Exhibit 10.36

[Loan No.:  04-751-3126554-9]


(NOTE:  THIS PROMISSORY NOTE MAY REQUIRE A BALLOON PAYMENT AT MATURITY)

                        PROMISSORY NOTE

$18,000,000 (U.S.)                                  Seattle, Washington
         JULY 23, 2001

         FOR VALUE RECEIVED, the undersigned (individually and collectively,
"Borrower"), jointly and severally, promise to pay to the order of
WASHINGTON MUTUAL BANK, a Washington corporation, at its office at 400
East Main Street, STA3MLM, Stockton, California  95290, Attention:
Commercial Real Estate Asset Management, or at such other place as the
holder of this Note (hereinafter, "holder") may from time to time
designate in writing, the sum of EIGHTEEN MILLION DOLLARS ($18,000,000)
in lawful money of the United States, with interest thereon from the date
of this Note until paid at the rates set forth below, computed on monthly
balances.  Interest for each full calendar month during the term of this
Note shall be calculated on the basis of a 360-day year and twelve
30-day months.  Interest for any partial calendar month at the
beginning or the end of the term of this Note shall be calculated on
the basis of a 365- or 366-day year and the actual number of days in
that month.

         Initial Interest Rate.

         The per annum interest rate hereunder (the "Note Rate") shall
initially be seven and nine hundred eighteen one-thousandths percent
(7.918%) (the "Initial Rate").  The Note Rate is subject to adjustment
as provided below.

         Interest Rate Adjustments.

         Interest Adjustment Date.  Beginning on FEBRUARY 1, 2002 (the
"Initial Interest Adjustment Date"), and on the first day of every
sixth month thereafter, the Note Rate shall be adjusted as provided
below.  Any date on which the Note Rate is to be adjusted as provided
in this Note is referred to herein as the "Interest Adjustment Date."

         The Index.  Beginning with the first Interest Adjustment Date, the
Note Rate will be based on an Index plus the Margin (each as defined
below).  As used in this Note, the term "Index" means the Twelve-Month
Average, determined as set forth below, of the annual yields reported
monthly on actively traded United States Treasury Securities adjusted
to a constant maturity of one year as published by the Federal Reserve
Board in the Federal Reserve Statistical Release entitled "Selected
Interest Rates (G.13)" (the "Monthly Yields").  The Twelve-Month
Average is determined by adding together the Monthly Yields for the
most recently available twelve months and dividing by 12.  The most
recent Index figure available as of fifteen (15) days before each
Interest Adjustment Date is referred to in this Note as the "Current
Index."  If the Index is no longer available, holder shall choose a new
index as the Index which is based upon comparable information.  Holder
shall give Borrower notice of such choice.

         Interest Rate Adjustment.  Before each Interest Adjustment Date,
holder will calculate the new Note Rate by adding two and six-tenths
percent (2.60%) (the "Margin") to the Current Index.  Holder will then
round the result of this addition to the nearest one-thousandth of one
percentage point (0.001%) provided the Note Rate will never increase or
decrease on any single Interest Adjustment Date more than one
percentage point (1.00%) from the immediately preceding Note Rate
except as set forth in Section 10 below.  Subject to the limits stated
in Section 2(d) below, this rounded amount will be the Note Rate until
the next Interest Adjustment Date.

         Interest Rate Limit.  Except as set forth in Section 10 below, the
Note Rate will never be greater than twelve and nine hundred eighteen
one-thousandths percent (12.918%) per annum (the "Rate Limit").

         Delayed Adjustment.  If for any reason holder fails to make an
adjustment to the Note Rate or the Monthly Payment Amount as described
in this Note, regardless of any notice requirement, holder may, upon
discovery of such failure, then make such adjustment as if it had been
made on time.  Borrower agrees not to hold holder responsible for any
damages which may result from holder's failure to make the adjustment
and to allow holder, at its option, to apply any excess monies which
Borrower may have paid to partial prepayment of the unpaid principal
balance of this Note.

         Monthly Payments.

         Beginning on SEPTEMBER 1, 2001 and on the first day of each and
every calendar month thereafter throughout the term of this Note (the
"Monthly Payment Dates"), Borrower shall make monthly payments of
principal and interest (the "Monthly Payment Amounts") to holder as
follows:

         Beginning on SEPTEMBER 1, 2001 through and including FEBRUARY 1,
2002, the Monthly Payment Amount shall be ONE HUNDRED FORTY-NINE
THOUSAND SIX HUNDRED FORTY-ONE and 92/100 Dollars ($149,641.92);

         The Monthly Payment Amount shall be adjusted semi-annually beginning
on MARCH 1, 2002, and on the same day of every sixth month thereafter,
to an amount sufficient to fully repay the unpaid principal balance of
this Note as of the last day of the month immediately preceding the
date of such adjustment, together with interest at the Note Rate as
adjusted on the Immediately Preceding Interest Adjustment Date, by the
date that is two hundred forty (240) months from the first day of the
first Monthly Payment Date.

         Maturity.

         Unless sooner repaid by Borrower, the entire unpaid principal
balance of this Note, plus all accrued but unpaid interest, and all
other amounts owing hereunder or under the Security Documents (as
defined in Section 8) shall be due and payable in full on AUGUST 1,
2011 (the "Maturity Date").

         Application of Payments.

         Payments shall be applied:  (a) first, to the payment of accrued
interest; (b) second, at the option of holder, to the payment of any
other amounts owing under this Note or secured by the Security
Documents, other than accrued interest and principal, including, but
not limited to advances holder may have made for attorneys' fees or for
taxes, assessments, insurance premiums, or other charges on any
property given as security for this Note and late charges due
hereunder; and (c) third, to the reduction of principal of this Note.

         Prepayment.

              Borrower may, upon thirty (30) days' prior written notice to
holder, prepay its obligation under this Note in full or in part on any
Monthly Payment Date upon payment of a premium (the "Prepayment
Premium") as follows:  during the First Loan Year (as hereinafter
defined) the Prepayment Premium will be one percent (1.00%) of the
amount prepaid.  Beginning with the Second Loan Year and during each
successive Loan Year throughout the remaining term of this Note,
Borrower may prepay its obligation under this Note in full upon thirty
(30) days prior written notice to holder, or in part on any Monthly
Payment Date, without payment of a Prepayment Premium.  "Loan Year"
shall mean each successive twelve-month period commencing with the
first day of the first full calendar month beginning on or after the
date of this Note.

         Borrower expressly waives any right to prepay this Note except as
provided in this Section 6.  Therefore, if the maturity of this Note is
accelerated for any reason, including, without limitation, the
occurrence of any event of default hereunder or under the Deed of Trust
(as defined in Section 8), including without limitation Section 4.13 of
the Deed of Trust, or any other document that evidences or secures the
repayment of this Note, then any subsequent tender of payment of this
Note, including any redemption following foreclosure of the Deed of
Trust, shall constitute an evasion of the restrictions on prepayment
set forth herein and shall be deemed a voluntary prepayment.
Accordingly, holder may impose as a condition to accepting any such
tender, and may bid at any sheriff's or trustee's sale under the Deed
of Trust, and/or include in any complaint for judicial foreclosure or
for any claim in bankruptcy, as part of the indebtedness evidenced by
this Note and secured by the Deed of Trust, the Prepayment Premium that
would have otherwise been payable hereunder for prepayment of this Note
occurring on the date of such acceleration.  The Prepayment Premium
will not be payable for prepayment of this Note occurring as a result
of the application of insurance and condemnation proceeds to the
reduction of the unpaid principal balance of this Note.

         Borrower acknowledges that:  (i) it is a knowledgeable real estate
investor, (ii) it fully understands the effect of the above waiver,
(iii) the making of the loan evidenced by this Note at the interest
rates set forth above is sufficient consideration for such waiver, and
(iv) holder would not make the loan evidenced by this Note without such
waiver.

         Borrower acknowledges that any statement made by holder setting
forth the amount of the Prepayment Premium shall only be binding upon
holder if such statement is made in writing and that the amount of the
Prepayment Premium set forth in such statement is subject to change and
is valid only for the date of such statement.

         Late Charge.

         If any amount payable hereunder is paid more than ten (10) days
after the due date thereof, Borrower promises to pay a late charge of
five percent (5%) of the delinquent amount as liquidated damages for
the extra expense in handling past due payments.


<PAGE>
         Security.
This Note is secured by a deed of trust, security agreement, assignment
of leases and rents, and fixture filing (the "Deed of Trust") of even
date herewith and executed by Borrower, encumbering real property
located in King County, Washington, and by an assignment of leases and
rents (the "Assignment of Leases and Rents") made by Borrower as
assignor in favor of Lender as assignee.  The Deed of Trust, the
Assignment of Leases and Rents and any and all other documents securing
this Note are collectively referred to as the "Security Documents,"
provided, however, that "Security Documents" specifically shall not
mean and shall not include the certificate and indemnity agreement
regarding hazardous substances being delivered concurrently herewith to
holder by Borrower (the "Indemnity Agreement").  The real property and
the other collateral provided for in the Security Documents are
collectively referred to as the "Property."

