan equal to such  Allocated  Loan Amount on such
          Property. Sufficient portions of the Defeasance Collateral must mature
          on or before the dates when such amounts are required to be applied to
          pay Defeasance Debt Service Payments when due.

               ML: As defined in Section 59(D)(ii)(B) hereof.

               ML Group: As defined in Section 59(D)(ii)(B) hereof.

               Mortgage: As defined in the recitals hereof.

               Mortgage Escrow Account: As defined in Section hereof.
<PAGE>
               Mortgage Escrow Amounts:  As defined in Section hereof.  Mortgage
          Escrow Security: As defined in Section hereof.

               Mortgaged Property: As defined in the Granting Clauses hereof.

               Lender: As defined in the introductory paragraph hereof.

               Borrower: As defined in the introductory paragraph hereof.

               Net Income: Shall mean, with respect to any period, all Operating
          Income  less  (x) all  Operating  Expenses  for such  period,  (y) the
          Monthly  Amount and all other amounts  payable under the Loan (as such
          term is  defined in the Note) and (z) the  amount of  Mortgage  Escrow
          Amounts,  other  reserve and escrow  amounts for such period and other
          reserves  reasonably  created by  Borrower,  as disclosed in an annual
          budget  submitted to Lender  pursuant to the terms of Section 5 of the
          Cash Collateral Agreement .

               Net Operating Income: Shall mean, with respect to any period, the
          excess of Operating Income over Operating Expenses for such period.

               Nondisqualification   Opinion:  Shall  mean  an  opinion  of  tax
          counsel,  which shall be independent  outside  counsel,  to the effect
          that a contemplated  action would not materially  adversely affect the
          federal  income tax status as a REMIC,  trust or other  vehicle of any
          REMIC, trust or other vehicle in which the Loan may be included at the
          time such opinion is required.

               Nondisturbance Agreement: As defined in Section 15(d) hereof.

               Note: As defined in the recitals hereof.

               Obligations: As defined in the recitals hereof.

               Officer's  Certificate:  Shall mean a  certificate  delivered  to
          Lender and signed by an officer of Borrower or General Partner.

               Operating   Agreements:   Shall  mean  the  reciprocal   easement
          agreements,  operating agreements and similar agreements affecting the
          ownership,  use and operation of a Property  included in the Permitted
          Encumbrances as such agreements have been or may hereafter be amended,
          modified or supplemented.

               Operating   Expenses   shall  mean,   for  any  period,   without
          duplication,  all expenses paid or to be paid by Borrower  during such
<PAGE>
          period in  connection  with the  operation,  management,  maintenance,
          repair,  leasing and use of the Mortgaged  Property,  determined on an
          accrual basis, including management fees and leasing expenses with the
          exception of leasing commissions.

               Operating  Income:  Shall  mean,  for any  period,  all income of
          Borrower during such period,  determined on an accrual basis, from the
          operation of the Mortgaged Property as follows:

                    (i) all  amounts  payable to  Borrower by any Person as Rent
               and other  amounts under Leases,  license  agreements,  occupancy
               agreements or other agreements relating to the Mortgaged Property
               or, as applicable, a Property;

                    (ii) business interruption insurance; and

                    (iii) casualty and condemnation proceeds.

               Opinion  of  Counsel:  Shall  mean an  opinion  of  counsel  of a
          nationally recognized law firm reasonably acceptable to Lender and, at
          any time that the Loan is included in any securitization  transaction,
          the Rating  Agencies,  procured by Borrower and rendered at Borrower's
          sole cost and expense.

               Original Mortgage(s): As defined in the recitals hereof.

               Original Note(s): As defined in the recitals hereof.

               Permitted Debt: As defined in Section hereof.

               Permitted Encumbrances: Shall mean:

                    (i) Liens for  Impositions  not yet due and payable or Liens
               arising  after the date hereof which are being  contested in good
               faith  by  appropriate   proceedings   promptly   instituted  and
               diligently conducted in accordance with Section hereof;

                    (ii) In the case of Liens  arising  before  the date  hereof
               identified  on  Schedule  4  attached  hereto,  or after the date
               hereof,  statutory  Liens of carriers,  warehousemen,  mechanics,
               materialmen  and other similar Liens arising by operation of law,
               which are insured over by the Title  Company or for those arising
               after the date  hereof are  incurred  in the  ordinary  course of
               business  for sums  which are being  contested  in good  faith in
               accordance with Section 7(c);
<PAGE>

                    (iii) All immaterial easements, rights-of-way,  restrictions
               and other similar  charges or non-monetary  encumbrances  against
               real property and other  agreements  which do not  materially and
               adversely  affect (A) the  ability of  Borrower to pay any of its
               obligations to any Person as and when due, (B) the  marketability
               of title to the Mortgaged Property,  (C) the fair market value of
               the  Mortgaged  Property,  or (D)  the  use or  operation  of the
               Mortgaged Property as of the Closing Date and thereafter;

                    (iv) Those matters set forth in the  "marked-up"  commitment
               for Lender's loan policy of title  insurance  concerning  each of
               the  Properties  issued by the  Title  Company  and  agreed to by
               Lender in Lender's sole discretion;

                    (v) Liens in favor of Lender  under  this  Mortgage  and the
               other Loan Documents;

                    (vi)  Such  other  title   exceptions   as  Lender  and  the
               applicable  Rating  Agencies may approve in writing in their sole
               discretion.

               Person:  Shall  mean any  individual,  corporation,  partnership,
          joint venture,  estate,  trust,  unincorporated  association,  and any
          federal,  state,  county  or  municipal  government  or any  political
          subdivision thereof.

               Pledge: Shall have the meaning set forth in the recitals hereto.

               Principal Amount: Shall mean the principal amount of the Note, as
          defined therein.

               Principal  Indebtedness:  Shall mean the Principal Amount payable
          by Borrower under the Note.

               Proceeds: As defined in Section hereof.

               Property: As defined in Granting Clause (E) hereof.

               Property Release: As defined in Section 38(d) hereof.

               Properties: As defined in Granting Clause (E) hereof.

               Qualifying Manager: As defined in Section hereof.
<PAGE>
               Rating Agencies:  Shall mean Standard & Poor's Ratings  Services,
          Duff & Phelps Credit Rating Co., Moody's Investors Services,  Inc. and
          Fitch  ICBA,  Inc.  or, if such  corporation  shall for any  reason no
          longer perform the functions of a securities rating agency,  any other
          nationally recognized  statistical rating agency designated by Lender,
          provided,  however, that at any time during which the Loan is an asset
          of a securitization,  "Rating Agencies" shall mean the rating agencies
          that from time to time rate the securities  issued in connection  with
          such securitization.

               Registration Statement: As defined in Section 59(d)(B) hereof.

               Release Date: As defined in Section 38(b) hereof.

               Renewal Lease: As defined in Section 15(b) hereof.

               Rents: As defined in Granting Clause (F) hereof.

               Required  Opinion:  Shall mean an Opinion of Counsel addressed to
          Lender and dated as of the date of delivery to the effect that (i) the
          Defeasance Collateral has been duly and validly assigned and delivered
          to  Lender,  (ii) the  security  interest  of Lender  for the  ratable
          benefit  of any  certificateholder,  with  respect  to the  Defeasance
          Collateral,  is  a  first  priority  perfected  security  interest  as
          security for payment of the Note,  which  opinion may contain,  and be
          subject to,  conditions,  exceptions  and  qualifications  customarily
          included  in  such  opinion,   and  (iii)  making  the  payment  which
          accompanies such opinion would not constitute an avoidable  preference
          under Section 547 of the Bankruptcy Code or under applicable state law
          in the event of a filing of a petition for relief under the Bankruptcy
          Code or such applicable  state law by or against  Borrower,  as to the
          portion of the Defeasance  Collateral that is equal to the fair market
          value of the Property being released in connection with such payment.

               Room and Facility Leases:  Shall mean Leases for short term hotel
          room and other customary  rentals to transient  guests of the extended
          stay hotels and users of the  extended  stay hotel  facilities  in the
          ordinary course of the operation of the extended stay hotels.

               Securities Act: As defined in Section 59(d)(B) hereof.

               Single  Purpose  Entity:  Shall  mean a  Person,  other  than  an
          individual, which (i) is formed or organized solely for the purpose of
          holding, directly, or, in the case of General Partner,  indirectly, an
          ownership  interest  in the  Properties,  (ii) does not  engage in any
          business unrelated to the Properties and the financing thereof,  (iii)
          has not and will not have any assets  other than those  related to its
<PAGE>
          interest  in  the   Properties  or  the   financing   thereof  or  any
          indebtedness  other than the Loan and trade  payables  incurred in the
          ordinary course of business and paid within the time periods set forth
          in the Loan Documents, and in amounts not to exceed those set forth in
          the Loan Documents,  (iv) maintains its own separate books and records
          and its own  accounts,  in each case which are separate and apart from
          the books and records  and  accounts  of any other  Person,  (v) holds
          itself  out as being a  Person,  separate  and  apart  from any  other
          Person,  (vi) does not and will not commingle its funds or assets with
          those of any other Person,  (vii) conducts its own business in its own
          name; (viii) maintains  separate financial  statements,  (ix) pays its
          own  liabilities  out of its own funds,  (x) observes all  partnership
          formalities  or corporate  formalities  or limited  liability  company
          formalities,   as   applicable,   (xi)   maintains   an   arm's-length
          relationship  with its Affiliates,  (xii) pays the salaries of its own
          employees and  maintains a sufficient  number of employees in light of
          its  contemplated  business  operations,  (xiii) does not guarantee or
          otherwise  obligate  itself  with  respect  to the  debts of any other
          Person  or hold out its  credit  as being  available  to  satisfy  the
          obligations of any other Person, (xiv) does not acquire obligations or
          securities of its partners,  members or  shareholders,  (xv) allocates
          fairly and reasonably shared expenses,  including, without limitation,
          any overhead for shared office space, (xvi) uses separate  stationery,
          invoices,  and checks,  (xvii) does not and will not pledge its assets
          for the  benefit of any other  Person or make any loans or advances to
          any  other   Person,   (xviii)   does  and  will   correct  any  known
          misunderstanding  regarding  its separate  identity,  (xix)  maintains
          adequate capital in light of its contemplated business operations, and
          (xx)  has  and  will  have  a  partnership  or  operating   agreement,
          certificate of  incorporation or other  organizational  document which
          complies  with the  standards and  requirements  for a Single  Purpose
          Entity set by the Rating  Agencies at such time. In addition,  if such
          Person is a limited  partnership,  (1) all  general  partners  of such
          Person shall be Single  Purpose  Entities,  and (2) if such Person has
          more than one general partner, then the organizational documents shall
          provide that such Person shall continue (and not dissolve) for so long
          as a solvent general partner exists. In addition,  if such Person is a
          corporation,  then, at all times:  (a) such Person shall have at least
          one (1) Independent  Director,  and (2) the board of directors of such
          Person may not take any action  requiring  the  unanimous  affirmative
          vote of one  hundred  percent  (100%) of the  members  of the board of
          directors  unless  all  of the  directors,  including  an  Independent
          Director,  shall have participated in such vote. In addition,  if such
          Person is a limited liability company,  (1) each managing member shall
          be  a  Single  Purpose  Entity,  (2)  its  articles  of  organization,
          certificate of formation  and/or operating  agreement,  as applicable,
          shall provide that such entity will dissolve only upon the  bankruptcy
          of each  managing  member,  and (3) if such  Person  has more than one
          managing member, then the organizational  documents shall provide that
          such Person shall continue (and not dissolve) for so long as a solvent
          managing  member  exists.  In  addition,  such  Person (1) without the
          unanimous  consent of all of the  partners,  directors or members,  as
          applicable,  has not and will not with  respect  to  itself  or to any
          other Person in which it has a direct or indirect  legal or beneficial
          interest  (a)  seek  or  consent  to the  appointment  of a  receiver,
          liquidator,  assignee,  trustee,  sequestrator,   custodian  or  other
          similar  official  for  such  Person  or all or any  portion  of  such
<PAGE>
          Person's  properties,  or (b) take any action  that  might  cause such
          Person to  become  insolvent,  (2) has and will  maintain  its  books,
          records,  resolutions and agreements as official records, (3) has held
          and will hold its  assets in its own name,  (4) has and will  maintain
          its  financial   statements,   accounting  records  and  other  entity
          documents  separate and apart from any other  Person,  (5) has not and
          will not  identify  its  partners,  members  or  shareholders,  or any
          affiliates of any of them as a division or part of it.

               Taking:  Shall  mean  a  temporary  or  permanent  taking  by any
          Governmental  Authority as the result or in lieu or in anticipation of
          the exercise of the right of condemnation or eminent domain, of all or
          any part of the Mortgaged  Property,  or any interest therein or right
          accruing thereto,  including any right of access thereto or any change
          of grade affecting a Property or any part thereof.

               Tax Opinion:  Shall mean an Opinion of Counsel to the effect that
          a  contemplated  action  (a) will not  result in any  deemed  exchange
          pursuant  to  Section  1001 of the Code of the Note;  and (b) will not
          adversely   affect  the  Note's  or  such  other   note's   status  as
          indebtedness for federal income tax purposes.

               Tenant:  Shall mean any Person  leasing,  subleasing or otherwise
          occupying any portion of a Property.

               Threshold  Amount:  Shall mean five percent (5%) of the Allocated
          Loan Amount with respect to any Property.

               Title Company:  Shall mean Chicago Title Insurance Corporation or
          such other title insurance  companies  acceptable to and issuing title
          policies to Lender.

               Total Defeasance Collateral Requirement:  Shall mean with respect
          to a Defeasance of the Lien of this Mortgage, Defeasance Collateral in
          an amount sufficient to pay all principal indebtedness  outstanding as
          of the  date  of  Defeasance  under  the  Note as it  becomes  due and
          sufficient  to pay  scheduled  interest  payments  on the Loan and the
          actual average  interest rate on the Note.  All Defeasance  Collateral
          must mature on or before the dates when such  amounts are  required to
          be applied to pay interest and principal on the Note when due.

               Total Loss: Shall mean (i) a casualty, damage or destruction of a
          Property,  the cost of restoration of which  (calculated in accordance
          with the  provisions  of Section 6 hereof)  would  exceed  twenty five
          percent  (25%)  of the  applicable  Allocated  Loan  Amount,  and with
          respect to which Borrower is not required, under the applicable Leases
          to  apply  Proceeds  to the  restoration  of such  Property  or (ii) a
          permanent  Taking of twenty  five  percent  (25%) or more of the gross
<PAGE>
          leasable area of a Property or so much of a Property,  in either case,
          such that it would be impracticable, in Lender's sole discretion, even
          after restoration,  to operate such Property as an economically viable
          whole and with respect to which the applicable  Lease does not require
          such restoration.

               Transfer:  Shall mean sell, assign, convey,  transfer,  pledge or
          otherwise  dispose  of, or where used as a noun,  a sale,  assignment,
          conveyance, transfer, pledge or other disposition.

               UCC: As defined in Granting Clause (F) hereof.

               Underwriter Group: As defined in Section 59(D)(ii)(B) hereof.

               U.S. Government Obligations: Any direct obligations of the United
          States  Government,  including,  without  limitation,  treasury bills,
          notes and bonds.

               Work: As defined in Section hereof.

               All  accounting  terms not  specifically  defined herein shall be
          construed  in  accordance  with  GAAP.  When  used  herein,  the  term
          "financial  statements" shall include the notes and schedules thereto.
          Unless  otherwise  specified  herein or therein,  all terms defined in
          this Mortgage  shall have the defined  meanings when used in any other
          Loan  Document  or in  any  certificate  or  other  document  made  or
          delivered pursuant thereto.

               The words "hereof," "herein" and "hereunder" and words of similar
          import when used in this  Mortgage  shall refer to this  Mortgage as a
          whole  and  not to any  particular  provision  of this  Mortgage,  and
          section,  schedule and exhibit  references are to this Mortgage unless
          otherwise  specified.  The words  "includes" and  "including"  are not
          limiting and mean "including without limitation."

               In the  computation of periods of time from a specified date to a
          later  specified date, the word "from" means "from and including;" the
          words  "to" and  "until"  each mean "to but  excluding,"  and the word
          "through" means "to and including."

               References to agreements and other  documents  shall be deemed to
          include all  subsequent  amendments  and other  modifications  thereto
          executed  in writing by all of the  parties  thereto  and, if Lender's
          consent was required for the original of any such document,  consented
          to by Lender.  All  references  in this  Mortgage to the plural of any
          document   described   herein   shall  mean  all  of  such   documents
          collectively.
<PAGE>
               References  to statutes or  regulations  are to be  construed  as
          including  all  statutory  and  regulatory  provisions  consolidating,
          amending, or replacing the statute or regulation.

               The captions and headings of this Mortgage are for convenience of
          reference only and shall not affect the construction of this Mortgage.


                    REPRESENTATIONS, WARRANTIES AND COVENANTS

               Borrower  represents  and warrants to, and  covenants  and agrees
          with, Trustee and Lender as follows:

               2 . Warranty.  Borrower owns good, indefeasible and insurable fee
          simple  title to the Land and the  Improvements,  subject  only to the
          Permitted  Encumbrances.  This  Mortgage  upon its due  execution  and
          proper  recordation is and will remain a valid and  enforceable  (and,
          with respect to all  personalty  (as to which  security  interests are
          governed  by the UCC),  upon  proper  recordation  and the filing of a
          financing  statement) perfected first Lien on and security interest on
          the Land,  Improvements  and such personalty  subject to the Permitted
          Encumbrances.  Borrower  represents  and  warrants  that  none  of the
          Permitted  Encumbrances will impair (i) the ability of Borrower to pay
          any of its  obligations  to any  Person  as and  when  due,  (ii)  the
          marketability  of  title to the  Mortgaged  Property,  (iii)  the fair
          market value of the Mortgaged  Property,  or (iv) the use or operation
          of the  Mortgaged  Property  as of the  Closing  Date and  thereafter.
          Borrower will preserve its fee simple title to the Mortgaged  Property
          for so long as the  Note  remains  outstanding  and will  warrant  and
          defend same and the  validity and priority of the Lien hereof from and
          against  any  and all  claims  whatsoever  other  than  the  Permitted
          Encumbrances.

               (b) This  Mortgage  and each of the Loan  Documents  executed  by
          Borrower,  is the legal,  valid and binding  obligation  of  Borrower,
          enforceable  against Borrower in accordance with their terms,  subject
          to   applicable   bankruptcy,    insolvency,    fraudulent   transfer,
          reorganization,  moratorium and other laws affecting creditor's rights
          generally in effect from time to time.

               (c) On the date  hereof,  no  portion  of the  Improvements  at a
          Property has been materially damaged,  destroyed or injured by fire or
          other  casualty  which is not now fully  restored or in the process of
          being restored;

               (d)  Borrower  (i) has full power and  authority  to carry on its
          business at each Property as currently conducted and (ii) has and will
          maintain  or cause to be  maintained  in effect at all times until the
          Indebtedness  and the Obligations are satisfied in full, all necessary
<PAGE>
          material   licenses,   permits,   authorizations,   registrations  and
          approvals  to own,  use and occupy each of the  Properties,  and (iii)
          except as otherwise disclosed,  has not received any written notice of
          any  violation  of  any  such   licenses,   permits,   authorizations,
          registrations  or  approvals  that  materially  impair  the value of a
          Property  for which  such  notice was given or which  would  adversely
          affect the use or operation of any Property in any material respect;


               (e) As of the date hereof,  Borrower has not received any written
          notice of any  Taking or  threatened  Taking  of any  Property  or any
          portion thereof which would  adversely  affect the use or operation of
          the Property in any material respect;

               (f) Each  Property  and the  Equipment  located  on the  Property
          constitutes all of the real property, equipment and fixtures currently
          owned or used by Borrower in the operation of the business  located on
          such Property;

               (g) Each Property has adequate access to public streets, roads or
          highways;

               (h) Each Property constitutes a separate tax lot, with a separate
          tax assessment,  independent of any other land or improvements, except
          as previously disclosed to Lender in writing;

               (i) All utility  services  necessary  for the  operation  of each
          Property  have  been,  or  upon  completion  of  construction  will be
          connected and are or will be available in adequate capacities directly
          from  utility  lines and without the need for  private  easements  not
          presently existing;

               (j) For so long as the Note remains  unpaid,  Borrower is not and
          shall not be an "employee benefit plan" (within the meaning of Section
          3(3) of ERISA) to which ERISA applies and Borrower's assets do not and
          will not constitute plan assets; and

               (k) As of the date hereof,  Borrower is and shall remain a Single
          Purpose Entity.

               (l) Borrower shall, during each calendar month, deposit, or cause
          to be deposited, an amount equal to four percent (4%) of the Operating
          Income from the month  second (2nd)  preceding  the month in which the
          deposit is made (i.e.,  the deposit in September shall be based on the
          Operating Income in July), into the FF&E Escrow Subaccount. Funds held
          in the FF&E  Escrow  Subaccount  shall  be used to pay for FF&E  items
          approved by Lender in its reasonable discretion.
<PAGE>
               (m) On the Closing Date,  Borrower shall deposit,  or cause to be
          deposited  into the  Construction  Completion  Escrow  Subaccount,  an
          amount equal to  $3,023,744  (i.e.,100%  the cost of completion of the
          Construction  Properties).  Provided  no Event of  Default  shall have
          occurred and be  continuing,  Lender shall pay to Borrower,  an amount
          equal to (i)  $211,868  with  respect  to the  Dulles  North  property
          identified on Exhibit A-23; (ii) $1,237,689 with respect to the Reston
          property identified on Exhibit A-20; and (iii) $1,574,187 with respect
          to the Merrifield  property  identified on Exhibit A-21, which amounts
          shall be paid to  Borrower  pursuant  to the  terms of  Section  6(g),
          provided  that  the  final  payment  for  retainage  shall  be paid to
          Borrower  upon  the (A)  completion  and  opening  for  business,  (B)
          delivery of a final unconditional certificate of occupancy and (C) the
          completion of the "Punch List" items for each such property to Lender,
          and deposit the same into an account designated by Borrower.

               3 . Payment and  Performance  of  Obligations  Secured.  Borrower
          shall  promptly  pay when due the  principal  of and  interest  on the
          Indebtedness  and  all  other  payment  Obligations  secured  by  this
          Mortgage,  all in lawful  money of the United  States of America,  and
          shall further  perform fully and in a timely manner all Obligations of
          Borrower. All sums payable by Borrower hereunder shall be paid without
          demand, counterclaim, offset, deduction (except as required by law) or
          defense.  Borrower  waives all rights now or  hereafter  conferred  by
          statute or  otherwise  to any such  demand,  counterclaim  (other than
          mandatory counterclaims), setoff, deduction or defense.

               4.  Negative  Covenants.  Borrower  covenants  and agrees that it
          shall not:

               (a) incur,  create or assume any  indebtedness for borrowed money
          or Transfer or lease the Mortgaged  Property or any interest  therein,
          except as permitted under Sections and hereof;

               (b) engage,  directly or  indirectly,  in any business other than
          that of entering  into this  Mortgage and the other Loan  Documents to
          which  Borrower  is a party and the  ownership,  management,  leasing,
          construction,  development, operation and maintenance of the Mortgaged
          Property for its present and related uses;

               (c) make  advances  or make  loans  to any  Persons  or  entities
          (including Affiliates of Borrower) or hold any investments (other than
          Permitted Investments, Defeasance Collateral and Cash and Cash
          Equivalents) under this Mortgage;

               (d)  partition  a  Property  without  Lender's  consent;
<PAGE>
               (e) commingle its assets with the assets of any of its Affiliates
          except in connection with the Cash Collateral Agreement;

               (f) guarantee any  obligations of any Person;

               (g) enter into any management agreement for any of the Properties
          without Lender's consent, except in accordance with Section 19 hereof;


               (h)  enter  into  any  agreement  for the  sale of any  asset  or
          transfer of any interest except as may be permitted hereby;

               (i) amend or modify any of its organizational documents needed to
          maintain  its  status  as a Single  Purpose  Entity  without  Lender's
          consent;

               (j)  dissolve,  wind-up,  terminate,  liquidate,  merge  with  or
          consolidate  into  another  Person,   except  as  expressly  permitted
          pursuant to this Mortgage;

               (k) engage in any activity  that would  subject it to  regulation
          under ERISA; or

               (l)  voluntarily  file or consent to the filing of a petition for
          bankruptcy, insolvency, reorganization,  assignment for the benefit of
          creditors or similar proceeding under any Federal or state bankruptcy,
          insolvency,  reorganization or other similar law or otherwise seek any
          relief  under  any  laws  relating  to  the  relief  of  debts  or the
          protection of debtors generally,  without the unanimous consent of its
          general partners  (including the unanimous consent of the directors of
          the corporate  general  partner or  shareholders,  as the case may be,
          which at all  times  shall  include  the  consent  of the  Independent
          Director).

               5. Insurance.

               (a) Insurance Coverage Requirements.  Borrower shall, at its sole
          cost and expense,  keep in full force and effect insurance coverage of
          the  types  and  minimum  limits as  follows  during  the term of this
          Mortgage:

                    (i)  Property  Insurance.  Insurance  with  respect  to  the
               Improvements  and  the  Building   Equipment  against  any  peril
               included within the  classification  "All Risks of Physical Loss"
               with  extended  coverage  in amounts at all times  sufficient  to
               prevent  Borrower from becoming a co-insurer  within the terms of
               the applicable policies, but in any event such insurance shall be
               maintained in an amount equal to the full insurable  value of the
               Improvements  and  the  Building   Equipment  (and  must  provide
<PAGE>
               coverage of any additional costs associated with applicable Legal
               Requirements),  and  such  policies  shall  be  subject  only  to
               exclusions   that  are  standard  and   customary   for  property
               comparable  to the  applicable  Property  and  acceptable  to the
               Rating Agencies and Lender. The term "full insurable value" means
               the actual  replacement cost of the Improvements and the Building
               Equipment  (without  taking into  account any  depreciation,  and
               exclusive of excavations,  footings and foundations,  landscaping
               and  paving)  (but in no event  less than 125% of the  applicable
               Allocated  Loan  Amount)  determined  annually by an  insurer,  a
               recognized   independent   insurance  broker  or  an  Independent
               Appraiser selected and paid by Borrower and in no event less than
               the  coverage  required  pursuant  to the  terms  of  any  Lease;
               provided,  however,  if the  terms  of the  applicable  insurance
               policies  expressly  provide for  insurance to be provided in the
               amount of the actual replacement cost of the Improvements and the
               Building  Equipment or such policies  contain a replacement  cost
               endorsement, no such annual determination will be necessary;

                    (ii) Liability  Insurance.  Comprehensive  general liability
               insurance, including bodily injury, contractual injury, death and
               property damage liability,  and excess and/or umbrella  liability
               insurance  against  any  and  all  claims,  including  all  legal
               liability  that  could be  imposed  upon  Lender,  to the  extent
               insurable,  and all court costs and attorneys' fees and expenses,
               arising out of or connected with the  possession,  use,  leasing,
               operation,  maintenance  or  condition  of each  Property in such
               amounts as are generally  required by  institutional  lenders for
               properties   comparable  to  the  Properties  written  on  a  per
               occurrence  basis  with a per  occurrence  limit of not less than
               Five Million Dollars  ($5,000,000) and with an aggregate limit of
               not less than Ten Million Dollars ($10,000,000) per Property;

                    (iii) Workers'  Compensation  Insurance.  Statutory workers'
               compensation  insurance  (to the  extent  the risks to be covered
               thereby are not already  covered by other  policies of  insurance
               maintained  by  Borrower),  with  respect  to any  work by or for
               Borrower performed on or about any Property;

                    (iv)  Loss of  Rental  Value.  Loss  of  "rental  value"  or
               "business  interruption"  insurance  in an amount  sufficient  to
               avoid any co-insurance penalty and to provide Proceeds which will
               cover the loss of Rents  sustained  during the period of at least
               twelve (12) months following the date of casualty.  Such policies
               of  insurance  shall  be  subject  only to  exclusions  that  are
               acceptable  to Lender and the Rating  Agencies.  The term "rental
               value"  means the sum of (A) the total then  ascertainable  Rents
               payable  or   anticipated   in  the  Budget  and  (B)  the  total
               ascertainable  amount  of all other  amounts  to be  received  by
               Borrower  from third  parties  which are the legal  obligation of
               Tenants, reduced to the extent such amounts would not be received
<PAGE>
               because of Operating  Expenses  not  incurred  during a period of
               non-occupancy  of that  portion of such  Property  then not being
               occupied;

                    (v)  Builder's  All-Risk  Insurance.  During  any  period of
               repair or  restoration,  builder's  "all  risk"  insurance  in an
               amount  equal to not less  than the full  insurable  value of the
               applicable  Property  against  such  risks  (including  fire  and
               extended  coverage  and  collapse of the  Improvements  to agreed
               limits as Lender may request),  in form and substance  acceptable
               to Lender.

                    (vi)  Boiler  and   Machinery   Insurance.   To  the  extent
               applicable,  broad form boiler and machinery  insurance  (without
               exclusion for  explosion)  covering all boilers or other pressure
               vessels, machinery and equipment, if any, located in, on or about
               each  Property  and  insurance  against  loss of occupancy or use
               arising from any such  breakdown in such amounts as are generally
               available at commercially  reasonable  premiums and are generally
               required by institutional lenders for property comparable to each
               of the Properties;

                    (vii) Flood Insurance. If any Improvement on any Property is
               located within an area  designated as "flood prone" or a "special
               flood  hazard  area" (as defined  under the  regulations  adopted
               under  the  National  Flood  Insurance  Act of 1968 and the Flood
               Disaster  Protection Act of 1973),  flood insurance if available,
               in an amount equal to the lesser of the Allocated Loan Amount for
               the  applicable  Property  and  the  maximum  limit  of  coverage
               available  with respect to the  Property,  acceptable  to Lender,
               provided,  however,  that if flood insurance shall be unavailable
               from private carriers, flood insurance provided by the federal or
               state government, if available;

                    (viii)  Windstorm  Insurance.  Windstorm  coverage with such
               limits and deductibles as are generally required by institutional
               lenders for similar  properties in the geographic  area where the
               Orlando  Property is located,  in any event at least equal to the
               lesser of the Allocated Loan Amount for the Orlando  Property and
               the  maximum  limit of  coverage  available  with  respect to the
               Orlando Property.  Such coverage shall be placed with one or more
               reputable  insurers  and may insure  additional  properties  on a
               pooled risk basis; and


                    (ix) Other Insurance.  At Lender's reasonable request,  such
               other   insurance,   including  but  not  limited  to  earthquake
               insurance, with respect to the Mortgaged Property against loss or
<PAGE>
               damage of the kinds from time to time customarily insured against
               and in such amounts as are  generally  required by  institutional
               lenders on loans of similar  amounts  and  secured by  properties
               comparable to the Properties.

                    (b)  Ratings  of  Insurers.   Borrower   will  maintain  the
               insurance coverage described in Section 5(a) above, in all cases,
               with one or more domestic primary insurers  acceptable to Lender,
               having  both (x) a  claims-paying-ability  rating by  Standard  &
               Poor's Ratings  Services of not less than "AA" and its equivalent
               by any other Rating  Agency,  and (y) an Alfred M. Best  Company,
               Inc.  ("Best")  rating  of "A" or  better  and a  financial  size
               category of not less than IX. All  insurers  providing  insurance
               required by this Mortgage shall be authorized to issue  insurance
               in the state where the insured Property is located.

                    For the purposes hereof, "Maximum Foreseeable Casualty Loss"
               shall mean the estimate of a qualified fire  protection  engineer
               in connection with Borrower's  existing  insurance package of the
               maximum probable casualty loss which would be suffered in respect
               of the Improvements and Building  Equipment as a result of damage
               caused  by the  perils  covered  by the  insurance  described  in
               Section 5(a)(i).

                    The insurance  coverage  required  under Section 5(a) may be
               effected  under  a  blanket  policy  or  policies   covering  the
               Mortgaged   Property   and  other   properties   and  assets  not
               constituting a part of the Mortgaged Property;  provided that any
               such blanket policy shall  specify,  except in the case of public
               liability  insurance,  the portion of the total  coverage of such
               policy  that is  allocated  to the  Mortgaged  Property,  and any
               sublimits  in such blanket  policy  applicable  to the  Mortgaged
               Property,  which  amounts  shall  not be less  than  the  amounts
               required  pursuant  to Section  5(a) and which  shall in any case
               comply  in all  other  respects  with  the  requirements  of this
               Section 5.

                    (c) Form of Insurance Policies;  Endorsements. All insurance
               policies shall be in such form and with such  endorsements and in
               such  amounts  satisfactory  to Lender (and Lender shall have the
               right to approve amounts, form, risk coverage,  deductibles, loss
               payees and insureds).  A certificate of insurance with respect to
               all of the above-mentioned  insurance policies has been delivered
               to Lender and originals or certified  copies of all such policies
               shall be  delivered  to Lender  when the same are  available  and
               shall  be  held by  Lender.  Borrower  shall  deliver  to  Lender
               annually,  simultaneously  with  the  renewal  of  the  insurance
               policies required  hereunder,  an Officer's  Certificate  stating
               that the  insurance  policies  required to be delivered to Lender
               pursuant to this Section 5(c) are  maintained  with  insurers who
               comply with the terms of Section  5(b)  hereof,  setting  forth a
               schedule  describing all premiums required to be paid by Borrower
               to maintain the policies of insurance required under this Section
               5, and stating  that  Borrower has paid such  premiums.  All such
               policies shall name Lender as an additional named insured,  shall
               provide  that all  Proceeds  (except  with respect to Proceeds of
               general liability and workers' compensation insurance) be payable
<PAGE>
               to Lender as and to the extent set forth in Section 6 hereof, and
               shall  contain:  (i)  a  standard  "non-contributory   mortgagee"
               endorsement or its equivalent  relating,  inter alia, to recovery
               by  Lender  notwithstanding  the  negligent  or  willful  acts or
               omissions of Borrower;  (ii) a waiver of subrogation  endorsement
               in favor of Lender; (iii) an endorsement providing that no policy
               shall be impaired or invalidated by virtue of any act, failure to
               act,  negligence of, or violation of declarations,  warranties or
               conditions  contained in such policy by  Borrower,  Lender or any
               other named insured, additional insured or loss payee, except for
               the willful  misconduct  of Lender  knowingly in violation of the
               conditions of such policy;  (iv) an  endorsement  providing for a
               deductible  per loss of an amount  not more  than  that  which is
               customarily   maintained   by  prudent   owners  of  First  Class
               properties  comparable  to and in the general  vicinities  of the
               Properties,  but in no event in excess of $100,000, except in the
               case of earthquake coverage,  for which such deductible shall not
               be in excess of that generally required by institutional  lenders
               on loans of similar amounts secured by comparable properties; and
               (v) a  provision  that  such  policies  shall  not be  cancelled,
               terminated  or expired  without at least  thirty (30) days' prior
               written  notice to  Lender,  in each  instance.  Certificates  of
               insurance  with  respect  to all  replacement  policies  shall be
               delivered to Lender not less than ten (10) Business Days prior to
               the expiration date of any of the insurance  policies required to
               be maintained  hereunder which  certificates shall bear notations
               evidencing   payment  of  applicable   premiums.   Originals  (or
               certified copies) of such replacement insurance policies shall be
               delivered to Lender promptly after Borrower's receipt thereof but
               in any case  within  thirty  (30) days after the  effective  date
               thereof.  If Borrower fails to maintain and deliver to Lender the
               certificates  of insurance  required by this Mortgage,  upon five
               (5)  Business  Days'  prior  notice to  Borrower,  Lender may, in
               accordance with the provisions of Section 8 hereof,  procure such
               insurance,  and all costs  thereof (and  interest  thereon at the
               Default Rate) shall be added to the Indebtedness.

                    Lender  shall not, by the fact of  approving,  disapproving,
               accepting,   preventing,  obtaining  or  failing  to  obtain  any
               insurance,  incur any liability for or with respect to the amount
               of insurance carried,  the form or legal sufficiency of insurance
               contracts, solvency of insurance companies, or payment or defense
               of  lawsuits,   and  Borrower  hereby   expressly   assumes  full
               responsibility  therefor and all liability,  if any, with respect
               thereto.

                    (d) Compliance with Insurance  Requirements.  Borrower shall
               comply  with all  Insurance  Requirements  and shall not bring or
               keep or permit to be brought or kept any article  upon any of the
               Properties  or cause or permit  any  condition  to exist  thereon
               which would be prohibited by any Insurance Requirement,  or would
               invalidate insurance coverage required hereunder to be maintained
               by  Borrower  on or with  respect  to any  part  of any  Property
               pursuant  to this  Section  5.  Notwithstanding  anything  to the
               contrary,   it  is  expressly  understood  and  agreed  that  any
               insurance  which  Borrower shall cause any Tenant to provide that
<PAGE>
               shall  otherwise  be in  compliance  with  all of the  terms  and
               conditions of this Section 5 shall satisfy Borrower's obligations
               with respect thereto hereunder.

                    (e) Separate Insurance.  Borrower will not take out separate
               insurance contributing in the event of loss with that required to
               be  maintained  pursuant to this Section 5 unless such  insurance
               complies with this Section 5.

                    (f) Blanket Policies. Except in the case of public liability
               insurance,  upon  Lender's  request,  Borrower  shall  deliver to
               Lender an Officer's  Certificate  setting forth (i) the number of
               properties covered by such policy,  (ii) the location by city (if
               available,  otherwise, county) and state of the properties, (iii)
               the average  square  footage of the  properties (or the aggregate
               square  footage),   (iv)  a  brief  description  of  the  typical
               construction  type  included in the  blanket  policy and (v) such
               other information as Lender may reasonably request.

                    6. Condemnation and Insurance Proceeds.

                    (a) Borrower  will  promptly  notify  Lender in writing upon
               obtaining  knowledge of (i) the  institution  of any  proceedings
               relating to any Taking,  or (ii) the  occurrence of any casualty,
               damage or injury to, any  Property  or any  portion  thereof  the
               restoration  of which is  estimated  by Borrower in good faith to
               cost more than the Threshold Amount.  In addition,  notice of any
               casualty,  damage,  injury or Taking, the restoration of which is
               estimated  by  Borrower  in good  faith  to cost  more  than  the
               Threshold Amount, shall set forth such good faith estimate of the
               cost of repairing or restoring such casualty,  damage,  injury or
               Taking in reasonable detail if the same is then available and, if
               not, as soon thereafter as it can reasonably be provided.

