EXHIBIT 10.24
                                               TIAA Appl. #VR-6
                                                     M -000462400

                         PROMISSORY NOTE
                       Bedford Portfolio #3

$27,350,000                                            Dated:
                                                       May __,
                                                       1999


          FOR VALUE RECEIVED, BEDFORD PROPERTY INVESTORS, INC., a
Maryland corporation ("Borrower"),  having its principal place of
business at 270 Lafayette Circle, Lafayette, California 94549,
promises to pay to TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF
AMERICA, a New York corporation ("Lender"), or order, at Lender's
offices at 730 Third Avenue, New York, New York  10017 or at such
other place as Lender designates in writing, the principal sum of
TWENTY SEVEN MILLION THREE HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS
($27,350,000) (the principal sum or so much of the principal sum as
may be advanced and outstanding from time to time, the "Principal"),
in lawful money of the United States of America, with interest on the
Principal from the date of this Promissory Note (this "Note") through
and including June 1, 2005 (the "Maturity Date") at the fixed rate of
seven and seventeen one-hundredths percent (7.17%) per annum (the
"Fixed Interest Rate").

          This Note is secured by, among other things, the Deed of
Trust, Assignment of Leases and Rents, Security Agreement and Fixture
Filing Statement, Bedford Portfolio #3 - California Properties) and
the Deed of Trust, Assignment of Leases and Rents, Security Agreement,
and Fixture Filing Statement (Bedford Portfolio #3 - Arizona
Properties) (collectively referred to as the "Deed of Trust") dated
the date of this Note made by Borrower for the benefit of Lender as
security for the Loan.  All capitalized terms not expressly defined in
this Note will have the definitions set forth in the Deed of Trust.


     Section 1.     Payments of Principal and Fixed Interest.

     (a)  Borrower will make monthly installment payments ("Debt
Service Payments") as follows:

     (i)  On June 1, 1999, a payment of accrued interest on the
     Principal at the Fixed Interest Rate; and

     (ii) On July 1, 1999 and on the first day of each succeeding
     calendar month through and including June 1, 2005, payments in
     the amount of One Hundred Ninety Six Thousand Two Hundred Eighty
     and 23/100 Dollars ($196,280.23), each of which will be applied
     first to accrued interest on the Principal at the Fixed Interest
     Rate and then to the Principal.

     (b)  On the Maturity Date, Borrower will pay the Principal in
full together with accrued interest at the Fixed Interest Rate and all
other amounts due under the Loan Documents.

     Section 2.     Prepayment Provisions.

     (a)  The following definitions apply:

"Discount Rate" means the yield on a U.S. Treasury issue selected by
Lender, as published in the Wall Street Journal, two weeks prior to
prepayment, having a maturity date corresponding (or most closely
corresponding, if not identical) to the Maturity Date, and, if
applicable, a coupon rate corresponding (or most closely
corresponding, if not identical) to the Fixed Interest Rate.

"Default Discount Rate" means the Discount Rate less 300 basis points.

"Discounted Value" means the Discounted Value of a Note Payment based
on the following formula:

           NP
     (1 + R/12)n  =  Discounted Value

     NP   =    Amount of Note Payment


     R    =    Discount Rate or Default Discount Rate as the case may
               be.

     n    =    The number of months between the date of prepayment
               and the scheduled date of the Note Payment being
               discounted rounded to the nearest integer.

"Note Payments" means (i) the scheduled Debt Service Payments for the
period from the date of prepayment through the Maturity Date and (ii)
the scheduled repayment of Principal, if any, on the Maturity Date.

"Prepayment Date Principal" means the Principal on the date of
prepayment.

     (b)  This Note may not be prepaid in full or in part before June
1, 2001.  Commencing on June 1, 2001, provided there is no Event of
Default that is not cured within the applicable cure period, Borrower
may prepay this Note in full, but not in part, on the first day of any
calendar month, upon 90 days prior notice to Lender and upon payment
in full of the Debt  which will include a payment (the "Prepayment
Premium") equal to the  greater of (i) an amount equal to 1% (the
"Prepayment Percentage") times the Prepayment Date Principal or (ii)
the amount by which the sum of the Discounted Values of Note Payments,
calculated at the Discount Rate plus 50 basis points, exceeds the
Prepayment Date Principal.  Provided there is no Event of Default that
is not cured within the applicable cure period, this Note may be
prepaid in full without payment of the Prepayment Premium during the
last 90 days of the Term.  This Note may not be prepaid without
simultaneous prepayment in full of any other notes secured by the Loan
Documents.

     (c)  After an Event of Default or upon any prepayment not
permitted by the Loan Documents, any tender of payment of the amount
necessary to satisfy all or any part of the Debt, any decree of
foreclosure, any statement of the amount due at the time of
foreclosure (including foreclosure by power of sale) and any tender of
payment during any redemption period after foreclosure, will include
an amount (the "Evasion Premium") equal to the greater of (i) an
amount equal to the product of the Prepayment Premium plus 300 basis
points times the Prepayment Date Principal, or (ii) the amount by
which the sum of the Discounted Values of the Note Payments,
calculated at the Default Discount Rate, exceeds the Prepayment Date
Principal.

     (d)  Borrower acknowledges that:

     (i)  a prepayment will cause damage to Lender;

     (ii) the Evasion Premium is intended to compensate Lender for
     the loss of its investment and the expense incurred and time and
     effort associated with making the Loan, which will not be fully
     repaid if the Loan is prepaid;

     (iii)     it will be extremely difficult and impractical to
     ascertain the extent of Lender's damages caused by a prepayment
     after an Event of Default or any other prepayment not permitted
     by the Loan Documents; and

     (iv) the Evasion Premium represents Lender and Borrower's
     reasonable estimate of Lender's damages for the prepayment and
     is not a penalty.

     (e)  BORROWER HEREBY ACKNOWLEDGES AND AGREES THAT LENDER WOULD
NOT LEND TO BORROWER THE LOAN EVIDENCED BY THIS NOTE WITHOUT
BORROWER'S AGREEMENT, AS SET FORTH ABOVE, TO PAY LENDER A PREPAYMENT
PREMIUM UPON THE SATISFACTION OF ALL OR ANY PORTION OF THE PRINCIPAL
INDEBTEDNESS EVIDENCED FOLLOWING THE ACCELERATION OF THE MATURITY DATE
HEREOF BY REASON OF A DEFAULT HEREUNDER OR UNDER THE DEED OF TRUST
INCLUDING, WITHOUT LIMITATION, A DEFAULT ARISING FROM THE CONVEYANCE
OF ANY RIGHT, TITLE OR INTEREST IN THE PROPERTY ENCUMBERED BY THE DEED
OF TRUST AND BORROWER ACKNOWLEDGES THAT (I) THE GENERAL PARTNERS,
PRINCIPALS OR MEMBERS, AS THE CASE MAY BE, OF BORROWER ARE
KNOWLEDGEABLE REAL ESTATE DEVELOPERS OR INVESTORS, (II) BORROWER FULLY
UNDERSTANDS THE EFFECT OF THE ABOVE WAIVER, (III) THE MAKING OF THE
LOAN BY LENDER AT THE RATE SET FORTH ABOVE IS SUFFICIENT CONSIDERATION
FOR SUCH WAIVER, AND (IV) LENDER WOULD NOT MAKE THE LOAN WITHOUT SUCH
WAIVER, AND BORROWER HAS CAUSED THOSE PERSONS SIGNING THIS NOTE ON
BORROWER'S BEHALF TO SEPARATELY INITIAL THE AGREEMENT CONTAINED IN
THIS PARAGRAPH BY PLACING THEIR INITIALS BELOW.

     INITIALS:____________

     Section 3.     Events of Default:

     (a)  It is an "Event of Default" under this Note:

     (i)  if Borrower fails to pay any amount due, as and when
     required, under this Note or any other Loan Document and the
     failure continues for a period of 5 days; or

     (ii) if an Event of Default occurs under any other Loan
     Document.

     (b)  If an Event of Default occurs, Lender may declare all or
any portion of the Debt immediately due and payable ("Acceleration")
and exercise any of the other Remedies.

     Section 4.     Interest on the Principal will accrue at the
Default Interest Rate from the date an Event of Default occurs.

     Section 5.     Late Charges.

     (a)  If Borrower fails to pay any Debt Service Payment when due
and the failure continues for a period of 5 days or more or fails to
pay any amount due under the Loan Documents on the Maturity Date,
Borrower agrees to pay to Lender an amount (a "Late Charge") equal to
five cents ($.05) for each one dollar ($1.00) of the delinquent
payment.

     (b)  Borrower acknowledges that:

     (i)   a delinquent payment will cause damage to Lender;

     (ii)  the Late Charge is intended to compensate Lender for loss
     of use of the delinquent payment and the expense incurred and
     time and effort associated with recovering the delinquent
     payment;

     (iii)     it will be extremely difficult and impractical to
     ascertain the extent of Lender's damages caused by the
     delinquency; and

     (iv)  the Late Charge represents Lender and Borrower's
     reasonable estimate of Lender's damages from the delinquency and
     is not a penalty.

     Section 6.     Limitation of Liability.   This Note is subject
to the limitations on liability set forth in the Article of the Deed
of Trust entitled "Limitation of Liability".

     Section 7.     WAIVERS.   IN ADDITION TO THE WAIVERS SET FORTH
IN THE ARTICLE OF THE DEED OF TRUST ENTITLED "WAIVERS", BORROWER
WAIVES PRESENTMENT FOR PAYMENT, DEMAND, DISHONOR AND, EXCEPT AS
EXPRESSLY SET FORTH IN THE LOAN DOCUMENTS, NOTICE OF ANY OF THE
FOREGOING.  BORROWER FURTHER WAIVES ANY PROTEST, LACK OF DILIGENCE OR
DELAY IN COLLECTION OF THE DEBT OR ENFORCEMENT OF THE LOAN DOCUMENTS.
BORROWER AND ALL INDORSERS, SURETIES AND GUARANTORS OF THE OBLIGATIONS
CONSENT TO ANY EXTENSIONS OF TIME, RENEWALS, WAIVERS AND MODIFICATIONS
THAT LENDER MAY GRANT WITH RESPECT TO THE OBLIGATIONS AND TO THE
RELEASE OF ANY SECURITY FOR THIS NOTE AND AGREE THAT ADDITIONAL
BORROWERS MAY BECOME PARTIES TO THIS NOTE AND ADDITIONAL INDORSERS,
GUARANTORS OR SURETIES MAY BE ADDED WITHOUT NOTICE AND WITHOUT
AFFECTING THE LIABILITY OF THE  ORIGINAL BORROWER OR ANY ORIGINAL
INDORSER, SURETY OR GUARANTOR.

     Section 8.     Commercial Loan.  The Loan is made for the
purpose of carrying on a business or commercial activity or acquiring
real or personal property as an investment or carrying on an
investment activity and not for personal or household purposes.

     Section 9.     Usury Limitations.  Borrower and Lender intend
to comply with all Laws with respect to the charging and receiving of
interest.  Any amounts charged or received by Lender for the use or
forbearance of the Principal to the extent permitted by Law, will be
amortized and spread throughout the Term until payment in full so that
the rate or amount of interest charged or received by Lender on
account of the Principal does not exceed the Maximum Interest Rate.
If any amount charged or received under the Loan Documents that is
deemed to be interest is determined to be in excess of the amount
permitted to be charged or received at the Maximum Interest Rate, the
excess will be deemed to be a prepayment of Principal when paid,
without premium, and any portion of the excess not capable of being so
applied will be refunded to Borrower.  If during the Term the Maximum
Interest Rate, if any, is eliminated, then for purposes of the Loan,
there will be no Maximum Interest Rate.

     Section 10.    Applicable Law.  The Loan Documents shall be
governed by and will be construed in accordance with the Laws of the
State of New York, without regard to conflicts of laws principles,
except as set forth below.  The parties acknowledge that the State of
New York is the principal place of business of Lender and has a
substantial relationship to the underlying transactions relating to
the Loan and to the parties involved.  Notwithstanding the foregoing,
Borrower and Lender agree that the laws of the State in which the
Property is located shall govern the creation and perfection of liens
on the Property and the procedures for enforcing remedies directly
related to the Property including the appointment of trustees, the
foreclosure or foreclosure sale of the Property, the appointment of
receiver and any other remedy with respect to the Property

     Section 11.    Time of the Essence.  Time is of the essence
with respect to the payment and performance of the Obligations.

     Section 12.    Cross-Default.  A default under any other note
now or hereafter secured by the Loan Documents or under any loan
document related to such other note constitutes a default under this
Note and under the other Loan Documents.  When the default under the
other note constitutes an Event of Default under that note or the
related loan document, an Event of Default also will exist under this
Note and the other Loan Documents.

     Section 13.    Construction.  Unless expressly provided
otherwise in this Note, this Note will be construed in accordance with
the Exhibit attached to the Deed of Trust entitled "Rules of
Construction".

     Section 14.    Deed of Trust Provisions Incorporated.   To the
extent not otherwise set forth in this Note, the provisions of the
Articles of the Deed of Trust entitled "Expenses and Duty to Defend",
"Waivers", "Notices", and "Miscellaneous" are applicable to this Note
and deemed incorporated by reference as if set forth at length in this
Note.

     Section 15.    Joint and Several Liability; Successors and
Assigns.   If Borrower consists of more than one entity, the
obligations and liabilities of each such entity will be joint and
several.  This Note binds Borrower and successors, assigns, heirs,
administrators, executors, agents and representatives and inures to
the benefit of Lender and its successors, assigns, heirs,
administrators, executors, agents and representatives.

     Section 16.    Absolute Obligation.  Except for the Section of
this Note entitled "Limitation of Liability", no reference in this
Note to the other Loan Documents and no other provision of this Note
or of the other Loan Documents will impair or alter the obligation of
Borrower, which is absolute and unconditional, to pay the Principal,
interest at the Fixed Interest Rate and any other amounts due and
payable under this Note, as and when required.

     IN WITNESS WHEREOF, Borrower has executed and delivered this
Note as of the date first set forth above.


                              BEDFORD PROPERTY INVESTORS, INC.,
                              a Maryland corporation


                              By:   /s/ Hanh Kihara

                                     Hanh Kihara, Senior Vice President





                                                 TIAA Appl. #VR-6
                                                      M-000462400


          DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS,
         SECURITY AGREEMENT AND FIXTURE FILING STATEMENT
Bedford Portfolio #3 - Arizona Properties

                         by and between

     BEDFORD PROPERTY INVESTORS, INC., a Maryland corporation
                           as Borrower

                               and

 FIRST AMERICAN TITLE INSURANCE COMPANY, a California corporation
                            as Trustee

                        for the benefit of

           TEACHERS INSURANCE AND ANNUITY ASSOCIATION
                OF AMERICA, a New York corporation
                            as Lender

                       Properties Known As

Westech Business Center, 4602-4640 E. Elwood Street, Phoenix Arizona
Westech Business Center II, 4710 E. Elwood Street, Phoenix, Arizona
            8125 North 23rd Street, Phoenix, Arizona

  After Recordation This Deed of Trust Should Be Returned To:

                   Beverly J. Quail, Esquire
             Ballard Spahr Andrews & Ingersoll LLP
                  1225 17th Street, Suite 2300
                     Denver, Colorado 80202

                        TABLE OF CONTENTS


                                                             Page

RECITALS:
 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1

ARTICLE I

DEFINITIONS AND RULES OF CONSTRUCTION. . . . . . . . . . . . . .1
Section 1.1.           Definitions . . . . . . . . . . . . . . .1
Section 1.2.           Rules of Construction . . . . . . . . . .2

ARTICLE II

GRANTING CLAUSES . . . . . . . . . . . . . . . . . . . . . . . .2
Section 2.1.           Encumbered Property . . . . . . . . . . .2
Section 2.2.           Habendum Clause . . . . . . . . . . . . .4
Section 2.3.           Security Agreement. . . . . . . . . . . .5
Section 2.4.           Conditions to Grant . . . . . . . . . . .5

ARTICLE III

OBLIGATIONS SECURED. . . . . . . . . . . . . . . . . . . . . . .5
Section 3.1.           The Obligations . . . . . . . . . . . . .5

ARTICLE IV

TITLE AND AUTHORITY. . . . . . . . . . . . . . . . . . . . . . .6
Section 4.1.           Title to the Property . . . . . . . . . .6
Section 4.2.           Authority . . . . . . . . . . . . . . . .6
Section 4.3.           No Foreign Person . . . . . . . . . . . .6
Section 4.4.           Litigation. . . . . . . . . . . . . . . .7

ARTICLE V

PROPERTY STATUS, MAINTENANCE AND LEASES. . . . . . . . . . . . .7
Section 5.1.           Status of the Property. . . . . . . . . .7
Section 5.2.           Maintenance of the Property . . . . . . .7
Section 5.3.           Change in Use . . . . . . . . . . . . . .8
Section 5.4.           Waste . . . . . . . . . . . . . . . . . .8
Section 5.5.           Inspection of the Property. . . . . . . .8
Section 5.6.           Leases and Rents. . . . . . . . . . . . .8
Section 5.7.           Parking . . . . . . . . . . . . . . . . .8
Section 5.8.           Separate Tax Lot. . . . . . . . . . . . .9
Section 5.9.           Changes in Zoning or Restrictive Covenants9
Section 5.10.          Lender's Right to Appear. . . . . . . . .9
Section 5.11.  Community Facilities District . . . . . . . . . .9

ARTICLE VI

IMPOSITIONS AND ACCUMULATIONS. . . . . . . . . . . . . . . . . 10
Section 6.1.           Impositions . . . . . . . . . . . . . . 10
Section 6.2.           Accumulations . . . . . . . . . . . . . 11
Section 6.3.           Changes in Tax Laws . . . . . . . . . . 12

ARTICLE VII

INSURANCE, CASUALTY, CONDEMNATION
AND RESTORATION. . . . . . . . . . . . . . . . . . . . . . . . 13
Section 7.1.           Insurance Coverages . . . . . . . . . . 13
Section 7.2.           Casualty and Condemnation . . . . . . . 14
Section 7.3.           Application of Proceeds . . . . . . . . 15
Section 7.4.           Conditions to Availability of Proceeds for Restoration
 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 7.5.           Restoration . . . . . . . . . . . . . . 17

ARTICLE VIII

COMPLIANCE WITH LAW AND AGREEMENTS . . . . . . . . . . . . . . 19
Section 8.1.           Compliance with Law . . . . . . . . . . 19
Section 8.2.           Compliance with Agreements. . . . . . . 19
Section 8.3.           ERISA Compliance. . . . . . . . . . . . 19
Section 8.4.           Section 6045(e) Filing. . . . . . . . . 20

ARTICLE IX

ENVIRONMENTAL. . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 9.1.           Environmental Representations and Warranties20
Section 9.2.           Environmental Covenants . . . . . . . . 20

ARTICLE X

FINANCIAL REPORTING. . . . . . . . . . . . . . . . . . . . . . 22
Section 10.1.          Financial Reporting . . . . . . . . . . 22
Section 10.2.          Annual Budget . . . . . . . . . . . . . 22

ARTICLE XI

EXPENSES AND DUTY TO DEFEND. . . . . . . . . . . . . . . . . . 23
Section 11.1.          Payment of Expenses . . . . . . . . . . 23
Section 11.2.          Duty to Defend. . . . . . . . . . . . . 23

ARTICLE XII

TRANSFERS, LIENS AND ENCUMBRANCES. . . . . . . . . . . . . . . 24
Section 12.1.          Prohibitions on Transfers, Liens and Encumbrances24
Section 12.2.          Permitted Transfers . . . . . . . . . . 24
Section 12.3.          Right to Contest Lien . . . . . . . . . 26
Section 12.4.          Reconveyance Rights . . . . . . . . . . 27
Section 12.5.          Substitution. . . . . . . . . . . . . . 29

ARTICLE XIII

ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS . . . . . 30
Section 13.1.          Further Assurances. . . . . . . . . . . 30
Section 13.2.          Estoppel Certificates . . . . . . . . . 31

ARTICLE XIV

DEFAULTS AND REMEDIES. . . . . . . . . . . . . . . . . . . . . 31
Section 14.1.          Events of Default . . . . . . . . . . . 31
Section 14.2.          Remedies. . . . . . . . . . . . . . . . 33
Section 14.3.          General Provisions Pertaining to Remedies34
Section 14.4.          Foreclosure by Power of Sale. . . . . . 35
Section 14.5.          General Provisions Pertaining to Receiver and other
Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 14.6.          General Provisions Pertaining to Foreclosures and the
Power of Sale. . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 14.7.          Application of Proceeds . . . . . . . . 38
Section 14.8.          Power of Attorney . . . . . . . . . . . 38
Section 14.9.          Tenant at Sufferance. . . . . . . . . . 38

ARTICLE XV

LIMITATION OF LIABILITY. . . . . . . . . . . . . . . . . . . . 38
Section 15.1.          Limitation of Liability . . . . . . . . 38

ARTICLE XVI

WAIVERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 16.1.          WAIVER OF STATUTE OF LIMITATIONS. . . . 41
Section 16.2.          WAIVER OF NOTICE. . . . . . . . . . . . 41
Section 16.3.          WAIVER OF MARSHALLING AND OTHER MATTERS 41
Section 16.4.          WAIVER OF TRIAL BY JURY . . . . . . . . 41
Section 16.5.          WAIVER OF COUNTERCLAIM. . . . . . . . . 41
Section 16.6.          WAIVER OF JUDICIAL NOTICE AND HEARING . 42
Section 16.7.          WAIVER OF SUBROGATION . . . . . . . . . 42
Section 16.8.          GENERAL WAIVER. . . . . . . . . . . . . 42

ARTICLE XVII

NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 17.1.          Notices . . . . . . . . . . . . . . . . 43
Section 17.2.          Change in Borrower's Name or Place of Business44

ARTICLE XVIII

MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 18.1.          Applicable Law. . . . . . . . . . . . . 44
Section 18.2.          Usury Limitations . . . . . . . . . . . 45
Section 18.3.          Lender's Discretion . . . . . . . . . . 45
Section 18.4.          Unenforceable Provisions. . . . . . . . 45
Section 18.5.          Survival of Borrower's Obligations. . . 45
Section 18.6.          Relationship Between Borrower and Lender; No Third
Party Beneficiaries
 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 18.7.          Partial Reconveyances or Releases, Extensions, Waivers
 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 18.8.          Service of Process. . . . . . . . . . . 46
Section 18.9.          Entire Agreement. . . . . . . . . . . . 46
Section 18.10.          No Oral Amendment. . . . . . . . . . . 46
Section 18.11.         Severability. . . . . . . . . . . . . . 47
Section 18.12.         Covenants Run with the Land . . . . . . 47
Section 18.13.         Time of the Essence . . . . . . . . . . 47
Section 18.14.         Subrogation . . . . . . . . . . . . . . 47
Section 18.15.          Joint and Several Liability. . . . . . 47
Section 18.16.         Successors and Assigns. . . . . . . . . 47
Section 18.17.         Duplicates and Counterparts . . . . . . 47
Section 18.18.  Deed of Trust as Mortgage. . . . . . . . . . . 47

ARTICLE XIX

TRUSTEE PROVISIONS . . . . . . . . . . . . . . . . . . . . . . 47
Section 19.1           Acceptance of Trust . . . . . . . . . . 48

Exhibit A

LEGAL DESCRIPTION. . . . . . . . . . . . . . . . . . . . . . . 50

Exhibit B

DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . 53

Exhibit C

RULES OF CONSTRUCTION. . . . . . . . . . . . . . . . . . . . . 59

                                                 TIAA Appl. #VR-6
                                                      M-000462400

          DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS,
              SECURITY AGREEMENT AND FIXTURE FILING
            Bedford Portfolio # 3 - Arizona Properties

        THIS DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS,
SECURITY AGREEMENT AND FIXTURE FILING STATEMENT made this ____ day of
May, l999, by BEDFORD PROPERTY INVESTORS, INC. ("Borrower"), a
Maryland corporation, having its principal place of business at 270
Lafayette Circle, Lafayette, California 94549, FIRST AMERICAN TITLE
INSURANCE COMPANY, a California corporation  ("Trustee"), having an
address of P.O. Box 3915, Phoenix, Arizona 85030, for the benefit of
TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA ("Lender"), a
New York corporation, having an address at 730 Third Avenue, New York,
New York l0017.


