REPLACEMENT RESERVE AND SECURITY AGREEMENT

          THIS REPLACEMENT RESERVE AND SECURITY AGREEMENT ("Agreement") is made
as of the ____ day of ______, 1998, by and between KENNEDY BOULEVARD ASSOCIATES
I, L.P., a Pennsylvania limited partnership having an address at c/o Insignia
Properties Trust, One Insignia Financial Plaza, Greenville, South Carolina 29601
("Borrower") and LEHMAN BROTHERS HOLDINGS INC. D/B/A LEHMAN CAPITAL, A DIVISION
OF LEHMAN BROTHERS HOLDINGS INC., a Delaware corporation having its principal
place of business at Three World Financial Center, 200 Vesey Street, New York,
New York  10285 ("Lender").

                                  RECITALS:

          A.   Borrower by its promissory note of even date herewith given to
Lender (the note together with all extensions, renewals, modifications,
substitutions and amendments thereof shall collectively be referred to as the
"Note") is indebted to Lender in the principal sum of $23,000,000.00 in lawful
money of the United States of America, with interest from the date thereof at
the rates set forth in the Note (the indebtedness evidenced by the Note,
together with such interest accrued thereon, shall collectively be referred to
as the "Loan"), principal and interest to be payable in accordance with the
terms and conditions provided in the Note.

          B.   The Loan is secured by, among other things, a Mortgage and
Security Agreement (the "Security Instrument"), dated as of even date herewith,
which grants Lender a first lien on the property encumbered thereby (the
"Property").  All and any of the documents other than the Note, the Security
Instrument and this Agreement now or hereafter executed by Borrower and/or
others and by or in favor of Lender, which wholly or partially secure or
guarantee payment of the Note are referred to as the "Other Security Documents."

          C.   Lender requires as a condition to the making of the Loan that
Borrower enter into this Agreement and make certain deposits with Lender as
provided in this Agreement as additional security for all of Borrower's
obligations under the Note, the Security Instrument and the Other Security
Documents.

                                  AGREEMENT:

          For good and valuable consideration the parties hereto agree as
follows:

          1.   Deposits.

          (a)  Concurrently with the execution of this Agreement, Borrower shall
deposit with Lender -0- Dollars ($-0-) (the "Deferred Maintenance Deposit").
The Deferred Maintenance Deposit represents one hundred percent (100%) of the
estimated cost to complete the Replacements (as defined in Section 3(a))
described on Exhibit C.

          (b)  On each date that a regularly scheduled payment of principal or
interest is due under the Note, Borrower shall deposit with Lender the
applicable Monthly Deposit (defined in Section 1(c) of this Agreement.

          (c)  The "Monthly Deposit" required to be made each month during the
term of the Loan is $17,489.75 for the payment of Replacements and Tenant
Improvements and Leasing Commissions.  The amount of the Monthly Deposit may be
increased by Lender in accordance with Section 8 of this Agreement.

          (d)  65% of each Monthly Deposit (i.e. $11,295.58 of the Monthly
Deposit) shall be allocated for the payment of Replacements (the "Replacement
Account"). The remaining portion of each Monthly Deposit (i.e. $6,194.17 of the
Monthly Deposit) shall be allocated for the payment of Tenant Improvements and
Leasing Commissions (as defined below) (the "Leasing Account").  Lender shall
maintain a record of all deposits into and withdrawals from the Reserve (defined
in Section 1(e) of this Agreement) and their allocation to the Replacement
Account and the Leasing Account.

          (e)  Lender shall deposit each Monthly Deposit, as received, in an
escrow account (the "Reserve").  The Reserve shall not constitute a trust fund
and may be commingled with other monies held by Lender.  Lender or a designated
representative of Lender shall have the sole right to make withdrawals from such
account.  Provided Borrower complies with the provisions of Section 12 hereof,
the Reserve shall be held in an interest bearing account.  Lender shall have no
responsibility or liability for the amount of interest earned on the Reserve.
All interest earned on funds in the Reserve shall be added to and become part of
the Reserve, shall be allocated pro rata to the Replacement Account and the
Leasing Account, and shall be for the benefit of Borrower, subject to Lender's
rights pursuant to the terms of this Agreement.