                    (b) In the  event  of any  Taking  of or  casualty  or other
               damage or injury to a  Property,  Borrower's  rights,  titles and
               interests in and to all compensation,  awards, proceeds, damages,
               claims,  insurance  recoveries,   causes  and  rights  of  action
               (whether  accrued prior to or after the date hereof) and payments
               which  Borrower  may  receive  or to which  Borrower  may  become
               entitled  with  respect  to the  Mortgaged  Property  or any part
               thereof  other than  payments  received  in  connection  with any
               liability  or loss  of  rental  value  or  business  interruption
               insurance (collectively, "Proceeds"), in connection with any such
               Taking of, or casualty or other damage or injury to, any Property
               or any part thereof are hereby assigned by Borrower to, and shall
               be paid to,  Lender.  Such Proceeds shall be applied by Lender to
               prepay the Note in accordance  with the provisions  hereof if (i)
               the Proceeds shall equal or exceed the Allocated Loan Amount with
               respect  to the  applicable  Property,  (ii) an Event of  Default
               shall have  occurred and be  continuing,  (iii) a Total Loss with
               respect to the applicable Property shall have occurred,  (iv) the
               Work is not  capable of being  completed  before  the  earlier to
               occur  of (x) the  date  which  is six (6)  months  prior  to the
<PAGE>
               Maturity   Date,   and  (y)  the  date  on  which  the   business
               interruption  insurance carried by Borrower shall expire, (v) the
               applicable   Property   is  not   capable   of   being   restored
               substantially  to its condition prior to such Taking or casualty,
               or (vi) Borrower is unable to demonstrate to Lender's  reasonable
               satisfaction   its   continuing   ability   to  pay   the   Loan.
               Notwithstanding  anything  to the  contrary  set  forth  in  this
               Mortgage,  however, and excluding situations requiring prepayment
               of the Note,  to the  extent  such  Proceeds  do not  exceed  the
               Threshold Amount,  or, if less than the Threshold Amount but when
               aggregated with all other then unapplied Proceeds with respect to
               any  Property,   do  not  exceed  the  Threshold  Amount  in  the
               aggregate,  such  Proceeds are to be paid directly to Borrower to
               be applied to restoration of the Mortgaged Property in accordance
               with the terms hereof.  Subject to the provisions of this Section
               and Sections and hereof  (except that Proceeds paid in respect of
               the  insurance  described  in  Section  6(b)  shall be  deposited
               directly  into the  Operating  Account  (as  defined  in the Cash
               Collateral  Agreement),  promptly  after  the  occurrence  of any
               damage or destruction to all or any portion of such Property or a
               Taking of a portion of such Property,  in either case which shall
               not  constitute  a Total Loss,  Borrower  shall either cause such
               Property  to be  released  from  the  lien  of this  Mortgage  in
               accordance  with  Section  38  hereof,   or  shall  commence  and
               diligently prosecute to completion,  subject to Excusable Delays,
               the repair,  restoration  and rebuilding of such Property (in the
               case of a partial  Taking,  to the  extent it is capable of being
               restored) (such repair,  restoration and rebuilding are sometimes
               hereinafter  collectively  referred to as the "Work") so damaged,
               destroyed or remaining  after such Taking in full compliance with
               all material Legal Requirements and free and clear of any and all
               Liens  except  Permitted   Encumbrances;   it  being  understood,
               however,  that  Borrower  shall not be  obligated to restore such
               Property to the precise  condition of the  Property  prior to any
               partial  Taking of, or casualty or other  damage or injury to the
               Property, if the Work actually performed, if any, or failed to be
               performed,  shall have no material adverse effect on the value of
               the Property  from the value that the Property  would have had if
               the same had been restored to its condition  immediately prior to
               such Taking or casualty.  Borrower  will,  in good faith and in a
               commercially   reasonable   manner,   file  and   prosecute   the
               adjustment,  compromise  or  settlement of any claim for Proceeds
               and, subject to Borrower's right to receive the direct payment of
               any  Proceeds as provided  above,  and,  with respect to Proceeds
               from a Total Loss, subject to the provisions below and subject to
               the applicable  terms of the Leases,  including any rights of the
               Tenants  thereunder,  will cause the same to be paid  directly to
               Lender,  to be held and applied in accordance with the provisions
               of this  Mortgage.  Except  upon the  occurrence  and  during the
               continuance  of an Event of  Default,  Borrower  may  settle  any
               insurance  claim with  respect to Proceeds  which does not exceed
               the Threshold  Amount. If an Event of Default shall have occurred
               and be continuing,  or if Borrower fails to file and/or prosecute
               any  insurance  claim for a period of fifteen (15)  Business Days
               following  Borrower's  receipt of  written  notice  from  Lender,
               Borrower  hereby  irrevocably  empowers  Lender,  in the  name of
               Borrower  as its true and  lawful  attorney-in-fact,  to file and
               prosecute such claim (including  settlement thereof) with counsel
<PAGE>
               satisfactory to Lender and to collect and to make receipt for any
               such payment,  all at Borrower's  expense  (including  payment of
               interest at the Default  Rate for any amounts  advanced by Lender
               pursuant  to this  Section  ). In the  event of (i) a Total  Loss
               resulting from a casualty,  damage or destruction,  if either (A)
               the cost to repair the Property as  estimated by the  Independent
               Architect  would exceed the Threshold  Amount and the restoration
               of the Property  cannot  reasonably be completed  before the date
               which is the  later to  occur  of the date of  expiration  of any
               business interruption  insurance or the date of expiration of any
               Letter of Credit  posted in lieu  thereof or in addition  thereto
               and under such  circumstances  Borrower is not required under the
               applicable  Lease to make Proceeds  available for  restoration of
               the  Property,  or (B) Lender  elects not to permit  Borrower  to
               restore  the  Property  or (ii) a  Total  Loss  resulting  from a
               Taking,  Borrower shall be required to comply with the provisions
               of Section 6(i) below and Lender shall apply such Proceeds, first
               toward reimbursement of Lender's reasonable costs and expenses in
               connection  with  recovery of the Proceeds (as further  described
               below), including, without limitation,  reasonable administrative
               costs and  inspection  fees, and then as required by Section 6(i)
               hereof.  Any Proceeds  remaining after  prepayment in part as set
               forth in Section  6(i) hereof  shall be paid to Borrower or as it
               may direct in writing.  Whether or not an Event of Default  shall
               have occurred and be  continuing,  Lender shall have the right to
               approve,  such  approval  not to be  unreasonably  withheld,  any
               settlement  which is for  Proceeds  in  excess  of the  Threshold
               Amount and  Borrower  will  deliver or cause to be  delivered  to
               Lender all instruments  reasonably  requested by Lender to permit
               such approval.  Borrower will pay all reasonable  costs, fees and
               expenses  reasonably incurred by Lender (including all reasonable
               attorneys'  fees and expenses,  the reasonable  fees of insurance
               experts  and  adjusters  and  reasonable  costs  incurred  in any
               litigation or  arbitration),  and interest thereon at the Default
               Rate to the extent not paid within five (5)  Business  Days after
               delivery of a request for  reimbursement by Lender, in connection
               with the settlement of any claim for insurance or Taking Proceeds
               and seeking and  obtaining  of any payment on account  thereof in
               accordance  with the  foregoing  provisions.  If any Proceeds are
               received by Borrower and may be retained by Borrower  pursuant to
               this Section 6, such Proceeds shall,  until the completion of the
               related Work, be held in trust for Lender and shall be segregated
               from other  funds of  Borrower  to be used to pay for the cost of
               the Work in accordance  with the terms  hereof,  and in the event
               such Proceeds exceed the Threshold Amount, such Proceeds shall be
               forthwith  paid  directly  to and held by Lender in a  segregated
               account  in trust for  Borrower,  in each case to be  applied  or
               disbursed in accordance with this Section 6.

                    (c) In the event that any Proceeds (other than Proceeds paid
               with respect to the  insurance  described in Section 6(b)) are in
               excess of the Threshold Amount, then all Proceeds (other than any
               portion  of any  Proceeds  paid  with  respect  to the  insurance
               described in Section 6(b) which shall be deposited  directly into
               the Operating  Account) shall be paid over to Lender and shall be
               applied as follows:  first,  toward  reimbursement of Lender's or
               its agent's  reasonable  costs and  expenses in  connection  with
               recovery of the  Proceeds  and  disbursement  of the Proceeds (as
<PAGE>
               further  described   below),   including,   without   limitation,
               reasonable administrative costs and inspection fees, and then, to
               the  prepayment  of  the   Indebtedness   secured  hereby  (which
               prepayment shall be made on the next Payment Date occurring after
               an elected or required prepayment hereunder),  without prepayment
               premium or penalty, only if:

                    (i) (A) the  amount of the  Proceeds  is equal to or greater
               than the  outstanding  Allocated  Loan Amount with respect to any
               Property, or

                         (B) the  casualty  or Taking  occurs on a date which is
                    less than one  hundred-eighty  (180) days prior to the final
                    Maturity Date (as defined in the Note), or

                         (C) more than twenty-five percent (25%) of the rentable
                    area of the applicable  Property shall have been the subject
                    of a casualty or shall have been taken, or

                    (ii) such  Proceeds  were the result of a Taking,  and after
               restoration  is completed,  there are excess  Proceeds which were
               not  required  to  effect  such   restoration,   in  which  event
               prepayment shall be made to the extent of such unneeded Proceeds.
               Any excess  Proceeds  shall be applied to the  prepayment  of the
               Indebtedness  secured hereby (which  prepayment  shall be made on
               the next Payment Date  occurring  after  completion  of the Work,
               without penalty or premium).

                    (d) Upon the  occurrence  and during the  continuance  of an
               Event of Default hereunder, or in the event that any Proceeds are
               required to be paid to Lender pursuant to subparagraph (b) above,
               then all Proceeds while an Event of Default exists,  and any such
               Proceeds so  required to be paid to Lender  shall be paid over to
               Lender  (if not paid  directly  to  Lender)  and shall be applied
               first  toward  reimbursement  of  Lender's  reasonable  costs and
               expenses (plus interest thereon at the Default Rate to the extent
               not paid  within  five (5)  Business  Days  after  delivery  of a
               request  for   reimbursement  by  Lender)  actually  incurred  in
               connection with recovery of the Proceeds and  disbursement of the
               Proceeds  (as  further  described  below),  including  reasonable
               administrative  costs and inspection fees, and then to be applied
               or disbursed in accordance with Sections 20 and 21.

                    Subject to  Borrower's  rights  pursuant to Section 38(b) to
               cause the Property to be released from the Lien of this Mortgage,
               Borrower  shall be obligated to restore,  or cause the applicable
               Tenant to restore,  the Property  following casualty or which has
               been  subject  to  a  partial  Taking  in  accordance   with  the
               provisions  of this Section 6, whether or not the Proceeds  shall
<PAGE>
               be sufficient,  provided that, if applicable,  the Proceeds shall
               be made  available to Borrower by Lender in accordance  with this
               Mortgage.

                    (e)  INTENTIONALLY  DELETED

                    (f) If  Proceeds  are not  required  to be  applied  towards
               payment of the  Indebtedness  pursuant to the terms hereof,  then
               Lender  shall make the Proceeds  which it is holding  pursuant to
               the  terms  hereof  (after  payment  of any  reasonable  expenses
               actually  incurred by Lender in  connection  with the  collection
               thereof plus  interest  thereon at the Default Rate to the extent
               the same are not paid within five (5) Business Days after request
               for reimbursement by Lender) available to Borrower for payment of
               or  reimbursement  of  Borrower's  or  the  applicable   Tenant's
               expenses  incurred  with respect to the Work,  upon the terms and
               subject to the  conditions  set forth  below and in Section  6(g)
               hereof:


                         (i) at the  time  of  loss  or  damage  or at any  time
                    thereafter  while  Borrower  is holding  any  portion of the
                    Proceeds,  there  shall be no  continuing  Event of  Default
                    hereunder;

                         (ii) if the estimated cost of the Work (as estimated by
                    the Independent Architect referred to in clause (iii) below)
                    shall exceed the  Proceeds,  Borrower  shall,  at its option
                    (within a  reasonable  period of time after  receipt of such
                    estimate)  either  deposit  with or deliver  to Lender  (and
                    promptly  following  any such deposit or delivery,  Borrower
                    shall provide written notice of same to the Rating Agencies)
                    (A) Cash and Cash  Equivalents,  (B) a Letter or  Letters of
                    Credit in an amount equal to the estimated  cost of the Work
                    less the Proceeds  available,  or (C) such other evidence of
                    Borrower's  ability to meet such  excess  costs and which is
                    reasonably  satisfactory to Lender and the Rating  Agencies;
                    and

<PAGE>
                         (iii) Lender shall,  within a reasonable period of time
                    prior to request for initial disbursement, be furnished with
                    an  estimate  of the  cost  of the  Work  accompanied  by an
                    Independent  Architect's  certification as to such costs and
                    appropriate plans and specifications for the Work. The plans
                    and specifications  shall require that the Work be done in a
                    First Class  workmanlike  manner at least  equivalent to the
                    quality  and   character  of  the   original   work  in  the
                    Improvements  (provided,  however,  that  in the  case  of a
                    partial Taking,  the Property  restoration  shall be done to
                    the extent reasonably  practicable after taking into account
                    the  consequences  of such  partial  Taking),  so that  upon
                    completion thereof,  the Property shall be at least equal in
                    value  and  general  utility  to the  Property  prior to the
                    damage or destruction;  it being understood,  however,  that
                    Borrower  shall not be  obligated to restore the Property to
                    the precise  condition of the Property  prior to any partial
                    Taking  of, or  casualty  or other  damage or injury to, the
                    Property, if the Work actually performed,  if any, or failed
                    to be performed,  shall have no material  adverse  effect on
                    the value of the Property  from the value that such Property
                    would  have  had  if  the  same  had  been  restored  to its
                    condition  immediately  prior to such  Taking  or  casualty.
                    Borrower shall restore all Improvements  such that when they
                    are fully restored and/or  repaired,  such  Improvements and
                    their  contemplated  use fully  comply  with all  applicable
                    material Legal Requirements including zoning,  environmental
                    and building laws, codes, ordinances and regulations.

                    (g) Disbursement of the Proceeds in Cash or Cash Equivalents
               to  Borrower  shall  be made  from  time to time  (but  not  more
               frequently than once in any month) by Lender but only for so long
               as no Event of Default shall have occurred and be continuing,  as
               the Work  progresses  upon  receipt by Lender of (i) an Officer's
               Certificate  dated  not  more  than ten  (10)  days  prior to the
               application   for  such  payment,   requesting  such  payment  or
               reimbursement  and  describing  the  Work  performed  that is the
               subject of such request, the parties that performed such Work and
               the actual cost thereof,  and also  certifying that such Work and
               materials are or, upon  disbursement of the payment  requested to
               the  parties  entitled  thereto,  will be free and clear of Liens
               other  than  Permitted   Encumbrances  and  (ii)  an  Independent
               Architect's   certificate  certifying  performance  of  the  Work
               together  with an estimate of the cost to complete  the Work.  No
               payment made prior to the final  completion  of the Work,  except
               for payment made to contractors  whose Work shall have been fully
               completed  and from which final lien waivers have been  received,
               shall exceed  ninety-five  percent (95%) of the value of the Work
               performed  and  materials  furnished  and  incorporated  into the
               Improvements  from time to time, and at all times the undisbursed
               balance of said  Proceeds  together  with all amounts  deposited,
               bonded,  guaranteed or otherwise  provided for pursuant to clause
               6(c)(ii)  above,  shall  be at  least  sufficient  to pay for the
               estimated  cost of completion  of the Work;  final payment of all
               Proceeds  remaining  with  Lender  shall be made upon  receipt by
               Lender of a certification by an Independent Architect,  as to the
               completion  of the  Work  substantially  in  accordance  with the
               submitted plans and specifications,  final lien releases, and the
               filing  of a notice  of  completion,  if  available  pursuant  to
               applicable Legal  Requirements,  and the expiration of the period
               provided  under  the law of the  State  in which  the  applicable
               Property   is   located   for  the  filing  of   mechanic's   and
               materialmen's  liens  which are  entitled to priority as to other
               creditors,  encumbrances and purchasers, as certified pursuant to
               an  Officer's  Certificate,  and  delivery  of a  certificate  of
               occupancy  with respect to the Work,  or, if not  applicable,  an
               Officer's  Certificate  to  the  effect  that  a  certificate  of
               occupancy is not required.

                    (h) If,  after  the  Work is  completed  and  all  costs  of
               completion  have been  paid,  there  are  excess  Proceeds  after
               repaying to Borrower any out-of-pocket costs incurred by Borrower
               in connection  with the  performance of the Work which costs were
<PAGE>
               approved by Lender in  connection  with its approval of the Work,
               then upon ten (10) days' prior  written  notice from  Borrower to
               Lender,  provided  no Event of Default has  occurred  and is then
               continuing, Borrower shall have the option of directing Lender to
               either (1) retain such Proceeds in the FF&E Account to be applied
               by  Borrower  to the cost of  improvements,  alterations,  tenant
               improvements or other capital  improvements  at the Property,  or
               (2) apply such excess  Proceeds  with respect to the Taking of or
               damage or injury to the  Mortgaged  Property  to the  payment  or
               prepayment  of all or any  portion  of the  Indebtedness  secured
               hereby without penalty or premium,  provided,  however,  that any
               such prepayment shall not reduce any Allocated Loan Amount.

                    (i) If (i) there is any casualty  that  constitutes  a Total
               Loss and Lender  elects not to permit  Borrower  to restore  such
               Property,  or (ii) there is any Taking that  constitutes  a Total
               Loss  and  Lender  elects  to  apply  the  Proceeds  against  the
               Indebtedness,  or (iii) Borrower is otherwise  required to comply
               with this Section 6(i), then Borrower, in any such instance, must
               prepay the Note, without premium or penalty, to the extent of the
               Proceeds  received up to an amount  equal to 125% of the original
               Allocated Loan Amount with respect to the relevant Property,  and
               the  Allocated  Loan  Amounts for all other  Properties  shall be
               increased or decreased in the manner  provided in the  definition
               of Allocated Loan Amount.

                    7 . Impositions, Liens and Other Items.

                    (a) Borrower shall deliver to Lender annually, no later than
               twenty (20) Business Days after the first day of each fiscal year
               of Borrower,  and shall update as new information is received,  a
               schedule  describing all  Impositions  payable or estimated to be
               payable during such fiscal year  attributable to or affecting the
               Mortgaged  Property or Borrower.  Subject to Borrower's  right of
               contest set forth in Section hereof, as set forth in the next two
               sentences, Lender on behalf of Borrower shall pay all Impositions
               which are  attributable  to or affect the  Mortgaged  Property or
               Borrower,  five (5) days prior to the date such Impositions shall
               become  delinquent  or  late  charges  may  be  imposed  thereon,
               directly to the applicable taxing authority with respect thereto.
               Lender shall direct the Agent under the Cash Collateral Agreement
               to pay to the taxing  authority  such amounts to the extent funds
               in the  Mortgage  Escrow  Account  are  sufficient  to  pay  such
               Impositions.  If Borrower has delivered  Mortgage Escrow Security
               in lieu of  maintaining  the Mortgage  Escrow  Account,  Borrower
               shall either deposit in the Mortgage Escrow Account not less than
               five  (5) days  prior  to the  date  the  same are due an  amount
               sufficient to pay such Impositions,  or Lender shall draw down on
               the Mortgage Escrow Security in such amount. Nothing contained in
               this Mortgage  shall be construed to require  Borrower to pay any
               tax,  assessment,  levy or charge imposed on Lender in the nature
               of a franchise,  capital levy, estate,  inheritance,  succession,
               income or net revenue tax.
<PAGE>
                    (b)  Subject  to its right of  contest  set forth in Section
               11(c) and 11(d)  hereof and its rights set forth in Sections  and
               hereof,  Borrower shall at all times keep the Mortgaged  Property
               free from all Liens  (other  than the Lien  hereof and  Permitted
               Encumbrances)  and shall pay when due and  payable all claims and
               demands of mechanics,  materialmen, laborers and others which, if
               unpaid,  might  result in or permit the creation of a Lien on the
               Mortgaged  Property or any portion thereof and shall in any event
               cause the prompt,  full and unconditional  discharge of all Liens
               imposed on or  against  the  Mortgaged  Property  or any  portion
               thereof within thirty (30) days after receiving written notice of
               the filing (whether from Lender,  the lienor or any other Person)
               thereof.  Borrower shall do or cause to be done, at the sole cost
               of Borrower,  everything  reasonably  necessary to fully preserve
               the  first  priority  of the Lien of this  Mortgage  against  the
               Mortgaged  Property subject to the Permitted  Encumbrances.  Upon
               the  occurrence  of an  Event  of  Default  with  respect  to its
               Obligations as set forth in this Section 7, Lender may (but shall
               not be obligated  to) make such  payment or discharge  such Lien,
               and  Borrower  shall  reimburse  Lender  on  demand  for all such
               advances  pursuant to Section 16 hereof  (together  with interest
               thereon at the Default Rate).

                    (c)  Nothing  contained  herein  shall be deemed to  require
               Borrower to pay, or cause to be paid, any Imposition,  to satisfy
               any Lien,  or to comply with any Legal  Requirement  or Insurance
               Requirement,  so long as Borrower is in good faith, and by proper
               legal proceedings,  where appropriate,  diligently contesting the
               validity,  amount or application  thereof,  provided that in each
               case,  at the  time of the  commencement  of any such  action  or
               proceeding,  and during the pendency of such action or proceeding
               (i) no Event of Default shall exist and be continuing  hereunder,
               (ii)  Borrower  shall keep Lender  apprised of the status of such
               contest,  (iii) if Borrower is not providing security as provided
               in clause (vi) below,  adequate reserves with respect thereto are
               maintained on Borrower's  books in accordance with GAAP or in the
               Mortgage  Escrow Account,  (iv) such contest  operates to suspend
               collection  or  enforcement  as the case may be, of the contested
               Imposition or Lien and such contest is maintained  and prosecuted
               continuously  and with  diligence  or the  Imposition  or Lien is
               bonded, (v) in the case of any Insurance Requirement, the failure
               of Borrower to comply  therewith shall not impair the validity of
               any insurance required to be maintained by Borrower under Section
               5 hereof or the right to full  payment of any claims  thereunder,
               and (vi) in the case of  Impositions  and  Liens in excess of One
               Hundred  Thousand  Dollars  ($100,000)  individually,  or in  the
               aggregate,  other than liens existing on the date hereof relating
               to the Properties  that were identified to Lender on an Officer's
               Certificate  delivered to Lender on the date hereof,  during such
               contest,  Borrower,  shall  provide  title  insurance in form and
               substance   acceptable   to  Lender  in  its  sole  and  absolute
               discretion or security in the form  required by Section  6(f)(ii)
               hereof  in an amount  reasonably  requested  by Lender  but in no
               event less than one hundred twenty-five percent (125%) of (A) the
               amount of Borrower's  obligations  being  contested  plus (B) any
               additional  interest,   charge,  or  penalty  arising  from  such
               contest.  Notwithstanding the foregoing, the creation of any such
<PAGE>
               reserves  or  the  furnishing  of any  bond  or  other  security,
               Borrower   promptly   shall  comply  with  any  contested   Legal
               Requirement  or Insurance  Requirement or shall pay any contested
               Imposition or Lien, and compliance  therewith or payment  thereof
               shall not be deferred,  if, at any time the Mortgaged Property or
               any portion thereof shall be, in Lender's reasonable judgment, in
               imminent danger of being forfeited or lost or Lender is likely to
               be subject to civil or criminal  damages as a result thereof.  If
               such action or proceeding is terminated or discontinued adversely
               to Borrower, Borrower shall deliver to Lender reasonable evidence
               of Borrower's  compliance with such contested  Imposition,  Lien,
               Legal Requirements or Insurance Requirements, as the case may be.


                    8 . Funds for Taxes and Insurance.

                    (a)  Borrower  shall  pay  into a  segregated  account  (the
               "Mortgage Escrow Account"),  amounts  sufficient to discharge the
               obligations  of Borrower  under Sections 5 and 7(a) and hereof as
               and when they  become due (such  amounts,  the  "Mortgage  Escrow
               Amounts").  As of the date hereof, Lender shall initially require
               payment  into  the  Mortgage   Escrow  Account  of  a  sum  equal
               to$1,433,879.73 plus one-twelfth of the annual insurance premiums
               for individual  policies  required to be maintained  hereunder or
               one-twelfth  of the  pro-rata  portion  of the  annual  insurance
               premiums due under any blanket policy affording the same required
               coverage,  for Impositions and all insurance being  maintained by
               Borrower as of the Closing  Date.  During each month  thereafter,
               Lender shall require  payment with respect to the annual Mortgage
               Escrow Amounts of a sum equal to one-twelfth  thereof, so that as
               each  installment of such premiums and  Impositions  becoming due
               and payable,  Borrower shall have paid a sum sufficient to enable
               Lender  to pay the  same.  If the  amount  of such  premiums  and
               Impositions  has not been  definitely  ascertained by Borrower at
               the time when any such monthly  deposits  are to be paid,  Lender
               shall require  payment of Mortgage  Escrow Amounts based upon the
               amount of such  premiums and  Impositions  paid for the preceding
               year,  subject  to  adjustment  as and  when the  amount  of such
               premiums and Impositions are ascertained by Borrower.

                    (b) At any time,  Borrower may elect to replace any Mortgage
               Escrow  Amounts  then being  retained  by Agent and  satisfy  its
               obligations  under  this  Section  8 by  delivery  of a Letter of
               Credit  (which  Letter of Credit  shall be either an  "evergreen"
               Letter of Credit or shall not expire  until a date two (2) months
               after the Maturity Date (as defined in the Note) or Cash and Cash
               Equivalents (any such security, "Mortgage Escrow Security") in an
               amount  reasonably  estimated  by  Borrower to be one-half of the
               amount sufficient (including the amount of any remaining Mortgage
               Escrow  Amounts)  to  discharge  the  Impositions  and  insurance
               premiums  which  shall  become due  during the twelve  (12) month
               period  immediately  after the date of delivery of such  Mortgage
               Escrow Security (and for each twelve (12) month period thereafter
               for so long as Borrower  elects to post such  security in lieu of
               Lender's retention of such amounts).  Cash Equivalents shall have
               maturities  corresponding  to the  respective  due  dates of such
<PAGE>
               obligations.   Notwithstanding  the  foregoing,  it  shall  be  a
               condition to Borrower's  delivery of any Mortgage Escrow Security
               (other than Cash) in satisfaction  of its obligations  under this
               Section , that Borrower, at its expense, execute, acknowledge and
               deliver  or cause  to be  delivered  to  Lender  such  additional
               security agreements,  financing statements and other documents or
               instruments  including an Opinion of Borrower's Counsel, and take
               all such actions which in the reasonable opinion of Lender or its
               counsel  may be  necessary  to  grant  and  convey  to  Lender  a
               perfected security interest in and to any and all of the Mortgage
               Escrow Security.

                    (c) The  Mortgage  Escrow  Amounts  shall  be held by  Agent
               pursuant  to the Cash  Collateral  Agreement  (and  any  Mortgage
               Escrow Security posted in lieu thereof pursuant to Section hereof
               shall be held by Lender), and shall be applied in accordance with
               the Cash  Collateral  Agreement to the payment of the obligations
               in respect of which such Mortgage  Escrow  Amounts were retained.
               Upon the  occurrence of an Event of Default and the  acceleration
               of the Note,  all or any portion of such Mortgage  Escrow Amounts
               (or any Mortgage  Escrow  Security posted in lieu thereof) may be
               applied to the  Indebtedness  in such order or priority as Lender
               may elect  (subject  to Sections 20 and 21 hereof) and Lender may
               exercise  any of its  rights or  remedies  with  respect  to same
               hereunder,   at  law  or  in  equity.  In  the  absence  of  such
               acceleration,  any  Mortgage  Escrow  Amounts  held by Agent  (or
               Mortgage  Escrow  Security  posted with  Lender)  that exceed the
               actual  obligations  for which they were retained,  shall be held
               and applied to the next due  obligations or otherwise  applied by
               Lender  in  accordance  with the  terms  hereof.  Nothing  herein
               contained shall be deemed to affect any right or remedy of Lender
               under this Mortgage or otherwise at law or in equity,  to pay any
               such  amount  and to add the  amount so paid to the  Indebtedness
               hereby  secured.  Any such  application  of said  amounts  or any
               portion thereof to any  Indebtedness  secured hereby shall not be
               construed  to cure or waive any  Default  or  notice  of  Default
               hereunder  (or  invalidate  any act  done  pursuant  to any  such
               Default or notice)  until such amounts have been repaid to Lender
               by Borrower.

                    (d) Borrower shall deliver to Lender all tax bills, bond and
               assessment  statements,  statements  of insurance  premiums,  and
               statements for any  obligations  referred to above as soon as the
               same are received by Borrower, and Lender shall cause the same to
               be paid when due to the  extent of  Mortgage  Escrow  Amounts  or
               Mortgage  Escrow  Security  available  therefor.  It is expressly
               acknowledged  and agreed  that  Lender  shall have no  obligation
               whatsoever  to advance  from its own funds any amounts in payment
               of all or any portion of such obligations.

                    9 . License to Collect  Rents.  Lender and  Borrower  hereby
               confirm  that  Rents as they  become  due and  payable  under the
               Leases shall be deposited in  accordance  with the  provisions of
               the  Assignment  of  Leases  and the Cash  Collateral  Agreement.
               Subject  to the  provisions  of the  Cash  Collateral  Agreement,
               Lender has granted to Borrower a license to cause the Rents to be
<PAGE>
               collected and deposited in  accordance  with the Cash  Collateral
               Agreement. Any rights of the Borrower hereunder shall not operate
               to  subordinate  this  assignment  of  leases  to any  subsequent
               assignment,  in  whole  or in part  by  Borrower,  and  any  such
               subsequent  assignment  shall be subject to Lender's rights under
               this  Mortgage.  Borrower  further  agrees to execute and deliver
               such  assignments  of  leases  as  Lender  may from  time to time
               reasonably  request  in  order to  better  assure,  transfer  and
               confirm  to Lender the  rights  intended  to be granted to Lender
               with respect  thereto.  In accordance  with the provisions of the
               Assignment  of  Leases,   upon  the  occurrence  and  during  the
               continuance  of an Event of  Default  (1)  Borrower  agrees  that
               Lender may, but shall not be obligated to, assume the  management
               of the real  property,  and collect the Rents,  applying the same
               upon the  Obligations  and (2)  Borrower  hereby  authorizes  and
               directs all tenants,  purchasers  or other  persons  occupying or
               otherwise acquiring any interest in any part of the real property
               to pay the Rents due under  the  Leases to Lender  upon  Lender's
               request.  In the event Lender actually receives such Rents, after
               an Event of Default, any application of the Rents by Lender shall
               not  constitute  a  misappropriation  of the  Rents  by  Borrower
               pursuant  to  Section  hereof.   Lender  shall  have  and  hereby
               expressly  reserves  the  right and  privilege  (but  assumes  no
               obligation) to demand,  collect, sue for, receive and recover the
               Rents,  or any part thereof,  now existing or hereafter made, and
               apply the same in accordance  with this Mortgage,  the Assignment
               of Leases, and applicable law.

                    10  .  Security   Agreement.

                    (a) Security Intended. Notwithstanding any provision of this
               Mortgage to the contrary,  the parties  intend that this document
               constitutes  security  for the  payment  and  performance  of the
               Obligations  and shall be a "mortgage",  "deed of trust" or "deed
               to secure debt" under applicable law. If, despite that intention,
               a court of competent  jurisdiction  determines that this document
               does not qualify as a "trust  deed",  "deed of trust" or "deed to
               secure  debt"  under   applicable  law,  then  ab  initio,   this
               instrument shall be deemed a realty mortgage under applicable law
               and shall be enforceable as a realty mortgage, and Borrower shall
               be deemed a  "mortgagor",  Lender shall be deemed a  "mortgagee",
               and Lender shall have no capacity (but shall be  disregarded  and
               all  references  to  "Lender"  shall  be  deemed  to refer to the
               "Lender" to the extent not inconsistent  with  interpreting  this
               instrument  as  though  it were a realty  mortgage).  As a realty
               mortgage,  Borrower,  as  mortgagor,  shall  be  deemed  to  have
               conveyed  the  Property  ab initio to Lender as  mortgagee,  such
               conveyance as a security to be void upon  condition that Borrower
               pay  and  perform  all  its  Obligations.  The  remedies  for any
               violation  of  the   covenants,   terms  and  conditions  of  the
               agreements  herein contained shall be as prescribed  herein or by
               general  law,  or,  as to that  part of the  security  in which a
               security interest may be perfected under the UCC, by the specific
               statutory  consequences now or hereafter enacted and specified in
               the UCC, all at Lender's sole election.
<PAGE>
                    (b) Fixture  Filing.  This Mortgage  constitutes a financing
               statement  and,  to the  extent  required  under UCC  ss.9-402(f)
               because  portions of the Property may constitute  fixtures,  this
               Mortgage  is to be filed in the office  where a mortgage  for the
               Land would be recorded.  Lender also shall be entitled to proceed
               against all or portions of the  Mortgaged  Property in accordance
               with the rights and  remedies  available  under UCC  ss.9-501(d).
               Borrower is, for the purposes of this Mortgage,  deemed to be the
               Debtor,  and Lender is deemed to be the Secured  Party,  as those
               terms are defined and used in the UCC.  Borrower  agrees that the
               Indebtedness and Obligations secured by this Mortgage are further
               secured by security  interests in all of Borrower's right,  title
               and  interest in and to all  inventory,  equipment,  fixtures and
               other goods (as those  terms are defined in the UCC,  and whether
               existing  now or in the future) now or in the future  located at,
               upon or about,  or affixed or  attached to or  installed  in, the
               Property,  or used or to be used in connection  with or otherwise
               relating  to the  Property  or the  ownership,  use  development,
               construction,   maintenance,  management,  operation,  marketing,
               leasing  or  occupancy  of  the  Property,  including  furniture,
               furnishings,   machinery,   appliances,  building  materials  and
               supplies,  generators,  boilers,  furnaces, water tanks, heating,
               ventilating and air conditioning equipment and all other types of
               tangible  personal  property  of any  kind  or  nature,  and  all
               accessories,  additions,  attachments, parts, proceeds, products,
               repairs,  replacements  and  substitutions  of or to any of  such
               property  which  are or are to  become  fixtures  related  to the
               Property and constitutes a "fixture  filing" with respect to such
               personal  property  executed by Borrower,  as debtor, in favor of
               Lender,  as secured party.  Borrower grants to Lender a valid and
               effectual security interest in all of Borrower's right, title and
               interest in and to such personal property (but only to the extent
               permitted in the case of leased personal property), together with
               all replacements,  additions, and proceeds.  Except for Permitted
               Encumbrances,  Borrower agrees that,  without the written consent
               of Lender,  no other security  interest will be created under the
               provisions  of the UCC and no lease  will be  entered  into  with
               respect  to any  goods,  fixtures,  appliances,  or  articles  of
               personal property now attached to or used or to be attached to or
               used  in  connection  with  the  Mortgaged   Property  except  as
               otherwise permitted hereunder.  Borrower agrees that all property
               of every nature and description covered by the lien and charge of
               this  Mortgage  together  with all such  property  and  interests
               covered by this security  interest are  encumbered as a unit, and
               upon  and  during  the  continuance  of an Event  of  Default  by
               Borrower,  all of the Mortgaged Property, at Lender's option, may
               be foreclosed  upon or sold in the same or different  proceedings
               or at the same or different  time,  subject to the  provisions of
               applicable law. The filing of any financing statement relating to
               any such  property or rights or interests  shall not be construed
               to diminish or alter any of Lender's  rights of priorities  under
               this Mortgage.

                    11 . Transfers,  Indebtedness and Subordinate Liens.  Unless
               such action is  permitted by the  provisions  of this Section 11,
               Section 15,  Section 38 or Section 45 hereof,  Borrower  will not
               (i)  Transfer  all or any part of the  Mortgaged  Property,  (ii)
               incur Debt, (iii) mortgage,  hypothecate or otherwise encumber or
<PAGE>
               grant a  security  interest  in all or any part of the  Mortgaged
               Property,  (iv) permit any  transfer of any  interest in Borrower
               (except as set forth in clause (b) of this  Section  11), or (iv)
               file a declaration of  condominium  with respect to the Property.
               Borrower shall deliver to Lender  written notice  pursuant to the
               provisions  of  Section  hereof  of any such  Transfer  permitted
               pursuant to the  provisions  of this  Section or Section  hereof,
               other than Room and Facility Leases.

                    In  connection  with any Transfer or any series of Transfers
               that affects (on a cumulative  basis) more than ten percent (10%)
               of the  value of the  Mortgaged  Property,  a Tax  Opinion  and a
               Nondisqualification Opinion shall be furnished to Lender.

                    (a) Sale of the Mortgaged Property. Borrower may transfer or
               dispose of Building Equipment which is being replaced or which is
               no  longer  necessary  in  connection  with  the  operation  of a
               Property free from the Lien of this  Mortgage  provided that such
               transfer or disposal  will not  materially  adversely  affect the
               value  of the  Mortgaged  Property  taken  as a  whole,  will not
               materially  impair  the  utility of such  Property,  and will not
               result  in a  reduction  or  abatement  of,  or right  of  offset
               against,  the Rents payable under any Lease,  in either case as a
               result  thereof,  and provided  that any new  Building  Equipment
               acquired by Borrower (and not so disposed of) shall be subject to
               the Lien of this Mortgage.  Lender shall, from time to time, upon
               receipt  of an  Officer's  Certificate  requesting  the  same and
               confirming  satisfaction  of  the  conditions  set  forth  above,
               execute a written  instrument in form reasonably  satisfactory to
               Lender to confirm that such Building Equipment which is to be, or
               has  been,  sold or  disposed  of is free  from  the Lien of this
               Mortgage.

                    (b)  Transfer  of  Interests  in  Borrower.  Notwithstanding
               anything  contained herein to the contrary,  Lender's consent and
               Rating Agency  confirmation  that the proposed  transfer will not
               result in a downgrade,  withdrawal or  qualification  of the then
               current ratings of any securities backed in part by this Mortgage
               shall be required with respect to Transfers of direct or indirect
               beneficial  interests in Borrower.  For the purposes hereof,  the
               sale of stock in  Homestead  Village  Incorporated  on a publicly
               traded  exchange  shall not be deemed an  indirect  Transfer of a
               beneficial  interest in Borrower.  Borrower may request  Lender's
               consent to such Transfers  provided (i) no Event of Default shall
               have occurred and be continuing, (ii) Borrower (or the transferor
               of such interest)  delivers such request for Lender's  consent to
               Lender and the Rating  Agencies at least  fifteen  (15)  Business
               Days prior to the proposed effective date of such Transfer, (iii)
               Borrower remains a Single Purpose Entity, and (iv) no transfer of
               limited  partner,  non-managing  member or shareholder  interests
               results in any one Person  (or any group of  Affiliates)  owning,
               directly  or  indirectly,  fifty  percent  (50%)  of  more of the
               beneficial ownership interests of Borrower.  If ten percent (10%)
               or  more  of  direct   beneficial   interests   in  Borrower  are
               Transferred  or if any  Transfer  shall  result  in a Person or a
               group of  Affiliates  acquiring  more than a fifty  percent (50%)
               interest as set forth above, Borrower shall also deliver or cause
               to be delivered to the Rating  Agencies and Lender (x) an Opinion
               of Counsel  addressed to the Rating Agencies and Lender and dated
               as of the date of the  Transfer  to the effect that in a properly
               presented  case,  a  bankruptcy  court in a case  involving  such
               transferee,  or any  Affiliate  thereof,  would not disregard the
               corporate or partnership  forms of such entity,  their Affiliates
               and/or their  partners,  as the case may be, so as to consolidate
<PAGE>
               the assets and  liabilities  of such  entity or  entities  and/or
               their  Affiliates  with  those of  Borrower  or their  respective
               general  partners,  and (y) an Officer's  Certificate  certifying
               that such Transfer is not an Event of Default.

                    (c) Indebtedness. Borrower shall not incur, create or assume
               any Debt or incur any liabilities  without the consent of Lender;
               provided,  however,  that  if no  Event  of  Default  shall  have
               occurred and be continuing,  Borrower may, without the consent of
               Lender,  incur,  create  or  assume  any or all of the  following
               indebtedness (collectively, "Permitted Debt"):

                    (i) the Note and the  other  obligations,  indebtedness  and
               liabilities  specifically  provided for in any Loan  Document and
               secured by this Mortgage and the other Loan Documents;

                    (ii) amounts, not secured by Liens on the Mortgaged Property
               (other than liens being properly contested in accordance with the
               provisions  of this  Mortgage),  not to exceed  in the  aggregate
               $700,000 (other than amounts held in the Construction  Completion
               Account),  payable by or on behalf of Borrower to third  parties,
               but not including  current  utility  charges for or in respect of
               the  operation  of  the  Mortgaged  Property  or for  trade  debt
               incurred in the ordinary course of operating Borrower's business,
               provided  that (but  subject  to the terms of the next  sentence)
               each such amount  shall be paid to trade  creditors  within sixty
               (60)  days  following  the date on which  each  such  amount  was
               actually  due and  payable.  Nothing  contained  herein  shall be
               deemed to require Borrower to pay any amount, so long as Borrower
               is in good faith,  and by proper  legal  proceedings,  diligently
               contesting the validity,  amount or application thereof, provided
               that in each case,  at the time of the  commencement  of any such
               action or  proceeding,  and during the pendency of such action or
               proceeding  (i) no Event of Default shall exist and be continuing
               hereunder,  (ii)  adequate  reserves  with  respect  thereto  are
               maintained on the books of Borrower in  accordance  with GAAP (as
               determined by the Independent Accountant), and (iii) such contest
               operates to suspend  collection or  enforcement,  as the case may
               be, of the contested  amount and such contest is  maintained  and
               prosecuted  continuously  and  with  diligence.   Notwithstanding
               anything  set  forth  herein,  in  no  event  shall  Borrower  be
               permitted  under  this  provision  to enter  into a note or other
               instrument for borrowed money; and
<PAGE>
                    (iii)  amounts,  not  secured  by  Liens  on  the  Mortgaged
               Property (other than liens being properly contested in accordance
               with the provisions of this Mortgage), payable or reimbursable to
               any  Tenant on account of work  performed  at a Property  by such
               Tenant or for costs  incurred by such Tenant in  connection  with
               its  occupancy  of space in the  Property,  including  for tenant
               improvements   (provided,   however,   that  notwithstanding  the
               foregoing,  in no event shall  Borrower be  permitted  under this
               provision to enter into a note or other  instrument  for borrowed
               money).