                            RECITALS:

        A.   Lender agreed to make and Borrower agreed to accept a
loan (the "Loan") in the maximum principal amount of $27,350,000.

        B.   To evidence the Loan, Borrower executed and delivered
to Lender a promissory note (the "Note"), dated the date of this Deed
of Trust, in the principal amount of TWENTY SEVEN MILLION THREE
HUNDRED FIFTY THOUSAND AND NO/100 Dollars ($27,350,000)(that amount or
so much as is outstanding from time to time is referred to as the
"Principal"), promising to pay the Principal with interest thereon to
the order of Lender as set forth in the Note and with the balance, if
any, of the Debt being due and payable on June 1, 2005 (the "Maturity
Date").

        C.   To secure the Note and the Obligations, this Deed of
Trust conveys, among other things, Borrower's fee interest in the real
property located in the City of Phoenix, County of Maricopa, State of
Arizona more particularly described in Exhibits A-1, A-2 and A-3 (the
"Land").


                            ARTICLE I

              DEFINITIONS AND RULES OF CONSTRUCTION

   Section 1.1.   Definitions.  Capitalized terms used in this
Deed of Trust are defined in Exhibit B or in the text with a cross-
reference in Exhibit B.

   Section 1.2.   Rules of Construction.  This Deed of Trust will
be interpreted in accordance with the rules of construction set forth
in Exhibit C.


                            ARTICLE II

                         GRANTING CLAUSES

   Section 2.1.   Encumbered Property.  Borrower irrevocably
grants, mortgages, warrants, sells, conveys, assigns and pledges to
Trustee for the benefit of Lender in trust, WITH POWER OF SALE, and
grants to Trustee for the benefit of Lender a security interest in,
any and all of the following property, rights, interests and estates
now or in the future owned or held by Borrower (the "Property") for
the uses and purposes set forth in this Deed of Trust:

             (i)  the Land;

             (ii) all buildings and improvements located on the
                  Land (the "Improvements");

             (iii)     all easements; rights of way or use,
                       including any rights of ingress and egress;
                       streets, roads, ways, sidewalks, alleys and
                       passages; strips and gores; sewer rights;
                       water, water rights, water courses,
                       riparian rights and drainage rights; air
                       rights and development rights; oil and
                       mineral rights; and tenements,
                       hereditaments and appurtenances, in each
                       instance adjoining or otherwise appurtenant
                       to or benefitting the Land or the
                       Improvements;

             (iv) all materials intended for construction, re-
                  construction, alteration or repair of the
                  Improvements, such materials to be deemed
                  included in the Land and the Improvements
                  immediately on delivery to the Land; all
                  fixtures and personal property that are attached
                  to, contained in or used in connection with the
                  Land or the Improvements (excluding personal
                  property owned by tenants), including:
                  furniture; furnishings; machinery; motors;
                  elevators; fittings; microwave ovens;
                  refrigerators; office systems and equipment;
                  plumbing, heating, ventilating and air
                  conditioning systems and equipment; maintenance
                  and landscaping equipment; lighting, cooking,
                  laundry, dry cleaning, refrigerating,
                  incinerating and sprinkler systems and
                  equipment; telecommunications systems and
                  equipment; computer or word processing systems
                  and equipment; security systems and equipment;
                  and equipment leases for any of the property
                  described in this subsection (the "Fixtures and
                  Personal Property");

             (v)  all agreements, ground leases, grants of
                  easements or rights-of-way, permits,
                  declarations of covenants, conditions and
                  restrictions, disposition and development
                  agreements, planned unit development agreements,
                  cooperative, condominium or similar ownership or
                  conversion plans, management, leasing, brokerage
                  or parking agreements or other material
                  documents affecting Borrower or the Land, the
                  Improvements or the Fixtures and Personal
                  Property, but expressly excluding the Leases
                  (the "Property Documents");

             (vi) all inventory (including all goods, merchandise,
                  raw materials, incidentals, office supplies and
                  packaging materials) held for sale, lease or
                  resale or furnished or to be furnished under
                  contracts of service, or used or consumed in the
                  ownership, use or operation of the Land, the
                  Improvements or the Fixtures and Personal
                  Property, all documents of title evidencing any
                  part of any of the foregoing and all returned or
                  repossessed goods arising from or relating to
                  any sale or disposition of inventory;

             (vii)     all intangible personal property relating
                       to the Land, the Improvements or the
                       Fixtures and Personal Property, including
                       choses in action and causes of action
                       (except those personal to Borrower),
                       corporate and other business records,
                       inventions, designs, promotional materials,
                       blueprints, plans, specifications, patents,
                       patent applications, trademarks, trade
                       names, trade secrets, goodwill, copyrights,
                       registrations, licenses, franchises, claims
                       for refunds or rebates of taxes, insurance
                       surpluses, refunds or rebates of taxes and
                       any letter of credit, guarantee, claim,
                       security interest or other security held by
                       or granted to Borrower to secure payment by
                       an account debtor of any of the accounts of
                       Borrower arising out of the ownership, use
                       or operation of the Land, the Improvements
                       or the Fixtures and Personal Property, and
                       documents covering all of the foregoing;
                       all accounts, accounts receivable,
                       documents, instruments, money, deposit
                       accounts, funds deposited in accounts
                       established with a bank, savings and loan
                       association, trust company or other
                       financial institution in connection with
                       the ownership, use or operation of the
                       Land, the Improvements or the Fixtures and
                       Personal Property, including any reserve
                       accounts or escrow accounts, and all
                       investments of the funds and all other
                       general intangibles;

             (viii)    all awards and other compensation paid
                       after the date of this Deed of Trust for
                       any Condemnation (the "Condemnation
                       Awards");

             (ix) all proceeds of and all unearned premiums on the
                  Policies (the "Insurance Proceeds");

             (x)  all licenses, certificates of occupancy,
                  contracts, management agreements, operating
                  agreements, operating covenants, franchise
                  agreements, permits and variances relating to
                  the Land, the Improvements or the Fixtures and
                  Personal Property;

             (xi) all books, records and other information,
                  wherever located, which are in Borrower's
                  possession, custody or control or to which
                  Borrower is entitled at law or in equity and
                  which are related to the Property, including all
                  computer or other equipment used to record,
                  store, manage, manipulate or access the
                  information (the "Books and Records");

             (xii)     all deposits and letters of credit held
                       from time to time by the Accumulations
                       Depositary to provide reserves for Taxes
                       and Assessments together with interest
                       thereon, if any (the "Accumulations") and
                       the account or accounts in which such
                       deposits are or may be held; and

             (xiii)    all after-acquired title to or remainder or
                       reversion in any of the property described
                       in this Section; all additions, accessions
                       and extensions to, improvements of and
                       substitutions or replacements for any of
                       such property; all products and all cash
                       and non-cash proceeds, immediate or remote,
                       of any sale or other disposition of any of
                       such property, excluding sales or other
                       dispositions of inventory in the ordinary
                       course of the business of operating the
                       Land or the Improvements; and all
                       additional lands, estates, interests,
                       rights or other property acquired by
                       Borrower after the date of this Deed of
                       Trust for use in connection with the Land
                       and Improvements, all without the need for
                       any additional mortgage, assignment, pledge
                       or conveyance to Lender but Borrower will
                       execute and deliver to Lender, upon
                       Lender's request, any documents reasonably
                       requested by Lender to further evidence the
                       foregoing.

   Section 2.2.   Habendum Clause.  The Property is conveyed to
Trustee, TO HAVE AND TO HOLD the Property IN TRUST, FOREVER, for the
purpose of securing the Note and the Obligations.

   Section 2.3.   Security Agreement.

        (a)  This Deed of Trust is a real property mortgage and
also a "security agreement" and a "financing statement" within the
meaning of the Uniform Commercial Code.  The Property includes both
real and personal property and all of Borrower's other right, title
and interest, whether tangible or intangible, in the Property.  By
executing and delivering this Deed of Trust, Borrower grants to
Trustee, as security for the Obligations, a security interest in the
Property to the full extent that any of the Property may be subject to
the Uniform Commercial Code.

        (b)  Borrower desires and intends that this Deed of Trust
also constitute a Fixture Filing between Borrower as debtor and Lender
as secured party, as defined in the Uniform Commercial Code.  To this
end, Borrower acknowledges that (i) this Deed of Trust covers goods
which are or are to become fixtures on the Land; (ii) this financing
statement is to be recorded; (iii) Borrower is the record owner of
such property; (iv) products of collateral are also covered.  Except
as otherwise provided in the Loan Documents, no financing statement in
favor of any secured party other than Lender covering the personal
property described herein or any portion thereof is on file in any
public office.  Provided that obsolete and worn-out articles may be
removed concurrently with the replacement or renewal thereof with
property of at least equal value or usefulness in the operation of the
Property; Borrower will not otherwise remove or permit the removal of
the collateral or any part thereof without the prior written
permission of Lender.

   Section 2.4.   Conditions to Grant.  This Deed of Trust is made
on the express condition that if Borrower pays and performs the
Obligations in full in accordance with the Loan Documents, then unless
expressly provided otherwise in the Loan Documents, the Loan Documents
will be released at Borrower's expense.


                           ARTICLE III

                       OBLIGATIONS SECURED

   Section 3.1.   The Obligations.  This Deed of Trust secures the
Principal, the Interest, the Late Charges, the Prepayment Premiums,
the Expenses, any additional advances made by Lender in connection
with the Property or the Loan and all other amounts payable under the
Loan Documents (the "Debt") and also secures both the timely payment
of the Debt as and when required and the timely performance of all
other obligations and covenants to be performed under the Loan
Documents (the "Obligations").


                            ARTICLE IV

                       TITLE AND AUTHORITY

   Section 4.1.   Title to the Property.

        (a)  Subject to the conveyance effectuated by this Deed of
Trust, Borrower has and will continue to have good and marketable
title in fee simple absolute to the Land and the Improvements and good
and marketable title to the Fixtures and Personal Property, in each
case, free and clear of liens, encumbrances and charges except the
Permitted Exceptions.  To Borrower's knowledge, there are no facts or
circumstances that might give rise to a lien, encumbrance or charge on
the Property.

        (b)  Borrower owns and will continue to own all of the
other Property free and clear of all liens, encumbrances and charges
except the Permitted Exceptions.

        (c)  This Deed of Trust is and will remain a valid and
enforceable first lien on and security interest in the Property,
subject only to the Permitted Exceptions.

   Section 4.2.   Authority.

        (a)  Borrower is and will continue to be (i) duly
organized, validly existing and in good standing under the Laws of the
state or commonwealth in which it was organized or incorporated and
(ii) duly qualified to conduct business, in good standing, in the
state or commonwealth where the Property is located.

        (b)  Borrower has and will continue to have all approvals
required by Law or otherwise and full right, power and authority to
(i) own and operate the Property and carry on Borrower's business as
now conducted or as proposed to be conducted; (ii) execute and deliver
the Loan Documents; (iii) grant, mortgage, warrant the title to,
convey, assign and pledge the Property to Lender pursuant to the
provisions of this Deed of Trust; and (iv) perform the Obligations.

        (c)  The execution and delivery of the Loan Documents and
the performance of the Obligations do not and will not conflict with
or result in a default under any Laws or any Leases or Property
Documents and do not and will not conflict with or result in a default
under any agreement binding upon any party to the Loan Documents.

        (d)  The Loan Documents constitute and will continue to
constitute legal, valid and binding obligations of all parties to the
Loan Documents enforceable in accordance with their respective terms.

   Section 4.3.   No Foreign Person.  Borrower is not a "foreign
person" within the meaning of Section 1445(f)(3) of the Code.

   Section 4.4.   Litigation.  There are no Proceedings or, to
Borrower's knowledge, investigations against or affecting Borrower or
the Property and, to Borrower's knowledge, there are no facts or
circumstances that might give rise to a Proceeding or an investigation
against or affecting Borrower or the Property.  Borrower will give
Lender prompt notice of the commencement of any Proceeding or
investigation against or affecting the Property or Borrower which
could have a material adverse effect on the Property or on Lender's
interests in the Property or under the Loan Documents.  Borrower also
will deliver to Lender such additional information relating to the
Proceeding or investigation as Lender may request from time to time.


                            ARTICLE V

             PROPERTY STATUS, MAINTENANCE AND LEASES

   Section 5.1.   Status of the Property.

        (a)  Borrower has obtained and will maintain in full force
and effect all certificates, licenses, permits and approvals that are
issued or required by Law or by any entity having jurisdiction over
the Property or over Borrower or that are necessary for the Permitted
Use, for occupancy and operation of the Property for the conveyance
described in this Deed of Trust and for the conduct of Borrower's
business on the Property in accordance with the Permitted Use.

        (b)  The Property is and will continue to be serviced by
all public utilities required for the Permitted Use of the Property.

        (c)  All roads and streets necessary for service of and
access to the Property for the current or contemplated use of the
Property have been completed and are and will continue to be
serviceable, physically open and dedicated to and accepted by the
Government for use by the public.

        (d)  The Property is free from damage caused by a Casualty.

        (e)  Except as disclosed in writing to Lender, all costs
and expenses of labor, materials, supplies and equipment used in the
construction of the Improvements have been paid in full.

   Section 5.2.   Maintenance of the Property.  Borrower will
maintain the Property in thorough repair and good and safe condition,
suitable for the Permitted Use, including, to the extent necessary,
replacing the Fixtures and Personal Property with property at least
equal in quality and condition to that being replaced and free of
liens.  Borrower will not erect any new buildings, building additions
or other structures on the Land or otherwise materially alter the
Improvements without Lender's prior consent which may be withheld in
Lender's sole discretion.  Lender shall be deemed to have consented if
it has not responded within 30 days of receipt of Borrower's written
request to the Lender at the addresses set forth herein.  In the event
that Borrower does not manage the Property itself, the Property will
be managed by a property manager satisfactory to Lender pursuant to a
management agreement satisfactory to Lender and terminable by Borrower
upon 30 days notice to the property  manager.

   Section 5.3.   Change in Use.  Borrower will use and permit the
use of the Property for the Permitted Use and for no other purpose.

   Section 5.4.   Waste.  Borrower will not commit or permit any
waste (including economic and non-physical waste), impairment or
deterioration of the Property or any alteration, demolition or removal
of any of the Property, excluding any tenant alterations of a non-
structural nature, without Lender's prior consent which may be
withheld in Lender's sole discretion.  Lender shall be deemed to have
consented if it has not responded within 30 days of receipt of
Borrower's written request to the Lender at the addresses set forth
herein.

   Section 5.5.   Inspection of the Property.  Subject to the
rights of tenants under the Leases, Lender has the right to enter and
inspect the Property on reasonable prior notice, except during the
existence of an Event of Default, when no prior notice is required.
Lender has the right to engage an independent expert to review and
report on Borrower's compliance with Borrower's obligations under this
Deed of Trust to maintain the Property, comply with Law and refrain
from waste, impairment or deterioration of the Property and the
alteration, demolition or removal of any of the Property except as may
be permitted by the provisions of this Deed of Trust.  If the
independent expert's report discloses material failure to comply with
such obligations or if Lender engages the independent expert after the
occurrence of an Event of Default, then the independent expert's
review and report will be at Borrower's expense, payable within 3 days
after demand.

   Section 5.6.   Leases and Rents.

        (a)  Borrower assigns the Leases and the Rents to Lender
absolutely and unconditionally and not merely as additional collateral
or security for the payment and performance of the Obligations, but
subject to a license back to Borrower of the right to collect the
Rents unless and until an Event of Default occurs at which time the
license will terminate automatically, all as more particularly set
forth in the Assignment, the provisions of which are incorporated in
this Deed of Trust by reference.

        (b)  Borrower appoints Lender as Borrower's attorney-in-
fact to execute unilaterally and record, at Lender's election, a
document subordinating this Deed of Trust to the Leases, provided that
the subordination will not affect (i) the priority of Lender's
entitlement to Insurance Proceeds or Condemnation Awards or (ii) the
priority of this Deed of Trust over intervening liens or liens arising
under or with respect to the Leases.

   Section 5.7.   Parking.  Borrower will provide, maintain,
monitor and light parking areas within the Property, including any
sidewalks, aisles, streets, driveways, sidewalk cuts and rights-of-way
to and from the adjacent public streets, in a manner consistent with
the Permitted Use and sufficient to accommodate the greatest of: (i)
the number of parking spaces required by Law; or (ii) the number of
parking spaces required by the Leases and the Property Documents.  The
parking areas will be reserved and used exclusively for ingress,
egress and parking for Borrower and the tenants under the Leases and
their respective employees, customers and invitees and in accordance
with the Leases and the Property Documents.

   Section 5.8.   Separate Tax Lot.  The Property is and will
remain assessed for real estate tax purposes as one or more wholly
independent tax lots, separate from any property that is not part of
the Property.

   Section 5.9.   Changes in Zoning or Restrictive Covenants.
Borrower will not (i) initiate, join in or consent to any change in
any Laws pertaining to zoning, any restrictive covenant or other
restriction which would restrict the Permitted Uses for the Property;
(ii) permit the Property to be used to fulfil any requirements of Law
for the construction or maintenance of any improvements on property
that is not part of the Property; (iii) permit the Property to be used
for any purpose not included in the Permitted Use; or (iv) impair the
integrity of the Property as a single, legally subdivided zoning lot
separate from all other property.

   Section 5.10.  Lender's Right to Appear.  If Lender determines,
in its sole discretion, that Borrower is not adequately protecting
Lender's interest in the Property, upon written notice to Borrower,
except in the case of an emergency, Lender has the right to appear in
and defend any Proceeding brought regarding the Property and to bring
any Proceeding, in the name and on behalf of Borrower or in Lender's
name.

   Section 5.11.  Community Facilities District.  Without obtaining
the prior written
consent of Lender, Borrower shall not consent to, or vote in favor of,
the inclusion of all or any part of the Property in any Community
Facilities District formed pursuant to the Community Facilities
District Act, A.R.S. Section 48-701, et seq., as amended from time to
time.  Borrower shall immediately give notice to Lender of any
notification or advice that Borrower may receive from any municipality
or other third party of any intent or proposal to include all or any
part of the Property in a Community Facilities District.  Lender shall
have the right to file a written objection to the inclusion of all or
any part of the Property in a Community Facilities District, either in
its own name or in the name of Borrower, and to appear at, and
participate in, any hearing with respect to the formation of any such
district.


                            ARTICLE VI

                  IMPOSITIONS AND ACCUMULATIONS

   Section 6.1.   Impositions.

        (a)  Borrower will pay each Imposition, unless the
Imposition is payable directly by the tenant, at least 15 days before
the date (the "Imposition Penalty Date") that is the earlier of (i)
the date on which the Imposition becomes delinquent and (ii) the date
on which any penalty, interest or charge for non-payment of the
Imposition accrues. If the Imposition is to be paid directly by a
tenant, Borrower shall deliver to Lender proof, in form and content
acceptable to Lender, of tenant's payment of such Impositions 15 days
before the Imposition Penalty Date.

        (b)  At least 10 days before each Imposition Penalty Date,
Borrower will deliver to Lender a receipted bill or other evidence of
payment.

        (c)  Borrower, at its own expense, may contest any Taxes or
Assessments, provided that the following conditions are met:

             (i)  not less than 30 days prior to the Imposition
                  Penalty Date, Borrower delivers to Lender notice
                  of the proposed contest;

             (ii) the contest is by a Proceeding promptly
                  initiated and conducted diligently and in good
                  faith;

             (iii)     there is no Event of Default;

             (iv) the Proceeding suspends the collection of the
                  contested Taxes or Assessments;

             (v)  the Proceeding is permitted under and is
                  conducted in accordance with the Leases and the
                  Property Documents;

             (vi) the Proceeding precludes imposition of criminal
                  or civil penalties and sale or forfeiture of the
                  Property and Lender will not be subject to any
                  civil suit; and

             (vii)     Borrower either deposits with the
                       Accumulations Depositary reserves or
                       furnishes a bond or other security
                       satisfactory to Lender, in either case in
                       an amount sufficient to pay the contested
                       Taxes or Assessments, together with all
                       interest and penalties or Borrower pays all
                       of the contested Taxes or Assessments under
                       protest.

        (d)  Installment Payments.  If any future Assessment is
payable in installments, Borrower will nevertheless pay the Assessment
in its entirety on the day the first installment becomes due and
payable or a lien, unless Lender, in its sole discretion, approves
payment of the Assessment in installments.

   Section 6.2.   Accumulations.

        (a)  If required by Lender pursuant to Subsection 6.2(j)
hereof, Borrower will make an initial deposit with either Lender or a
mortgage servicer or financial institution designated or approved by
Lender from time to time to receive, hold and disburse the
Accumulations in accordance with this Section (the "Accumulations
Depositary").  On the first day of each calendar month during the
Term, Borrower will deposit with the Accumulations Depositary an
amount equal to one-twelfth (1/12) of the annual Taxes and Assessments
as determined by Lender or its designee.  At least 45 days before each
Imposition Penalty Date, Borrower will deliver to the Accumulations
Depositary any bills and other documents that are necessary to pay the
Taxes and Assessments.

        (b)  The Accumulations will be applied to the payment of
Taxes and Assessments.  Any excess Accumulations after payment of
Taxes and Assessments will be returned to Borrower or credited against
future payments of the Accumulations, at Lender's election or as
required by Law.  If the Accumulations are not sufficient to pay Taxes
and Assessments, Borrower will pay the deficiency to the Accumulations
Depositary within 5 days of demand.  At any time after an Event of
Default occurs, Lender may apply the Accumulations as a credit against
any portion of the Debt selected by Lender in its sole discretion.

        (c)  The Accumulations Depositary will hold the
Accumulations as additional security for the Obligations until applied
in accordance with the provisions of this Deed of Trust. If Lender is
not the Accumulations Depositary, the Accumulations Depositary will
deliver the Accumulations to Lender upon Lender's demand at any time
after an Event of Default.