         Notwithstanding anything to the contrary in this Note or the Security
Documents, this Note shall not evidence Borrower's obligations under the
Indemnity Agreement and nothing contained in this Note or the Security
Documents shall be deemed to limit or expand Borrower's obligations under
such Indemnity Agreement.  All of such obligations (and all substantial
equivalents of such obligations) shall constitute the separate, unsecured
recourse obligations of Borrower and shall not be deemed to be evidenced
by this Note or secured by the Deed of Trust.

         Default; Remedies.

         If default is made in the payment of any amount payable hereunder
when due or in the keeping of any covenant of the Security Documents,
then, at the option of holder, the entire indebtedness evidenced hereby
shall become immediately due and payable.  Upon default, and without
notice or demand, all amounts owed under this Note, including all
accrued but unpaid interest, shall thereafter bear interest at a
variable rate, adjusted at the times at which the Note Rate would
otherwise have been adjusted pursuant to Section 2, of five percent
(5%) per annum above the Note Rate which would have been applicable
from time to time had there been no default (the "Default Rate") until
such default is cured.  Failure to exercise any option granted to
holder hereunder shall not waive the right to exercise the same in the
event of any subsequent default.  Interest at the Default Rate shall
commence to accrue upon default under this Note, including the failure
to pay this Note at maturity.

SECTION 1. Attorneys' Fees.

         In the event of any default under this Note, or in the event that
any dispute arises relating to the interpretation, enforcement, or
performance of this Note, holder shall be entitled to collect from
Borrower on demand all fees and expenses incurred in connection
therewith, including but not limited to fees of attorneys, accountants,
appraisers, environmental inspectors, consultants, expert witnesses,
arbitrators, mediators, and court reporters.  Without limiting the
generality of the foregoing, Borrower shall pay all such costs and
expenses incurred in connection with:  (a) arbitration or other
alternative dispute resolution proceedings, trial court actions, and
appeals; (b) bankruptcy or other insolvency proceedings of Borrower,
any guarantor or other party liable for any of the obligations of this
Note or any party having any interest in any security for any of those
obligations; (c) judicial or nonjudicial foreclosure on, or appointment
of a receiver for, any property securing this Note; (d) postjudgment
collection proceedings; (e) all claims, counterclaims, cross-claims,
and defenses asserted in any of the foregoing whether or not they arise
out of or are related to this Note or any security for this Note;
(f) all preparation for any of the foregoing; and (g) all settlement
negotiations with respect to any of the foregoing.

SECTION 2. Miscellaneous.

(a)      Every person or entity at any time liable for the
payment of the indebtedness evidenced hereby waives presentment for
payment, demand, and notice of nonpayment of this Note.  Every such
person or entity further hereby consents to any extension of the time
of payment hereof or other modification of the terms of payment of this
Note, the release of all or any part of the security herefor, or the
release of any party liable for the payment of the indebtedness
evidenced hereby at any time and from time to time at the request of
anyone now or hereafter liable therefor.  Any such extension or release
may be made without notice to any of such persons or entities and
without discharging their liability.

(b)      Each person or entity who signs this Note is jointly
and severally liable for the full repayment of the entire indebtedness
evidenced hereby and the full performance of each and every obligation
contained in the Security Documents.

(c)      The headings to the various sections have been inserted
for convenience of reference only and do not define, limit, modify, or
expand the express provisions of this Note.

(d)      Time is of the essence under this Note and in the
performance of every term, covenant, and obligation contained herein.

(e)      This Note is made with reference to and is to be
construed in accordance with the laws of the State of Washington.

(f)      Each married person who executes this Note as a
Borrower agrees that recourse hereunder can be had to his or her
separate property as well as the assets of his or her marital
community.

Notwithstanding any contrary provision of applicable law,
each general partner in any partnership which is a party hereto, agrees
that holder need not exhaust the partnership assets of such partnership
before executing upon the assets of such general partner in
satisfaction of the obligations evidenced hereby or by any other
document, instrument or agreement entered into by such partnership in
connection with the loan evidenced by this Note, but may execute upon
such general partner's assets prior to, at the same time as, or after
executing upon the partnership assets of such partnership.  Each such
general partner shall be jointly and severally liable for such
obligations with all other persons and entities liable therefor.


         DATED as of the day and year first above written.

ORAL AGREEMENTS ORAL COMMITMENTS TO LEND MONEY, EXTEND
CREDIT OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE
NOT ENFORCEABLE UNDER WASHINGTON LAW.


                      BEDFORD PROPERTY INVESTORS, INC., a
                      Maryland corporation



                      By
                                Hanh Kihara
                      Its      Sr. Vice President and Chief
                      Financial Officer




<PAGE>
AFTER RECORDING RETURN TO:

Washington Mutual Bank
400 E. Main St., Dept. 4036
Stockton, California  95290-4036

Attention:    Commercial Real Estate
              Department

         BE ADVISED THAT THE PROMISSORY NOTE SECURED BY THIS DEED OF
TRUST PROVIDES FOR A VARIABLE RATE OF INTEREST.

              DEED OF TRUST, SECURITY AGREEMENT,
                ASSIGNMENT OF LEASES AND RENTS,
                      AND FIXTURE FILING

                 [Loan No.:  04-751-3126554-9]



Grantor (Borrower):
BEDFORD PROPERTY INVESTORS, INC., a
Maryland corporation


Grantee (Lender):
WASHINGTON MUTUAL BANK, a Washington
corporation


Grantee (Trustee):
FIRST AMERICAN TITLE INSURANCE COMPANY, a
California corporation


Legal Description:
Lots 2-3 & 7, Block 5, Burlington Northern
Industrial Park, Vol. 111, P. 42-44



Additional Legal(s) on Exhibit A


Assessor's Tax Parcel ID
Number:
125381-0020-00 & 125381-0055-08



         THIS DEED OF TRUST, SECURITY AGREEMENT, ASSIGNMENT OF LEASES AND
RENTS, AND FIXTURE FILING ("Deed of Trust") is made this 23rd day of JULY,
2001 among BEDFORD PROPERTY INVESTORS, INC., a Maryland corporation, the
address of which is 270 Lafayette Circle, Lafayette, California 94549
("Grantor"); FIRST AMERICAN TITLE INSURANCE COMPANY, a California
corporation, the address of which is 2101 Fourth Avenue, Seattle, WA
98121, and its successors in trust and assigns ("Trustee"), and WASHINGTON
MUTUAL BANK, a Washington corporation, the address of which is 400 E. Main
St., Stockton, California 95290-4036 ("Beneficiary").

         GRANTING CLAUSE.  Grantor, in consideration of the acceptance by
Trustee of the trust hereunder, and of other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, and in order to secure the obligations described in
Section 3 below, grants, bargains, sells, and conveys to Trustee and
its successors in trust and assigns, forever, in trust, with power of
sale, all of Grantor's estate, right, title, interest, claim, and
demand in and to the property in the county of King, state of
Washington, described as follows, whether now existing or hereafter
acquired (all of the property described in all parts of this Section 1
and all additional property, if any, described in Section 2 is herein
called the "Property"):

Land and Appurtenances.  The land described on Exhibit A
hereto, and all tenements, hereditaments, rights-of-way, easements,
appendages, and appurtenances thereto belonging or in any way
appertaining, including without limitation all of the right, title and
interest of Grantor in and to any avenues, streets, ways, alleys,
vaults, strips, or gores of land adjoining that property, and all
claims or demands of Grantor either in law or in equity in possession
or expectancy of, in, and to that property; and

Improvements and Fixtures.  All buildings, structures, and
other improvements now or hereafter erected on the property described
in 1.1 above, and all facilities, fixtures, machinery, apparatus,
installations, goods, equipment, inventory, furniture, and other
properties of whatsoever nature (including without limitation all
heating, ventilating, air conditioning, plumbing and electrical
equipment, elevators and escalators, sprinkler systems, engines and
motors, lighting, laundry, cleaning, fire prevention and fire
extinguishing equipment, ducts and compressors, refrigerators, stoves
and other appliances, attached cabinets, partitions, rugs, carpets and
draperies, building materials and supplies, and construction forms,
tools, and equipment), now or hereafter located in or used or procured
for use in connection with that property, it being the intention of the
parties that all property of the character hereinabove described that
is now owned or hereafter acquired by Grantor and that is affixed or
attached to, stored upon, or used in connection with the property
described in 1.1 above shall be, remain, or become a portion of that
property and shall be covered by and subject to the lien of this Deed
of Trust, together with all contracts, agreements, permits, plans,
specifications, drawings, surveys, engineering reports, and other work
products relating to the construction of the existing or any future
improvements on the Property, any and all rights of Grantor in, to, or
under any architect's contracts or construction contracts relating to
the construction of the existing or any future improvements on the
Property, and any performance and/or payment bonds issued in connection
therewith, together with all trademarks, trade names, copyrights,
computer software, and other intellectual property used by Grantor in
connection with the Property; and