          2.   Security.

          (a)  Borrower assigns to Lender the Deferred Maintenance Deposit and
the Reserve as additional security for all of Borrower's obligations under the
Note, the Security Instrument and the Other Security Documents; provided,
however, that Lender shall make disbursements from the Reserve in accordance
with the terms of this Agreement.

          3.   Disbursements.

          (a)  Lender shall make disbursements from the portion of the Reserve
allocated to the Replacement Account to reimburse Borrower for the costs of
those items listed in Exhibit A attached hereto and made a part of this
Agreement (collectively the "Replacements").  Lender shall not be obligated to
make disbursements from the portion of the Reserve allocated to the Replacement
Account to reimburse Borrower for the costs described on Exhibit B attached
hereto and made a part hereof.

          (b)  Lender shall make disbursements from the portion of the Reserve
allocated to the Leasing Account to reimburse Borrower for the cost of (i)
tenant improvements required under any new Lease or modification, renewal or
extension of any existing Lease which is entered into after the date hereof,
provided that (A) any such Lease, modification, renewal or extension is entered
into in accordance with terms and provisions of the Security Instrument and the
Other Security Documents (collectively, the "Tenant Improvements") and (B) such
disbursement shall not, with respect to such Lease, modification, renewal or
extension, exceed the amount shown on Exhibit E on a per square foot basis, and
(ii) leasing commissions (including any so-called "override" leasing commissions
which may be due to any leasing or rental agent engaged by Borrower for the
Property in the event that an agent other than such agent shall also be entitled
to a leasing commission) incurred by Borrower in connection with the leasing of
the Property or a portion thereof, provided that (A)(x) such leasing commissions
and "override" leasing commissions are reasonable and customary for properties
similar to the Property and the portion of the Property leased for which such
leasing commission and "override" leasing commission is due, and (y) the amount
of such leasing commissions and "override" leasing commissions are determined
pursuant to arms length transactions between Borrower and any leasing agent to
which a leasing commission or "override" leasing commission is due, and
excluding any leasing commissions and "override" leasing commissions which shall
be due any general partner, or shareholder of Borrower (collectively, "Leasing
Commissions"), (B) such commissions are payable in connection with a new Lease
or modification, renewal or extension of an existing Lease which is entered into
after the date hereof in accordance with the provisions of the Security
Instrument and the Other Security Documents, and (C) such disbursement shall
not, with respect to any Lease or modification, extension or renewal thereof,
exceed the amount shown on Exhibit E on a per square foot basis.

          (c)  Lender shall, upon written request from Borrower and satisfaction
of the requirements set forth in this Section 3 and Section 4 below, disburse to
Borrower amounts from the Reserve necessary to reimburse Borrower for the actual
costs of (i) any approved Leasing Commissions upon satisfactory evidence that
the obligations of the leasing agent have been fully performed and (ii) any
approved Replacements and Tenant Improvements upon satisfactory completion of
such Replacements or Tenant Improvements (or upon partial completion in the case
of Replacements or Tenant Improvements made pursuant to Section 3(h)), as
determined by Lender in its sole discretion.  In no event shall Lender be
obligated to disburse funds from the Reserve if an Event of Default (as defined
in Section 5.1 herein) exists under the Note, the Security Instrument, or this
Agreement (including but not limited to Borrower's failure to pay in full any
fees, costs and expenses then due and payable under this Agreement).

          (d)  Each request for disbursement from the Reserve in connection with
a Replacement or a Tenant Improvement shall be in a form specified or approved
by Lender and shall at a minimum set forth:

          (i)  the Replacements or Tenant Improvements for which such
disbursement is requested,

          (ii) the quantity and price of each item purchased, if the Replacement
or Tenant Improvement includes the purchase or replacement of specific items
(such as appliances),

          (iii)   the price of all materials (grouped by type or category) used
in any Replacement or Tenant Improvement other than the purchase or replacement
of specific items, and

          (iv) the cost of all contracted labor or other services applicable to
each Replacement or Tenant Improvement for which such request for disbursement
is made.

