CASH COLLATERAL ACCOUNT
            SECURITY, PLEDGE AND ASSIGNMENT AGREEMENT


          CASH COLLATERAL ACCOUNT SECURITY, PLEDGE AND ASSIGNMENT
AGREEMENT (this "Agreement"), dated as of June 18, 1996, among
KRT PROPERTY HOLDINGS, INC., HILLCREST PLAZA LIMITED PARTNERSHIP,
KR SUBURBAN, L.P., FOX RUN, LIMITED PARTNERSHIP, KR MACARTHUR
ASSOCIATES, L.P., KR BEST ASSOCIATES, L.P., KR 69TH STREET, L.P.,
KR TRUST ONE, INC., KR MANCHESTER, INC., KR STREET ASSOCIATES,
L.P., KR ORANGE, INC., KR COLLEGETOWN, INC., KR HILLCREST MALL,
INC. and KR PILGRIM, L.P., as borrowers (collectively,
"Borrower"), KRT ORIGINATION CORP., a Delaware corporation, as
lender (together with its successors and assigns "Lender") and
STATE STREET BANK AND TRUST COMPANY, a banking corporation
organized under the laws of the Commonwealth of Massachusetts, as
agent for Lender ("Agent").


                      W I T N E S S E T H:

          WHEREAS, Borrower is the owner of certain real property
more particularly described in Exhibit A attached hereto and made
a part hereof (the "Properties");

          WHEREAS, Lender has agreed to lend Borrower the sum of
One Hundred Eighty One Million Seven Hundred Thousand Dollars
($181,700,000) (the "Loan"), which Loan is evidenced by four
Mortgage Notes, each dated as of the date hereof (individually, a
"Note" and collectively, the "Notes"), made by Borrower, as
maker, in favor of Lender, as payee, and secured by (i) an
Indenture of Mortgage, Deed of Trust, Security Agreement,
Financing Statement, Fixture Filing and Assignment of Leases,
Rents and Security Deposits, dated as of the date hereof, among
Borrower, as grantor, Ronald P. Fish, Esq. and Thomas A. Hauser,
Esq., together as mortgage trustee, and Lender, as beneficiary
(the "Mortgage"), (ii) an Assignment of Leases, Rents and
Security Deposits (the "Assignment") and (iii) the other Loan
Documents; 

          WHEREAS, pursuant to the Mortgage and the Assignment,
Borrower has granted to Lender a first perfected security
interest in the Rents, Proceeds and other revenues derived from
or otherwise attributable or allocable to the Properties, and has
absolutely assigned and conveyed to Lender all of the rents,
income, revenue, issues and profits due and to become due or to
which Borrower is now or may hereafter become entitled, arising
out of the Leases or the Trust Estate or any part or parts
thereof; and

          WHEREAS, pursuant to the Mortgage and the Assignment,
in order to further effectuate the assignment of rents and
profits by the Borrower to the Lender set forth therein, Borrower
has agreed to establish the Receipts Account, the Collection
Account, the Default Interest Account, the Capital and TI Reserve
Account and the Sinking Fund Account (as such terms are
hereinafter defined) (the foregoing accounts being hereinafter
collectively referred to as the "Accounts") and to grant to
Agent, as agent for Lender, first perfected security interests
therein upon the terms and subject to the conditions hereof.

          NOW, THEREFORE, in consideration of the agreements and
covenants hereinafter contained and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

          1.  Defined Terms.  Capitalized terms used but not
otherwise defined herein shall have the respective meanings given
thereto in the Mortgage unless otherwise expressly provided
herein.  For purposes hereof, an "Event of Default" shall mean an
"Event of Default" under the Mortgage.  Agent shall not be deemed
to have any knowledge hereunder of an Event of Default unless
notified thereof in writing by Borrower or Lender hereunder or
the Servicer or Depositor (each capitalized term as defined in
the Trust and Servicing Agreement referred to in Paragraph 15(j)
hereof). 

          2.  Security for Obligations.  To secure the full and
punctual payment and performance of all obligations of Borrower
now or hereafter existing with respect to the Loan, whether for
principal, interest, fees, expenses or otherwise, and all
obligations of Borrower now or hereafter existing under the
Notes, the Mortgage, this Agreement and all other Loan Documents
(all such obligations, collectively, the "Obligations"), Borrower
hereby assigns, conveys, pledges and transfers to Lender, a first
continuing security interest in and to the following property of
Borrower, whether now owned or existing or hereafter acquired or
arising and regardless of where located (all of the same,
collectively, the "Collateral"):

               (a)  the Accounts and all cash, checks,
     drafts, certificates and instruments, if any, from time
     to time deposited or held in the Accounts from time to
     time including, without limitation, all deposits or
     wire transfers made to the Accounts pursuant to
     Paragraph 3(a) hereof; 

               (b)  any and all amounts invested by Agent in
     Eligible Investments (as hereinafter defined);

               (c)  all interest, dividends, cash (other
     than amounts disbursed to Borrower in accordance with
     Section 3(f) hereof), instruments and other property
     from time to time received, receivable or otherwise
     payable in respect of, or in exchange for, any or all
     of the foregoing; and

               (d)  to the extent not covered by clauses
     (a), (b) and (c) above, all proceeds (as defined under
     the Uniform Commercial Code as in effect in the
     Commonwealth of Massachusetts (the "UCC")) of any or
     all of the foregoing.

Lender shall have with respect to the Collateral, in addition to
the rights and remedies herein set forth, all of the rights and
remedies available to a secured party under the UCC, as if such
rights and remedies were fully set forth herein.

          3.  Accounts.  (a)  Establishment of Accounts. 
Borrower hereby agrees that all Rents from each Tenant of the
Properties received by Borrower or any of its Affiliates shall be
deposited by Borrower within one Business Day of receipt by
Borrower or such Affiliate into an account or accounts in the
name of Agent, as agent for Lender, as secured party (the
"Receipts Account").  Borrower shall enter into an agreement
(which agreement may not be amended without the consent of
Lender) with each bank where a Receipt Account is established,
which agreement shall provide that prior to the payment in full
of the Notes, all cleared funds in the Receipts Account shall be
transferred each Business Day into an interest-bearing trust
account established by Borrower in the name of Agent, as agent
for Lender, as secured party (the "Collection Account").  Until
so deposited into the Collection Account, any such amounts held
by Borrower shall be deemed to be Collateral and shall be held in
trust by it for the benefit of Agent, as agent for Lender, and
shall not be commingled with any other funds or property of
Borrower or any Affiliate of Borrower.  Borrower represents,
warrants and covenants that (i) all Operating Income from the
Properties will be deposited into the Receipts Account, (ii)
there are no other accounts maintained by Borrower with respect
to the receipt of funds from the ownership and operation of the
Properties, and (iii) so long as the Notes shall be outstanding,
it shall not open any other property accounts except as
contemplated by the Loan Documents (any account designated by
Borrower for the receipt of funds from the Accounts pursuant to
this Agreement or for the receipt of Proceeds permitted to be
held by Borrower not being property accounts within this
context).  Borrower has established in the name of Agent, as
agent for Lender, as secured party, the following trust accounts
with Agent, as more particularly described in the Cash Collateral
Agreement (as hereinafter defined):  the "Capital and TI Reserve
Account," the "Sinking Fund Account" and the "Default Interest
Account."  The Accounts may be maintained on a sub-ledger basis
only rather than in individual segregated accounts.  The
Collateral shall be held in the Accounts in accordance with the
terms of the cash collateral agreement, dated the date hereof
(the "Cash Collateral Agreement"), between Borrower and Agent, a
copy of which is attached hereto as Exhibit B.  Borrower agrees
that prior to the payment in full of the Notes, the Cash
Collateral Agreement shall be irrevocable by Borrower without the
prior written consent of Lender.  The Accounts shall be subject
to such applicable laws, and such applicable regulations of the
Board of Governors of the Federal Reserve System and of any other
banking or governmental authority, as may now or hereafter be in
effect.  Interest accruing on the Accounts shall be periodically
added to the principal amount of the Accounts and shall be held,
disbursed and applied in accordance with the provisions of this
Agreement.  All statements relating to the Accounts shall be
issued by Agent to Lender (or at the written direction of Lender,
to Lender's representative) and Borrower and Lender shall be
notified in writing or by electronic media of account activity on
a monthly basis.  Agent shall provide Lender and Borrower with
such other information as Lender or Borrower may reasonably
request.  Borrower shall be the beneficial owner of the Accounts
for federal income tax purposes and shall report all income on
the Accounts but Borrower shall have no right of withdrawal
therefrom except as specifically provided herein.