                    (d)  Additional  Permitted  Transfers.  Notwithstanding  the
               above  provisions of this Section 11,  Borrower may,  without the
               consent of Lender, (i) make immaterial transfers of portions of a
               Property to Governmental Authorities for dedication or public use
               (subject to the provisions of Section 6 hereof) or, portions of a
               Property to third parties,  including  owners of  outparcels,  or
               other  properties  for the  purpose  of  erecting  and  operating
               additional structures whose use is integrated with the use of the
               Property,  and (ii)  grant  easements,  restrictions,  covenants,
               reservations and rights of way in the ordinary course of business
               for access, water and sewer lines, telephone and telegraph lines,
               electric lines or other  utilities or for other similar  purposes
               or  amend  the  Operating  Agreements,   provided  that  no  such
               transfer,  conveyance or  encumbrance  set forth in the foregoing
               clauses  (i) and (ii) shall  materially  impair the  utility  and
               operation of such  Property or  materially  adversely  affect the
               value  of such  Property  taken  as a whole.  If  Borrower  shall
               receive any net proceeds in connection  with any such transfer or
               other  conveyance,  Borrower shall have the right to use any such
               proceeds  in  connection  with  any   Alterations   performed  in
               connection  with,  or required  as a result of, such  conveyance.
               Except as provided  below with respect to any Taking,  the amount
               of any net proceeds received by Borrower in excess of the cost of
               such  Alterations  shall be deposited in the FF&E Reserve Account
               (which  amounts  shall  be in  addition  to,  and not in lieu of,
               amounts  otherwise  required to be deposited  pursuant to Section
               48(a)  hereof,  and shall be  available  to  Borrower  for use in
               performing any further or other Alterations.  Any amounts held in
               such account shall be invested in accordance with Section 3(s) of
               the Cash Collateral  Agreement.  In connection with any transfer,
               conveyance  or  encumbrance  permitted  pursuant to this  Section
               11(d), Lender shall execute and deliver any instrument reasonably
               necessary or appropriate,  in the case of the transfers  referred
               to in clause (i) above,  to release the portion of such  Property
               affected  by such Taking or such  transfer  from the Lien of this
               Mortgage or, in the case of clause (ii) above, to subordinate the
               Lien of this Mortgage to such easements, restrictions, covenants,
               reservations and rights of way or other similar grants by receipt
               by Lender of:

                    (i) a copy of the instrument of transfer; and

                    (ii) an  Officer's  Certificate  stating (x) with respect to
               any  Transfer,  the  consideration,  if any,  being  paid for the
<PAGE>
               Transfer and (y) that such  Transfer does not  materially  impair
               the utility and operation of the affected  Property or materially
               reduce its value.

                    All Taking  Proceeds shall be applied in accordance with the
               provisions of Section hereof.

                    (e) Not less than  fifteen (15)  Business  Days prior to the
               closing  of any  transaction  subject to the  provisions  of this
               Section 11,  transfers of a ten percent  (10%) direct or indirect
               beneficial  interest in Borrower  or of any  transfer  that shall
               result in a Person  acquiring a greater than  forty-nine  percent
               (49%)  interest in Borrower or of any transfer  that shall result
               in a Person  that had a greater  than  forty-nine  percent  (49%)
               interest in Borrower having less than a forty-nine  percent (49%)
               interest in Borrower,  Borrower  shall  deliver to Lender and the
               Rating  Agencies  (i) an  Officer's  Certificate  describing  the
               proposed   transaction  and  stating  that  such  transaction  is
               permitted  pursuant to the terms of this Section , together  with
               any  appraisal  or other  documents  upon  which  such  Officer's
               Certificate  is based,  and (ii) an  Opinion  of  Counsel  to the
               transferee, addressed to the Rating Agencies and Lender and dated
               as of the date of the Transfer, to the effect that, in a properly
               presented  case,  a  bankruptcy  court in a case  involving  such
               transferee  would not disregard the corporate or partnership form
               of  such   transferee  so  as  to  consolidate   the  assets  and
               liabilities  of such  transferee  with those of Borrower or their
               respective  general  partners.  Such Transfer shall be subject to
               Rating Agency  confirmation  that the proposed  transfer will not
               result in a downgrade,  withdrawal or  qualification  of the then
               current  ratings  of  any  securities  backed  in  part  by  this
               Mortgage.  In addition,  Borrower  shall  provide  Lender and the
               Rating  Agencies with copies of executed  deeds,  assignments  of
               Direct Beneficial Owner interests in Borrower, mortgages or other
               similar  closing  documents  within  ten  (10)  days  after  such
               closing.

                    12  .  Maintenance  of  Mortgaged   Property;   Alterations;
               Inspection; Utilities.

                    (a) Maintenance of Mortgaged  Property.  Borrower shall keep
               and  maintain  the  Mortgaged  Property and every part thereof in
               good  condition  and repair,  subject to ordinary  wear and tear,
               and,  subject  to  Excusable  Delays and the  provisions  of this
               Mortgage with respect to damage or destruction caused by casualty
               events  or  Takings,  shall  not  permit  or  commit  any  waste,
               impairment,  or  deterioration  of any  portion of the  Mortgaged
               Property in any material  respect.  Borrower further covenants to
               do  all  other  acts  which  from  the  character  or  use of the
               Mortgaged  Property  may be  reasonably  necessary to protect the
               security hereof, the specific  enumerations  herein not excluding
               the   general.   Borrower   shall  not  remove  or  demolish  any
               Improvement  except as the same may be  necessary  in  connection
               with an Alteration or a restoration  in connection  with a Taking
               or casualty in accordance with the terms and conditions hereof.
<PAGE>
                    (b) No  Changes  in  Use.  Except  as may  be  necessary  in
               connection with an Alteration  permitted by Section 12(c) hereof,
               Borrower  shall not make any  changes or allow any  changes to be
               made in the nature of the use of a Property  or any part  thereof
               or  initiate or take any action in  furtherance  of any change in
               any zoning or other land use classification  affecting all or any
               portion of a Property.

                    (c)  Conditions  to  Alteration.  Provided  that no Event of
               Default shall have occurred and be continuing hereunder, Borrower
               shall have the right,  without Lender's consent, to undertake any
               alteration,  improvement,  demolition or removal of a Property or
               any portion thereof (any such alteration, improvement, demolition
               or removal,  an  "Alteration")  so long as (i) Borrower  provides
               Lender with prior written notice of any Material Alteration,  and
               (ii)  any  Alteration  is  undertaken  in  accordance   with  the
               applicable  provisions  of  this  Mortgage  and  the  other  Loan
               Documents, is not prohibited by any relevant Operating Agreements
               and the Leases and shall not upon  completion  (giving  credit to
               rent and other charges  attributable to Leases executed upon such
               completion)  materially  adversely  (A) affect the value,  use or
               operation of such Property taken as a whole or (B) reduce the Net
               Operating  Income  for such  Property  from the  level  available
               immediately  prior  to  commencement  of  such  Alteration.   Any
               Material  Alteration  with  respect  to  any  Property  shall  be
               conducted under the  supervision of an Independent  Architect and
               no such Material  Alteration  shall be undertaken until three (3)
               Business Days after there shall have been filed with Lender,  for
               information  purposes  only  and  not  for  approval  by  Lender,
               detailed plans and  specifications  and cost estimates  therefor,
               prepared by such Independent  Architect,  as well as an Officer's
               Certificate   stating  that  such   Alteration  will  involve  an
               estimated  cost of more  than (I) the  greater  of the  Threshold
               Amount with respect to Alterations  being  undertaken at a single
               Property at such time, or (II) the Aggregate Alteration Threshold
               Amount for Alterations at all of the  Properties.  Such plans and
               specifications  may be  revised at any time and from time to time
               by such Independent Architect provided that material revisions of
               such  plans  and   specifications  are  filed  with  Lender,  for
               information  purposes only. All work done in connection  with any
               Alteration  shall be performed  with due  diligence in a good and
               workmanlike  manner,  all materials  used in connection  with any
               Alteration  shall not be less than the standard of quality of the
               materials  currently used at such Property and all materials used
               shall  be  in  accordance  with  all  applicable  material  Legal
               Requirements and Insurance Requirements.

                    (d) Costs of  Alteration.  Notwithstanding  anything  to the
               contrary   contained  in  Section  12(c)   hereof,   no  Material
               Alteration nor any Alteration other than  Alterations  related to
               the initial  construction  of a Property for which funds equal to
               the  cost of  construction  has  been  deposited  into an  escrow
               account  controlled  by Lender,  which when  aggregated  with all
               other  Alterations  (other than Material  Alterations) then being
               undertaken by Borrower  (exclusive of Alterations  being directly
               paid for by Tenants)  at the  Properties  exceeds  the  Aggregate
<PAGE>
               Alteration  Threshold Amount,  shall be performed by or on behalf
               of Borrower  unless  Borrower shall have delivered to Lender Cash
               and Cash Equivalents  and/or a Letter of Credit as security in an
               amount not less than the estimated cost (exclusive of costs to be
               funded  from  amounts  held  in  any  Account)  of  the  Material
               Alteration or the  Alterations in excess of the Threshold  Amount
               (as set forth in the  Independent  Architect's  written  estimate
               referred to above). In addition to payment or reimbursement  from
               time to time of Borrower's  expenses  incurred in connection with
               any Material  Alteration  or any such  Alteration,  the amount of
               such  security  shall be  reduced  on any  given  date by  Lender
               delivering   funds  to  Borrower  in  a  sum  equivalent  to  the
               Independent  Architect's written estimate of the cost to complete
               the  Material  Alterations  or  the  Alterations  (including  any
               retainages),  free  and  clear of  Liens,  other  than  Permitted
               Encumbrances.  Costs which are subject to retainage  (which in no
               event shall be less than five  percent  (5%)) shall be treated as
               due and  payable  and unpaid  from the date they would be due and
               payable but for their  characterization  as subject to retainage.
               In the event that any Material  Alteration or Alteration shall be
               made in conjunction  with any  restoration  with respect to which
               Borrower  shall be  entitled  to  withdraw  Proceeds  pursuant to
               Sections  6(f) and 6(g)  hereof,  the amount of the Cash and Cash
               Equivalents  and/or  Letter of Credit  to be  furnished  pursuant
               hereto need not exceed the aggregate cost of such restoration and
               such  Material  Alteration  or  Alteration  (as  estimated by the
               Independent  Architect),  less  the  sum  of  the  amount  of any
               Proceeds which  Borrower may be entitled to withdraw  pursuant to
               Sections  6(f) and 6(g)  hereof  and  which are held by Lender in
               accordance  with Section 6 hereof.  Payment or  reimbursement  of
               Borrower's   expenses  incurred  with  respect  to  any  Material
               Alteration or any such Alteration shall be accomplished  upon the
               terms and  conditions  specified  in Sections  6(f)  through 6(g)
               hereof. At any time after substantial  completion of any Material
               Alteration  or any such  Alteration  in respect  whereof Cash and
               Cash Equivalents and/or a Letter of Credit was deposited pursuant
               hereto,  the whole  balance of any Cash and Cash  Equivalents  so
               deposited by Lender and then remaining on deposit  (together with
               earnings thereon), as well as all retainages, may be withdrawn by
               Borrower and shall be paid by Lender to  Borrower,  and any other
               Cash and Cash Equivalents  and/or a Letter of Credit so deposited
               or  delivered  shall,  to the extent it has not been called upon,
               reduced or theretofore released, be released to Borrower,  within
               ten (10) days after receipt by Lender of an application  for such
               withdrawal and/or release together with an Officer's Certificate,
               and  signed  also  (as  to  the  following  clause  (i))  by  the
               Independent Architect, setting forth in substance as follows:

                    (i) that the Material Alteration or Alteration in respect of
               which  such Cash and Cash  Equivalents  and/or a Letter of Credit
               was  deposited has been  substantially  completed in all material
               respects in accordance with any plans and specifications therefor
               previously filed with Lender under Section 12(c) hereof and that,
               if  applicable,  a certificate  of occupancy has been issued with
               respect to such Material Alteration or Alteration by the relevant
               Governmental   Authority(ies)  or,  if  not  applicable,  that  a
               certificate  of occupancy is not  required;  and

<PAGE>
                  (ii) that to the  knowledge  of the  certifying  Person  all
               amounts which  Borrower is or may become liable to pay in respect
               of such Material Alteration or Alteration through the date of the
               certification  have been paid in full or adequately  provided for
               or are being contested in accordance with Section 7(c) hereof and
               that lien waivers have been obtained from the general  contractor
               and major subcontractors  performing such Material Alterations or
               Alterations  (or such waivers are not  customary  and  reasonably
               obtainable by prudent  managers in the area where the Property is
               located).

               (e) Right to Inspect. Lender and any Persons authorized by it may
          at all reasonable  times and upon reasonable  notice enter and examine
          each of the Properties and may inspect all work done,  labor performed
          and  materials  furnished  in and about the  Property  subject  in all
          instances to the rights of Tenants under Leases.  Lender shall have no
          duty to make  any such  inspection  and  shall  have no  liability  or
          obligation   for  making   (except  for  its   negligence  or  willful
          misconduct)  or  not  making  any  such  inspection.  

               13. Legal Compliance. (a) Borrower and the Mortgaged Property and
          the use  thereof  materially  comply with all Legal  Requirements  (as
          defined below).  Borrower represents and warrants that, as of the date
          hereof,  it has not  received  notice  of any  violation  of any Legal
          Requirement that remains  outstanding other than those to which Lender
          has  consented  in  writing.  Subject to  Borrower's  right to contest
          pursuant  to Section  7(c)  hereof,  Borrower  shall  comply  with all
          material present and future laws, statutes, codes, ordinances, orders,
          judgments, decrees, injunctions,  rules, regulations and requirements,
          and  irrespective  of the  nature  of the  work to be  done,  of every
          Governmental  Authority including,  without limitation,  Environmental
          Laws,  consumer  protection laws and all covenants,  restrictions  and
          conditions now or hereafter of record which may be applicable to it or
          to any  Property and the Building  Equipment  thereon,  or to the use,
          manner  of  use,  occupancy,   possession,   operation,   maintenance,
          alteration,  repair or reconstruction of any Property and the Building
          Equipment thereon including,  without limitation,  building and zoning
          codes and ordinances (collectively, the "Legal Requirements"),  except
          where the failure is not reasonably  likely to have a Material Adverse
          Effect. 

               (b)  Borrower  currently  holds all  certificates  of  occupancy,
          licenses,  registrations,  permits, consents, franchises and approvals
          of any  Governmental  Authority  which are  necessary  for  Borrower's
          ownership and  operation of the  Properties or which are necessary for
          the conduct of Borrower's  business thereon.  All such certificates of
          occupancy, licenses, registrations,  permits, consents, franchises and
          approvals  are current and will be kept  current and in full force and
          effect.
<PAGE>
               14 . Books and Records,  Financial Statements,  Reports and Other
          Information.

               (a) Books and  Records.  Borrower  will  keep and  maintain  on a
          fiscal year basis  proper  books and records  separate  from any other
          Person,  in which  accurate and complete  entries shall be made of all
          dealings or  transactions of or in relation to the Note, the Mortgaged
          Property  and the  business  and affairs of  Borrower  relating to the
          Mortgaged Property,  in accordance with GAAP, at Borrower's  election,
          prior to the  Initial  Maturity  Date (as such term is  defined in the
          Note). Lender and its authorized  representatives shall have the right
          at reasonable  times and upon  reasonable  notice to examine the books
          and records of Borrower  relating to the  operation  of the  Mortgaged
          Property  and to make such  copies or  extracts  thereof as Lender may
          reasonably require.

               (b) Financial Statements.

               (i)  Quarterly  Reports.  Not  later  than  forty-five  (45) days
          following  the end of each  calendar  quarter  (other  than the fourth
          (4th) quarter of any calendar  year),  Borrower will deliver to Lender
          (with a copy to the Rating Agencies) unaudited  financial  statements,
          internally prepared,  in accordance with GAAP,  consistently  applied,
          including  a  balance  sheet  as of the  end of  such  quarter,  and a
          statement of revenues and expenses through the end of such quarter,  a
          statement of Net Operating  Income as to each Property and  aggregated
          for all the Properties for such quarter, and, only upon the request of
          either the Rating  Agencies  or Lender,  a  statement  of profits  and
          losses.  Such  statements  for each quarter shall be accompanied by an
          Officer's   Certificate   certifying  to  the  best  of  the  signer's
          knowledge,  (A) that such  statements  fairly  represent the financial
          condition and results of  operations  of Borrower in  accordance  with
          GAAP consistently  applied,  (B) that as of the date of such Officer's
          Certificate,  no Default exists under this  Mortgage,  the Note or any
          other Loan  Document  or, if so,  specifying  the nature and status of
          each such  Default  and the action  then being  taken by  Borrower  or
          proposed  to be taken to remedy  such  Default,  (C) the Debt  Service
          Coverage Ratio for the preceding  calendar  quarter and calendar year,
          and  (D)  that  as of the  date  of  each  Officer's  Certificate,  no
          uninsured  litigation  exists  involving  Borrower  or  the  Mortgaged
          Property in which the aggregate  amount  involved is Two Hundred Fifty
          Thousand  Dollars  ($250,000)  or more,  or,  if so,  specifying  such
          litigation  and the  actions  being  taking  in  relation  thereto  in
          accordance  with Section 23 hereof.  Such financial  statements  shall
          contain such other  information  as shall be  reasonably  requested by
          Lender for purposes of  calculations  to be made by Lender pursuant to
          the terms hereof.
<PAGE>
               In  addition  to  the  quarterly   reports  required  under  this
          subsection  (b)(i),  Borrower  shall  deliver to Lender and the Rating
          Agencies, a list of all litigation and proceedings  affecting Borrower
          or the  Mortgaged  Property or any part thereof in which the aggregate
          amount  involved is Two Hundred Fifty Thousand  Dollars  ($250,000) or
          more, whether or not covered by insurance and whether or not relief is
          being sought.

               (ii)  Annual  Reports.  Not later than ninety (90) days after the
          end of  each  fiscal  year of  Borrower's  operations,  Borrower  will
          deliver  to  Lender  (with  a copy  to the  Rating  Agencies)  audited
          financial  statements  certified by an Independent  Accountant,  which
          statements  shall be prepared  in  accordance  with GAAP  consistently
          applied.  Any statement delivered under this sub-section shall include
          a  balance  sheet  as of the  end of such  year,  a  statement  of Net
          Operating  Income  for each  Property  for the year and for the fourth
          quarter  thereof and a statement  of revenues  and  expenses  for each
          Property for such year,  and stating in  comparative  form the figures
          for the previous fiscal year, as well as the supplemental  schedule of
          net income or loss  presenting  the net  income or loss and  occupancy
          statistics for each Property.  Such annual financial  statements shall
          also be accompanied  by an Officer's  Certificate in the form required
          pursuant to Section hereof.

               (c) Occupancy Reports.  Not later than forty-five (45) days after
          the end of each fiscal quarter of Borrower's operations, Borrower will
          deliver  to Lender  (with a copy to the  Rating  Agencies)  a true and
          complete report of (i) Leases, other than Room and Facility Leases and
          (ii) room rentals and facility  uses with respect to Room and Facility
          Leases,  for each Property,  dated as of the last month of such fiscal
          quarter,  showing  the  percentage  of  gross  leasable  area  of each
          Property  (and in the  aggregate)  leased  other  than  for  Room  and
          Facility Leases as of the last day of the preceding  calendar quarter,
          a summary of new lease, other than Room and Facility Leases,  signings
          (including tenant name, square footage occupied and designation of the
          tenant's  operations  as  national,   regional  or  local)  and  lease
          terminations,  other than Room and Facility Leases,  for the preceding
          calendar  quarter,  the Rent  received  from Room and Facility  Leases
          during the prior calendar  quarter for each  Property,  the expiration
          date of each lease other than Room and  Facility  Leases,  the various
          options,  if any, available to the tenant other than with respect to a
          Room or Facility  Lease with respect to renewal  (including the amount
          of the rent in the event of renewal),  whether to Borrower's knowledge
          any portion of the Property  has been sublet,  and if it has, the name
          of the subtenant,  and the names of the Tenants under Material  Leases
          expiring  within one (1) year of the date thereof,  and such rent roll
          shall be accompanied by an Officer's Certificate  certifying that such
          rent roll is true, correct and complete in all material respects as of
          its date and  stating  whether  Borrower,  within  the past  three (3)
          months, has issued a notice of default with respect to any Lease other
          than with respect to Room and Facility Leases which has not been cured
          and  the  nature  of  such  default.   
<PAGE>
               (d)  Capital  Expenditures  Summaries.   Borrower  shall,  within
          forty-five  (45) days after the end of each  calendar  year during the
          term of the Notes, deliver to Lender and the Rating Agencies an annual
          summary  of any and all  capital  expenditures  made at each  Property
          during the prior twelve (12) month period.

               (e) Other  Information.  Borrower  will,  promptly  after written
          request  by  Lender or the  Rating  Agencies,  furnish  or cause to be
          furnished  to  Lender,  in such  manner  and in such  detail as may be
          reasonably requested by Lender, such reasonable additional information
          as may be reasonably requested by Lender with respect to the Mortgaged
          Property,  to the extent  such  information  is readily  available  to
          Borrower  in the  normal  course of  business  and will not  result in
          additional expense to Borrower.

               15. Compliance with Leases and Agreements.

               (a) Leases and Operating Agreements. The Leases and the Operating
          Agreements, if any, are in full force and effect. Borrower has neither
          given to, nor received any notice of default from, any party to any of
          the Operating Agreements,  if any, or any Lease which remains uncured.
          To the best of Borrower's knowledge,  no events or circumstances exist
          which with or without  the  giving of notice,  the  passage of time or
          both, may  constitute a default under any of the Operating  Agreements
          or the Leases on the part of Borrower,  or party thereunder.  Borrower
          has complied  with and  performed  all of its  material  construction,
          improvement and alteration  obligations  with respect to each Property
          required  under the  Operating  Agreements  and the  Leases  which was
          required  prior to the  date  hereof.  Borrower  will  promptly  after
          receipt  thereof  deliver to Lender a copy of any notice received with
          respect to the  Operating  Agreements  and the Leases,  claiming  that
          Borrower is in default in the  performance or observance of any of the
          material  terms,  covenants  or  conditions  of any  of the  Operating
          Agreements or the Leases.

               (b) No Default Under Leases.  Borrower shall (i) promptly perform
          and  observe  all of the  material  terms,  covenants  and  conditions
          required to be performed and observed by Borrower under the Leases and
          the  Operating  Agreements,  if the  failure to perform or observe the
          same would  materially and adversely affect the value of any Property;
          (ii) except with respect to Room and Facility Leases, exercise, within
          fifteen  (15)  Business  Days after a written  request by Lender,  any
          right to request  from the Tenant  under any Lease or the party to any
          Operating  Agreement a certificate with respect to the status thereof;
          and (iii) not  collect any of the Rents under the Leases more than one
          (1) month in advance  (except  that  Borrower  may  collect  (A) taxes
          semi-annually  in advance from Tenants,  (B) security  deposits as are
          permitted by Legal Requirements and are commercially reasonable in the
          prevailing  market and (C) other charges in accordance  with the terms
          of each Lease). 
<PAGE>
               16 . Lender's  Right to Perform.  Upon the  occurrence and during
          the continuance of an Event of Default with respect to the performance
          of  any of the  Obligations  contained  herein,  Lender  may,  without
          waiving or releasing  Borrower  from any  Obligation  or Default under
          this Mortgage,  but shall not be obligated to, at any time perform the
          same, and the cost thereof, with interest at the Default Rate from the
          date of payment by Lender to the date such amount is paid by Borrower,
          shall immediately be due from Borrower to Lender and the same shall be
          secured by this Mortgage and shall be a Lien on the Mortgaged Property
          prior to any right,  title to, interest in or claim upon the Mortgaged
          Property attaching subsequent to the Lien of this Mortgage (subject to
          the  provisions  of Section 11 (d)  hereof).  No payment or advance of
          money by Lender  under this Section 16 shall be deemed or construed to
          cure  Borrower's  Default  or waive  any  right or  remedy  of  Lender
          hereunder.

               17 . Borrower's  Existence;  Organization  and Authority.  For so
          long as this  Mortgage  remains of record  with  respect to any of the
          Properties,  Borrower  shall do all things  necessary  to preserve and
          keep in full force and effect its existence,  rights and privileges as
          a limited  partnership,  and its  right to own  property  or  transact
          business in the states in which each of the Properties is located. For
          so long as any portion of the Indebtedness  shall remain  outstanding,
          Borrower  shall do all things  necessary  to  continue to be, a Single
          Purpose  Entity  (including  without  limitation,  ensuring  that  its
          general  partner  continues  as a Single  Purpose  Entity),  and shall
          prevent  General  Partner from amending  General  Partner's  formation
          documents,  in any manner that would enable General  Partner to expand
          Borrower's  business purposes beyond those specified in such documents
          as of the date hereof. Borrower hereby represents and warrants that it
          (i)  is  either  a  duly  organized  and  validly   existing   limited
          partnership,  corporation or limited  liability company under the laws
          of the state of its organization,  (ii) has the power and authority to
          own its properties and to carry on its business as now being conducted
          and as proposed to be conducted and is qualified to do business in the
          states in which each Property is located,  and (iii) has the requisite
          power to execute and deliver  and perform its  obligations  under this
          Mortgage, the Note and each of the other Loan Documents. The execution
          and  delivery by Borrower of this  Mortgage,  the Note and each of the
          other  Loan   Documents  to  be  executed  by   Borrower,   Borrower's
          performance of its respective  obligations thereunder and the creation
          of the security  interest and Liens provided for in this Mortgage have
          been duly authorized by all requisite  action on the part of Borrower,
          and will not violate in any  material  respect any Legal  Requirement,
          any order of any  court or other  Governmental  Authority,  Borrower's
          certificate of limited  partnership  or  partnership  agreement or any
          material indenture, agreement or other instrument to which Borrower is
          a party,  or by which  Borrower is bound;  and will not conflict with,
          result in a breach of, or constitute (with due notice or lapse of time
          or both) a  default  under  any of the  foregoing,  or  result  in the
          creation or imposition of any Lien, of any nature whatsoever, upon any
          of the  property  or  assets of  Borrower  except  the  Liens  created
          hereunder. Borrower is not required to obtain any consent, approval or
<PAGE>
          authorization  from or to file any  declaration or statement with, any
          Governmental  Authority  in  connection  with or as a condition to the
          execution,  delivery or performance of this Mortgage,  the Note or the
          other Loan  Documents by Borrower  other than those which have already
          been obtained or filed.  Borrower further represents and warrants that
          it is and, so long as any  portion of the  Indebtedness  shall  remain
          outstanding, shall do all things necessary to continue to be, a Single
          Purpose  Entity. 

               18 . Protection of Security;  Costs and Expenses.  Borrower shall
          appear in and defend any action or  proceeding  of which it has notice
          purporting  to affect the  security  hereof or the rights or powers of
          Lender or  Trustee  hereunder  and  shall pay all costs and  expenses,
          including,   without  limitation,   cost  of  evidence  of  title  and
          reasonable  attorneys' fees and  disbursements,  in any such action or
          proceeding,  and in any suit brought by Lender or Trustee to foreclose
          this  Mortgage or to enforce or establish any other rights or remedies
          of Lender  hereunder upon the occurrence and during the continuance of
          an  Event  of  Default.  If an  Event of  Default  occurs  under  this
          Mortgage,  or if any action or  proceeding  is  commenced  in which it
          becomes  necessary  to defend or uphold the Lien or  priority  of this
          Mortgage or which adversely affects Lender or Lender's interest in the
          Mortgaged Property or any part thereof, including, but not limited to,
          eminent   domain,   enforcement  of,  or  proceedings  of  any  nature
          whatsoever  under  any  Legal  Requirement   affecting  the  Mortgaged
          Property or involving Borrower's bankruptcy, insolvency,  arrangement,
          reorganization  or other  form of debtor  relief,  then  Lender,  upon
          reasonable  notice to Borrower,  may, but without  obligation to do so
          and without  releasing  Borrower from any obligation  hereunder,  make
          such  appearances,  disburse such reasonable sums and take such action
          as  Lender  reasonably  deems  necessary  or  appropriate  to  protect
          Lender's  interest  in the  Mortgaged  Property,  including,  but  not
          limited to, disbursement of reasonable attorneys' fees, entry upon the
          Mortgaged Property to make repairs or take other action to protect the
          security hereof, and payment,  purchase,  contest or compromise of any
          encumbrance, charge or lien which in the reasonable judgment of Lender
          appears to be prior or superior hereto;  provided,  however,  that the
          foregoing  shall be subject  to  Borrower's  rights to  contest  under
          Section 7(c) hereof and Lender  shall not pay or  discharge  any lien,
          encumbrance or charge being  contested by Borrower in accordance  with
          Section 7(c) hereof.  Borrower  further  agrees to pay all  reasonable
          costs  and  expenses  of  Lender  and  Trustee  including   reasonable
          attorneys'  fees and  disbursements  incurred by Lender and Trustee in
          connection with (a) the negotiation,  preparation, execution, delivery
          and  performance  of  this  Mortgage,  the  Note  and the  other  Loan
          Documents,  and (b) the performance of its obligations and exercise of
          its  rights  under  this  Mortgage,  the  Note,  and  the  other  Loan
          Documents.  All of the costs,  expenses  and amounts set forth in this
          Section  shall be payable by Borrower,  on demand and,  together  with
          interest  thereon at the Default Rate, if the same are not paid within
          five (5) Business  Days after demand  therefor by Lender (or Trustee),
          until  the  date of  repayment  by  Borrower,  shall be  deemed  to be
          Indebtedness  hereunder and shall be a Lien on the Mortgaged  Property
<PAGE>
          prior  to any  right,  title,  interest  or claim  upon the  Mortgaged
          Property (subject to the provisions of Section 11(d) hereof).  Nothing
          contained in this  Section 18 shall be construed to require  Lender to
          incur any expense, make any appearance, or take any other action.

               19.  Management of the Mortgaged Property.

               (a) For purposes  hereof,  a "Qualifying  Manager" shall mean any
          property manager of national standing reasonably acceptable to Lender,
          that, as of the date of such designation,  manages not less than fifty
          (50)  extended  stay  hotels  in the  region  in which a  Property  is
          located. Notwithstanding the foregoing, Homestead Village Incorporated
          or an Affiliate of Homestead  Village  Incorporated  shall be deemed a
          Qualifying Manager acceptable to Lender.  Borrower shall notify Lender
          and the Rating  Agencies in writing  (and shall  deliver a copy of the
          proposed management agreement) of any entity proposed to be designated
          as a Qualifying  Manager other than Homestead Village  Incorporated or
          an Affiliate of Homestead  Village  Incorporated  of all or any of the
          Properties  no less than  thirty  (30)  days  before  such  Qualifying
          Manager  begins to manage such Property or Properties and shall obtain
          prior  to  any   appointment   of  a  Qualifying   Manager  a  written
          confirmation  from the Rating  Agencies  that  retention of such other
          Person as  Manager  shall not  result in a  downgrade,  withdrawal  or
          qualification of the then ratings of any securities  backed in part by
          this Mortgage.

               (b) It is acknowledged  and agreed that a Qualifying  Manager may
          be retained at Lender's direction at any time following the occurrence
          and during the  continuance  of an Event of Default.

               (c) Upon the retention of a Qualifying Manager, Lender shall have
          the  right  to  approve  (which  approval  shall  not be  unreasonably
          withheld or delayed) any new management agreement with such Qualifying
          Manager  which is on  different  terms from the  management  agreement
          previously  in  effect.  Borrower  shall  provide  a copy of such  new
          management  agreement to the Rating Agencies.

               20. Remedies.  Upon the occurrence and during the continuation of
          an Event of Default,  Lender may take such actions  against  Borrower,
          subject to Section 33 hereof, and/or against Mortgaged Property or any
          portion  thereof as Lender  determines  is  necessary  to protect  and
          enforce its rights  hereunder,  without notice or demand except as set
          forth below or as required  under  applicable  law.  Any such  actions
          taken by Lender shall be cumulative  and concurrent and may be pursued
          independently,  singly,  successively,  together or otherwise, at such
          time and in such order as Lender may determine in its sole discretion,
          to the fullest extent permitted by law, without impairing or otherwise
          affecting  the other rights and  remedies of Lender  permitted by law,
          equity  or  contract  or as set  forth  herein  or in the  other  Loan
<PAGE>
          Documents.  Lender's  determination of appropriate action may be based
          on an appropriate real estate or other consultant and/or counsel,  and
          Lender may rely  conclusively on such advice.  Borrower shall pay such
          consultant's and reasonable  attorney's fees and expenses  incurred by
          Lender pursuant to this Section 20. Such actions may include,  without
          limitation,  the  following:

               (a)  Acceleration.  Subject to any  applicable  provisions of the
          Note and the other  Loan  Documents,  Lender  may  declare  all or any
          portion of the unpaid principal balance under the Note,  together with
          all  accrued  and  unpaid  interest  thereon,  and  all  other  unpaid
          Indebtedness,  to be  immediately  due and  payable.

               (b)  Entry.   Subject  to  the  provisions  and  restrictions  of
          applicable law, Lender,  personally, or by its agents or attorneys, at
          Lender's  election,  may  enter  into  and upon all or any part of the
          Mortgaged Property (including any Property and any part thereof),  and
          may exclude  Borrower,  its agents and  servants  therefrom  (but such
          entry  shall  be  subject  to any  Nondisturbance  Agreements  then in
          effect);  and Lender,  having and holding the same, may use,  operate,
          manage and control  the  Mortgaged  Property  or any part  thereof and
          conduct  the   business   thereof,   either   personally   or  by  its
          superintendents,  managers,  agents, servants,  attorneys or receiver.
          Upon every such entry,  Lender may, at the  reasonable  expense of the
          Mortgaged  Property  and/or  Borrower,  from  time to time,  either by
          purchase,  repair or construction,  maintain and restore the Mortgaged
          Property or any part thereof,  and may insure and reinsure the same in
          such  amount and in such  manner as may seem to them to be  advisable.
          Similarly,  from time to time,  Lender may, at the expense of Borrower
          (which amounts may be disbursed by Lender from the Mortgaged  Property
          on  behalf  of  Borrower),  make  all  necessary  or  proper  repairs,
          renewals,  replacements,   alterations,   additions,  betterments  and
          improvements  to and on the Mortgaged  Property or any part thereof as
          it may seem  advisable.  Lender or its  designee  shall  also have the
          right to manage and operate the Mortgaged Property or any part thereof
          and to carry on the  business  thereof  and  exercise  all  rights and
          powers  of  Borrower  with  respect  thereto,  either  in the  name of
          Borrower  or  otherwise,  as may  seem  to them  to be  advisable.  In
          confirmation of the grant made in Granting  Clause (G) hereof,  in the
          case of the occurrence and continuation of an Event of Default, Lender
          shall be  entitled to collect  and  receive  all  earnings,  revenues,
          rents,  issues,  profits and income of the  Mortgaged  Property or any
          part  thereof  (i.e.,  the  "Rents")  to be  applied  in the  order of
          priorities  and amounts as shall be provided for in Section 21 hereof.
          Lender shall be liable to account  only for rents,  issues and profits
          and other proceeds actually received by Lender.

               (c) Foreclosure.  Prior to taking title to any Property  (whether
          by foreclosure,  deed in lieu or otherwise),  Lender shall obtain,  in
          each  instance,  at  Borrower's  reasonable  expense  a  new  phase  I
          environmental   report  with  respect  to  such  Property,   and  such
          additional environmental studies as may be recommended in such phase I
          report.
<PAGE>
                    (i)  Lender,  with or without  entry,  personally  or by its
               agents or attorneys,  insofar as  applicable,  and in addition to
               any and every other remedy,  may (i) sell or instruct the Trustee
               to sell, to the extent permitted by law and pursuant to the power
               of sale granted herein, all and singular the Mortgaged  Property,
               and all  estate,  right,  title and  interest,  claim and  demand
               therein,  and right of redemption  thereof, at one or more sales,
               as an  entirety  or in  parcels,  and at such times and places as
               required or permitted  by law and as are  customary in any county
               or parish in which the Property is located and upon such terms as
               Lender (or  Trustee,  as  applicable)  may fix and specify in the
               notice of sale to be given to Borrower  (and on such other notice
               published  or otherwise  given as provided by law),  or as may be
               required by law; (ii) institute  proceedings  for the complete or
               partial  foreclosure of this Mortgage under the provisions of the
               laws of the  jurisdiction in which the Mortgaged  Property or any
               part thereof is located, or under any other applicable  provision
               of law; or (iii) take all steps to protect and enforce the rights
               of Lender,  whether by action, suit or proceeding in equity or at
               law (for the specific  performance of any covenant,  condition or
               agreement contained in this Mortgage,  or in aid of the execution
               of any power herein granted, or for any foreclosure hereunder, or
               for the enforcement of any other  appropriate  legal or equitable
               remedy),  or otherwise,  as Lender,  being advised by counsel and
               its financial  advisor,  shall deem most advisable to protect and
               enforce any of their rights or duties hereunder.

                    (ii)  Lender (or  Trustee,  as  applicable)  may conduct any
               number of sales from time to time. The power of sale shall not be
               exhausted  by any one or more  such  sales  as to any part of the
               Mortgaged   Property   remaining   unsold,   but  shall  continue
               unimpaired  until the entire  Mortgaged  Property shall have been
               sold or the Obligations satisfied.

                    (iii) With respect to a Property, this Mortgage is made upon
               any  statutory  conditions of the State in which such Property is
               located,  and, for any breach  thereof or any breach of the terms
               of this Mortgage,  Lender (or Trustee,  as applicable) shall have
               the statutory power of sale, if any,  provided for by the laws of
               such State.

               (d)  Specific  Performance.  Lender,  in its  sole  and  absolute
          discretion,  may institute an action,  suit or proceeding at law or in
          equity for the  specific  performance  of any  covenant,  condition or
          agreement contained herein or in the Notes or any other Loan Document,
          or in aid of the execution of any power  granted  hereunder or for the
          enforcement of any other appropriate  legal or equitable  remedy.

               (e) Enforcement of Note.  Subject to Section 33 hereof and to the
          extent  permitted  under the provisions of applicable  law, Lender may
<PAGE>
          recover  judgment  on the Note  (or any  portion  of the  Indebtedness
          evidenced thereby), either before, during or after any proceedings for
          the  foreclosure  (or  partial  foreclosure)  or  enforcement  of this
          Mortgage.

               (f) Sale of Mortgaged Property;  Application of Proceeds.

                    (i) Subject to the laws of the State in which such  Property
               is located,  Lender (or Trustee,  as applicable) may postpone any
               sale of all or any  part  of the  Mortgaged  Property  to be made
               under or by virtue of this Section 20 by public  announcement  at
               the time and place of such sale, or by  publication,  if required
               by law, and, from time to time, thereafter,  may further postpone
               such sale by public  announcement  made at the time of sale fixed
               by the preceding postponement.

                    (ii) Upon the completion of any sale made by Lender under or
               by virtue of this Section 20, Lender (or Trustee,  as applicable)
               shall execute and deliver to the accepted purchaser or purchasers
               a  good  and  sufficient  deed  or  deeds  or  other  appropriate
               instruments,   conveying,  assigning  and  transferring  all  its
               estate,  right,  title and  interest in and to the  Property  and
               rights so sold.  Lender is hereby  appointed  the true and lawful
               irrevocable attorney-in-fact of Borrower in its name and stead or
               in  the  name  of  Lender  to  make  all  necessary  conveyances,
               assignments,  transfers and deliveries of the Property and rights
               so sold, and, for that purpose,  Lender may execute all necessary
               deeds and other  instruments of assignment and transfer,  and may
               substitute one or more persons with like power,  Borrower  hereby
               ratifying and  confirming  all that such attorney or attorneys or
               such  substitute  or  substitutes  shall  lawfully  do by  virtue
               hereof. Borrower shall, nevertheless,  if so requested in writing
               by Lender, ratify and confirm any such sale or sales by executing
               and  delivering to Lender or to such  purchaser or purchasers all
               such instruments as may be advisable,  in the judgment of Lender,
               for such purposes and as may be  designated in such request.  Any
               such sale or sales  made  under or by virtue of this  Section  20
               shall operate to divest all the estate,  right, title,  interest,
               claim and demand, whether at law or in equity, of Borrower in and
               to the Property and rights so sold, and shall be a perpetual bar,
               at law  and in  equity,  against  Borrower,  its  successors  and
               assigns and any Person claiming through or under Borrower and its
               successors and assigns.

                    (iii) The receipt of Lender (or Trustee, as applicable ) for
               the  purchase  money paid as a result of any such sale shall be a
               sufficient discharge therefor to any purchaser of the Property or
               rights,  or any part thereof,  so sold. No such purchaser,  after
               paying such purchase money and receiving  such receipt,  shall be
               bound to see to the  application  of such purchase  money upon or
               for  any  trust  or  purpose  of  this  Mortgage,   or  shall  be
               answerable,  in any  manner,  for  any  loss,  misapplication  or
<PAGE>
               non-application  of any such purchase  money or any part thereof,
               nor  shall  any such  purchaser  be bound  to  inquire  as to the
               authorization, necessity, expediency or regularity of such sale.

                    (iv) Upon any sale made  under or by virtue of this  Section
               20, Lender may bid for and acquire the Mortgaged  Property or any
               part  thereof  and,  in lieu of paying  cash  therefor,  may make
               settlement  for the  purchase  price by  crediting  upon the Note
               secured  by  this  Mortgage  the  net  proceeds  of  sale,  after
               deducting  therefrom the expense of the sale and the costs of the
               action and any other sums which  Lender is  authorized  to deduct
               under this  Mortgage.  The person  making such sale shall  accept
               such settlement  without  requiring the production of the Note or
               this Mortgage,  and without such production there shall be deemed
               credited to the Indebtedness and Obligations  under this Mortgage
               the net  proceeds  of  such  sale.  Lender,  upon  acquiring  the
               Mortgaged Property or any part thereof, shall be entitled to own,
               hold, lease, rent, operate, manage or sell the same in any manner
               permitted by applicable laws.