With each such request Borrower shall certify that the applicable Replacements
and Tenant Improvements have been completed, and have been made in accordance
with all applicable laws, ordinances, and regulations of any governmental office
or authority having jurisdiction over the Property.  Each request for
disbursement shall include (i) to the extent the items set forth in such request
have been paid by Borrower, waivers of lien from each contractor providing
materials, labor or services, and evidence of the payment of such items
satisfactory to Lender, (ii) to the extent such items have not been paid by
Borrower, copies of invoices for all items or materials purchased and all
contracted labor or services in form satisfactory to Lender and (iii) unless
previously delivered to Lender in accordance with the terms hereof, waivers of
lien and evidence satisfactory to Lender that all contractors and other persons
who were the subject of previous disbursements from the Reserve have been paid
in full.

          (e)  Each request for disbursement from the Reserve in connection with
a Leasing Commission shall be in a form specified or approved by Lender and
shall at a minimum set forth.

               (i) The Leasing Commissions for which such disbursement is
requested; and

               (ii) The amount of each Leasing Commission.

With each such request Borrower shall certify that the obligations of the
leasing agent have been fully performed, and Borrower shall also deliver a
certification from the leasing agent that no further sums are due to it in
connection with the applicable Leasing Commission. Each request for disbursement
shall include copies of invoices and bills for such Leasing Commissions.

          (f)  To the extent disbursements from the Reserve are intended to pay
contractors and other persons who have not yet been paid by Borrower, such
disbursements shall constitute a trust fund in the possession of Borrower for
the benefit of such persons and shall be promptly applied by Borrower to the
payment of such persons.

          (g)  Except as provided in Section 3(h), each request for disbursement
from the Reserve shall be made only after completion of the Replacement for
which such disbursement is requested.  Borrower shall provide Lender evidence
satisfactory to Lender, of completion.

          (h)  If (i) the time required to complete a Replacement or Tenant
Improvement exceeds one month, (ii) the contractor performing a Replacement or
Tenant Improvement requires periodic payments pursuant to terms of a written
contract, (iii) the total cost of such Replacement or Tenant Improvement exceeds
$25,000, and (iv) Lender has approved in writing in advance such periodic
payments, a request for reimbursement from the portion of Reserve allocated to
the Replacement Account or the Leasing Account (as the case may be) may be made
after completion of a portion of the work under such contract, provided (u) such
contract requires payment upon completion of such portion of the work, (v) the
materials for which the request is made are on site at the Property and are
properly secured or have been installed in the Property, (w) all other
conditions in this Agreement for disbursement have been satisfied, (x) funds
remaining in the Replacement Account or Leasing Account (as the case may be)
are, in Lender's judgment, sufficient to complete such Replacement or Tenant
Improvement and the other Replacements or Tenant Improvements when required (y)
the cost of the portion of the work completed under such contract exceeds
$5,000, and (z) each contractor or subcontractor receiving payments under such
contract shall provide a waiver of lien with respect to amounts which have been
paid to that contractor or subcontractor.  Borrower shall not make a request for
disbursements more frequently than monthly under this subsection.

          (i)  Except for disbursements to be made pursuant to Section 3(h),
Borrower shall not make a request for disbursement from the Reserve more
frequently than once in any calendar month.

          (j)  Borrower shall not make a request for disbursement from the
Reserve in an amount less than the lesser of (i) $5,000, or (ii) except as set
forth in Section 3(h), the total cost of the Replacement, Tenant Improvement or
Leasing Commission  for which the disbursement is requested.

          (k)  Borrower shall not make a request for disbursement from the
Reserve (A) for a Replacement in an amount greater than the amount allocated to
the Replacement Account, or (B) for a Tenant Improvement or Leasing Commission
in an amount greater than the amount allocated to the Leasing Account.

          (l)  In connection with any Replacement or Tenant Improvement that is
(i) a structural repair or improvement, or (ii) a replacement or repair of a
major component or element of any part of the Property, Lender may require, at
Borrower's expense, one or more inspections and/or certificates of completion by
an appropriate independent, qualified professional (e.g., architect, engineer,
consultant) approved by Lender.