Enforcement and Collection.  Any and all rights of Grantor
without limitation to make claim for, collect, receive, and receipt for
any and all rents, income, revenues, issues, royalties, and profits,
including mineral, oil, and gas rights and profits, insurance proceeds,
condemnation awards, and other moneys, payable or receivable from or on
account of any of the Property, including interest thereon, or to
enforce all other provisions of any other agreement (including those
described in Section 1.2 above) affecting or relating to any of the
Property, to bring any suit in equity, action at law, or other
proceeding for the collection of such moneys or for the specific or
other enforcement of any such agreement, award, or judgment, in the
name of Grantor or otherwise, and to do any and all things that Grantor
is or may be or become entitled to do with respect thereto, provided,
however, that no obligation of Grantor under the provisions of any such
agreements, awards, or judgments shall be impaired or diminished by
virtue hereof, nor shall any such obligation be imposed upon Trustee or
Beneficiary; and

Accounts and Income.  Any and all rights of Grantor in any
and all accounts, rights to payment, contract rights, chattel paper,
documents, instruments, licenses, contracts, agreements, and general
intangibles relating to any of the Property, including, without
limitation, income and profits derived from the operation of any
business on the Property or attributable to services that occur or are
provided on the Property or generated from the use and operation of the
Property; and

Leases.  All of Grantor's rights as landlord in and to all
existing and future leases and tenancies, whether written or oral and
whether for a definite term or month to month or otherwise, now or
hereafter demising all or any portion of the property described in 1.1
and 1.2 above, including all renewals and extensions thereof and all
rents, deposits, and other amounts received or receivable thereunder
and including all guaranties, supporting obligations, letters of credit
and letter of credit rights guaranteeing or supporting any of the
foregoing.  In accepting this Deed of Trust neither Beneficiary nor
Trustee assumes any liability for the performance of any such lease.

Books and Records.  All books and records of Grantor relating
to the foregoing in any form and all computer software necessary or
useful to reading such books and records.

         SECURITY AGREEMENT.  To the extent any of the property
described in Section 1 is personal property, Grantor, as debtor, grants
to Beneficiary, as secured party, a security interest therein together
with a security interest in all other personal property of whatsoever
nature that is located on, used, or to be used in connection with any
of the property described in Section 1, and any products or proceeds of
any thereof, pursuant to the Uniform Commercial Code of the state of
Washington (the "UCC"), on the terms and conditions contained herein.
Beneficiary hereby assigns such security interest to Trustee, in trust,
for the benefit of Beneficiary to be dealt with as a portion of the
"Property" except as otherwise specified herein.

         OBLIGATIONS SECURED.  This Deed of Trust is given for
the purpose of securing:

Performance and Payment.  The performance of the obligations
contained herein and the payment of EIGHTEEN MILLION DOLLARS
($18,000,000) with interest thereon and all other amounts payable
according to the terms of a promissory note of even date herewith made
by Grantor, payable to Beneficiary or order, and any and all
extensions, renewals, modifications, or replacements thereof, whether
the same be in greater or lesser amounts (the "Note"), which Note
contains provision for a variable rate of interest; and

Future Advances.  The repayment of any and all sums advanced
or expenditures made by Beneficiary subsequent to the execution of this
Deed of Trust for the maintenance or preservation of the Property or
advanced or expended by Beneficiary pursuant to any provision of this
Deed of Trust subsequent to its execution, together with interest
thereon.

Exclusion From Secured Obligations.  Notwithstanding anything
to the contrary set forth herein or in any other Loan Document (as
hereinafter defined), this Deed of Trust shall not secure the
obligations of Grantor under that certain Certificate and Indemnity
Agreement Regarding Hazardous Materials dated as of even date herewith
made by Grantor in favor of Beneficiary (the "Indemnity Agreement") or
the substantial equivalent of the obligations arising under the
Indemnity Agreement.  All of such obligations (and substantial
equivalents thereof) shall constitute the separate, unsecured recourse
obligations of Grantor and shall not be deemed to be evidenced by the
Note or secured by this Deed of Trust.

         WARRANTIES AND COVENANTS OF GRANTOR.  Grantor warrants,
covenants, and agrees:

Warranties

Grantor has full power and authority to grant the
Property to Trustee and warrants the Property to be free and clear of
all liens, charges, and other monetary encumbrances except those
appearing of record on the date hereof.

None of the Property is used principally or at all for
agricultural or farming purposes.

The Property is free from damage and no matter has come
to Grantor's attention (including, but not limited to, knowledge of any
construction defects or nonconforming work) that would materially
impair the value of the Property as security.

The loan evidenced by the Note and secured by this Deed
of Trust is primarily for commercial, industrial, or business purposes
and is not primarily for personal, family, or household purposes.

Preservation of Lien and Perfection; Letters of Credit.
Grantor will preserve and protect the priority of this Deed of Trust as
a first lien on the Property and all portions thereof, and will take
all actions, and execute and deliver to Beneficiary all documents, that
Beneficiary may require in order to perfect the liens and security
interests granted in this Deed of Trust or in any other Loan Document
(as defined below).  Without limiting the generality of the foregoing,
Grantor will notify Beneficiary in writing prior to becoming the
beneficiary under any letter of credit in which a security interest is
granted under Section 1.5 of this Deed of Trust and will take all
actions, and execute all documents, necessary or appropriate to give
Beneficiary control (as defined in the UCC, including but not limited
to Section 9-107 thereof) of such letter of credit and all letter of
credit rights thereunder and, if so required by Beneficiary, to
constitute Beneficiary the transferee beneficiary of such letter of
credit.

Repair and Maintenance of Property; Compliance With Laws,
Etc.

Grantor will keep the Property in good condition and
repair, which duty shall include but is not limited to continual
cleaning, painting, landscaping, repairing, and refurbishing of the
Property; will complete and not remove or demolish, alter, or make
additions to any building or other improvement that is part of the
Property without the express written consent of Beneficiary; will
underpin and support when necessary any such building or other
improvement and protect and preserve the same; will complete or restore
promptly and in good and workmanlike manner any such building or other
improvement that may be damaged or destroyed and pay when due all
claims for labor performed and materials furnished therefor; will not
commit, suffer, or permit any act upon the Property in violation of
law; and will do all other acts that from the character or use of the
Property may be reasonably necessary for the continued operation of the
Property in a safe and legal manner, the specific enumerations herein
not excluding the general.

Grantor shall comply in all material respects with (a)
all laws, statutes, ordinances, rules, regulations, licenses, permits,
approvals, orders, judgments and other requirements of governmental
authorities relating to the Property or Grantor's use thereof, and (b)
all easements, licenses and agreements relating to the Property or
Grantor's use thereof.

Insurance

All Risk/Hazard.  Grantor will provide, maintain, and
deliver to Beneficiary, as further security for the faithful
performance of this Deed of Trust, insurance covering fire, casualty,
and such other hazards as may be specified by Beneficiary (including
insurance against flood, if the Property is situated in a designated
flood zone) in an amount equal to one hundred percent (100%) of the
replacement cost of the Property and including a building upgrade and
municipal ordinance endorsement.  Such insurance policy or policies
shall include rental or business interruption and extra expense
coverage as more specifically described in Section 4.4.3 below.  All
policies of insurance on the Property, whether or not required by the
terms of this Deed of Trust, shall name Beneficiary as first loss payee
pursuant to a standard first-mortgage endorsement on Form 438BFU or on
a loss-payee form substantially equivalent to the New York standard
mortgage endorsement, with such deductibles as approved by Beneficiary
but that are, in any event, not more than Ten Thousand Dollars
($10,000).  Grantor shall be responsible for any uninsured losses and
any deductibles.  All existing and future policies for all insurance
required by this Deed of Trust and all other insurance obtained by
Grantor with respect to the Property, whether or not required by
Beneficiary (including but not limited to earthquake insurance), and
the proceeds of all of the foregoing, are hereby assigned to
Beneficiary, but no such assignment shall be effective to invalidate or
impair any insurance policy.

Liability.  Grantor will maintain comprehensive general
liability insurance covering the legal liability of Grantor against
claims for bodily injury, personal injury, death, property damage or
advertising injury occurring on, in, or about the Property with
coverage of One Million Dollars ($1,000,000) combined single limit, and
naming Beneficiary an additional insured.

4.4.3    Rental Interruption.  Grantor will maintain
rental or business interruption and extra expense insurance in an
amount equal to at least twelve (12) months' gross rental income from
the Property, and naming Beneficiary as first loss payee; provided that
Grantor may collect and retain any payments under said policies so long
as it is not in default hereunder.