               (b)  Default Interest Deposit.  While an Event of
Default is continuing, Borrower shall deposit in the Default
Interest Account any interest at the Default Rate with respect to
the debt service payments due on the Notes ("Default Interest")
(amounts required to be deposited in such Account from time to
time pursuant hereto being hereinafter referred to as the
"Default Interest Amounts").  Lender shall notify Agent of any
amounts required to be deposited into the Default Interest
Account pursuant to Section 3(k) hereof.

               (c)  Annual Statement of Monthly Deposit.  On or
before the first day of each calendar year during the term of the
Notes, and from time to time as any amount to be withdrawn by
Agent from the Collection Account ("Withdrawal Amounts") shall
change due to prepayment (whether voluntary or mandatory) of the
principal amount of the Indebtedness (as defined in the
Mortgage), substitution of Properties or otherwise, Borrower
shall deliver to Agent and Lender a statement, together with an
Officer's Certificate, setting forth any necessary revisions to
any Withdrawal Amounts for the balance of the applicable calendar
year.  Any such statement shall be subject to reasonable
verification by Lender.

               (d)  Monthly Funding of Accounts; Funding of
Accounts Subsequent to Acceleration.  (A)  Borrower and Lender
each hereby instructs Agent to withdraw from the Collection
Account for each month on or before each Due Date (as defined in
the Notes) (i.e., the fourth Business Day prior to each
Distribution Date (as defined in the Trust and Servicing
Agreement) each month) as soon as there shall be sufficient
collected funds on deposit in the Collection Account, funds in an
amount equal to, and in the following order of priority:

                 (i)     first, to the Servicer as reimbursement
     for any Mortgage Recording Tax Advance (as defined in the
     Trust and Servicing Agreement), or any portion thereof, made
     by the Servicer;

                (ii)     second, to the Distribution Account (the
     "Distribution Account") established pursuant to the Trust
     and Servicing Agreement, an amount equal to the Interest
     Installment (as defined in the Notes) in the next succeeding
     month (other than Default Interest), which, until further
     notice from Lender, shall be $1,205,566.67;

               (iii)     third, to the Distribution Account to
     pay fees and expenses incurred by the Lender pursuant to
     Section 18 of the Mortgage;

                (iv)     fourth, upon written notice from Lender
     or the Servicer to Agent, to reimburse Lender or Servicer in
     connection with the enforcement of Borrower's obligations
     under the Loan;

                 (v)     fifth, to the Capital and TI Reserve
     Account an amount equal to the amount required to be
     deposited in such Account from time to time pursuant to
     Section 48(a) of the Mortgage (the "Capital and TI Reserve
     Amount"), i.e., (1) 1/12th of $0.25 per square foot of the
     gross leasable area of the Properties, determined pursuant
     to Section 48(a) and (b) of the Mortgage, minus (2) funds
     expended by Borrower for capital expenditures and tenant
     improvements from sources other than the Capital and TI
     Reserve Account, as determined in accordance with Section
     48(a) of the Mortgage;

                (vi)     sixth, to the Sinking Fund Account an
     amount equal to the amount required to be deposited in such
     Account each month pursuant to Section 48(c) of the Mortgage
     (the "Sinking Fund Amount"), i.e., $11,000, until such time
     as the aggregate amount in the Sinking Fund Account,
     together with all investment income earned thereon, equals
     or exceeds $786,000; provided that amounts on deposit in the
     Sinking Fund Account shall be released pursuant to the terms
     of Section 48(c) of the Mortgage (i.e., on the earlier of
     (1) repayment in full of the Mortgage Loan and (2) the date
     of release or substitution of the Property located in
     Orange, Connecticut in accordance with the provisions of the
     Mortgage);

               (vii)     seventh, upon written notice from
     Trustee to Agent, to pay any other amounts owing under the
     Notes or the Mortgage, including Default Interest to the
     Default Interest Account; and

              (viii)     eighth, the remaining balance, if any
     (including, without limitation, interest and other earnings
     on the Eligible Investments), to such account or accounts as
     Borrower may direct.   

          (B)  In the event that two Business Days prior to any
Due Date, the aggregate balances in the Accounts are not adequate
to make the required monthly fundings as described in this
Section 3(d), Lender shall so notify Borrower (with a copy to
Agent) no later than the following Business Day of such
deficiency and Borrower, subject to the provisions of Section 33
of the Mortgage, shall deposit such deficiency in the Collection
Account no later than such Due Date.

          (C)  Borrower and Lender each hereby instructs Agent
that upon the occurrence of an Event of Default and the
acceleration of the Notes, to withdraw from the Collection
Account as soon as there shall be sufficient collected funds on
deposit in the Collection Account, funds in an amount equal to,
and in the following order of priority:

                 (i)     first, upon written notice from Lender
     to Agent, to reimburse Lender in connection with the
     enforcement of Borrower's obligations under the Mortgage
     (other than reimbursement of any Advances);

                (ii)     second, to the Distribution Account an
     amount equal to any Interest Installments then due and
     payable;

               (iii)     third, to the Distribution Account an
     amount equal to any Principal Amount then outstanding on the
     Notes;

                (iv)     fourth, upon written notice from Trustee
     to Agent, to pay any other amounts owing under the Notes or
     the Mortgage, including Default Interest to the Default
     Interest Account; and 

                 (v)     fifth, the remaining balance, if any
     (including, without limitation, interest and other earnings
     on the Eligible Investments), to such account or accounts as
     Borrower may direct.

               (e)  Payments from Certain Accounts Prior to and
After an Event of Default.  Prior to Agent's receipt of written
notice from Lender of the occurrence of an Event of Default,
Borrower may request Lender to instruct Agent to transfer from
the Capital and TI Reserve Account to an account designated by
Borrower such amounts as are in accordance with Section 48(a) of
the Mortgage and subject to the conditions set forth therein,
Lender shall so instruct Agent within five (5) Business Days of
Borrower's request (provided the same is in compliance with such
Section 48(a)), and Agent shall disburse such amounts.  After
Agent's receipt of any notice of an Event of Default, and during
the continuance of such Event of Default, Borrower shall have no
right to request Lender to so instruct Agent.  Agent may rely
exclusively upon such written instructions and directions from
Lender and shall not incur any liability as a result of funding
amounts to Borrower in accordance with the terms hereof prior to
the occurrence of an Event of Default.

               (f)  Disbursement of Excess Amounts prior to an
Event of Default.  Provided that (i) Agent has not received
notice of an Event of Default hereunder or under any of the other
Loan Documents and (ii) all required installments of the Capital
and TI Reserve Amounts, the Sinking Fund Amounts and the
Distribution Amounts have been deposited or retained in the
applicable Accounts pursuant to clause 3(d), then, subject to the
provisions of Section 3(d)(B), from time to time during the term
of the Loan, Agent shall transfer amounts from the Collection
Account (including, without limitation, interest and other
earnings on the Eligible Investments) to such account or accounts
of Borrower as Borrower may direct, to pay Operating Expenses of
the Properties, to make distributions to the shareholders or
partners of Borrower, or otherwise (pursuant to written
instructions to Agent with a copy to Lender).  Borrower's
instructions delivered as aforesaid shall remain in effect until
such time as Borrower delivers new instructions to Agent, with a
copy to Lender.  

               (g)  Disbursements of Excess Amounts Subsequent to
an Event of Default and Prior to Acceleration.  If an Event of
Default shall occur, Borrower shall have no further right to
request withdrawals from the Collection Account while such Event
of Default is continuing, except as provided below.  Provided
that (i) the Notes have not theretofore been accelerated and (ii)
the balance in the Accounts is at all relevant times greater than
the then sum of the required amounts to be deposited therein and
(iii) the amount of the debt service payments due under the Notes
in the next succeeding month (or in the month of June 1996 as to
the first debt service payment) shall have been deposited in the
Distribution Account plus all other amounts then due under the
Notes or the Mortgage, Borrower may request Lender to instruct
Agent in writing to transfer amounts from the Collection Account
solely for the purpose of curing such Event of Default to the
payee thereof or to an account designated by Borrower; provided
that such request to Lender is accompanied by (1) an Officer's
Certificate from Borrower certifying that such funds will be used
solely to cure such Event of Default (and that upon payment of
such funds such Event of Default will be cured) and (2)
reasonably detailed documentation as to the amount, necessity and
purpose therefor.  Lender agrees to promptly notify Agent of the
existence of an Event of Default in writing; provided, however,
Agent shall be permitted to rely conclusively on Lender's written
instructions, and shall have no liability for transfers from the
Collection Account based on any such written instructions. 
Notwithstanding anything contained herein to the contrary,
Borrower hereby acknowledges that, from and during the
continuance of any Event of Default hereunder or under any other
Loan Document, Lender shall have the right to direct Agent and
Agent shall comply with any such direction, to apply any amounts
in any of the Accounts to the curing of such Event of Default or
the payment of any Operating Expenses in accordance with the
provisions of the Mortgage and the Assignment.