          4.   Performance of Replacements.

          4.1  Workmanlike Completion; Additional Replacements.

          (a)  Borrower shall complete all Replacements and Tenant Improvements
in a good and workmanlike manner as soon as practicable following the
commencement of making each such Replacement or Tenant Improvement.  Lender
shall have the right to approve all subcontractors, contractors or other parties
providing labor or materials in connection with the Replacements and Tenant
Improvements costing in excess of $10,000, which approval shall not be
unreasonably withheld or delayed.  Upon Lender's request, Borrower shall assign
any contract to Lender.

          (b)  If Borrower abandons or fails to proceed diligently with and
complete any Replacements and Tenant Improvements in a timely fashion or an
Event of Default has occurred, Lender shall have the right (but not the
obligation) to enter upon the Property and take over and cause the completion of
such Replacements and Tenant Improvements.  Any contracts entered into or
indebtedness incurred upon the exercise of such right may be in the name of
Borrower, and Lender is hereby irrevocably appointed the attorney in fact of
Borrower, such appointment being coupled with an interest, to enter into such
contracts, incur such obligations, enforce any contracts or agreements made by
or on behalf of Borrower (including the prosecution and defense of all actions
and proceedings in connection with the Replacements and Tenant Improvements and
the payment, settlement or compromise of all bills and claims for materials and
work performed in connection with the Replacements and Tenant Improvements) and
do any and all things necessary or proper to complete any Replacements and
Tenant Improvements including signing Borrower's name to any contracts and
documents as may be deemed necessary by Lender.  In no event shall Lender be
required to expend its own funds to complete any Replacements and Tenant
Improvements, but Lender may, in its sole discretion, advance such funds.  Any
funds advanced shall be added to the outstanding balance of the Loan, secured by
the Security Instrument, bear interest at the Default Rate (as defined in the
Note) and payable to Lender by Borrower in accordance with the provisions of the
Security Instrument pertaining to the protection of Lender's security and
advances made by Lender.  Borrower waives any and all claims it may have against
Lender for materials used, work performed or resultant damage to the Property.

          4.2  Deferred Maintenance.

          Notwithstanding anything contained herein to the contrary, Borrower
agrees to perform all Replacements shown on Exhibit C within sixty (60) days
after the date hereof, except to the extent a different time period with respect
to the completion of any such Replacement is expressly set forth on Exhibit C,
in which case such Replacement shall be performed within the time period so
specified.  Notwithstanding anything to the contrary contained herein, (i) the
Deferred Maintenance Deposit shall be used solely for the payment of the actual
costs of the Replacements described on Exhibit C until such time as such
Replacements are completed in accordance with the terms of this Agreement and
(ii) Borrower shall not be entitled to receive disbursements from the Deferred
Maintenance Deposit in excess of the amounts budgeted for each Replacement on
Exhibit C, except to the extent that Borrower shall achieve cost savings with
respect to other amounts budgeted for Replacement items described on Exhibit C,
in which event such cost savings may be applied to cost overruns with respect to
other Replacement items described therein.  All conditions, covenants and
agreements set forth herein with respect to a disbursement from the Reserve
shall apply to the disbursements from the Deferred Maintenance Deposit.

          4.3  Entry Onto Property: Inspections.

          (a)  Borrower shall permit Lender or Lender's representatives
(including an independent person such as an engineer, architect, consultant or
contractor) making Replacements or Tenant Improvements pursuant to Section
4.1(b) of this Agreement to enter onto the Property during normal business hours
(subject to the rights of tenants under their leases) (i) to inspect the
condition of the Property, (ii) inspect the progress of any Replacements or
Tenant Improvements and all materials being used in connection therewith, (iii)
to examine all plans and shop drawings relating to such Replacements or Tenant
Improvements which are or may be kept at the Property, and (iv) to complete any
Replacements or Tenant Improvements made pursuant to Sections 4.1 (b). Borrower
agrees to cause all contractors and subcontractors to cooperate with Lender or
Lender's representatives or such other persons described above in connection
with inspections described in this Section 4.3 or the completion of Replacements
or Tenant Improvements pursuant to Sections 4.1(b).

          (b)  Lender may inspect the Property in connection with any
Replacement or Tenant Improvement prior to disbursing funds from the Reserve for
such Replacement or Tenant Improvement.  In addition to Lender's costs and
expenses, Borrower shall pay Lender a reasonable inspection fee not exceeding
$400.00 for each such inspection by Lender. Lender, at Borrower's expense, also
may require an inspection by an appropriate independent qualified professional
selected by Lender and/or a copy of a certificate of completion by an
independent qualified professional acceptable to Lender prior to the
disbursement of any amounts from the Reserve.