        (d)  If the Property is sold or conveyed, other than by
foreclosure or transfer in lieu of foreclosure, and the Property
remains subject to this Deed of Trust, all right, title and interest
of Borrower to the Accumulations will automatically, and without
necessity of further assignment, be held for the account of the new
owner, subject to the provisions of this Section and Borrower will
have no further interest in the Accumulations.

        (e)  Borrower waives all right to demand, receive or
collect any interest or other return on the Accumulations which will
be held in a non-interest bearing account (except as required by Law)
and may be commingled with other monies held by the Accumulations
Depositary and will not be held in trust.

        (f)  Lender has the right to pay, or to direct the
Accumulations Depositary to pay, any Taxes or Assessments unless
Borrower is contesting the Taxes or Assessments in accordance with the
provisions of this Deed of Trust, in which event any payment of the
contested Taxes or Assessments will be made under protest in the
manner prescribed by Law or, at Lender's election, will be withheld.

        (g)  If Lender assigns this Deed of Trust, Lender will pay,
or cause the Accumulations Depositary to pay, the unapplied balance of
the Accumulations to or at the direction of the assignee.
Simultaneously with the payment, Lender and the Accumulations
Depositary will be released from all liability with respect to the
Accumulations and Borrower will look solely to the assignee with
respect to the Accumulations.  When the Obligations have been fully
satisfied, any unapplied balance of the Accumulations will be returned
to Borrower.

        (h)  Notwithstanding the requirements set forth in
subsections (a) through (g) of this Section 6.2 and provided Borrower
pays the Taxes and Assessments to the taxing authority when due, as an
alternative to the requirements set forth in subsections (a) through
(g), subject to the limitation in subsection 6.2(j) hereof, at
Closing, Borrower shall, at Borrower's option, either (1) deposit an
amount equal to the annual real estate taxes for the Property next due
in an interest bearing account with an agent acceptable to Lender or
approved by Lender or (2) deposit a Letter of Credit equal to such
amount in a form satisfactory to Lender, which Letter of Credit shall
be renewed from time to time at least 30 days prior to the expiration
date thereof, pursuant to an agreement satisfactory to Lender to be
held by a depository, satisfactory to Lender, in Lender's sole
discretion.  The amount deposited pursuant to this Subsection 6.2(h)
shall be held as additional security for the Obligations for the term
of the Loan.  So long as there is no default under the Loan Documents
and so long as Borrower has deposited the required amount or provided
Lender with an acceptable Letter of Credit, Borrower shall pay real
estate taxes for the Property directly to the appropriate tax
authority.

        (i)  So long as there is no default under the Loan
Documents, real estate tax escrows will not be required for any tenant
with a credit rating equivalent to a Standard and Poors rating of BBB-
if the tenant's lease states that real estate taxes are to be paid
directly by the tenant and Borrower provides Lender written evidence
within 30 days after payment verifying payment of real estate taxes.

        (j)  If there is an Event of Default, Lender may, in
Lender's sole discretion, in addition to all of its other rights and
remedies under the Loan Documents, draw down on the deposited amount
or Letter of Credit, as the case may be, to pay the real estate taxes
and require Borrower to comply with the provisions set forth in
subsections 6.2(a) through (g) hereof rather than the provisions of
Subsection 6.2(h) hereof, and the requirement to make such deposits
shall not relieve Borrower of the obligation to remedy and cure the
Event of Default.

   Section 6.3.   Changes in Tax Laws.  If a Law requires the
deduction of the Debt from the value of the Property for the purpose
of taxation or imposes a tax, either directly or indirectly, on the
Debt, any Loan Document or Lender's interest in the Property, Borrower
will pay the tax with interest and penalties, if any.  If Lender
determines that Borrower's payment of the tax may be unlawful,
unenforceable, usurious or taxable to Lender, the Debt will become
immediately due and payable on 60 days' prior notice unless the tax
must be paid within the 60-day period, in which case, the Debt will be
due and payable within the lesser period in accordance with this
Section 6.3.  Notwithstanding anything herein to the contrary, no
Prepayment Premium or Evasion Premium (as such terms are defined in
the Note) shall be due or payable in the event that all or any portion
of the Debt is prepaid as a result of the payment to Lender of the
Debt pursuant to this Section 6.3.


                           ARTICLE VII

                INSURANCE, CASUALTY, CONDEMNATION
                         AND RESTORATION

   Section 7.1.   Insurance Coverages.

        (a)  Borrower will maintain such insurance coverages and
endorsements in form and substance and in amounts as Lender may
require in its sole discretion, from time to time.  Until Lender
notifies Borrower of changes in Lender's requirements, Borrower will
maintain not less than the insurance coverages and endorsements Lender
required for closing of the Loan for all insurance except earthquake
insurance.  Borrower will maintain not less than a $20,000,000
earthquake insurance policy.

        (b)  The insurance, including renewals, required under this
Section will be issued on valid and enforceable policies and
endorsements satisfactory to Lender (the "Policies").     Each Policy
will contain a standard waiver of subrogation and a replacement cost
endorsement and will provide that Lender will receive not less than 30
days' prior written notice of any cancellation, termination or non-
renewal of a Policy or any material change other than an increase in
coverage and that Lender will be named under a standard mortgage
endorsement as loss payee.

        (c)  The insurance companies issuing the Policies (the
"Insurers") must be authorized to do business in the State or
Commonwealth where the Property is located, must have been in business
for at least 5 years, must carry an A.M. Best Company, Inc. policy
holder rating of A or better and an A.M. Best Company, Inc. financial
category rating of Class X or better and must be otherwise
satisfactory to Lender.  Lender may select an alternative credit
rating agency and may impose different credit rating standards for the
Insurers.  Notwithstanding Lender's right to approve the Insurers and
to establish credit rating standards for the Insurers, Lender will not
be responsible for the solvency of any Insurer.

        (d)  Notwithstanding Lender's rights under this Article,
Lender will not be liable for any loss, damage or injury resulting
from the inadequacy or lack of any insurance coverage.

        (e)  Borrower will comply with the provisions of the
Policies and with the requirements, notices and demands imposed by the
Insurers and applicable to Borrower or the Property.

        (f)  Borrower will pay the Insurance Premiums for each
Policy not less than 5 days before the expiration date of the Policy
being replaced or renewed and will deliver to Lender an original or,
if a blanket policy, a certified copy of each Policy marked "Paid" not
less than 15 days prior to the expiration date of the Policy being
replaced or renewed.

        (g)  Borrower will not carry separate insurance concurrent
in kind or form or contributing in the event of loss with any other
insurance carried by Borrower.

        (h)  Borrower will not carry any of the insurance required
under this Section on a blanket or umbrella policy without in each
instance Lender's prior approval which may be withheld in Lender's
sole discretion.  If Lender approves, Borrower will deliver to Lender
a certified copy of the blanket policy which will allocate to the
Property the amount of coverage required under this Section and
otherwise will provide the same coverage and protection as would a
separate policy insuring only the Property.  Lender shall be deemed to
have approved the policy if it has not responded within 30 days of
receipt of Borrower's written request to the Lender at the addresses
set forth herein.

        (i)  Borrower will give the Insurers prompt notice of any
change in ownership or occupancy of the Property.  This subsection
does not abrogate the prohibitions on transfers set forth in this Deed
of Trust.

        (j)  If the Property is sold at a foreclosure sale or
otherwise is transferred so as to extinguish the Obligations, all of
Borrower's right, title and interest in and to the Policies then in
force will be transferred automatically to the purchaser or
transferee.

   Section 7.2.   Casualty and Condemnation.

        (a)  Borrower will give Lender notice of any Casualty
promptly after it occurs and will give Lender notice of any
Condemnation Proceeding promptly after Borrower receives notice of
commencement or notice that such a Condemnation Proceeding will be
commencing.   Borrower promptly will deliver to Lender copies of all
documents Borrower delivers or receives relating to the Casualty or
the Condemnation Proceeding, as the case may be.

        (b)  Borrower authorizes Lender, at Lender's option, to act
on Borrower's behalf to collect, adjust and compromise any claims for
loss, damage or destruction under the Policies on such terms as Lender
determines in Lender's sole discretion.  If there is no Event of
Default which remains uncured within the applicable cure period,
Lender shall consult with Borrower before collecting, adjusting or
compromising said claims.  Borrower authorizes Lender to act, at
Lender's option, on Borrower's behalf in connection with any
Condemnation Proceeding.  Borrower will execute and deliver to Lender
all documents requested by Lender and all documents as may be required
by Law to confirm such authorizations.  Nothing in this Section will
be construed to limit or prevent Lender from joining with Borrower
either as a co-defendant or as a co-plaintiff in any Condemnation
Proceeding.

        (c)  If Lender elects not to act on Borrower's behalf as
provided in this Section, then Borrower promptly will file and
prosecute all claims (including Lender's claims) relating to the
Casualty and will prosecute or defend (including defense of Lender's
interest) any Condemnation Proceeding.  Borrower will have the
authority to settle or compromise the claims or Condemnation
Proceeding, as the case may be, provided that Lender has approved in
Lender's sole discretion any compromise or settlement that exceeds
$250,000.00.  Any check for Insurance Proceeds or Condemnation Awards,
as the case may be (the "Proceeds") will be made payable to Lender and
Borrower.  Borrower will endorse the check to Lender immediately upon
Lender presenting the check to Borrower for endorsement or if Borrower
receives the check first, will endorse the check immediately upon
receipt and forward it to Lender.  If any Proceeds are paid to
Borrower, Borrower immediately will deposit the Proceeds with Lender,
to be applied or disbursed in accordance with the provisions of this
Deed of Trust.  Lender will be responsible for only the Proceeds
actually received by Lender.

   Section 7.3.   Application of Proceeds.  After deducting any
third party and out-of-pocket costs incurred by Lender in collecting
the Proceeds, Lender may, in its sole discretion, (i) apply the
Proceeds as a credit against any portion of the Debt selected by
Lender in its sole discretion of the Debt; (ii) apply the Proceeds to
restore the Improvements, provided that Lender will not be obligated
to see to the proper application of the Proceeds and provided further
that any amounts released for Restoration will not be deemed a payment
on the Debt; or (iii) deliver the Proceeds to Borrower.

   Section 7.4.   Conditions to Availability of Proceeds for
Restoration.   Notwithstanding the preceding Section, after a Casualty
or a Condemnation (a "Destruction Event"), Lender will make the
Proceeds (less any third party and out-of-pocket costs incurred by
Lender in collecting the Proceeds) available for Restoration in
accordance with the conditions for disbursements set forth in the
Section entitled "Restoration", provided that the following conditions
are met:


             (i)  Bedford Property Investors, Inc. or the
                  transferee under a Permitted Transfer, if any,
                  continues to be Borrower at the time of the
                  Destruction Event and at all times thereafter
                  until the Proceeds have been fully disbursed;

             (ii) no monetary default under the Loan Documents
                  exists at the time of the Destruction Event and
                  no Event of Default has occurred during the 12
                  months prior to the Destruction Event;

             (iii)     all Leases in effect immediately prior to
                       the Destruction Event and all Property
                       Documents in effect immediately prior to
                       the Destruction Event that are essential to
                       the use and operation of the Property
                       continue in full force and effect
                       notwithstanding the Destruction Event;

             (iv) if the Destruction Event is a Condemnation,
                  Borrower delivers to Lender evidence reasonably
                  satisfactory to Lender that the Improvements can
                  be restored to an economically and
                  architecturally viable unit;

             (v)  Borrower delivers to Lender evidence reasonably
                  satisfactory to Lender that the Proceeds are
                  sufficient to complete Restoration or if the
                  Proceeds are insufficient to complete
                  Restoration, Borrower first deposits with Lender
                  funds ("Additional Funds") that when added to
                  the Proceeds will be sufficient to complete
                  Restoration;

             (vi) if the Destruction Event is a Casualty, Borrower
                  delivers to Lender evidence reasonably
                  satisfactory to Lender that the Insurer under
                  each affected Policy has not denied liability
                  under the Policy as to Borrower or the insured
                  under the Policy;

             (vii)     Lender is reasonably satisfied that the
                       proceeds of any business interruption
                       insurance in effect together with other
                       available gross revenues from the Property
                       are sufficient to pay Debt Service Payments
                       after paying the Impositions, Insurance
                       Premiums, reasonable and customary
                       operating expenses and capital expenditures
                       until Restoration is complete;

             (viii)    Lender is reasonably satisfied that
                       Restoration will be completed on or before
                       the date (the "Restoration Completion
                       Date") that is the earliest of:  (A) 12
                       months prior to the Maturity Date; (B) 12
                       months after the Destruction Event; (C) the
                       earliest date required for completion of
                       Restoration under any Lease or any Property
                       Document; or (D) any date required by Law;
                       and

             (ix) the annual Rents (excluding security deposits)
                  under Leases in effect on the date of the
                  Destruction Event are providing debt service
                  coverage for the annual Debt Service Payments of
                  1.15 after payment of annual Insurance Premiums,
                  Impositions and operating expenses of the
                  Property (including ground rent, if any),
                  provided that, if the Rents do not provide such
                  debt service coverage, then Borrower expressly
                  authorizes and directs Lender to apply an amount
                  from the Proceeds to reduction of Principal in
                  order to reduce the annual Debt Service Payments
                  sufficiently for such debt service coverage to
                  be achieved.  The reduced debt service payments
                  will be calculated using the Fixed Interest Rate
                  and an amortization schedule that will achieve
                  the same proportionate amortization of the
                  reduced Principal over the then remaining Term
                  as would have been achieved if the Principal and
                  the originally scheduled Debt Service Payments
                  had not been reduced.  Borrower will execute any
                  documentation that Lender deems reasonably
                  necessary to evidence the reduced Principal and
                  debt service payments.

   Section 7.5.   Restoration.

        (a)  If the total Proceeds for any Destruction Event are
$250,000.00 or less and Lender elects or is obligated by Law or under
this Article to make the Proceeds available for Restoration, Lender
will disburse to Borrower the entire amount received by Lender and
Borrower will commence Restoration promptly after the Destruction
Event and complete Restoration not later than the Restoration
Completion Date.

        (b)  If the Proceeds for any Destruction Event exceed
$250,000.00 and Lender elects or is obligated by Law or under this
Article to make the Proceeds available for Restoration, Lender will
disburse the Proceeds and any Additional Funds (the "Restoration
Funds") upon Borrower's request as Restoration progresses, generally
in accordance with normal construction lending practices for
disbursing funds for construction costs, provided that the following
conditions are met:

             (i)  Borrower commences Restoration promptly after
                  the Destruction Event and completes Restoration
                  on or before the Restoration Completion Date;

             (ii) if Lender requests, Borrower delivers to Lender
                  prior to commencing Restoration, for Lender's
                  approval, plans and specifications and a
                  detailed budget for the Restoration;

             (iii)     Borrower delivers to Lender reasonably
                       satisfactory evidence of the costs of
                       Restoration incurred prior to the date of
                       the request, and such other documents as
                       Lender may request including mechanics'
                       lien, waivers and title insurance
                       endorsements;

             (iv) Borrower pays all costs of Restoration whether
                  or not the Restoration Funds are sufficient and,
                  if at any time during Restoration, Lender
                  determines that the undisbursed balance of the
                  Restoration Funds is insufficient to complete
                  Restoration, Borrower shall either:  (1) deposit
                  with Lender, as part of the Restoration Funds,
                  an amount equal to the deficiency within 30 days
                  of receiving notice of the deficiency from
                  Lender; or (2) provide Lender with a letter of
                  credit, in form and content satisfactory to
                  Lender, in an amount equal to the deficiency
                  within 30 days of receiving notice of the
                  deficiency from Lender ; and

             (v)  there is no default under the Loan Documents at
                  the time Borrower requests funds or at the time
                  Lender disburses funds.

        (c)  If an Event of Default occurs at any time after the
Destruction Event, then Lender will have no further obligation to make
any remaining Proceeds available for Restoration and may apply any
remaining Proceeds as a credit against any portion of the Debt
selected by Lender in its sole discretion.

        (d)  Lender may elect at any time prior to commencement of
Restoration or while work is in progress to retain, at Borrower's
expense, an independent engineer or other consultant to review the
plans and specifications, to inspect the work as it progresses and to
provide reports.  If any matter included in a report by the engineer
or consultant engaged by Lender is not in compliance with approved
plans and specifications, Lender may suspend disbursement of the
Restoration Funds until the matters contained in the report are
resolved to Lender's satisfaction.

        (e)  If Borrower fails to commence and complete Restoration
in accordance with the terms of this Article, then in addition to the
Remedies, Lender may elect to restore the Improvements on Borrower's
behalf and reimburse itself out of the Restoration Funds for costs and
expenses incurred by Lender in restoring the Improvements, or Lender
may apply the Restoration Funds as a credit against any portion of the
Debt selected by Lender in its sole discretion.

        (f)  Lender may commingle the Restoration Funds with its
general assets and will not be liable to pay any interest or other
return on the Restoration Funds unless otherwise required by Law.
Lender will not hold any Restoration Funds in trust.  Lender may elect
to deposit the Restoration Funds with a depositary satisfactory to
Lender under a disbursement and security agreement satisfactory to
Lender.

        (g)  Borrower will pay all of Lender's out-of-pocket and
third party expenses incurred in connection with a Destruction Event
or Restoration.  If Borrower fails to do so, then in addition to the
Remedies, Lender may from time to time reimburse itself out of the
Restoration Funds.

        (h)  Any excess Proceeds, excluding any proceeds from
business interruption insurance maintained by Borrower, remaining
after Restoration less than $100,000, shall be delivered to Borrower.
If the excess Proceeds remaining after Restoration are more than
$100,000, Lender may elect, in its sole discretion to apply any excess
as a credit against any portion of the Debt as selected by Lender in
its sole discretion or to deliver the excess to Borrower.


                           ARTICLE VIII

                COMPLIANCE WITH LAW AND AGREEMENTS

   Section 8.1.   Compliance with Law.  Borrower, the Property and
the use of the Property comply and will continue to comply with Law
and with all agreements and conditions necessary to preserve and
extend all rights, licenses, permits, privileges, franchises and
concessions (including zoning variances, special exceptions and non-
conforming uses) relating to the Property or Borrower.  Borrower will
notify Lender of the commencement of any investigation or Proceeding
relating to a possible violation of Law immediately after Borrower
receives notice thereof and, will deliver promptly to Lender copies of
all documents Borrower receives or delivers in connection with the
investigation or Proceeding.  Borrower will not alter the Property in
any manner that would increase Borrower's responsibilities for
compliance with Law.

   Section 8.2.   Compliance with Agreements.  There are no
defaults, events of defaults or events which, with the passage of time
or the giving of notice, would constitute an event of default under
the Property Documents.  Borrower will pay and perform all of its
obligations under the Property Documents as and when required by the
Property Documents.  Borrower will cause all other parties to the
Property Documents to pay and perform their obligations under the
Property Documents as and when required by the Property Documents.
Borrower will not amend or waive any provisions of the Property
Documents; exercise any options under the Property Documents; give any
approval required or permitted under the Property Documents that would
adversely affect the Property or Lender's rights and interests under
the Loan Documents; cancel or surrender any of the Property Documents;
or release or discharge or permit the release or discharge of any
party to or entity bound by any of the Property Documents, without, in
each instance, Lender's prior approval (excepting therefrom all
service contracts or other agreements entered into in the normal
course of business that are cancelable upon not more than 30 days
notice).  Lender shall be deemed to have approved the same if it has
not responded within 90 days of receipt of Borrower's written request
to the Lender at the addresses set forth herein.  Borrower will
deliver promptly to Lender copies of any notices of default or of
termination that Borrower receives or delivers relating to any
Property Document.

   Section 8.3.   ERISA Compliance.

        (a)  Borrower is not and will continue not to be an
"employee benefit plan" as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974 ("ERISA") that is subject to
Title I of ERISA or a "plan" as defined in Section 4975(e)(1) of the
Code that is subject to Section 4975 of the Code, and Borrower's
assets do not and will not constitute "plan assets" of one or more
such plans for purposes of Title I of ERISA or Section 4975 of the
Code.

        (b)  Borrower is not and will continue not to be a
"governmental plan" within the meaning of Section 3(32) of ERISA and
transactions by or with Borrower are not and will not be subject to
any Laws regulating investments of and fiduciary obligations with
respect to governmental plans.

        (c)  Borrower will not engage in any transaction which
would cause any obligation or any action under the Loan Documents,
including Lender's exercise of the Remedies, to be a non-exempt
prohibited transaction under ERISA.

   Section 8.4.   Section 6045(e) Filing.  Borrower will supply or
cause to be supplied to Lender either (i) a copy of a completed Form
1099-B, Statement for Recipients of Proceeds from Real Estate, Broker
and Barter Exchange Proceeds prepared by Borrower's attorney or other
person responsible for the preparation of the form, together with a
certificate from the person who prepared the form to the effect that
the form has, to the best of the preparer's knowledge, been accurately
prepared and that the preparer will timely file the form; or (ii) a
certification from Borrower that the Loan is a refinancing of the
Property or is otherwise not required to be reported to the Internal
Revenue Service pursuant to Section 6045(e) of the Code.  Under no
circumstances will Lender or Lender's counsel be obligated to file the
reports or returns.


                            ARTICLE IX

                          ENVIRONMENTAL

   Section 9.1.   Environmental Representations and Warranties.

   Except as disclosed in the Environmental Report and to
Borrower's knowledge as of the date of this Deed of Trust:

             (i)  no Environmental Activity has occurred or is
                  occurring on the Property other than the use,
                  storage, and disposal of Hazardous Substances
                  which (A) is in the ordinary course of business
                  consistent with the Permitted Use; (B) is in
                  compliance with all Environmental Laws and (C)
                  has not resulted in Material Environmental
                  Contamination of the Property; and

             (ii) no Environmental Activity has occurred or is
                  occurring on any property in the vicinity of the
                  Property which has resulted in Material
                  Environmental Contamination of the Property.

   Section 9.2.   Environmental Covenants.

        (a)  Borrower will not cause or permit any Material
Environmental Contamination of the Property.

        (b)  No Environmental Activity will occur on the Property
other than the use, storage and disposal of Hazardous Substances which
(A) is in the ordinary course of business consistent with the
Permitted Use; (B) is in compliance with all Environmental Laws; and
(C) does not create a risk of Material Environmental Contamination of
the Property.

        (c)  Borrower will notify Lender promptly upon Borrower
becoming aware of (i) any Material Environmental Contamination of the
Property or (ii) any Environmental Activity with respect to the
Property that is not in accordance with the preceding subsection (b).
Borrower promptly will deliver to Lender copies of all documents
delivered to or received by Borrower regarding the matters set forth
in this subsection, including notices of Proceedings or investigations
concerning any Material Environmental Contamination of the Property or
Environmental Activity or concerning Borrower's status as a
potentially responsible party (as defined in the Environmental Laws).
Borrower's notification of Lender in accordance with the provisions of
this subsection will not be deemed to excuse any default under the
Loan Documents resulting from the violation of Environmental Laws or
the Material Environmental Contamination of the Property or
Environmental Activity that is the subject of the notice.  If Borrower
receives notice of a suspected violation of Environmental Laws in the
vicinity of the Property that poses a risk of Material Environmental
Contamination of the Property, Borrower will give Lender notice and
copies of any documents received relating to such suspected violation.