                    (g) Voluntary  Appearance;  Receivers.  After the happening,
               and  during  the  continuance  of,  any  Event  of  Default,  and
               immediately  upon  commencement of (i) any action,  suit or other
               legal  proceeding by Lender to obtain  judgment for the principal
               and interest on the Notes and any other sums  required to be paid
               pursuant  to this  Mortgage,  or (ii) any  action,  suit or other
               legal  proceeding  by Lender  of any  other  nature in aid of the
               enforcement of the Loan  Documents or any of them,  Borrower will
               (a) enter their  voluntary  appearance  in such  action,  suit or
               proceeding,  and  (b)  if  required  by  Lender,  consent  to the
               appointment  of one or more  receivers of the Mortgaged  Property
               and of the earnings,  revenues, rents, issues, profits and income
               thereof. After the happening of any Event of Default, or upon the
               filing of a bill in  equity  to  foreclose  this  Mortgage  or to
               enforce the specific  performance  hereof or in aid  thereof,  or
               upon the commencement of any other judicial proceeding to enforce
               any right of Lender,  Lender  shall be  entitled,  as a matter of
               right,  if it shall so elect,  without  notice to any other party
               and  without  regard  to  the  adequacy  of the  security  of the
               Mortgaged Property,  forthwith,  either before or after declaring
               the principal and interest on the Notes to be due and payable, to
               the appointment of such a receiver or receivers.  Any receiver or
               receivers  so  appointed  shall  have  such  powers as a court or
               courts shall confer, which may include,  without limitation,  any
               or all of the powers  which Lender is  authorized  to exercise by
               the  provisions  of this  Section 20, and shall have the right to
               incur such obligations and to issue such certificates therefor as
               the court shall authorize.  Notwithstanding the foregoing, Lender
               as a matter of right may appoint or secure the  appointment  of a
               receiver,   trustee,   liquidator  or  similar  official  of  the
               Mortgaged  Property or any portion  thereof,  and Borrower hereby
               irrevocably  consents  and  agrees to such  appointment,  without
               notice  to  Borrower  and  without  regard  to the  value  of the
               Mortgaged   Property  or  adequacy  of  the   security   for  the
               Indebtedness  and without  regard to the solvency of the Borrower
               or any other Person  liable for the payment of the  Indebtedness,
               and such  receiver  or other  official  shall have all rights and
<PAGE>
               powers  permitted  by  applicable  law and such other  rights and
               powers as the court making such  appointment may confer,  but the
               appointment  of such receiver or other  official shall not impair
               or in any manner  prejudice  the rights of Lender to receive  the
               Rents with respect to any of the Mortgaged  Property  pursuant to
               this Mortgage,  the  Assignment of Leases or the Cash  Collateral
               Agreement.

                    (h) UCC  Remedies.  Lender  may  exercise  any or all of the
               remedies  granted to a secured party under the UCC,  specifically
               including,   without   limitation,   the  right  to  recover  the
               attorneys'  fees and  other  expenses  incurred  by Lender in the
               enforcement  of this  Mortgage or in connection  with  Borrower's
               redemption of the Improvements or Building Equipment.  Lender may
               exercise  its rights  under this  Mortgage  independently  of any
               other  collateral  or guaranty  that Borrower may have granted or
               provided to Lender in order to secure payment and  performance of
               the Obligations,  and Lender shall be under no obligation or duty
               to foreclose or levy upon any other  collateral given by Borrower
               to secure any  Obligation  or to proceed  against  any  guarantor
               before enforcing its rights under this Mortgage. 

                    (i) Leases. Lender may, at its option, before any proceeding
               for the  foreclosure  (or partial  foreclosure) or enforcement of
               this Mortgage,  treat any Lease which is subordinate by its terms
               to the Lien of this Mortgage,  as either  subordinate or superior
               to the Lien of this  Mortgage. 

                    (j) Other  Rights.  Subject to Section 33, Lender may pursue
               against   Borrower  any  other  rights  and  remedies  of  Lender
               permitted by law, equity or contract or as set forth herein or in
               the  other  Loan  Documents. 

                    (k) Retention of Possession. Notwithstanding the appointment
               of any receiver, liquidator or trustee of Borrower, or any of its
               property,  or of the  Mortgaged  Property  or any  part  thereof,
               Lender to the  extent  permitted  by law,  shall be  entitled  to
               retain  possession  and control of all  property now or hereafter
               granted to or held by Lender under this  Mortgage. 

                    (l)  Suits by  Lender.  All  rights  of  action  under  this
               Mortgage may be enforced by Lender  without the possession of the
               Note and without the  production  thereof or this Mortgage at any
               trial or other  proceeding  relative  thereto.  Any such  suit or
               proceeding  instituted  by Lender shall be brought in the name of
               Lender  and any  recovery  of  judgment  shall be  subject to the
               rights of Lender. 

                    (m) Remedies  Cumulative.  Subject to Section 33 hereof,  no
               remedy herein  conferred upon or reserved to Lender shall exclude
               any other remedy, and each such remedy shall be cumulative and in
               addition  to  every  other  remedy  given  hereunder  or  now  or
<PAGE>
               hereafter  existing at law or in equity.  No delay or omission of
               Lender to exercise any right or power  accruing upon any Event of
               Default  shall  impair  any  such  right  or  power,  or shall be
               construed  to be a waiver  of any such  Event  of  Default  or an
               acquiescence  therein.  Every power and remedy given to Lender by
               this Mortgage to the Lender and/or  Trustee may be exercised from
               time to time  and as  often as the  Lender  may  deem  expedient.
               Nothing in this Mortgage shall affect  Borrower's  obligations to
               pay the principal of, and interest on, the Note in the manner and
               at the time and place  expressed  in the Note. 

                    (n) Waiver of Rights.  Borrower  agrees that, to the fullest
               extent  permitted  by law,  it will not at any time,  (1)  insist
               upon,  plead or claim or take any  benefit  or  advantage  of any
               stay,  extension or moratorium law, wherever  enacted,  now or at
               any time  hereafter in force,  which may affect the covenants and
               terms of performance of this Mortgage,  (2) claim, take or insist
               upon any  benefit  or  advantage  of any law,  now or at any time
               hereafter in force,  providing  for valuation or appraisal of the
               Mortgaged  Property,  or any part  thereof,  prior to any sale or
               sales thereof which may be made pursuant to any provision  herein
               contained,  or pursuant  to the decree,  judgment or order of any
               court of  competent  jurisdiction,  or (3) after any such sale or
               sales,  claim or exercise any right, under any statute heretofore
               or hereafter  enacted by the United States of America,  any State
               thereof or  otherwise,  to redeem the  Property  and rights  sold
               pursuant  to such  sale or  sales or any  part  hereof.  Borrower
               hereby expressly waives all benefits and advantages of such laws,
               and  covenants,  to the fullest  extent  permitted by law, not to
               hinder, delay or impede the execution of any power herein granted
               or delegated to Lender or the Lenders, but will suffer and permit
               the execution of every power as though no such laws had been made
               or enacted.  Borrower for itself and all who may claim through or
               under it,  waives,  to the extent it lawfully  may do so, any and
               all  homestead  rights and, any and all rights to  reinstatement,
               any and all right to have the property  comprising  the Mortgaged
               Property marshaled upon any foreclosure of the Lien hereof.

                    21. Application of Proceeds.

                    (a) Sale  Proceeds.  The proceeds of any sale or foreclosure
               of the Mortgaged Property or any portion thereof shall be applied
               to the following in the  following  order of priority the payment
               of: (i) the costs and  expenses  of the  foreclosure  proceedings
               with respect to the Property  (including  reasonable counsel fees
               and  disbursements  actually  incurred and advertising  costs and
               expenses),  liabilities  and advances made or incurred under this
               Mortgage,  and  reasonable  receivers'  and  trustees'  fees  and
               commissions  and fees and expenses  incurred by Lender,  together
               with interest at the Default Rate to the extent payable, (ii) any
<PAGE>
               other  sums  advanced  by Lender (or any  advancing  agent on its
               behalf) in accordance  with the terms hereof and not repaid to it
               by Borrower,  together  with  interest at the Default Rate to the
               extent payable, (iii) all sums due under the Note in the order of
               priority set forth  therein,  and (iv) any surplus to Borrower or
               other party legally entitled thereto.

                    (b) Other Proceeds.  All Proceeds or other amounts collected
               by Lender and applied to pay interest or principal of the Note or
               other amounts due on this Mortgage  following an Event of Default
               and  acceleration  of the Note  shall be applied  (1)  first,  to
               reimburse  any  expenses  related  to  such  collection  and  (2)
               thereafter,  as provided in Section 21(a) hereof. If the Note has
               not been  accelerated,  any amount  available to make payments or
               applied in lieu of such  payments  thereon  shall be applied  (1)
               first,  to  interest  due or overdue on the Note,  (2) then,  any
               amounts applied to pay or applied in lieu of paying  principal on
               the Note then due shall be  applied  to pay or applied in lieu of
               paying each Note in order of  priority,  and (3)  thereafter,  to
               Borrower.

                    22 . CERTAIN  WAIVERS.  TO INDUCE LENDER TO  CONSUMMATE  THE
               TRANSACTIONS CONTEMPLATED BY THE NOTES AND THIS MORTGAGE, AND FOR
               OTHER  GOOD  AND   VALUABLE   CONSIDERATION,   THE   RECEIPT  AND
               SUFFICIENCY OF WHICH ARE HEREBY  ACKNOWLEDGED,  BORROWER AND EACH
               OF THE PARTNERS  COMPRISING  BORROWER  EXPRESSLY AND  IRREVOCABLY
               HEREBY  WAIVES THE  FOLLOWING  RIGHTS,  IN ADDITION TO AND NOT IN
               DEROGATION  OF ALL OTHER  WAIVERS  CONTAINED  IN THE  NOTE,  THIS
               MORTGAGE AND THE OTHER LOAN  DOCUMENTS:

                    (a) WAIVER OF RIGHT TO TRIAL BY JURY. BORROWER HEREBY WAIVES
               AND SHALL WAIVE TRIAL BY JURY IN ANY ACTION OR PROCEEDING BROUGHT
               BY, OR COUNTERCLAIM  ASSERTED BY LENDER WHICH ACTION,  PROCEEDING
               OR COUNTERCLAIM ARISES OUT OF OR IS CONNECTED WITH THIS MORTGAGE,
               THE NOTE OR ANY OTHER LOAN  DOCUMENTS.  

                    23 . Notice of Certain Occurrences. In addition to all other
               notices  required  to be given by  Borrower  hereunder,  Borrower
               shall give notice to Lender and the Rating Agencies promptly upon
               the occurrence  of: (a) any Default or Event of Default;  (b) any
               litigation  or  proceeding  affecting  Borrower or the  Mortgaged
               Property or any part thereof in which the amount  involved is Two
               Hundred Fifty Thousand Dollars ($250,000) or more and not covered
               by insurance or in which  injunctive or similar  relief is sought
               and likely to be obtained;  and (c) a material  adverse change in
               the  business,  operations,  property or  financial  condition of
               Borrower or the  Mortgaged  Property.
<PAGE>
                    24 . Trust Funds.  To the extent required by applicable law,
               all security  deposits  paid under the Leases shall be treated as
               trust funds and not commingled  with any other funds of Borrower.
               Within ten (10) days after  request  by  Lender,  Borrower  shall
               furnish Lender with satisfactory evidence of compliance with this
               Section 24, together with a statement of all security deposits by
               Tenants under the Leases,  which  statement shall be certified by
               Borrower.

                    25 .  Taxation.  In the event a law is passed after the date
               hereof of the  United  States or of any state in which a Property
               is  located  either  (a)  changing  in any way the  laws  for the
               taxation of mortgages or debts secured thereby for federal, state
               or local purposes, or the manner of collection of any such taxes,
               or  (b)  imposing  a  tax,  either  directly  or  indirectly,  on
               mortgages  or debts  secured  thereby,  in each case  other  than
               income  taxes,   franchise  taxes,  or  withholding  taxes,  that
               materially adversely affects Lender,  Lender shall have the right
               to  declare  the Note due on a date to be  specified  by not less
               than  ninety  (90) days'  written  notice to be given to Borrower
               unless within such ninety (90) day period  Borrower  shall assume
               as an  obligation  hereunder  the  payment  of any tax so imposed
               until full payment of the Note provided such assumption  shall be
               permitted by law.

                    26 . Notices. Any notice, election,  request or demand which
               by any  provision of this Mortgage is required or permitted to be
               given or served  hereunder shall be in writing and shall be given
               or served by hand delivery  against  receipt,  by any  nationally
               recognized  overnight courier service  providing  evidence of the
               date of delivery or by certified mail return  receipt  requested,
               postage  prepaid,   addressed  to  Borrower  at:  2100  RiverEdge
               Parkway, 9th Floor, Atlanta, Georgia 30328, Attention: Mr. Robert
               Aldworth,  with a copy to Mayer, Brown & Platt, 190 South LaSalle
               Street, Chicago, Illinois 60603, Attention: Thomas S. Reif, Esq.;
               if to  Lender,  addressed  to Lender  at:  210 West 10th  Street,
               Kansas City, Missouri 64105, Attention: Alan Torgler, with a copy
               to Skadden,  Arps,  Slate,  Meagher & Flom LLP, 919 Third Avenue,
               New York, New York 10022, Attention:  Harvey R. Uris, Esq.; if to
               Trustee,  at such  address as  indicated  in Sections  51-56,  as
               applicable,  or at such other address as shall be designated from
               time to time by  Borrower,  Lender or Trustee by notice  given in
               accordance  with the  provisions  of this  Section  26.  Any such
               notice or demand given hereunder shall be effective upon receipt.
               All  notices,   elections,   requests  and  demands  required  or
               permitted under this Mortgage shall be in the English language.

                    27 . No Oral Modification.  This Mortgage may not be waived,
               altered,  amended,  modified,  changed,  discharged or terminated
               orally  but  only by a  written  agreement  signed  by the  party
               against which enforcement is sought.

                    28 . Partial Invalidity. In the event any one or more of the
               provisions  contained  in this  Mortgage  shall for any reason be
               held to be invalid, illegal or unenforceable in any respect, such

<PAGE>
               invalidity,  illegality or unenforceability  shall not affect any
               other  provision  hereof,  but each shall be construed as if such
               invalid,  illegal  or  unenforceable  provision  had  never  been
               included hereunder.  

                    29 .  Successors  and  Assigns.  All  covenants  of Borrower
               contained in this Mortgage are imposed solely and exclusively for
               the  benefit of Lender and its  successors  and  assigns,  and no
               other Person shall have standing to require  compliance with such
               covenants  or  be  deemed,  under  any  circumstances,  to  be  a
               beneficiary of such covenants,  any or all of which may be freely
               waived  in whole or in part by  Lender at any time if in its sole
               discretion it deems it advisable to do so. All such  covenants of
               Borrower  shall  run  with  the  land  and  bind  Borrower,   the
               successors  and  assigns of  Borrower  (and each of them) and all
               subsequent  owners,  encumbrancers  and Tenants of the  Mortgaged
               Property,   and  shall  inure  to  the  benefit  of  Lender,  its
               successors and assigns.  

                    30 . Governing Law. This Mortgage,  the obligations  arising
               hereunder shall be governed by and construed in accordance  with,
               the laws of the State of New York  applicable  to contracts  made
               and performed in the State of New York and any applicable laws of
               the  United  States  of  America,  except  that at all  times the
               provisions for the creation,  perfection  and  enforcement of the
               Liens and security  interest  created  pursuant to this  Mortgage
               with respect to each  Property and pursuant to the  Assignment of
               Leases  shall be  governed  by the law of the state in which each
               respective Property is located. Whenever possible, each provision
               of this Mortgage  shall be  interpreted in such a manner as to be
               effective and valid under applicable law, but if any provision of
               this  Mortgage   shall  be  prohibited   by,  or  invalid  under,
               applicable law, such provision shall be ineffective to the extent
               of  such  prohibition  or  invalidity  without  invalidating  the
               remaining provisions of this Mortgage.  Nothing contained in this
               Mortgage or in any Loan Document shall require either Borrower to
               pay or Lender to accept any sum in any amount which would,  under
               applicable  law,  subject  Lender,  or any  Lender to  penalty or
               adversely  affect the  enforceability  of this  Mortgage.  In the
               event that the payment of any sum due hereunder or under any Loan
               Document would have such result under  applicable law, then, ipso
               facto,  the obligation of Borrower to make such payments shall be
               reduced to the highest sum then  permitted  under  applicable law
               and appropriate adjustment shall be made by Borrower and Lender.

                    31 . Certain  Representations,  Warranties and Covenants.

                    (a) Recording Fees,  Taxes,  Etc.  Borrower hereby agrees to
               take all such further reasonable  actions,  and to pay all taxes,
               recording  fees,  charges,  costs and other  expenses  including,
               without limitation,  reasonable  attorneys' and professional fees
               and  disbursements  which are currently or in the future shall be
               imposed,  and which may be required or  necessary  to  establish,
               preserve,  protect or enforce the Lien of this  Mortgage. 
<PAGE>
                    (b) No Offsets. Borrower warrants,  covenants and represents
               to  Lender  that  there  exists  no cause of  action at law or in
               equity  that  would   constitute  any  offset,   counterclaim  or
               deduction  against the Indebtedness or Obligations.

                    (c) Full and Accurate Disclosure.  To the best of Borrower's
               knowledge,  no statement of fact made by or on behalf of Borrower
               in this Mortgage or in any of the other Loan  Documents  contains
               any untrue  statement  of a  material  fact or omits to state any
               material fact necessary to make  statements  contained  herein or
               therein  not  misleading  as of the date  made.  There is no fact
               presently  known to Borrower which has not been  disclosed  which
               adversely  affects,  nor as far as Borrower  can  foresee,  might
               adversely   affect,   the   business,   operations  or  condition
               (financial  or  otherwise)  of  Borrower.  

                    (d) Tax Filings.  Borrower has filed all federal,  state and
               local tax  returns  required to be filed prior to the date hereof
               and has paid or made  adequate  provision  for the payment of all
               federal,  state and local taxes, charges and assessments shown to
               be due from Borrower on such tax returns. 

                    (e)  No   Litigation.   No  litigation  is  pending  or,  to
               Borrower's best knowledge,  threatened against Borrower which, if
               determined  adversely to Borrower,  would have a material adverse
               effect on the  Property  or the  security  created  hereby and no
               Taking has been commenced or, to Borrower's  best  knowledge,  is
               contemplated  with respect to all or any portion of the Mortgaged
               Property or for the  relocation of roadways  providing  access to
               the  Mortgaged   Property  which,  if  determined   adversely  to
               Borrower, would have a material adverse effect on the Property or
               the security created hereby. Borrower has delivered to Lender and
               the Rating  Agencies a certificate  setting forth all  litigation
               affecting Borrower or the Properties.  

                    (f) Solvency.  The fair saleable value of Borrower's  assets
               exceeds and will,  immediately following the issuance and sale of
               the  Note  and  the   consummation  of  the  other   transactions
               contemplated  to  take  place  simultaneously  therewith,  exceed
               Borrower's  liabilities,  including  subordinated,  unliquidated,
               disputed and contingent liabilities. Borrower does not intend to,
               and does not believe  that it will,  incur debts and  liabilities
               (including,  without limitation,  contingent  liabilities) beyond
               its  ability  to pay such  debts as they  mature. 

                    (g)  ERISA.  Borrower  is not  an  "employee  benefit  plan"
               (within  the  meaning  of Section  3(3) of ERISA) to which  ERISA
               applies and Borrower's  assets do not constitute plan assets.  No
               actions,   suits  or  claims  under  any  laws  and   regulations
               promulgated  pursuant  to ERISA are  pending  or,  to  Borrower's
               knowledge, threatened against Borrower. Borrower has no knowledge
               of any  material  liability  incurred by Borrower  which  remains
<PAGE>
               unsatisfied  for any  taxes  or  penalties  with  respect  to any
               employee benefit plan or any  Multiemployer  Plan, or of any lien
               which has been imposed on Borrower's  assets  pursuant to Section
               412 of the Code or Sections 302 or 4068 of ERISA.

                    (h) Claims. No claims,  actions,  suits,  proceedings or, to
               the best knowledge of Borrower after due inquiry,  investigations
               whether  judicial  or  otherwise  are  pending  or,  to the  best
               knowledge of Borrower,  threatened  against  Borrower  before any
               domestic   or   foreign   court  or   administrative,   arbitral,
               governmental   or  regulatory   authority  or  agency  which,  if
               determined  adversely to Borrower,  would have a material adverse
               effect on the security created hereby.  Borrower has delivered to
               Lender a  certificate  setting forth all claims  pending  against
               Borrower.  

                    (i) Liens. No Lien, other than Permitted Encumbrances, which
               remains  outstanding  as of the date hereof,  including,  without
               limitation,  any tax lien,  has been levied against the Mortgaged
               Property other than certain mechanic's liens previously disclosed
               to  Lender  and  which  have  been  bonded  or  insured   against
               collection  from against the Property by the Title  Company.

                    (j) Outstanding  Liabilities.  No outstanding liabilities of
               Borrower exist which,  individually  or in the  aggregate,  would
               have a material  adverse effect on the security created hereby or
               would  materially  adversely  affect the condition  (financial or
               otherwise)  of Borrower  other than as disclosed for in financial
               statements  and other required  reports  delivered by Borrower to
               Lender,  pursuant  to the terms of this  Mortgage.  Borrower  has
               delivered to Lender a certificate  setting forth all  liabilities
               of  Borrower.  

                    (k) Creditors'  Claims.  To Borrower's  best  knowledge,  no
               claim of any creditor of Borrower  would have a material  adverse
               effect  on  the  security  created  hereby  or  would  materially
               adversely  affect  the  condition  (financial  or  otherwise)  of
               Borrower.  Borrower has delivered to Lender a certificate setting
               forth  all  such  claims  of  creditors  of  Borrower.

                    (l) Enforceability of Loan Documents.  This Mortgage and the
               other Loan Documents are the legal, valid and binding obligations
               of Borrower,  enforceable  against  Borrower in  accordance  with
               their  terms,  subject  to  applicable  bankruptcy,   insolvency,
               fraudulent  transfer,  reorganization,  moratorium and other laws
               affecting  creditor's  rights  generally  in effect  from time to
               time.

                    (m) Contingent Liabilities. Borrower does not have any known
               material contingent liabilities. 

                    (n) No Other  Debt.  Borrower  has not  borrowed or received
               debt financing (other than financing  evidenced by the Note) that
               has  not  been   heretofore   repaid  in  full.  
<PAGE>
                    (o) Fraudulent Conveyance.  Borrower represents and warrants
               as  follows:  (i) it has not  entered  into this  Mortgage or the
               other Loan Documents or the transactions  contemplated  hereby or
               thereby with the actual intent to hinder,  delay,  or defraud any
               creditor, and (ii) it has received reasonably equivalent value in
               exchange for its  obligations  under this  Mortgage and the other
               Loan Documents. Giving effect to the transactions contemplated by
               this  Mortgage and the other Loan  Documents,  the fair  saleable
               value of the assets of  Borrower  exceeds  and will,  immediately
               following  the  execution  and delivery of this  Mortgage and the
               other Loan Documents,  exceed the total  liabilities of Borrower,
               including,   without  limitation,   subordinated,   unliquidated,
               disputed or contingent  liabilities.  The fair saleable  value of
               the assets of Borrower  is and will,  immediately  following  the
               execution  and  delivery  of this  Mortgage  and the  other  Loan
               Documents,  be  greater  than  Borrower's  probable  liabilities,
               including the maximum  amount of the  contingent  liabilities  of
               Borrower  or  their  debts  as such  debts  become  absolute  and
               matured. The assets of Borrower do not and, immediately following
               the  execution  and delivery of this  Mortgage and the other Loan
               Documents  will not,  constitute  unreasonably  small  capital to
               carry out the business of Borrower as conducted or as proposed to
               be  conducted.  Borrower does not intend to, and does not believe
               that it will,  incur debts and  liabilities  (including,  without
               limitation,  contingent liabilities and other commitments) beyond
               its ability to pay such debts as they mature (taking into account
               the  timing  and  amounts  to be  payable  on or  in  respect  of
               obligations  of  Borrower).

                    (p)  Access/Utilities.  The Property has adequate  rights of
               access  to  public  ways  and  is,  or,   with   respect  to  the
               Construction Properties,  after obtaining a permanent Certificate
               of Occupancy will be, served by adequate water,  sewer,  sanitary
               sewer and storm drain facilities.  All public utilities necessary
               to the  continued  use and  enjoyment  of a Property as presently
               used and enjoyed are located in the public right-of-way  abutting
               the Property, and all such utilities are, or, with respect to the
               Construction  Properties,  after obtaining permanent Certificates
               of  Occupancy  will be,  connected  so as to serve  the  Property
               without passing over other  property,  or if the same passes over
               other property,  easements or other agreements provide for rights
               of use  covering  the  same.  All  roads  necessary  for the full
               utilization  of the  Property  for its current  purpose have been
               completed  and  dedicated  to  public  use  and  accepted  by all
               governmental  authorities or are the subject of access  easements
               for the benefit of the Property. 

                    (q) Special  Assessments.  Except to the extent set forth in
               Schedule  3,  there  are  no  pending  or,  to the  knowledge  of
               Borrower,  proposed  special  or  other  assessments  for  public
               improvements  or  otherwise  affecting  a  Property,  nor, to the
               knowledge of Borrower, are there any contemplated improvements to
               the   Property   that  may  result  in  such   special  or  other
               assessments. 
<PAGE>
                    (r) Flood Zone.  Except as shown on the surveys delivered to
               Lender on the date hereof,  none of the Properties are located in
               a  flood  hazard  area  as  defined  by  the  Federal   Insurance
               Administration.   

                    (s)  Separate  Business;  Corporate  Formalities.

                         (i) Borrower shall maintain its own deposit  account or
                    accounts,   separate  from  those  of  any  Affiliate,  with
                    commercial banking institutions.  The funds of Borrower will
                    not be  diverted  to any  other  Person  or for  other  than
                    business uses of Borrower, nor will such funds be commingled
                    with the funds of any other Affiliate;

                         (ii)  To the  extent  that  Borrower  shares  the  same
                    officers  or  other  employees  as any of  its  partners  or
                    Affiliates,  the  salaries  of and the  expenses  related to
                    providing  benefits  to such  officers  and other  employees
                    shall be fairly allocated among such entities, and each such
                    entity  shall bear its fair share of the salary and  benefit
                    costs   associated   with  all  such  common   officers  and
                    employees;

                         (iii) To the extent  that  Borrower  jointly  contracts
                    with any of its partners or  Affiliates  to do business with
                    vendors or service providers or to share overhead  expenses,
                    the costs  incurred  in so doing shall be  allocated  fairly
                    among such  entities,  and each such  entity  shall bear its
                    fair  share  of such  costs.  To the  extent  that  Borrower
                    contracts or does business with vendors or service providers
                    where the goods and services  provided are partially for the
                    benefit of any other Person,  the costs incurred in so doing
                    shall be fairly  allocated  to or among  such  entities  for
                    whose benefit the goods and services are provided,  and each
                    such  entity  shall bear its fair share of such  costs.  All
                    material  transactions  between  Borrower  and  any  of  its
                    Affiliates shall be only on an arm's length basis.

                         (iv)  To  the  extent  that  Borrower  and  any  of its
                    constituent  partners or Affiliates have offices in the same
                    location,  there shall be a fair and appropriate  allocation
                    of overhead  costs among  them,  and each such entity  shall
                    bear its fair share of such expenses.

                         (v)  Borrower  shall  conduct its  affairs  strictly in
                    accordance with its  organizational  documents,  and observe
                    all  necessary,   appropriate   and  customary   partnership
                    formalities,  as applicable,  including, but not limited to,
                    obtaining  any  and  all  partners'  consents  necessary  to
                    authorize  actions  taken or to be  taken,  and  maintaining
                    accurate  and   separate   books,   records  and   accounts,
                    including,  but not  limited to,  payroll  and  intercompany
                    transaction accounts. 
<PAGE>
                         (vi) In addition,  Borrower  shall:  (a) maintain books
                    and records  separate  from those of any other  person;  (b)
                    maintain  its assets in such a manner  that it is nor costly
                    or  difficult  to  segregate,  identify  or  ascertain  such
                    assets; (c) hold regular meetings of its board of directors,
                    shareholders,  partners or members,  as the case may be, and
                    observe  all  other   corporate,   partnership   or  limited
                    liability company, as the case may be, formalities; (d) hold
                    itself out to  creditors  and the  public as a legal  entity
                    separate and  distinct  from any other  entity;  (e) prepare
                    separate tax returns and financial statements, or if part of
                    a  consolidated  group,  then it will be shown as a separate
                    member  of  such  group;  (f)  transact  all  business  with
                    Affiliates  on  an   arm's-length   basis  and  pursuant  to
                    enforceable agreements; (g) conduct business in its name and
                    use  separate  stationery,  invoices  and  checks;  (h)  not
                    commingle  its  assets  or funds  with  those  of any  other
                    Person;  and (i) not assume,  guarantee  or pay the debts or
                    obligations   of  any  other  Person.   

                         (t) Director Consents.  The General Partner of Borrower
                    shall obtain the consent of all its directors, including the
                    Independent Director, to (i) file a bankruptcy or insolvency
                    petition or otherwise institute insolvency proceedings or to
                    authorize  Borrower  to do  so,  (ii)  dissolve,  liquidate,
                    consolidate,  merge  or  sell  all or  substantially  all of
                    Borrower's  assets,  (iii)  engage  in  any  other  business
                    activity,  or (iv) amend its  organizational  documents in a
                    manner that  affects the status of the General  Partner as a
                    Single  Purpose  Entity or that changes the voting rights of
                    the  Independent  Director.

                         (u) No Default. As of the date hereof,  Borrower is not
                    in material  default  under the terms and  provisions of any
                    Operating   Agreement  or  any  Material   Lease.  

                         (v)  Collateral As Entirety of Property.  Each Property
                    and the Personalty  located  thereon  constitutes all of the
                    real  property,  equipment and fixtures  currently  owned by
                    Borrower or currently  used in the operation of the business
                    located on such Property.

                         (w) No  Property  Damage.  As of the  date  hereof,  to
                    Borrower's  knowledge,  no portion of the  Improvements at a
                    Property has been materially  damaged,  destroyed or injured
                    by fire or other casualty which is not now fully restored or
                    in the  process  of being  restored.

                         (x) Separate Tax Parcels. Each Property constitutes one
                    or more separate tax lots,  with a separate tax  assessment,
                    independent of any other land or improvements.

                         (y) Title  Insurance.  Borrower has delivered to Lender
                    (i) a lender's title insurance  policy in form acceptable to
                    Lender,  issued by the Title Company for each Property other
                    than the  Properties  located in  Florida,  in an amount not
                    less than the Allocated  Loan Amount for each such Property,
<PAGE>
                    with  a  "Tie-In"  endorsement  with  respect  to  all  such
                    Properties,  and (ii) for the Properties located in Florida,
                    a blanket lender's title insurance policy in form acceptable
                    to Lender, issued by the Title Company in an amount not less
                    than the Allocated Loan Amount of the Properties  located in
                    Florida.  The title insurance  policies  referred to in this
                    sub-paragraph  (y) include all title insurance  endorsements
                    requested by Lender in its sole and absolute discretion, are
                    dated as of the date hereof and insure that this Mortgage is
                    a valid first  priority  lien on the Land and  Improvements,
                    subject only to Permitted Encumbrances,  standard exceptions
                    contained in the current ALTA printed form policy  issued by
                    the Title  Company,  and any other  matters  consented to by
                    Lender. 

                         32 . No Waiver. No failure by Lender to insist upon the
                    strict  performance  of any term hereof or to  exercise  any
                    right,  power or  remedy  consequent  upon a breach  thereof
                    shall  constitute a waiver of any such term or right,  power
                    or remedy  or of any such  breach.  No waiver of any  breach
                    shall affect or alter this Mortgage, which shall continue in
                    full force and effect,  or shall  affect or alter the rights
                    of  Lender  with  respect  to any  other  then  existing  or
                    subsequent   breach.   

                         33 . Non-Recourse Obligations. Notwithstanding anything
                    in this  Mortgage  (other  than as set forth in  Section  41
                    hereof),  the Note or the other Loan Documents,  no personal
                    liability  shall be  asserted  or  enforceable  against  (i)
                    Borrower,  (ii) any Affiliate of Borrower,  (iii) any Person
                    owning  directly  or  indirectly,  any  legal or  beneficial
                    interest in Borrower or any  Affiliate of Borrower,  or (iv)
                    any  partner,   principal,   officer,   controlling  person,
                    beneficiary, trustee, advisor, shareholder, employee, agent,
                    Affiliate  or director of any Persons  described  in clauses
                    (i)  through  (iii)  above  (collectively,  the  "Exculpated
                    Parties")  by Lender in  respect  of the  Obligations,  this
                    Mortgage,  the  Note  or any  other  Loan  Document,  or the
                    making, issuance or transfer thereof, all such liability, if
                    any,  being  expressly  waived by Lender.  Lender,  and each
                    successive holder of any Note and this Mortgage shall accept
                    the Note and this  Mortgage  upon the express  condition  of
                    this  provision  and  limitation  that  in the  case  of the
                    occurrence and continuance of an Event of Default,  Lender's
                    remedies  in its sole  discretion  shall be any or all of:

                         (i)  Foreclosure  of  the  lien  of  this  Mortgage  in
                    accordance  with the terms and  provisions set forth in this
                    Mortgage;

                         (ii)  Action  against  any other  security  at any time
                    given to secure the  payment of the Note and under the other
                    Loan Documents; and

                         (iii)  Exercise  of any other  remedy set forth in this
                    Mortgage or any other Loan Document.
<PAGE>
                    The lien of any judgment against Borrower and any proceeding
               instituted  on,  under  or in  connection  with  the Note or this
               Mortgage,  or both,  shall  not  extend  to any  property  now or
               hereafter  owned by Borrower or any  Exculpated  Party other than
               the Net  Operating  Income  from and  after an Event of  Default,
               provided  that  Borrower or any  Exculpated  Party shall not have
               misappropriated  the same, and the ownership interest of Borrower
               in the Mortgaged  Property and the other security for the payment
               of the Note or this Mortgage.

                    Notwithstanding anything to the contrary in this Mortgage or
               any of the Loan  Documents,  Lender  shall  not be deemed to have
               waived any right  which  Lender may have  under  Section  506(a),
               506(b), 1111(b) or any other provisions of the Bankruptcy Code to
               file a claim  for the full  amount  of the Debt  secured  by this
               Mortgage  or to require  that all  collateral  shall  continue to
               secure  all of the Debt  owing to Lender in  accordance  with the
               Loan Documents.

                    Notwithstanding  anything in this  Mortgage to the contrary,
               there shall at no time be any limitation on Borrower's  liability
               for the  payment  to Lender  of:  (1)  condemnation  proceeds  or
               insurance  proceeds  which  Borrower  has  received  and to which
               Lender is entitled  pursuant to the terms of this Mortgage or any
               of the  Loan  Documents  to the  extent  the  same  have not been
               applied  toward  payment of sums due under the Note or under this
               Mortgage,  or used for the repair or replacement of the Mortgaged
               Property  pursuant to this Mortgage,  or (2) all loss, damage and
               expense as  incurred  by Lender and  arising  from any fraud,  or
               intentional    misrepresentation   of   Borrower   or   (3)   any
               misappropriation of Rents or security deposits by Borrower or any
               Affiliate of Borrower.

                    34 . Further Assurances.  Borrower, at its own expense, will
               execute,  acknowledge  and  deliver all such  reasonable  further
               acts,  documents or instruments  including security agreements on
               any  building  equipment  included  or  to  be  included  in  the
               Mortgaged  Property  and a  separate  assignment  of each  Lease,
               excluding Room and Facilities  Leases,  and take all such actions
               as Lender  from  time to time may  reasonably  request  to better
               assure,  transfer  and  confirm  unto  Lender  the  rights now or
               hereafter intended to be granted to Lender under this Mortgage or
               the other Loan  Documents.  Borrower  shall notify Lender no less
               than  thirty  (30)  days  prior to a  change  of  address. 

                    35 . Estoppel  Certificates.  Borrower and Lender each will,
               from time to time,  upon twenty (20) days' prior written  request
               by the other  party,  execute,  acknowledge  and  deliver  to the
               requesting  party,  in  the  case  of  a  request  to  Lender,  a
               certificate  signed by an  authorized  officer or officers and in
               the case of a request  to  Borrower,  an  Officer's  Certificate,
               stating that this  Mortgage is  unmodified  and in full force and
               effect (or, if there have been modifications,  that this Mortgage
               is in full force and effect as modified  and  setting  forth such
               modifications)  and  stating  the  amount of  accrued  and unpaid
               interest and the  outstanding  principal  amount of the Note. The
<PAGE>
               estoppel certificate from Lender shall also state either that, to
               Borrower's   best   knowledge   and   based  on  no   independent
               investigation,  no Default  exists  hereunder or, if any Event of
               Default  shall exist  hereunder,  specify any Event of Default of
               which Borrower has actual  knowledge and the steps being taken to
               cure such Event of Default.  

                    36 .  [Intentionally  Omitted] 

                    37  .  INDEMNIFICATION  BY  BORROWER.