               (h)  Disbursements of Excess Amounts Subsequent to
Acceleration.  Upon the occurrence of an Event of Default and the
acceleration of the Notes, then, in addition to the provisions of
clause (g) above, Lender shall promptly notify Agent in writing
of such Event of Default and acceleration and, without notice
from Agent or Lender, (i) Borrower shall have no further right in
respect of (including, without limitation, the right to instruct
Lender or Agent to transfer from) the Accounts and (ii) Lender
may direct Agent to liquidate and transfer any amounts then
invested in Eligible Investments to the Collection Account and
withdraw funds from the Collection Account and pay the same in
accordance with the provisions of Section 3(d)(B) hereof.

               (i)  Investments.  Any amounts held in any of the
Accounts shall be invested, liquidated and reinvested at
Borrower's written direction to Agent with a copy to Lender
(provided Agent has not received notice that an Event of Default
has occurred and is continuing), or if Agent has received notice
that an Event of Default has occurred and is continuing, at
Lender's written direction, in the name of Agent, as agent for
Lender, as secured party under this Agreement, in either case, in
permitted investments, as set forth on Exhibit C hereto (the
"Eligible Investments") (or, if Borrower so directs and Agent has
not received notice that an Event of Default has occurred and is
continuing, shall be retained in the applicable Account) and
disbursed in accordance with this Agreement.  Agent shall not
have any liability for any decline in value of any investment
made by it at the direction of Borrower or Lender other than as a
result of Agent's gross negligence or willful misconduct in
maintaining custody of any such investment or determining whether
any such investment is an Eligible Investment.  Notwithstanding
anything to the contrary contained herein, in no event shall
Borrower instruct Agent to invest funds in the Accounts in (i)
stock representing more than ten percent (10%) of the outstanding
voting stock of the issuer thereof or (ii) interests in any
partnership or trust owning stock where the portion of such stock
attributable to such interests would represent more than ten
percent (10%) of the outstanding voting stock of the issuer
thereof.

               (j)  Payments on the Notes.  Borrower and Lender
hereby irrevocably instruct Agent to withdraw from the Collection
Account by 12:00 p.m. New York time on each Due Date and deposit
in the Distribution Account amounts necessary to pay the interest
installment due to the Lender on such Due Date as specified in
Section 3(d)(A)(i) hereof.

               (k)  Disbursements of Default Interest Amounts. 
During any period in which the Borrower is required to pay
Default Interest Amounts pursuant to any Loan Document, Agent, at
the written direction of Lender, shall transfer to an account
designated by Lender amounts necessary to pay the installments of
the Default Interest Amounts due to the Lender on such Due Date.

          4.   Financing Statement; Further Assurances. 
Simultaneously herewith, Borrower shall execute and deliver to
Lender for filing a financing statement or statements in
connection with the Collateral in the form reasonably required to
properly perfect Lender's security interest therein.  Borrower
agrees that at any time and from time to time, at the reasonable
expense of Borrower, Borrower will promptly execute and deliver
all further instruments and documents, and take all further
action, that may be reasonably necessary or desirable, or that
Lender may reasonably request, in order to perfect and protect
any security interest granted or purported to be granted hereby
(including, without limitation, any security interest in and to
any Eligible Investments) or to enable Agent or Lender to
exercise and enforce its rights and remedies hereunder with
respect to any Collateral.  Borrower authorizes Lender to file
one or more financing or continuation statements under the UCC
relating to the Collateral, naming Lender as "secured party."

          5.  Transfers and Other Liens.  Subject to the powers
granted by Section 3(d), Borrower agrees that it will not (i)
sell or otherwise dispose of any of the Collateral or (ii) create
or permit to exist any Lien upon or with respect to all or any of
the Collateral, except for the Lien granted to Lender, under this
Agreement.

          6.  Lender's Right to Perform Borrower's Obligations;
No Liability of Lender.  If Borrower fails to perform any of the
covenants or obligations contained herein, and such failure shall
continue for a period of ten (10) days after Borrower's receipt
of written notice thereof from the Lender, Lender may itself
perform, or cause performance of, such covenants or obligations,
and the reasonable expenses of Lender incurred in connection
therewith shall be payable by Borrower to Lender in accordance
with Section 10 hereof.  Notwithstanding the Lender's right to
perform certain obligations of Borrower, it is acknowledged and
agreed that, prior to the consummation of any foreclosure or
transfer in lieu of foreclosure with respect to any of the
Properties, Borrower retains control of the Properties and
operation thereof and notwithstanding anything contained herein
or the Cash Collateral Agreement or Agent's or Lender's exercise
of any of its rights or remedies hereunder, under the Loan
Documents or otherwise at law or in equity (but only to the
extent permitted by law), neither Agent nor Lender shall be
deemed to be a mortgagee-in-possession nor shall Agent or Lender
be subject to any liability with respect to the Properties other
than any claims arising from the gross negligence or willful
misconduct of Agent or Lender or their respective employees,
officers, agents or representatives.

          7.  Reasonable Care.  Beyond the exercise of reasonable
care in the custody thereof, neither Agent nor Lender shall have
any duty as to any Collateral in its possession or in the
possession or control of any agent therefor or bailees thereof or
any income thereon or the preservation of rights against any
person or otherwise with respect thereto.  Agent and Lender each
shall be deemed to have exercised reasonable care in the custody
and preservation of the Collateral in its possession if the
Collateral is accorded treatment substantially in accordance with
the customary standards of practice of reasonable commercial
banks utilized with respect to Collateral comparable to the
Collateral.

          8.  Remedies.  Upon the occurrence of an Event of
Default, Lender may:

               (a) without further notice to Borrower,
     except as required by law, and at any time or from time
     to time, charge, set-off and otherwise apply all or any
     part of the Collateral against the Indebtedness or any
     part thereof;

               (b) in its sole discretion, at any time and
     from time to time, exercise any and all rights and
     remedies available to it under this Agreement, and/or
     as a secured party under the UCC; and

               (c) demand, collect, take possession of,
     receipt for, settle, compromise, adjust, sue for,
     foreclose or realize upon the Collateral (or any
     portion thereof) as Lender may determine in its sole
     discretion.

Borrower hereby expressly waives, to the fullest extent permitted
by law, presentment, demand, protest or any notice of any kind in
connection with this Agreement or the Collateral.  Borrower
acknowledges and agrees that ten (10) days' prior written notice
of the time and place of any public sale of the Collateral or any
other intended disposition thereof shall be reasonable and
sufficient notice to Borrower within the meaning of the UCC.

          9.  No Waiver.  The rights and remedies provided in
this Agreement and the other Loan Documents are cumulative and
may be exercised independently or concurrently, and are not
exclusive of any other right or remedy provided at law or in
equity.  No failure to exercise or delay by Lender in exercising
any right or remedy hereunder or under the Loan Documents shall
impair or prohibit the exercise of any such rights or remedies in
the future or be deemed to constitute a waiver or limitation of
any such right or remedy or acquiescence therein.  Every right
and remedy granted to Lender under Section 8 or by law may be
exercised by Lender, as the case may be, at any time and from
time to time, and as often as Lender may deem it expedient.  Any
and all of Lender's rights with respect to the lien and security
interest granted hereunder shall continue unimpaired, and
Borrower shall be and remain obligated in accordance with the
terms hereof, notwithstanding (a) any proceeding of Borrower
under the Federal Bankruptcy Code or any bankruptcy, insolvency
or reorganization laws or statutes of any state, (b) the release
or substitution of Collateral at any time, or of any rights or
interests therein or (c) any delay, extension of time, renewal,
compromise or other indulgence granted by the Lender in the event
of any default, with respect to the Collateral or otherwise
hereunder.  No delay or extension of time by Lender in exercising
any power of sale, option or other right or remedy hereunder, and
no notice or demand which may be given to or made upon Borrower
by Lender, shall constitute a waiver thereof, or limit, impair or
prejudice Lender's right, without notice or demand, to take any
action against Borrower or to exercise any other power of sale,
option or any other right or remedy.