        (d)  From time to time at Lender's request, Borrower will
deliver to Lender any information known and documents available to
Borrower relating to the environmental condition of the Property.

        (e)  Lender may perform or engage an independent consultant
to perform an assessment of the environmental condition of the
Property and of Borrower's compliance with this Section on an annual
basis or at any time for reasonable cause or after an Event of
Default.  In connection with the assessment:  (i) Lender or consultant
may enter and inspect the Property and perform tests of the air, soil,
ground water and building materials; (ii) Borrower will cooperate and
use best efforts to cause tenants and other occupants of the Property
to cooperate with Lender or consultant; (iii) Borrower will receive a
copy of any final report prepared after the assessment, to be
delivered to Borrower not more than 10 days after Borrower requests a
copy and executes Lender's standard confidentiality and waiver of
liability letter; (iv) Borrower will accept custody of and arrange for
lawful disposal of any Hazardous Substances required to be disposed of
as a result of the tests; (v) Lender will not have liability to
Borrower with respect to the results of the assessment; (vi) Lender
will not be responsible for any damage to the Property resulting from
the tests described in this subsection and Borrower will look solely
to the consultants to reimburse Borrower for any such damage and (vii)
Borrower acknowledges that the results of the assessment are to be
solely for Lender's benefit and Borrower may not rely on such results
for any purpose.  The consultant's assessment and reports will be at
Borrower's expense (i) if the reports disclose any material adverse
change in the environmental condition of the Property from that
disclosed in the Environmental Report or any environmental report
previously ordered by Lender; (ii) if Lender engaged the consultant
when Lender had reasonable cause to believe Borrower was not in
compliance with the terms of this Article and, after written notice
from Lender, Borrower failed to provide promptly reasonable evidence
that Borrower is in compliance; or (iii) if Lender engaged the
consultant or after the occurrence of an Event of Default.

        (f)  If Lender has reasonable cause to believe that there
is Environmental Activity at the Property, Lender may elect in its
sole discretion to direct the Trustee to reconvey any portion of the
Property affected by the Environmental Activity and Borrower will
accept the reconveyance.


                            ARTICLE X

                       FINANCIAL REPORTING

   Section 10.1.  Financial Reporting.

        (a)  Borrower will deliver to Lender within 90 days after
the close of each Fiscal Year an annual financial statement, certified
by the chief financial officer of Borrower (the "Annual Financial
Statement") for the Property for the Fiscal Year, which will include a
comparative balance sheet, a cash flow statement, an income and
expense statement, a detailed breakdown of all receipts and expenses
and all supporting schedules.  Upon request of Lender, Borrower will
also deliver to Lender within 90 days after the close of each Fiscal
Year the Form 10-K Annual Report to the Security and Exchange
Commission for Borrower.  The Annual Financial Statement for the
Property will be:

             (i)  accompanied by an opinion of the CPA that, in
                  all material respects, the Annual Financial
                  Statement fairly presents the financial position
                  of Borrower;

             (ii) accompanied by an opinion of the chief financial
                  officer of Borrower that, in all material
                  respects, the Annual Financial Statement fairly
                  presents the financial position of the Property;

             (iii)     separate and distinct from any consolidated
                       statement or report for Borrower or any
                       other entity or any other property.

   Section 10.2.  Annual Budget.  Not less than 30 days prior to
the end of each Fiscal Year, Borrower will deliver to Lender, a
detailed comparative budget (the "Budget") for the Property for the
next succeeding Fiscal Year showing anticipated operating expenses,
Insurance Premiums, Impositions, leasing commissions, capital
improvement costs, tenant improvement costs and any other information
Lender requests.  Unless Lender notifies Borrower within 60 days after
Lender receives the Budget that Lender disputes information in the
Budget, the Budget as submitted will constitute the Budget for the
next succeeding Fiscal Year.  If Lender concludes in good faith that a
Budget needs material revision, Borrower will submit a revised Budget
to Lender, together with a detailed explanation of the revisions.
Borrower waives any defense or right of offset to the Obligations, and
any claim or counterclaim against Lender, arising out of any
discussions between Borrower and Lender regarding any Budget or
revised Budget delivered to Lender or the resolution of any
disagreements relating to a Budget or revised Budget including any
defense, right of offset, claim or counterclaim alleging in substance,
that by virtue of such delivery, discussions or resolution, Lender has
interfered with, influenced or controlled Borrower or the operations
at the Property.


                            ARTICLE XI

                   EXPENSES AND DUTY TO DEFEND

   Section 11.1.  Payment of Expenses.

        (a)  Borrower is obligated to pay all fees and expenses
(the "Expenses") incurred by Lender, Trustee or that are otherwise
payable in connection with the Loan, the Property or Borrower,
including attorneys' fees and expenses and any fees and expenses
relating to (i) the preparation, execution, acknowledgment, delivery
and recording or filing of the Loan Documents; (ii) any Proceeding or
other claim asserted against Lender; (iii) any inspection, assessment,
survey and test permitted under the Loan Documents; (iv) any
Destruction Event; (v) the preservation of Trustee's title, Lender's
security and the exercise of any rights or remedies available at Law,
in equity or otherwise; and (vi) the Leases and the Property
Documents.

        (b)  Borrower will pay the Expenses promptly on demand,
together with any applicable interest, premiums or penalties.  If
Lender pays any of the Expenses, Borrower will reimburse Lender the
amount paid by Lender promptly upon demand, together with interest on
such amount at the Fixed Interest Rate from the date Lender paid the
Expenses through the fifth day after demand.  Interest on such amount
will be at the Default Interest Rate from the sixth day after demand
through and including the date Borrower reimburses Lender.  The
Expenses together with any applicable interest, premiums or penalties
constitute a portion of the Debt secured by this Deed of Trust.

   Section 11.2.  Duty to Defend.  If Lender or any of its
trustees, officers, participants, employees or affiliates is a party
in any Proceeding relating to the Property, Borrower or the Loan,
Borrower will indemnify and hold harmless the party and will defend
the party with attorneys and other professionals retained by Borrower
and approved by Lender.  Lender may elect to engage its own attorneys
and other professionals, at Borrower's expense, to defend or to assist
in the defense of the party.  In all events, case strategy will be
determined by Lender if Lender so elects and no Proceeding will be
settled without Lender's prior approval which may be withheld in its
sole discretion.  Lender shall be deemed to have approved if it has
not responded within 30 days of receipt of Borrower's written request
to the Lender at the addresses set forth herein, provided however,
Lender shall not incur any liability or costs relating to any
settlement pursuant to this Section 11.2.


                           ARTICLE XII

                TRANSFERS, LIENS AND ENCUMBRANCES

   Section 12.1.  Prohibitions on Transfers, Liens and
Encumbrances.

        (a)  Borrower acknowledges that in making the Loan, Lender
is relying to a material extent on the business expertise and net
worth of Borrower and Borrower's general partners, members or
principals and on the continuing interest that each of them has,
directly or indirectly, in the Property.  Accordingly, except as
specifically set forth in this Deed of Trust, Borrower (i) will not,
and will not permit its partners, members or principals to, effect a
Transfer without Lender's prior approval, which may be withheld in
Lender's sole discretion and (ii) will keep the Property free from all
liens and encumbrances other than the lien of this Deed of Trust and
the Permitted Exceptions.  Lender shall be deemed to have approved a
Transfer if it has not responded within 90 days of receipt of
Borrower's written request providing any information required by
Lender as to the proposed Transfer to the Lender at the addresses set
forth herein.  A "Transfer" is defined as any sale, grant, lease
(other than bona fide third-party space leases with tenants),
conveyance, assignment or other transfer of, or any encumbrance or
pledge against, the Property, any interest in the Property, any
interest of Borrower's partners, members or principals in the
Property, or any change in Borrower's composition, in each instance
whether voluntary or involuntary, direct or indirect, by operation of
law or otherwise and including the grant of an option or the execution
of an agreement relating to any of the foregoing matters.  A Transfer
shall not include the public trading of shares of the Borrower in
accordance with applicable law.

        (b)  Borrower represents, warrants and covenants that:

             (i)  Borrower is a publically traded Maryland
                  corporation whose five largest shareholders as
                  of March 1999 (the "Existing Shareholders") are:
                  Bed Preferred No. 1 Limited Partnership, Lend
                  Lease Rosen Real Estate Securities LLC, PRA
                  Securities Advisors LP, Heitman PRA Securities
                  Advisors LLC and Peter B. Bedford.

   Section 12.2.  Permitted Transfers.

        (a)  Notwithstanding the prohibitions regarding Transfers,
a Permitted Transfer (as defined in (b) below) may occur, provided
that the following conditions are met:

             (i)  at least 30 days prior to the proposed Permitted
                  Transfer, Borrower delivers to Lender a notice
                  that is sufficiently detailed to enable Lender
                  to determine that the proposed Permitted
                  Transfer complies with the terms of this
                  Section;

             (ii) there is no default under the Loan Documents
                  either when Lender receives the notice or when
                  the proposed Permitted Transfer occurs;

             (iii)     the proposed Permitted Transfer will not
                       result in a violation of any of the
                       covenants contained in the Section
                       entitled, "ERISA Compliance" and Borrower
                       will deliver to Lender such documentation
                       of compliance as Lender requests in its
                       sole discretion;

             (iv) when Lender receives the notice and when the
                  proposed Permitted Transfer occurs, the
                  transferee has never been an adverse party to
                  Lender in any litigation to which Lender was a
                  party; the transferee has never defaulted on a
                  loan from Lender or on any contract or other
                  agreement with Lender; the transferee has never
                  threatened litigation against Lender; and the
                  transferee is free from bankruptcy (for purposes
                  of this subsection "transferee" includes the
                  transferee's constituent entities at all levels
                  and "Lender" includes Lender's subsidiaries);

             (v)  Borrower pays all of Lender's expenses relating
                  to the Transfer including Lender's attorneys'
                  fees regardless of whether or not the proposed
                  Transfer is consummated; and

             (vi) Lender is satisfied that the Property will
                  continue to be managed by a manager satisfactory
                  to Lender.

        (b)  Upon compliance with the conditions set forth in the
preceding subsection, the following Transfers (the "Permitted
Transfers") may occur without Lender's prior consent as provided for
in Section 12.1.

             (i)  Transfers of shares in Borrower among the
             Existing Shareholders;

             (ii) Public trading of shares in Borrower in
             accordance with applicable law (for public trading of
             Borrower's shares, Borrower will not be required to
             notify Lender in the event of trading in its shares
             and Borrower shall not be required to reimburse the
             Lender for the review of trades); and

             (iii)     A one-time sale of the Property together
             with the Property as defined in the Deed of Trust,
             Assignment of Leases and Rents, Security Agreement and
             Fixture Filing (Bedford Portfolio #3 - California
             Property) dated the date of this Deed of Trust,
             executed by Borrower and which also secures the Note
             ("Portfolio #3 California Property"), to one,
             unaffiliated,  bona fide purchaser, provided that the
             following conditions are met:

                  (A)  the transferee has a net worth of at least
        $25,000,000;

                  (B)  the transferee is (i) an Institutional
        Investor or (ii) a developer or manager of first-class
        commercial real estate comparable to the Property and
        having a reputation in the industry at least equivalent to
        that of Borrower as of the date of this Deed of Trust;

                  (C)  the transferee has expressly assumed the
        obligations of Borrower under the Property Documents and
        under the Loan Documents; and

                  (D)  subsequent to the Transfer, the Property is
        managed by a property manager satisfactory to Lender; and

                  (E)  Borrower pays to Lender a transfer fee of
                  one-half percent (0.5%) of the outstanding
                  Principal; provided, however, if, in a single
                  transaction there is a Transfer to the same
                  third-party approved by Lender, of the Property
                  and the Portfolio #3 California Property
                  together with the properties described in the
                  Deeds of Trust, Assignments of Leases and Rents,
                  Security Agreements and Fixture Filings which
                  secure the Promissory Note - Bedford Portfolio
                  #1 in the original principal amount of
                  $43,450,000 dated the date of this Deed of Trust
                  executed by Borrower pursuant to Lender's Loan
                  Application and Commitment Agreement #VR-5 for
                  Lender's Mortgage Number M-000462300 ("Bedford
                  Portfolio #1 Loan") and the properties described
                  in the Deeds of Trust, Assignment of Leases and
                  Rents, Security Agreements and Fixture Filings
                  which secure the Promissory Note - Bedford
                  Portfolio #2 in the original principal amount of
                  $37,200,000 dated the date of this Deed of Trust
                  executed by Borrower pursuant to Lender's Loan
                  Application and Commitment Agreement #VR-7 for
                  Lender's Mortgage Number M-000462600 ("Bedford
                  Portfolio #2 Loan"), then Borrower pays to
                  Lender a transfer fee of one-fourth percent
                  (.25%) of the combined outstanding principal for
                  the Loan, the Bedford Portfolio #1 Loan and the
                  Bedford Portfolio #2 Loan.

   Section 12.3.  Right to Contest Liens.  Borrower, at its own
expense, may contest the amount, validity or application, in whole or
in part, of any mechanic's, materialmen's or environmental liens in
which event Lender will refrain from exercising any of the Remedies,
provided that the following conditions are met:

             (i)  Borrower delivers to Lender notice of the
                  proposed contest not more than 30 days after the
                  lien is filed;

             (ii) the contest is by a Proceeding promptly
                  initiated and conducted in good faith and with
                  due diligence;

             (iii)     there is no Event of Default other than the
                       Event of Default arising from the filing of
                       the lien;

             (iv) the Proceeding suspends enforcement of
                  collection of the lien, imposition of criminal
                  or civil penalties and sale or forfeiture of the
                  Property and Lender will not be subject to any
                  civil suit;

             (v)  the Proceeding is permitted under and is
                  conducted in accordance with the Leases and the
                  Property Document;

             (vi) Borrower sets aside reserves or furnishes a bond
                  or other security satisfactory to Lender, in
                  either case, in an amount sufficient to pay the
                  claim giving rise to the lien, together with all
                  interest and penalties, or Borrower pays the
                  contested lien under protest; and

             (vii)     with respect to an environmental lien,
                       Borrower is using best efforts to mitigate
                       or prevent any deterioration of the
                       Property resulting from the alleged
                       violation of any Environmental Laws or the
                       alleged Environmental Activity.

   Section 12.4.  Reconveyance Rights.  Borrower may obtain the
reconveyance from Trustee of the property listed in Exhibit A-1 or
Exhibit A-2 or Exhibit A-3 and the property listed in Exhibit A-1 or
Exhibit A-2 of the Deed of Trust, Assignment of Leases and Rents,
Security Agreement, and Fixture Filing (Bedford Portfolio #3 -
California Property) dated the date of this Deed of Trust and which
also secures the Note (each of the five described properties being
referred to as a "Release Parcel") at any time more than 24 months
after the execution of this Deed of Trust, provided that the following
conditions are met for each reconveyance:

             (i)  Borrower shall not be entitled to the
                  reconveyance of more than two Release Parcels;
                  one reconveyance of a Release Parcel shall be
                  solely for the purpose of a sale and a transfer
                  of the Release Parcel to a bona fide purchaser.
                  The reconveyance of any Release Parcel shall
                  occur simultaneously with either the addition of
                  a new Arizona property to the Property or the
                  addition of a one or more new properties to
                  secure the Loan, in accordance with the
                  provisions of Section 12.5 of this Deed of Trust
                  and the securing of the lien of the Lender's
                  mortgage to encumber the Substitution Property
                  (as defined in Section 12.5);

             (ii)      not less than 60 days prior to the proposed
                       date of reconveyance, Borrower delivers to
                       Lender a notice setting forth (A) the
                       proposed date of the reconveyance, (B) the
                       name of the proposed transferee (if the
                       Release Parcel is adjacent to a property
                       still covered by this Deed of Trust); (C)
                       the intended use of the Release Parcel; (D)
                       any other information reasonably necessary
                       for Lender to analyze the terms of the
                       reconveyance.   Not less than 30 days prior
                       to the proposed reconveyance, Borrower will
                       deliver to Lender a copy of the contract of
                       sale or ground lease;

             (iii)     on the date Borrower delivers to Lender
                       notice of the proposed reconveyance and on
                       the date of the reconveyance, there is no
                       default under the Loan Documents on either
                       the notice date or the release date;

             (iv) Borrower delivers to Lender evidence
                  satisfactory to Lender that Borrower has
                  complied with any requirements of the Property
                  Documents or the Leases applicable to the
                  reconveyance, that the reconveyance does not
                  violate any of the provisions of the Property
                  Documents or the Leases and, to the extent
                  necessary to comply with the Property Documents
                  or the Leases, that the transferee has assumed
                  all of Borrower's obligations relating to the
                  Release Parcel under the Property Documents;

             (v)  Borrower delivers to Lender an endorsement to
                  Lender's title insurance policy satisfactory to
                  Lender that (A) extends the effective date of
                  the policy to the effective date of the
                  reconveyance; (B) confirms no change in the
                  priority of the lien of Lender's Deed of Trust
                  on the balance of the Property and on the
                  Portfolio #3 California Property or in the
                  amount of coverage; (C) consents to the
                  reconveyance; (D) waives any defense resulting
                  from the reconveyance; (E) to the extent of the
                  value of the Release Parcel, waives any right of
                  subrogation; and (F) includes the Substitution
                  Property (as defined in Section 12.5) or in the
                  alternative a separate title insurance policy
                  that affects the foregoing;

             (vi) not less than 10 days prior to the date of the
                  reconveyance, Borrower delivers to Lender
                  consents to the reconveyance and substitution by
                  entities holding liens affecting the Property or
                  holding any other interest in the Property that
                  would be affected by the reconveyance and
                  substitution, including parties to any Property
                  Documents or to any Leases;

             (vii)     Borrower pays all expenses relating to the
                       reconveyance of the Release Parcel and the
                       addition of the Substitution Property,
                       including Lender's reasonable attorney's
                       fees if outside counsel is engaged by
                       Lender;

             (viii)    Borrower delivers to Lender copies of the
                       executed documents evidencing the transfer
                       of the Release Parcel as provided in
                       subsection (i) above;

             (ix) Borrower delivers to Lender any other
                  information, approvals and documents reasonably
                  required by Lender relating to the reconveyance
                  and the substitution;

             (x)  The remaining Property together with the
                  remaining Portfolio #3 California Property
                  together with the Substitution Property must
                  have a loan to value ratio of no more than 70%
                  and provide a debt service coverage ratio of at
                  least 1.50 times the debt service coverage (in a
                  manner reasonably determined by Lender); and

             (xi) Borrower must prepay 110% of the difference
                  between the Principal of the Loan allocable to
                  the Release Parcel that is being released and
                  70% of the appraised value for the Substitution
                  Property with a prepayment premium equal to the
                  Prepayment Percentage (as defined in the Note)
                  times the resulting difference.  For purposes of
                  this Subsection 12.4 (xi) only, if the
                  prepayment premium payable hereunder is
                  calculated on the Discounted Value (defined in
                  the Note), then the discount rate used to
                  calculate the prepayment premium shall equal the
                  Discount Rate (defined in the Note) plus 50
                  basis points.  Allocation of the original
                  outstanding principal balance will be determined
                  by Lender's appraisal at Closing.  The
                  additional 10% principal proceeds from a
                  prepayment pursuant to this Subsection 12.4(xi)
                  shall be applied at par to a pro-rata reduction
                  of the Principal balance of the Loan allocated
                  among the remaining Property, the remaining
                  Portfolio #1 Arizona Property and the
                  Substitution Property.

   Section 12.5.  Substitution.  In conjunction with the
reconveyance of a Release Parcel (described in Section 12.4),
Borrower shall provide to Lender, as security for the Loan, the
replacement and substitution of one or more new properties to secure
the Loan, as provided herein (the "Substitution Property").  In
connection with providing the Substitution Property, Borrower shall,
at Borrower's expense, execute and deliver to Lender loan documents,
including an additional deed of trust or mortgage, an assignment of
leases, a UCC-1 financing statement, and any other document, including
title policy, that Lender may require, in form and content acceptable
to Lender in Lender's sole discretion, necessary in order to add the
Substitution Property as collateral for the Loan.  Borrower shall also
provide for the Substitution Property all items required for the
Property by the Loan Application and Commitment Agreement dated
February 26, 1999 by and between Lender and Borrower for the Loan.
Lender shall have the sole and absolute discretion to either approve
or disapprove any proposed substitution, provided that such approval
shall not be unreasonably withheld so long as the Substitution
Property is (i) of comparable quality as the Release Parcel being
replaced, and (ii) Borrower demonstrates to Lender's satisfaction that
the Substitution Property has a fair market value of no less than 90%
of the fair market value of the Release Parcel immediately prior to
substitution.  Lender shall be deemed to have approved the proposed
substitution if it has not responded within 90 days of Borrower's
written request providing all information required by Lender as to the
proposed substitution at the addresses set forth herein.  In all
cases, Lender shall have 90 days to respond from the date of Lender's
receipt of the last information provided by Borrower.  Any
substitutions shall be on terms and conditions acceptable to Lender
and shall be subject to Lender's internal approval process.  The
Substitution Property together with the other properties comprising
the Property and the Portfolio #3 California Property shall be subject
to a maximum loan-to-value ratio of 70%, have, at a minimum, a debt
service coverage ratio equal to 1.50, and a lease expiration profile
acceptable to Lender.  Furthermore, Lender will not approve a
substitution that would negatively impact the loan portfolio with
regard to its geographic diversity, credit risk, leasing pro formas,
tenant quality, lease expiration risk and other similar factors,
including the ability to legally cross-default and cross-collateralize
the Substitution Property with the remainder of the portfolio, to be
determined in Lender's sole discretion.  Borrower shall provide Lender
with such information and documentation (including leases and other
property documents) as Lender shall deem necessary to make an informed
decision and properly evaluate the proposed substitution.  The
Substitution Property will be required to have a value of not less
than 90% of the fair market value of the Release Parcel to be
reconveyed.  Borrower shall be responsible for all costs and expenses,
including, without limitation, reasonable attorney's fees (if outside
counsel is engaged by Lender), incurred by Lender in connection with
any proposed transaction along with title insurance premium and
engineering, environmental and appraisal reports associated with such
substitution.


                           ARTICLE XIII

       ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS

   Section 13.1.  Further Assurances.

        (a)  Borrower will execute, acknowledge and deliver to
Lender or to any other entity Lender designates any additional or
replacement documents and perform any additional actions that Lender
determines are reasonably necessary to evidence, perfect or protect
Lender's first lien on and prior security interest in the Property or
to carry out the intent or facilitate the performance of the
provisions of the Loan Documents.

        (b)  Borrower appoints Lender as Borrower's attorney-in-
fact to perform, at Lender's election, any actions and to execute and
record any of the additional or replacement documents referred to in
this Section, in each instance only at Lender's election and only to
the extent Borrower has failed 3 days after written notice to Borrower
to comply with the terms of this Section.

   Section 13.2.  Estoppel Certificates.