                    SUBJECT TO THE PROVISIONS OF SECTION  HEREOF,  BORROWER WILL
               PROTECT,  INDEMNIFY AND SAVE HARMLESS  LENDER,  AND ALL OFFICERS,
               DIRECTORS, STOCKHOLDERS,  PARTNERS, EMPLOYEES, AGENTS, SUCCESSORS
               AND ASSIGNS THEREOF  (COLLECTIVELY,  THE  "INDEMNIFIED  PARTIES")
               FROM AND AGAINST ALL LIABILITIES,  OBLIGATIONS,  CLAIMS, DAMAGES,
               PENALTIES,  CAUSES OF ACTION,  COSTS AND EXPENSES  (INCLUDING ALL
               REASONABLE   ATTORNEYS'  FEES  AND  EXPENSES  ACTUALLY  INCURRED)
               IMPOSED UPON OR INCURRED BY OR ASSERTED  AGAINST THE  INDEMNIFIED
               PARTIES OR THE  MORTGAGED  PROPERTY  OR ANY PART OF ITS  INTEREST
               THEREIN  BY A  THIRD  PARTY,  BY  REASON  OF  THE  OCCURRENCE  OR
               EXISTENCE  OF ANY OF  THE  FOLLOWING  (TO  THE  EXTENT  INSURANCE
               PROCEEDS PAYABLE ON ACCOUNT OF THE FOLLOWING SHALL BE INADEQUATE;
               IT BEING UNDERSTOOD THAT IN NO EVENT WILL THE INDEMNIFIED PARTIES
               BE REQUIRED  TO ACTUALLY  PAY OR INCUR ANY COSTS OR EXPENSES AS A
               CONDITION TO THE EFFECTIVENESS OF THE FOREGOING  INDEMNITY) PRIOR
               TO  (I)  THE  ACCEPTANCE  BY  LENDER  OR  ANY  THIRD  PARTY  OF A
               DEED-IN-LIEU  OF  FORECLOSURE  WITH  RESPECT  TO  THE  APPLICABLE
               PROPERTY,  OR (II) THE INDEMNIFIED  PARTIES TAKING  POSSESSION OR
               CONTROL OF THE APPLICABLE  PROPERTY,  UNLESS CAUSED SOLELY BY THE
               ACTUAL WILLFUL  MISCONDUCT OR GROSS NEGLIGENCE OF THE INDEMNIFIED
               PARTIES (OTHER THAN SUCH WILLFUL  MISCONDUCT OR GROSS  NEGLIGENCE
               IMPUTED TO THE  INDEMNIFIED  PARTIES BECAUSE OF THEIR INTEREST IN
               THE MORTGAGED PROPERTY):  (1) OWNERSHIP OF BORROWER'S INTEREST IN
               THE MORTGAGED  PROPERTY,  OR ANY INTEREST THEREIN,  OR RECEIPT OF
               ANY RENTS OR OTHER SUM THEREFROM, (2) ANY ACCIDENT,  INJURY TO OR
               DEATH OF ANY PERSONS OR LOSS OF OR DAMAGE TO  PROPERTY  OCCURRING
               ON OR ABOUT THE MORTGAGED PROPERTY OR ANY APPURTENANCES  THERETO,
               (3) ANY DESIGN,  CONSTRUCTION,  OPERATION,  REPAIR,  MAINTENANCE,
               USE,   NON-USE  OR  CONDITION  OF  THE   MORTGAGED   PROPERTY  OR
               APPURTENANCES THERETO, INCLUDING CLAIMS OR PENALTIES ARISING FROM
               VIOLATION OF ANY LEGAL REQUIREMENT OR INSURANCE  REQUIREMENT,  AS
               WELL AS ANY CLAIM BASED ON ANY PATENT OR LATENT  DEFECT,  WHETHER
               OR NOT  DISCOVERABLE  BY LENDER,  ANY CLAIM THE  INSURANCE  AS TO
               WHICH IS INADEQUATE, AND ANY ENVIRONMENTAL CLAIM, (4) ANY DEFAULT
               UNDER THIS  MORTGAGE  OR ANY OF THE OTHER LOAN  DOCUMENTS  OR ANY
               FAILURE ON THE PART OF  BORROWER TO PERFORM OR COMPLY WITH ANY OF
               THE MATERIAL TERMS OF ANY LEASE OR OPERATING AGREEMENT WITHIN THE
               APPLICABLE  NOTICE OR GRACE PERIODS,  (5) ANY  PERFORMANCE OF ANY
               LABOR OR SERVICES OR THE  FURNISHING  OF ANY  MATERIALS  OR OTHER
               PROPERTY  IN  RESPECT  OF THE  MORTGAGED  PROPERTY  OR  ANY  PART
               THEREOF,  (6) ANY  NEGLIGENCE  OR TORTIOUS ACT OR OMISSION ON THE
               PART OF  BORROWER OR ANY OF ITS  AGENTS,  CONTRACTORS,  SERVANTS,
               EMPLOYEES,  SUBLESSEES,  LICENSEES OR  INVITEES,  (7) ANY CONTEST
<PAGE>
               REFERRED  TO IN  SECTION  7(c)  HEREOF,  (8)  ANY  OBLIGATION  OR
               UNDERTAKING  RELATING TO THE  PERFORMANCE  OR DISCHARGE OF ANY OF
               THE TERMS,  COVENANTS AND CONDITIONS OF THE LANDLORD CONTAINED IN
               THE LEASES OR (9) THE  PRESENCE  AT, IN OR UNDER THE  PROPERTY OR
               THE IMPROVEMENTS  THEREON OF ANY HAZARDOUS SUBSTANCE IN VIOLATION
               OF ANY LEGAL REQUIREMENT. ANY AMOUNTS THE INDEMNIFIED PARTIES ARE
               LEGALLY  ENTITLED TO RECEIVE  UNDER THIS SECTION 37 WHICH ARE NOT
               PAID WITHIN TEN (10) BUSINESS DAYS AFTER WRITTEN DEMAND  THEREFOR
               BY THE INDEMNIFIED PARTIES OR LENDER, SETTING FORTH IN REASONABLE
               DETAIL THE AMOUNT OF SUCH  DEMAND AND THE BASIS  THEREFOR,  SHALL
               BEAR INTEREST  FROM THE DATE OF DEMAND AT THE DEFAULT  RATE,  AND
               SHALL,  TOGETHER WITH SUCH INTEREST,  BE PART OF THE INDEBTEDNESS
               AND  SECURED  BY THIS  MORTGAGE.  IN  CASE  ANY  ACTION,  SUIT OR
               PROCEEDING IS BROUGHT AGAINST THE  INDEMNIFIED  PARTIES BY REASON
               OF ANY SUCH  OCCURRENCE,  BORROWER  SHALL AT  BORROWER'S  EXPENSE
               RESIST AND DEFEND SUCH ACTION,  SUIT OR  PROCEEDING OR WILL CAUSE
               THE SAME TO BE RESISTED  AND  DEFENDED  BY COUNSEL AT  BORROWER'S
               REASONABLE EXPENSE FOR THE INSURER OF THE LIABILITY OR BY COUNSEL
               DESIGNATED BY BORROWER (UNLESS  REASONABLY  DISAPPROVED BY LENDER
               PROMPTLY  AFTER  LENDER  HAS  BEEN  NOTIFIED  OF  SUCH  COUNSEL);
               PROVIDED, HOWEVER, THAT NOTHING HEREIN SHALL COMPROMISE THE RIGHT
               OF LENDER (OR ANY  INDEMNIFIED  PARTY) TO APPOINT ITS OWN COUNSEL
               AT BORROWER'S  EXPENSE FOR ITS DEFENSE WITH RESPECT TO ANY ACTION
               WHICH IN ITS REASONABLE  OPINION PRESENTS A CONFLICT OR POTENTIAL
               CONFLICT  BETWEEN  LENDER  AND  BORROWER  THAT  WOULD  MAKE  SUCH
               SEPARATE  REPRESENTATION  ADVISABLE;  PROVIDED  FURTHER  THAT  IF
               LENDER  SHALL HAVE  APPOINTED  SEPARATE  COUNSEL  PURSUANT TO THE
               FOREGOING,  BORROWER SHALL NOT BE RESPONSIBLE  FOR THE EXPENSE OF
               ADDITIONAL  SEPARATE  COUNSEL OF ANY INDEMNIFIED  PARTY UNLESS IN
               THE REASONABLE OPINION OF LENDER A CONFLICT OR POTENTIAL CONFLICT
               EXISTS  BETWEEN  SUCH  INDEMNIFIED  PARTY AND LENDER.  SO LONG AS
               BORROWER  IS  RESISTING  AND  DEFENDING  SUCH  ACTION,   SUIT  OR
               PROCEEDING  AS  PROVIDED  ABOVE  IN A  PRUDENT  AND  COMMERCIALLY
               REASONABLE MANNER,  LENDER AND THE INDEMNIFIED  PARTIES SHALL NOT
               BE ENTITLED TO SETTLE SUCH ACTION,  SUIT OR PROCEEDING  AND CLAIM
               THE BENEFIT OF THIS SECTION 37 WITH RESPECT TO SUCH ACTION,  SUIT
               OR PROCEEDING  AND LENDER AGREES THAT IT WILL NOT SETTLE ANY SUCH
               ACTION,  SUIT OR  PROCEEDING  WITHOUT  THE  CONSENT OF  BORROWER;
               PROVIDED,  HOWEVER,  THAT IF LENDER  REASONABLY  DETERMINES  THAT
               BORROWER  IS  NOT  DILIGENTLY  DEFENDING  SUCH  ACTION,  SUIT  OR
               PROCEEDING  IN A PRUDENT AND  COMMERCIALLY  REASONABLE  MANNER AS
               PROVIDED ABOVE, AND HAS PROVIDED  BORROWER WITH THIRTY (30) DAYS'
               PRIOR  WRITTEN  NOTICE,  OR  SHORTER  PERIOD IF  MANDATED  BY THE
               REQUIREMENTS  OF APPLICABLE  LAW, AND OPPORTUNITY TO CORRECT SUCH
               DETERMINATION,  LENDER MAY SETTLE SUCH ACTION, SUIT OR PROCEEDING
               SUBJECT   ONLY  TO   BORROWER'S   CONSENT   WHICH  SHALL  NOT  BE
               UNREASONABLY  WITHHELD OR DELAYED,  AND CLAIM THE BENEFIT OF THIS
               SECTION 37 WITH RESPECT TO  SETTLEMENT  OF SUCH  ACTION,  SUIT OR
               PROCEEDING.  ANY  INDEMNIFIED  PARTY  WILL GIVE  BORROWER  PROMPT
               NOTICE AFTER SUCH  INDEMNIFIED  PARTY OBTAINS ACTUAL KNOWLEDGE OF
               ANY POTENTIAL CLAIM BY SUCH INDEMNIFIED PARTY FOR INDEMNIFICATION
               HEREUNDER.
<PAGE>
                    38 . Release of Property. (a) If Borrower shall pay or cause
               to be paid,  the principal of and interest on the Note in full at
               maturity or as permitted in accordance  with the terms thereof or
               hereof and all other Indebtedness  payable to Lender hereunder by
               Borrower or secured hereby or by the other Loan Documents and all
               of the payment  Obligations shall have been performed,  then this
               Mortgage and all the other Loan Documents shall be discharged and
               satisfied  or assigned  (to  Borrower  or to any other  Person at
               Borrower's  direction and without  representation or warranty by,
               or recourse to, Lender),  at Borrower's option,  without warranty
               (except that Lender shall be deemed to have represented that such
               release and termination or reassignment  has been duly authorized
               and that it has not assigned or  encumbered  this Mortgage or the
               other  Loan  Documents),  at the  expense  of  Borrower  upon its
               written  request,  and,  with respect to the  Mortgaged  Property
               located  in  the  State  of  Georgia,  Lender  shall  cancel  and
               surrender  this  Mortgage.  Concurrently  with such  release  and
               satisfaction or assignment or cancellation  and surrender of this
               Mortgage and all the other Loan Documents,  Lender will return to
               Borrower  the Note and all  insurance  policies  relating  to the
               Mortgaged  Property which may be held by Lender, any amounts held
               in  escrow  pursuant  to this  Mortgage  or the  Cash  Collateral
               Agreement,  if  applicable,  or  otherwise,  and any  part of the
               Mortgaged  Property  or  other  Collateral  that  may  be in  its
               possession  and,  on the  written  request  and at the expense of
               Borrower,   will   execute  and  deliver  such   instruments   of
               conveyance,  assignment and release (including  appropriate UCC-3
               termination   statements)   prepared  by  Borrower   and  as  may
               reasonably  be requested by Borrower to evidence such release and
               satisfaction,  or assignment,  or cancellation  and surrender and
               any such  instrument,  when  duly  executed  by  Lender  and,  if
               appropriate,  duly  recorded by Borrower in the places where this
               Mortgage  and  each  other  Loan  Document  is  recorded,   shall
               conclusively  evidence the release and satisfaction or assignment
               or cancellation and surrender of this Mortgage and the other Loan
               Documents. 

                    (b)  Notwithstanding  anything contained in this Section 38,
               Borrower  shall  be  entitled  to  have  one or  more  Properties
               released from the Lien of this Mortgage or may require  Lender to
               cancel and surrender this Mortgage with respect to one or more of
               the  Properties,  but,  in  either  case,  not more  than six (6)
               Properties,  in  connection  with (A) prior to June 30,  1999 (or
               June 30,  2001 if the  Maturity  Date of the Note is  extended to
               such date by Lender),  payment of an amount  equal to one hundred
               twenty-five  percent  (125%) of the  Allocated  Loan  Amount with
               respect to the Property to be released  together with all accrued
               and unpaid interest  related to said Allocated Loan Amount or (B)
               delivery  of  Defeasance  Collateral,  provided  that  all of the
               conditions set forth below have been satisfied:

                    (i)  Lender  shall  have  received  from  Borrower  at least
                         thirty days' prior written  notice of the date proposed
                         for such release (the  "Release  Date"),  which Release
                         Date shall be a Payment Date (as defined in the Note);
<PAGE>
                    (ii) No  Event  of  Default   shall  have  occurred  and  be
                         continuing  as of the  date  of  such  notice  and  the
                         Release Date;

                    (iii)(A) If the Release Date shall be prior to June 30, 1999
                         (or June 30, 2001 if the  Maturity  Date of the Note is
                         extended  to  such  date  by  Lender),  Borrower  shall
                         deliver  to  Lender  funds  in an  amount  equal to one
                         hundred  twenty-five  percent  (125%) of the  Allocated
                         Loan  Amount for the  Property to be released or (B) if
                         the  Release  Date is after June 30,  1999 (or June 30,
                         2001 if the  Maturity  Date of the Note is  extended to
                         such date by Lender),  Borrower shall deliver to Lender
                         (pursuant to and in accordance  with the  provisions of
                         Sections  46  and  47  hereof)  on  the  Release   Date
                         Defeasance  Collateral  in such amount as shall satisfy
                         the  Minimum  Defeasance  Collateral  Requirement  with
                         respect to such Property;

                    (iv) Borrower  shall have  delivered  to Lender an Officer's
                         Certificate,  dated the Release  Date,  confirming  the
                         matters  referred to in clause  (ii) above,  certifying
                         that the  provisions  of clause  (iii)  above have been
                         complied  with  and  certifying   that  all  conditions
                         precedent  for such release  contained in this Mortgage
                         have been complied with;

                    (v)  Borrower,  at its sole  cost and  expense,  shall  have
                         delivered to Lender,  one or more  endorsements  to the
                         Lender policy of title insurance delivered to Lender on
                         the  date  hereof  in  connection  with  this  Mortgage
                         insuring that, after giving effect to such release, (x)
                         the Liens  created  hereby and insured  thereunder  are
                         first  priority  Liens  on  the  respective   remaining
                         Properties  subject only to the Permitted  Encumbrances
                         applicable  to the  remaining  Properties  and (y) that
                         such policy is in full force and effect and  unaffected
                         by such release;

                    (vi) The Debt  Service  Coverage  Ratio with  respect to the
                         remaining Properties would be not less than 1.60:1;

                    (vii)The Loan to  Value  Ratio  for  each of the  Properties
                         that will not be released is less than seventy  percent
                         (70%).
<PAGE>
                  (viii) Borrower shall deliver written  confirmation from the
                         Rating  Agencies that such release will not result in a
                         downgrade,  withdrawal  or  qualification  of the  then
                         current  ratings  of any  securities  backed in part by
                         this Mortgage;

                    (ix) (as  evidenced by  appraisals  prepared by  Independent
                         Appraisers  selected by Lender  performed at Borrower's
                         expense) the fair market value of the  Properties  that
                         will remain  subject to the lien of this Mortgage as of
                         the date of the proposed release shall not be less than
                         the fair market value of such Properties as of the date
                         of this Mortgage as evidenced by  appraisals  delivered
                         to Lender on the Closing Date;

                    (x)  Lender shall have  received  from Borrower with respect
                         to  the  matters   referred  to  in  clause  (vi),  (x)
                         statements of the Net Operating Income and Debt Service
                         (both on a  consolidated  basis and  separately for the
                         applicable   Property(ies)  to  be  released)  for  the
                         applicable  measuring  period,  and  (y)  based  on the
                         foregoing  statements of Net Operating  Income and Debt
                         Service,  calculations  of the  Debt  Service  Coverage
                         Ratio  both  with  and  without  giving  effect  to the
                         proposed  release,  and (z)  calculations of the ratios
                         referred  to in such  clause  (vi),  accompanied  by an
                         Officers'  Certificate  stating  that such  statements,
                         calculations  and  information are true,  correct,  and
                         complete in all material respects.

               (d)  Upon  or  after  the  delivery  of  Payment  of one  hundred
          twenty-five percent (125%) of the Allocated Loan Payment or Defeasance
          Collateral  in  accordance   with  Section  38(b)  (iii)  and  Section
          46(b)(iii)  hereof and, if Borrower is required to deliver  Defeasance
          Collateral,  the  satisfaction  of all other  conditions  provided for
          herein in Sections 46 and 47,  Lender shall  effectuate  the following
          (hereinafter  referred  to  as a  "Property  Release"):  the  security
          interest  of Lender in this  Mortgage  and the  other  Loan  Documents
          relating to the released Property shall be split, severed and released
          from the Lien of this Mortgage and Lender will execute and deliver any
          agreements  reasonably  requested by Borrower to release and terminate
          or reassign,  at Borrower's  option,  this Mortgage as to the released
          Property;  provided, that such release and termination or reassignment
          shall be without  recourse  to Lender and such  documents  shall be in
          form and  substance  acceptable  to  Lender  in its sole and  absolute
          discretion;  and without  any  representation  or warranty  and Lender
          shall return the originals of any Loan Documents that relate solely to
          the released Property to Borrower;  provided,  further,  that upon the
          release and termination or reassignment of Lender's  security interest
<PAGE>
          in this  Mortgage  relating to the released  Property  all  references
          herein to this  Mortgage  relating to the released  Property  shall be
          deemed  deleted,  except as otherwise  provided herein with respect to
          indemnities.

               39 . Rating Agency Monitoring.  Until the Obligations are paid in
          full,  Borrower  shall provide the Rating  Agencies with all financial
          reports  required  hereunder  and such other  information  as it shall
          reasonably  request,  including copies of any notices delivered to and
          received from Lender hereunder,  to enable it to continuously  monitor
          the  creditworthiness of Borrower and to permit an annual surveillance
          of the implied credit rating of certain securities secured by a pledge
          of the Note; provided,  however, such information shall be provided to
          the  Rating  Agencies  to  the  extent  such  information  is  readily
          available to Borrower in the ordinary course of business and would not
          result in additional expense to Borrower.

               40. Environmental Matters.

               (a)  Representations.  Borrower  hereby  represents  and warrants
          that,  (i)  Borrower  has not engaged in or  knowingly  permitted  any
          operations  or  activities  upon,  or  any  use  or  occupancy  of the
          Property,  or any  portion  thereof,  for the purpose of or in any way
          involving  the  handling,   manufacture,   treatment,   storage,  use,
          generation,  release, discharge,  refining, dumping or disposal of any
          Hazardous  Substances  on,  under,  in  or  about  the  Property,   or
          transported any Hazardous  Substances to, from or across the Property,
          except  in  all  cases  in  material   compliance  with  Environmental
          Requirements and only in the course of legitimate  business operations
          by Borrower  and use and  occupancy by Tenants at the  Property;  (ii)
          except as disclosed in Environmental Reports delivered to Lender on or
          prior to the date hereof, to Borrower's knowledge, no tenant, occupant
          or user of any Property,  nor any other person,  has during Borrower's
          ownership of such Property,  engaged in or permitted any operations or
          activities  upon,  or any use or  occupancy  of the  Property,  or any
          portion  thereof,  for the purpose of or in any material way involving
          the  handling,  manufacture,   treatment,  storage,  use,  generation,
          release,  discharge,  refining,  dumping or disposal of any  Hazardous
          Substances on, in or about the Property,  or transported any Hazardous
          Substances  to,  from or across the  Property,  except in all cases in
          material  compliance with  Environmental  Requirements and only in the
          course of legitimate business operations at the Property; (iii) except
          as disclosed in Environmental  Reports delivered to Lender on or prior
          to the date hereof, to Borrower's  knowledge,  no Hazardous Substances
          are presently constructed, deposited, stored, or otherwise located on,
          under,  in or about any Property  except in material  compliance  with
          Environmental Requirements; (iv) to Borrower's knowledge, no Hazardous
          Substances  have  migrated  from the  Property  upon or beneath  other
          properties  which would  reasonably  be expected to result in material
          liability for Borrower; and (v) to Borrower's knowledge,  no Hazardous
          Substances have migrated or threaten to migrate from other  properties
          upon, about or beneath any Property which would reasonably be expected
          to result in material liability for Borrower.
<PAGE>
               (b)  Covenants.  Subject to  Borrower's  right to  contest  under
          Section 7(c) hereof, Borrower covenants and agrees with Lender that it
          shall comply with all Environmental Laws in all material respects.  If
          at any time during the  continuance  of the Lien of this  Mortgage,  a
          Governmental Authority having jurisdiction over the Mortgaged Property
          requires   remedial  action  to  correct  the  presence  of  Hazardous
          Materials  in,  around,  or  under  any  Property  (an  "Environmental
          Event"),  Borrower  shall deliver  prompt notice of the  occurrence of
          such  Environmental  Event to Lender.  Within  (30)  thirty days after
          Borrower has knowledge of the  occurrence of an  Environmental  Event,
          Borrower  shall  deliver  to  Lender  an  Officer's   Certificate  (an
          "Environmental  Certificate")  explaining the  Environmental  Event in
          reasonable  detail and setting forth the proposed  remedial action, if
          any.

               (c) ENVIRONMENTAL INDEMNIFICATION.  SUBJECT TO SECTION 33 OF THIS
          MORTGAGE,  BORROWER SHALL PROTECT,  INDEMNIFY,  SAVE, DEFEND, AND HOLD
          HARMLESS  LENDER,  ITS  SUBSIDIARIES,  AFFILIATES  AND  ALL  OFFICERS,
          DIRECTORS,  STOCKHOLDERS,  PARTNERS, EMPLOYEES, AGENTS, SUCCESSORS AND
          ASSIGNS  THEREOF   (COLLECTIVELY,   THE   "INDEMNIFIED   ENVIRONMENTAL
          PARTIES")  FROM  AND  AGAINST  ANY AND ALL  LIABILITY,  LOSS,  DAMAGE,
          ACTIONS,  CAUSES OF ACTION,  COSTS OR EXPENSES  WHATSOEVER  (INCLUDING
          REASONABLE ATTORNEYS' FEES AND EXPENSES) AND ANY AND ALL CLAIMS, SUITS
          AND JUDGMENTS WHICH ANY INDEMNIFIED ENVIRONMENTAL PARTY MAY SUFFER, AS
          A RESULT OF OR WITH RESPECT TO: (A) ANY  ENVIRONMENTAL  CLAIM RELATING
          TO  OR  ARISING  FROM  SUCH   PROPERTY;   (B)  THE  VIOLATION  OF  ANY
          ENVIRONMENTAL  LAW IN CONNECTION WITH SUCH PROPERTY;  (C) ANY RELEASE,
          SPILL,  OR THE PRESENCE OF ANY  HAZARDOUS  SUBSTANCES  AFFECTING  SUCH
          PROPERTY;  AND (D) THE PRESENCE  AT, IN, ON OR UNDER,  OR THE RELEASE,
          ESCAPE,  SEEPAGE,  LEAKAGE,  DISCHARGE OR  MIGRATION AT OR FROM,  SUCH
          PROPERTY OF ANY HAZARDOUS  SUBSTANCES,  WHETHER OR NOT SUCH  CONDITION
          WAS KNOWN OR UNKNOWN TO BORROWER PROVIDED THAT, IN EACH CASE, BORROWER
          MAY BE RELIEVED OF ITS OBLIGATION  UNDER THIS SUBSECTION IF ANY OF THE
          MATTERS  REFERRED  TO IN CLAUSES  (A)  THROUGH (D) ABOVE DID NOT OCCUR
          (BUT NEED NOT HAVE BEEN  DISCOVERED)  PRIOR TO THE EARLIEST OF (1) THE
          FORECLOSURE  OF THIS MORTGAGE WITH RESPECT TO SUCH  PROPERTY,  (2) THE
          DELIVERY BY BORROWER TO LENDER OR A THIRD PARTY OF A  DEED-IN-LIEU  OF
          FORECLOSURE  WITH RESPECT TO SUCH  PROPERTY,  OR (3)  LENDER'S  TAKING
          POSSESSION  AND CONTROL OF SUCH  PROPERTY  AFTER THE  OCCURRENCE OF AN
          EVENT OF DEFAULT HEREUNDER AND SUCH OBLIGATION IS A RESULT OF THE ACTS
          OR OMISSIONS  OF ANY  INDEMNIFIED  PARTY.  IF ANY SUCH ACTION OR OTHER
          PROCEEDING  SHALL BE BROUGHT AGAINST LENDER,  UPON WRITTEN NOTICE FROM
          BORROWER  TO LENDER  (GIVEN  REASONABLY  PROMPTLY  FOLLOWING  LENDER'S
          NOTICE TO BORROWER OF SUCH ACTION OR  PROCEEDING),  BORROWER  SHALL BE
          ENTITLED TO ASSUME THE DEFENSE THEREOF,  AT BORROWER'S  EXPENSE,  WITH
          COUNSEL REASONABLY  ACCEPTABLE TO LENDER;  PROVIDED,  HOWEVER,  LENDER
          MAY, AT ITS OWN EXPENSE,  RETAIN  SEPARATE  COUNSEL TO  PARTICIPATE IN
          SUCH  DEFENSE,  BUT SUCH  PARTICIPATION  SHALL  NOT BE  DEEMED TO GIVE
          LENDER A RIGHT TO CONTROL SUCH DEFENSE, WHICH RIGHT BORROWER EXPRESSLY
          RETAINS. NOTWITHSTANDING THE FOREGOING, EACH INDEMNIFIED ENVIRONMENTAL
          PARTY SHALL HAVE THE RIGHT TO EMPLOY  SEPARATE  COUNSEL AT  BORROWER'S
          EXPENSE IF, IN THE REASONABLE  OPINION OF LEGAL COUNSEL, A CONFLICT OR
<PAGE>
          POTENTIAL CONFLICT EXISTS BETWEEN THE INDEMNIFIED  ENVIRONMENTAL PARTY
          AND BORROWER THAT WOULD MAKE SUCH SEPARATE  REPRESENTATION  ADVISABLE.
<PAGE>
               41 . Recourse Nature of Certain Indemnifications. Notwithstanding
          anything to the  contrary  provided  in this  Mortgage or in any other
          Loan Document,  the  indemnification  provided in Section 40(c) hereof
          shall be fully  recourse to Borrower  (but not to (i) any Affiliate of
          Borrower, (ii) any Person owning directly or indirectly,  any legal or
          beneficial  interest in Borrower or any  Affiliate  of  Borrower,  and
          (iii)   any   partner,   principal,   officer,   controlling   person,
          beneficiary, trustee, advisor, shareholder, employee, agent, Affiliate
          or director of  Borrower  or of any Persons  described  in clauses (i)
          through (ii) above) and shall be  independent  of, and shall  survive,
          the  discharge  of the  Indebtedness,  the release of the Lien created
          under this Mortgage,  the  cancellation and surrender of this Mortgage
          and/or  the  conveyance  of title to any  Property  to  Lender  or any
          purchaser  or  designee  in  connection  with a  foreclosure  of  this
          Mortgage or conveyance  in lieu of  foreclosure.

               42 .  Counterparts.  This Mortgage may be executed in one or more
          counterparts, each of which shall be deemed to be an original, and all
          of which together shall constitute one and the same instrument.

               43 . Merger, Conversion,  Consolidation or Succession to Business
          of  Lender.  Any  corporation  into  which  Lender  may be  merged  or
          converted  or with which it may be  consolidated,  or any  corporation
          resulting from any merger, conversion or consolidation to which Lender
          shall  be  a  party,   or  any   corporation   succeeding  to  all  or
          substantially all the corporate trust business of Lender, shall be the
          successor of Lender hereunder,  without the execution or filing of any
          paper or any  further  act on the part of any of the  parties  hereto.
          Lender shall provide the Rating  Agencies  with written  notice of any
          merger or conversion  to be undertaken  pursuant to this Section 43 no
          less than thirty (30) days' prior to such merger or conversion.

               44 . No Endorsement.  Lender shall not become or be considered to
          be an  endorser,  co-maker  or  co-obligor  on  any  Note  or  on  any
          obligation of Borrower secured by this Mortgage or otherwise.

               45 . Intentionally Omitted.


               46 . Defeasance.


<PAGE>



               (a)  With  respect  to a  release  of the  Lien of this  Mortgage
          pursuant  to Section  38(b)  hereof  where the  payment of  Defeasance
          Collateral is required pursuant to Section  38(c)(iii),  other than in
          connection  with a total  repayment  on the  Maturity  Date  (each,  a
          "Defeasance"),  the Borrower  shall deposit  Defeasance  Collateral in
          accordance  with  subsection  (b) below to the  Defeasance  Collateral
          Account.  In no event shall the  deliverance of Defeasance  Collateral
          cause  the  Borrower  to be  released  from  its  obligations  to make
          payments of principal and interest on the Note.

               (b) The Defeasance  shall be permitted at such time as all of the
          following  events shall have  occurred: 

                    (i) during the Extension Term (as hereinafter defined),  the
               Defeasance  shall  occur after any lockout  period  provided  for
               during such Extension Term;

                    (ii)  the  Defeasance  Collateral  Account  shall  have been
               established pursuant to Section 47 hereof; 

                    (iii)  Borrower  shall have delivered or caused to have been
               delivered to Lender the  Defeasance  Collateral  for deposit into
               the Defeasance  Collateral  Account such that it will satisfy the
               Total Defeasance Collateral Requirement with respect to a release
               of the Properties at the time of delivery and all such Defeasance
               Collateral,  if in  registered  form,  shall be registered in the
               name of Lender or its nominee (and, if registered in nominee name
               endorsed  to  Lender or in blank)  and,  if issued in  book-entry
               form, the name of Lender or its nominee shall appear as the owner
               of such  securities  on the books of the Federal  Reserve Bank or
               other party maintaining such book-entry system;

                    (iv)  Borrower  shall  have  granted  or caused to have been
               granted  to  Lender a valid  perfected  first  priority  security
               interest in the Defeasance Collateral and all proceeds thereof;

                    (v) Borrower  shall have delivered or caused to be delivered
               to Lender an Officers' Certificate,  dated as of the date of such
               delivery (x) that sets forth the aggregate  face amount or unpaid
               principal  amount,   interest  rate  and  maturity  of  all  such
               Defeasance Collateral, a copy of the transaction journal, if any,
               or such other notification,  if any, published by or on behalf of
               the Federal Reserve Bank or other party  maintaining a book-entry
               system  advising  that Lender or its nominee is the owner of such
               securities  issued in book-entry  form,  and (y) to the following
               effect that states that:
<PAGE>
                         (A)  Borrower  owns  the  Defeasance  Collateral  being
                    delivered  to Lender  free and  clear of any and all  Liens,
                    security  interests  or  other  encumbrances,  and  has  not
                    assigned any interest or  participation  therein (or, if any
                    such interest or  participation  has been  assigned,  it has
                    been released), and Borrower has full power and authority to
                    pledge such Defeasance Collateral to Lender;

                         (B)  such  Defeasance  Collateral  consists  solely  of
                    Defeasance Eligible Investments;

                         (C) such  Defeasance  Collateral  satisfies  the  Total
                    Defeasance Collateral Requirement, or the Minimum Defeasance
                    Collateral  Requirement (for a Partial Release), as the case
                    may be, determined as of the date of delivery;

                         (D) the  Defeasance  contemplated  hereby will not give
                    rise to an Event of Default; and

                         (E) the information set forth in the schedule  attached
                    to such Officers'  Certificate is correct and complete as of
                    the date of delivery (such schedule, which shall be attached
                    to and  form a part of  such  Officers'  Certificate,  shall
                    demonstrate  satisfaction  of the  requirement  set forth in
                    clause  (C)  above,  in  a  form  reasonably  acceptable  to
                    Lender);

                    (vi) Borrower shall have delivered or caused to be delivered
               to Lender (A) the  Required  Opinion  with  respect  to  Lender's
               interest in such Defeasance Collateral, (B) a Tax Opinion, (C) if
               the  Mortgage  Loan  at such  time  is  included  in a  REMIC,  a
               Nondisqualification  Opinion,  and (D) an  additional  Opinion of
               Counsel,  to the effect  that  Lender  will not be required to be
               registered  under the Investment  Company Act as a result of such
               Defeasance,  and (E) an Opinion of Counsel  that  Lender has been
               granted  a first  priority  perfected  security  interest  in the
               Defeasance Collateral;

                    (vii)   Borrower  shall  have  delivered  or  caused  to  be
               delivered to Lender a certificate,  acceptable to Lender, from an
               independent  certified public accountant confirming that Borrower
               has satisfied the provisions of this Section 46(b);

                    (viii)  Lender shall have  received  from each of the Rating
               Agencies  written  affirmation that the current credit ratings of
               the securities  secured by a pledge of the Note immediately prior
               to such defeasance will not be qualified, downgraded or withdrawn
               as a result of such defeasance,  which affirmation may be granted
               or withheld in the Rating Agencies' sole and absolute discretion;
               and

 <PAGE>
               (ix) Borrower  shall have  delivered or caused to be delivered to
          Lender such other documents and  certificates as Lender may reasonably
          request in connection with  demonstrating  that Borrower has satisfied
          the provisions of this Section 46(b).

               (c) For purposes of determining whether sufficient amounts are on
          deposit in the Defeasance Collateral Account,  there shall be included
          only  payments of  principal  and  predetermined  and  certain  income
          thereon  (determined  without  regard  to  any  reinvestment  of  such
          amounts)  that will occur on a stated date for a stated  payment on or
          before the dates when such  amounts  may be  required to be applied to
          pay the principal and interest when due on the Note, together with the
          outstanding principal balance of the Note as of such date.



<PAGE>



               47 . Defeasance Collateral Account.

               (a) On or before the date on which Borrower  delivers  Defeasance
          Collateral  to Lender  pursuant  to Section 6 or 46  hereof,  Borrower
          shall  open at any  Approved  Bank or Banks at the time and  acting as
          custodian for Lender, a defeasance collateral account (the "Defeasance
          Collateral  Account") which shall at all times be an Eligible  Account
          (as defined in the Cash Collateral Agreement), in which Borrower shall
          grant to  Lender  or  reconfirm  the  grant to  Lender  of a  security
          interest as part of the Mortgaged Property hereunder.  Should Borrower
          open the Defeasance  Collateral  Account at a bank or banks other than
          an  Approved  Bank,  such  Defeasance   Collateral   Account  must  be
          maintained as a segregated  trust account.  The Defeasance  Collateral
          Account  shall  contain (i) all  Defeasance  Collateral  delivered  by
          Borrower pursuant to Sections 38, 46 and 47 hereof,  (ii) all payments
          received on Defeasance  Collateral  held in the Defeasance  Collateral
          Account and (iii) all income or other gains from  investment of moneys
          or other  property  deposited in the  Defeasance  Collateral  Account,
          provided,  however,  that  (x)  any  sums  earned  on  any  Defeasance
          Collateral,  which sums were not included in the  determination of the
          Total  Defeasance  Collateral,  shall be paid  monthly  by  Lender  to
          Borrower  and  (y)  any  sums  earned  on  any  Defeasance  Collateral
          representing  the difference  between the assumed interest on the Note
          at the  Default  Rate and the  lesser,  if  applicable,  of the actual
          interest on the Note for the quarter  prior to the  preceding Due Date
          shall be paid quarterly to the Borrower.  All such amounts,  including
          all income from the investment or reinvestment thereof,  shall be held
          by Lender as part of the Mortgaged Property,  subject to withdrawal by
          Lender for the purposes set forth in this Section 47.  Borrower  shall
          be the owner of the Defeasance Collateral Account and shall report all
          income accrued on Defeasance  Collateral for federal,  state and local
          income tax  purposes  in its income tax return. 
<PAGE>
               (b)  Lender  shall  withdraw,  draw on or  collect  and apply the
          amounts that are on deposit in the  Defeasance  Collateral  Account to
          pay  when due the  principal  and all  installments  of  interest  and
          principal on the Note and other amounts due under the Loan  Documents.

               (c) Funds and other property in the Defeasance Collateral Account
          shall not be commingled  with any other monies or property of Borrower
          or any  Affiliate of Borrower.

               (d) Lender  shall not in any way be held  liable by reason of any
          insufficiency  in  the  Defeasance   Collateral  Account.

               48 . [Intentionally Omitted]

               49 .  Liability  of  Lender.  Lender  shall not be liable for any
          error of judgment or act done by Lender in good faith, or be otherwise
          responsible or accountable under any circumstances whatsoever,  except
          for Lender's gross negligence or willful misconduct. Lender shall have
          the right to rely on any instrument, document or signature authorizing
          or  supporting  any  action  taken  or  proposed  to be  taken  by him
          hereunder,  believed  by him in good faith to be  genuine.  All monies
          received by Lender shall, until used or applied as herein provided, be
          held in trust for the purposes for which they were received, and shall
          be  segregated  from all other  monies,  and Lender  shall be under no
          liability  for  interest  on any  monies  received  by him  hereunder.
          Borrower  will  reimburse  Lender  for,  and  indemnify  and  save him
          harmless  against,  any and all  liability  and expenses  which may be
          incurred by him in the  performance of his duties  hereunder.

               50 . Lender and Trustee.  This Section 50 shall be  applicable to
          all Deed of Trust States. 

               (a) The Trustees  accept the trusts  hereby  created and agree to
          perform  the  duties  herein  required  of them  upon  the  terms  and
          conditions  hereof. 

               The duties and  obligations  of the  Trustees  in respect of this
          Mortgage shall be as set forth in this Section 50. 

                    (i) Except upon the occurrence and during the continuance of
               an Event of Default actually known to Lender:



<PAGE>



                         (1) The Trustees shall undertake to perform such duties
                    and  obligations and only such duties and obligations as are
                    specifically  set forth in this  Mortgage and the other Loan
                    Documents or as otherwise  directed by a letter of direction
                    from Lender,  and no implied  covenants or obligations shall
                    be read  into this  Mortgage  or the  other  Loan  Documents
                    against the Trustees; and

                         (2) In the  absence  of bad  faith,  the  Trustees  may
                    conclusively rely, as to the truth of the statements and the
                    correctness  of  the  opinions   expressed   therein,   upon
                    certificates  or  opinions  furnished  to the  Trustees  and
                    conforming  to the  requirements  of this  Mortgage  and the
                    other  Loan   Documents;   but  in  the  case  of  any  such
                    certificates  or opinions  which by any provision  hereof or
                    thereof are specifically required to be furnished to Lender,
                    the  Trustees  shall be under a duty to examine  the same to
                    determine whether or not they conform to the requirements of
                    this Mortgage and the other Loan Documents.



<PAGE>



                    (ii) In  case an  Event  of  Default  known  to  Lender  has
               occurred  and is  continuing,  the  Trustees  shall  exercise the
               rights and powers vested in the Trustees by this Mortgage and the
               other Loan Documents, with reasonable care.

                    (iii) No  provision of this  Mortgage  shall be construed to
               relieve the Trustees from  liability for their own  negligence or
               willful misconduct, except that:

                         (1) Section  50(a)  hereof  shall not be  construed  to
                    limit the effect of Section 50(b) hereof;

                         (2) The  Trustees  shall not be liable for any error of
                    judgment  made in good faith by an officer of the  Trustees,
                    unless it shall be proved that the Trustees  were  negligent
                    in ascertaining the pertinent facts; and

                         (3) The  Trustees  shall not be liable with  respect to
                    any  action  taken or  omitted  to be taken in good faith in
                    accordance  with the  direction  of Lender  relating  to the
                    time,  method and place of conducting any proceeding for any
                    remedy available to the Trustees, or exercising any trust or
                    power conferred upon the Trustees under this Mortgage.

                    (iv) Whether or not therein  expressly  so  provided,  every
               provision of this  Mortgage  relating to the conduct or affecting
               the liability of or affording protection to the Trustees shall be
               subject to the provisions of this Section 50(a).

                    (v) No provision of this Mortgage shall require the Trustees
               to expend or risk their own funds or otherwise incur any personal
               financial  liability  in the  performance  of any of their duties
               hereunder,  or in the  exercise of any of their rights or powers,
               if  they  shall  have  reasonable   grounds  for  believing  that
               repayment of such funds or adequate  indemnity  against such risk
               or liability is not reasonably assured to them.



<PAGE>



               (b) At any time or times for the  purpose  of  meeting  the Legal
          Requirements  of any  jurisdiction in which any part of a Property may
          at the time be located,  Lender  shall have the power to appoint  and,
          upon the written  request of Lender,  Borrower  shall for such purpose
          join with Lender in the  execution,  delivery and  performance  of all
          instruments and agreements  reasonably  necessary or proper to appoint
          one or more  Persons  reasonably  approved by Lender to act as trustee
          pursuant to this Mortgage in such jurisdiction for such portion of the
          Property located in such jurisdiction (the  "Jurisdictional  Trustee")
          with such powers as are  provided  in the  instrument  of  appointment
          which shall expressly designate the Property affected and the capacity
          of the  appointee  as a  Jurisdictional  Trustee,  and to vest in such
          Person or Persons in the  capacity  aforesaid,  any  property,  title,
          right or power  deemed  necessary or  desirable,  subject to the other
          provisions of this Section 50; provided,  however,  that no instrument
          or  document  shall be signed on  Borrower's  behalf  or  required  of
          Borrower  that  expressly  creates  personal  liability on the part of
          Borrower or requires  Borrower to expend any funds.  If Borrower  does
          not join in such  appointment  within  fifteen  (15)  days  after  the
          receipt  by it of a request  so to do, or in case an Event of  Default
          has  occurred  and  is  continuing,   Lender  alone  shall  make  such
          appointment;  provided,  however, that no instrument or document shall
          be signed on Borrower's  behalf or required of Borrower that expressly
          creates  personal  liability  on the  part  of  Borrower  or  requires
          Borrower  to expend any  funds.  Should any  written  instrument  from
          Borrower  be  reasonably  required  by any  Jurisdictional  Trustee so
          appointed  for more fully  confirming to such  Jurisdictional  Trustee
          such property,  title,  right or power,  any and all such  instruments
          shall,  on  request,  be  executed,   acknowledged  and  delivered  by
          Borrower;  provided,  however, that no instrument or document shall be
          signed on  Borrower's  behalf or required of Borrower  that  expressly
          creates  personal  liability  on the  part  of  Borrower  or  requires
          Borrower  to expend any funds.

                    (i)  Every  Jurisdictional  Trustee  shall,  to  the  extent
               permitted by law, but to such extent only,  be appointed  subject
               to the terms set forth in Section 50(b)(iii) hereof.

                    (ii) As of the date hereof (i) Alexander title Agency, Inc.,
               a  Virginia  Corporation,   is  hereby  appointed  Jurisdictional
               Trustee with  respect to the  Maryland  and Virginia  Properties;
               (ii) Chicago Title Insurance Company, a Missouri Corporation,  is
               hereby appointed Jurisdictional Trustee with respect to the North
               Carolina  properties;  and (iii) Joseph B. Pitt, Jr., Trustee,  a
               resident  of  Davidson  County,  Tennessee,  is hereby  appointed
               Jurisdictional Trustee with respect to the Tennessee properties.

                    (iii) To the extent  permitted  by law,  but to such  extent
               only, the  Jurisdictional  Trustee is appointed herein subject to
               the following terms, namely:

                         (1)  Subject  to the  terms  hereof  and to the  extent
                    permitted by law, all rights, powers, duties and obligations
                    under this  Mortgage  granted to or imposed  upon Lender and
                    the  Jurisdictional  Trustee  shall be  exercised  solely by
                    Lender.

                         (2) The rights,  powers,  duties and obligations hereby
                    conferred  or imposed  upon  Lender  and the  Jurisdictional
                    Trustee  in  respect  of  any   Property   covered  by  such
                    appointment  shall  be  exercised  or  performed  by  Lender
                    separately,  or at the  election of Lender by Lender and the
                    Jurisdictional  Trustee  jointly,  except to the extent that
                    (i)  under  any  law  of  any   jurisdiction  in  which  any
                    particular  act is to be  performed  by  Lender  and/or  the
                    Jurisdictional  Trustee,  Lender  shall  be  incompetent  or
                    unqualified to perform such act or (ii) Lender shall deem it
                    inconvenient or undesirable to perform such act, then in any
                    such event such rights, powers, duties and obligations shall
                    be exercised and performed by the Jurisdictional  Trustee at
                    the written direction of Lender.