          10.  Expenses.  The Collateral shall secure, and
Borrower shall pay to Agent and Lender and/or Agent's and
Lender's counsel (if so directed by Agent or Lender,
respectively) on demand, from time to time, all costs and
expenses (including, but not limited to, reasonable attorneys'
fees and disbursements, and transfer, recording and filing fees,
taxes and other charges) of, or incidental to, (a) the
negotiation of this Agreement and the review of the other Loan
Documents, (b) the creation or perfection of any lien or security
interest granted or intended to be granted hereby, (c) the
custody, care, sale, transfer, administration, collection of or
realization on the Collateral, or in any way relating to the
enforcement, protection or preservation of the rights or remedies
of Agent and/or Lender under this Agreement, the Notes, the
Mortgage, the Assignment or the other Loan Documents after an
Event of Default.  Any such costs and expenses or portion thereof
not paid promptly upon the demand thereof shall accrue interest
thereon from and including the date of demand through but not
including the date of payment thereof at a rate per annum equal
to the Prime Rate (as most recently published in The Wall Street
Journal) on the date of demand plus 100 basis points, compounded
monthly.  The provisions of this Section 10 shall survive the
termination of this Agreement and the resignation or removal of
Agent.

          11.  Lender Appointed Attorney-In-Fact.  Borrower
hereby irrevocably constitutes and appoints Lender as Borrower's
true and lawful attorney-in-fact, with full power of
substitution, to execute, acknowledge and deliver any instruments
and to exercise and enforce every right, power, remedy, option
and privilege of Borrower with respect to the Collateral, and do
in the name, place and stead of Borrower, all such acts, things
and deeds for and on behalf of and in the name of Borrower, which
Borrower could or might do or which Lender may deem necessary or
desirable to more fully vest in Lender the rights and remedies
provided for herein and to accomplish the purposes of this
Agreement in the event that Borrower shall fail to perform any of
the foregoing agreements within ten (10) days after written
request therefor by Lender.  The foregoing powers of attorney are
irrevocable and coupled with an interest.  If Borrower fails to
perform any agreement herein contained within ten (10) days after
written request therefor by Lender, Lender may itself perform or
cause performance of any such agreement, and any reasonable
expenses of Agent and Lender incurred in connection therewith
shall be paid by Borrower as provided in Section 10 hereof.

          12.  Liability and Indemnification of Lender and Agent. 
               (a)  Lender, in its capacity as secured party
hereunder, and Agent each shall be responsible for the
performance only of such duties as are specifically set forth
herein and in the Cash Collateral Agreement, and no duty shall be
implied from any provision hereof.  Neither Lender nor Agent
shall be under any obligation or duty to perform any act which
would involve it in expense or liability or to institute or
defend any suit in respect hereof, or to advance any of its own
monies.  Borrower shall indemnify and hold harmless Agent and
Lender, their agents, employees, directors, and officers from and
against any loss, cost or damage (including, without limitation,
reasonable attorneys' fees and disbursements) incurred by the
Agent or Lender in connection with the transactions contemplated
hereby other than as a result of the negligence or willful
misconduct of Agent or Lender or their respective agents,
employees, directors or officers. The provisions of this Section
12 shall survive the termination of this Agreement and the
resignation or removal of Agent.

               (b)  Agent shall be protected in acting upon any
notice, resolution, request, consent, order, certificate, report,
opinion, bond or other paper, document or signature believed by
it to be genuine, and it may be assumed that any person
purporting to give any of the foregoing in connection with the
provisions hereof has been duly authorized to do so.  Agent may
consult with counsel of its selection, and the opinion of such
counsel shall be full and complete authorization and protection
in respect of any action taken or suffered by it hereunder and in
good faith in accordance therewith.  Agent shall not be liable to
Borrower for any act or omission done or omitted to be done by
Agent in reliance upon any written instruction, direction or
certification received by Agent and without gross negligence or
bad faith.

               (c)  Agent shall not be required to, and shall
not, expend or risk any of its own funds or otherwise incur any
financial liability in the performance of any of its duties
hereunder.

               (d)  Agent shall not incur any liability for not
performing any act or fulfilling any duty, obligation or
responsibility hereunder by reason of any occurrence beyond the
control of Agent (including but not limited to any act or
provision of any present or future law or regulation or
governmental authority, any act of God or war, or the
unavailability of the Federal Reserve Bank wire or telex or other
wire or communication facility).

               (e)  In the event of any ambiguity or uncertainty
hereunder or in any notice, instruction or other communication
received by Agent hereunder, Agent may, in its sole discretion,
refrain from taking any action other than retaining possession of
the Collateral, unless Agent receives written instructions,
signed by Lender, which eliminates such ambiguity or uncertainty.

               (f)  In the event of any dispute between or
conflicting claims by or among the Borrower and Lender and/or any
other person or entity with respect to any Collateral, Agent
shall be entitled to rely on instructions from Lender, and Agent
shall not be or become liable in any way to the Borrower or
Lender for failure or refusal to comply with such conflicting
claims, demands or instructions of Borrower or such other person. 


               (g)  Agent shall have no duty to verify amounts
required to be deposited or withdrawn from the Accounts if such
amounts are in accordance with the terms hereof or written
instructions of Lender.  Nor shall Agent have any duty to file
UCC financing statements or perfect or maintain perfected the
first priority security interest in the Collateral.  In the
absence of actual notice from Lender, Agent shall have no duty to
determine whether an Event of Default has occurred or is
continuing.

          13.  Continuing Security Interest.  This Agreement
shall create a continuing security interest in the Collateral and
shall remain in full force and effect until payment in full of
the Indebtedness.  Upon payment in full of the Indebtedness, this
Agreement shall terminate and Borrower shall be entitled to the
return, upon its request and at its expense, of such of the
Collateral as shall not have been sold or otherwise applied
pursuant to the terms hereof and Agent and/or Lender shall
execute such instruments and documents as may be reasonably
requested by Borrower to evidence such termination and the
release of the lien hereof.

          14.  Replacement and Resignation of Agent.  (a)
Borrower shall have the right at any time, so long as no Event of
Default shall have occurred and be continuing, with or without
cause, to remove Agent as agent hereunder upon 30 days' written
notice to Agent and Lender and to appoint any banking institution
which has a rating of "AA" or better for its senior unsecured
debt obligations, as successor Agent, provided that no removal of
Agent shall be effective until the successor Agent shall have
accepted such appointment and executed an instrument by which it
shall have assumed all of the rights and obligations of Agent
hereunder.

               (b)  Agent shall have the right to resign as agent
hereunder upon 30 days' written notice to Borrower and Lender,
and in the event of such resignation, Borrower shall appoint a
successor Agent meeting the qualifications set forth in clause
(a) above.  No such resignation by Agent shall become effective
until a successor Agent shall have accepted such appointment and
executed an instrument by which it shall have assumed all of the
rights and obligations of Agent hereunder.  If no such successor
Agent is appointed within 60 days after receipt of the resigning
Agent's notice of resignation, the resigning Agent may petition a
court for the appointment of a successor Agent.

               (c)  In connection with any removal of or
resignation by the Agent, (i) the removed or resigning Agent
shall, at Borrower's sole cost, (A) duly assign, transfer and
deliver to the successor Agent this Agreement and the Cash
Collateral Agreement and all cash and Eligible Investments held
by it hereunder, (B) execute such financing statements and other
instruments as may be necessary to assign to the successor Agent
the security interest in the Collateral existing in favor of the
retiring Agent hereunder and to otherwise give effect to such
succession and (C) take such other actions as may be reasonably
required by Borrower, Lender or the successor Agent in connection
with the foregoing and (ii) the successor Agent shall establish
in its name, as agent for Lender, as secured party, cash
collateral trust accounts satisfying all requirements of this
Agreement, which shall become the Accounts for purposes of this
Agreement upon the succession of such Agent.

