OCTOBER 2001 AMENDMENT TO THE LETTER
                        OF CREDIT REIMBURSEMENT AGREEMENT
                        ---------------------------------

     OCTOBER  2001  AMENDMENT  TO THE LETTER OF CREDIT  REIMBURSEMENT  AGREEMENT
(this  "Amendment"),  dated as of October 26, 2001,  among  Palomino Park Public
Improvements Corporation,  a Colorado nonprofit corporation (the "Bond Issuer"),
Wellsford Real Properties, Inc., a Maryland corporation ("WRP"), and Commerzbank
AG,  acting  through its New York Branch (the  "Bank").  All  capitalized  terms
defined in the  hereinafter  defined Letter of Credit  Agreement  shall have the
same meaning when used herein unless otherwise defined herein.

                              W I T N E S S E T H:
                              - - - - - - - - - -

     WHEREAS,  the Bond  Issuer,  WRP and the Bank are  parties  to a Letter  of
Credit  Reimbursement  Agreement  dated as of June 16, 2000 (as in effect on the
date hereof, the "Letter of Credit Agreement"); and

     WHEREAS,  the Bond  Issuer,  WRP and the Bank desire to amend the Letter of
Credit Agreement as hereinafter provided; and

     WHEREAS,   ERP  Operating   Limited   Partnership,   an  Illinois   limited
partnership,  has guaranteed certain obligations of the Account Parties incurred
or to be incurred pursuant to the Letter of Credit Agreement;

     NOW,  THEREFORE,  in  consideration  of the premises  and mutual  covenants
herein contained, the parties hereto hereby agree as follows:

     1. Amendment to the Letter of Credit  Agreement.  Section 1.1 of the Letter
of  Credit   Agreement   is  hereby   amended  by  deleting   the  defined  term
"Shareholder's Equity" in its entirety and replacing it with the following:

          "Shareholder's  Equity"  means,  at any date,  the total  consolidated
     shareholder's equity of WRP and its Subsidiaries,  determined in conformity
     with generally accepted accounting principles  consistently applied, but in
     any  event  including  as  equity  the  aggregate  principal  amount of the
     Debentures outstanding at the time of any determination thereof.

     2.  Representations  and  Warranties.  In order to induce the Bank to enter
into this  Amendment,  each of the Bond  Issuer  and WRP hereby  represents  and
warrants that:

     (a) no  Default  or Event of  Default  exists or will  exist as of the date
hereof or after giving effect to this Amendment; and

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     (b) as of the date hereof,  and after giving effect to this Amendment,  all
representations,  warranties and agreements of the Bond Issuer and WRP contained
in the  Letter of Credit  Agreement  will be true and  correct  in all  material
respects.

     3.  GOVERNING  LAW. THIS  AMENDMENT AND THE RIGHTS AND  OBLIGATIONS  OF THE
PARTIES  HEREUNDER  SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE
LAW OF THE  STATE OF NEW  YORK,  WITHOUT  GIVING  EFFECT  TO THE  CHOICE  OF LAW
PROVISIONS THEREOF.

     4. Effectiveness. This Amendment shall be effective as of the date hereof.

     5. Agreement Not Otherwise Amended.  This Amendment is limited precisely as
written  and  shall  not  be  deemed  to be an  amendment,  consent,  waiver  or
modification of any other term or condition of the Letter of Credit Agreement or
any of the instruments or agreements referred to therein, or prejudice any right
or  rights  which  the Bank may now have or may have in the  future  under or in
connection  with the Letter of Credit  Agreement  or any of the  instruments  or
agreements  referred to therein.  Except as expressly modified hereby, the terms
and  provisions of the Letter of Credit  Agreement  shall continue in full force
and effect. Whenever the Letter of Credit Agreement is referred to in the Letter
of Credit Agreement or any of the instruments,  agreements or other documents or
papers  executed  and  delivered in  connection  therewith  (including,  without
limitation,  the Letter of Credit or the  Guaranty),  it shall be deemed to be a
reference to the Letter of Credit Agreement as modified hereby.

     6.   Counterparts.   This   Amendment  may  be  executed  in  two  or  more
counterparts,  each of  which  shall be  deemed  an  original,  but all of which
together shall constitute one and the same instrument.

     IN WITNESS  WHEREOF,  the parties  hereto have caused this  Amendment to be
duly executed and delivered by their  respective duly authorized  officers as of
the date first above written.

                         PALOMINO PARK PUBLIC IMPROVEMENTS CORPORATION

                                    By /s/ David M. Strong
                                       -------------------------------
                                      Name:  David M. Strong
                                      Title: President

                         WELLSFORD REAL PROPERTIES, INC.

                                    By /s/ James J. Burns
                                       -------------------------------
                                      Name:  James J. Burns
                                      Title: Senior Vice President

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                         COMMERZBANK AG, NEW YORK BRANCH

                                    By /s/ Douglas Traynor
                                       -------------------------------
                                      Name:  Douglas Traynor
                                      Title: Senior Vice President

                                    By /s/ David Buettner
                                       -------------------------------
                                      Name:  David Buettner
                                      Title: Assistant Vice President

Acknowledged, agreed and consented to:

ERP OPERATING LIMITED PARTNERSHIP

By   EQUITY RESIDENTIAL PROPERTIES
       TRUST, General Partner

By /s/ Robert Tanaka
   -------------------------------
  Name:  Robert Tanaka
  Title: Authorized Signator

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