THIRD AMENDMENT TO FORBEARANCE AGREEMENT


         THIRD AMENDMENT TO FORBEARANCE  AGREEMENT dated as of December 18, 2000
by and among  HISTORIC  PRESERVATION  PROPERTIES  1989  LIMITED  PARTNERSHIP,  A
Delaware  limited  partnership  ("HPP"),  and EAST BANK ANGEL JOINT VENTURE,  an
Oregon general partnership (the "Developer").

                                    RECITALS

A. HPP and the  Developer  are the  partners of the  Portland  Lofts  Associates
Limited Partnership, a Delaware limited partnership, pursuant to the Amended and
Restated Agreement of Limited  Partnership of the Partnership dated as of August
30, 1989 (the "Partnership Agreement").

B. The parties entered into a Forbearance Agreement, dated as of July 1,
1997,  clarifying  their  understanding  regarding  certain  provisions  of  the
Partnership Agreement and amending the Partnership Agreement as set forth in the
Forbearance Agreement.

C. The parties entered into the First Amendment to Forbearance Agreement,  dated
as of June 21, 2000, and the Second Amendment to Forbearance Agreement, dated as
of September 27, 2000, both amending the Forbearance Agreement.

D. The  parties  desire to amend the  Forbearance  Agreement  again as set forth
below.

E.  Capitalized  terms used  herein  and not  otherwise  defined  shall have the
meaning set forth in the Partnership Agreement.


         NOW,  THEREFORE,  in consideration of the mutual covenants contained in
this  Amendment,  the  parties  agree to amend  the  Forbearance  Agreement  and
Partnership Agreement as follows:

1. The parties acknowledge and ratify the provisions of Section 5.12 of the
Partnership Agreement,  as amended by the Forbearance Agreement,  subject to the
changes described herein.

2. Provided that HPP receives  distributions  of no less than $13,000 per month,
HPP agrees that it will  forbear its right to exercise its Put Right until April
1, 2001.

3. In all other respects,  the provisions of the Partnership Agreement,
including,  without  limitation,  Section  5.12 as modified  by the  Forbearance
Agreement and herein, and Section 9.09 are hereby ratified and confirmed.


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         IN WITNESS WHEREOF, the Partners have executed this Amendment as of the
date first above written.

                            HISTORIC PRESERVATION PROPERTIES 1989
                            LIMITED PARTNERSHIP

                            By:  Boston Historic Partners Limited Partnership,
                                 General Partner

                                 By: Portfolio Advisory Services, Inc.,
                                     General Partner

                                     By:

                                          Terrence P. Sullivan, President

                                 and

                                 By:
                                      Terrence P. Sullivan, General Partner


                             EAST BANK ANGEL JOINT VENTURE

                             By:
                                 Joseph W. Angel, Partner

                             and

                             By: PACIFIC STAR CORPORATION, Partner

                                 By:
                                      Joseph W. Angel, President