               (d)  Agent may enter into a Sub-Agency Agreement
with GE Capital Asset Management Corporation ("Sub-Agent")
(provided such agreement would not result in the withdrawal,
qualification or downgrade of the then current ratings on the
Class A, Class B, Class C or Class D Certificates, as evidenced
by a letter to such effect from the Rating Agency delivered to
the Lender prior to entering into any sub-agency Agreement with
Sub-Agent ("Sub-Agency Agreement") and provided such Sub-Agency
Agreement requires the Sub-Agent to comply with all of the
conditions of this Agreement applicable to Agent in respect of
the duties delegated) for the performance of the duties of Agent
hereunder.  References in this Agreement to actions taken or to
be taken by Agent in performing its duties hereunder include
actions taken or to be taken by Sub-Agent on behalf of Agent. 
For purposes of this Agreement, Agent shall be deemed to have
received any payment when Sub-Agent receives such payment.  Agent
shall notify Lender in writing promptly upon the appointment of
Sub-Agent and promptly furnish Lender with a copy of the Sub-
Agency Agreement.  Any and all fees and expenses payable to Sub-
Agent, in its capacity as such, pursuant to the terms of the Sub-
Agency Agreement or otherwise shall be due and payable from Agent
and Agent shall not be entitled to any reimbursement with respect
thereof, and neither Lender nor any other Person shall have any
obligation or liability with respect thereto.  Notwithstanding
any Sub-Agency Agreement, Agent shall remain obligated and liable
to Borrower and Lender for the performance of the duties of Agent
hereunder without diminution of such obligation or liability by
virtue of the Sub-Agency Agreement or arrangements or by virtue
of indemnification from Sub-Agent and to the same extent and
under the same terms and conditions as if the Agent alone were
performing the obligations of Agent hereunder.

          15.  Miscellaneous.  (a)  This Agreement constitutes
the entire and final agreement between the parties with respect
to the subject matter hereof and may not be changed, terminated
or otherwise varied, except by a writing duly executed by the
parties.

               (b)  No waiver of any term or condition of this
Agreement, whether by delay, omission or otherwise, shall be
effective unless in writing and signed by the party sought to be
charged, and then such waiver shall be effective only in the
specific instance and for the purpose for which given.

               (c)  This Agreement shall be binding upon and
inure to the benefit of the parties hereto, their respective
successors and permitted assigns.

               (d)  All notices, demands, requests, consents,
approvals and other communications (any of the foregoing, a
"Notice") required, permitted, or desired, to be given hereunder
shall be in writing (i) sent by telecopy or by registered or
certified mail, postage prepaid, return receipt requested or (ii)
delivered by hand or reputable overnight courier, addressed to
the party to be so notified at its address hereinafter set forth,
or to such other address as such party may hereafter specify in
accordance with the provisions of this Section 15(d).  Any such
Notice shall be deemed to have been received three (3) days after
the date such Notice is mailed or on the date of sending by
telecopy or delivery by hand or courier addressed to the parties
as follows:

If to Lender:       KRT Origination Corp.
c/o Kranzco Realty Trust
128 Fayette Street
Conshohocken, Pennsylvania 19428
Attn: Norman M. Kranzdorf
Facsimile: (610) 941-9193
If to Borrower:     
KRT Property Holdings, Inc.,
Hillcrest Plaza Limited
Partnership, KR Suburban, L.P.,
Fox Run, Limited Partnership, KR
MacArthur Associates, L.P., KR
Best Associates, L.P., KR 69th
Street, L.P., KR Trust One, Inc.,
KR Manchester, Inc., KR Street
Associates, L.P., KR Orange,
Inc., KR Collegetown, Inc., KR
Hillcrest Mall, Inc. and KR
Pilgrim, L.P.
c/o Kranzco Realty Trust
128 Fayette Street
Conshohocken, Pennsylvania 19428
Attn: Robert Dennis
Facsimile: (610) 941-9193

With a Copy to:Robinson Silverman Pearce
   Aronsohn & Berman LLP 
1290 Avenue of the Americas
New York, New York 10104 
Attn: Alan S. Pearce, Esq.
Facsimile: (212) 541-4630

If to Agent:
State Street Bank and Trust
Company
Two International Place
5th Floor
Boston, Massachusetts 02110
Attn: Corporate Trust
Facsimile: (617) 664-5367

If to the Rating
Agency:Fitch Investors Service, L.P.
One State Street Plaza
New York, New York 10004
Attn: Commercial Mortgage
      Surveillance
Facsimile: (212) 635-0295

               (e)  All captions in this Agreement are included
herein for convenience of reference only and shall not constitute
part of this Agreement for any other purpose.

               (f)  This Agreement shall be governed by and
construed and enforced in all respects in accordance with the
laws of the State of New York.

               (g)  As between Borrower and Lender, but not
Agent, this Agreement and Borrower's obligations hereunder shall
be subject to the provisions and limitations set forth in Section
33 of the Mortgage except that Borrower shall be liable to Lender
for any sums received by Borrower which are not deposited in the
Collection Account in accordance with this Agreement, and the
non-recourse provisions of Section 33 of the Mortgage and any
other non-recourse provisions contained in the Loan Documents
shall be inapplicable to any claims with respect thereto.

               (h)  Notwithstanding anything contained herein to
the contrary, at such time as Borrower shall withdraw any amounts
from any Accounts in accordance with the provisions hereof, the
same shall cease to constitute Collateral.

               (i)  Notwithstanding anything contained herein to
the contrary, if at any time the credit rating of the long term
debt obligations of Agent by the Rating Agency shall be less than
"AA-," Borrower shall cause Agent to be replaced with another
commercial bank with a credit rating by the Rating Agency of its
long term debt obligations of "AA" or better in accordance with
and subject to Section 14 hereof within thirty (30) days after
Borrower receives notice of such downgrading. 

               (j)  The parties hereto hereby acknowledge that
the rights of the Lender are simultaneously herewith being
assigned to KRT Origination Corp., which is assigning the same to
State Street Bank and Trust Company, as trustee under the Trust
and Servicing Agreement (the "Trust and Servicing Agreement") and
who shall thereafter be deemed to be "Lender" for the purposes of
this Agreement.  In addition, the parties hereby acknowledge that
Agent shall be entitled to rely on, and shall follow, any
instructions from GE Capital Asset Management Corporation, as
Servicer on behalf of Lender unless Agent has received
instructions to the contrary from Lender.

               (k)  Upon repayment in full of the Obligations,
Lender shall take such actions and execute and deliver such
documents and instruments including, without limitation, UCC-3
termination statements as are reasonably necessary to terminate
this Agreement and the security interests created hereby.

          16.  Counterparts.  This Agreement 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.

          IN WITNESS WHEREOF, the parties hereto have duly
executed this Agreement as of the day and year first above
written.

                               BORROWER:

                               KRT PROPERTY HOLDINGS, INC.


                               By: /s/ Norman Kranzdorf          
                                      ------------------------    

                                    Name:  Norman Kranzdorf
                                    Title:    President


                               HILLCREST PLAZA LIMITED
                                   PARTNERSHIP

                               By KR Hillcrest, Inc.

                               By: /s/ Norman Kranzdorf          
                                      ------------------------    

                                    Name:  Norman Kranzdorf
                                    Title:    President


                               KR SUBURBAN, L.P.

                               By KR Suburban, Inc.

                               By: /s/ Norman Kranzdorf          
                                      ------------------------    

                                    Name:  Norman Kranzdorf
                                    Title:    President


                               FOX RUN, LIMITED PARTNERSHIP

                               By Fox Run, Inc.

                               By: /s/ Norman Kranzdorf          
                                      ------------------------    

                                    Name:  Norman Kranzdorf
                                    Title:    President

    [Signatures to Cash Collateral Account, Security, Pledge
       and Assignment Agreement continue on following page]
                               KR MACARTHUR ASSOCIATES, L.P.

                               By KR MacArthur, Inc.


                               By: /s/ Norman Kranzdorf          
                                      ------------------------    

                                    Name:  Norman Kranzdorf
                                    Title:    President


                               KR BEST ASSOCIATES, L.P.

                               By KR Best Associates, Inc.


                               By: /s/ Norman Kranzdorf          
                                      ------------------------    

                                    Name:  Norman Kranzdorf
                                    Title:    President


                               KR 69TH STREET, L.P.

                               By KR 69th Street, Inc.


                               By: /s/ Norman Kranzdorf          
                                      ------------------------    

                                    Name:  Norman Kranzdorf
                                    Title:    President


                               KR TRUST ONE, INC.


                               By: /s/ Norman Kranzdorf          
                                      ------------------------    

                                    Name:  Norman Kranzdorf
                                    Title:    President


                               KR MANCHESTER, INC.

                               By: /s/ Norman Kranzdorf          
                                      ------------------------    

                                    Name:  Norman Kranzdorf
                                    Title:    President

    [Signatures to Cash Collateral Account, Security, Pledge
       and Assignment Agreement continue on following page]
                               KR STREET ASSOCIATES, L.P.

                               By KR Street, Inc.


                               By: /s/ Norman Kranzdorf          
                                      ------------------------    

                                    Name:  Norman Kranzdorf
                                    Title:    President


                               KR ORANGE, INC.