Insurance Survey.  During the last thirty (30) days of
every third year computed from the date hereof, Grantor will have an
insurance survey of the Property made.  Grantor shall at these times
obtain such additional coverages or make such increases in the amounts
of existing coverage as may be requested by Beneficiary on the basis of
such survey.

General Provisions.  All policies of insurance required
to be maintained by Grantor pursuant to this Section 4.4 shall (i) be
primary and noncontributory with any other insurance Grantor may carry;
(ii) be in form and substance and with companies acceptable to
Beneficiary which are authorized to conduct business in the state in
which the Property is located and which have a current rating of A-/X
or better from the current Best Key Rating Guide, (iii) contain a
mortgagee endorsement acceptable to Beneficiary; and (iv) contain
waivers of subrogation and of any co-insurance clauses.  Beneficiary
reserves the right, in its reasonable discretion, to increase the
amount of the required coverages, require insurance against additional
risks, or withdraw approval of any insurance company at any time.
Grantor shall deliver to Beneficiary an original of all policies of
insurance and shall obtain renewals of any policies that expire and
deliver evidence of such renewals to Beneficiary no later than ten (10)
days prior to the expiration date of the policy being replaced.  All
policies and renewals thereof shall contain provision for thirty (30)
days' notice to Beneficiary prior to any cancellation thereof or
material change thereto.  In the event of any loss covered by such
policies, Grantor shall give immediate written notice to the insurance
carrier and to Beneficiary.  Grantor hereby authorizes and empowers
Beneficiary as attorney-in-fact for Grantor to make proof of loss, to
adjust and compromise any claim under insurance policies, to appear in
and prosecute any action arising from such insurance policies, to
collect and receive insurance proceeds, and to deduct therefrom
Beneficiary's expenses incurred in the collection of such proceeds;
provided, however, that nothing contained in this Section 4.4.5 shall
require Beneficiary to incur any expense or take any action hereunder.
Notwithstanding any of the foregoing, neither Trustee nor Beneficiary
shall be responsible for any such insurance or for the collection of
any insurance moneys, or for any insolvency of any insurer or insurance
underwriter.  Any and all unexpired insurance shall inure to the
benefit of and pass to the purchaser of the Property at any trustee's
or sheriff's sale held hereunder.

Damage and Destruction.

(a)      Trustor's Obligations.  In the event of any damage
to or loss or destruction of the Property, Grantor shall:  (i) promptly
notify Beneficiary of such event if the damage to or loss or destruction
of the Property is a value in excess of $25,000; (ii) take such steps as
shall be necessary to preserve any undamaged portion of the Property; and
(iii) unless otherwise instructed by Beneficiary shall, regardless of
whether the insurance proceeds, if any, shall be sufficient for the
purpose, promptly commence and diligently pursue to completion the
restoration, replacement and rebuilding (collectively, "Restoration") of
the Property as nearly as possible to its value, condition and character
immediately prior to such damage, loss or destruction and in accordance
the plans and specifications approved, and with other provisions for the
preservation of the security hereunder established , by Beneficiary, which
approval shall not be unreasonably withheld or delayed.

     Beneficiary's Rights:  Application of Proceeds.  In the event that
any portion of the Property is so damaged, destroyed or lost, and any
such damage, destruction or loss is covered in whole or in part, by
insurance described in subsection 4.4.1, whether or not such insurance
is specifically required by the terms of this Deed of Trust, then the
following provisions shall apply:

         If an Event of Default (as defined in Section 5.1) has occurred
hereunder and is continuing: (A) Beneficiary may, but shall not be
obligated to, make proof of loss to any insurer if not made promptly
by Grantor, and Beneficiary is hereby authorized and empowered by
Grantor to settle, adjust or compromise any claims for damage,
destruction or loss thereunder unless the proposed amount of proceeds
from such claims exceeds the then outstanding amount of the
indebtedness secured hereby, and (B) each insurance company concerned
is hereby authorized and directed to make payment therefor directly
to Beneficiary, to be applied, at Beneficiary's option, to the
indebtedness secured hereby in such order as Beneficiary may
determine, in its sole discretion or to be held by Beneficiary for
future application to the obligations secured hereby.  Unless
otherwise required by law, any application to the indebtedness
secured hereby by Beneficiary of such payments shall not, by itself,
cure or waive any Event of Default hereunder or notice of default
under this Deed of Trust or invalidate any act done pursuant to such
notice or waive any collateral encumbered hereby or otherwise
securing the Note.

(ii)     If no Event of Default hereunder has occurred
and is continuing, and if the amount of proceeds from any claim for
damage, destruction or loss is reasonably expected to be $25,000 or less,
Grantor shall be entitled to receive all such proceeds and shall apply
such proceeds to the Restoration of that portion of the Property so
damaged, destroyed or lost to as nearly the same condition, character and
value as may have existed prior to such damage, destruction or loss, with
such changes or alterations as may be required to conform to applicable
law.

(iii)    If such proceeds are reasonably expected
to exceed $25,0000, and if an Event of Default has not occurred hereunder
and is not continuing, Beneficiary shall apply all such insurance proceeds
to the Restoration of the damaged portion of the Property, and such
Restoration shall be accomplished as provided in this Section 4.4.6 so
long as such Restoration can, in the reasonable judgment of Beneficiary,
be completed (A) no later than two (2) years prior to the maturity date
of the Note, (B) within one (1) year after the date of the casualty, and
(C) in such a manner so that the Property will have a value at least equal
to its value prior to the casualty.  Otherwise, Beneficiary may elect in
its sole discretion to apply all such insurance proceeds to reduction of
the indebtedness secured hereby.


Disbursement of Insurance Proceeds.  Insurance proceeds
held by Beneficiary for Restoration shall be disbursed from time to
time as the Restoration progresses by Beneficiary (or at Beneficiary's
election by a disbursing or escrow agent who shall be selected by
Beneficiary and whose fees shall be paid by Grantor), upon delivery to
Beneficiary of the following:  (i)  evidence reasonably satisfactory to
Beneficiary of the estimated cost of Restoration; (ii) funds (or
assurances reasonably satisfactory to Beneficiary that such funds are
available) sufficient in addition to the proceeds of insurance to
complete and fully pay for the Restoration; and (iii) such architect's
certificates, waivers of lien, contractor's sworn statements, title
insurance endorsements, plats of survey and such other evidences of
cost, payment and performance as Beneficiary may reasonably require and
approve.  No payment made prior to the final completion of Restoration
shall exceed ninety percent of the value of the work performed from
time to time, as such value shall be determined by Beneficiary in its
reasonable judgment.  Prior to commencement of the work, and from time
to time thereafter, if so requested by Beneficiary, Grantor shall
deposit with Beneficiary an amount of funds in excess of the insurance
proceeds which, together with such proceeds, shall at all times be at
least sufficient in the reasonable judgment of Beneficiary to pay the
entire unpaid cost of the Restoration, free and clear of all liens or
claims of lien.  Funds so deposited by Grantor shall be disbursed prior
to the disbursement of any insurance proceeds.  Any surplus which may
remain out of insurance proceeds held by Beneficiary after payment of
all costs of the Restoration shall be paid to Grantor.  No interest
shall be allowed to Grantor on account of any insurance proceeds or
other funds held by Beneficiary, but Beneficiary agrees that, at
Grantor's request, Beneficiary will deposit any proceeds of insurance
held by it for Restoration into a blocked interest-bearing account with
Beneficiary over which Beneficiary has sole possession, authority and
control, in which Beneficiary has a perfected first-priority security
interest to secure the indebtedness secured by this Deed of Trust, and
otherwise on terms and conditions satisfactory to Beneficiary in its
sole discretion.  Notwithstanding the above, if an Event of Default
occurs prior to full disbursement of the insurance proceeds and any
other funds held by Beneficiary to be disbursed to Grantor any
undisbursed portion of the insurance proceeds or other such funds may,
at Beneficiary's option, be applied against the indebtedness secured by
this Deed of Trust, whether or not then due, in such order and manner
as Beneficiary shall select.

(d)      Effect on the Indebtedness.  Any reduction in the
indebtedness secured hereby resulting from the application to the
indebtedness secured hereby of insurance proceeds pursuant to this
subsection 4.4.6 shall be deemed to take effect only on the date of
receipt by Beneficiary of such proceeds and application thereof to the
indebtedness secured hereby; provided that, if, prior to the receipt by
Beneficiary of such proceeds, the Property shall have been sold in
connection with a trustee's sale under, or foreclosure of this Deed of
Trust, or shall have been transferred by a deed in lieu of foreclosure
of this Deed of Trust, notwithstanding any limitation on Grantor's
liability contained herein or in the Note, Beneficiary shall have the
right to receive the same to the extent of any deficiency following
such sale or conveyance, together with attorneys' fees and
disbursements incurred by Beneficiary in connection with the collection
thereof.