          4.4  Lien-Free Completion.

          (a)  Borrower covenants and agrees that each of the Replacements and
Tenant Improvements and all materials, equipment, fixtures, or any other item
comprising a part of any Replacement or Tenant Improvement shall be constructed,
installed or completed, as applicable, free and clear of all mechanic's,
materialman's or other liens (except for those liens existing on the date of
this Agreement which have been approved in writing by Lender).

          (b)  Prior to each disbursement from the Reserve, Lender may require
Borrower to provide Lender with either (i) a search of title to the Property
effective to the date of the disbursement, or (ii) an endorsement to the title
insurance policy insuring Lender's interest in the Property which updates the
effective date of the policy to the date of the disbursement, which search or
title endorsement shows that no mechanic's or materialmen's liens or other liens
of any nature have been placed against the Property since the date of
recordation of the Security Instrument (other than liens which Borrower is
diligently contesting in good faith and which have been bonded off to the
satisfaction of Lender) and that title to the Property is free and clear of all
liens (other than the lien of the Security Instrument and any other liens
previously approved in writing by Lender, if any).

          (c)  In addition, as a condition to any disbursement for any
Replacement, series of related Replacements or Tenant Improvements, Lender may
require Borrower to obtain from each contractor, subcontractor, or materialman
an acknowledgment of payment and release of lien for work performed and
materials supplied. Any such acknowledgment and release shall conform to the
requirements of applicable law and shall cover all work performed and materials
supplied (including equipment and fixtures) for the Property by that contractor,
subcontractor or materialman through the date covered by the current
reimbursement request.

          5.   Event of Default.

          5.1  Event of Default Under this Agreement. An "Event of Default"
shall occur under this Agreement if Borrower fails to comply with any provision
of this Agreement and such failure is not cured within thirty (30) days after
notice from Lender, provided that, if such failure does not involve merely the
payment of money and cannot be cured within thirty (30) days of Lender's notice,
Borrower shall have such additional period of time, not to exceed ninety (90)
days from Lender's notice, to cure same before such failure shall constitute an
Event of Default hereunder.  Borrower understands that an Event of Default under
this Agreement shall be deemed to be an Event of Default under the terms of the
Note, the Security Instrument and the Other Security Documents, and that in
addition to the remedies specified in this Agreement, Lender shall be able to
exercise all of its rights and remedies under the Note, the Security Instrument
and the Other Security Documents upon an Event of Default.  If an Event of
Default occurs under the Note, the Security Instrument or any of the Other
Security Documents, such event shall be deemed an Event of Default hereunder.

          5.2  Application of Reserve and Deferred Maintenance Deposit Upon an
               Event of Default.

          (a)  The funds held in the Reserve and the Deferred Maintenance
Deposit are pledged as additional security for the indebtedness evidenced by the
Note and secured by the Security Instrument. Following the occurrence of an
Event of Default, Borrower shall immediately lose all of its rights to receive
disbursements from the Reserve and the Deferred Maintenance Deposit unless and
until all amounts secured by the Security Instrument have been paid in full and
the lien of the Security Instrument has been released or assigned by Lender.
Upon any such Event of Default, Lender may in its sole and absolute discretion,
use the Reserve and the Deferred Maintenance Deposit (or any portion thereof)
for any purpose, including but not limited to (i) repayment of any indebtedness
secured by the Security Instrument, including but not limited to principal
prepayments and the prepayment premium applicable to such full or partial
prepayments (as applicable); provided, however, that such application of funds
shall not cure or be deemed to cure any Event of Default; (ii) reimbursement of
Lender for all losses and expenses (including, without limitation, reasonable
legal fees) suffered or incurred by Lender as a result of such an Event of
Default; (iii) completion of the Replacements and Tenant Improvements as
provided in Section 4.1, or for any other repair or replacement to the Property;
(iv) payment of any Leasing Commissions then due and payable, or (v) payment of
any amount expended in exercising (and exercise) all rights and remedies
available to Lender at law or in equity or under this Agreement or under the
Note, the Security Instrument or any of the Other Security Documents.