                               By: /s/ Norman Kranzdorf          
                                      ------------------------    

                                    Name:  Norman Kranzdorf
                                    Title:    President


                               KR COLLEGETOWN, INC.

                               By: /s/ Norman Kranzdorf          
                                      ------------------------    

                                    Name:  Norman Kranzdorf
                                    Title:    President


                               KR HILLCREST MALL, INC.

                               By: /s/ Norman Kranzdorf          
                                      ------------------------    

                                    Name:  Norman Kranzdorf
                                    Title:    President

                               KR PILGRIM, L.P.

                               By KR Pilgrim, Inc.


                               By: /s/ Norman Kranzdorf          
                                      ------------------------    

                                    Name:  Norman Kranzdorf
                                    Title:    President

    [Signatures to Cash Collateral Account, Security, Pledge
       and Assignment Agreement continue on following page]
                               LENDER:

                               KRT ORIGINATION CORP.


                               By: /s/ Norman Kranzdorf          
                                      ------------------------    

                                    Name:  Norman Kranzdorf
                                    Title:    President


                               AGENT:

                               STATE STREET BANK AND TRUST
COMPANY


                               By: /s/ James Byrnes              
                                   ----------------------------
                                    Name:  James Byrnes
                                    Title:    Assistant Vice
President
                            EXHIBIT A

                           PROPERTIES

                                            Location of
                Property                     Property  
                --------                    ----------

              CONNECTICUT
                Groton Square. . . . . .     Groton
                Manchester Kmart . . . .     Manchester
                Milford. . . . . . . . .     Milford
                Orange . . . . . . . . .     Orange

              MARYLAND
                Anneslie . . . . . . . .     Baltimore
                Fox Run. . . . . . . . .     Prince Frederick
                Hillcrest Plaza. . . . .     Frederick

              NEW JERSEY
                Collegetown. . . . . . .     Glassboro
                Hillcrest Mall . . . . .     Phillipsburg
                Suburban Plaza . . . . .     Hamilton Township

              NEW YORK
                A&P Mamaroneck . . . . .     Mamaroneck
                The Mall at Cross County     Yonkers
                Highridge Plaza. . . . .     Yonkers
                North Ridge. . . . . . .     New Rochelle
                Port Washington. . . . .     Port Washington
                Village Square . . . . .     Larchmont

              PENNSYLVANIA
                69th Street Plaza. . . .     Upper Darby
                Barn Plaza . . . . . . .     Doylestown
                Bensalem Square. . . . .     Bensalem
                Best Plaza . . . . . . .     Tredyffrin
                Bethlehem Square . . . .     Bethlehem
                Bristol Commerce Park. .     Bristol
                MacArthur Road . . . . .     Whitehall
                Park Hills Plaza . . . .     Altoona
                Pilgrim Gardens. . . . .     Drexel Hill
                Street Road. . . . . . .     Bensalem
                Whitehall Square . . . .     Whitehall

                            EXHIBIT B

                    CASH COLLATERAL AGREEMENT


                                                    June 18, 1996



State Street Bank and Trust Company
Two International Place
5th Floor
Boston, Massachusetts 02110
Attn: Corporate Trust

          Re:  KRT Property Holdings, Inc., Hillcrest Plaza
               Limited Partnership, KR Suburban, L.P., Fox Run,
               Limited Partnership, KR MacArthur Associates,
               L.P., KR Best Associates, L.P., KR 69th Street,
               L.P., KR Trust One, Inc., KR Orange, Inc., KR
               Collegetown, Inc., KR Hillcrest Mall, Inc. and KR
               Pilgrim, L.P.,  KR Manchester, Inc. and KR Street
               Associates, L.P.   
       

Ladies and Gentlemen:

          Reference is made to trust account no. 990-01265 (such
account, together with all subaccounts thereunder, the
"Accounts") maintained with you (the "Bank") at your corporate
trust offices located at Two International Place, Boston,
Massachusetts, by KRT Property Holdings, Inc., Hillcrest Plaza
Limited Partnership, KR Suburban, L.P., Fox Run, Limited
Partnership, KR MacArthur Associates, L.P., KR Best Associates,
L.P., KR 69th Street, L.P., KR Trust One, Inc., KR Manchester,
Inc., KR Street Associates, L.P., KR Orange, Inc., KR
Collegetown, Inc., KR Hillcrest Mall, Inc. and KR Pilgrim, L.P.
(collectively, "Borrower").  The Accounts are further described
as set forth on Schedule I attached hereto.  Pursuant to a
Collection Account Security, Pledge and Assignment Agreement,
dated as of the date hereof (the "Security Agreement"), Borrower
has agreed with the Bank and KRT Origination Corp., as lender
("Lender") to establish and maintain the Accounts and to confirm
and/or create a security interest in favor of the Bank as agent
for Lender in the following (the "Account Collateral"):  the
Accounts, all funds held therein and all certificates and
instruments, if any, from time to time representing or evidencing
the Accounts, all interest, dividends, cash, instruments and
other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all
of the foregoing and all proceeds of any and all of the foregoing
other than Account Collateral distributed to the Borrower under
the Security Agreement.  It is a condition to the continued
maintenance of the Accounts with the Bank that the Bank agrees to
this letter agreement.

          By signing this letter agreement, the parties agree
with each other as follows:

          1.  Notwithstanding anything to the contrary in any
other agreement relating to the Accounts, (a) the Accounts will
be entitled: (i) "State Street Bank and Trust Company, as agent,
Re: KRT Property Holdings, Inc., Hillcrest Plaza Limited
Partnership, KR Suburban, L.P., Fox Run, Limited Partnership, KR
MacArthur Associates, L.P., KR Best Associates, L.P., KR 69th
Street, L.P., KR Trust One, Inc., KR Manchester, Inc., KR Street
Associates, L.P., KR Orange, Inc., KR Collegetown, Inc., KR
Hillcrest Mall, Inc. and KR Pilgrim, L.P., Receipts Account," and
(ii) "State Street Bank and Trust Company, as agent, Re: KRT
Property Holdings, Inc., Hillcrest Plaza Limited Partnership, KR
Suburban, L.P., Fox Run, Limited Partnership, KR MacArthur
Associates, L.P., KR Best Associates, L.P., KR 69th Street, L.P.,
KR Trust One, Inc., KR Manchester, Inc., KR Street Associates,
L.P., KR Orange, Inc., KR Collegetown, Inc., KR Hillcrest Mall,
Inc. and KR Pilgrim, L.P., Collection Account"; and (b) the
subaccounts thereunder: (i)  "State Street Bank and Trust
Company, as agent, Re: KRT Property Holdings, Inc., Hillcrest
Plaza Limited Partnership, KR Suburban, L.P., Fox Run, Limited
Partnership, KR MacArthur Associates, L.P., KR Best Associates,
L.P., KR 69th Street, L.P., KR Trust One, Inc., KR Manchester,
Inc., KR Street Associates, L.P., KR Orange, Inc., KR
Collegetown, Inc., KR Hillcrest Mall, Inc. and KR Pilgrim, L.P.,
Capital and TI Reserve Account," (ii) "State Street Bank and
Trust Company, as agent, Re: KRT Property Holdings, Inc.,
Hillcrest Plaza Limited Partnership, KR Suburban, L.P., Fox Run,
Limited Partnership, KR MacArthur Associates, L.P., KR Best
Associates, L.P., KR 69th Street, L.P., KR Trust One, Inc., KR
Manchester, Inc., KR Street Associates, L.P., KR Orange, Inc., KR
Collegetown, Inc., KR Hillcrest Mall, Inc. and KR Pilgrim, L.P.,
Sinking Fund Account," and (iii) "State Street Bank and Trust
Company, as agent, Re: KRT Property Holdings, Inc., Hillcrest
Plaza Limited Partnership, KR Suburban, L.P., Fox Run, Limited
Partnership, KR MacArthur Associates, L.P., KR Best Associates,
L.P., KR 69th Street, L.P., KR Trust One, Inc., KR Manchester,
Inc., KR Street Associates, L.P., KR Orange, Inc., KR
Collegetown, Inc., KR Hillcrest Mall, Inc. and KR Pilgrim, L.P.,
Default Interest Account," and withdrawals therefrom will be
permitted only in accordance with the Security Agreement.