                         (3)  Lender at any time,  by an  instrument  in writing
                    executed by it, may accept the  resignation of or remove any
                    Jurisdictional  Trustee. Upon the written request of Lender,
                    Borrower shall join with Lender in the  execution,  delivery
                    and performance of all instruments and agreements reasonably
                    necessary  or  proper  to  effectuate  such  resignation  or
                    removal;  provided  that  Borrower  shall not be required to
                    incur  personal  liability  as a direct  result  thereof.  A
                    successor  to the  Jurisdictional  Trustee  so  resigned  or
                    removed  may be  appointed  in the manner  provided  in this
                    Section 50.

                         (4) Subject to compliance with the laws of the State in
                    which the  Property  is  located,  upon the  resignation  or
                    removal of any Jurisdictional Trustee, Lender shall have the
                    power to appoint  and,  upon the written  request of Lender,
                    Borrower shall,  for such purpose and provided that Borrower
                    shall not incur any personal  liability  as a direct  result
                    thereof,  join with Lender in the  execution,  delivery  and
                    performance of all  instruments  and  agreements  reasonably
                    necessary   or  proper  to  appoint  one  or  more   Persons
                    reasonably   approved   by  Lender   to  act  as   successor
                    Jurisdictional  Trustee  together  with Lender of all or any
                    part of the Trust Estate so  designated,  with such power as
                    provided  for in this Section 50, and to vest in such Person
                    or Persons in the capacity aforesaid,  any property,  title,
                    right or power deemed necessary or desirable, subject to the
                    other  provisions  of this Section 50. If Borrower  does not
                    join in such appointment, within fifteen (15) days after the
                    receipt  by it of a request so to do, or in case an Event of
                    Default has occurred and is continuing,  Lender acting alone
                    shall make such appointment.  Should any written  instrument
                    from  Borrower be required by any  successor  Jurisdictional
                    Trustee  so  appointed  for more  fully  confirming  to such
                    trustee such property,  title,  right or power,  any and all
                    such   instruments   shall,   on   request,   be   executed,
                    acknowledged  and  delivered  by  Borrower;   provided  that
                    Borrower shall not be required to incur  personal  liability
                    as a direct result thereof.
<PAGE>
                         (5)  No  Jurisdictional   Trustee  hereunder  shall  be
                    personally liable by reason of any act or omission of Lender
                    or any  other  trustee  hereunder  and  Lender  shall not be
                    personally  liable by reason of any act or  omission  of the
                    Jurisdictional Trustee; neither shall knowledge of Lender be
                    imputed to the Jurisdictional Trustee nor shall knowledge of
                    the Jurisdictional Trustee be imputed to Lender.

                         (6) Any notice  delivered  to Lender shall be deemed to
                    have been sufficiently delivered without any delivery to the
                    Jurisdictional Trustee.

                         (7) Any obligation of Borrower to file or give notices,
                    reports  or  information  to  Lender   hereunder   shall  be
                    satisfied by the delivery thereof to Lender.

                         (8)  Any  successor  to  the   Jurisdictional   Trustee
                    (herein,  called  the  "Successor  Jurisdictional  Trustee")
                    shall execute,  acknowledge  and deliver to its  predecessor
                    (herein called the  "Predecessor  Jurisdictional  Trustee"),
                    Lender  and   Borrower,   an   instrument   accepting   such
                    appointment. Thereupon, the Successor Jurisdictional Trustee
                    shall,  without any further act, deed or conveyance,  become
                    vested with the estates, properties,  rights, powers, duties
                    and trusts of the Predecessor  Jurisdictional Trustee in the
                    trusts created by this Mortgage,  with the same effect as if
                    originally named as Jurisdictional  Trustee.  At the written
                    request of Borrower,  Lender or the Successor Jurisdictional
                    Trustee,  the  Predecessor   Jurisdictional   Trustee  shall
                    execute  and  deliver an  instrument,  in  recordable  form,
                    transferring to the Successor  Jurisdictional  Trustee, upon
                    the trusts herein expressed, the Trust Estate and shall duly
                    assign  transfer,  deliver  and pay  over  to the  Successor
                    Jurisdictional  Trustee,  any property and money  subject to
                    the Lien hereof held by it. If any written  instrument  from
                    Borrower   or   Lender   be   required   by  the   Successor
                    Jurisdictional  Trustee for more fully and certainly vesting
                    in and  confirming to the Successor  Jurisdictional  Trustee
                    such estates,  properties,  rights, powers and trusts, then,
                    at the request of the Successor  Jurisdictional Trustee, all
                    such instruments shall be made,  executed,  acknowledged and
                    delivered   by   Borrower   or  Lender   to  the   Successor
                    Jurisdictional Trustee,  provided that Borrower shall not be
                    required to incur any personal  liability as a direct result
                    thereof.

               (c) Borrower covenants and agrees:
<PAGE>
                    (i) to pay to the  Trustees  from  time to  time  reasonable
               compensation for all services rendered by them hereunder;

                    (ii) to reimburse each of Lender (subject to Section 18) and
               the   Trustees   upon  request  for  all   reasonable   expenses,
               disbursements  and  advances  incurred  or  made by it or them in
               accordance  with  any  provision  of  this  Mortgage   (including
               reasonable compensation, expenses and disbursements of agents and
               counsel), except any such expense, disbursement or advance as may
               be attributable to its negligence or bad faith; and

                    (iii)  subject to Section 33, to indemnify the Trustees for,
               and to hold each harmless against, any loss, liability or expense
               incurred without  negligence,  willful misconduct or bad faith on
               its part,  arising out of or in connection with the acceptance or
               administration   of  the  trust  or  trusts   hereunder   or  the
               enforcement  of  remedies  hereunder   including  the  costs  and
               expenses  of   defending   against  any  claim  or  liability  in
               connection  with the exercise or performance of any of the powers
               or duties hereunder or thereunder  (except any liability incurred
               by  Trustee  and  the  Jurisdictional  Trustee  with  negligence,
               willful misconduct or bad faith on its or their part).

The  obligations of Borrower under this Section 50(c) to compensate or indemnify
the Trustees and to pay or reimburse  the Trustees for  expenses,  disbursements
and  advances  shall  constitute  additional  Indebtedness  hereunder  and shall
survive the  satisfaction and discharge of this Mortgage and shall be subject to
the  limitations  of Section 33. When the Trustees or Lender  incur  expenses or
render  services  after an  occurrence  of an Event of  Default  hereunder,  the
expenses and  compensation  for services are intended to constitute  expenses of
administration under any bankruptcy law.

               (d) To the extent  permitted by law, but to such extent only, the
          Individual  Trustee  is  appointed  herein  by Lender  subject  to the
          following  terms,  namely: 

                    (i) Subject to the terms hereof and to the extent  permitted
               by law, all the rights, powers, duties and obligations under this
               Mortgage granted to or imposed upon the Individual  Trustee shall
               be exercised solely by Lender except as herein provided.

                    (ii)  The  rights, powers,  duties  and  obligations  hereby
               conferred  or imposed upon the  Individual  Trustee in respect of
               any property  covered by such  appointment  shall be exercised or
               performed by Lender  separately,  or at the election of Lender by
               Lender and the Individual  Trustee jointly,  except to the extent
               that  (i)  under  any  law  of  any  jurisdiction  in  which  any
               particular  act is to be  performed  by the  Individual  Trustee,
               Lender shall be incompetent or unqualified to perform such act or
               (ii) Lender shall deem it  inconvenient or undesirable to perform
               such act, then in any such event such rights,  powers, duties and
               obligations  shall be exercised and  performed by the  Individual
               Trustee at the written direction of Lender.

                    (iii)  Lender  at any  time,  by an  instrument  in  writing
               executed  by it,  may  accept  the  resignation  of or remove any
               Individual Trustee. Upon the written request of Lender,  Borrower
               shall join with Lender in the execution, delivery and performance
               of all instruments and agreements  reasonably necessary or proper
               to effectuate such resignation or removal, provided that Borrower
               shall not be required to incur any personal liability as a direct
               result thereof. A successor to the Individual Trustee so resigned
               or  removed  may be  appointed  in the  manner  provided  in this
               Section 50.

                    (iv)  Upon  the  death,   resignation   or  removal  of  any
               Individual Trustee,  Lender shall have power to appoint and, upon
               the written request of Lender,  Borrower shall,  for such purpose
               and provided that Borrower shall not incur any personal liability
               as a direct result  thereof,  join with Lender in the  execution,
               delivery  and  performance  of  all  instruments  and  agreements
               reasonably  necessary  or proper to appoint,  one or more persons
               approved  by  Lender  to  act  as  Successor  Individual  Trustee
               together with Lender of all or any part of the Trust Estate, with
               such  powers as provided  for in this  Section 50, and to vest in
               such person or persons in the capacity  aforesaid,  any property,
               title,  right or power deemed necessary or desirable,  subject to
               the other  provisions  of this  Section 50. If Borrower  does not
               join in such  appointment,  within  fifteen  (15) days  after the
               receipt  by it of a  request  so to do,  or in case an  Event  of
               Default has occurred and is continuing, Lender acting alone shall
               make such appointment, provided that Borrower shall not incur any
               personal liability as a direct result thereof.

                    (v)  Should  any  written   instrument   from   Borrower  be
               reasonably  required  by  any  successor  Individual  Trustee  so
               appointed  for  more  fully   confirming  to  such  trustee  such
               property,  title,  right or power,  any and all such  instruments
               shall,  on request,  be executed,  acknowledged  and delivered by
               Borrower,  provided  that  Borrower  shall not incur any personal
               liability as a direct result thereof.

                    (vi) No  Individual  Trustee  hereunder  shall be personally
               liable by reason  of any act or  omission  of Lender or any other
               Trustee  hereunder and Lender shall not be  personally  liable by
               reason of any act or omission of the Individual Trustee;  neither
               shall  knowledge of Lender be imputed to the  Individual  Trustee
               nor shall  knowledge  of the  Individual  Trustee  be  imputed to
               Lender.

                    (vii) Any notice delivered to Lender shall be deemed to have
               been   sufficiently   delivered   without  any  delivery  to  the
               Individual Trustee.

                    (viii) Any  obligation  of Borrower to file or give notices,
               reports  or  information  to  the  Trustees  hereunder  shall  be
               satisfied by the delivery thereof to Lender.

                  Any  successor  to the  Individual  Trustee  (herein,  in this
subsection called the "Successor Individual Trustee") shall execute, acknowledge
and  deliver  to  his  predecessor  (herein,  in  this  subsection,  called  the
"Predecessor Individual Trustee"),  Lender and Borrower, an instrument accepting
such appointment. Thereupon, the Successor Individual Trustee shall, without any
further act, deed or  conveyance,  become  vested with the estates,  properties,
rights,  powers, duties and trusts of the Predecessor  Individual Trustee in the
trusts created by this Mortgage,  with the same effect as if originally named as
Individual Trustee. At the written request of Borrower,  Lender or the Successor
Individual Trustee, the Predecessor Individual Trustee shall execute and deliver
an instrument  transferring to the Successor Individual Trustee, upon the trusts
herein expressed, the Trust Estate and shall duly assign, transfer,  deliver and
pay over to the Successor  Individual Trustee, any property and money subject to
the Lien hereof held by him. If any written  instrument  from Borrower or Lender
be reasonably  required by the Successor  Individual  Trustee for more fully and
certainly  vesting in and  confirming to the Successor  Individual  Trustee such
estates,  properties,  rights,  powers and trusts,  then,  at the request of the
Successor  Individual  Trustee,  all such instruments  shall be made,  executed,
acknowledged  and delivered by Borrower  (provided that Borrower shall not incur
any personal  liability as a direct  result  thereof) or Lender to the Successor
Individual Trustee.

               (e) At any time or times,  (i) for the  purpose  of  meeting  the
          Legal  Requirements  of any  jurisdiction in which any part of a Trust
          Estate  may at the time be  located  or (ii) if Lender  deems it to be
          necessary or desirable  for the  protection of its  interests,  Lender
          shall have the power to appoint,  and upon written  request of Lender,
          Borrower  shall for such  purpose  join with Lender in the  execution,
          delivery and performance of all instruments and agreements  reasonably
          necessary  or proper to appoint  (;  provided,  however,  that no such
          instruments or agreements shall be required of Borrower that expressly
          creates  personal  liability  on the  part  of  Borrower  or  requires
          Borrower to expend any funds),  one or more Persons approved by Lender
          either to act as co-trustee,  jointly with Lender,  of all or any part
          of the  Trust  Estate,  or to  act as  separate  trustee  of any  such
          property,  in either  case with such  powers as may be provided in the
          instrument of appointment which shall expressly designate the property
          affected and the capacity of the  appointee as either a co-trustee  or
          separate  trustee,  and to vest  in  such  person  or  persons  in the
          capacity  aforesaid,  any  property,  title,  right  or  power  deemed
          necessary  or  desirable,  subject  to the  other  provisions  of this
          Section  50.  If  Borrower  does not join in such  appointment  within
          fifteen (15) days after the receipt by it of a request so to do, or in
          case an Event of Default has occurred and is continuing,  Lender alone
          shall make such  appointment. 
<PAGE>
               Should any written  instrument  from  Borrower be required by any
          co-trustee or separate  trustee so appointed for more fully confirming
          to such co-trustee or separate trustee such property,  title, right or
          power,  any and all such instruments  shall, by request,  be executed,
          acknowledged  and delivered by Borrower  (provided that Borrower shall
          not incur any personal liability as a direct result thereof).

               Every  co-trustee  or  separate  trustee  shall,  to  the  extent
          permitted by law, but to such extent only, be appointed subject to the
          same terms as hereinabove  set forth for the Individual  Trustee.

               (f)  Borrower  and Lender  intend that the  relationship  created
          under this  Mortgage be solely that of  mortgagor  and  mortgagee  and
          lender and  borrower.  Nothing  herein is  intended  to create a joint
          venture, partnership,  tenancy-in-common or joint tenancy relationship
          between Borrower and Lender.


               51 . As to Property in Florida.  Notwithstanding  anything to the
          contrary  elsewhere in this Mortgage,  as to any Properties located in
          Florida: 

                    (a)  Section  50 is  deleted  in  its  entirety  as  to  the
               Mortgaged  Properties  located in Florida,  and all references to
               "Jurisdictional   Trustee",   "Individual  Trustee",   "Successor
               Trustee",  "Co-Trustee"  and "Separate  Trustee" in this Mortgage
               are  deleted in their  entirety  as to the  Mortgaged  Properties
               located in Florida.  It is the intention of the parties that this
               Mortgage shall be a mortgage and not a deed of trust with respect
               to the  Mortgaged  Properties  located  in  Florida  and that the
               Lender  shall have all of the rights  and  remedies  respectively
               granted  herein  to the  above-identified  trustee.

                    (b) This  Mortgage  secures  a  portion  of the  Note  made,
               executed  and  delivered  in the  State of New York,  which  Note
               renews, consolidates,  amends and restates in their entirety, the
               Original Notes and the Additional Notes in the aggregate original
               principal amount of $122,028,471.

                    (c) The following  provision  replaces the first sentence of
               Section 3 of this  Mortgage  as to all  Florida  Properties.  The
               recourse  of Lender  to the  Properties  located  in the State of
               Florida  (the  "Florida  Properties"),  for recovery of principal
               under the Note is limited to the aggregate sum of $31,715,515.00,
               which is allocated as follows  among the  Properties  in Florida:

<PAGE>
<TABLE>
<CAPTION>
                                                                     Allocated
               Parcel No. Property Name (County)                   Mortgage Debt

               <S>        <C>                                      <C>       
                2         North Airport, Tampa (Hillsborough)         $3,278,599
                4         Ft.   Lauderdale (Broward)                  $5,125,232
                8         Miami  Airport  (Dade)                      $6,071,257
                9         Southside  (Duval)                          $4,330,185
               10         Regency Brandon  (Hillsborough)             $4,351,157
               11         Davie Plantation (Broward)                  $4,952,824
               13         Clearwater (Pinellas)                       $3,606,261
                                                                      ----------

                         Total                                       $31,715,515
</TABLE>

Nothing herein shall (a) limit Lender's recourse to such Properties for recovery
of interest,  costs or any other amounts other than  principal on the Note,  (b)
limit  Lender's  recourse to any other  Properties or other  collateral  for the
obligations secured hereby, or (c) obligate Lender to apply any recoveries under
the obligations  secured by this Mortgage (as a result of recourse to any of the
Properties or otherwise) in any particular order.

                    (d) Compliance with Mortgage  Foreclosure  Law. In the event
               that any provision in this Mortgage  shall be  inconsistent  with
               any  provision  of the  statutes  or  common  law of the State of
               Florida governing the foreclosure of this Mortgage (collectively,
               the "Foreclosure  Laws"),  the provisions of the Foreclosure Laws
               shall take  precedence  over the  provisions of this Mortgage but
               shall not invalidate or render  unenforceable any other provision
               of this  Mortgage  that can be construed  in a manner  consistent
               with the Foreclosure Laws.

                    (e) Future  Advances.  This  Mortgage is given to secure not
               only  existing  indebtedness,  but  also  such  future  advances,
               whether  such  advances are  obligatory  or are to be made at the
               option of the Lender,  or  otherwise,  as are made within  twenty
               (20) years from the date  hereof,  to the same  extent as if such
               future  advances  were made on the date of the  execution of this
               Mortgage. The total amount of indebtedness that may be so secured
               may decrease or increase from time to time,  but the total unpaid
               principal  balance  so  secured  at one  time  shall  not  exceed
               $500,000,000,  plus interest thereon,  and any disbursements made
               for the payment of taxes,  levies or insurance  on the  Mortgaged
               Property, with interest on such disbursements.

<PAGE>
                    (f) Renewal,  Consolidation,  Amendment and  Restatement  of
               Original Mortgage.  The Original Note was secured by the Original
               Mortgages described on Exhibit "D". The obligations  contained in
               the Original Note and the Original  Mortgages  have been renewed,
               consolidated,  amended  and  restated  in this  Mortgage  so that
               together  they  shall  constitute  in law,  but one  mortgage,  a
               single,  first  mortgage  upon the Property  described in Exhibit
               "A-1"  through  "A-26"  securing to Lender the  repayment  of the
               obligations  as  limited   herein.   Other  than  for  the  lien,
               conveyance and grant of the Original  Mortgages as  consolidated,
               amended  and  restated  herein,  the terms,  representations  and
               covenants and  conditions of the Original  Mortgage  shall be and
               hereby are superseded and replaced by the terms, representations,
               covenants and conditions contained herein and the parties certify
               that this instrument secures the same indebtedness  evidenced and
               secured by the  Original  Mortgage as  consolidated,  amended and
               restated  by this  Mortgage  and  secures  no  further  or  other
               indebtedness.

                    (g) The  reference in Section D of the  Granting  Clauses to
               the Uniform  Commercial  Code shall be deemed to refer to Florida
               Statutes  Section  679.313  and  Section  679.402,   as  amended,
               respectively.  This  Mortgage  is  intended  to  be  a  Financing
               Statement  within the purview of Florida  Statute Section 679.402
               with  respect to the  personal  property  described  herein.  The
               addresses of the Borrower (Debtor) and the Lender (Secured Party)
               are herein set forth. This Mortgage is to be filed of record with
               the Clerk of the Circuit  Court of the County or  Counties  where
               the Mortgaged Property is located.

                    (h) This  Mortgage  shall  constitute  a Security  Agreement
               within the meaning of the Florida  Uniform  Commercial  Code with
               respect  to (i) any and all sums at any time on  deposit  for the
               benefit of the Lender or held by the Lender (whether deposited by
               or on behalf of the Borrower or anyone  else)  pursuant to any of
               the  provisions  of the  Mortgage  and (ii) with  respect  to any
               personal  property  included  in the  Granting  Clauses  of  this
               Mortgage, and all replacements of such personal property, and the
               proceeds thereof.  Upon default,  without limitation of any other
               remedies,  the Lender shall have the remedies of a Secured  Party
               under the Florida Uniform  Commercial  Code. The  Debtor/Borrower
               hereby authorizes the Secured  Party/Lender to execute,  deliver,
               file or refile as Secured Party without  joinder of the Borrower,
               any  Financing   Statement,   Continuation   Statement  or  other
               instruments  the Lender may reasonably  require from time to time
               to perfect  or renew such  security  interest  under the  Uniform
               Commercial Code.

                    (i)  This  Mortgage  shall  be  deemed  to be and  shall  be
               construed  as a  Mortgage  as well as a  Security  Agreement  and
               Collateral Assignment of Leases, Rents and Revenues.  Each of the
               remedies  set forth  herein,  including  without  limitation  the
               remedies  involving  a power of sale or power  of  attorney  with
               respect to the  Properties  located  in Florida  and the right of
               Lender to exercise  self-help in connection  with the enforcement
               of the terms of this Mortgage  shall be exercisable if and to the
               extent  permitted by the laws of the State of Florida in force at
               the time of the exercise of such remedies  without  regard to the
               enforceability  of such remedies at the time of the execution and
               delivery of this Mortgage.
<PAGE>

                    (j) In any suit to foreclose the lien of this Mortgage there
               shall be allowed and included as additional  indebtedness  hereby
               secured  in  the  final  judgment  decree  all  expenditures  and
               expenses  which  may be paid or  incurred  by or on behalf of the
               Lender for attorneys' and  paralegals'  fees,  appraisers'  fees,
               outlays  for  documentary  and  expert   evidence,   stenographer
               charges,  publication  costs, costs (which may be estimated as to
               items to be expended  after entry of the decree) of procuring all
               title searches and  examinations  and policies,  and similar date
               and assurance with respect to title as Lender may deem reasonably
               necessary either to prosecute such suit or to evidence to bidders
               at  sales  which  may be had  pursuant  to such  decree  the true
               condition of the title to or the value of the mortgaged property.

                    (k) The  definition of  Environmental  Laws in this Mortgage
               shall,  with  respect  to the  Florida  Properties,  be deemed to
               include the Florida  Pollutant Spill  Prevention and Control Act,
               Chapter  376.  Florida  Statutes,  and the  Florida Air and Water
               Pollution  Control  Act,  Chapter  403,  part  I of  the  Florida
               Statutes,  together with any and all other  environmental laws in
               effect from time to time in the State of Florida, as the same may
               be hereafter amended or modified.

               52. As to Property in  Georgia.  Notwithstanding  anything to the
          contrary  elsewhere in this Mortgage,  as to any Properties located in
          Georgia:

                    (a) The Borrower hereby GRANTS,  BARGAINS, SELLS AND CONVEYS
               the  Mortgaged  Property  unto  the  Lender  and the  successors,
               successors-in-title and assigns of the Lender , subject, however,
               to the Permitted Encumbrances,  TO HAVE AND TO HOLD IN FEE SIMPLE
               FOREVER. With respect to the Georgia Property, this instrument is
               intended to operate  and to be  construed  as a deed  passing fee
               simple or leasehold title to the Georgia  Property to the Lender,
               as well  as an  assignment  of  leases  and  rents  and  security
               agreement,  and  not  as a  mortgage  and  is  made  under  those
               provisions of the existing  laws of the State of Georgia  related
               to deeds to secure  debt.

                    Should the  Obligations  be paid  according to the tenor and
               effect  thereof when the same shall  become due and payable,  and
               should the Borrower  perform all covenants  herein contained in a
               timely  manner,   then  this  Mortgage  shall  be  cancelled  and
               surrendered.

                    (b)  Section  50 is  deleted  in  its  entirety  as  to  the
               Mortgaged  Properties  located in Georgia,  and all references to
               "Jurisdictional   Trustee",   "Individual  Trustee",   "Successor
               Trustee",  "Co-Trustee"  and "Separate  Trustee" in this Mortgage
               are  deleted in their  entirety  as to the  Mortgaged  Properties
               located in Georgia.  It is the intention of the parties that this
               Mortgage  shall be a deed to secure  debt and not a deed of trust
               with respect to the Mortgaged  Properties  located in Georgia and
               that  the  Lender  shall  have  all of the  rights  and  remedies
               respectively granted herein to the  above-identified  trustee.

<PAGE>
                    THE NAMES OF THE DEBTOR AND THE SECURED  PARTY,  THE MAILING
               ADDRESS OF THE SECURED  PARTY FROM WHICH  INFORMATION  CONCERNING
               THE SECURITY  INTEREST MAY BE OBTAINED AND THE MAILING ADDRESS OF
               THE  DEBTOR  ARE  AS  DESCRIBED  IN  EXHIBIT  "--"  HERETO  AND A
               STATEMENT  INDICATING  THE TYPES,  OR  DESCRIBING  THE ITEMS,  OF
               COLLATERAL  IS  CONTAINED   HEREIN,   IN   COMPLIANCE   WITH  THE
               REQUIREMENTS OF ARTICLE 9, SECTION 402 OF THE UNIFORM  COMMERCIAL
               CODE,  SECTION 11-9-402 OF THE OFFICIAL CODE OF GEORGIA ANNOTATED
               (1982). 

                    (d) Power of Sale.

                         (i) If an Event of Default shall have occurred, Lender,
                    at its option,  may sell the Mortgaged  Property or any part
                    of the Mortgaged Property at public sale or sales before the
                    door of the  courthouse of the county in which the Mortgaged
                    Property or any part of the Mortgaged  Property is situated,
                    to the  highest  bidder  for  cash,  in  order  to  pay  the
                    indebtedness secured hereby and accrued interest thereon and
                    insurance  premiums,  liens assessments,  taxes and charges,
                    including  utility  charges,  if any, with accrued  interest
                    thereon and all expenses of the sale and of all  proceedings
                    in connection  therewith,  including  reasonable  attorneys'
                    fees actually  incurred,  after  advertising the time, place
                    and terms of sale once a week for four (4) weeks immediately
                    preceding  such sale (but  without  regard to the  number of
                    days) in a newspaper in which Sheriff's sales are advertised
                    in said county.  At any such public sale, Lender may execute
                    and deliver to the  purchaser a conveyance  of the Mortgaged
                    Property  or any  part  of  the  Mortgaged  Property  in fee
                    simple, with full warranties of title (or without warranties
                    if  Lender  so  elect)  and to  this  end,  Borrower  hereby
                    constitutes    and    appoints    Lender   the   agent   and
                    attorney-in-fact of Borrower hereby constitutes and appoints
                    Lender the agent and  attorney-in-fact  of  Borrower to make
                    such sale and conveyance,  and thereby to divest Borrower of
                    all right, title, interest,  equity and equity of redemption
                    that Borrower may have in and to the Mortgaged  Property and
                    to vest the same in the purchaser or purchasers at such sale
                    or  sales,  and all the acts and  doings  of said  agent and
                    attorney-in-fact  are hereby  ratified and confirmed and any
                    recitals  in said  conveyance  or  conveyances  as to  facts
                    essential  to a valid sale shall be binding  upon  Borrower.
                    The aforesaid  power of sale and agency  hereby  granted are
                    coupled with an interest and are irrevocable by dissolution,
                    insolvency  or  otherwise,  are granted as cumulative of the
                    other remedies  provided  hereby or by law for collection of
                    the  indebtedness  secured hereby and shall not be exhausted
                    by one  exercise  thereof but may be  exercised  until fully
                    payment of all indebtedness  secured hereby. In the event of
                    any  such  foreclosure  sale by  Lender,  Borrower  shall be
                    deemed a tenant  holding  over and shall  forthwith  deliver

<PAGE>
                    possession to the purchaser or purchasers at such sale or be
                    summarily   dispossess   according  to   provisions  of  law
                    applicable to tenants holding over.

                         (ii) Lender may  adjourn  form time to time any sale by
                    it to be  made  under  or by  virtue  of  this  Mortgage  by
                    announcement  at the time and place  appointed for such sale
                    or  for  such  adjourned  sale  or  sales;  and,  except  as
                    otherwise  provided  by any  applicable  provision  of  law,
                    Lender, without further notice or publication, may make such
                    sale at the time and  place  to which  the same  shall so be
                    adjourned.

                         (iii)  Upon any sale  made  under or by  virtue of this
                    paragraph  3 (whether  made  under the power of sale  herein
                    granted or under or by virtue of judicial  proceedings or of
                    a judgment or decree of  foreclosure  and sale),  Lender may
                    bid for and  acquire  the  Mortgaged  Property  or any  part
                    thereof  and in  lieu  of  paying  cash  therefor  may  make
                    settlement  for the  purchase  price by  crediting  upon the
                    indebtedness  the net sales price after deducting  therefrom
                    the expenses of the sale and the costs of the action and any
                    other sums which Lender is  authorized  to deduct under this
                    Mortgage.

                         (iv) No recovery of any  judgment by Lender and no levy
                    of an  execution  under  any  judgment  upon  the  Mortgaged
                    Property or upon any other property of Borrower shall affect
                    in any  manner or to any  extent  the lien and title of this
                    Mortgage upon the Mortgaged Property or any part thereof, or
                    any liens,  titles,  rights,  powers or  remedies  of Lender
                    hereunder,  but  such  liens,  titles,  rights,  powers  and
                    remedies of Lender shall continue unimpaired as before.

                         (v) Upon the  completion  of any sale or sales  made by
                    Lender under or by virtue of this paragraph 52,  Lender,  or
                    an officer of any court  empowered to do so,  shall  execute
                    and deliver to the accepted  purchaser or  purchasers a good
                    and   sufficient   instrument,   or  good   and   sufficient
                    instruments,   conveying,  assigning  and  transferring  all
                    estate, right, title and interest in and to the property and
                    rights sold. Lender is hereby irrevocably appointed the true
                    and lawful  attorney of Borrower,  in its name and stead, to
                    make all necessary conveyances,  assignments,  transfers and
                    deliveries of the Mortgaged  Property and rights so sold and
                    for  that   purpose   Lender  may  execute   all   necessary
                    instruments of conveyance,  assignment and transfer, and may
                    substitute  one or more  persons  with like power,  Borrower
                    hereby  ratifying and  confirming all that its said attorney
                    or such  substitute  or  substitutes  shall  lawfully  do by
                    virtue  hereof.  Any  such  sale or sales  made  under or by
                    virtue of this  paragraph 52, whether made unde the power of
                    sale  herein  granted  or under  or by  virtue  of  judicial
                    proceedings  or of a judgment or decree of  foreclosure  and
                    sale, shall operate to divest all the estate,  right, title,
                    interest, claim and demand whatsoever,  whether at law or in
                    equity,  of Borrower in and to the  properties and rights so
                    sold, and shall be a perpetual bar both at law and in equity

<PAGE>
                    against Borrower and against any and all persons claiming or
                    who may claim the same, or any part thereof from, through or
                    under Borrower.

                         (vi) Lender,  at its option, is authorized to foreclose
                    this  Mortgage  subject to the rights of any  tenants of the
                    Mortgaged Property, and the failure to make any such tenants
                    parties to any such foreclosure proceedings and to foreclose
                    their rights will not be, nor be asserted to be by Borrower,
                    a defense to any proceedings instituted by Lender to collect
                    the sums secured hereby.

                    (e)  Discontinuance  of  Proceedings.  If Lender  shall have
               proceeded to invoke any right, remedy or recourse permitted under
               the Loan Documents and shall  thereafter  elect to discontinue or
               abandon it for any  reason,  Lender  shall  have the  unqualified
               right to do so and, in such an event,  Borrower  and Lender shall
               be  restored  to  their  former  positions  with  respect  tot he
               Indebtedness,  the Obligations, the Loan Documents, the Mortgaged
               Property and otherwise, and the rights,  remedies,  recourses and
               powers  of  Lender  shall  continue  as if the  right,  remedy or
               recourse had never been invoked,  but no such  discontinuance  or
               abandonment shall waive any Event of Default which may then exist
               or the right of Lender  thereafter to exercise any right,  remedy
               or recourse  under the Loan  Documents for such Event of Default.
               Borrower hereby  expressly  waives any and all benefits  Borrower
               may have under  O.C.G.A.  ss.44-14-85 to claim or assert that the
               Indebtedness  has been  reinstated in  accordance  with its terms
               following  the  withdrawal  of  any  foreclosure  proceedings  by
               Lender,  and  acknowledges  and agrees that  reinstatement  shall
               occur only upon written agreement of Lender.


              [THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]


<PAGE>


                    (f)  Borrower's  waiver  of  constitutional  rights  (to  be
               initialed by Borrower):

WAIVER OF  BORROWER'S  RIGHTS.  BY EXECUTION OF THIS  MORTGAGE AND BY INITIALING
THIS SECTION,  BORROWER EXPRESSLY:  (A) ACKNOWLEDGES THE RIGHT TO ACCELERATE THE
INDEBTEDNESS  EVIDENCED  BY THE NOTES AND THE POWER OF ATTORNEY  GIVEN HEREIN TO
LENDER TO SELL THE MORTGAGED PROPERTY BY NONJUDICIAL FORECLOSURE UPON DEFAULT BY
BORROWER  WITHOUT  ANY  JUDICIAL  HEARING  AND  WITHOUT  ANY  NOTICE  (EXCEPT AS
OTHERWISE PROVIDED HEREIN);  (B) EXCEPT TO THE EXTENT PROVIDED OTHERWISE HEREIN,
WAIVES ANY AND ALL RIGHTS WHICH BORROWER MAY HAVE UNDER THE  CONSTITUTION OF THE
UNITED STATES  (INCLUDING  THE FIFTH AND  FOURTEENTH  AMENDMENTS  THEREOF),  THE
VARIOUS  PROVISIONS OF THE CONSTITUTIONS FOR THE SEVERAL STATES, OR BY REASON OF
ANY  OTHER  APPLICABLE  LAW,  TO NOTICE  AND TO  JUDICIAL  HEARING  PRIOR TO THE
EXERCISE  BY LENDER  OF ANY  RIGHT OR REMEDY  HEREIN  PROVIDED  TO  LENDER;  (C)
ACKNOWLEDGES  THAT BORROWER HAS READ THIS MORTGAGE AND ITS PROVISIONS  HAVE BEEN
EXPLAINED  FULLY  TO  BORROWER  AND  BORROWER  HAS  CONSULTED  WITH  COUNSEL  OF
BORROWER'S  CHOICE PRIOR TO EXECUTING THIS MORTGAGE;  AND (D) ACKNOWLEDGES  THAT
ALL  WAIVERS  OF THE  AFORESAID  RIGHTS OF  BORROWER  HAVE BEEN MADE  KNOWINGLY,
INTENTIONALLY  AND  WILLINGLY  BY  BORROWER  AS PART  OF A  BARGAINED  FOR  LOAN
TRANSACTION:

                             INITIALED BY BORROWER:

                             -------------------------------------

                         By: __________________________

              [THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]



<PAGE>


               53. As to Property in Maryland.  Notwithstanding  anything to the
          contrary  elsewhere in this Mortgage,  as to any Properties located in
          Maryland:

                    (a) This Mortgage  shall be deemed a deed of trust and not a
               mortgage,  and title to the Maryland  Property shall be deemed to
               have been  granted and  conveyed to the  Individual  Trustee,  in
               trust, with the power of sale or assert to decree, and not to the
               Lender.  

                    (b) If the Lender elects to declare the entire principal sum
               of the obligation  secured hereby to be forthwith due and payable
               as provided in this  Section,  the Lender may invoke the power of
               sale and any other remedies by applicable law. 

                    (c) Any sale by the Trustee of the Property shall be made in
               the county in which the Property is situated.  If the Property is
               situated in more than one  county,  then  notices as  hereinafter
               provided  shall  be given  in both or all of such  counties,  the
               Property may be sold in either  county,  and such  notices  shall
               designate  the county where the Property  will be sold. If Lender
               invokes the power of sale,  Lender shall mail or cause Trustee to
               mail a notice of sale to  Borrower  in the manner  prescribed  by
               applicable  law.  Trustee  shall  give  notice  of sale by public
               advertisement  for  the  time  and in the  manner  prescribed  by
               applicable law. Trustee,  without demand on Borrower,  shall sell
               the Property at public  auction to the highest bidder at the time
               and place and under the terms designated in the notice of sale in
               one or more parcels and in any order Trustee determines.  Trustee
               may postpone  sale of all or any parcel of the Property by public
               announcement  at the time and place of any  previously  scheduled
               sale. 

                    Trustee  shall  deliver  to  the  purchaser  Trustee's  deed
               conveying   the  Property   without  any  covenant  or  warranty,
               expressed or implied. The recitals in the Trustee's deed shall be
               prima facie evidence of the truth of the statements made therein.

                    (d) Borrower, in accordance with Rule 14-202 of the Maryland
               Rules of Procedure, does hereby declare and assent to the passage
               of a decree to sell the  Property,  in one or more parcels by the
               equity court having  jurisdiction  for the sale of the  Property,
               and  consents to the  granting to any  trustee  appointed  by the
               assent to decree of all the rights,  powers and remedies  granted
               to the Trustee in this Deed of Trust,  together  with any and all
               rights,  powers and remedies  granted by the decree.  Neither the
               assent to decree nor the power of sale granted in this Section 53
               shall be  exhausted  in the event  the  proceeding  is  dismissed
               before the  payment  in full of all sums  secured by this Deed of
               Trust.  

                    (e) The  proceeds  of any  such  sale  shall be  applied  in
               accordance with  applicable law. 
<PAGE>


                    (f) Borrower  warrants and represents  that the  Liabilities
               secured  by this  Mortgage  are  "commercial  loans"  within  the
               meaning of the  Commercial  Law Article of the Annotated  Code of
               Maryland.  

                    (g) Notices  sent to Trustee in  accordance  with Section 26
               shall be addressed to Trustee at:  Alexander Title Agency,  Inc.,
               7921 Jones Branch Drive, 6th Floor, McLean,  Virginia 22102.

               54 .  Notwithstanding  anything to the contrary elsewhere in this
          Mortgage,  as to any  Properties  located  in North  Carolina:

                    (a) Special  Provisions  Regarding  Future  Advances.  It is
               intended  that this  Mortgage is and shall be a deed of trust and
               shall comply with the  provisions of Section 45-67 of the General
               Statutes of North  Carolina.  For purposes of complying  with the
               provisions  of Section  45-68 of said  statutes  Borrower  hereby
               represents  as  follows:

                         (i)  That  this  Mortgage  is given  to  secure  future
                    Obligations  which may be  incurred  from time to time under
                    this  Mortgage  or the Note;  

                         (ii) That the principal  amount of present  obligations
                    secured by this Mortgage is $122,028,471; 

                         (iii)  That the  maximum  principal  amount,  including
                    present and future obligations, which may be secured by this
                    Mortgage at any one time is $122,028,471,  provided that the
                    foregoing  limitation shall apply only to the lien upon real
                    property  created  by this  Mortgage  and  shall  not in any
                    manner  limit,  affect  or impair  any  grant of a  security
                    interest  in any  personal  property in favor of the Lender,
                    for the benefit of the Lender,  under the provisions of this
                    Mortgage or the Note or under any other  security  agreement
                    at any time  executed  by the  Borrower;  and

                         (iv) The period  within  which such future  Liabilities
                    may be  incurred  shall  extend up to and  include 15 years.

                    (b) Additional Provisions Regarding Power of Sale.

                         (i) In exercising  the power of sale herein  conferred,
                    after  having  been  instructed  by the Lender to do so, the
                    Trustee shall comply with all applicable laws in effect with
                    respect to the exercise of powers of sale contained in deeds
                    of  trust  as  of  the  date  of  the  commencement  of  the
                    proceeding.  The Borrower agrees that in the event of a sale
                    under the power of sale hereunder, the Lender shall have the
<PAGE>
                    right to bid  thereat.  The  Trustee  may  require  that the
                    successful  bidder at any sale deposit  immediately with the
                    Trustee cash or  certified  check in an amount not to exceed
                    ten  percent  (10%)  of the  bid,  provided  notice  of such
                    requirement is contained in the  advertisement  of sale. The
                    bid may be rejected if the deposit is not immediately  made,
                    and thereupon the next highest  bidder may be declared to be
                    the  purchaser.  Such  deposit  shall be  refunded in case a
                    resale  is  had;  otherwise,  it  shall  be  applied  to the
                    purchase price. If personal  property is sold hereunder,  it
                    need  not be at the  place of sale;  the  published  notice,
                    however,  shall state the time and place where such personal
                    property  may  be  inspected   prior  to  sale. 

                         (ii)  Notwithstanding  the  provisions of Section 20 of
                    this  Mortgage,  the  proceeds of any sale of the  Mortgaged
                    Property  pursuant  to the  power of sale  contained  herein
                    shall  be  applied  first  to  the  costs  and  expenses  of
                    foreclosure,  including,  but  not  limited  to a  Trustee's
                    commission  and  to  all  costs,   expenses  and  reasonable
                    attorney's  fees incurred by the Lender in  connection  with
                    such  sale,  with the  remaining  proceeds  to be applied as
                    provided in Section 21 of this Mortgage.

                    (c) N.C. Gen. Stat. ss. 45-45.1. The provisions of N.C. Gen.
               Stat. ss. 45-45.1 and any similar  statute enacted in replacement
               or substitution thereof shall be inapplicable to this Mortgage.

