Exhibit 10.12     Employment contract dated September 29, 1995 between the Trust
                  and Mr. Zoffinger.


                              EMPLOYMENT AGREEMENT


        This  Employment  Agreement  (the  "Agreement")  is  entered  into as of
September 29, 1995,  by and between  Value  Property  Trust  (formerly  known as
Mortgage and Realty Trust), a Maryland business trust having its principal place
of business at 120 Albany Street  Plaza,  New  Brunswick,  New Jersey 08901 (the
"Trust"),  and George R.  Zoffinger,  an individual  residing at the address set
forth below his name on the signature page hereof ("Executive").

        WHEREAS,  the Trust  desires to employ  Executive as the  President  and
Chief  Executive  Officer of the Trust,  and  Executive has agreed to become the
President and Chief  Executive  Officer of the Trust,  on the terms set forth in
this Agreement.

        NOW,  THEREFORE,  in  consideration  of the mutual  covenants  contained
herein, the Trust and Executive agree as follows:

        1. Term.  The Trust agrees to employ  Executive,  and  Executive  hereby
agrees to work for the Trust as a full-time employee, for a period commencing on
the date first set forth above and ending on the third  anniversary of such date
(the "Original  Term").  The Original Term shall be extended  automatically  for
additional  one-year  periods  (each a "Renewal  Term")  unless notice that this
Agreement  will not be  extended  is given by either  party to the other 30 days
prior to the expiration of the Original Term or any Renewal Term. (The period of
Executive's  employment  hereunder within the Original Term and any Renewal Term
is herein referred to as the "Employment Period".)

        2. Employment. During the Employment Period, Executive shall be employed
as the President and Chief Executive Officer of the Trust. In the performance of
his duties, Executive shall be subject to the direction of the Board of Trustees
of the Trust  (the  "Board of  Trustees")  and  shall  not be  required  to take
direction from or report to any other person.  Executive's  duties and authority
shall be  commensurate  with his title and  position  with the Trust.  Executive
agrees to his  employment  as  described  in this Section 2 and agrees to devote
substantially  all of his business  time and efforts to the business and affairs
of the Trust.  Executive agrees to serve the Trust faithfully and to the best of
his ability,  and to perform such  services  and duties in  connection  with the
business, affairs and operations of the Trust as may be assigned or delegated to
him from time to time by or under,  and in  accordance  with,  the authority and
direction of the Board of Trustees,  and to use his  reasonable  best efforts in
the promotion and advancement of the Trust and its welfare.

        3. Noncompetition During Employment Period. Because Executive's services
to the Trust are  essential  and  because  Executive  has access to the  Trust's
confidential  information,  Executive  covenants  and  agrees  that  during  the
Employment  Period,  Executive  will be a  full-time  employee  of the  Trust as
provided in Section 2 hereof and Executive  will not,  without the express prior
written consent of the Board of Trustees, invest in any real estate in which the
Trust has an  investment  or has  reviewed  as a possible  investment  or become
actively  involved  in any  business  or venture  which  competes,  directly  or
indirectly,  with the Trust or which would materially impair Executive's ability
to perform fully his obligations under this Agreement.  Notwithstanding anything
<PAGE>
contained herein to the contrary,  Executive is not prohibited by this Section 3
from (a) making  investments in any entity that owns,  invests in,  refurbishes,
manages, leases or markets real estate if the shares of such entity are publicly
traded and Executive's  aggregate  investments in such entity's  constitute less
than 5% of the equity  ownership  or  $250,000,  whichever  is greater,  of such
entities, (b) participating as an officer, director or advisor to any charitable
or tax-exempt  organization,  or (c) making investments of up to $100,000 in any
private real estate investment (other than real estate in which the Trust has an
investment or has reviewed as a possible investment) after the Board of Trustees
has been duly informed of such Proposed investment.

        4. Base Salary. During the Employment Period, Executive's salary will be
at the rate of $200,000 per year ("Base  Salary").  Base Salary shall be payable
in accordance  with the Trust's normal business  practices for senior  executive
officers, but no less frequently than monthly.  Executive's Base Salary shall be
reviewed no less  frequently  than annually by the  Compensation  and Nominating
Committee  of the Board of Trustees  and may be  increased,  but not  decreased,
during the Employment Period.

        5.  Performance  Incentive  Bonus Plan and Share Option Plan.  Executive
will  be  eligible  for  annual  bonus  compensation  pursuant  to  the  Trust's
Performance  Incentive  Bonus Plan (the "Bonus  Plan") and the 1995 Share Option
Plan and any other share option or incentive  compensation  plan that is adopted
by the Trust and in which the Trust's executive officers  generally  participate
(the  "Other  Plans").  Awards,  if any,  made under the Bonus Plan or the Other
Plans shall be determined in the discretion of the  Compensation  and Nominating
Committee of the Board of Trustees.  Upon commencement of the Employment Period,
Executive  will receive share options to purchase  244,000  shares of beneficial
interest  of the  Trust,  subject  to vesting at a rate of 33 1/3% per year over
three years,  pursuant to the Trust's 1995 Share Option Plan. The exercise price
and  other  terms   applicable  to  such  options  will  be  determined  by  the
Compensation and Nominating Committee of the Board of Trustees in its discretion
pursuant to the 1995 Share Option Plan.