          2.  The Bank shall be entitled to exercise any and all
rights of Borrower in respect of the Accounts and Borrower
authorizes the Bank to exercise any and all rights in respect of
the Accounts (provided that such exercise is consistent with the
Security Agreement) as the Bank shall deem reasonably necessary
or desirable in order to effectuate the provisions of this letter
agreement.  The Bank shall, as soon as practicable after its
exercise of such rights, notify Borrower and Lender in writing of
such exercise, provided, however, that in no event shall any
failure by the Bank to so notify Borrower affect in any way the
Bank's rights under this Paragraph 2.  The Bank hereby waives any
and all rights it may have at law or otherwise to set off, or
make any claim, against the Accounts, other than the right to
receive compensation and indemnification under the Security
Agreement.

          3.  Notwithstanding any other provisions of this letter
agreement, it is agreed that the Bank shall not be liable either
directly or indirectly for any action taken by it or any of its
directors, officers, agents or employees in accordance with this
letter agreement except for its or their own gross negligence or
bad faith.  In no event shall the Bank be liable either directly
or indirectly for losses or delays resulting from force majeure,
computer malfunctions, interruption of communication facilities,
labor difficulties or other causes beyond the Bank's reasonable
control or for consequential damages.

          4.  This letter agreement shall be effective as of the
date above written.  Neither this letter agreement nor any
provisions hereof may be changed, amended, modified or waived
orally, but only by an instrument in writing signed by the
parties hereto and consented to by Lender.  Any provisions of
this letter agreement which may prove unenforceable under any law
or regulation shall not affect the validity of any other
provision hereof.

          5.  All notices, demands, requests, consents, approvals
and other communications (each herein a "Notice" or collectively
"Notices") required, permitted, or desired, to be given hereunder
shall be in writing and (i) sent by telecopy or by registered or
certified mail, postage prepaid, return receipt requested or (ii) 
delivered by hand or reputable overnight courier service,
addressed to the party to be so notified at its address
hereinafter set forth, or to such other address as such party
shall have specified most recently by like Notice.


If to the Bank:          State Street Bank and Trust
                         Company Two International
                         Place-5th Floor
                         Boston, Massachusetts 02110
                         Attn: Corporate Trust
                         Facsimile: (617) 664-5367

If to Borrower:          KRT Property Holdings, Inc.,
                         Hillcrest Plaza Limited
                         Partnership, KR Suburban,
                         L.P., Fox Run, Limited
                         Partnership, KR MacArthur
                         Associates, L.P., KR Best
                         Associates, L.P., KR 69th
                         Street, L.P., KR Trust One,
                         Inc., KR Manchester, Inc., KR
                         Street Associates, L.P., KR
                         Orange, Inc., KR Collegetown,
                         Inc., KR Hillcrest Mall, Inc.
                         and KR Pilgrim, L.P., c/o
                         Kranzco Realty Trust
                         128 Fayette Street
                         Conshohocken, Pennsylvania
                           19428
                         Attn: Robert Dennis
                         Facsimile: (610) 941-9193

With a Copy to:          Robinson Silverman Pearce
                           Aronsohn & Berman LLP 
                         1290 Avenue of the Americas
                         New York, New York 10104 
                         Attn: Alan S. Pearce, Esq.
                         Facsimile: (212) 541-4630

If to Lender:            KRT Origination Corp.
                         c/o Kranzco Realty Trust
                         128 Fayette Street
                         Conshohocken, Pennsylvania 
                          
                         19428
                         Attn: Norman M. Kranzdorf
                         Facsimile: (610) 941-9193

          6.  This letter agreement shall not be assignable by
the Bank without the consent of the undersigned (which shall not
be unreasonably withheld) and Lender and shall not be assignable
by the undersigned.  This letter agreement shall be binding upon
the parties and their respective successors and permitted assigns
and shall inure to the benefit of the parties and their
respective successors and permitted assigns.  The Bank may
terminate this letter agreement only upon thirty (30) days' prior
written notice to Borrower in accordance with Section 14 of the
Security Agreement.  Upon such termination the Bank shall hold
all funds in the Accounts until it receives instructions from
Lender or its successor instructing it how to dispose of such
funds.

          7.  This letter agreement shall be governed by and
construed in accordance with the laws of the State of New York
without regard to conflicts of law principles of such State.

          8.  The rights and remedies of the Bank as set forth in
the Security Agreement are expressly incorporated in this letter
agreement.

          9.  This letter agreement shall be subject to all of
the terms, covenants and conditions of the Security Agreement all
of which are incorporated herein by reference as if fully set
forth herein.

                                   Very truly yours,

                                   BORROWER:

                                   KRT PROPERTY HOLDINGS, INC.


                                   By:---------------------------
                                       Name: Norman Kranzdorf
                                       Title:    President


                                   HILLCREST PLAZA LIMITED
                                    PARTNERSHIP

                                   By KR Hillcrest, Inc.


                                      By:------------------------
                                          Name:  Norman Kranzdorf
                                          Title:    President


                                   KR SUBURBAN, L.P.

                                   By KR Suburban, Inc.


                                      By:------------------------ 
                                     
                                          Name:  Norman Kranzdorf
                                          Title:    President


 [Signatures to Cash Collateral Agreement continue on following
page]

                                   FOX RUN, LIMITED PARTNERSHIP

                                   By Fox Run, Inc.


                                      By:------------------------
                                          Name:  Norman Kranzdorf
                                          Title:     President

                                   KR MACARTHUR ASSOCIATES, L.P.

                                   By KR MacArthur, Inc.


                                     By:------------------------- 
                                        Name:  Norman Kranzdorf
                                         Title: President


                                   KR BEST ASSOCIATES, L.P.

                                   By KR Best Associates, Inc.


                                      By:--------------------
                                        Name:  Norman Kranzdorf
                                         Title:  President


                                   KR 69TH STREET, L.P.

                                   By KR 69th Street, Inc.

                                      By:------------------------
                                         Name:  Norman Kranzdorf
                                          Title:   President


                                   KR TRUST ONE, INC.


                                   By:-------------------------
                                       Name:   Norman Kranzdorf
                                       Title:     President

 [Signatures to Cash Collateral Agreement continue on following
page]
                                   KR MANCHESTER, INC.


                                   By:--------------------------
                                       Name:   Norman Kranzdorf
                                       Title:     President


                                   KR STREET ASSOCIATES, L.P.

                                   By KR Street, Inc.


                                      By:------------------------
                                          Name: Norman Kranzdorf
                                          Title:   President


                                   KR ORANGE, INC.


                                   By:---------------------------
                                       Name:  Norman Kranzdorf
                                       Title:    President


                                   KR COLLEGETOWN, INC.


                                   By:---------------------------
                                       Name:  Norman Kranzdorf
                                       Title:    President


                                   KR HILLCREST MALL, INC.


                                   By:------------------------
                                       Name:  Norman Kranzdorf
                                       Title:    President


 [Signatures to Cash Collateral Agreement continue on following
page]
                                   KR PILGRIM, L.P.

                                   By KR Pilgrim, Inc.


                                      By:------------------------
                                          Name:  Norman Kranzdorf
                                          Title:   President

ACKNOWLEDGED AND AGREED TO
AS OF THE DATE FIRST
ABOVE WRITTEN:

STATE STREET BANK AND
  TRUST COMPANY, as Agent

By:-----------------------------
   Name:  James Byrnes
   Title:                            SCHEDULE I

Account Number                          Account Name
--------------                          -------------
1412912975          State Street Bank and Trust Company, as
                    agent, Re:  KRT Property
(CoreStates Bank)   Holdings, Inc., Hillcrest Plaza Limited
                    Partnership, KR Suburban, L.P., Fox Run,
                    Limited Partnership, KR MacArthur Associates,
                    L.P., KR Best Associates, L.P., KR 69th
                    Street, L.P., KR Trust One, Inc., KR
                    Manchester, Inc., KR Street Associates, L.P.,
                    KR Orange, Inc., KR Collegetown, Inc., KR
                    Hillcrest Mall, Inc. and KR Pilgrim, L.P.,
                    Receipts Account

990-01265           State Street Bank and Trust Company, as
                    agent, Re:  KRT Property
(State Street       Holdings, Inc., Hillcrest Plaza Limited
Partnership, KR     L.P., Fox Run, Limited Partnership, KR
Suburban, Bank      MacArthur Associates, L.P.,
and Trust           KR Best Associates, L.P., KR 69th Street,   
Company)            L.P., KR Trust One, Inc., KR Manchester,
                    Inc., KR Street Associates, L.P., KR Orange,
                    Inc., KR Collegetown, Inc., KR Hillcrest
                    Mall, Inc. and KR Pilgrim, L.P., Collection
                    Account