                    (d) THIS CONVEYANCE IS MADE IN TRUST, that if Borrower shall
               pay and  perform  or cause to be paid  and  performed  all of the
               Obligations in accordance  with the terms of the Loan  Documents,
               and shall comply with all of the term,  covenants and  conditions
               of the Loan  Documents,  then this  conveyance  shall be null and
               void and may be  cancelled  of record at the  request and cost of
               Borrower.

                    (e) Notices  sent to Trustee in  accordance  with Section 26
               shall  be  addressed  to  Trustee  at:  Chicago  Title  Insurance
               Company,  One Exchange Plaza, Suite 707, Raleigh,  North Carolina
               27601.

               55. As to Property in Tennessee.  Notwithstanding anything to the
          contrary  elsewhere in this Mortgage,  as to any Properties located in
          Tennessee:

                    (a)  The  maximum   principal   indebtedness  for  Tennessee
               Recording Tax purposes is $11,345,278.86. This instrument secures
               obligatory advances and is for commercial purposes.

<PAGE>
                    (b)  This  Mortgage  shall  be  deemed  to be and  shall  be
               construed as a deed of trust,  enforceable in accordance with the
               applicable  laws  of  the  State  of  Tennessee,  as  well  as  a
               Consolidated,  Amended and Restated Mortgage, Deed of Trust, Deed
               to Secure Debt, Security Agreement,  Financing Statement, Fixture
               Filing and Assignment of Leases,  Rents and Security Deposits and
               reference  throughout  this  instrument to "this  Mortgage" shall
               mean, as appropriate, this "Deed of Trust, Indenture of Mortgage,
               Deed to Secure Debt,  Security  Agreement,  Financing  Statement,
               Fixture  Filing  and  Assignment  of Leases,  Rents and  Security
               Deposits" and this "Deed of Trust" in its capacity as a Tennessee
               deed of trust.  Nothing herein set forth shall limit the right of
               the  Trustee to  foreclose  this Deed of Trust as a deed of trust
               under Tennessee law, at the option of Lender.

                    (c) Additional  Provisions.  The following  provisions shall
               also   constitute  an  integral  part  of  this  Deed  of  Trust.
               Furthermore,  in the event that any prior provisions of this Deed
               of Trust  conflict with the following  provisions of this Section
               55, the  provisions of this  Addendum  shall control and shall be
               deemed a modification of or amendment to the section or provision
               at issue.  Reference throughout this Mortgage to "Borrower" shall
               mean Trustor, as appropriate.

                         (i) References to Sections 9-313, 9-402 and 9-501of the
                    Uniform  Commercial  Code  shall  mean  TCA  47-9-313,   TCA
                    47-9-402,  and TCA  47-9-501,  respectively.  References  to
                    9-402(f) and 9-501(d) of the Uniform  Commercial  Code shall
                    mean TCA 47-9-402(5) and TCA 47-9-501(3), respectively.

                         (ii)  Trustor   agrees  to  pay  all  transfer   taxes,
                    recording fees, and any other fees required by or imposed by
                    the State of Tennessee or the county in which the  Mortgaged
                    Property is located in order to record this Deed of Trust in
                    the Register's Office of said County. 

                         (iii) Any grant or conveyance of property to the Lender
                    shall, with respect to the properties  located in Tennessee,
                    be made  in  trust  to the  Trustee.  

                         (iv) Upon the  occurrence  of an Event of  Default  and
                    upon the  election of Lender to effect a  trustee's  sale of
                    the Mortgaged Property in lieu of judicial foreclosure, then
                    Lender may instruct the Trustee to enter and take possession
                    of the Mortgaged Property, and before or after such entry to
                    advertise  for  the  sale  of  the  Mortgaged  Property  for
                    twenty-one  (21) days by three (3)  weekly  notices  in some
                    newspaper  published  in the  county  and state  where  such
                    property is  situated,  and sell the  Mortgaged  Property or
                    such  portion  of  the  Mortgaged  Property  not  thereafter
                    released  from the liens of this Deed of Trust as one parcel
                    in its  entirety or any part  thereof,  either in mass or in
                    parcels, at public vendue, to the highest bidder for cash at
<PAGE>
                    the usual door of the  Courthouse in the county in which the
                    Mortgaged   Property  is  situated,   free  from  equity  of
                    redemption,  and any  statutory  or  common  law  rights  of
                    redemption,  homestead, dower, marital shares, and all other
                    exemptions,  all of which are hereby expressly  waived;  and
                    said Trustee  shall execute a conveyance to the purchaser in
                    fee simple and deliver  possession to the  purchaser,  which
                    Trustor binds itself and its successors and assigns shall be
                    given  without  obstruction,  hindrance,  or delay.  Trustee
                    shall deliver to the purchaser,  at any such trustee's sale,
                    its  deed,  without  warranty,  which  will  convey  to  the
                    purchaser of the interest in the property  which the Trustor
                    has or has the power to convey at the time of the  execution
                    of this  Deed of  Trust,  and such as it may  have  acquired
                    hereafter.  The  owners  or  holders  of  any  part  of  the
                    indebtedness  hereby  secured may become  purchasers  at any
                    sale under this  conveyance.

                         (v) The Trustee named herein or any  Successor  Trustee
                    shall be  clothed  with the  full  power to act when  action
                    herein  shall be required and to execute any  conveyance  of
                    the  Mortgaged   Property  except  as  otherwise   expressly
                    required.  In the event that the substitution of the Trustee
                    shall become  necessary for any reason,  the substitution of
                    one trustee in the place of the Trustee  herein  named shall
                    be sufficient. The necessity of the Trustee herein named, or
                    any  successor  in  trust,  making  oath or  giving  bond is
                    expressly  waived.  

                         The Trustee or anyone acting in his stead,  shall have,
                    in his discretion, authority to employ all proper agents and
                    attorneys in the  execution of this  Mortgage  and/or in the
                    conducting  of any sale made  pursuant to the terms  hereof,
                    and to pay for such services rendered out of the proceeds of
                    the sale of the Mortgaged Property,  should any be realized;
                    and if no sale be made, then Borrower hereby  undertakes and
                    agrees  to pay the cost of such  services  rendered  to said
                    Trustee.  

                         (d)  Owner  and  Trustee.  The  owner of the  Mortgaged
                    Property is Homestead  Village Limited  Partnership  with an
                    office at c/o Homestead Village Incorporated, 2100 RiverEdge
                    Parkway,  Atlanta,  Georgia.  The Trustee is Joseph B. Pitt,
                    Jr. with an office in the city of Nashville,  Tennessee.

                         (e) Notices sent to Trustee in accordance  with Section
                    26 shall be  addressed to Trustee at:  Joseph B. Pitt,  Jr.,
                    Trustee,  c/o Chicago  Title  Insurance  Company,  414 Union
                    Street, Suite 1800, Nashville, Tennessee 37219.

               56. As to Property in Virginia.  Notwithstanding  anything to the
          contrary  elsewhere in this Mortgage,  as to any Properties located in
          Virginia:  

                         (a)  With  respect  to the  portions  of the  Mortgaged
                    Property  located in Virginia  constituting  real  property,
                    this instrument shall be deemed to be and shall be construed
                    as a Deed of  Trust,  enforceable  in  accordance  with  the
                    applicable laws of the  Commonwealth of Virginia.  As to the
                    remainder  of the  Mortgaged  Property  located in Virginia,

<PAGE>
                    this instrument shall be deemed to be and shall be construed
                    as  a  Security   Agreement,   Financing   Statement  and/or
                    Assignment   of  Rents,   as   appropriate,   and  reference
                    throughout this instrument to "this Mortgage" shall mean, as
                    appropriate,   this  Deed  of  Trust,   Security  Agreement,
                    Financing   Statement   and/or   Assignment   of  Rents  and
                    references  herein to "this  Deed of Trust"  shall mean this
                    Mortgage in its  capacity as a Virginia  deed of trust. 

                         (b) NOTICE - THE DEBT SECURED HEREBY IS SUBJECT TO CALL
                    IN FULL OR THE TERMS HEREOF  BEING  MODIFIED IN THE EVENT OF
                    SALE OR CONVEYANCE OF THE PROPERTY CONVEYED

                    (c) Remedies of Lender.  Subject to the  provisions  of this
               Mortgage,  upon the  occurrence  of an Event of Default under the
               terms of the  Mortgage,  in addition  to any rights and  remedies
               provided  for in the  Mortgage,  and to the extent  permitted  by
               applicable law, the following provisions shall apply:

                         (i) Lender's Power of Enforcement. Beneficiary, with or
                    without entry,  personally or by its agents or attorneys, in
                    so far as  applicable,  may  pursue  any  and  all  remedies
                    against  Grantor and the  Mortgaged  Property  permitted  by
                    applicable  law and the  provisions of this Deed,  including
                    without  limitation  causing Trustee to execute the power of
                    sale granted by this Deed to sell the Mortgaged  Property at
                    public  auction to the highest  bidder in strict  accordance
                    with all notice,  advertisement and other applicable laws of
                    the  Commonwealth  of  Virginia.   Grantor  agrees  that  in
                    addition to all other  remedies  and rights  provided for in
                    this Deed, this Deed shall be construed to impose and confer
                    upon the parties  hereto,  and  Beneficiary  hereunder,  all
                    duties,  rights and obligations  prescribed in Section 55-59
                    et seq. Of the Code of Virginia and in effect as of the date
                    of the  acknowledgment  hereof,  and further to  incorporate
                    herein  the   following   provisions,   by  the   short-term
                    references below, of Sections 55-59 et seq. And 55-60 of the
                    Code of Virginia:


                                EXEMPTIONS WAIVED

                           SUBJECT TO ALL UPON DEFAULT

                  RENEWAL, EXTENSION OR REINSTATEMENT PERMITTED

                       ADVERTISEMENT REQUIRED ONCE A WEEK
                         FOR TWO CONSECUTIVE WEEKS IN A
                NEWSPAPER PUBLISHED OR HAVING GENERAL CIRCULATION
<PAGE>
                                IN THE COUNTY OF
              [HENRICO, LOUDEN, FAIRFAX (AS APPLICABLE)], VIRGINIA

                       SUBSTITUTION OF TRUSTEE PERMITTED.


                         (ii)  Lender's  Right  to Enter  and  Take  Possession,
                    Operate and Apply Income.  Lender shall, at its option, have
                    the right,  acting  through its agents or attorneys,  either
                    with or without  process of law,  forcibly or otherwise,  to
                    enter upon and take  possession of the  Mortgaged  Property,
                    expel and remove any persons,  goods, or chattels  occupying
                    or upon the same,  to  collect  or  receive  all the  rents,
                    issues and  profits  thereof  and to manage and  control the
                    same,  and to lease the same or any part thereof,  from time
                    to time, and, after deducting all reasonable attorneys' fees
                    and expenses,  and all reasonable  expenses  incurred in the
                    protection,  care, maintenance,  management and operation of
                    the Mortgaged  Property,  distribute and apply the remaining
                    net income in accordance  with the terms of this Mortgage or
                    upon  any  deficiency  decree  entered  in  any  foreclosure
                    proceedings or otherwise established.

                    (d)  Reference  to  Sections  9-313 and 9-402 of the Uniform
               Commercial  Code.  References to Sections  9-313 and 9-402 of the
               Uniform  Commercial Code shall mean, if the Mortgaged Property is
               located in the State of Virginia,  Section 8.9-313 and 8.9-402 of
               the Code of Virginia (1950 as amended).

                    (d) THE VIRGINIA PROPERTY DESCRIBED HEREIN CONSTITUTE SIX OF
               SEVERAL  PROPERTIES  LOCATED IN APPROXIMATELY SIX (6) STATES, ALL
               OF WHICH SECURE THE OBLIGATIONS OF BORROWER. 

                    (e) Notices  sent to Trustee in  accordance  with Section 26
               shall be addressed to Trustee at:  Alexander Title Agency,  Inc.,
               7921 Jones Branch Drive, 6th Floor,  McLean,  Virginia 22102

               57.Liability  of Assignees  of Lender.  No assignee of Lender (an
          "Assignee") shall have any personal liability, directly or indirectly,
          under  or in  connection  with  this  Mortgage  or  any  amendment  or
          amendments hereto made at any time or times,  heretofore or hereafter,
          any liability being limited to the assets pledged as security pursuant
          to this Mortgage and Borrower  hereby forever and  irrevocably  waives
          and  releases any and all such  personal  liability.  In addition,  no
          Assignee  shall  have at any  time or  times  hereafter  any  personal
          liability,  directly or  indirectly,  under or in  connection  with or
          secured by any agreement,  lease,  instrument,  encumbrance,  claim or
          right  affecting  or  relating  to  the  Properties  or to  which  the
          Properties  are now or hereafter  will be subject.  The  limitation of
<PAGE>
          liability  provided in this  Section 57 is (i) in addition to, and not
          in  limitation  of, any  limitation  of  liability  applicable  to the
          assignee  provided  by law  or by any  other  contract,  agreement  or
          instrument,  and (ii) shall not apply to any Assignee's  negligence or
          willful misconduct.

               58. Securitization 

               (A) Sale of Note and Securitization. At the request of the holder
          of the Note and, to the extent not already  required to be provided by
          Borrower under this Mortgage, Borrower shall use reasonable efforts to
          satisfy  the  market  standards  to  which  the  holder  of  the  Note
          customarily  adheres  or  which  may  be  reasonably  required  in the
          marketplace or by the Rating  Agencies in connection  with the sale of
          the  Note  or   participation   therein   or  the   first   successful
          securitization (such sale and/or securitization, the "Securitization")
          of rated single or multi-class  securities (the "Securities")  secured
          by or  evidencing  ownership  interests in the Note and the  Mortgage,
          including:

                    (a) at Lender's  expense,  (i) provide  such  financial  and
               other  information  with respect to the Properties,  Borrower and
               its  Affiliates,  the Manager and any Tenants of the  Properties,
               (ii)  provide   business  plans  and  budgets   relating  to  the
               Properties  and  (iii)  to  perform  or  permit  or  cause  to be
               performed or permitted such site inspection,  appraisals,  market
               studies,  environmental  reviews and  reports  (phase I's and, if
               appropriate,  phase  II's),  engineering  reports  and  other due
               diligence investigations of the Properties,  as may be reasonably
               requested by the holder of the Note or the Rating  Agencies or as
               may  be  necessary  or   appropriate   in  connection   with  the
               Securitization  (the  "Provided   Information"),   together,   if
               customary,  with appropriate  verification and/or consents of the
               Provided  Information  through letters of auditors or opinions of
               counsel of  independent  attorneys  acceptable  to Lender and the
               Rating  Agencies;  

                    (b)  cause  counsel  to  render  opinions  as to  fraudulent
               conveyance,  and true  sale or any  other  opinion  customary  in
               securitization  transactions  with respect to the  Properties and
               Borrower and its Affiliates,  including,  without  limitation,  a
               Bankruptcy  Opinion,  to be provided at Lender's  expense,  and a
               10b-5  Opinion,  to be provided  at the request of Lender,  which
               counsel and  opinions  shall be  reasonably  satisfactory  to the
               holder  of the Note and the  Rating  Agencies;  for the  purposes
               hereof,  (i)  "Bankruptcy  Opinion"  shall mean an opinion to the
               effect  that  if the  Borrower  or  the  general  partner  of the
               Borrower  were a debtor under the U.S.  Bankruptcy  Code, a court
               would not have valid  legal  grounds to cause the  Borrower to be
               substantively  consolidated  with any other  Person  and (ii) the
               "10b-5 Opinion" shall mean an opinion or other written  assurance
               of counsel  acceptable  to Lender and its counsel  regarding  the
               absence of any  misstatement  of a material fact, or the omission
               to state a material fact in any  materials,  other than financial
               information with respect to the Properties or the Loan,  provided

<PAGE>
               by the Borrower to the Lender in connection  with the origination
               of  the  Loan,  including  without  limitation  information  with
               respect to the Mortgage, the Mortgaged Property, the Manager, the
               Borrower and other legal aspects of the Mortgage  Loan. The 10b-5
               Opinion  shall  be  delivered  at  Lender's  expense,   provided,
               however,  that Borrower shall pay all expenses in connection with
               the  10b-5  Opinion  exceeding  $20,000.  Borrower's  failure  to
               deliver the opinions  required  hereby  within ten (10)  Business
               Days shall  constitute  an "Event of Default"  hereunder; 

                    (c)  make  such  representations  and  warranties  as of the
               closing   date  of  the   Securitization   with  respect  to  the
               Properties,  Borrower,  and the Loan Documents as are customarily
               provided in securitization  transactions and as may be reasonably
               requested by the holder of the Note or the Rating  Agencies  and,
               to the extent still true,  consistent  with the facts  covered by
               such  representations  and  warranties  as they exist on the date
               thereof, including the representations and warranties made in the
               Loan Documents;  and

                    (d) at Borrower's  expense,  execute such  amendments to the
               Loan Documents and Borrower's organizational documents, as may be
               reasonably  requested  by the  holder  of the Note or the  Rating
               Agencies or otherwise to effect the Securitization, provided that
               nothing  contained  in this  subsection  (d) shall  result in any
               economic change in the transaction,  or increase the liability or
               obligations,  or reduce the rights and benefits,  of the Borrower
               hereunder.


<PAGE>



  
             (B)  Cooperation  with  Rating  Agencies.  In the event this Loan
          becomes an asset of a securitization  underwritten by Lender or any of
          its  Affiliates,   Borrower,  prior  to  such  securitization,   shall
          implement any and all operations and maintenance plans recommended for
          asbestos   or  other   environmental   matters   recommended   in  any
          environmental report and complete all surveys in connection therewith;
          provided,  however, that nothing contained in this paragraph (B) shall
          limit the  obligations  of Borrower  contained in this Mortgage or the
          other  Loan  Documents.  In  addition,  Borrower  shall (i) gather any
          environmental   information   required  by  the  Rating   Agencies  in
          connection with such a securitization,  (ii) at Lender's request, meet
          with  representatives  of such Rating Agencies to discuss the business
          and operations of the Mortgaged Property, and (iii) cooperate with the
          requests  of  the  Rating  Agencies  in  connection  with  all  of the
          foregoing as well as in connection with all other matters,  including,
          without  limitation,  entering into any amendments or modifications to
          this  Mortgage or to any other Loan Document as may be required by the
          Rating   Agencies;   provided,   however,   that  such  amendments  or
          modifications shall not increase Borrower's  obligations or materially
          decrease  Borrower's  rights and  benefits  under the Loan  Documents;
          further  provided  that  Borrower  shall not be  obligated  under this
          paragraph  (B) to  expend  any of its funds or incur  any  expense  to
          comply herewith. 
<PAGE>
               (C) Securitization  Financial Statements.  Borrower covenants and
          agrees that, upon Lender's written request therefor in connection with
          a securitization in which this Mortgage is to be included as an asset,
          Borrower shall, at Borrower's sole cost and expense,  promptly deliver
          the most recent audited financial statements and related documentation
          prepared by an independent  certified  public  accountant that satisfy
          applicable  federal  securities law  requirements  for use in a Public
          Registration  Statement  (which  may  include up to three (3) years of
          historical audited financial statements or for so long as Borrower has
          owned a  Property).  A "Public  Registration  Statement"  shall mean a
          registration  statement  meeting the  requirements of Section 5 of the
          Securities Act of 1933, as amended.  

               (D)   Borrower   understands   that  certain  of  the  Provided
          Information and the  information  required to be delivered by Borrower
          hereunder  (the  "Required  Records")  may be included  in  disclosure
          documents  in  connection   with  the   Securitization,   including  a
          prospectus  or  private  placement  memorandum  (each,  a  "Disclosure
          Document") and may also be included in filings with the Securities and
          Exchange Commission pursuant to the Securities Act of 1933, as amended
          (the "Securities Act"), or the Securities and Exchange Act of 1934, as
          amended  (the  "Exchange  Act"),  or  provided  or made  available  to
          investors  or  prospective  investors  in the  Securities,  the Rating
          Agencies, and service providers relating to the Securitization. In the
          event that the Disclosure  Document is required to be revised prior to
          the sale of all Securities, Borrower will cooperate with the holder of
          the Note in updating the Provided  Information or Required Reports for
          inclusion  or summary in the  Disclosure  Document  by  providing  all
          current   information   pertaining  to  Borrower  and  the  Properties
          necessary to keep the Disclosure Document accurate and complete in all
          material  respects  with  respect  to  such  matters.  (iii)  (iv)  In
          connection  with each of (x) a  preliminary  and a  private  placement
          memorandum or (y) a preliminary and final  prospectus,  as applicable,
          and provided  that Lender,  at Lender's  cost and expense has provided
          Borrower with drafts of such preliminary and final documents, and such
          additional information as Borrower shall reasonably require,  Borrower
          agrees to provide an indemnification  certificate: 

          (A)  certifying that Borrower has carefully examined those portions of
               such  memorandum  or  prospectus,  as  applicable,  pertaining to
               Borrower,  the  Properties  and  the  Loan  including  applicable
               portions  of  the  sections  entitled  "Special  Considerations",
               "Description  of the  Mortgages",  "Description  of the  Mortgage
               Loans and Mortgaged Property",  "The Manager", "The Borrower" and
               "Certain Legal Aspects of the Mortgage  Loan",  and such sections
               (and any other  sections  reasonably  requested and pertaining to
               Borrower,  the  Properties or the Loan) do not contain any untrue
               statement  of a material  fact or omit to state a  material  fact
               necessary in order to make the  statements  made, in the light of
               the circumstances under which they were made, not misleading; 
<PAGE>
          (B)  indemnifying  Lender and the  affiliates  of Merrill  Lynch & Co.
               ("ML"), that has filed the registration statement relating to the
               securitization  (the  "Registration  Statement"),   each  of  its
               directors,  each of its officers who have signed the Registration
               Statement  and each  person or entity who  controls ML within the
               meaning of Section 15 of the  Securities Act or Section 30 of the
               Exchange  Act  of  1933,  as  amended  (the   "Securities   Act")
               (collectively, the "ML Group"), and ML, each of its directors and
               each person who controls ML,  within the meaning of Section 15 of
               the   Securities   Act  and  Section  20  of  the   Exchange  Act
               (collectively,  the "Underwriter Group") for any losses,  claims,
               damages or liabilities (the  "Liabilities") to which Lender,  the
               ML Group or the  Underwriter  Group may become subject insofar as
               the  Liabilities  arise  out  of or are  based  upon  any  untrue
               statement  or  alleged  untrue  statement  of any  material  fact
               contained in the applicable  portions of such sections applicable
               to Borrower,  the  Properties or the Loan, or arise out of or are
               based upon the  omission or alleged  omission to state  therein a
               material fact required to be stated in the applicable portions of
               such sections or necessary in order to make the statements in the
               applicable   portions  of  such  sections  or  in  light  of  the
               circumstances under which they were made, not misleading; and

          (C)  agreeing  to  reimburse  Lender  and ML for any  legal  or  other
               expenses  reasonably incurred by Lender and ML in connection with
               investigating or defending the Liabilities for which Borrower has
               liability  to  Lender,  the ML  Group or the  Underwriter  Group.
               Borrower's  Liability  under  clauses  (A) or (B) above  shall be
               limited  to  Liabilities  arising  out of or based  upon any such
               untrue statement or omission made therein in reliance upon and in
               conformity  with  information  furnished to Lender by Borrower in
               connection   with  the  preparation  of  those  portions  of  the
               memorandum or prospectus  pertaining to Borrower,  the Properties
               or the Loan or in connection  with the  underwriting of the debt,
               including financial statements of Borrower, operating statements,
               and rent rolls with  respect to the  Properties.  This  indemnity
               agreement will be in addition to any liability which Borrower may
               otherwise have.

               (iii) In connection with filings under the Exchange Act, Borrower
          agrees to (i) indemnify Lender, ML Group and the Underwriter Group for
          any Liabilities to which Lender, the ML Group or the Underwriter Group
          may  become  subject  insofar as the  Liabilities  arise out of or are
          based upon the  omission or alleged  omission to state in the Provided
          Information or Required  Records a material fact required to be stated
          in the Provided  Information or Required  Records in order to make the
          statements in the Provided  Information or Required Records,  in light
          of the  circumstances  under which they were made not  misleading  and
<PAGE>
          (ii) reimburse Lender or ML for any reasonable legal or other expenses
          reasonably  incurred by Lender and ML in connection  with defending or
          investigating the Liabilities. 

               (iv) Promptly  after receipt by an  indemnified  party under this
          Section  58  of  notice  of  the  commencement  of  any  action,  such
          indemnified  party will,  if a claim in respect  thereof is to be made
          against  the  indemnifying  party under this  Section  58,  notify the
          indemnifying  party in writing of the  commencement  thereof,  but the
          omission  to so notify the  indemnifying  party will not  relieve  the
          indemnifying party from any liability which the indemnifying party may
          have to any  indemnified  party  hereunder  except to the extent  that
          failure to notify causes prejudice to the  indemnifying  party. In the
          event that any action is brought against any indemnified party, and it
          notifies  the  indemnifying  party of the  commencement  thereof,  the
          indemnifying   party  will  be   entitled,   jointly  with  any  other
          indemnifying  party, to participate therein and, to the extent that it
          (or they) may elect by written  notice  delivered  to the  indemnified
          party  promptly  after  receiving  the  aforesaid   notice  from  such
          indemnified   party,  to  assume  the  defense  thereof  with  counsel
          satisfactory  to  such  indemnified   party.  After  notice  from  the
          indemnifying party to such indemnified party under this Section 58 for
          any legal or other expenses  subsequently incurred by such indemnified
          party in connection  with the defense  thereof  other than  reasonable
          costs of investigation;  provided,  however,  if the defendants in any
          such action include both the  indemnified  party and the  indemnifying
          party  shall  have  reasonably  concluded  that  there  are any  legal
          defenses  available  to it and/or other  indemnified  parties that are
          different  from or additional to those  available to the  indemnifying
          party, the indemnified party or parties shall have the right to select
          separate  counsel  to assert  such  legal  defenses  and to  otherwise
          participate   in  the  defense  of  such  action  on  behalf  of  such
          indemnified  party or  parties.  The  indemnifying  party shall not be
          liable for the  expenses of more than one separate  counsel  unless an
          indemnified  party shall have  reasonably  concluded that there may be
          legal  defenses  available to it that are different from or additional
          to those available to another  indemnified party.

               (v) In order to provide for just and  equitable  contribution  in
          circumstances in which the indemnity agreement provided for in Section
          58 is for any reason held to be unenforceable by an indemnified  party
          in respect of any losses, claims, damages or liabilities (or action in
          respect  thereof)   referred  to  therein  which  would  otherwise  be
          indemnifiable   under  Section  58,  the   indemnifying   party  shall
          contribute to the amount paid or payable by the indemnified party as a
          result of such losses,  claims,  damages or liabilities  (or action in
          respect  thereof);   provided,  however,  that  no  person  guilty  of
          fraudulent  misrepresentation  (within the meaning of Section 11(f) of
          the Securities Act) shall be entitled to contribution  from any person
          who  was  not  guilty  of  such   fraudulent   misrepresentation.   In
          determining the amount of contribution to which the respective parties
          are entitled,  the following  factors shall be considered:  (i) the ML
          Group's and  Borrower's  relative  knowledge and access to information
          concerning  the matter with respect to which claim was asserted;  (ii)
          the opportunity to correct and prevent any statement or omission;  and
<PAGE>
          (iii)  any  other   equitable   considerations   appropriate   in  the
          circumstances.  Lender and  Borrower  hereby  agree that it may not be
          equitable if the amount of such  contribution  were  determined by pro
          rata or per capita allocation. (vi) (i)



          (E) Depositor and Registrant. Notwithstanding anything to the contrary
     contained  herein,  Borrower shall have no obligation to act as a depositor
     with  respect to the Loan or an issuer or  registrant  with  respect to the
     securities issued in any Securitization (or be deemed by the Securities and
     Exchange  Commission  to  be  an  issuer,   registrant  or  the  functional
     equivalent  thereof  for  purposes  of the  Securities  Act).

          (F).  Retention  of  Servicer.  Lender  reserves the right to retain a
     servicer to act as its agent hereunder with such powers as are specifically
     delegated to the servicer by Lender,  whether pursuant to the terms of this
     Mortgage,  the Cash Collateral  Agreement or otherwise,  together with such
     other powers as are reasonably  incidental thereto. 

          (G)  Exculpated  Parties.  Notwithstanding  anything  to the  contrary
     contained  in this Section 58, no personal  liability  shall be asserted or
     enforceable  against  the  Exculpated  Parties for the  Liabilities.

          59. Securitization Extension Term. Notwithstanding any other provision
     of this  Mortgage,  the  provisions of Section 58 and all  requirements  of
     Borrower to deliver  documents  or  certificates  or to seek the consent or
     approval   any  Rating   Agency   shall  only  be  effect  (i)  during  the
     Securitization Extension Term and (ii) from the Anticipated  Securitization
     Maturity  Date until the Final  Maturity  Date,  and shall have no force or
     effect prior to the  Securitization  Extension  Term.

                     [REMAINDER OF PAGE INTENTIONALLY BLANK]

<PAGE>

<PAGE>





                  IN WITNESS WHEREOF, this Mortgage has been duly executed under
seal by Borrower, Trustee and Lender on the date first hereinabove written.

                                   BORROWER:

                                        HOMESTEAD VILLAGE LIMITED PARTNERSHIP,
                                        a Delaware limited partnership

                                        By:HVI INCORPORATED,
                                           a Delaware corporation

                                           By:__________________________________
                                              Name: Laura L. Hamilton
                                              Title:   Senior Vice President

                                           Attest:______________________________
                                                  Name: J. Michael Dugan
                                                  Title:    Assistant Secretary

                                                  [CORPORATE SEAL]

Signed, sealed and delivered
in the presence of:

-----------------------------------------------
Witness

-----------------------------------------------
Witness















<PAGE>


                                        TRUSTEE:

                                        ALEXANDER TITLE AGENCY, INC.,
                                         a Virginia corporation

                                        By:__________________________________
                                           Name:
                                           Title

                                        Attest:______________________________
                                               Name:
                                               Title:

                                        [CORPORATE SEAL]

Signed, sealed and delivered
in the presence of:

------------------------------------------------
Witness

------------------------------------------------
Witness





<PAGE>


                                   TRUSTEE:

                                   CHICAGO TITLE INSURANCE COMPANY, a Missouri
                                             corporation

                                   By:_______________________________________
                                      Name:
                                      Title

                                   Attest:______________________________
                                             Name:
                                             Title:

                                   [CORPORATE SEAL]

Signed, sealed and delivered
in the presence of:

------------------------------------------------
Witness

------------------------------------------------
Witness




<PAGE>


                                        TRUSTEE:

                                        ----------------------------------------
                                        JOSEPH B. PITT, JR., Trustee,
                                        a resident of Davidson County, Tennessee


Signed, sealed and delivered
in the presence of:

------------------------------------------------
Witness

------------------------------------------------
Witness






<PAGE>





                                        LENDER:

                                        MIDLAND LOAN SERVICES, INC.,
                                        a Delaware corporation

                                        By:_____________________________________
                                             Name: Alan H. Torgler
                                             Title:Senior Portfolio Manager


                                        Attest:_________________________________
                                                  Name:
                                                  Title:

                                        [CORPORATE SEAL]

Signed, sealed and delivered
in the presence of:

------------------------------------------------
Witness

------------------------------------------------
Witness



<PAGE>





                                                                [FL, GA, TN, VA]

State:  New York
County:  New York


On August 7, 1998, before me, the undersigned officer, personally appeared:

Laura L. Hamilton

personally known and acknowledged himself to me (or proved to me on the basis of
satisfactory evidence) to be the

Senior Vice President of HVI Incorporated, the general partner of Homestead
Village Limited Partnerhsip (herinafter, the "Partnership"),


and  that as  such  person,  being  duly  authorized  to do so  pursuant  to the
Partnership's   agreement  of  limited  partnership,   executed, subscribed  and
acknowledged  the foregoing  instrument for the purposes therein  contained,  by
signing the name of the  Corporation by  himself/herself  in his/her  authorized
capacities  as such officer as his/her free and  voluntary  act and deed and the
free and voluntary act and deed of said Partnership.


IN WITNESS WHEREOF, I hereunto set my hand and official seal.


                                    --------------------------------------------
                                    Notary Public

                                    My Commission Expires: __________

                                    Apply Stamp/Seal


<PAGE>




                                                                           [MD]

STATE OF NEW YORK

COUNTY OF NEW YORK                                   TO WIT:

         I HEREBY CERTIFY,  that on this 7th day of August,  1998,  before me a
Notary Public of the State aforesaid, personally appeared Laura L. Hamilton, who
acknowledged  herself to be the Senior Vice President of HVI  Incorporated,  the
general  partner  of  Homestead  Village  Limited  Partnership,  known to me (or
satisfactorily  proven) to be the person whose name is  subscribed to the within
instrument,  who  signed  the  same in my  presence,  and  acknowledged  that he
executed the same for the purposes therein contained and in the capacity therein
stated.

         WITNESS my hand and Notarial Seal.

                                                  ------------------------------
                                                  Notary Public

                                                  My commission expires:________



<PAGE>





                                                                          NC-HVI
STATE OF NEW YORK

COUNTY OF NEW YORK

     I, Marlene Aponte, a Notary Public for said County and State,  certify that
J. Michael Dugan, personally came before me this day and acknowledged that he is
the Assistant  Secretary of HVI  Incorporated,  a Delaware  corporation,  who is
general partner of Homestead Village Limited Partnership, and that, by authority
duly given and as the act of the corporation as general  partner,  the foregoing
instrument  was signed by its Senior Vice  President,  sealed with its corporate
seal,  and  attested  by himself as its  Assistant  Secretary  on behalf of said
partnership.

                Witness my hand and official seal, this 7th day of August, 1998.

My commission expires: 12/22/99                   ______________________________
                                                  (Notary Public)
(Notary Seal)




<PAGE>





                                                                  [NC - Midland]
STATE OF NEW YORK

COUNTY OF NEW YORK

                  I, ______________________, a Notary Public for said County and
State,  certify that  _____________________,  personally came before me this day
and acknowledged that he is the ______________________ of Midland Loan Services,
Inc., a Delaware  corporation,  and that, by authority duly given and as the act
of   the   corporation,   the   foregoing   instrument   was   signed   by   its
_______________________, sealed with its corporate seal.

               Witness my hand and official seal, this __th day of August, 1998.

My commission expires:_____________               ______________________________
                                                  (Notary Public)
(Notary Seal)





<PAGE>




188980.04-New YorkS7A
                                                            [NC - Chicago Title]

STATE OF NEW YORK

COUNTY OF NEW YORK

                  I, ______________________, a Notary Public for said County and
State,  certify that  _____________________,  personally came before me this day
and  acknowledged  that  he  is  the  ______________________  of  Chicago  Title
Insurance company, a Missouri corporation, and that, by authority duly given and
as the act of the  corporation,  the  foregoing  instrument  was  signed  by its
_______________________, sealed with its corporate seal.

               Witness my hand and official seal, this __th day of August, 1998.

My commission expires:_____________               ______________________________
                                                  (Notary Public)
(Notary Seal)


<PAGE>




188980.04-New YorkS7A
                                                                [VA - Alexander]

State:  __________________
County:  ________________


On August ___, 1998, before me, the undersigned officer, personally appeared:

----------------------------------------------------------------

[CORPORATE SEAL]

personally known and acknowledged himself to me (or proved to me on the basis of
satisfactory evidence) to be the _______________________________________________

respectively of Alexander Title Agency, Inc. (hereinafter, the "Corporation")

and that as such officer,  being duly authorized to do so pursuant to its bylaws
or a resolution of its board of directors, executed, subscribed and acknowledged
the foregoing instrument for the purposes therein contained, by signing the name
of the Corporation by himself/herself  in his/her authorized  capacities as such
officer as his/her free and  voluntary  act and deed and the free and  voluntary
act and deed of said Corporation.


                   IN WITNESS WHEREOF, I hereunto set my hand and official seal.


                                               ---------------------------------
                                               Notary Public

                                               My Commission Expires: __________

                                               Apply Stamp/Seal


<PAGE>





                                                    [all states - Chicago Title]

State:  __________________
County:  ________________


On August ___, 1998, before me, the undersigned officer, personally appeared:

-------------------------------------------

[CORPORATE SEAL]

personally known and acknowledged himself to me (or proved to me on the basis of
 satisfactory evidence) to be the ______________________________________________

respectively of Chicago Title Insurance Company (hereinafter, the "Corporation")

and that as such officer,  being duly authorized to do so pursuant to its bylaws
or a resolution of its board of directors, executed, subscribed and acknowledged
the foregoing instrument for the purposes therein contained, by signing the name
of the Corporation by himself/herself  in his/her authorized  capacities as such
officer as his/her free and  voluntary  act and deed and the free and  voluntary
act and deed of said Corporation.


IN WITNESS WHEREOF, I hereunto set my hand and official seal.


                                               ---------------------------------
                                               Notary Public

                                               My Commission Expires: __________

                                               Apply Stamp/Seal


<PAGE>





                                                                     [TN - Pitt]


State of _____________
County of ____________

                  Personally  appeared  before  me,  the  undersigned,  a Notary
Public in and for said  County  and  State,  duly  commissioned  and  qualified,
____________________,  the within named  bargainors,  with whom I am  personally
acquainted,  or  proved  to me on the basis of  satisfactory  evidence,  and who
acknowledged  that they  executed  the  foregoing  instrument  for the  purposes
therein contained.

Witness my hand seal at office this ___ day of __________, 1998.

My Commission Expires:


<PAGE>






                            EXHIBIT A-1 through A-26

                               LEGAL DESCRIPTIONS


<PAGE>






                                    EXHIBIT B

                                    Mortgages


PEACHTREE
GWINNETT COUNTY, GEORGIA

1.   Deed to Secure Debt, Assignment of Leases and Rents and Security Agreement,
     dated as of January 24,  1996,  and  recorded  January 26, 1996 at Superior
     Court,  Gwinnett  County,  Georgia in Book  12240,  Page 80, by and between
     Atlantic Homestead Village Inc., as Grantor, and Security Capital Atlantic,
     Inc., as Grantee.

2.   First  Amended and Restated  Deed to Secure Debt,  Assignment of Leases and
     Rents and Security  Agreement,  dated as of May 28, 1996,  and recorded May
     30, 1996 at Superior Court,  Gwinnett County,  Georgia in Book 12749,  Page
     162,  by and between  Atlantic  Homestead  Village  Inc.,  as Grantor,  and
     Security Capital Atlantic, Inc., as Grantee.


NORTH AIRPORT - TAMPA
HILLSBOROUGH COUNTY, FLORIDA

1.   Mortgage with Assignment of Leases and Rents and Security Agreement,  dated
     as of January 24,  1996,  and  recorded  January  26, 1996 in the  official
     records of  Hillsborough  County,  Florida  in Book  8027,  Page 84, by and
     between Atlantic Homestead Village Inc., as Mortgagor, and Security Capital
     Atlantic Inc., as Mortgagee.

2.   Amended and Restated Mortgage,  Assignment of Leases and Rents and Security
     Agreement,  dated as of May 28, 1996,  and recorded May 30, 1996 at Circuit
     Court, Hillsborough County, Florida in Book 8163, Page 1562, by and between
     Atlantic  Homestead  Village  Inc.,  as  Mortgagor,  and  Security  Capital
     Atlantic Inc., as Mortgagee.




<PAGE>


CUMBERLAND
COBB COUNTY, GEORGIA

1.   Deed to Secure Debt, Assignment of Leases and Rents and Security Agreement,
     dated as of July 11, 1996,  and recorded  August 12, 1996,  in the official
     records  of Cobb  County,  Georgia in Book  9791,  Page 33, by and  between
     Atlantic Homestead Village Inc., as Grantor,  and Security Capital Atlantic
     Inc., as Grantee.


PERIMETER
FULTON CO., GEORGIA

1.   Deed to Secure Debt, Assignment of Leases and Rents and Security Agreement,
     dated as of January  24,  1996,  and  recorded  January  26,  1996 with the
     Clerk's Office of Superior  Court of Fulton County,  Florida in Book 20521,
     Page 179, by and between Atlantic  Homestead Village Inc., as Grantor,  and
     Security Capital Atlantic Inc., as Grantee.

2.   First  Amended and Restated  Deed to Secure Debt,  Assignment of Leases and
     Rents and Security  Agreement,  dated as of May 28, 1996,  and recorded May
     30,  1996 with the  Clerk's  Office  of  Superior  Court of Fulton  County,
     Florida in Book 21012, Page 188, by and between Atlantic  Homestead Village
     Inc., as Grantor, and Security Capital Atlantic Inc., as Grantee.


RESEARCH TRIANGLE PARK
DURHAM COUNTY, NORTH CAROLINA



1.   Deed of Trust with  Assignment of Leases and Rents and Security  Agreement,
     dated as of January 24, 1996, and recorded January 26, 1996 with the Office
     of Register of Deeds of Durham County,  North  Carolina in Book 2159,  Page
     220, by and between  Atlantic  Homestead  Village Limited  Partnership,  as
     Grantor,  and Security Capital  Atlantic Inc., as Beneficiary.