Right of Inspection.  Subject to the rights of
Tenants, Grantor shall permit Beneficiary or its agents, at all
reasonable times, to enter upon and inspect the Property.

         Preservation of Licenses, Etc.  Grantor shall
observe and comply with all requirements necessary to the continued
existence and validity of all rights, licenses, permits, privileges,
franchises, and concessions relating to any existing or presently
contemplated use of the Property, including but not limited to any
zoning variances, special exceptions, and nonconforming use permits.

         Further Assurances.  Grantor will, at its expense,
from time to time execute and deliver any and all such instruments of
further assurance and other instruments and do any and all such acts,
or cause the same to be done, as Trustee or Beneficiary deems necessary
or advisable to grant to Trustee the Property or to carry out more
effectively the purposes of this Deed of Trust.

         Legal Actions.  Grantor will appear in and defend
any action or proceeding before any court or administrative body
purporting to affect the security hereof or the rights or powers of
Beneficiary or Trustee; and will pay all costs and expenses, including
cost of evidence of title, title insurance premiums, and any fees of
attorneys, appraisers, environmental inspectors, and others, incurred
by Beneficiary or Trustee, in a reasonable sum, in any such action or
proceeding in which Beneficiary or Trustee may appear and in any suit
brought by Beneficiary or Trustee to foreclose this Deed of Trust and
in any nonjudicial foreclosure of this Deed of Trust.

         Taxes, Assessments, and Other Liens.  Grantor will
pay not later than when due all taxes, assessments, encumbrances,
charges, and liens with interest, on the Property or any part thereof,
which at any time appear to be or are alleged to be prior and superior
hereto, including but not limited to any tax on or measured by rents of
the Property, the Note, this Deed of Trust, or any obligation or part
thereof secured hereby.

         Expenses.  Grantor will pay all costs, fees, and
expenses reasonably incurred by Beneficiary or Trustee in connection
with this Deed of Trust.

         Repayment of Expenditures.  Grantor will pay
immediately and without demand all amounts secured by this Deed of
Trust, other than principal of and interest on the Note, with interest
from date of expenditure at the default rate of interest specified in
the Note (the "Default Rate") and the repayment thereof shall be
secured hereby.

         Financial & Operating Information.  Grantor will,
within ninety (90) days of the close of Grantor's fiscal year, furnish
to Beneficiary in such form as it may request, financial statements and
balance sheets of Grantor and the entities and individuals who are
liable for repayment of the Note, and itemized annual statements of
income and expense in connection with the operation of the Property,
including but not limited to utilization and property inspection
reports, and such other financial and operating statements of Grantor
as Beneficiary may from time to time require and such operating
statements, occupancy reports, variance reports, and financial
information for the Property as Beneficiary may from time to time
require.

         If Grantor defaults in its obligation to provide
Beneficiary with any of the financial and operating information required
to be provided under this subsection 4.12 within the time periods required
under this subsection 4.12 and such default continues after Beneficiary
has provided Grantor with thirty (30) days' notice and opportunity to cure
such default, Grantor shall pay to Beneficiary, as liquidated damages for
the extra expense in servicing the loan secured hereby, Five Hundred
Dollars ($500) on the first day of the month following the expiration of
such thirty (30)-day period and One Hundred Dollars ($100) on the first
day of each month thereafter until such default is cured.  All such
amounts shall be secured by this Deed of Trust.

         Sale, Transfer, or Encumbrance of Property.
Grantor shall not, without the prior written consent of Beneficiary,
sell, transfer, or otherwise convey the Property or any interest
therein, further encumber the Property or any interest therein, cause
or permit any change in the entity, ownership, or control of Grantor or
agree to do any of the foregoing without first repaying in full the
Note and all other sums secured hereby.

         Consent to any one such occurrence shall not be
deemed a waiver of the right to require consent to any future occurrences.

         In each instance in which a sale, transfer, or other
conveyance of the Property occurs and regardless of whether Beneficiary's
consent thereto is given, waived or denied or whether Beneficiary elects
to accelerate the maturity date of the Note, Grantor and its successors
shall be jointly and severally liable to Beneficiary for the payment of
a transfer fee (the "Transfer Fee") of one percent (1%) of the unpaid
principal balance of the Note as of the date of such sale, transfer, or
other conveyance.  Such fee shall be payable on demand, shall bear
interest from ten (10) days after such demand to and including the date
of collection at the Default Rate (as defined in the Note), and shall be
secured by this Deed of Trust.  Beneficiary's waiver of such fee in whole
or in part for any one sale, transfer, or other conveyance shall not
preclude the imposition thereof in any other transaction.

         Notwithstanding the foregoing, Beneficiary's consent
will not be required, and the one percent (1%) Transfer Fee will not be
imposed, for the transfer of not more than twenty-five percent (25%) in
the aggregate during the term of the Note of partnership interests in
Grantor, if Grantor is a partnership, or member interests in Grantor, if
Grantor is a limited liability company, or of shares of stock of Grantor,
if Grantor is a corporation, provided that none of the persons or entities
liable for the repayment of the Note is released from such liability.

         Information for Participants.  Grantor agrees to
furnish such information and confirmation as may be required from time
to time by Beneficiary on request of potential loan participants and
agrees to make adjustments in this Deed of Trust, the Note, the
Assignment of Leases and Rents and the other documents evidencing or
securing the loan secured hereby to accommodate such participant's
requirements, provided that such requirements do not vary the economic
terms of the loan secured hereby.

         Grantor Existence.  Except as otherwise provided in
Section 4.13:

         If Grantor is a corporation, Beneficiary is making
this loan in reliance on Grantor's continued existence, ownership, and
control in its present corporate form.  Grantor will not alter such
corporate structure, ownership, or control without the prior written
consent of Beneficiary and will do all things necessary to preserve and
maintain said corporate existence and to insure its continuous right to
carry on its business, including but not limited to, filing within the
prescribed time all corporate tax returns and reports, and paying when
due all such taxes.

         If Grantor is a partnership, Beneficiary is making
this loan in reliance on the continued existence of Grantor partnership
and upon the business and financial reputation of Grantor partnership
as a business entity and each of the general partners thereof.
Therefore, the general partners of Grantor hereby agree that they will
take no action to dissolve Grantor partnership and will do all things
within their power to prevent the dissolution and winding up of Grantor
partnership, notwithstanding the death, withdrawal, or expulsion of any
general partner.  They further agree that without the prior written
consent of Beneficiary, none of the general partners of Grantor will
withdraw or be removed as a general partner of Grantor.  The withdrawal
or expulsion of any general partner from Grantor partnership shall not
in any way affect the liability of the withdrawing or expelled general
partner hereunder or on the Note.

         If Grantor is a limited liability company,
Beneficiary is making this loan in reliance on Grantor's continued
existence, ownership, and control in its present limited liability
company form.  Grantor will not alter such limited liability company
structure, ownership, or control without the prior written consent of
Beneficiary and will do all things necessary to preserve and maintain
said limited liability company existence and to insure its continuous
right to carry on its business.

         Tax and Insurance Reserves.  In addition to the
payments required by the Note, Grantor agrees to pay Beneficiary, at
Beneficiary's request, such sums as Beneficiary may from time to time
estimate will be required to pay, at least thirty (30) days before due,
the next due taxes, assessments, insurance premiums, and similar
charges affecting the Property, less all sums already paid therefor
divided by the number of months to elapse before one month prior to the
date when such taxes, assessments, and premiums will become delinquent,
such sums to be held by Beneficiary without interest or other income to
the Grantor to pay such taxes, assessments and premiums.  Should this
estimate as to taxes, assessments, and premiums prove insufficient, the
Grantor upon demand agrees to pay Beneficiary such additional sums as
may be required to pay them before delinquent.

         If the total of the above-described payments in any one
year shall exceed the amounts actually paid by Beneficiary for taxes,
assessments, and premiums, such excess may be credited by Beneficiary on
subsequent payments under this section.  If there shall be a default
hereunder for which Beneficiary elects to realize upon this Deed of Trust,
then at any time after default and prior to the trustee's sale or
sheriff's sale, Beneficiary may apply any balance of funds it may hold
pursuant to this Section 4.16 to any amount secured by this Deed of Trust
and in such order as Beneficiary may elect.  If Beneficiary does not so
apply such funds at or prior to the trustee's sale or sheriff's sale, the
purchaser at such sale shall be entitled to all such funds.  If
Beneficiary acquires the Property in lieu of realizing on this Deed of
Trust, the balance of funds it holds shall become the property of
Beneficiary.

         Any transfer in fee of all or a part of the Property
shall automatically transfer to the grantee all or a proportionate part
of Grantor's rights and interest in the fund accumulated hereunder.