        (a)  Within 10 days of Lender's request, but in no case
more often that twice in any 18 month period, except where Lender is
selling all or part of the Loan Borrower will deliver to Lender or to
any entity Lender designates a certificate certifying (i) the original
principal amount of the Note; (ii) the unpaid principal amount of the
Note; (iii) the Fixed Interest Rate; (iv) the amount of the then
current Debt Service Payments; (v) the Maturity Date; (vi) the date a
Debt Service Payment was last made; (vii) that, except as may be
disclosed in the statement, there are no defaults or events which,
with the passage of time or the giving of notice, would constitute an
Event of Default; and (viii) there are no offsets or defenses against
any portion of the Obligations except as may be disclosed in the
statement.

        (b)  If Lender requests, Borrower promptly will deliver to
Lender or to any entity Lender designates a certificate from each
party to any Property Document, certifying that the Property Document
is in full force and effect with no defaults or events which, with the
passage of time or the giving of notice, would constitute an event of
default under the Property Document and that there are no defenses or
offsets against the performance of its obligations under the Property
Document.

        (c)  If Lender requests, Borrower promptly will deliver to
Lender, or to any entity Lender designates, a certificate from each
tenant under a Lease then affecting the Property, certifying to any
facts regarding the Lease as Lender may require, including that the
Lease is in full force and effect with no defaults or events which,
with the passage of time or the giving of notice, would constitute an
event of default under the Lease by any party, that the rent has not
been paid more than one month in advance and that the tenant claims no
defense or offset against the performance of its obligations under the
Lease.


                           ARTICLE XIV

                      DEFAULTS AND REMEDIES

   Section 14.1.  Events of Default.  The term "Event of Default"
means the occurrence of any of the following events:

             (i)  if Borrower fails to pay any amount due, as and
                  when required, under any Loan Document and the
                  failure continues for a period of 5 days;

             (ii) if Borrower makes a general assignment for the
                  benefit of creditors or generally is not paying,
                  or is unable to pay, or admits in writing its
                  inability to pay, its debts as they become due;
                  or if Borrower or any other party commences any
                  Proceeding (A) relating to bankruptcy,
                  insolvency, reorganization, conservatorship or
                  relief of debtors, in each instance with respect
                  to Borrower; (B) seeking to have an order for
                  relief entered with respect to Borrower; (C)
                  seeking attachment, distraint or execution of a
                  judgment with respect to Borrower; (D) seeking
                  to adjudicate Borrower as bankrupt or insolvent;
                  (E) seeking reorganization, arrangement,
                  adjustment, winding-up, liquidation,
                  dissolution, composition or other relief with
                  respect to Borrower or Borrower's debts; or (F)
                  seeking appointment of a Receiver, trustee,
                  custodian, conservator or other similar official
                  for Borrower or for all or any substantial part
                  of Borrower's assets, provided that if the
                  Proceeding is commenced by a party other than
                  Borrower or any of Borrower's general partners
                  or members, Borrower will have 120 days to have
                  the Proceeding dismissed or discharged before an
                  Event of Default occurs;

             (iii)     if Borrower is in default beyond any
                       applicable grace and cure period under any
                       other mortgage, deed of trust, deed to
                       secure debt or other security agreement
                       encumbering the Property whether junior or
                       senior to the lien of this Deed of Trust;


             (iv) if Borrower is in default beyond any applicable
                  grace and cure period under the loan documents
                  described in the Deed of Trust, Assignment of
                  Leases and Rents, Security Agreement and Fixture
                  Filing (Bedford Portfolio #3 - California
                  Property) evidencing and securing the Loan made
                  by Lender in favor of Borrower pursuant to the
                  Note and encumbering the Portfolio #3 -
                  California Property;

             (v)  if a Transfer occurs except in accordance with
                  the provisions of this Deed of Trust;

             (vi) if Borrower abandons the Property or ceases to
                  conduct its business at the Property;

             (vii)     if there is a default in the performance of
                       any other provision of any Loan Document or
                       if there is any inaccuracy or falsehood in
                       any representation or warranty contained in
                       any Loan Document which is not remedied
                       within 30 days after Borrower receives
                       notice thereof, provided that if the
                       default, inaccuracy or falsehood is of a
                       nature that it cannot be cured within the
                       30-day period and during that period
                       Borrower commences to cure, and thereafter
                       diligently continues to cure, the default,
                       inaccuracy or falsehood, then the 30-day
                       period will be extended for a reasonable
                       period not to exceed 120 days after the
                       notice to Borrower; or

             (viii)    if Borrower fails to provide Lender with
                       the Leasing Letter of Credit (defined
                       below) or if Borrower fails to renew the
                       Leasing Letter of Credit; the "Leasing
                       Letter of Credit" shall mean the Letter of
                       Credit in the amount of Two Million Seven
                       Hundred Thousand and No/100 Dollars
                       ($2,700,000) that Borrower is required to
                       provide and renew pursuant to Section 6.4
                       of the Deed of Trust, Assignment of Leases
                       and Rents, Security Agreement and Fixture
                       Filing Statement (Bedford Portfolio #1 -
                       Colorado Properties) dated the date of this
                       Deed of Trust, executed by Borrower for the
                       benefit of Lender pursuant to TIAA
                       Application #VR-5, M-000462300.

   Section 14.2.  Remedies.

        (a)  If an Event of Default occurs, Lender may take any of
the following actions (the "Remedies") without notice to Borrower:

             (i)  declare all or any portion of the Debt
                  immediately due and payable ("Acceleration");

             (ii) pay or perform any Obligation;

             (iii)     institute a Proceeding for the specific
                       performance of any Obligation;

             (iv) apply for and obtain the appointment of a
                  Receiver to be vested with the fullest powers
                  permitted by Law, without bond being required,
                  which appointment may be made ex parte, as a
                  matter of right and without regard to the value
                  of the Property, the amount of the Debt or the
                  solvency of Borrower or any other person liable
                  for the payment or performance of any portion of
                  the Obligations;

             (v)  directly, by its agents or representatives or
                  through a Receiver appointed by a court of
                  competent jurisdiction, enter on the Land and
                  Improvements, take possession of the Property,
                  dispossess Borrower and exercise Borrower's
                  rights with respect to the Property, either in
                  Borrower's name or otherwise;

             (vi) institute a Proceeding for the foreclosure of
                  this Deed of Trust or, if applicable, sell by
                  power of sale, all or any portion of the
                  Property, in any court of competent
                  jurisdiction;

             (vii)     institute proceedings for the partial
                       foreclosure of this Deed of Trust for the
                       portion of the Debt then due and payable,
                       subject to the continuing lien of this Deed
                       of Trust for the balance of the Debt not
                       then due;

             (viii)    cause Trustee to commence sale of
                       Borrower's interest in the Property
                       pursuant to applicable law;

             (ix) exercise any and all rights and remedies granted
                  to a secured party under the Uniform Commercial
                  Code; and

             (x)  pursue any other right or remedy available to
                  Lender at Law, in equity or otherwise.

        (b)  If an Event of Default occurs, the license granted to
Borrower in the Loan Documents to collect Rents will terminate
automatically without any action required of Lender.

   Section 14.3.  General Provisions Pertaining to Remedies.

        (a)  The Remedies are cumulative and may be pursued by
Lender or Trustee concurrently or otherwise, at such time and in such
order as Lender or Trustee may determine in their sole discretion and
without presentment, demand, protest or further notice of any kind,
all of which are expressly waived by Borrower.

        (b)  The enumeration in the Loan Documents of specific
rights or powers will not be construed to limit any general rights or
powers or impair Lender's or Trustee's rights with respect to the
Remedies.

        (c)  If Lender or Trustee exercises any of the Remedies,
Lender will not be deemed a mortgagee-in-possession unless Lender has
elected affirmatively to be a mortgagee-in-possession.

        (d)  Lender and Trustee will not be liable for any act or
omission of Lender or Trustee in connection with the exercise of the
Remedies.

        (e)  Lender's and Trustee's right to exercise any Remedy
will not be impaired by any delay in exercising or failure to exercise
the Remedy and the delay or failure will not be construed as extending
any cure period or constitute a waiver of the default or Event of
Default.

        (f)  If an Event of Default occurs, Lender's payment or
performance or acceptance of payment or performance will not be deemed
a waiver or cure of the Event of Default.

        (g)  Lender's acceptance of partial payment or receipt of
Rents will not extend or affect any grace period or constitute a
waiver of a default or Event of Default or constitute a rescission of
Acceleration.

   Section 14.4.  Foreclosure by Power of Sale.

        (a)  Should Lender elect, following an Event of Default, to
foreclose this Deed of Trust by exercise of the power of sale
contained in this Deed of Trust, Lender will notify Trustee and
deposit, if required by Trustee, with Trustee this Deed of Trust, the
Note and such of the other Loan Documents as Trustee may require.

        (b)  Upon receipt of the notice from Lender, Trustee will
have recorded, published and delivered to Borrower any notice of
default as is then required by Law.  Trustee will, without demand on
Borrower after lapse of any time as may then be required by Law and
after notice of sale having been given as required by Law, sell the
Property at the time and place of sale fixed by it in the notice of
sale, either as a whole, or in separate lots or parcels or items and
in such order as Lender may direct Trustee so to do, at public auction
to the highest bidder as provided by Law.  Trustee will deliver to the
purchaser of the Property a good and sufficient deed or deeds
conveying the Property so sold, but without any covenant or warranty,
express or implied.  The recitals in the deed of any matter or fact
will be conclusive proof of the truthfulness of the recitals.  Any
person, including Borrower, Trustee or Lender may purchase at the
sale, and Borrower will warrant and defend the title of the purchaser.

        (c)  After deducting all costs, fees and expenses of Lender
and Trustee, including costs of evidence of title in connection with
sale, Lender will apply the proceeds of sale in the following
priority, to payment of (i) first, all sums expended under the terms
of the Loan Documents, not then repaid, with accrued interest at the
Default Rate; (ii) second, the Debt in such order as Lender
determines; and (iii) the remainder, if any to the person or persons
legally entitled to it.

        (d)  Trustee may postpone sale of all or any portion of the
Property as permitted by Law, and without further notice make such
sale at the time fixed by the last postponement, or may, in its
discretion, give a new notice of sale.

        (e)  A sale of less than the whole of the Property or any
defective or irregular sale made under this Deed of Trust will not
exhaust the power of sale provided for in this Deed of Trust; and
subsequent sales may be made until the Obligations have been
satisfied, or the entire Property sold, without defect or
irregularity.

   Section 14.5.  General Provisions Pertaining to Receiver and
other Remedies.

        (a)  If an Event of Default occurs and without notice to
Borrower, any court of competent jurisdiction will, upon application
by Lender, appoint a Receiver as designated in the application and
issue an injunction prohibiting Borrower from interfering with the
Receiver, collecting Rents, disposing of any Rents or any part of the
Property, committing waste or doing any other act that will tend to
affect the preservation of the Leases, the Rents and the Property and
Borrower approves the appointment of the designated Receiver or any
other Receiver appointed by the court.  By execution of this Deed of
Trust, Borrower irrevocably consents to the appointment of a receiver
to be made ex parte and as a matter of right to Lender or Trustee,
either before or after sale of the Property, without further notice,
and without regard to the solvency or insolvency, at the time of
application for the Receiver, of the person or persons, if any, liable
for the payment of any portion of the Debt and the performance of any
portion of the Obligations and without regard to the value of the
Property or whether the Property is occupied as a homestead and
without bond being required of the applicant.

        (b)  The Receiver will be vested with the fullest powers
permitted by Law including all powers necessary or usual in similar
cases for the protection, possession and operation of the Property and
all the powers and duties of Lender as a mortgagee-in-possession as
provided in this Deed of Trust and may continue to exercise all the
usual powers and duties until the Receiver is discharged by the court.

        (c)  In addition to the Remedies and all other available
rights, Lender or the Receiver may take any of the following actions:

             (i)  take exclusive possession, custody and control
                  of the Property and manage the Property so as to
                  prevent waste;

             (ii) require Borrower to deliver to Lender or the
                  Receiver all keys, security deposits, operating
                  accounts, prepaid Rents, past due Rents, the
                  Books and Records and all original counterparts
                  of the Leases and the Property Documents;

             (iii)     collect, sue for and give receipts for the
                       Rents and, after paying all expenses of
                       collection, including reasonable
                       receiver's, broker's and attorney's fees,
                       apply the net collections to any portion of
                       the Debt selected by Lender in its sole
                       discretion,

             (iv) enter into, modify, extend, enforce, terminate,
                  renew or accept surrender of Leases and evict
                  tenants except that in the case of a Receiver,
                  such actions may be taken only with the written
                  consent of Lender as provided in this Deed of
                  Trust and in the Assignment;

             (v)  enter into, modify, extend, enforce, terminate
                  or renew Property Documents except that in the
                  case of a Receiver, such actions may be taken
                  only with the written consent of Lender as
                  provided in this Deed of Trust and in the
                  Assignment;

             (vi) appear in and defend any Proceeding brought in
                  connection with the Property and bring any
                  Proceeding to protect the Property as well as
                  Borrower's and Lender's respective interests in
                  the Property (unless any such Proceeding has
                  been assigned previously to Lender in the
                  Assignment, or if so assigned, Lender has not
                  expressly assigned such Proceeding to the
                  Receiver and consented to such appearance or
                  defense by Receiver); and

             (vii)     perform any act in the place of Borrower
                       that Lender or the Receiver deems necessary
                       (A) to preserve the value, marketability or
                       rentability of the Property; (B) to
                       increase the gross receipts from the
                       Property; or (C) otherwise to protect
                       Borrower's and Lender's respective
                       interests in the Property.

        (d)  Borrower appoints Lender as Borrower's attorney-in-
fact, at Lender's election, to perform any actions and to execute and
record any instruments necessary to effectuate the actions described
in this Section, in each instance only at Lender's election and only
to the extent Borrower has failed to comply with the provisions of
this Section.

   Section 14.6.  General Provisions Pertaining to Foreclosures
and the Power of Sale.  The following provisions will apply to any
Proceeding to foreclose and to any sale of the Property by power of
sale or pursuant to a judgment of foreclosure and sale:

             (i)  Lender's or Trustee's right to institute a
                  Proceeding to foreclose or to sell by power of
                  sale will not be exhausted by a Proceeding or a
                  sale that is defective or not completed or by
                  conducting separate sales of portions of the
                  Property;

             (ii) any sale may be postponed or adjourned by Lender
                  by public announcement at the time and place
                  appointed for the sale without further notice;

             (iii)     with respect to sale pursuant to a judgment
                       of foreclosure and sale, the Property may
                       be sold as an entirety or in parcels, at
                       one or more sales, at the time and place,
                       on terms and in the order that Lender deems
                       expedient in its sole discretion;

             (iv) if a portion of the Property is sold pursuant to
                  this Article, the Loan Documents will remain in
                  full force and effect with respect to any
                  unmatured portion of the Debt and this Deed of
                  Trust will continue as a valid and enforceable
                  first lien on and security interest in the
                  remaining portion of the Property, subject only
                  to the Permitted Exceptions, without loss of
                  priority and without impairment of any of
                  Lender's or Trustee's rights and remedies with
                  respect to the unmatured portion of the Debt;

             (v)  Lender may bid for and acquire the Property at a
                  sale and, in lieu of paying cash, may credit the
                  amount of Lender's bid against any portion of
                  the Debt selected by Lender in its sole
                  discretion after deducting from the amount of
                  Lender's bid the expenses of the sale, costs of
                  enforcement and other amounts that Lender is
                  authorized to deduct at Law, in equity or
                  otherwise; and

             (vi) Lender's receipt of the proceeds of a sale will
                  be sufficient consideration for the portion of
                  the Property sold and Lender will apply the
                  proceeds as set forth in this Deed of Trust.

   Section 14.7.  Application of Proceeds.  Lender may apply the
proceeds of any sale of the Property pursuant to a judgment of
foreclosure and sale and any other amounts collected by Lender in
connection with the exercise of the Remedies to payment of the Debt in
such priority and proportions as Lender may determine in its sole
discretion or in such priority and proportions as required by Law.

   Section 14.8.  Power of Attorney.  Borrower appoints Lender as
Borrower's attorney-in-fact to perform any actions necessary and
incidental to exercising the Remedies.

   Section 14.9.  Tenant at Sufferance.  If Lender, Trustee, or a
Receiver enters the Property in the exercise of the Remedies and
Borrower is allowed to remain in occupancy of the Property, Borrower
will pay to Lender, Trustee, or the Receiver, as the case may be, in
advance, a reasonable rent for the Property occupied by Borrower.  If
Borrower fails to pay the rent, Borrower may be dispossessed by the
usual Proceedings available against defaulting tenants.


                            ARTICLE XV

                     LIMITATION OF LIABILITY

   Section 15.1.  Limitation of Liability.

        (a)  Notwithstanding any provision in the Loan Documents to
the contrary, except as set forth in subsections (b) and (c), if
Lender seeks to enforce the collection of the Debt, Lender will
foreclose this Deed of Trust instead of instituting suit on the Note.
If a lesser sum is realized from a foreclosure of this Deed of Trust
and sale of the Property than the then outstanding Debt, Lender will
not institute any Proceeding against Borrower or Borrower's general
partners, if any, for or on account of the deficiency, except as set
forth in subsections (b) and (c).

        (b)  The limitation of liability in subsection (a) will not
affect or impair (i) the lien of this Deed of Trust or Lender's other
rights and Remedies under the Loan Documents, including Lender's right
as mortgagee or secured party to commence an action to foreclose any
lien or security interest Lender has under the Loan Documents; (ii)
the validity of the Loan Documents or the Obligations; (iii) Lender's
rights under any Loan Document that are not expressly non-recourse; or
(iv) Lender's right to present and collect on any letter of credit or
other credit enhancement document held by Lender in connection with
the Obligations.

        (c)  The following are excluded and excepted from the
limitation of liability in subsection (a) and Lender may recover
personally against Borrower and its general partners, if any, for the
following:

             (i)  all losses suffered and liabilities and expenses
                  incurred by Lender relating to any fraud or
                  intentional misrepresentation or omission by
                  Borrower or any of Borrower's partners, members,
                  officers, directors, shareholders or principals
                  in connection with (A) the performance of any of
                  the conditions to Lender making the Loan; (B)
                  any inducements to Lender to make the Loan; (C)
                  the execution and delivery of the Loan
                  Documents; (D) any certificates, representations
                  or warranties given in connection with the Loan
                  (including, but not limited to, Estoppel
                  Certificates executed by Borrower and
                  representations made by Borrower related to
                  Property); or (E) Borrower's performance of the
                  Obligations;

             (ii) all Rents derived from the Property after a
                  default under the Loan Documents which default
                  is a basis of a Proceeding by Lender to enforce
                  collection of the Debt and all moneys that, on
                  the date such a default occurs, are on deposit
                  in one or more accounts used by or on behalf of
                  Borrower relating to the operation of the
                  Property, except to the extent properly applied
                  to payment of Debt Service Payments,
                  Impositions, Insurance Premiums and any
                  reasonable and customary expenses incurred by
                  Borrower in the operation, maintenance and
                  leasing of the Property or delivered to Lender;

             (iii)     the cost of remediation of any
                       Environmental Activity affecting the
                       Property, any diminution in the value of
                       the Property arising from any Environmental
                       Activity affecting the Property and any
                       other losses suffered and liabilities and
                       expenses incurred by Lender relating to a
                       default under the Article entitled
                       "Environmental";

             (iv) all security deposits collected by Borrower or
                  any of Borrower's predecessors and not refunded
                  to Tenants in accordance with their respective
                  Leases, applied in accordance with the Leases or
                  Law or delivered to Lender, and all advance
                  rents collected by Borrower or any of Borrower's
                  predecessors and not applied in accordance with
                  the Leases or delivered to Lender;

             (v)  the replacement cost of any Fixtures or Personal
                  Property removed from the Property after a
                  default occurs;

             (vi) all losses suffered and liabilities and expenses
                  incurred by Lender relating to any acts or
                  omissions by Borrower that result in waste
                  (including economic and non-physical waste) on
                  the Property;

             (vii)     all protective advances and other payments
                       made by Lender pursuant to express
                       provisions of the Loan Documents to protect
                       Lender's security interest in the Property
                       or to protect the assignment of the
                       property described in and effected by the
                       Assignment, but only to the extent that the
                       Rents would have been sufficient to permit
                       Borrower to make the payment and Borrower
                       failed to do so;

             (viii)    all mechanics' or similar liens relating to
                       work performed on or materials delivered to
                       the Property prior to a foreclosure sale of
                       the Property, but only to the extent Lender
                       had advanced funds to pay for the work or
                       materials;

             (ix) all Proceeds that are not applied in accordance
                  with this Deed of Trust or not paid to Lender as
                  required under this Deed of Trust;

             (x)  all losses suffered and liabilities and expenses
                  incurred by Lender relating to a Transfer that
                  is not permitted under the Section entitled
                  "Permitted Transfers".

             (xi) all losses suffered and liabilities and expenses
                  incurred by Lender relating to forfeiture or
                  threatened forfeiture of the Property to the
                  Government; and

             (xii)     all losses suffered and liabilities and
                       expenses incurred by Lender relating to any
                       default by Borrower under any of the
                       provisions of this Deed of Trust relating
                       to ERISA including the prohibition on any
                       Transfer that results in a violation of
                       ERISA.

        (d)  Nothing under subsection (a) above will be deemed to
be a waiver of any right which Lender may have under Section 506(a),
506(b), 1111(b) or any other provisions of the Bankruptcy Code or
under any other Law relating to bankruptcy or insolvency to file a
claim for the full amount of the Debt or to require that all
collateral will continue to secure all of the Obligations in
accordance with the Loan Documents.


                           ARTICLE XVI

                             WAIVERS

   Section 16.1.  WAIVER OF STATUTE OF LIMITATIONS.  BORROWER
WAIVES THE RIGHT TO CLAIM ANY STATUTE OF LIMITATIONS AS A DEFENSE TO
BORROWER'S PAYMENT AND PERFORMANCE OF THE OBLIGATIONS.

   Section 16.2.  WAIVER OF NOTICE.  BORROWER WAIVES THE RIGHT TO
RECEIVE ANY NOTICE FROM LENDER OR TRUSTEE WITH RESPECT TO THE LOAN
DOCUMENTS EXCEPT FOR THOSE NOTICES THAT LENDER OR TRUSTEE IS EXPRESSLY
REQUIRED TO DELIVER PURSUANT TO THE LOAN DOCUMENTS.

   Section 16.3.  WAIVER OF MARSHALLING AND OTHER MATTERS.
BORROWER WAIVES THE BENEFIT OF ANY RIGHTS OF MARSHALLING OR ANY OTHER
RIGHT TO DIRECT THE ORDER IN WHICH ANY OF THE PROPERTY WILL BE (i)
SOLD; OR (ii) MADE AVAILABLE TO ANY ENTITY IF THE PROPERTY IS SOLD BY
POWER OF SALE OR PURSUANT TO A JUDGMENT OF FORECLOSURE AND SALE.
BORROWER ALSO WAIVES THE BENEFIT OF ANY LAWS RELATING TO APPRAISEMENT,
VALUATION, STAY, EXTENSION, REINSTATEMENT, MORATORIUM, HOMESTEAD AND
EXEMPTION RIGHTS OR A SALE IN INVERSE ORDER OF ALIENATION.