2.   Amended and Restated Mortgage,  Assignment of Leases and Rents and Security
     Agreement,  dated as of May 28,  1996 and  recorded  in Public  Records  of
     Durham  County,  North  Carolina  in Book 2198,  Page 389,  by and  between
     Atlantic Homestead Village Inc., as Grantor,  and Security Capital Atlantic
     Inc., as Grantee. 4 5


<PAGE>


SOUTHSIDE
DUVAL COUNTY, FLORIDA



1    Mortgage,  Assignment of Leases and Rents and Security Agreement,  dated as
     of May 29,  1996,  and  recorded  May 31,  1996 with the Office of Clerk of
     Duval  County,  Florida in Book 8358,  Page 1251,  by and between  Atlantic
     Homestead  Village Inc., as Mortgagor,  and Security Capital Atlantic Inc.,
     as Mortgagee.


INNSBROOK
HENRICO COUNTY, VIRGINIA

1.   Deed of Trust, Assignment of Leases and Rents and Security Agreement, dated
     as of October 17, 1996,  and recorded  November 8, 1996 with Clerk's Office
     of Henrico  County,  Virginia  in Book  2683,  Page  2014,  by and  between
     Homestead Village Incorporated,  as Trustor, and Security Capital Atlantic,
     Inc., as Beneficiary.


BRANDON
HILLSBOROUGH COUNTY, FLORIDA

1.   Mortgage,  Assignment of Leases and Rents and Security Agreement,  dated as
     of June  25,  1996,  and  recorded  June  26,  1996  in  Circuit  Court  of
     Hillsborough  County,  Florida  in Book  8196,  Page  418,  by and  between
     Atlantic  Homestead  Village  Inc.,  as  Mortgagor,  and  Security  Capital
     Atlantic Inc., as Mortgagee.


FT. LAUDERDALE
BROWARD COUNTY, FLORIDA

1.   Mortgage with Assignment of Leases and Rents and Security Agreement,  dated
     as of January 29, 1996 and recorded  February 2, 1996 in the public records
     of Broward County, Florida in Book 24449, Page 598, by and between Atlantic
     Homestead  Village Inc., as Mortgagor,  and Security Capital Atlantic Inc.,
     as Mortgagee.

2.   Amended and Restated Mortgage,  Assignment of Leases and Rents and Security
     Agreement,  dated as of May 28, 1996, and recorded in the public records of
     Broward County,  Florida in Book 24940,  Page 160, by and between  Atlantic
     Homestead  Village Inc., as Mortgagor,  and Security Capital Atlantic Inc.,
     as Mortgagee.
<PAGE>

BWI
ANNE ARUNDEL COUNTY, MARYLAND

1.   Deed of Trust, Assignment of Leases and Rents and Security Agreement, dated
     as of October 30, 1996,  and recorded  November 1, 1996 in Circuit Court of
     Anne Arundel County in Book 7660 Page 789, by and between Homestead Village
     Inc., as Trustor,  Edward M. Hanson, Jr., as Trustee,  and Security Capital
     Atlantic Inc., as Beneficiary.


EXECUTIVE PARK
DEKALB COUNTY, GEORGIA

1.   Deed to Secure Debt, Assignment of Leases and Rents and Security Agreement,
     dated as of September  20,  1996,  and  recorded  October 23, 1996,  in the
     official records of DeKalb County,  Georgia, in Book 9185, Page 467, by and
     between Atlantic  Homestead Village Inc., as Grantor,  and Security Capital
     Atlantic Inc., as Grantee.


GWINNETT PLACE
GWINNETT, GEORGIA

1.   Deed to Secure Debt, Assignment of Leases and Rents and Security Agreement,
     dated as of November 19, 1996,  and recorded  December 20, 1996 in Superior
     Court,  Gwinnett  County,  Georgia in Book  13588,  Page 37, by and between
     Homestead Village Inc., as Grantor,  and Security Capital Atlantic Inc., as
     Grantee.

CLEARWATER
PINELLAS COUNTY, FLORIDA

1.   Mortgage,  Assignment of Leases and Rents and Security Agreement,  dated as
     of August 5, 1996,  and  recorded  August 7, 1996 in the Records  Office of
     Pinellas  County,  Florida in Book 9427, Page 455, by and between  Atlantic
     Homestead  Village Inc., as Mortgagor,  and Security Capital Atlantic Inc.,
     as Mortgagee.





<PAGE>


MIAMI AIRPORT
DADE COUNTY, FLORIDA

1.   Mortgage with Assignment of Leases and Rents and Security Agreement,  dated
     as of May ___,  1996, and recorded May 8, 1996 in the public records office
     of Dade County,  Florida in Book 17194,  Page 1229, by and between Atlantic
     Homestead Village Inc.,  Mortgagor,  and Security Capital Atlantic Inc., as
     Mortgagee.

2.   Amended and Restated Mortgage,  Assignment of Leases and Rents and Security
     Agreement, dated as of May 28, 1996, and recorded in _______, _____ in Book
     17219,  Page 1229,  by and between  Atlantic  Homestead  Village  Inc.,  as
     Mortgagor, and Security Capital Atlantic Inc., as Mortgagee.


NORTH RALEIGH
WAKE COUNTY, NORTH CAROLINA

1.   Deed of Trust with  Assignment of Leases and Rents and Security  Agreement,
     dated as of  February  20,  1996,  and  recorded  February  20, 1996 in the
     Register of Deeds for Wake County,  North Carolina in Book 6854,  Page 500,
     by and between Atlantic  Homestead  Limited  Partnership,  as Grantor,  and
     Security Capital Atlantic Inc., as Grantee.

2.   Amended  and  Restated  Deed of Trust,  Assignment  of Leases and Rents and
     Security Agreement,  dated as of May 28, 1996, and recorded May 30, 1996 in
     the Register of Deeds for Wake County,  North  Carolina in Book 7001,  Page
     47, by and between  Atlantic  Homestead  Village  Limited  Partnership,  as
     Trustor,  Ross J. Smyth, as Trustee, and Security Capital Atlantic Inc., as
     Beneficiary.

DAVIE PLANTATION
BROWARD COUNTY, FLORIDA

1.   Mortgage,  Assignment of Leases and Rents and Security Agreement,  dated as
     of June 27,  1996,  and recorded  June 28, 1996 in the official  records of
     Broward County,  Florida in Book 25068,  Page 732, by and between  Atlantic
     Homestead  Village Inc., as Mortgagor,  and Security Capital Atlantic Inc.,
     as Mortgagee.





<PAGE>


ROSWELL
FULTON COUNTY, GEORGIA

1.   Deed to Secure Debt, Assignment of Leases and Rents and Security Agreement,
     dated as of September  27,  1996,  and  recorded  October 17, 1996,  in the
     official records of Fulton County, Georgia, in Book 21668, Page 138, by and
     between Atlantic  Homestead Village Inc., as Grantor,  and Security Capital
     Atlantic Inc., as Grantee,  as affected by that certain  Partial  Quitclaim
     Release Deed,  dated as of June 30, 1998, by and between  Security  Capital
     Atlantic  Inc.,  and  Homestead  Village  Inc., as successor in interest to
     Atlantic Homestead Village Inc.


GERMANTOWN
MONTGOMERY COUNTY, MARYLAND

1.   Deed of Trust, Assignment of Leases and Rents and Security Agreement, dated
     as of April 11,  1997,  and  recorded  February  16,  1997 in the  official
     records of  Montgomery  County,  Maryland in Liber 14811,  Folio 98, by and
     between  Homestead  Village  Inc.,  as Trustor,  Edward M. Hanson,  Jr., as
     Trustee, and Security Capital Atlantic Inc., as Beneficiary.


NASHVILLE AIRPORT
DAVIDSON COUNTY, TENNESSEE


1.   Deed of Trust, Assignment of Leases and Rents and Security Agreement, dated
     as of March 22, 1996,  and recorded  March 22, 1996 with the Clerk's Office
     of  Davidson  County,  Tennessee  in Book 9988,  Page 227,  by and  between
     Atlantic Homestead Village Limited  Partnership,  as Grantor,  and Security
     Capital Atlantic Inc., as Beneficiary.

2.   Amended  and  Restated  Deed of Trust,  Assignment  of Leases and Rents and
     Security  Agreement,  dated as of May 30,  1996,  and recorded May 30, 1996
     with the Clerk's Office of Davidson County,  Tennessee in Book 10066,  Page
     472, by and between  Atlantic  Homestead  Village Limited  Partnership,  as
     Grantor,  James Cheshire,  Esq., as Trustee,  and Security Capital Atlantic
     Incorporated, as Beneficiary.





<PAGE>


DULLES SOUTH
FAIRFAX COUNTY, VIRGINIA

1.   Deed of Trust, Assignment of Leases and Rents and Security Agreement, dated
     as of November  14, 1996,  and  recorded  November 15, 1996 in the official
     records of Fairfax County,  Virginia in Book 9856, Page 832, by and between
     Homestead Village Inc., as Trustor,  William A. Walsh, Jr., as Trustee, and
     Security Capital Atlantic Inc., as Beneficiary.

2.   First  Amendment  to Deed of  Trust,  Assignment  of  Leases  and Rents and
     Security Agreement,  and recorded December 19, 1996 in the official records
     of Fairfax  County,  Virginia  in Book  9883,  Page  1122,  by and  between
     Homestead Village Inc., as Trustor,  and Security Capital Atlantic Inc., as
     Beneficiary,  as amended by that certain Second Amendment to Deed of Trust,
     Assignment of Leases and Rents,  and Security  Agreement,  recorded in Book
     1515, Page 371, Public Records of Louden County, Virginia, and that certain
     Third  Amendment  to Deed of  Trust,  Assignment  of  Leases  and Rents and
     Security  Agreement,  recorded in Book 10082,  Page 1909, Public Records of
     Fairfax County, Virginia.


FAIR OAKS
FAIRFAX COUNTY, VIRGINIA

1.   Deed of Trust, Assignment of Leases and Rents and Security Agreement, dated
     as of October 3, 1996, and recorded  October 9, 1996 with Clerk's Office of
     Fairfax County,  Virginia in Book 9828,  Page 831, by and between  Atlantic
     Homestead Village  Incorporated,  as Trustor, and Security Capital Atlantic
     Incorporated, as Beneficiary.


COOL SPRINGS
WILLIAMSON COUNTY, TENNESSEE

1    Deed of Trust, Assignment of Leases and Rents and Security Agreement, dated
     as of  November 8, 1996,  and  recorded  November  8, 1996 in the  official
     records of  Williamson  County,  Tennessee  in Book 1461,  Page 437, by and
     between Atlantic Homestead Village  Incorporated,  as Grantor, and Security
     Capital Atlantic Incorporated, as Beneficiary.




<PAGE>


CRABTREE
WAKE COUNTY, NORTH CAROLINA

1.   Deed of Trust, Assignment of Leases and Rents and Security Agreement, dated
     as of November 6, 1996,  and recorded  November 7, 1996, in the Wake County
     Registry,  North Carolina in Book 7218,  Page 177, by and between  Atlantic
     Homestead  Village  Limited  Partnership,  as Trustor,  Ross J.  Smyth,  as
     Trustee, and Security Capital Atlantic Inc., as Beneficiary.

2.   Modification Agreement,  dated as of March 2, 1998 in the Register of Deeds
     for Wake County Registry, North Carolina in Book 7974, Page 939.


DULLES NORTH
LOUDEN COUNTY, VIRGINIA

1.   Deed of Trust, Assignment of Leases and Rents and Security Agreement, dated
     as of November  14, 1996,  and  recorded  November 15, 1996 in the official
     records of Fairfax County,  Virginia in Book 9856, Page 832, by and between
     Homestead Village Inc., as Trustor,  William A. Walsh, Jr., as Trustee, and
     Security Capital Atlantic Inc., as Beneficiary.

2.   First  Amendment  to Deed of  Trust,  Assignment  of  Leases  and Rents and
     Security Agreement,  and recorded December 19, 1996 in the official records
     of Fairfax  County,  Virginia  in Book  9883,  Page  1122,  by and  between
     Homestead Village Inc., as Trustor,  and Security Capital Atlantic Inc., as
     Beneficiary,  as amended by that certain Second Amendment to Deed of Trust,
     Assignment  of Leases and Rents and  Security  Agreement,  recorded in Book
     1515, Page 371, Public Records of Louden County, Virginia, and that certain
     Third  Amendment  to Deed of Trust,  Assignment  of Leases and  Rents,  and
     Security  Agreement,  recorded in Book 10082,  Page 1909, Public Records of
     Fairfax County, Virginia.

RESTON
FAIRFAX COUNTY, VIRGINIA

1.   Deed of Trust, Assignment of Leases and Rents and Security Agreement, dated
     as of November  14, 1996,  and  recorded  November 15, 1996 in the official
     records of Fairfax County,  Virginia in Book 9856, Page 832, by and between
     Homestead Village Inc., as Trustor,  William A. Walsh, Jr., as Trustee, and
     Security Capital Atlantic Inc., as Beneficiary.

2.   First  Amendment  to Deed of  Trust,  Assignment  of  Leases  and Rents and
     Security Agreement,  and recorded December 19, 1996 in the official records
     of Fairfax  County,  Virginia  in Book  9883,  Page  1122,  by and  between
     Homestead Village Inc., as Trustor,  and Security Capital Atlantic Inc., as
     Beneficiary,  as amended by that certain Second Amendment to Deed of Trust,
     Assignment of Leases and Rents,  and Security  Agreement,  recorded in Book
     1515, Page 371, Public Records of Louden County, Virginia, and that certain
     Third  Amendment  to Deed of  Trust,  Assignment  of  Leases  and Rents and
     Security  Agreement,  recorded in Book 10082,  Page 1909, Public Records of
     Fairfax County, Virginia.
<PAGE>


FAIRVIEW PARK
FAIRFAX COUNTY, VIRGINIA

1.   Deed of Trust, Assignment of Leases and Rents and Security Agreement, dated
     as of November  14, 1996,  and  recorded  November 15, 1996 in the official
     records of Fairfax County,  Virginia in Book 9856, Page 832, by and between
     Homestead Village Inc., as Trustor,  William A. Walsh, Jr., as Trustee, and
     Security Capital Atlantic Inc., as Beneficiary.

2.   First  Amendment  to Deed of  Trust,  Assignment  of  Leases  and Rents and
     Security Agreement,  and recorded December 19, 1996 in the official records
     of Fairfax  County,  Virginia  in Book  9883,  Page  1122,  by and  between
     Homestead Village Inc., as Trustor,  and Security Capital Atlantic Inc., as
     Beneficiary,  as amended by that certain Second Amendment to Deed of Trust,
     Assignment of Leases and Rents,  and Security  Agreement,  recorded in Book
     1515, Page 371, Public Records of Louden County, Virginia, and that certain
     Third  Amendment  to Deed of  Trust,  Assignment  of  Leases  and Rents and
     Security  Agreement,  recorded in Book 10082,  Page 1909, Public Records of
     Fairfax County, Virginia.



<PAGE>






                                    EXHIBIT C

                                 Existing Notes



<PAGE>






                                    EXHIBIT D

                          SUBORDINATION, NONDISTURBANCE
                            AND ATTORNMENT AGREEMENT

                  This Agreement is entered into as of ____________, [199__], by
and   between   ___________________,   a   _________________   ("Tenant"),   and
_____________ LIMITED PARTNERSHIP ("Lender").

W I T N E S S E T H:
                  A. __________ ("Landlord") has executed and delivered a
                  Mortgage Note, dated as of ______, 199_ (the "Note").

                  B. The Note is held by the Lender and is secured in part by an
Indenture of Mortgage, Security Agreement,  Financing Statement,  Fixture Filing
and Assignment of Leases,  Rents and Security Deposits dated as of ______, 199_,
among Landlord,  as grantor,  Lender (as amended or modified,  the  "Mortgage"),
which  Mortgage  is  recorded  at Book __,  Page __ of the  Official  Records of
________  County,  ________,  and covers certain real property which is commonly
known as __________ in _________ (the "Project") and more particularly described
on Exhibit A attached hereto and made a part hereof.

                  C.  Tenant  is  entering  into a lease  with  Landlord,  dated
____________,  19__,  pursuant to which Tenant will let certain  premises at the
Project (the "Lease").

                  D. Pursuant to Article [ ] of the Lease, Tenant is required to
enter into this Agreement, and upon execution by Lender and Tenant, the Tenant's
leasehold  interest in the Project will be subordinate to the interest of Lender
under the Mortgage.

                  NOW THEREFORE, the parties hereto mutually agree as follows:



<PAGE>



          1.  Subordination.  The Lease shall be subject and  subordinate in all
     respects to the Mortgage, and to any and all advances to be made thereunder
     and  all  renewals,   modifications,   consolidations,   replacements   and
     extensions thereof. 

          2. Nondisturbance.  So long as Tenant pays all rents and other charges
     as  specified  in the Lease and is not  otherwise  in default of any of its
     obligations and covenants pursuant to the Lease beyond any applicable grace
     periods thereunder, Lender agrees for itself and its successors in interest
     and for any  purchaser of the Project upon a  foreclosure  of the Mortgage,
     that  Tenant's  possession  of the  premises as  described in the Lease and
     Tenant's other rights under the Lease will not be disturbed during the term
     of the Lease,  as said term may be  extended  pursuant  to the terms of the
     Lease or said premises may be expanded as specified in the Lease,  and that
     the  successor  in interest to the rights and  obligations  of the Landlord
     under the Lease will abide by the provisions of the Lease,  notwithstanding
     any other  provisions in the Mortgage.  For purposes of this  paragraph,  a
     foreclosure  shall include a sheriff's or trustee's sale under the power of
     sale  contained in the Mortgage  and any other  transfer of the  Landlord's
     interest  in the  Project  under peril of  foreclosure,  including  without
     limitation the  generality of the foregoing,  an assignment or sale in lieu
     of foreclosure. 

          3. Attornment.  Subject (i) to Landlord's successor in interest's full
     compliance with the conditions  relating to  nondisturbance as set forth in
     Section 2 above and (ii) to the  performance by the same of all obligations
     of the  Landlord  under the Lease with respect to  obligations  arising and
     accrued from and after the date that said  successor  in interest  acquires
     its  interest  in the  Project,  Tenant  agrees to attorn  to,  accept  and
     recognize  said  successor in interest as the landlord  under the Lease for
     the then  remaining  balance of the term of the Lease,  and any  extensions
     thereof  as made  pursuant  to the  Lease.  Tenant  agrees to  execute  and
     deliver,  at any time and from time to time,  upon the request of Lender or
     the purchaser at any  foreclosure  sale or any other successor to Landlord,
     as the case may be, any  reasonable  instrument  which may be  necessary or
     appropriate to such successor  landlord to evidence such attornment.

          4. Notwithstanding anything to the contrary contained herein or in the
     Lease,  it is  specifically  understood  and  agreed  that  Lender  or  any
     receiver,  purchaser or successor  landlord  shall not be: 

          (a) liable for any act,  omission,  negligence or default of any prior
     landlord;  provided,  however, that such successor landlord shall be liable
     and  responsible  for the  performance of all covenants and  obligations of
     landlord under the Lease from and after the date that it takes title to the
     Project;  or

          (b) subject to any offsets, claims or defenses which Tenant might have
     against any prior landlord except those  permitted  under the Mortgage;  or

          (c) bound by any rent or additional rent which is payable on a monthly
     basis  and  which  Tenant  might  have  paid for more than one (1) month in
     advance to any prior landlord.

Notwithstanding the foregoing,  Tenant reserves its rights to any and all claims
or causes of action  against such prior landlord for prior losses or damages and
against the successor  landlord for all losses or damages arising from and after
the  date  that  such  successor  landlord  takes  title  to  the  Project.

          5.  Successors.  The obligations and rights of the parties pursuant to
     this  Agreement  shall  bind and inure to the  benefit  of the  successors,
     assigns, heirs and legal representatives of the respective parties.


<PAGE>




                  IN WITNESS  WHEREOF,  the parties have executed under seal and
delivered this Agreement in _____________, ____________ County, _________, as of
the date set forth above.


                                     Lender:

                                     -----------------------------------
                                     as Lender


                                     By:____________________________


                                    [TENANT]:


                                     By:____________________________


<PAGE>




                                    EXHIBIT E

                                    AFFIDAVIT



STATE OF NEW YORK

COUNTY OF NEW YORK


         BEFORE ME came in person Laura L. Hamilton  (hereinafter referred to as
the  "Deponent"),  who, having been duly sworn and on oath,  deposes and says as
follows:

         That Deponent is the duly elected and acting  Senior Vice  President of
HVI  Incorporated,  a  Delaware  corporation,  which is the  general  partner of
Homestead Village Limited Partnership (hereinafter referred to as the "Lender"),
and as such  Deponent is  authorized  to make this  affidavit  and is personally
familiar  with the  matters  set forth  herein. 

          (a) That Borrower is a limited partnership organized under the laws of
     the State of Delaware;  maintains its  principal  place of business at 2100
     RiverEdge Parkway,  Atlanta,  Georgia;  and hat the note referred to herein
     will be held by, or on behalf of, the Lender.

          b)  Contemporaneously  herewith  Lender is making a loan  (hereinafter
     referred to as the "Loan") to Homestead Village Limited Partnership,  which
     Loan will be evidenced  by a  Consolidated,  Amended,  Renewed and Restated
     Promissory Note in the aggregate principal amount of One Hundred Twenty-Two
     Million,   Twenty-Eight   Thousand,   Four  Hundred   Seventy-One   Dollars
     ($122,028,471) (the "Note") to be held by Lender.

          (c) That the  Consolidated,  Amended and  Restated  Mortgage,  Deed of
     Trust,  Deed to  Secure  Debt,  Security  Agreement,  Financing  Statement,
     Fixture  Filing and  Assignment  of  Leases,  Rents and  Security  Deposits
     (hereinafter referred to as the "Mortgage") being given to secure the Loan,
     secures  the Note.  

          (d) That the Loan is secured by  interests  in real  property  located
     within the State of Georgia and in the following States: Florida, Maryland,
     North Carolina, Tennessee and Virginia.

          (e) That  based upon  written  appraisals  prepared  by  licensed  and
     experienced appraisers, obtained in connection with the making of the Loan,
     the fair market  value of the real  property  securing the loan and located
     within  the State of Georgia  is  $52,886,993.00  and the value of all real
     property  securing  the Loan and  located  within and  without the State of
     Georgia is  $217,770,835.00;  accordingly,  the value of the real  property
     located in the State of Georgia securing the Loan is 24% of the total value
     of all real  property  securing  the Loan  within and  without the State of
     Georgia.

          (f)  The  Intangible  Recording  Tax  due  the  State  of  Georgia  in
     connection with the Loan transaction is calculated as follows:
<TABLE>
<CAPTION>
----------------------------------------------------------- --------------------------------------------------------
<S>                                                                              <C>         
                    Total Loan Amount                                            $122,028,471
----------------------------------------------------------- --------------------------------------------------------
Value of Real Property Located within the State of Georgia                        $52,886,993
----------------------------------------------------------- --------------------------------------------------------
Value of all Real Property Located within and without the                        $217,770,835
                     State of Georgia
----------------------------------------------------------- --------------------------------------------------------
       Intangible Recording Tax Due on Entire Loan                                $366,085.41
----------------------------------------------------------- --------------------------------------------------------
  Allocated Intangible Recording Tax Due With Respect to                          $87,860.50
                  Georgia Real Property
----------------------------------------------------------- --------------------------------------------------------
    Intangible Recording Tax Due After Application of                               $25,000
                      $25,000.00 Cap
----------------------------------------------------------- --------------------------------------------------------
</TABLE>
          (g) Within the State of Georgia, the following  percentages  represent
     the  value of the real  estate  interest  in each  county  of the  State of
     Georgia to the total fair market value of all of the real estate  interests
     within the State of Georgia:
<TABLE>
<CAPTION>
------------------ ------------------ --------------------------- -----------------------
<S>                <C>                <C>                         <C>   

                                      PERCENTAGE OF
                   PROPERTY           TOTAL GEORGIA               TAX PAID
COUNTY             VALUE              PROPERTY                    THIS COUNTY
------------------ ------------------ --------------------------- -----------------------
Gwinnett                  14,016,019           26.5%              $6,625.00
------------------ ------------------ --------------------------- -----------------------
Fulton                    20,783,562           39.3%              $9,825.00
------------------ ------------------ --------------------------- -----------------------
Cobb                       9,155,054           17.3%              $4,325.00
------------------ ------------------ --------------------------- -----------------------
DeKalb                     8,932,358           16.9%              $4,225.00
------------------ ------------------ --------------------------- -----------------------
TOTAL                     52,886,993           100%               $25,000.00
------------------ ------------------ --------------------------- -----------------------
</TABLE>
          (h) This Affidavit is being given pursuant to Rule 560-11-8-.07 of the
     Rules and  Regulations  of the  Georgia  Department  of Revenue  and may be
     relied upon by the Georgia  Department of Revenue and the Clerk of Superior
     Court or Tax Commissioner in the county in which real property securing the
     Loan is located in  connection  with the payment of the Georgia  intangible
     recording  tax.  

          Deponent say further not.


                                               _________________________________
                                               Name:

          Sworn  to and  subscribed  before  me,  a  Notary  Public  in for  the
     aforesaid State and County by  _________________________,  known personally
     to me, who, being duly sworn and on oath,  deposed and said that the within
     and  foregoing  statements  are true  and  correct  as of this  ____ day of
     _________________,  1998.

                                               _________________________________

                                               Notary Public

                                              My Commission Expires: ___________

                                              [NOTARIAL SEAL]

<PAGE>




                                   EXHIBIT F-1

                            DEED OF TRUST INFORMATION
                           MONTGOMERY COUNTY, MARYLAND


TYPE OF INSTRUMENT:  CONSOLIDATED, AMENDED AND RESTATED MORTGAGE, DEED OF TRUST,
                     DEED  TO  SECURE   DEBT,  SECURITY  AGREEMENT,    FINANCING
                     STATEMENT, FIXTURE FILING AND ASSIGNMENT OF LEASES,  RENTS
                     AND SECURITY DEPOSITS


BORROWER'S NAME AND ADDRESS:       HOMESTEAD VILLAGE LIMITED PARTNERSHIP
                                   40 HOMESTEAD VILLAGE INCORPORATED
                                   2100 RIVEREDGE PARKWAY
                                   ATLANTA, GEORGIA 30228

LENDER'S NAME AND ADDRESS:         MIDLAND LOAN SERVICES, INC.
                                   210 WEST 10TH STREET
                                   KANSAS CITY, MISSOURI 64105

PARCEL IDENTIFICATION NUMBERS:     80009044

PROPERTY DESCRIPTION:              SEE EXHIBIT "A"

TITLE INSURER AND ADDRESS:         CHICAGO TITLE INSURANCE COMPANY
                                   700 SOUTH FLOWER STREET 920
                                   LOS ANGELES, CALIFORNIA 90017

ADDRESS OF PROPERTY:               20141 CENTURY BOULEVARD
                                   GERMANTOWN, MD 20874








<PAGE>


                                   EXHIBIT F-2

                            DEED OF TRUST INFORMATION
                          ANNE ARUNDEL COUNTY, MARYLAND


TYPE OF INSTRUMENT:  CONSOLIDATED, AMENDED AND RESTATED MORTGAGE, DEED OF TRUST,
                     DEED  TO  SECURE  DEBT,   SECURITY  AGREEMENT,    FINANCING
                     STATEMENT,  FIXTURE FILING AND ASSIGNMENT OF LEASES,  RENTS
                     AND SECURITY DEPOSITS


BORROWER'S NAME AND ADDRESS:       HOMESTEAD VILLAGE LIMITED PARTNERSHIP
                                   40 HOMESTEAD VILLAGE INCORPORATED
                                   2100 RIVEREDGE PARKWAY
                                   ATLANTA, GEORGIA 30228

LENDER'S NAME AND ADDRESS:         MIDLAND LOAN SERVICES, INC.
                                   210 WEST 10TH STREET
                                   KANSAS CITY, MISSOURI 64105

PARCEL IDENTIFICATION NUMBERS:     5017-9005-0067

PROPERTY DESCRIPTION:              SEE EXHIBIT "A"

TITLE INSURER AND ADDRESS:         CHICAGO TITLE INSURANCE COMPANY
                                   700 SOUTH FLOWER STREET 920
                                   LOS ANGELES, CALIFORNIA 90017

ADDRESS OF PROPERTY:               939 INTERNATIONAL DRIVE
                                   LINTHICUM, MD 21090





<PAGE>


                                   SCHEDULE 1

                             ALLOCATED LOAN AMOUNTS






<PAGE>



                                   SCHEDULE 2

                              OPERATING AGREEMENTS



<PAGE>






<TABLE>
<CAPTION>
                               TABLE OF CONTENTS

          <S>      <C>                       <C>
          1.       Definitions                                             10
          2.       Warranty30
          3.       Payment and Performance of Obligations Secured.         32
          4.       Negative Covenants                                      32
          5.       Insurance                                               33
          6.       Condemnation and Insurance Proceeds                     38
          7.       Impositions, Liens and Other Items                      44
          8.       Funds for Taxes and Insurance                           46
          9.       License to Collect Rents                                47
          10.      Security Agreement                                      48
          11.      Transfers, Indebtedness and Subordinate Liens           49
          12.      Maintenance of Mortgaged Property; Alterations; Inspection;
                     Utilities                                             53
          13.      Legal Compliance                                        56
          14.      Books and Records, Financial Statements, Reports and
                     Other Information                                     57
          15.      Compliance with Leases and Agreements                   59
          16.      Lender's Right to Perform                               60
          17.      Borrower's Existence; Organization and Authority        60
          18.      Protection of Security; Costs and Expenses              61
          19.      Management of the Mortgaged Property                    62
          20.      Remedies62
          21.      Application of Proceeds                                 68
          22.      CERTAIN WAIVERS                                         69
          23.      Notice of Certain Occurrences                           69
          24.      Trust Funds                                             70
          25.      Taxation                                                70
          26.      Notices                                                 70
          27.      No Oral Modification                                    70
          28.      Partial Invalidity                                      70
          29.      Successors and Assigns                                  71
          30.      Governing Law                                           71
          31.      Certain Representations, Warranties and Covenants       71
          32.      No Waiver                                               77
          33.      Non-Recourse Obligations                                77
          34.      Further Assurances                                      78
          35.      Estoppel Certificates                                   78
          36.      [Intentionally Omitted]                                 79
          37.      Indemnification by Borrower                             79
          38.      Release of Property                                     81
          39.      Rating Agency Monitoring                                84
          40.      Environmental Matters                                   84
          41.      Recourse Nature of Certain Indemnifications             86
          42.      Counterparts                                            86
          43.      Merger, Conversion, Consolidation or Succession to
                     Business of Lender                                    86
          44.      No Endorsement                                          86
          45.      Intentionally Omitted.                                  86
          46.      Defeasance                                              86
          47.      Defeasance Collateral Account                           89
          48.      [Intentionally Omitted]                                 90
          49.      Liability of Lender                                     90
          50.      Lender and Trustee.                                     90
          51.      As to Property in Florida.                              98
          52.      As to Property in Georgia.                              101
          53.      As to Property in Maryland                              106
          54.      As to Property in North Carolina                        107
          55.      As to Property in Tennessee                             108
          56.      As to Property in Virginia                              110
          57.      Liability of Assignees of Lender                        112
          58.      Securitization                                          113
          59.      Securitization Extension Term                           118

</TABLE>

EXHIBIT A          Legal Descriptions
EXHIBIT B          Mortgages
EXHIBIT C          Existing Notes
EXHIBIT D          Subordination, Nondisturbance and Attornment Agreement
EXHIBIT E          Affidavit
EXHIBIT F          Deed of Trust Information (Maryland only)

SCHEDULE 1                 Allocated Loan Amounts



<PAGE>





                       CONSOLIDATED, AMENDED AND RESTATED
                  MORTGAGE, DEED OF TRUST, DEED TO SECURE DEBT,
                    SECURITY AGREEMENT, FINANCING STATEMENT,
                    FIXTURE FILING AND ASSIGNMENT OF LEASES,
                           RENTS AND SECURITY DEPOSITS
                           Dated as of August 7, 1998
                                      from

                      HOMESTEAD VILLAGE LIMITED PARTNERSHIP

                                having an address
                       c/o Homestead Village Incorporated
                             2100 RiverEdge Parkway
                             Atlanta, Georgia 30328

                                   as Borrower

                                       to

                          ALEXANDER TITLE AGENCY INC.,
                         CHICAGO TITLE INSURANCE COMPANY
                                       and
                              JOSEPH B. PITT, JR.,
                   as their interests may appear herein with respect
                          to the Deed of Trust States

                                       and

                           MIDLAND LOAN SERVICES, INC.
                              having an address at
                              210 West 10th Street
                           Kansas City, Missouri 64105

                        as its interest may appear herein
 ------------------------------------------------------------------------------

                   Prepared and drafted by and after recording, return to:
                    Skadden, Arps, Slate, Meagher & Flom LLP
                                919 Third Avenue
                            New York, New York 10022
                           Attn: Harvey R. Uris, Esq.


<PAGE>


                                                                             TN



                       CONSOLIDATED, AMENDED AND RESTATED
                  MORTGAGE, DEED OF TRUST, DEED TO SECURE DEBT,
                    SECURITY AGREEMENT, FINANCING STATEMENT,
                    FIXTURE FILING AND ASSIGNMENT OF LEASES,
                           RENTS AND SECURITY DEPOSITS
                           Dated as of August 7, 1998
                                      from

                      HOMESTEAD VILLAGE LIMITED PARTNERSHIP

                                having an address
                       c/o Homestead Village Incorporated
                             2100 RiverEdge Parkway
                             Atlanta, Georgia 30328

                                   as Borrower

                                       to

                          ALEXANDER TITLE AGENCY INC.,
                         CHICAGO TITLE INSURANCE COMPANY
                                       and
                              JOSEPH B. PITT, JR.,
                   as their interests may appear herein with respec
                          to the Deed of Trust States

                                       and

                           MIDLAND LOAN SERVICES, INC.
                              having an address at:
                              210 West 10th Street
                           Kansas City, Missouri 64105

                        as its interest may appear herein
                  Prepared and drafted by and after recording,
                  return to:
                    Skadden, Arps, Slate, Meagher & Flom LLP
                                919 Third Avenue
                            New York, New York 10022
                           Attn: Harvey R. Uris, Esq.
 ------------------------------------------------------------------------------
MAXIMUM  PRINCIPAL  INDEBTEDNESS   FOR  TENNESSE   RECORDING   TAX  PURPOSES  IS
$11,345,278.86.

THIS INSTRUMENT SECURES OBLIGATORY ADVANCES AND IS FOR COMMERCIAL PURPOSES.


<PAGE>





                                                                              FL
                       CONSOLIDATED, AMENDED AND RESTATED
                  MORTGAGE, DEED OF TRUST, DEED TO SECURE DEBT,
                    SECURITY AGREEMENT, FINANCING STATEMENT,
                    FIXTURE FILING AND ASSIGNMENT OF LEASES,
                           RENTS AND SECURITY DEPOSITS
                           Dated as of August 7, 1998
                                      from

                      HOMESTEAD VILLAGE LIMITED PARTNERSHIP

                                having an address
                       c/o Homestead Village Incorporated
                             2100 RiverEdge Parkway
                             Atlanta, Georgia 30328

                                   as Borrower

                                       to

                          ALEXANDER TITLE AGENCY INC.,
                         CHICAGO TITLE INSURANCE COMPANY
                                       and
                              JOSEPH B. PITT, JR.,
                   as their interests may appear herein with respect to the
                              Deed of Trust States

                                       and

                           MIDLAND LOAN SERVICES, INC.
                              having an address at
                              210 West 10th Street
                           Kansas City, Missouri 64105

                        as its interest may appear herein

                  Prepared and drafted by and after recording, return to:
                    Skadden, Arps, Slate, Meagher & Flom LLP
                                919 Third Avenue
                            New York, New York 10022
                           Attn: Harvey R. Uris, Esq.
 ------------------------------------------------------------------------------




<PAGE>



NOTES TO TAX EXAMINER

1. THE "NOTE" (DEFINED BELOW) SECURED HEREBY WAS EXECUTED AND DELIVERED  OUTSIDE
OF THE  STATE  OF  FLORIDA.  AS  MORE  PARTICULARLY  SET  FORTH  IN  SECTION  51
HEREINBELOW,  BENEFICIARY'S  RECOURSE AGAINST EACH OF THE PROPERTIES  LOCATED IN
THE STATE OF FLORIDA  FOR  RECOVERY  OF  PRINCIPAL  SECURED BY THIS  MORTGAGE IS
LIMITED TO THE AMOUNT FOR THAT FLORIDA  PROPERTY  REFERRED TO IN SECTION 51 (THE
AMOUNT TO WHICH SUCH  RECOURSE IS LIMITED AS TO ANY  FLORIDA  PROPERTY IS CALLED
THAT FLORIDA  PROPERTY'S  "LIMITED  AMOUNT",  WHICH  LIMITED  AMOUNTS  AGGREGATE
$31,715,515.

2.  DOCUMENTARY  STAMP TAX HEREON IN THE AMOUNT OF  $111,004.60 IS CALCULATED ON
THE AGGREGATE OF THE LIMITED  AMOUNTS AND IS AFFIXED TO THE  COUNTERPART OF THIS
INSTRUMENT RECORDED IN THE FOLLOWING COUNTIES IN FLORIDA:  HILLSBOROUGH  COUNTY,
BROWARD COUNTY, DUVAL COUNTY, PINELLAS COUNTY AND DADE COUNTY.

3. THE NOTE RENEWS THE "ORIGINAL  NOTES" AND THIS MORTGAGE  RENEWS THE "ORIGINAL
MORTGAGES"  (EACH DEFINED BELOW).  FLORIDA  NON-RECURRING  INTANGIBLE TAX ON THE
ORIGINAL  NOTES  WAS  PAID ON THE  FOLLOWING  ORIGINAL  MORTGAGES,  BASED ON THE
FOLLOWING AMOUNTS:

PROPERTY/COUNTY                     ORB/PAGE         AMOUNT
---------------                     --------         ------
North Airport Tampa (Hillsborough)          8027/84           $6,750.94
Ft. Lauderdale (Broward)                    24449/598         $7,118.24
Miami Airport (Dade)                        17194/1229        $7,671.97
Southside (Duval)                           8358/1251         $8,251.09
Regency Brandon (Hillsborough)              8196/418          $6,386.91
Davie Plantation (Broward)          25068/732                $10,181.43
Clearwater (Pinellas)                       9427/455          $7,415.51
                                                              ---------
         Total                                               $53,776.09

FLORIDA  NON-RECURRING  INTANGIBLE TAX HEREON IS COMPUTED ON $4,924,243.00,  THE
AGGREGATE  AMOUNT BY WHICH THE LIMITED  AMOUNT FOR ANY  FLORIDA  PROPERTY AS SET
FORTH  IN NOTE 1  ABOVE,  EXCEEDS  THE  AMOUNT  ON  WHICH  SUCH  TAX WAS PAID ON
RECORDATION OF THE ORIGINAL  MORTGAGE  ENCUMBERING  SUCH FLORIDA PROPERTY AS SET
FORTH IN NOTE 3 ABOVE.


<PAGE>



                                                                          GA
     Prepared and drafted by and after recording,
return to:
                    Skadden, Arps, Slate, Meagher & Flom LLP
                                919 Third Avenue
                            New York, New York 10022
                           Attn: Harvey R. Uris, Esq.

                       CONSOLIDATED, AMENDED AND RESTATED
                  MORTGAGE, DEED OF TRUST, DEED TO SECURE DEBT,
                    SECURITY AGREEMENT, FINANCING STATEMENT,
                    FIXTURE FILING AND ASSIGNMENT OF LEASES,
                           RENTS AND SECURITY DEPOSITS
                           Dated as of August 7, 1998
                                      from

                      HOMESTEAD VILLAGE LIMITED PARTNERSHIP

                                having an address
                       c/o Homestead Village Incorporated
                             2100 RiverEdge Parkway
                             Atlanta, Georgia 30328

                                   as Borrower

                                       to

                          ALEXANDER TITLE AGENCY INC.,
                         CHICAGO TITLE INSURANCE COMPANY
                                       and
                              JOSEPH B. PITT, JR.,
                   as their interests may appear herein with respect to the
                              Deed of Trust States

                                       and

                           MIDLAND LOAN SERVICES, INC.
                              having an address at
                              210 West 10th Street
                           Kansas City, Missouri 64105

                        as its interest may appear herein

NOTE TO CLERK OR TAX COMMISSIONER: THIS INSTRUMENT SECURES AN INDEBTEDNESS IN AN
AGGREGATE  PRINCIPAL  FACE AMOUNT OF  $122,028,471  SECURED BY PROPERTY  LOCATED
WITHIN AND WITHOUT THE STATE OF GEORGIA AND WITHIN MULTIPLE  COUNTIES WITHIN THE
STATE OF  GEORGIA.  ATTACHED  HERETO  AS  EXHIBIT  E IS AN  AFFIDAVIT  SIGNED BY
MORTGAGEE  DESCRIBING THE  ALLOCATION,  CALCULATION AND AMOUNT OF INTANGIBLE TAX
DUE ON THIS INSTRUMENT.