         Performance of Rental Agreements.  Grantor will in all
respects promptly and faithfully keep, perform, and comply with all of
the terms, provisions, covenants, conditions, and agreements in each of
the agreements pursuant to which any tenant of any part of the Property
is occupying such Property (the "rental agreements") to be kept,
performed, and complied with by the lessor therein, and will require,
demand, and strictly enforce, by all available means, the prompt and
faithful performance of and compliance with all of the terms,
provisions, covenants, conditions, and agreements in the rental
agreements to be performed and complied with by the lessees therein.

         No Prepayment of Rent.  With respect to the rental
agreements, Grantor is not authorized to collect in advance more than
one month's rental plus a security deposit not to exceed two months'
rental.

         DEFAULT.

         Definition.  Any of the following shall constitute an
"Event of Default" as that term is hereinafter used:

         Any representation or warranty made by or for the
benefit of Grantor herein or elsewhere in connection with the loan
secured hereby, including but not limited to any representations in
connection with the security therefor, shall prove to have been
incorrect or misleading in any material respect;

         Grantor or any other person or entity liable
therefor shall fail to pay when due any indebtedness secured hereby;

         Grantor or any other signatory thereto shall
default in the performance of any covenant or agreement contained in
this Deed of Trust, the Note, or any other agreement securing the
indebtedness secured hereby;

         Grantor or any other person or entity liable for
the repayment of the indebtedness secured hereby shall become unable or
admit in writing its inability to pay its debts as they mature, or
file, or have filed against it, a voluntary or involuntary petition in
bankruptcy, or make a general assignment for the benefit of creditors,
or become the subject of any other receivership or insolvency
proceeding;

         Grantor or any other signatory thereto shall
default in the performance of any covenant or agreement contained in
any mortgage or deed of trust encumbering the Property, or the note or
any other agreement evidencing or securing the indebtedness evidenced
thereby;

         A tax, charge, or lien shall be placed upon or
measured by the Note, this Deed of Trust, or any obligation secured
hereby that Grantor does not or may not legally pay in addition to the
payment of all principal and interest as provided in the Note; or

         There shall occur any default under the Indemnity
Agreement.

         Beneficiary's and Trustee's Right To Perform.  Upon the
occurrence of any Event of Default, Beneficiary or Trustee, but without
the obligation so to do and without notice to or demand upon Grantor
and without releasing Grantor from any obligations hereunder, may make
any payments or do any acts required of Grantor hereunder in such
manner and to such extent as either may deem necessary to protect the
security hereof, Beneficiary or Trustee being authorized to enter upon
the Property for such purposes; commence, appear in, and defend any
action or proceeding purporting to affect the security hereof or the
rights or powers of Beneficiary or Trustee; pay, purchase, contest,or
compromise any encumbrance, charge, or lien in accordance with the
following paragraph; and in exercising any such powers, pay necessary
expenses, employ counsel, and pay a reasonable fee therefor.  All sums
so expended shall be payable on demand by Grantor, be secured hereby
and bear interest at the Default Rate from the date advanced or
expended until repaid.

         Beneficiary or Trustee in making any payment herein is
hereby authorized, in the place and stead of the Grantor, in the case of
a payment of taxes, assessments, water rates, sewer rentals, and other
governmental or municipal charges, fines, impositions, or liens asserted
against the Property, to make such payment in reliance on any bill,
statement, or estimate procured from the appropriate public office without
inquiry into the accuracy of the bill, statement, or estimate or into the
validity of any tax, assessment, sale, forfeiture, tax lien, or title or
claim thereof; in the case of any apparent or threatened adverse claim of
title, lien, statement of lien, encumbrance, deed of trust, claim, or
charge Beneficiary or Trustee, as the case may be, shall be the sole judge
of the legality or validity of same; and in the case of a payment for any
other purpose herein and hereby authorized, but not enumerated in this
paragraph, such payment may be made whenever, in the sole judgment and
discretion of Trustee or Beneficiary, as the case may be, such advance or
advances shall seem necessary or desirable to protect the full security
intended to be created by this instrument, provided further, that in
connection with any such advance, Beneficiary at its option may and is
hereby authorized to obtain a continuation report of title prepared by a
title insurance company, the cost and expenses of which shall be repayable
by the Grantor without demand and shall be secured hereby.

         Remedies on Default.  Upon the occurrence of any Event
of Default all sums secured hereby shall become immediately due and
payable, without notice or demand, at the option of Beneficiary and
Beneficiary may:

         Have a receiver appointed as a matter of right,
without regard to the sufficiency of the Property or any other security
for the indebtedness secured hereby and, without the necessity of
posting any bond or other security, such receiver shall take possession
and control of the Property and shall collect and receive all of the
rents, issues, and profits thereof;

         Foreclose this Deed of Trust as a mortgage or
otherwise realize upon the Property;

         Cause Trustee to exercise its power of sale;

         Sue on the Note according to law; or

         To the extent permitted by law, including, without
limitation, RCW 61.24.100, seek and obtain a deficiency judgment
following the completion of a judicial foreclosure or a trustee's sale
of all or a portion of the security for the obligations secured by this
Deed of Trust.

         No Waiver.  By accepting payment of any sum secured
hereby after its due date, Beneficiary does not waive its right either
to require prompt payment when due of all other sums so secured or to
declare an Event of Default for failure to do so.

         Remedies Cumulative.  The rights and remedies accorded
by this Deed of Trust shall be in addition to, and not in substitution
of, any rights or remedies available under now existing or hereafter
arising applicable law.  All rights and remedies provided for in this
Deed of Trust or afforded by law or equity are distinct and cumulative
and may be exercised concurrently, independently or successively.  The
failure on the part of Beneficiary to promptly enforce any right
hereunder shall not operate as a waiver of such right and the waiver of
any default shall not constitute a waiver of any subsequent or other
default.  Beneficiary shall be subrogated to the claims and liens of
those whose claims or liens are discharged or paid with the loan
proceeds hereof.

         CONDEMNATION.  Any award of damages, whether paid as
a result of judgment or prior settlement, in connection with any
condemnation or other taking of any portion of the Property, for public
or private use, or for injury to any portion of the Property is hereby
assigned and shall be paid to Beneficiary, which may apply such moneys
received by it in the same manner and with the same effect as provided
in Section 4.4.6 above for disposition of proceeds of hazard insurance,
provided that if the taking results in a loss of the Property to an
extent which, in the reasonable opinion of Beneficiary, renders or will
render the Property not economically viable or which substantially
impairs Beneficiary's security or lessens to any extent the value,
marketability of intended use of the Property, Beneficiary may apply
the condemnation proceeds to reduce the unpaid indebtedness secured
hereby in such order as Beneficiary may determine, and without any
adjustment in the amount of installments due under the Note..  If so
applied, any proceeds in excess of the unpaid balance of the Note and
other sums due to Beneficiary shall be paid to Grantor or Grantor's
assignee.  Beneficiary shall in no case by obligated to see to the
proper application of any amount paid over to Grantor.  Such
application or release shall not cure or waive any default or notice of
default hereunder or invalidate any act done pursuant to such notice.
Should the Property or any part or appurtenance thereof or right or
interest therein be taken or threatened to be taken by reason of any
public or private improvement, condemnation proceeding (including
change of grade), or in any other manner, Beneficiary may, at its
option, commence, appear in, and prosecute, in its own name, any action
or proceeding, or make any reasonable compromise or settlement in
connection with such taking or damage, and obtain all compensation,
awards, or other relief therefor, and Grantor agrees to pay
Beneficiary's costs and reasonable attorneys' fees incurred in
connection therewith.  No condemnation award at any time assigned to or
held by Beneficiary shall be deemed to be held in trust, and
Beneficiary may commingle such award with its general assets and shall
not be liable for the payment of any interest thereon.

         TRUSTEE.

         General Powers and Duties of Trustee.  At any time or
from time to time, without liability therefor and without notice and
without affecting the liability of any person for the payment of the
indebtedness secured hereby, upon written request of Beneficiary,
payment of its own fees and presentation of this Deed of Trust and the
Note for endorsement (in case of full reconveyance, for cancellation or
retention), Trustee may:

         Consent to the making of any map or plat of the
Property;

         Join in granting any easement or creating any
restriction thereon;

         Join in any subordination or other agreement
affecting this Deed of Trust or the lien or charge thereof; or

         Reconvey, without warranty, all or any part of the
Property.

         Reconveyance.  Upon written request of Beneficiary
stating that all sums secured hereby have been paid, and upon surrender
of this Deed of Trust and the Note to Trustee for cancellation and
retention and upon payment of its fees, Trustee shall reconvey, without
warranty, the Property then held hereunder.  The recitals in any
reconveyance executed under this Deed of Trust of any matters of fact
shall be conclusive proof of the truthfulness thereof.  The grantee in
such reconveyance may be described as "the person or persons legally
entitled thereto."