   Section 16.4.  WAIVER OF TRIAL BY JURY.  BORROWER WAIVES TRIAL
BY JURY IN ANY PROCEEDING BROUGHT BY, OR AGAINST, OR COUNTERCLAIM OR
CROSS-COMPLAINT ASSERTED BY OR AGAINST, LENDER OR TRUSTEE RELATING TO
THE LOAN, THE PROPERTY DOCUMENTS OR THE LEASES.

   Section 16.5.  WAIVER OF COUNTERCLAIM.  BORROWER WAIVES THE
RIGHT TO ASSERT A COUNTERCLAIM OR CROSS-COMPLAINT, OTHER THAN
COMPULSORY OR MANDATORY COUNTERCLAIMS OR CROSS-COMPLAINTS, IN ANY
PROCEEDING LENDER OR TRUSTEE BRINGS AGAINST BORROWER RELATING TO THE
LOAN, INCLUDING ANY PROCEEDING TO ENFORCE REMEDIES.

   Section 16.6.  WAIVER OF JUDICIAL NOTICE AND HEARING.  BORROWER
WAIVES ANY RIGHT BORROWER MAY HAVE UNDER LAW TO NOTICE OR TO A
JUDICIAL HEARING PRIOR TO THE EXERCISE OF ANY RIGHT OR REMEDY PROVIDED
BY THE LOAN DOCUMENTS TO LENDER AND BORROWER WAIVES THE RIGHTS, IF
ANY, TO SET ASIDE OR INVALIDATE ANY SALE DULY CONSUMMATED IN
ACCORDANCE WITH THE PROVISIONS OF THE LOAN DOCUMENTS ON THE GROUND (IF
SUCH BE THE CASE) THAT THE SALE WAS CONSUMMATED WITHOUT A PRIOR
JUDICIAL HEARING.

   Section 16.7.  WAIVER OF SUBROGATION.  BORROWER WAIVES ALL
RIGHTS OF SUBROGATION TO LENDER'S RIGHTS OR CLAIMS RELATED TO OR
AFFECTING THE PROPERTY OR ANY OTHER SECURITY FOR THE LOAN UNTIL THE
LOAN IS PAID IN FULL AND ALL FUNDING OBLIGATIONS UNDER THE LOAN
DOCUMENTS HAVE BEEN TERMINATED.

   Section 16.8.  GENERAL WAIVER.  BORROWER ACKNOWLEDGES THAT (A)
BORROWER AND BORROWER'S PARTNERS, MEMBERS OR PRINCIPALS, AS THE CASE
MAY BE, ARE KNOWLEDGEABLE BORROWERS OF COMMERCIAL FUNDS AND
EXPERIENCED REAL ESTATE DEVELOPERS OR INVESTORS WHO UNDERSTAND FULLY
THE EFFECT OF THE ABOVE PROVISIONS; (B) LENDER WOULD NOT MAKE THE LOAN
WITHOUT THE PROVISIONS OF THIS ARTICLE; (C) THE LOAN IS A COMMERCIAL
OR BUSINESS LOAN UNDER THE LAWS OF THE STATE OR COMMONWEALTH WHERE THE
PROPERTY IS LOCATED NEGOTIATED BY LENDER AND BORROWER AND THEIR
RESPECTIVE ATTORNEYS AT ARMS LENGTH; AND (D) ALL WAIVERS BY BORROWER
IN THIS ARTICLE HAVE BEEN MADE VOLUNTARILY, INTELLIGENTLY AND
KNOWINGLY, AFTER BORROWER FIRST HAS BEEN  INFORMED BY COUNSEL OF
BORROWER'S OWN CHOOSING AS TO POSSIBLE ALTERNATIVE RIGHTS, AND HAVE
BEEN MADE AS AN INTENTIONAL RELINQUISHMENT AND ABANDONMENT OF A KNOWN
RIGHT AND PRIVILEGE. THE FOREGOING ACKNOWLEDGMENT IS MADE WITH THE
INTENT THAT LENDER AND ANY SUBSEQUENT HOLDER OF THE NOTE WILL RELY ON
THE ACKNOWLEDGMENT.


                           ARTICLE XVII

                             NOTICES

   Section 17.1.  Notices.  All acceptances, approvals, consents,
demands, notices, requests, waivers and other communications (the
"Notices") required or permitted to be given under the Loan Documents
must be in writing and (a) delivered personally by a process server
providing a sworn declaration evidencing the date of service, the
individual served, and the address where the service was made; (b)
sent by certified mail, return receipt requested; or (c) delivered by
nationally recognized overnight delivery service that provides
evidence of the date of delivery, with all charges prepaid (for next
morning delivery if sent by overnight delivery service), addressed to
the appropriate party at its address listed below:

If to Borrower:
             Bedford Property Investors, Inc.
             270 Lafayette Circle
             Lafayette, California 94549
             Attn: Ms. Hanh Kihara
             Chief Financial Officer and Senior Vice President
             Application #VR-6
             Mortgage #000462400

with a courtesy copy to:
             Sherman & Sterling
             555 California Street, 20th Floor
             San Francisco, California 94104
             Attn: Emery Mitchell, Esq.
                       Barbara J.S. McKee, Esq.
             Application #VR-6
             Mortgage #000462400

If to Lender:
             Teachers Insurance and Annuity
             Association
             730 Third Avenue
             New York, New York 10017
             Attn:     Director of Portfolio Management
                  for Mortgage and Real Estate Division
                  Region: Midwest

                  TIAA Appl. # VR-6
                  M - 000462400

with a courtesy copy to:
             Teachers Insurance and Annuity
             Association
             730 Third Avenue
             New York, New York 10017
                  Attn:     Vice President and Chief Counsel,
                  Mortgage and Real Estate Law

                  TIAA Appl. # VR-6
                  M - 000462400


If to Trustee:         First American Title Insurance Company
             P.O. Box 3915
             Phoenix, Arizona 85030
             Attention: __________________

Lender and Borrower each may change from time to time the address to
which Notices must be sent, by notice given in accordance with the
provisions of this Section.  All Notices given in accordance with the
provisions of this Section will be deemed to have been received on the
earliest of (i) actual receipt; (ii) Borrower's rejection of delivery;
or (iii) 3 Business Days after having been deposited in any mail
depository regularly maintained by the United States postal service,
if sent by certified mail, or 1 Business Day after having been
deposited with a nationally recognized overnight delivery service, if
sent by overnight delivery or on the date of personal service, if
served by a process server.

   Section 17.2.  Change in Borrower's Name or Place of Business.
Borrower will immediately notify Lender in writing of any change in
Borrower's name or the place of business set forth in the beginning of
this Deed of Trust.


                          ARTICLE XVIII

                          MISCELLANEOUS

   Section 18.1.  Applicable Law.  The Loan Documents shall be
governed by and will be construed in accordance with the Laws of the
State of New York, without regard to conflicts of laws principles,
except as set forth below.  The parties acknowledge that the State of
New York is the principal place of business of Lender and has a
substantial relationship to the underlying transactions relating to
the Loan and to the parties involved.  Notwithstanding the foregoing,
Borrower and Lender agree that the laws of the State in which the
Property is located shall govern the creation and perfection of liens
on the Property and the procedures for enforcing remedies directly
related to the Property including the appointment of trustees, the
foreclosure or foreclosure sale of the Property, the appointment of
receiver and any other remedy with respect to the Property.

   Section 18.2.  Usury Limitations.   Borrower and Lender intend
to comply with all Laws with respect to the charging and receiving of
interest.  Any amounts charged or received by Lender for the use or
forbearance of the Principal to the extent permitted by Law, will be
amortized and spread throughout the Term until payment in full so that
the rate or amount of interest charged or received by Lender on
account of the Principal does not exceed the Maximum Interest Rate.
If any amount charged or received under the Loan Documents that is
deemed to be interest is determined to be in excess of the amount
permitted to be charged or received at the Maximum Interest Rate, the
excess will be deemed to be a prepayment of Principal when paid,
without premium, and any portion of the excess not capable of being so
applied will be refunded to Borrower.  If during the Term the Maximum
Interest Rate, if any, is eliminated, then for purposes of the Loan,
there will be no Maximum Interest Rate.

   Section 18.3.  Lender's Discretion.  Wherever under the Loan
Documents any matter is required to be satisfactory to Lender, Lender
has the right to approve or determine any matter or Lender has an
election, Lender's approval, determination or election will be made in
Lender's reasonable discretion unless expressly provided to the
contrary.

   Section 18.4.  Unenforceable Provisions.  If any provision in
the Loan Documents is found to be illegal or unenforceable or would
operate to invalidate any of the Loan Documents, then the provision
will be deemed expunged and the Loan Documents will be construed as
though the provision was not contained in the Loan Documents and the
remainder of the Loan Documents will remain in full force and effect.

   Section 18.5.  Survival of Borrower's Obligations.  Borrower's
representations, warranties and covenants contained in the Loan
Documents will continue in full force and effect and survive (i)
satisfaction of the Obligations; (ii) reconveyance of the lien of this
property by Trustee; (iii) assignment or other transfer of all or any
portion of Lender's interest in the Loan Documents or the Property;
(iv) Lender's or Trustee's exercise of any of the Remedies or any of
Lender's or Trustee's other rights under the Loan Documents; (v) a
Transfer; (vi) amendments to the Loan Documents; and (vii) any other
act or omission that might otherwise be construed as a release or
discharge of Borrower.

   Section 18.6.  Relationship Between Borrower and Lender; No
Third Party Beneficiaries.
        (a)  Lender is not a partner of or joint venturer with
Borrower or any other entity as a result of the Loan or Lender's
rights under the Loan Documents; the relationship between Lender and
Borrower is strictly that of creditor and debtor.  Each Loan Document
is an agreement between the parties to that Loan Document for the
mutual benefit of the parties and no entities other than the parties
to that Loan Document will be a third party beneficiary or will have
any claim against Lender or Borrower by virtue of the Loan Document.
As between Lender and Borrower, any actions taken by Lender under the
Loan Documents will be taken for Lender's protection only, and Lender
has not and will not be deemed to have assumed any responsibility to
Borrower or to any other entity by virtue of Lender's actions.

        (b)  All conditions to Lender's performance of its
obligations under the Loan Documents are imposed solely for the
benefit of Lender.  No entity other than Lender will have standing to
require satisfaction of the conditions in accordance with their
provisions or will be entitled to assume that Lender will refuse to
perform its obligations in the absence of strict compliance with any
of the conditions.

   Section 18.7.  Partial Reconveyances or Releases, Extensions,
Waivers.  Lender may: (i) permit the reconveyance of any part of the
Property or release any entity obligated for the Obligations; (ii)
extend the time for payment or performance of any of the Obligations
or otherwise amend the provisions for payment or performance by
agreement with any entity that is obligated for the Obligations or
that has an interest in the Property; (iii) accept additional security
for the payment and performance of the Obligations; and (iv) waive any
entity's performance of an Obligation, release any entity or
individual now or in the future liable for the performance of the
Obligation or waive the exercise of any Remedy or option.  Lender may
exercise any of the foregoing rights without notice, without regard to
the amount of any consideration given, without affecting the priority
of the Loan Documents, without releasing any entity not specifically
released from its obligations under the Loan Documents, without
releasing any guarantor(s) or surety(ies) of the Obligations, without
effecting a novation of the Loan Documents and, with respect to a
waiver, without waiving future performance of the Obligation or
exercise of the Remedy waived.

   Section 18.8.  Service of Process.  Borrower irrevocably
consents to service of process by registered or certified mail,
postage prepaid, return receipt requested, to Borrower at its address
set forth in the Article entitled "Notices" or any other address to
which such address has been changed as permitted hereunder.

   Section 18.9.  Entire Agreement.  Oral agreements or
commitments between Borrower and Lender to lend money, to extend
credit or to forbear from enforcing repayment of a debt, including
promises to extend or renew the debt, are not enforceable.  Any
agreements among Borrower, Lender and Trustee relating to the Loan are
contained in the Loan Documents, which contain the complete and
exclusive statement of the agreements among Borrower, Lender and
Trustee, except as Borrower, Lender and, if applicable, Trustee may
later agree in writing to amend the Loan Documents.  The language of
each Loan Document will be construed as a whole according to its fair
meaning and will not be construed against the draftsman.

   Section 18.10.  No Oral Amendment.  The Loan Documents may not
be amended, waived or terminated orally or by any act or omission made
individually by Borrower, Lender or Trustee but may be amended, waived
or terminated only by a written document signed by the party against
which enforcement of the amendment, waiver or termination is sought.

   Section 18.11. Severability.  The invalidity, illegality or
unenforceability of any provision of any of the Loan Documents will
not affect any other provisions of the Loan Documents, which will be
construed as if the invalid, illegal or unenforceable provision never
had been included.

   Section 18.12. Covenants Run with the Land.  Subject to the
restrictions on transfer contained in the Article entitled "TRANSFERS,
LIENS AND ENCUMBRANCES", all of the covenants of this Deed of Trust
and the Assignment run with the Land, will bind all parties hereto and
all tenants and subtenants of the Land or the Improvements and their
respective heirs, executors, administrators, successors and assigns,
and all occupants and subsequent owners of the Property, and will
inure to the benefit of Lender and all subsequent holders of the Note
and this Deed of Trust.

   Section 18.13. Time of the Essence.  Time is of the essence
with respect to Borrower's payment and performance of the Obligations.

   Section 18.14. Subrogation.  If the Principal or any other
amount advanced by Lender is used directly or indirectly to pay off,
discharge or satisfy all or any part of an encumbrance affecting the
Property, then Lender is subrogated to the encumbrance and to any
security held by the holder of the encumbrance, all of which will
continue in full force and effect in favor of Lender as additional
security for the Obligations.

   Section 18.15.  Joint and Several Liability.  If Borrower
consists of more than one person or entity, the obligations and
liabilities of each such person or entity under this Deed of Trust are
joint and several.

   Section 18.16. Successors and Assigns.  The Loan Documents bind
the parties to the Loan Documents and their respective successors,
assigns, heirs, administrators, executors, agents and representatives
and inure to the benefit of Lender and its successors, assigns, heirs,
administrators, executors, agents and representatives and to the
extent applicable inure to the benefit of Trustee and its successors,
assigns, heirs, administrators, executors, agents and representatives.

   Section 18.17. Duplicates and Counterparts.  Duplicate
counterparts of any of the Loan Documents, other than the Note, may be
executed and together will constitute a single original document.

   Section 18.18.  Deed of Trust as Mortgage. If for any reason
this Deed of Trust shall be
ineffective as a Deed of Trust, it shall be construed and enforced as
a realty mortgage with Borrower being the Mortgagor and Lender being
the Mortgagee.

                           ARTICLE XIX

                        TRUSTEE PROVISIONS

   Section 19.1   Acceptance of Trust.

        (a)  Trustee accepts this Trust upon recordation of this
Deed of Trust as provided by Law.  Except as provided by Law, Trustee
is not obligated to notify any party of a pending sale under this Deed
of Trust or of a Proceeding in which Borrower, Lender or Trustee is a
party.

        (b)  Lender may from time to time unilaterally substitute a
successor to Trustee pursuant to a recordable instrument that complies
with Law for substitution of Trustees.  The recorded substitution will
be conclusive proof of proper substitution of trustee who will,
without conveyance from predecessor trustee, succeed to all of the
predecessor trustee's title, estate, rights, powers and duties.

   IN WITNESS WHEREOF, Borrower has executed and delivered this
Deed of Trust as of the date first set forth above.


                            BEDFORD PROPERTY INVESTORS, INC.,
                            a Maryland corporation


                            By: /s/ Hanh Kihara

                                  Hanh Kihara, Senior Vice
President



<PAGE>
                         ACKNOWLEDGMENTS




STATE OF               )
                  )    SS:
COUNTY OF              )


On ____________________, before me, the undersigned, a Notary Public
in and for said State, personally appeared _____________________,
personally 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 executed the same in his
authorized capacity, and that by his signature on the instrument the
person, or the entity upon behalf of which the person acted, executed
the instrument.

WITNESS my hand and official seal.

Signature:

______________________________
Name (Typed or Printed)



STATE OF               )
                  )    SS:
COUNTY OF              )


On ____________________, before me, the undersigned, a Notary Public
in and for said State, personally appeared _____________________,
personally 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 executed the same in his
authorized capacity, and that by his signature on the instrument the
person, or the entity upon behalf of which the person acted, executed
the instrument.

WITNESS my hand and official seal.

Signature:

______________________________
Name (Typed or Printed)

                            Exhibit A

                        LEGAL DESCRIPTIONS

                           Exhibit A-1

                 Legal Description of Property #2
                     Westech Business Center
           4602-4640 E. Elwood Street, Phoenix, Arizona

                           Exhibit A-2

                 Legal Description of Property #3
                    Westech Business Center II
             4710 E. Elwood Street, Phoenix, Arizona

                           Exhibit A-3

                 Legal Description of Property #5
             8125 North 23rd Street, Phoenix, Arizona

<PAGE>
                            Exhibit B

                           DEFINITIONS


"Acceleration" is defined in Section 14.2(a)(i).

"Accumulations" is defined in Section 2.1(xii).

"Accumulations Depositary" is defined in Section 6.2(a).

"Additional Funds" is defined in Section 7.4(v).

"Annual Financial Statement" is defined in Section 10.1(a).

"Assessments" is defined as all assessments now or hereafter levied,
assessed or imposed against the Property.

"Assignment" is defined as the Assignment of Leases and Rents dated of
even date with this Deed of Trust made by Borrower for the benefit of
Lender.

"Bankruptcy Code" means Title 11 of the United States Code.

"Books and Records" is defined in Section 2.1(xi).

"Borrower" is defined in the introductory paragraph.

"Budget" is defined in Section 10.2.

"Business Days" is defined as any day on which commercial banks are
not authorized or required by Law to close in New York, New York.

"Casualty" is defined as damage to or destruction of the Property by
fire or other casualty.

"Code" is defined as the Internal Revenue Code of 1986, as amended and
the regulations promulgated thereunder.

"Condemnation" is defined as the permanent or temporary taking of all
or any portion of the Property, or any interest therein or right
accruing thereto, by the exercise of the right of eminent domain
(including any transfer in lieu of or in anticipation of the exercise
of the right), inverse condemnation or any similar injury or damage to
or decrease in the value of the Property, including severance and
change in the grade of any streets

"Condemnation Awards" is defined in Section 2.1(viii).

"Condemnation Proceeding" is defined as a Proceeding that could result
in a Condemnation.

"CPA" is defined as an independent certified public accountant
satisfactory to Lender.

"Debt" is defined in Section 3.1.

"Debt Service Payments" is defined as the monthly installments of
principal and interest payable by Borrower to Lender as set forth in
the Note.

"Deed of Trust" is defined as this Deed of Trust, Assignment of Leases
and Rents, Security Agreement and Fixture Filing Statement.

"Default Interest Rate" is defined as the lower of 5% per annum over
the Fixed Interest Rate or the Maximum Interest Rate, if any.

"Destruction Event" is defined in Section 7.4.

"Environmental Activity" is defined as any actual, suspected or
threatened abatement, cleanup, disposal, generation, handling,
manufacture, possession, release, remediation, removal, storage,
transportation, treatment or use of any Hazardous Substances.  The
actual, suspected or threatened presence of any Hazardous Substances,
or the actual, suspected or threatened noncompliance with any
Environmental Laws, will be deemed Environmental Activity.

"Environmental Laws" is defined as all Laws pertaining to health,
safety, protection of the environment, natural resources,
conservation, wildlife, waste management, Environmental Activities and
pollution.

"Environmental Report" is defined as the report prepared by ICF
Kaiser, dated April 30, 1999 as to the Property described in Exhibit
A-3 and dated April 22, 1999 as to the Property described in Exhibits
A-1 and A-2, all as amended.

"ERISA" is defined in Section 8.3(a).

"Event of Default" is defined in Section 14.1.

"Existing Shareholder" is defined in Section 12.1(b).

"Expenses" is defined in Section 11.1(a).

"Financial Books and Records" is defined as detailed accounts of the
income and expenses of the Property and of Borrower and all other
data, records and information that either are specifically referred to
in the Article entitled "FINANCIAL REPORTING" or are necessary to the
preparation of any of the statements, reports or certificates required
under such Article and includes all supporting schedules prepared or
used by the CPA in auditing the Annual Financial Statement or in
issuing its opinion.

"Fiscal Year" is defined as any calendar year or partial calendar year
during the Term.

"Fixed Interest Rate" is defined as 7.17% per annum.

"Fixtures and Personal Property" is defined in Section 2.1(iv).

"Government" is defined as any federal, state or municipal
governmental or quasi-governmental authority including executive,
legislative or judicial branch, division and any subdivision or agency
of any of them and any entity to which any of them has delegated
authority.

"Hazardous Substances" is defined as (i) any by product, chemical,
compound, material, mixture or substance that is now or hereafter
defined or listed in, or otherwise classified pursuant to, any
Environmental Laws, as a "hazardous substance", "hazardous material",
"hazardous waste", "extremely hazardous waste", infectious waste",
"toxic substance", "toxic pollutant", or any other formulation intended
to define, list, or classify substances by reason of deleterious
properties such as ignitability, corrosivity, reactivity,
carcinogenicity, toxicity, reproductive toxicity, or "EP toxicity",
(ii) any petroleum, natural gas, natural gas liquid, liquified natural
gas, synthetic gas usable for fuel (or mixtures of natural gas and
such synthetic gas), ash produced by a resource recovery facility
utilizing a municipal solid waste stream, and drilling fluids,
produced waters, and other wastes associated with the exploration,
development or production of crude oil, natural gas, or geothermal
resources, and (iii) any underground storage tanks.

"Imposition Penalty Date" is defined in Section 6.1(a).

"Impositions" is defined as all Taxes, Assessments, ground rent, if
any, water and sewer rents, fees and charges, levies, permit,
inspection and license fees and other dues, charges or impositions,
including all charges and license fees for the use of vaults, chutes
and similar areas adjoining the Land, maintenance and similar charges
and charges for utility services, in each instance whether now or in
the future, directly or indirectly, levied, assessed or imposed on the
Property or Borrower and whether levied, assessed or imposed as
excise, privilege or property taxes.

"Improvements" is defined in Section 2.1(ii).

"Individual Property" is defined in Recital D of the Assignment.

"Insurance Premiums" is defined as all present and future premiums and
other charges due and payable on policies of fire, rental value and
other insurance covering the Property and required pursuant to the
provisions of this Deed of Trust.

"Insurance Proceeds" is defined in Section 2.1(ix).

"Insurers" is defined in Section 7.1(c).

"Institutional Investor" is defined as any bank, savings institution,
charitable foundation, insurance company, real estate investment
trust, pension fund or investment advisor registered under the
Investment Advisors Act of 1940, as amended, and acting as trustee or
agent.

"Interest" is defined as the amount of fixed interest payable under
the Note at the Fixed Interest Rate and any other sums which could be
deemed to be interest under Law.