        6. Other Benefits.  During the Employment  Period,  Executive shall have
the right to  participate  in the Trust's 401 (k) Savings Plan,  and any health,
dental,  retirement,  pension or other  benefit  plans  that are made  generally
available to the  executive  officers of the Trust from time to time.  Executive
shall be entitled to reasonable  paid vacation time in accordance  with the then
regular procedures of the Trust for senior executive officers.


        7.     Termination.

               (a)   Employment.   Executive's   employment   hereunder  may  be
        terminated  by the Trust at any time for  other  than  Good  Reason  (as
        defined in Section 7 (c)),  by a majority  vote of all of the members of
        the Board of Trustees upon written notice to Executive.  In the event of
        such  termination,  all compensation and benefits  provided to Executive
        under this Agreement shall cease except that the Trust shall continue to
        pay only  the  Executive's  Base  Salary  at the  same  rate for six (6)
        months.  Any unexercised vested options shall remain exercisable only to
        the extent  provided  in the  applicable  share  option  plan and option
        agreements.
<PAGE>
               (b)  Termination  by  Executive   Under  Certain   Circumstances.
        Executive's employment hereunder may be terminated effective immediately
        by Executive by written  notice to the Board of Trustees in the event of
        (i) a failure by the Board of  Trustees  to elect  Executive  to offices
        with the same or substantially the same duties and  responsibilities  as
        set forth in Section  2, (ii) a failure by the Trust to comply  with the
        provisions  of Sections  4, 5 or 6 or a material  breach by the Trust of
        any  other  provision  of  this  Agreement,  or  (iii)  personal  health
        problems.  In the  event  of  such  termination,  all  compensation  and
        benefits  provided to Executive  under this Agreement shall cease except
        that the Trust shall continue to pay only the Executive's Base Salary at
        the same rate for six (6) months.  Any unexercised  vested options shall
        remain  exercisable  only to the extent provided in the applicable share
        option plan and option agreements.

               (c)  Termination  by the  Trust for Good  Reason or by  Executive
        Without  Cause.  If (A)  Executive  is  terminated  for Good  Reason (as
        defined  below) or (B) if  Executive  shall  voluntarily  terminate  his
        employment hereunder (other than pursuant to Section 7 (b) hereof), then
        the Employment Period shall terminate as of the effective date set forth
        in the written notice of such termination (the  "Termination  Date") and
        Executive  shall be entitled to receive only his Base Salary at the rate
        provided pursuant to Section 4 which is payable prior to the Termination
        Date. Any unexercised  vested options shall remain  exercisable  only to
        the extent  provided  in the  applicable  share  option  plan and option
        agreements.  "Good Reason" shall mean a finding by the Board of Trustees
        that the  Executive  has (i) acted  with  gross  negligence  or  willful
        misconduct in connection  with the  performance  of his material  duties
        hereunder and has not corrected  such action within fifteen (15) days of
        receipt of written notice thereof;  (ii) defaulted in the performance of
        his material  duties  hereunder and has not corrected such action within
        fifteen (15) days of receipt of written notice thereof;  (iii) committed
        a material act of common law fraud  against the Trust or its  employees,
        which act has had an  adverse  impact on the  financial  affairs  of the
        Trust; or (iv) been convicted of a felony and such conviction has had an
        adverse  effect  on  the  interests  of the  Trust.  In  the  case  of a
        termination pursuant to Section 7(c)(B), the Executive shall continue to
        comply with the  provisions of Section 3 until the first  anniversary of
        the Termination Date.

               (d) Termination by Reason of Death.  The Employment  Period shall
        terminate upon  Executive's  death and in such event, the Trust will pay
        Executive's  Base  Salary for a period of three (3) months from the date
        of his  death  or  such  other  period  as the  Board  of  Trustees  may
        determine,   to  Executive's  estate  or  a  beneficiary  designated  by
        Executive in writing  prior to his death.  Any  unexercised  or unvested
        options shall remain  exercisable or vest upon Executive's death only to
        the extent  provided  in the  applicable  share  option  plan and option
        agreements.
<PAGE>
               (e)  Termination  by Reason  of  Disability.  In the  event  that
        Executive  shall  become  unable  to  efficiently   perform  his  duties
        hereunder  because of any  physical  or mental  disability  or  illness,
        Executive shall be entitled to be paid his Base Salary until the earlier
        of such time when (i) the period of  disability  or illness  (whether or
        not the same  disability or illness) shall exceed 180  consecutive  days
        during the  Employment  Period or (ii)  Executive  becomes  eligible  to
        receive  benefits  under a  comprehensive  disability  insurance  policy
        obtained  by  the  Trust  (the  "Disability   Period").   Following  the
        expiration  of the  Disability  Period,  the  Trust may  terminate  this
        Agreement upon written notice of such  termination.  Any  unexercised or
        unvested  share  options  shall  remain  exercisable  or vest  upon such
        termination  only to the extent provided in the applicable  share option
        plan and option agreements.