         Powers and Duties on Default.  Upon written request
therefor by Beneficiary specifying the nature of the default, or the
nature of the several defaults, and the amount or amounts due and
owing, Trustee shall execute a written notice of default and of its
election to cause the Property to be sold to satisfy the obligation
secured hereby, and shall cause such notice to be recorded and
otherwise given according to law.

         Notice of sale having been given as then required by law
and not less than the time then required by law having elapsed after
recordation of such notice of breach, Trustee, without demand on Grantor,
shall sell the Property at the time and place of sale specified in the
notice, as provided by statute, either as a whole or in separate parcels
and in such order as it may determine, at public auction to the highest
and best bidder for cash in lawful money of the United States, payable at
time of sale.  Grantor agrees that such a sale (or a sheriff's sale
pursuant to judicial foreclosure) of all the Property as real estate
constitutes a commercially reasonable disposition thereof, but that with
respect to all or any part of the Property that may be personal property
Trustee shall have and exercise, at Beneficiary's sole election, all the
rights and remedies of a secured party under the UCC.  Whenever notice is
permitted or required hereunder or under the UCC, ten (10) days shall be
deemed reasonable.  Trustee may postpone sale of all or any portion of the
Property, and from time to time thereafter may postpone such sale, as
provided by statute.  Trustee shall deliver to the purchaser its deed and
bill of sale conveying the Property so sold, but without any covenant or
warranty, express or implied.  The recital in such deed and bill of sale
of any matters or facts shall be conclusive proof of the truthfulness
thereof.  Any person other than Trustee, including Grantor or Beneficiary,
may purchase at such sale.

         After deducting all costs, fees, and expenses of Trustee
and of this trust, including the cost of evidence of title search and
title insurance and reasonable counsel fees in connection with sale,
Trustee shall apply the proceeds of sale to payment of all sums secured
hereby in such order as Beneficiary may determine; and the remainder, if
any, to the clerk of the superior court of the county in which the sale
took place, as provided in RCW 61.24.080.

         Reassignment of Security Interest.  At the request of
Beneficiary, Trustee shall reassign to Beneficiary the security
interest created hereby and after such reassignment Beneficiary shall
have the right, upon the occurrence or continuance of any Event of
Default, to realize upon the personal property subject to this Deed of
Trust, independent of any action of Trustee, pursuant to the UCC.

         Acceptance of Trust.  Trustee accepts this trust when
this Deed of Trust, duly executed and acknowledged, is made a public
record as provided by law.  Trustee is not obligated to notify any
party hereto except Beneficiary of pending sale under any other deed of
trust or of any action or proceeding in which Grantor, Beneficiary, or
Trustee shall be a party unless brought by Trustee.

         Reliance.  Trustee, upon presentation to it of an
affidavit signed by Beneficiary setting forth facts showing a default
by Grantor under this Deed of Trust, is authorized to accept as true
and conclusive all facts and statements therein, and to act thereon
hereunder.

         Replacement of Trustee.  Beneficiary may, from time to
time, as provided by statute, appoint another trustee in place and
stead of Trustee herein named, and thereupon Trustee herein named shall
be discharged and the trustee so appointed shall be substituted as
Trustee hereunder, with the same effect as if originally named Trustee
herein.

         No Impairment of Right to Pursue Unsecured Obligations.
The foreclosure of this Deed of Trust or sale by Trustee of the
Property through the exercise of its power of sale granted hereunder
shall not preclude or impair any action to collect or enforce any
obligation of Grantor or any guarantor or other party liable for any of
the obligations secured by this Deed of Trust, or the substantial
equivalent of such obligation, which obligation is not secured by this
Deed of Trust including, without limitation, the obligations of Grantor
under the Indemnity Agreement and the obligations of each such
guarantor under its guaranty.  All of such obligations (and all
substantial equivalents of such obligations) shall constitute separate
recourse obligations of Grantor and each such guarantor or other party
and shall not be deemed to be evidenced by the Note or secured by this
Deed of Trust.

         APPLICATION OF RENTS.  Grantor hereby gives to and
confers upon Beneficiary the right, power, and authority during the
continuance of this Deed of Trust to collect the rents, issues, and
profits of the Property, reserving unto Grantor the right, prior to any
default in payment of any indebtedness secured hereby or hereunder, to
collect and retain such rents, issues, and profits as they become due
and payable.  Upon any such default, Grantor's right to spend or retain
any rents, issues, or profits of the Property shall cease immediately
and without notice or demand and Beneficiary may at any time and
without notice, either in person, by agent, or by a receiver to be
appointed by a court, without regard to the adequacy of any security
for the indebtedness hereby secured and without the necessity for
posting any bond or other security, enter upon and take possession of
the Property or any part thereof, or in its own name sue for or
otherwise collect such rents, issues, and profits, including those past
due and unpaid, and apply the same, less costs and expenses of
operation and collection, including reasonable attorneys' fees, upon
any indebtedness secured hereby, and in such order as Beneficiary may
determine.  The entering upon and taking possession of the Property,
the collection of such rents, issues, and profits and the application
thereof as aforesaid, shall not cure or waive any default or notice of
default hereunder or invalidate any act done pursuant to such notice.

         NOTICES.

         Trustee.  Any notice or demand upon Trustee may be
given or made at:

            First American Title Insurance Company
            2101 Fourth Avenue
            Seattle, Washington 98121

         Grantor and Beneficiary.  Any notice to or demand upon
Grantor (including any notice of default or notice of sale) or notice
to or demand upon Beneficiary shall be deemed to have been sufficiently
made for all purposes when deposited in the United States Mail, postage
prepaid, registered or certified, return receipt requested, addressed
as follows:

         Grantor:       Bedford Property Investors, Inc.
            270 Lafayette Circle
            Lafayette, California 94549
            Attention:  Hanh Kihara

         Beneficiary:        Washington Mutual Bank
            400 E. Main St., Dept. 4036
            Stockton, California 95290-4036
            Attention:  Commercial Real Estate
            Department

or to such other address as may be filed in writing by Grantor
or Beneficiary with Trustee.

         Waiver of Notice.  The giving of notice may be waived
in writing by the person or persons entitled to receive such notice,
either before or after the time established for the giving of such
notice.

         MODIFICATIONS.  Upon written request of any party then
liable for any sum secured hereby, Beneficiary reserves the right to
extend the term, or otherwise modify the terms, hereof or of the Note
as Beneficiary and such person may from time to time deem appropriate
and any such change shall not operate to release, in any manner, the
liability of the original Grantor or Grantor's successors in interest.

         SUCCESSORS AND ASSIGNS.  All provisions herein
         contained shall be binding upon and inure to the
         benefit of the respective successors and assigns of
         the parties.

         GOVERNING LAW; SEVERABILITY.  This Deed of Trust shall
be governed by the law of the state of Washington.  In the event that
any provision or clause of this Deed of Trust or the Note conflicts
with applicable law, the conflict shall not affect other provisions of
this Deed of Trust or the Note that can be given effect without the
conflicting provision and to this end the provisions of this Deed of
Trust and the Note are declared to be severable.

         GRANTOR'S RIGHT TO POSSESSION.  Grantor may be and
remain in possession of the Property for so long as it is not in
default hereunder or under the terms of the Note and Grantor may, while
it is entitled to possession of the Property, use the same.

         MAXIMUM INTEREST.  No provision of this Deed of Trust
or of the Note shall require the payment or permit the collection of
interest in excess of the maximum permitted by law.  If any excess of
interest in such respect is herein or in the Note provided for, neither
Grantor nor its successors or assigns shall be obligated to pay that
portion of such interest that is in excess of the maximum permitted by
law, and the right to demand the payment of any such excess shall be
and is hereby waived and this Section 14 shall control any provision of
this Deed of Trust or the Note that is inconsistent herewith.

         ATTORNEYS' FEES AND LEGAL EXPENSES.  In the event of
any default under this Deed of Trust, or in the event that any dispute
arises relating to the interpretation, enforcement, or performance of
any obligation secured by this Deed of Trust, Beneficiary shall be
entitled to collect from Grantor on demand all fees and expenses
incurred in connection therewith, including but not limited to fees of
attorneys, accountants, appraisers, environmental inspectors,
consultants, expert witnesses, arbitrators, mediators, and court
reporters.  Without limiting the generality of the foregoing, Grantor
shall pay all such costs and expenses incurred in connection with
(a) arbitration or other alternative dispute resolution proceedings,
trial court actions, and appeals; (b) bankruptcy or other insolvency
proceedings of Grantor, any guarantor or other party liable for any of
the obligations secured by this Deed of Trust, or any party having any
interest in any security for any of those obligations; (c) judicial or
nonjudicial foreclosure on, or appointment of a receiver for, any of
the Property; (d) postjudgment collection proceedings; (e) all claims,
counterclaims, cross-claims, and defenses asserted in any of the
foregoing whether or not they arise out of or are related to this Deed
of Trust; (f) all preparation for any of the foregoing; and (g) all
settlement negotiations with respect to any of the foregoing.