990-01265           State Street Bank and Trust Company, as
                    agent, Re:  KRT Property
(State Street       Holdings, Inc., Hillcrest Plaza Limited
                    Partnership, KR Suburban,
Bank and Trust      L.P., Fox Run, Limited Partnership, KR
                    MacArthur Associates, L.P.,
Company)            KR Best Associates, L.P., KR 69th Street,
                    L.P., KR Trust One, Inc., KR Manchester,
                    Inc., KR Street Associates, L.P., KR Orange,
                    Inc., KR Collegetown, Inc., KR Hillcrest
                    Mall, Inc. and KR Pilgrim, L.P., Capital and
                    TI Reserve Account

990-01265           State Street Bank and Trust Company, as
                    agent, Re:  KRT Property
(State Street       Holdings, Inc., Hillcrest Plaza Limited
                    Partnership, KR Suburban,
Bank and Trust      L.P., Fox Run, Limited Partnership, KR
                    MacArthur Associates, L.P.,
Company)            KR Best Associates, L.P., KR 69th Street,
                    L.P., KR Trust One, Inc., KR Manchester,
                    Inc., KR Street Associates, L.P., KR Orange,
                    Inc., KR Collegetown, Inc., KR Hillcrest
                    Mall, Inc. and KR Pilgrim, L.P., Sinking Fund
                    Account

990-01265           State Street Bank and Trust Company, as
                    agent, Re: KRT Property
(State Street       Holdings, Inc., Hillcrest Plaza Limited
                    Partnership, KR Suburban,
Bank and Trust      L.P., Fox Run, Limited Partnership, KR
                    MacArthur Associates, L.P.,
Company)            KR Best Associates, L.P., KR 69th Street,
                    L.P., KR Trust One, Inc., KR Manchester,
                    Inc., KR Street Associates, L.P., KR Orange,
                    Inc., KR Collegetown, Inc., KR Hillcrest
                    Mall, Inc. and KR Pilgrim, L.P., Default
                    Interest Account
                                                Exhibit C
                            ----------

     "Eligible Investments" shall mean at any time, any one or
more of the following obligations and securities (each
capitalized term not otherwise defined herein shall have the
respective meaning set forth in the Trust and Servicing
Agreement):

          (a)  direct debt obligations of, and debt obligations
fully guaranteed as to timely payment of principal and interest
by, the United States, FNMA, FHLMC, or any agency or
instrumentality thereof, provided such obligations are backed by
the full faith and credit of the United States;

          (b)   general obligations of or debt obligations
guaranteed by any state of the United States, or the District of
Columbia, in each case receiving the highest long-term debt
rating of the Rating Agency, or such lower rating as will not
result in the downgrading or withdrawal of the ratings then
assigned to the Class A, Class B, Class C or Class D Certificates
by the Rating Agency as evidenced by a letter confirming such
result by the Rating Agency;

          (c)  commercial or finance company paper or demand
notes that constitute vehicles for commercial paper which are
then rated in the highest unsecured commercial or finance company
paper rating category of the Rating Agency (whether or not
published by the Rating Agency) or if such commercial or finance
company paper is not then rated by the Rating Agency, which is
then rated in the highest unsecured commercial or finance company
paper rating category by at least two other nationally recognized
rating agencies, or such lower category as will not result in the
downgrading or withdrawal of the ratings then assigned to the
Class A, Class B, Class C or Class D Certificates by the Rating
Agency as evidenced by a letter confirming such result by the
Rating Agency;

          (d)  certificates of deposit, demand or time deposits,
federal funds or bankers' acceptances issued by any depository
institution or trust company incorporated under the laws of the
United States or of any state thereof and subject to supervision
and examination by federal or state banking authorities, provided
that the short-term unsecured debt obligations of such depository
institution or trust company (or in the case of the principal
depository institution or trust company in a holding company
system, the short-term unsecured debt obligations of such holding
company) are rated F-1+ by the Rating Agency (whether or not
published by the Rating Agency) or, if not then rated by the
Rating Agency, are rated in the highest short-term rating
category by at least two other nationally recognized rating
agencies, or such lower or other rating category as will not
result in the downgrading or withdrawal of the ratings then
assigned to the Class A, Class B, Class C or Class D Certificates
by the Rating Agency as evidenced by a letter confirming such
result by the Rating Agency;

          (e)   guaranteed reinvestment agreements issued by any
bank, insurance company or other corporation and providing for a
return in the nature of interest; provided that the short-term
unsecured debt obligations of such corporation (or in the case of
the principal depository institution or trust company in a
holding company system, the short-term unsecured debt obligations
of such holding company) are rated F-1+ by the Rating Agency
(whether or not published by the Rating Agency) or, if not then
rated by the Rating Agency, are rated in the highest short-term
rating category by at least two other nationally recognized
rating agencies, or such lower or other rating category as will
not result in the downgrading or withdrawal of the ratings then
assigned to the Class A, Class B, Class C or Class D Certificates
by the Rating Agency as evidenced by a letter confirming such
result by the Rating Agency;

          (f)  repurchase obligations with respect to any
security described in clauses (a) and (b) of this definition and
providing for a return in the nature of interest, in each case
entered into with a depository institution or trust company
(acting as principal) described in clause (d) above or, on an
overnight basis, with the Trustee;

          (g)  securities (other than stripped bonds or stripped
coupons) bearing interest or sold at a discount issued by any
corporation incorporated under the laws of the United States or
any state thereof, which are rated AA by the Rating Agency
(whether or not published by the Rating Agency) or, if not then
rated by the Rating Agency, are rated in the highest long-term
rating category by at least two other nationally recognized
rating agencies, or in such lower rating category as will not
result in the downgrading or withdrawal of the ratings then
assigned to the Class A, Class B, Class C or Class D Certificates
by the Rating Agency as evidenced by a letter confirming such
result by the Rating Agency;

          (h)  such other investments bearing interest or sold at
a discount, or earning a return "in the nature of interest"
within the meaning of Treasury Regulations Section 1.860G-2(g) (1), (as
evidenced by an Opinion of Counsel delivered to the Trustee by
the Servicer at its own expense), as are acceptable to the Rating
Agency, and otherwise treated as a "permitted investment" under
Section 860(G)(a)(5) of the Code, as will not result in the
downgrading or withdrawal of the ratings then assigned to the
Class A, Class B, Class C or Class D Certificates by the Rating
Agency as evidenced by a letter confirming such result by the
Rating Agency; and

          (i)  money market funds investing in such obligations
and securities set forth in clause (a) above, which funds
maintain a constant net asset value and which are rated AAA by
the Rating Agency (whether or not published by the Rating Agency)
or, if not then rated by the Rating Agency, are rated in the
highest long-term rating category by at least two other
nationally recognized rating agencies, or in such lower rating
category as will not result in the downgrading or withdrawal of
the ratings then assigned to the Class A, Class B, Class C or
Class D Certificates by the Rating Agency as evidenced by a
letter confirming such result by the Rating Agency.

          Unless otherwise specified herein, (i) any such
Permitted Investment must be available for withdrawal without
penalty and must mature no later than the Business Day
immediately preceding the date of anticipated use, (ii) no such
instrument set forth above shall constitute a Permitted
Investment if such instrument evidences either (a) a right to
receive only interest payments with respect to the obligations
underlying such instrument or (b) a right to receive both
principal and interest payments derived from obligations
underlying such instrument and the principal and interest
payments with respect to such instrument provide for a yield to
maturity of greater than 120% of the yield to maturity at par of
such underlying obligations; provided that if any such instrument
or security is redeemable by the issuer thereof, it shall not be
redeemable at less than par and if redeemable by any party, such
redemption must be without penalty or discount; and (iii) no
Permitted Investment shall be purchased at a price in excess of
the face amount thereof.
                     CASH COLLATERAL ACCOUNT
            SECURITY, PLEDGE AND ASSIGNMENT AGREEMENT


                              among


      KRT Property Holdings, Inc., Hillcrest Plaza Limited
Partnerships, KR Suburban, L.P., Fox Run Limited Partnership, KR
  MacArthur Associates, L.P., KR Best Associates, L.P., KR 69th
Street, L.P., KR Trust One, Inc., KR Manchester, Inc., KR Street
                        Associates, L.P.,
 KR Orange, Inc., KR Collegetown, Inc., KR Hillcrest Mall, Inc.
and KR Pilgrim, L.P.,
                           as Borrower


                               and

          State Street Bank and Trust Company, as Agent

                               and

                KRT Origination Corp., as Lender


                    Dated as of June 18, 1996