          (b)  Nothing in this Agreement or the Security Instrument shall
obligate Lender to apply all or any portion of the Reserve or the Deferred
Maintenance Deposit on account of any Event of Default by Borrower or to
repayment of the indebtedness secured by the Security Instrument or in any
specific order of priority.

          5.3  Borrower's Other Obligations. Nothing contained in this Agreement
shall in any manner whatsoever alter, impair or affect the obligations of
Borrower, or relieve Borrower of any of its obligations to make payments and
perform all of its other obligations required under the Note, the Security
Instrument or the Other Security Documents.

          6.   Subsequent Requirement of Monthly Deposits. Commencing on the
first date that a regularly scheduled payment of principal or interest is due
under the Note, and continuing each consecutive month thereafter, Borrower shall
be required to make the Monthly Deposits provided for hereunder until and unless
Lender approves a temporary deferral or a reduction in the amount of the Monthly
Deposits; provided, however, that if Lender approves either a temporary deferral
or reduction in the amount of the Monthly Deposits, such action by Lender shall
not prevent Lender, in the event of an Event of Default by Borrower under this
Agreement, the Note, the Security Instrument or the Other Security Documents (or
upon any other date that Lender may deem appropriate) from requiring Borrower to
subsequently resume payment of the Monthly Deposits.

          7.   Remedies Cumulative.  None of the rights and remedies herein
conferred upon or reserved to Lender under this Agreement is intended to be
exclusive of any other rights, and each and every right shall be cumulative and
concurrent, and may be enforced separately, successively or together, and may be
exercised from time to time as often as may be deemed necessary by Lender.

          8.   Insufficient Balance.  The insufficiency of any balance in the
Reserve or the Deferred Maintenance Deposit shall not abrogate Borrower's
agreement to fulfill its obligations contained herein or in the Security
Instrument.  In the event Lender determines that (i) the balance of any of the
Replacement Account or the Leasing Account is less than the current estimated
cost to make the Replacements or the Tenant Improvements and Leasing Commissions
which Borrower, in the prudent operation of the Property, can reasonably be
anticipated to incur during the succeeding twenty four (24) months, or (ii) the
balance of the Deferred Maintenance Deposit is less than the amount necessary to
complete the items set forth on Exhibit D, Borrower shall deposit the shortage
within ten (10) days of request by Lender. In the event Lender determines from
time to time based on Lender's inspections that the amount of the Monthly
Deposit is insufficient to fund the cost of likely Replacements, Tenant
Improvements and Leasing Commissions and related contingencies that may arise
during the remaining term of the Loan, Lender may require an increase in the
amount of the Monthly Deposits upon thirty (30) days prior written notice to
Borrower.

          9.   Indemnification.  Borrower agrees to indemnify Lender and to hold
Lender harmless from and against any and all actions, suits, claims, demands,
liabilities, losses, damages, obligations and costs and expenses (including
litigation costs and reasonable attorneys' fees and expenses) arising from or in
any way connected with the performance of the Replacements and Tenant
Improvements or the holding or investment of the Reserve or in connection with
any Leasing Commissions.  Borrower assigns to Lender all rights and claims
Borrower may have against all persons or entities supplying labor or materials
in connection with the Replacements and Tenant Improvements or acting as a
leasing agent in connection with Leasing Commissions; provided, however, that
Lender may not pursue any such right or claim unless an Event of Default has
occurred.

          10.  Determinations by Lender. In any instance in this Agreement where
the consent or approval of Lender may be given or is required, or where any
determination, judgment or decision is to be rendered by Lender under this
Agreement, the granting, withholding or denial of such consent or approval and
the rendering of such determination, judgment or decision shall be made or
exercised by Lender, at its sole and exclusive option and in its sole and
absolute discretion.

          11.  Borrower's Records. Borrower shall furnish such financial
statements, invoices, records, papers and documents relating to the Property as
Lender may reasonably require from time to time to make the determinations
permitted or required to be made by Lender under this Agreement.

          12.  Interest Fees.  If Borrower wishes to earn interest on the
Reserve, Borrower shall be required to pay a one-time set-up fee on the date
hereof of $250.