         PREPAYMENT PROVISIONS.  If at any time after default
and acceleration of the indebtedness secured hereby there shall be a
tender of payment of the amount necessary to satisfy such indebtedness
by or on behalf of the Grantor, its successors or assigns, the same
shall be deemed to be a voluntary prepayment such that the sum required
to satisfy such indebtedness in full shall include, to the extent
permitted by law, the additional payment required under the prepayment
privilege as stated in the Note.

         TIME IS OF THE ESSENCE.  Time is of the essence under
this Deed of Trust and in the performance of every term, covenant, and
obligation contained herein.

         MISCELLANEOUS.

Whenever the context so requires the singular number includes
the plural herein, and the impersonal includes the personal.

The headings to the various sections have been inserted for
convenient reference only and shall not modify, define, limit, or
expand the express provisions of this Deed of Trust.

This Deed of Trust, the Note, the Assignment of Leases and
Rents and the other documents, instruments, and agreements entered into
by Grantor and Beneficiary in connection therewith (collectively, the
"Loan Documents") constitute the final expression of the entire
agreement of the parties with respect to the transactions set forth
therein.  No party is relying upon any oral agreement or other
understanding not expressly set forth in the Loan Documents.  The Loan
Documents may not be amended or modified except by means of a written
document executed by the party sought to be charged with such amendment
or modification.


                         [END OF TEXT]

<PAGE>
         DATED as of the day and year first above written.

        ORAL AGREEMENTS OR ORAL COMMITMENTS TO LEND MONEY, EXTEND CREDIT,
OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT
ENFORCEABLE UNDER WASHINGTON LAW


                      GRANTOR:     BEDFORD PROPERTY INVESTORS, INC.,
                      a Maryland corporation


                      By

                               Hanh Kihara
                          Its     Sr. Vice President and Chief
                          Financial             Officer



STATE OF CALIFORNIA          )
                             ) ss.
COUNTY OF CONTRA COSTA  )


              On July ___, 2001, before me, ____________________________,
a Notary Public in and for said County and State, personally appeared
_______________________, known to me or proved to me on the basis of
satisfactory evidence to be the person whose name is subscribed to the
within instrument and acknowledged to me that he/she executed the same
in his/her authorized capacity, and that by his/her signature on this
instrument the person, or the entity on behalf of which the person
acted, executed the instrument.

              WITNESS my hand and official seal

              __________________________
              Notary Public



                           EXHIBIT A

         The land is located in the county of King, state of Washington, and
is described as follows:

PARCEL A:


LOT 2 IN BLOCK 5 OF BURLINGTON NORTHERN INDUSTRIAL PARK, RENTON II,
ACCORDING
TO PLAT RECORDED IN VOLUME 111 OF PLATS AT PAGE(S) 42, 43 AND 44, IN KING
COUNTY,
WASHINGTON;
TOGETHER WITH LOT 3 IN BLOCK 5 OF BURLINGTON NORTHERN INDUSTRIAL PARK,
RENTON
11, ACCORDING TO PLAT RECORDED IN VOLUME 111 OF PLATS AT PAGE(S) 42, 43
AND 44, IN KING COUNTY, WASHINGTON;
ALSO TOGETHER WITH THAT PORTION OF LOT 7 OF SAID BLOCK 5, AND OF THE
BURLINGTON NORTHERN RAILROAD RIGHT-OF-WAY ADJOINING ON THE SOUTHEAST, ALL
DESCRIBED AS FOLLOWS;

COMMENCING AT THE MOST NORTHERLY CORNER OF SAID LOT 7;
THENCE SOUTH 42 DEGREES 36'37" EAST ALONG THE LINE COMMON TO LOT 7 AND LOT
8 OF SAID
BLOCK, A DISTANCE OF 290.00 FEET TO THE MOST EASTERLY CORNER OF SAID LOT
7;
THENCE CONTINUING SOUTH 42 DEGREES 36'37" EAST ALONG THE SOUTHEASTERLY
PROLONGATION
OF SAID COMMON LINE 26.55 FEET TO INTERSECT THE ARC OF A CURVE, BEING THE
NORTHWESTERLY LINE OF LOT 2 OF SAID BLOCK 5, AT A POINT FROM WHICH THE
CENTER
BEARS SOUTH 34 DEGREES 18'58" EAST;
THENCE SOUTHWESTERLY ALONG SAID CURVE TO THE LEFT HAVING A RADIUS OF
625.84
FEET, ALSO BEING THE SOUTHEASTERLY MARGIN OF SAID RAILROAD RIGHT-OF-WAY.
THROUGH A CENTRAL ANGLE OF 08 DEGREES 17'39", AN ARC DISTANCE OF 90.60
FEET TO A POINT OF TANGENCY;
THENCE SOUTH 47 DEGREES 23'23" WEST ALONG THE SOUTHEASTERLY MARGIN OF SAID
RAILROAD
RIGHT-OF-WAY, A DISTANCE OF 233.72 FEET;
THENCE NORTH 42 DEGREES 36'37" WEST, 310.00 FEET TO THE NORTHWESTERLY LINE
OF SAID LOT 7;
THENCE NORTH 47 DEGREES 23'23" EAST ALONG THE SAID NORTHWESTERLY LINE, A
DISTANCE OF
324.00 TO THE TRUE POINT OF BEGINNING;

(ALSO KNOWN AS LOT A OF CITY OF RENTON LOT LINE ADJUSTMENT NO. LLA-004-86,
RECORDED UNDER RECORDING NO. 8604240962.)


PARCEL B:

LOT 7 IN BLOCK 5 OF BURLING TON NORTHERN INDUSTRIAL PARK RENTON II,
ACCORDING TO PLAT RECORDED IN VOLUME 111 OF PLATS AT PAGE(S) 42, 43 AND
44, IN KING COUNTY,
WASHINGTON;
EXCEPTING THEREFROM THE FOLLOWING DESCRIBED PARCEL OF LAND:

COMMENCING AT THE MOST NORTHERLY CORNER OF SAID LOT 7;
THENCE SOUTH 42 DEGREES 36'37" EAST ALONG THE LINE COMMON TO SAID LOT 7
AND LOT 8 OF
SAID BLOCK A DISTANCE OF 290.00 FEET TO THE MOST EASTERLY CORNER OF SAID
LOT;
THENCE SOUTH 47 DEGREES 23'23" WEST ALONG THE SOUTHEASTERLY LINE OF SAID
LOT.  A
DISTANCE OF 324.00 FEET;
THENCE NORTH 42 DEGREES 36'37" WEST 290.00 FEET TO THE NORTHWESTERLY LINE
OF SAID LOT;
THENCE NORTH 47 DEGREES 23'23" EAST ALONG THE SAID NORTHWESTERLY LINE, A
DISTANCE OF
324.00 TO THE TRUE POINT OF BEGINNING;

TOGETHER WITH THAT PORTION OF THE BURLINGTON NORTHERN RAILROAD RIGHT-OF-
WAY ADJOINING SAID LOT 7 TO THE SOUTHEAST, MORE PARTICULARLY DESCRIBED AS
FOLLOWS:

COMMENCING AT THE MOST SOUTHERLY CORNER OF SAID LOT 7, BEING THE POINT OF
INTERSECTION OF THE NORTHERLY RIGHT-OF-WAY MARGIN OF SOUTHWEST 39TH STREET;
AND THE NORTHWESTERLY MARGIN OF SAID RAILROAD RIGHT-OF-WAY;
THENCE NORTH 47 DEGREES 23'23" EAST ALONG SAID MARGIN OF SAID RAILROAD
RIGHT-OF-WAY, A
DISTANCE OF 619.43 FEET TO A POINT SOUTH 47 DEGREES 23'23" WEST, A
DISTANCE OF 324.00 FEET
FROM THE MOST EASTERLY CORNER OF SAID LOT 7;
THENCE SOUTH 42 DEGREES 36'37" EAST 20.00 FEET TO THE SOUTHEASTERLY MARGIN
OF SAID
RAILROAD RIGHT-OF-WAY;
THENCE SOUTH 47 DEGREES 23'23" WEST ALONG SAID SOUTHEASTERLY MARGIN, A
DISTANCE OF 598.38 FEET TO SAID NORTHERLY RIGHT-OF-WAY MARGIN OF SOUTHWEST
39TH STREET;
THENCE NORTH 89 DEGREES 05'08" WEST ALONG SAID MARGIN 29.04 FEET TO THE
TRUE POINT OF
BEGINNING;

(ALSO KNOWN AS LOT B OF CITY OF RENTON LOT LINE ADJUSTMENT NO. LLA-004-86,
RECORDED UNDER RECORDING NO. 8604240962).