        8.  Remedies  For  Breach.  If  Executive  breaches  the  terms  of this
Agreement,  in addition to any other  remedies  which it may have, the Trust may
terminate  Executive's  employment and any further participation in any employee
plan in accordance with employment policies of the Trust, as in effect from time
to time, and Executive shall forfeit any further compensation.  In addition, the
provisions of Sections 3 and 9 of this Agreement may be specifically enforced if
not performed  according to their terms.  Without limiting the generality of the
foregoing,  the parties  acknowledge that the Trust would be irreparably damaged
and there would be no adequate remedy at law for Executive's  breach of Sections
3 and 9 hereof and,  accordingly,  Executive hereby consents to the entry of any
temporary  restraining order or preliminary or ex parte injunction,  in addition
to any other remedies  available at law or in equity,  to enforce the provisions
thereof. This Section shall survive the termination of this Agreement.

        9. Records and Nondisclosure of Confidential  Information.  All records,
financial  statements and similar  documents  obtained,  reviewed or compiled by
Executive  in the course of the  performance  by him of services  for the Trust,
whether or not confidential information or trade secrets, shall be the exclusive
property of the Trust. Executive shall have no rights in such documents upon any
termination of this  Agreement.  The agreement set forth in this Section 9 shall
survive the  expiration of the  Employment  Period and any  termination  of this
Agreement.

        10. Waiver.  The failure of the Trust to require the  performance of any
term or obligation provided for herein, or the waiver by the Trust of any breach
of this Agreement,  shall not prevent  enforcement of such term or obligation or
be deemed a waiver of any subsequent breach.

        11.  Conflicting  Agreements.  Executive hereby  represents and warrants
that the  execution  of this  Agreement  and the  performance  of his duties and
obligations hereunder will not breach or be in conflict with any other agreement
to which  he is a party  or is  bound,  and  that he is not now  subject  to any
covenants against  competition or similar covenants in favor of any other person
or entity which could affect the performance of his duties hereunder.

        12. Entire  Agreement.  This Agreement  constitutes the entire agreement
among the  parties  hereto  with  respect to the  subject  matter  hereof.  This
Agreement supersedes and replaces any prior agreement or arrangement relative to
Executive's  employment  by  the  Trust,  and  all  such  prior  agreements  and
arrangements are hereby terminated.
<PAGE>
        13. Governing Law and Severability.  This Agreement shall be governed by
and  construed  under  the laws of the  State of New  Jersey  and  shall  not be
modified or  discharged  in whole or in part except by an  agreement  in writing
signed by the parties hereto. In case any one or more of the provisions or parts
of a provision  contained in this  Agreement  shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability  shall not affect any other provision or part of a provision of
this  Agreement,  but this  Agreement  shall be  construed as if such invalid or
illegal or  unenforceable  provision or part of a provision  had been limited or
modified (consistent with its general intent) to the extent necessary so that it
shall be valid,  legal and  enforceable,  or if it shall not be  possible  to so
limit or modify such invalid,  illegal or  unenforceable  provision or part of a
provision,  this  Agreement  shall be construed as if such  invalid,  illegal or
unenforceable  provision or part of a provision had never been contained herein,
and the parties  will use their best efforts to  substitute  a valid,  legal and
enforceable provision which, insofar as practicable,  implements the purpose and
intent of the provision or part of such provision originally contained herein.

        14.  Successors and Assigns.  This  Agreement  shall be binding upon and
inure to the benefit of the parties hereto and their  respective  successors and
permitted assigns; provided, however, that this Agreement may not be assigned by
Executive  without  the prior  written  consent  of the Trust.  The Trust  shall
require any successor of the Trust which shall acquire,  directly or indirectly,
by merger, consolidation, purchase or otherwise, all or substantially all of the
assets of the Trust,  by an  agreement  in form and  substance  satisfactory  to
Executive,  expressly to assume and agree to perform this  Agreement in the same
manner and to the same  extent as the Trust  would be  required to perform if no
such succession had taken place.

        15.  Counterparts.  This  Agreement  may be  executed  in any  number of
counterparts,  each of which shall be deemed an original  and all of which shall
constitute one agreement.
<PAGE>
        IN WITNESS  WHEREOF,  the parties  hereto have executed this  Employment
Agreement as an instrument under seal as of the date first set forth above.

                                    VALUE PROPERTY TRUST


                                    By: Martin Bernstein
                                        Compensation and Nominating Committee
                                        Value Propert Trust


                                    /s/ George R. Zoffinger
                                    -----------------------
                                        GEORGE R. ZOFFINGER

                                       Signed 9/29/95