          13.  No Third Party Beneficiary.  This Agreement is intended solely
for the benefit of Borrower and Lender and their respective successors and
assigns, and no third party shall have any rights or interest in the Replacement
Reserve, this Agreement, the Note, the Security Instrument or any of the Other
Security Documents.  Nothing contained in this Agreement shall be deemed or
construed to create an obligation on the part of Lender to any third party, nor
shall any third party have a right to enforce against Lender any right that
Borrower may have under this Agreement.

          14.  Completion of Replacements.  Lender's approval of any plans for
any Replacement, any Tenant Improvement, release of funds from the Replacement
Reserve, inspection of the Property by Lender or Lender's agents, or other
acknowledgment of completion of any Replacement or Tenant Improvement in a
manner satisfactory to Lender shall not be deemed an acknowledgment or warranty
of Lender to any person that the Replacement or Tenant Improvement has been
completed in accordance with applicable building, zoning or other codes,
ordinances, statutes, laws, regulations or requirements of any governmental
agency.

          15.  No Agency or Partnership.  Nothing contained in this Agreement
shall constitute Lender as a joint venturer, partner or agent of Borrower, or
render Lender liable for any debts, obligations, acts, omissions,
representations, or contracts of Borrower.

          16.  Choice of Law.  This Agreement shall be governed, construed,
applied and enforced in accordance with the laws of the state in which the
Property is located and applicable laws of the United States of America.

          17.  Termination of Reserve. After payment in full of all
sums evidenced by the Note and secured by the Security Instrument and release or
assignment by Lender of the lien of the Security Instrument, Lender shall
disburse to Borrower all amounts remaining in the Reserve.

          18.  Notices.  All notices or other written communications to Borrower
or Lender hereunder shall be deemed to have been properly given (i) upon
delivery, if delivered in person with receipt acknowledged by the recipient
thereof, (ii) one (1) Business Day (hereinafter defined) after having been
deposited for overnight delivery with any reputable overnight courier service,
or (iii) three (3) Business Days after having been deposited in any post office
or mail depository regularly maintained by the U.S. Postal Service and sent by
registered or certified mail, postage prepaid, return receipt requested,
addressed to Borrower or Lender at their addresses set forth in the Security
Instrument or addressed as such party may from time to time designate by written
notice to the other parties.  For purposes of this Section 18, the term
"Business Day" shall mean a day on which commercial banks are not authorized or
required by law to close in New York, New York.  Either party by notice to the
other may designate additional or different addresses for subsequent notices or
communications.

          19.  No Oral Change.  This Agreement, and any provisions hereof, may
not be modified, amended, waived, extended, changed, discharged or terminated
orally or by any act or failure to act on the part of Borrower or Lender, but
only by an agreement in writing signed by the party against whom enforcement of
any modification, amendment, waiver, extension, change, discharge or termination
is sought.

          20.  Liability.  If Borrower consists of more than one person, the
obligations and liabilities of each such person hereunder shall be joint and
several.  This Agreement shall be binding upon and inure to the benefit of
Borrower and Lender and their respective successors and assigns forever.

          21.  Inapplicable Provisions.  If any term, covenant or condition of
this Agreement is held to be invalid, illegal or unenforceable in any respect,
this Agreement shall be construed without such provision.

          22.  Headings, etc.  The headings and captions of various paragraphs
of this Agreement are for convenience of reference only and are not to be
construed as defining or limiting, in any way, the scope or intent of the
provisions hereof.

          23.  Duplicate Originals; Counterparts.  This Agreement may be
executed in any number of duplicate originals and each duplicate original shall
be deemed to be an original.  This Agreement may be executed in several
counterparts, each of which counterparts shall be deemed an original instrument
and all of which together shall constitute a single Agreement.  The failure of
any party hereto to execute this Agreement, or any counterpart hereof, shall not
relieve the other signatories from their obligations hereunder.

          24.  Number and Gender.  Whenever the context may require, any
pronouns used herein shall include the corresponding masculine, feminine or
neuter forms, and the singular form of nouns and pronouns shall include the
plural and vice versa.