"Land" is defined in the Recitals.

"Late Charge" is defined in the Note.

"Law" is defined as all present and future codes, constitutions,
cases, opinions, rules, manuals, regulations, determinations, laws,
orders, ordinances, requirements and statutes, as amended, of any
Government that affect or that may be interpreted to affect the
Property, Borrower or the Loan, including amendments and all guidance
documents and publications promulgated thereunder.

"Leases" is defined as all present and future leases, subleases,
licenses and other agreements for the use and occupancy of the Land
and Improvements, any related guarantees and including any use and
occupancy arrangements created pursuant to Section 365 (h) of the
Bankruptcy Code or otherwise in connection with the commencement or
continuation of any bankruptcy, reorganization, arrangement,
insolvency, dissolution, receivership or similar Proceedings, or any
assignment for the benefit of creditors, in respect of any tenant or
other occupant of the Land and Improvements.

"Lender" is defined in the introductory paragraph.

"Loan" is defined in the Recitals.

"Loan Documents" is defined as the Note, this Deed of Trust, the Deed
of Trust, Assignment of Leases and Rents, Security Agreement and
Fixture Filing Statement (Bedford Portfolio #3 - California Property)
dated the date of this Deed of Trust and securing the Note, the
Assignment, the Assignment of Leases and Rents (Bedford Portfolio #3 -
California Properties) dated the date of this Deed of Trust and
securing the Note and all documents now or hereafter executed by
Borrower or held by Lender or Trustee relating to the Loan, including
all amendments.

"Material Environmental Contamination" is defined as contamination of
the Property with Hazardous Substances (i) that constitutes a
violation of one or more Environmental Laws; (ii) for which there is a
significant possibility that remediation will be required under
Environmental Laws; (iii) that results in a material risk of liability
or expense to Lender; or (iv) that diminishes the value of the
Property.

"Maturity Date" is defined in the Recitals.

"Maximum Interest Rate" is defined as the maximum rate of interest, if
any, permitted by Law to be charged with respect to the Loan as the
maximum rate may be increased or decreased from time to time.

"Note" is defined in the Recitals.

"Note Payments" is defined in the Note.

"Notices" is defined in Section 17.1.

"Obligations" is defined in Section 3.1.

"Permitted Exceptions" is defined as the matters shown in Schedule B,
Part 1 and 2 of the title insurance policy insuring the lien of this
Deed of Trust.

"Permitted Transfers" is defined in Section 12.2(b).

"Permitted Use" is defined as use as first-class commercial office
buildings with respect to the property described in Exhibit A-3, known
as 8125 North 23rd Street, Phoenix, Arizona, and as industrial research
and development buildings with respect to the properties described in
Exhibit A-1 known as Westech Business Center, 4602-4640 E. Elwood
Street, Phoenix, Arizona and Exhibit A-2 known as Westech Business
Center II, 4710 E. Elwood Street, Phoenix, Arizona, and uses
incidentally and directly related to such uses.

"Policies" is defined in Section 7.1(b).

"Prepayment Premium" is defined in the Note.

"Principal" is defined in the Recitals.

"Proceeding" is defined as a pending or threatened action, claim or
litigation before a legal, equitable or administrative tribunal having
proper jurisdiction.

"Proceeds" is defined in Section 7.2(c).

"Property" is defined in Section 2.1.

"Property Documents" is defined in Section 2.1(v).

"Receiver" is defined as a receiver, custodian, trustee, liquidator or
conservator of the Property.

"Release Parcel" is defined in Section 12.4.

"Remedies" is defined in Section 14.2(a).

"Rents" is defined as all present and future rents, prepaid rents,
percentage, participation or contingent rents, issues, profits,
proceeds, parking fees, revenues and other consideration accruing
under the Leases or otherwise derived from the use and occupancy of
the Land or the Improvements, including tenant contributions to
expenses, security deposits, royalties and contingent rent, if any,
all other fees, accounts, accounts receivable or payments paid to or
for the benefit of Borrower, including liquidated damages after a
default under a lease, any premium or other termination fee payable by
tenant after cancellation of a Lease and the proceeds of any rental
insurance, and any payments received pursuant to Section 502(b) of the
Bankruptcy Code or otherwise in connection with the commencement or
continuance of any bankruptcy, reorganization, arrangement,
insolvency, dissolution, receivership or similar proceedings, or any
assignment for the benefit of creditors, in respect of any tenant or
other occupant of the Land or the Improvements and all claims as a
creditor in connection with any of the foregoing.

"Restoration" is defined as the restoration of the Property after a
Destruction Event as nearly as possible to its condition immediately
prior to the Destruction Event, in accordance with the plans and
specifications, in a first-class workmanlike manner using materials
substantially equivalent in quality and character to those used for
the original improvements, in accordance with Law and free and clear
of all liens, encumbrances or other charges other than this Deed of
Trust and the Permitted Exceptions.

"Restoration Completion Date" is defined in Section 7.4(viii).

"Restoration Funds" is defined in Section 7.5(b).

"Substitution Property" is defined in Section 12.5.

"Taxes" is defined as all present and future real estate taxes levied,
assessed or imposed against the Property.

"Term" is defined as the scheduled term of this Deed of Trust
commencing on the date Lender makes the first disbursement of the Loan
and terminating on the Maturity Date.

"Transfer" is defined in Section 12.1(a).

"Uniform Commercial Code" is defined as the Uniform Commercial Code in
effect in the jurisdiction where the Land is located.

<PAGE>
                            Exhibit C

                      RULES OF CONSTRUCTION


   (a)  References in any Loan Document to numbered Articles or
Sections are references to the Articles and Sections of that Loan
Document.  References in any Loan Document to lettered Exhibits are
references to the Exhibits attached to that Loan Document, all of
which are incorporated in and constitute a part of that Loan Document.
Article, Section and Exhibit captions used in any Loan Document are
for reference only and do not describe or limit the substance, scope
or intent of that Loan Document or the individual Articles, Sections
or Exhibits of that Loan Document.

   (b)  The terms "include", "including" and similar terms are
construed as if followed by the phrase "without limitation".

   (c)  The terms "Land", "Improvements", "Fixtures and Personal
Property", "Condemnation Awards", "Insurance Proceeds" and "Property"
are construed as if followed by the phrase "or any part thereof".

   (d)  Any agreement by or duty imposed on Borrower in any Loan
Document to perform any obligation or to refrain from any act or
omission constitutes a covenant running with the ownership or
occupancy of the Land and the Improvements, which will bind all
parties hereto and their respective successors and assigns, and all
lessees, subtenants and assigns of same, and all occupants and
subsequent owners of the Property, and will inure to the benefit of
Lender and all subsequent holders of the Note and this Deed of Trust
and includes a covenant by Borrower to cause its partners, members,
principals, agents, representatives and employees to perform the
obligation or to refrain from the act or omission in accordance with
the Loan Documents.  Any statement or disclosure contained in any Loan
Document about facts or circumstances relating to the Property,
Borrower or the Loan constitutes a representation and warranty by
Borrower made as of the date of the Loan Document in which the
statement or disclosure is contained.

   (e)  The term "to Borrower's knowledge" is construed as meaning
to the best of Borrower's knowledge after diligent inquiry.

   (f)  The singular of any word includes the plural and the plural
includes the singular.  The use of any gender includes all genders.

   (g)  The terms "person", "party" and "entity" include natural
persons, firms, partnerships, limited liability companies and
partnerships, corporations and any other public or private legal
entity.

   (h)  The term "provisions" includes terms, covenants,
conditions, agreements and requirements.

   (i)  The term "amend" includes modify, supplement, renew,
extend, replace or substitute and the term "amendment" includes
modification, supplement, renewal, extension, replacement and
substitution.

   (j)  Reference to any specific Law or to any document or
agreement, including the Note, this Deed of Trust, any of the other
Loan Documents, the Leases and the Property Documents, includes any
future amendments to the Law, document or agreement, as the case may
be.

   (k)  No inference in favor of or against a party with respect to
any provision in any Loan Document may be drawn from the fact that the
party drafted the Loan Document.

   (l)  The term "certificate" means the sworn, notarized statement
of the entity giving the certificate, made by a duly authorized person
satisfactory to Lender affirming the truth and accuracy of every
statement in the certificate.  Any document that is "certified" means
the document has been appended to a certificate of the entity
certifying the document that affirms the truth and accuracy of
everything in the document being certified.  In all instances the
entity issuing a certificate must be satisfactory to Lender.

   (m)  Any appointment of Lender as Borrower's attorney-in-fact is
irrevocable and coupled with an interest.  Lender may appoint a
substitute attorney-in-fact.  Borrower ratifies all actions taken by
the attorney-in-fact but, nevertheless, if Lender requests, Borrower
will specifically ratify any action taken by the attorney-in-fact by
executing and delivering to the attorney-in-fact or to any entity
designated by the attorney-in-fact all documents necessary to effect
the ratification.

   (n)  Any document, instrument or agreement to be delivered by
Borrower will be in form and content satisfactory to Lender.

   (o)  All obligations, rights, remedies and waivers contained in
the Loan Documents will be construed as being limited only to the
extent required to be enforceable under the Law.

   (p)  The unmodified word "days" means calendar days.



          DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS,
         SECURITY AGREEMENT AND FIXTURE FILING STATEMENT
Bedford Portfolio #3 - California Properties

                                by


     BEDFORD PROPERTY INVESTORS, INC., a Maryland corporation
                           as Borrower

                               and

 FIRST AMERICAN TITLE INSURANCE COMPANY, a California corporation
                            as Trustee

                        for the benefit of

           TEACHERS INSURANCE AND ANNUITY ASSOCIATION
                OF AMERICA, a New York corporation
                            as Lender

                       Properties Known As

   Fujitsu Building, 598 Gibraltar Drive, Milpitas, California
           201-215 Fourier Avenue, Fremont, California




   After Recordation This Deed of Trust Should Be Returned To:

                    Beverly J. Quail, Esquire
            c/o Ballard Spahr Andrews & Ingersoll LLP
                   1225 17th Street, Suite 2300
                      Denver, Colorado 80202

<PAGE>
                        TABLE OF CONTENTS


                                                             Page

RECITALS:
 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1

ARTICLE I

DEFINITIONS AND RULES OF CONSTRUCTION. . . . . . . . . . . . . .2
Section 1.1.           Definitions . . . . . . . . . . . . . . .2
Section 1.2.           Rules of Construction . . . . . . . . . .2

ARTICLE II

GRANTING CLAUSES . . . . . . . . . . . . . . . . . . . . . . . .2
Section 2.1.           Encumbered Property . . . . . . . . . . .2
Section 2.2.           Habendum Clause . . . . . . . . . . . . .5
Section 2.3.           Security Agreement. . . . . . . . . . . .5
Section 2.4.           Conditions to Grant . . . . . . . . . . .5

ARTICLE III

OBLIGATIONS SECURED. . . . . . . . . . . . . . . . . . . . . . .6
Section 3.1.           The Obligations . . . . . . . . . . . . .6

ARTICLE IV

TITLE AND AUTHORITY. . . . . . . . . . . . . . . . . . . . . . .6
Section 4.1.           Title to the Property . . . . . . . . . .6
Section 4.2.           Authority . . . . . . . . . . . . . . . .6
Section 4.3.           No Foreign Person . . . . . . . . . . . .7
Section 4.4.           Litigation. . . . . . . . . . . . . . . .7

ARTICLE V

PROPERTY STATUS, MAINTENANCE AND LEASES. . . . . . . . . . . . .7
Section 5.1.           Status of the Property. . . . . . . . . .7
Section 5.2.           Maintenance of the Property . . . . . . .8
Section 5.3.           Change in Use . . . . . . . . . . . . . .8
Section 5.4.           Waste . . . . . . . . . . . . . . . . . .8
Section 5.5.           Inspection of the Property. . . . . . . .8
Section 5.6.           Leases and Rents. . . . . . . . . . . . .8
Section 5.7.           Parking . . . . . . . . . . . . . . . . .9
Section 5.8.           Separate Tax Lot. . . . . . . . . . . . .9
Section 5.9.           Changes in Zoning or Restrictive Covenants9
Section 5.10.          Lender's Right to Appear. . . . . . . . .9

ARTICLE VI

IMPOSITIONS AND ACCUMULATIONS. . . . . . . . . . . . . . . . . 10
Section 6.1.           Impositions . . . . . . . . . . . . . . 10
Section 6.2.           Accumulations . . . . . . . . . . . . . 11
Section 6.3.           Changes in Tax Laws . . . . . . . . . . 12

ARTICLE VII

INSURANCE, CASUALTY, CONDEMNATION
AND RESTORATION. . . . . . . . . . . . . . . . . . . . . . . . 13
Section 7.1.           Insurance Coverages . . . . . . . . . . 13
Section 7.2.           Casualty and Condemnation . . . . . . . 14
Section 7.3.           Application of Proceeds . . . . . . . . 15
Section 7.4.           Conditions to Availability of Proceeds for Restoration
 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 7.5.           Restoration . . . . . . . . . . . . . . 17

ARTICLE VIII

COMPLIANCE WITH LAW AND AGREEMENTS . . . . . . . . . . . . . . 19
Section 8.1.           Compliance with Law . . . . . . . . . . 19
Section 8.2.           Compliance with Agreements. . . . . . . 19
Section 8.3.           ERISA Compliance. . . . . . . . . . . . 19
Section 8.4.           Section 6045(e) Filing. . . . . . . . . 20

ARTICLE IX

ENVIRONMENTAL. . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 9.1.           Environmental Representations and Warranties20
Section 9.2.           Environmental Covenants . . . . . . . . 20

ARTICLE X

FINANCIAL REPORTING. . . . . . . . . . . . . . . . . . . . . . 22
Section 10.1.          Financial Reporting . . . . . . . . . . 22
Section 10.2.          Annual Budget . . . . . . . . . . . . . 22

ARTICLE XI

EXPENSES AND DUTY TO DEFEND. . . . . . . . . . . . . . . . . . 23
Section 11.1.          Payment of Expenses . . . . . . . . . . 23
Section 11.2.          Duty to Defend. . . . . . . . . . . . . 23

ARTICLE XII

TRANSFERS, LIENS AND ENCUMBRANCES. . . . . . . . . . . . . . . 24
Section 12.1.          Prohibitions on Transfers, Liens and Encumbrances24
Section 12.2.          Permitted Transfers . . . . . . . . . . 24
Section 12.3.          Right to Contest Lien . . . . . . . . . 26
Section 12.4.          Reconveyance Rights . . . . . . . . . . 27
Section 12.5.          Substitution. . . . . . . . . . . . . . 29

ARTICLE XIII

ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS . . . . . 30
Section 13.1.          Further Assurances. . . . . . . . . . . 30
Section 13.2.          Estoppel Certificates . . . . . . . . . 31

ARTICLE XIV

DEFAULTS AND REMEDIES. . . . . . . . . . . . . . . . . . . . . 31
Section 14.1.          Events of Default . . . . . . . . . . . 31
Section 14.2.          Remedies. . . . . . . . . . . . . . . . 33
Section 14.3.          General Provisions Pertaining to Remedies34
Section 14.4.          Foreclosure by Power of Sale. . . . . . 35
Section 14.5.          General Provisions Pertaining to Mortgagee-in-
Possession or Receiver
 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 14.6.          General Provisions Pertaining to Foreclosures and the
Power of Sale. . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 14.7.          Application of Proceeds . . . . . . . . 38
Section 14.8.          Power of Attorney . . . . . . . . . . . 38
Section 14.9.          Tenant at Sufferance. . . . . . . . . . 38

ARTICLE XV

LIMITATION OF LIABILITY. . . . . . . . . . . . . . . . . . . . 38
Section 15.1.          Limitation of Liability . . . . . . . . 38

ARTICLE XVI

WAIVERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 16.1.          WAIVER OF STATUTE OF LIMITATIONS. . . . 41
Section 16.2.          WAIVER OF NOTICE. . . . . . . . . . . . 41
Section 16.3.          WAIVER OF MARSHALLING AND OTHER MATTERS 41
Section 16.4.          WAIVER OF TRIAL BY JURY . . . . . . . . 41
Section 16.5.          WAIVER OF COUNTERCLAIM. . . . . . . . . 41
Section 16.6.          WAIVER OF JUDICIAL NOTICE AND HEARING . 41
Section 16.7.          WAIVER OF SUBROGATION . . . . . . . . . 42
Section 16.8.          GENERAL WAIVER. . . . . . . . . . . . . 42

ARTICLE XVII

NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 17.1.          Notices . . . . . . . . . . . . . . . . 42
Section 17.2.          Change in Borrower's Name or Place of Business44

ARTICLE XVIII

MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 18.1.          Applicable Law. . . . . . . . . . . . . 44
Section 18.2.          Usury Limitations . . . . . . . . . . . 44
Section 18.3.          Lender's Discretion . . . . . . . . . . 45
Section 18.4.          Unenforceable Provisions. . . . . . . . 45
Section 18.5.          Survival of Borrower's Obligations. . . 45
Section 18.6.          Relationship Between Borrower and Lender; No Third
Party Beneficiaries
 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 18.7.          Partial Reconveyances or Releases, Extensions, Waivers
 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 18.8.          Service of Process. . . . . . . . . . . 46
Section 18.9.          Entire Agreement. . . . . . . . . . . . 46
Section 18.10.          No Oral Amendment. . . . . . . . . . . 46
Section 18.11.         Severability. . . . . . . . . . . . . . 46
Section 18.12.         Covenants Run with the Land . . . . . . 46
Section 18.13.         Time of the Essence . . . . . . . . . . 47
Section 18.14.         Subrogation . . . . . . . . . . . . . . 47
Section 18.15.          Joint and Several Liability. . . . . . 47
Section 18.16.         Successors and Assigns. . . . . . . . . 47
Section 18.17.  Duplicates and Counterparts. . . . . . . . . . 47

ARTICLE XIX

TRUSTEE PROVISIONS . . . . . . . . . . . . . . . . . . . . . . 47
Section 19.1           Acceptance of Trust . . . . . . . . . . 47

Exhibit A

LEGAL DESCRIPTION. . . . . . . . . . . . . . . . . . . . . . .A-1

Exhibit B

DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . .B-1

Exhibit C

RULES OF CONSTRUCTION. . . . . . . . . . . . . . . . . . . . .C-1






          DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS,
              SECURITY AGREEMENT AND FIXTURE FILING
          Bedford Portfolio # 3 - California Properties

        THIS DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS,
SECURITY AGREEMENT AND FIXTURE FILING STATEMENT made this ____ day of
May, l999, by BEDFORD PROPERTY INVESTORS, INC., a Maryland corporation
("Borrower"), having its principal place of business at 270 Lafayette
Circle, Lafayette, California 94549, and FIRST AMERICAN TITLE
INSURANCE COMPANY ("Trustee"), a California corporation, having an
office at 1850 Mt. Diablo Boulevard, Walnut Creek, California 94596,
for the benefit of TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF
AMERICA, a New York corporation ("Lender"), having an address at 730
Third Avenue, New York, New York l0017.


                            RECITALS:

        A.   Lender agreed to make and Borrower agreed to accept a
loan (the "Loan") in the maximum principal amount of $27,350,000.

        B.   To evidence the Loan, Borrower executed and delivered
to Lender a promissory note (the "Note"), dated the date of this Deed
of Trust, in the principal amount of TWENTY-SEVEN MILLION THREE
HUNDRED FIFTY THOUSAND AND NO/100 Dollars ($27,350,000) (that amount
or so much as is outstanding from time to time is referred to as the
"Principal"), promising to pay the Principal with interest thereon to
the order of Lender as set forth in the Note and with the balance, if
any, of the Debt being due and payable on June 1, 2005 (the "Maturity
Date").

        C.   To secure the Note and the Obligations, this Deed of
Trust conveys, among other things, Borrower's fee interest in the real
property located in the Cities of Milpitas and Fremont, Counties of
Santa Clara and Alameda, State of California more particularly
described in Exhibits A-1  and A-2, (the "Land").


                            ARTICLE I

              DEFINITIONS AND RULES OF CONSTRUCTION

   Section 1.1.   Definitions.  Capitalized terms used in this
Deed of Trust are defined in Exhibit B or in the text with a cross-
reference in Exhibit B.

   Section 1.2.   Rules of Construction.  This Deed of Trust will
be interpreted in accordance with the rules of construction set forth
in Exhibit C.