          25.  Definitions.  The word "Lender" as used herein includes Lender
and any and all of its agents.  All capitalized words and phrases not otherwise
defined herein shall have the meanings ascribed to them in the Security
Instrument.

          26.  Miscellaneous.  Wherever pursuant to this Agreement it is
provided that Borrower pay any costs and expenses, such costs and expenses shall
include, but not be limited to, legal fees and disbursements of Lender, whether
retained firms, the reimbursement for the expenses of in-house staff or
otherwise.

          27.  Exculpation.  Borrower's obligations under this Agreement are
subject to the provisions of paragraph 50 of the Security Instrument, and such
provisions are incorporated herein by reference.
                        [NO FURTHER TEXT ON THIS PAGE]
          IN WITNESS WHEREOF the undersigned have executed this agreement as of
the date and year first written above.


                    BORROWER:

                    KENNEDY BOULEVARD ASSOCIATES I, L.P., a Pennsylvania limited
                    partnership

                         By:  KENNEDY BOULEVARD ASSOCIATES II, L.P., a
                              Pennsylvania limited partnership, its general
                              partner

                              By:  KENNEDY BOULEVARD I GP, L.L.C., a South
                                   Carolina limited liability company, its
                                   general partner

                                   By:  CONSOLIDATED CAPITAL INSTITUTIONAL
                                        PROPERTIES, a California limited
                                        partnership, its sole member

                                        By:  CONCAP EQUITIES, INC., a Delaware
                                             corporation, its general partner

                                           By: /s/ Robert D. Long, Jr.
                                               Robert D. Long, Jr.
                                               Vice President


                    LENDER:

                    LEHMAN BROTHERS HOLDINGS INC., D/B/A LEHMAN CAPITAL, A
                    DIVISION OF LEHMAN BROTHERS HOLDINGS INC.

                    By:
                         Name:
                         Title:
                                  EXHIBIT A

LIST OF REPLACEMENTS


     Except as specifically excluded in Exhibit B hereof, Replacements shall
consist of all capital repairs or replacements to the improvements or personal
property located on the Property, including, but not limited to, (i) structural
improvements and replacements, (ii) resurfacing, striping and sealing of parking
lots, (iii) roofing, (iv) window, window treatment, storefront and door
replacements, (v) brick pointing, (vi) curbing, (vii) installation or
replacement of HVAC systems, (viii) substantial improvement and replacement of
plumbing, sprinkler and electrical systems, (ix) the cost of replacing
carpeting, blinds, equipment and appliances, (x) painting of the exterior of the
Property and (xi) the costs of any repairs, improvements, equipment,
alterations, additions, changes, replacements and other items which, under
generally accepted accounting principles, consistently applied, are properly
classified as capital expenditures or capital improvements.


                                  EXHIBIT B

                         EXCLUSIONS FROM REPLACEMENTS

          Notwithstanding the provisions of Exhibit A hereto or anything else
contained in this Agreement to the contrary, the following costs shall not
constitute "Replacements" and Lender shall not be obligated to make
disbursements from the Replacement Reserve to reimburse Borrower for such costs:

          (a)  costs of routine maintenance to the Property;

          (b)  the costs of salaries, benefits and administrative expenses
               related to the employment of (i) officers and executives of
               Borrower, and of employees of Borrower above the level of
               building manager, and (ii) employees of Borrower at or below the
               level of building manager except, in the case of (ii), those
               costs which Borrower can demonstrate to Lender's satisfaction to
               be properly allocable to the work performed by such employees in
               connection with Replacements;

          (c)  the cost of any items for which Borrower is reimbursed by
               insurance or otherwise;

          (d)  the cost of any landscaping work to the Property;

          (e)  the cost of any material additions or material alterations to the
               Property after the date hereof.


                                  EXHIBIT C

                              SCHEDULED REPAIRS


SCHEDULED REPAIRS

          NONE



                                   EXHIBIT D


                                      NONE



                                   EXHIBIT E

                  TENANT IMPROVEMENTS AND LEASING COMMISSIONS


TENANT IMPROVEMENTS

     Tenant Improvement Allowance $___________ per square foot of leased space.

LEASING COMMISSIONS

     Leasing Commissions Allowance $__________ per square foot of leased space.