                            ARTICLE II

                         GRANTING CLAUSES

   Section 2.1.   Encumbered Property.  Borrower irrevocably
grants, mortgages, warrants, sells, conveys, assigns and pledges to
Trustee in trust, WITH POWER OF SALE, and grants to Trustee a security
interest in any and all of the following property, rights, interests
and estates now or in the future owned or held by Borrower (the
"Property") for the uses and purposes set forth in this Deed of Trust:

             (i)  the Land;

             (ii) all buildings and improvements located on the
                  Land (the "Improvements");

             (iii)     all easements; rights of way or use,
                       including any rights of ingress and egress;
                       streets, roads, ways, sidewalks, alleys and
                       passages; strips and gores; sewer rights;
                       water, water rights, water courses,
                       riparian rights and drainage rights; air
                       rights and development rights; oil and
                       mineral rights; and tenements,
                       hereditaments and appurtenances, in each
                       instance adjoining or otherwise appurtenant
                       to or benefitting the Land or the
                       Improvements;

             (iv) all materials intended for construction, re-
                  construction, alteration or repair of the
                  Improvements, such materials to be deemed
                  included in the Land and the Improvements
                  immediately on delivery to the Land; all
                  fixtures and personal property that are attached
                  to, contained in or used in connection with the
                  Land or the Improvements (excluding personal
                  property owned by tenants), including:
                  furniture; furnishings; machinery; motors;
                  elevators; fittings; microwave ovens;
                  refrigerators; office systems and equipment;
                  plumbing, heating, ventilating and air
                  conditioning systems and equipment; maintenance
                  and landscaping equipment; lighting, cooking,
                  laundry, dry cleaning, refrigerating,
                  incinerating and sprinkler systems and
                  equipment; telecommunications systems and
                  equipment; computer or word processing systems
                  and equipment; security systems and equipment;
                  and equipment leases for any of the property
                  described in this subsection (the "Fixtures and
                  Personal Property");

             (v)  all agreements, ground leases, grants of
                  easements or rights-of-way, permits,
                  declarations of covenants, conditions and
                  restrictions, disposition and development
                  agreements, planned unit development agreements,
                  cooperative, condominium or similar ownership or
                  conversion plans, management, leasing, brokerage
                  or parking agreements or other material
                  documents affecting Borrower or the Land, the
                  Improvements or the Fixtures and Personal
                  Property, but expressly excluding the Leases
                  (the "Property Documents");

             (vi) all inventory (including all goods, merchandise,
                  raw materials, incidentals, office supplies and
                  packaging materials) held for sale, lease or
                  resale or furnished or to be furnished under
                  contracts of service, or used or consumed in the
                  ownership, use or operation of the Land, the
                  Improvements or the Fixtures and Personal
                  Property, all documents of title evidencing any
                  part of any of the foregoing and all returned or
                  repossessed goods arising from or relating to
                  any sale or disposition of inventory;

             (vii)     all intangible personal property relating
                       to the Land, the Improvements or the
                       Fixtures and Personal Property, including
                       choses in action and causes of action
                       (except those personal to Borrower),
                       corporate and other business records,
                       inventions, designs, promotional materials,
                       blueprints, plans, specifications, patents,
                       patent applications, trademarks, trade
                       names, trade secrets, goodwill, copyrights,
                       registrations, licenses, franchises, claims
                       for refunds or rebates of taxes, insurance
                       surpluses, refunds or rebates of taxes and
                       any letter of credit, guarantee, claim,
                       security interest or other security held by
                       or granted to Borrower to secure payment by
                       an account debtor of any of the accounts of
                       Borrower arising out of the ownership, use
                       or operation of the Land, the Improvements
                       or the Fixtures and Personal Property, and
                       documents covering all of the foregoing;
                       all accounts, accounts receivable,
                       documents, instruments, money, deposit
                       accounts, funds deposited in accounts
                       established with a bank, savings and loan
                       association, trust company or other
                       financial institution in connection with
                       the ownership, use or operation of the
                       Land, the Improvements or the Fixtures and
                       Personal Property, including any reserve
                       accounts or escrow accounts, and all
                       investments of the funds and all other
                       general intangibles;

             (viii)    all awards and other compensation paid
                       after the date of this Deed of Trust for
                       any Condemnation (the "Condemnation
                       Awards");

             (ix) all proceeds of and all unearned premiums on the
                  Policies (the "Insurance Proceeds");

             (x)  all licenses, certificates of occupancy,
                  contracts, management agreements, operating
                  agreements, operating covenants, franchise
                  agreements, permits and variances relating to
                  the Land, the Improvements or the Fixtures and
                  Personal Property;

             (xi) all books, records and other information,
                  wherever located, which are in Borrower's
                  possession, custody or control or to which
                  Borrower is entitled at law or in equity and
                  which are related to the Property, including all
                  computer or other equipment used to record,
                  store, manage, manipulate or access the
                  information (the "Books and Records");

             (xii)     all deposits and letters of credit held
                       from time to time by the Accumulations
                       Depositary to provide reserves for Taxes
                       and Assessments together with interest
                       thereon, if any (the "Accumulations") and
                       the account or accounts in which such
                       deposits are or may be held; and

             (xiii)    all after-acquired title to or remainder or
                       reversion in any of the property described
                       in this Section; all additions, accessions
                       and extensions to, improvements of and
                       substitutions or replacements for any of
                       such property; all products and all cash
                       and non-cash proceeds, immediate or remote,
                       of any sale or other disposition of any of
                       such property, excluding sales or other
                       dispositions of inventory in the ordinary
                       course of the business of operating the
                       Land or the Improvements; and all
                       additional lands, estates, interests,
                       rights or other property acquired by
                       Borrower after the date of this Deed of
                       Trust for use in connection with the Land
                       and Improvements, all without the need for
                       any additional mortgage, assignment, pledge
                       or conveyance to Lender but Borrower will
                       execute and deliver to Lender, upon
                       Lender's request, any documents reasonably
                       requested by Lender to further evidence the
                       foregoing.

   Section 2.2.   Habendum Clause.  The Property is conveyed to
Trustee, TO HAVE AND TO HOLD the Property IN TRUST, FOREVER, for the
purpose of securing the Note and the Obligations.

   Section 2.3.   Security Agreement.

        (a)  This Deed of Trust is a real property deed of trust
and also a "security agreement" and a "financing statement" within the
meaning of the Uniform Commercial Code.  The Property includes both
real and personal property and all of Borrower's other right, title
and interest, whether tangible or intangible, in the Property.  By
executing and delivering this Deed of Trust, Borrower grants to
Trustee, as security for the Obligations, a security interest in the
Property to the full extent that any of the Property may be subject to
the Uniform Commercial Code.

        (b)  Borrower desires and intends that this Deed of Trust
also constitute a Fixture Filing between Borrower as debtor and Lender
as secured party, as defined in the Uniform Commercial Code.  To this
end, Borrower acknowledges that (i) this Deed of Trust covers goods
which are or are to become fixtures on the Land; (ii) this financing
statement is to be recorded; (iii) Borrower is the record owner of
such property; (iv) products of collateral are also covered; (v) the
debtor is Bedford Property Investors, Inc., a Maryland corporation
whose address is 270 Lafayette Circle, Lafayette, California 94549;
(vi) the secured party is Teachers Insurance and Annuity Association
of America, a New York corporation, whose address is 730 Third Avenue,
New York, New York 10070; (vii)  the record owner of the Property is
Bedford Property Investors, Inc., a Maryland corporation, whose
address is stated above.  Except as otherwise provided in the Loan
Documents, no financing statement in favor of any secured party other
than Lender covering the personal property described herein or any
portion thereof is on file in any public office.  Provided that
obsolete and worn-out articles may be removed concurrently with the
replacement or renewal thereof with property of at least equal value
or usefulness in the operation of the Property; Borrower will not
otherwise remove or permit the removal of the collateral or any part
thereof without the prior written permission of Lender.

   Section 2.4.   Conditions to Grant.  This Deed of Trust is made
on the express condition that if Borrower pays and performs the
Obligations in full in accordance with the Loan Documents, then unless
expressly provided otherwise in the Loan Documents, the Loan Documents
will be released at Borrower's expense.



                           ARTICLE III

                       OBLIGATIONS SECURED

   Section 3.1.   The Obligations.  This Deed of Trust secures the
Principal, the Interest, the Late Charges, the Prepayment Premiums,
the Expenses, any additional advances made by Lender in connection
with the Property or the Loan and all other amounts payable under the
Loan Documents (the "Debt") and also secures both the timely payment
of the Debt as and when required and the timely performance of all
other obligations and covenants to be performed under the Loan
Documents (the "Obligations").


                            ARTICLE IV

                       TITLE AND AUTHORITY

   Section 4.1.   Title to the Property.

        (a)  Subject to the conveyance effectuated by this Deed of
Trust, Borrower has and will continue to have good and marketable
title in fee simple absolute to the Land and the Improvements and good
and marketable title to the Fixtures and Personal Property, in each
case, free and clear of liens, encumbrances and charges except the
Permitted Exceptions.  To Borrower's knowledge, there are no facts or
circumstances that might give rise to a lien, encumbrance or charge on
the Property.

        (b)  Borrower owns and will continue to own all of the
other Property free and clear of all liens, encumbrances and charges
except the Permitted Exceptions.

        (c)  This Deed of Trust is and will remain a valid and
enforceable first lien on and security interest in the Property,
subject only to the Permitted Exceptions.

   Section 4.2.   Authority.

        (a)  Borrower is and will continue to be (i) duly
organized, validly existing and in good standing under the Laws of the
state or commonwealth in which it was organized or incorporated and
(ii) duly qualified to conduct business, in good standing, in the
state or commonwealth where the Property is located.

        (b)  Borrower has and will continue to have all approvals
required by Law or otherwise and full right, power and authority to
(i) own and operate the Property and carry on Borrower's business as
now conducted or as proposed to be conducted; (ii) execute and deliver
the Loan Documents; (iii) grant, mortgage, warrant the title to,
convey, assign and pledge the Property to Lender pursuant to the
provisions of this Deed of Trust; and (iv) perform the Obligations.

        (c)  The execution and delivery of the Loan Documents and
the performance of the Obligations do not and will not conflict with
or result in a default under any Laws or any Leases or Property
Documents and do not and will not conflict with or result in a default
under any agreement binding upon any party to the Loan Documents.

        (d)  The Loan Documents constitute and will continue to
constitute legal, valid and binding obligations of all parties to the
Loan Documents enforceable in accordance with their respective terms.

   Section 4.3.   No Foreign Person.  Borrower is not a "foreign
person" within the meaning of Section 1445(f)(3) of the Code.

   Section 4.4.   Litigation.  There are no Proceedings or, to
Borrower's knowledge, investigations against or affecting Borrower or
the Property and, to Borrower's knowledge, there are no facts or
circumstances that might give rise to a Proceeding or an investigation
against or affecting Borrower or the Property.  Borrower will give
Lender prompt notice of the commencement of any Proceeding or
investigation against or affecting the Property or Borrower which
could have a material adverse effect on the Property or on Lender's
interests in the Property or under the Loan Documents.  Borrower also
will deliver to Lender such additional information relating to the
Proceeding or investigation as Lender may request from time to time.


                            ARTICLE V

             PROPERTY STATUS, MAINTENANCE AND LEASES

   Section 5.1.   Status of the Property.

        (a)  Borrower has obtained and will maintain in full force
and effect all certificates, licenses, permits and approvals that are
issued or required by Law or by any entity having jurisdiction over
the Property or over Borrower or that are necessary for the Permitted
Use, for occupancy and operation of the Property for the conveyance
described in this Deed of Trust and for the conduct of Borrower's
business on the Property in accordance with the Permitted Use.

        (b)  The Property is and will continue to be serviced by
all public utilities required for the Permitted Use of the Property.

        (c)  All roads and streets necessary for service of and
access to the Property for the current or contemplated use of the
Property have been completed and are and will continue to be
serviceable, physically open and dedicated to and accepted by the
Government for use by the public.

        (d)  The Property is free from damage caused by a Casualty.

        (e)  Except as disclosed in writing to Lender, all costs
and expenses of labor, materials, supplies and equipment used in the
construction of the Improvements have been paid in full.

   Section 5.2.   Maintenance of the Property.  Borrower will
maintain the Property in thorough repair and good and safe condition,
suitable for the Permitted Use, including, to the extent necessary,
replacing the Fixtures and Personal Property with property at least
equal in quality and condition to that being replaced and free of
liens.  Borrower will not erect any new buildings, building additions
or other structures on the Land or otherwise materially alter the
Improvements without Lender's prior consent which may be withheld in
Lender's sole discretion.  Lender shall be deemed to have consented if
it has not responded within 30 days of receipt of Borrower's written
request to the Lender at the addresses set forth herein.  In the event
that Borrower does not manage the Property itself, the Property will
be managed by a property manager satisfactory to Lender pursuant to a
management agreement satisfactory to Lender and terminable by Borrower
upon 30 days notice to the property  manager.

   Section 5.3.   Change in Use.  Borrower will use and permit the
use of the Property for the Permitted Use and for no other purpose.

   Section 5.4.   Waste.  Borrower will not commit or permit any
waste (including economic and non-physical waste), impairment or
deterioration of the Property or any alteration, demolition or removal
of any of the Property, excluding any tenant alterations of a non-
structural nature, without Lender's prior consent which may be
withheld in Lender's sole discretion.  Lender shall be deemed to have
consented if it has not responded within 30 days of receipt of
Borrower's written request to the Lender at the addresses set forth
herein.

   Section 5.5.   Inspection of the Property.  Subject to the
rights of tenants under the Leases, Lender has the right to enter and
inspect the Property on reasonable prior notice, except during the
existence of an Event of Default, when no prior notice is required.
Lender has the right to engage an independent expert to review and
report on Borrower's compliance with Borrower's obligations under this
Deed of Trust to maintain the Property, comply with Law and refrain
from waste, impairment or deterioration of the Property and the
alteration, demolition or removal of any of the Property except as may
be permitted by the provisions of this Deed of Trust.  If the
independent expert's report discloses material failure to comply with
such obligations or if Lender engages the independent expert after the
occurrence of an Event of Default, then the independent expert's
review and report will be at Borrower's expense, payable within 3 days
after demand.

   Section 5.6.   Leases and Rents.

        (a)  Borrower assigns the Leases and the Rents to Lender
absolutely and unconditionally and not merely as additional collateral
or security for the payment and performance of the Obligations, but
subject to a license back to Borrower of the right to collect the
Rents unless and until an Event of Default occurs at which time the
license will terminate automatically, all as more particularly set
forth in the Assignment, the provisions of which are incorporated in
this Deed of Trust by reference.

        (b)  Borrower appoints Lender as Borrower's attorney-in-
fact to execute unilaterally and record, at Lender's election, a
document subordinating this Deed of Trust to the Leases, provided that
the subordination will not affect (i) the priority of Lender's
entitlement to Insurance Proceeds or Condemnation Awards or (ii) the
priority of this Deed of Trust over intervening liens or liens arising
under or with respect to the Leases.

   Section 5.7.   Parking.  Borrower will provide, maintain,
monitor and light parking areas within the Property, including any
sidewalks, aisles, streets, driveways, sidewalk cuts and rights-of-way
to and from the adjacent public streets, in a manner consistent with
the Permitted Use and sufficient to accommodate the greatest of: (i)
the number of parking spaces required by Law; or (ii) the number of
parking spaces required by the Leases and the Property Documents.  The
parking areas will be reserved and used exclusively for ingress,
egress and parking for Borrower and the tenants under the Leases and
their respective employees, customers and invitees and in accordance
with the Leases and the Property Documents.

   Section 5.8.   Separate Tax Lot.  The Property is and will
remain assessed for real estate tax purposes as one or more wholly
independent tax lots, separate from any property that is not part of
the Property.

   Section 5.9.   Changes in Zoning or Restrictive Covenants.
Borrower will not (i) initiate, join in or consent to any change in
any Laws pertaining to zoning, any restrictive covenant or other
restriction which would restrict the Permitted Uses for the Property;
(ii) permit the Property to be used to fulfil any requirements of Law
for the construction or maintenance of any improvements on property
that is not part of the Property; (iii) permit the Property to be used
for any purpose not included in the Permitted Use; or (iv) impair the
integrity of the Property as a single, legally subdivided zoning lot
separate from all other property.

   Section 5.10.  Lender's Right to Appear.  If Lender determines,
in its sole discretion, that Borrower is not adequately protecting
Lender's interest in the Property, upon written notice to Borrower,
except in the case of an emergency, Lender has the right to appear in
and defend any Proceeding brought regarding the Property and to bring
any Proceeding, in the name and on behalf of Borrower or in Lender's
name.


                            ARTICLE VI

                  IMPOSITIONS AND ACCUMULATIONS

   Section 6.1.   Impositions.

        (a)  Borrower will pay each Imposition, unless the
Imposition is payable directly by the tenant, at least 15 days before
the date (the "Imposition Penalty Date") that is the earlier of (i)
the date on which the Imposition becomes delinquent and (ii) the date
on which any penalty, interest or charge for non-payment of the
Imposition accrues.  If the Imposition is to be paid directly by a
tenant, Borrower shall deliver to Lender proof, in form and content
acceptable to Lender, of tenant's payment of such Imposition 15 days
before the Imposition Penalty Date.

        (b)  At least 10 days before each Imposition Penalty Date,
Borrower will deliver to Lender a receipted bill or other evidence of
payment.

        (c)  Borrower, at its own expense, may contest any Taxes or
Assessments, provided that the following conditions are met:

             (i)  not less than 30 days prior to the Imposition
                  Penalty Date, Borrower delivers to Lender notice
                  of the proposed contest;

             (ii) the contest is by a Proceeding promptly
                  initiated and conducted diligently and in good
                  faith;

             (iii)     there is no Event of Default;

             (iv) Borrower pays the contested Taxes or Assessments
                  under protest;

             (v)  the Proceeding is permitted under and is
                  conducted in accordance with the Leases and the
                  Property Documents;

             (vi) the Proceeding precludes imposition of criminal
                  or civil penalties and sale or forfeiture of the
                  Property and Lender will not be subject to any
                  civil suit; and

             (vii)     Borrower either (a) deposits with the
                       Accumulations Depositary reserves or
                       furnishes a bond or other security
                       satisfactory to Lender, in either case in
                       an amount sufficient to pay the contested
                       Taxes or Assessments, together with all
                       interest and penalties, or (b) Borrower
                       pays all of the contested Taxes or
                       Assessments under protest.

        (d)  Installment Payments.  If any future Assessment is
payable in installments, Borrower will nevertheless pay the Assessment
in its entirety on the day the first installment becomes due and
payable or a lien, unless Lender, in its sole discretion, approves
payment of the Assessment in installments.

   Section 6.2.   Accumulations.

        (a)  If required by Lender pursuant to Subsection 6.2 (j)
hereof, Borrower will make an initial deposit with either Lender or a
mortgage servicer or financial institution designated or approved by
Lender from time to time to receive, hold and disburse the
Accumulations in accordance with this Section (the "Accumulations
Depositary").  On the first day of each calendar month during the Term
Borrower will deposit with the Accumulations Depositary an amount
equal to one-twelfth (1/12) of the annual Taxes and Assessments as
determined by Lender or its designee.  At least 45 days before each
Imposition Penalty Date, Borrower will deliver to the Accumulations
Depositary any bills and other documents that are necessary to pay the
Taxes and Assessments.

        (b)  The Accumulations will be applied to the payment of
Taxes and Assessments.  Any excess Accumulations after payment of
Taxes and Assessments will be returned to Borrower or credited against
future payments of the Accumulations, at Lender's election or as
required by Law.  If the Accumulations are not sufficient to pay Taxes
and Assessments, Borrower will pay the deficiency to the Accumulations
Depositary within 5 days of demand.  At any time after an Event of
Default occurs, Lender may apply the Accumulations as a credit against
any portion of the Debt selected by Lender in its sole discretion.

        (c)  The Accumulations Depositary will hold the
Accumulations as additional security for the Obligations until applied
in accordance with the provisions of this Deed of Trust. If Lender is
not the Accumulations Depositary, the Accumulations Depositary will
deliver the Accumulations to Lender upon Lender's demand at any time
after an Event of Default.

        (d)  If the Property is sold or conveyed, other than by
foreclosure or transfer in lieu of foreclosure, and the Property
remains subject to this Deed of Trust, all right, title and interest
of Borrower to the Accumulations will automatically, and without
necessity of further assignment, be held for the account of the new
owner, subject to the provisions of this Section and Borrower will
have no further interest in the Accumulations.

        (e)  Borrower waives all right to demand, receive or
collect any interest or other return on the Accumulations which will
be held in a non-interest bearing account (except as required by Law)
and may be commingled with other monies held by the Accumulations
Depositary and will not be held in trust.

        (f)  Lender has the right to pay, or to direct the
Accumulations Depositary to pay, any Taxes or Assessments unless
Borrower is contesting the Taxes or Assessments in accordance with the
provisions of this Deed of Trust, in which event any payment of the
contested Taxes or Assessments will be made under protest in the
manner prescribed by Law or, at Lender's election, will be withheld.

        (g)  If Lender assigns this Deed of Trust, Lender will pay,
or cause the Accumulations Depositary to pay, the unapplied balance of
the Accumulations to or at the direction of the assignee.
Simultaneously with the payment, Lender and the Accumulations
Depositary will be released from all liability with respect to the
Accumulations and Borrower will look solely to the assignee with
respect to the Accumulations.  When the Obligations have been fully
satisfied, any unapplied balance of the Accumulations will be returned
to Borrower.

        (h)  Notwithstanding the requirements set forth in
subsections (a) through (g) of this Section 6.2 and provided Borrower
pays the Taxes and Assessments to the taxing authority when due, as an
alternative to the requirements set forth in subsections (a) through
(g), subject to the limitation in subsection 6.2(j) hereof, at
Closing, Borrower shall, at Borrower's option, either (1) deposit an
amount equal to the annual real estate taxes for the Property next due
in an interest bearing account with an agent acceptable to Lender or
approved by Lender or (2) deposit a Letter of Credit equal to such
amount in a form satisfactory to Lender, which Letter of Credit shall
be renewed from time to time at least 30 days  prior to the expiration
date thereof, pursuant to an agreement satisfactory to Lender to be
held by a depository, satisfactory to Lender, in Lender's sole
discretion.  The amount deposited pursuant to this Subsection 6.2(h)
shall be held as additional security for the Obligations for the term
of the Loan.  So long as there is no default under the Loan Documents
and so long as Borrower has deposited the required amount or provided
Lender with an acceptable Letter of Credit, Borrower shall pay real
estate taxes for the Property directly to the appropriate tax
authority.

        (i)  So long as there is no default under the Loan
Documents, real estate tax escrows will not be required for any tenant
with a credit rating equivalent to a Standard and Poors rating of BBB-
if the tenant's lease states that real estate taxes are to be paid
directly by the tenant and Borrower provides Lender written evidence
within 30 days after payment verifying payment of real estate taxes.

        (j)  If there is an Event of Default, Lender may, in
Lender's sole discretion, in addition to all of its other rights and
remedies under the Loan Documents, draw down on the deposited amount
or Letter of Credit, as the case may be, to pay the real estate taxes
and require Borrower to comply with the provisions set forth in
subsections 6.2(a) through (g) hereof rather than the provisions of
Subsection 6.2(h) hereof, and the requirement to make such deposits
shall not relieve Borrower of the obligation to remedy and cure the
Event of Default.

   Section 6.3.   Changes in Tax Laws.  If a Law requires the
deduction of the Debt from the value of the Property for the purpose
of taxation or imposes a tax, either directly or indirectly, on the
Debt, any Loan Document or Lender's interest in the Property, Borrower
will pay the tax with interest and penalties, if any.  If Lender
determines that Borrower's payment of the tax may be unlawful,
unenforceable, usurious or taxable to Lender, the Debt will become
immediately due and payable on 60 days' prior notice unless the tax
must be paid within the 60-day period, in which case, the Debt will be
due and payable within the lesser period in accordance with this
Section 6.3.  Notwithstanding anything herein to the contrary, no
Prepayment Premium or Evasion Premium (as such terms are defined in
the Note) shall be due or payable in the event that all or any portion
of the Debt is prepaid as a result of the payment to Lender of the
Debt pursuant to this Section 6.3.


                           ARTICLE VII

                INSURANCE, CASUALTY, CONDEMNATION
                         AND RESTORATION

   Section 7.1.   Insurance Coverages.

        (a)  Borrower will maintain such insurance coverages and
endorsements in form and substance and in amounts as Lender may
require in its sole discretion, from time to time.  Until Lender
notifies Borrower of changes in Lender's requirements, Borrower will
maintain not less than the insurance coverages and endorsements Lender
required for closing of the Loan for all insurance except earthquake
insurance.  Borrower will maintain not less than a $20,000,000
earthquake insurance policy.

        (b)  The insurance, including renewals, required under this
Section will be issued on valid and enforceable policies and
endorsements satisfactory to Lender (the "Policies").  Each Policy
will contain a standard waiver of subrogation and a replacement cost
endorsement and will provide that Lender will receive not less than 30
days' prior written notice of any cancellation, termination or non-
renewal of a Policy or any material change other than an increase in
coverage and that Lender will be named under a standard mortgage
endorsement as loss payee.

        (c)  The insurance companies issuing the Policies (the
"Insurers") must be authorized to do business in the State or
Commonwealth where the Property is located, must have been in business
for at least 5 years, must carry an A.M. Best Company, Inc. policy
holder rating of A or better and an A.M. Best Company, Inc. financial
category rating of Class X or better and must be otherwise
satisfactory to Lender.  Lender may select an alternative credit
rating agency and may impose different credit rating standards for the
Insurers.  Notwithstanding Lender's right to approve the Insurers and
to establish credit rating standards for the Insurers, Lender will not
be responsible for the solvency of any Insurer.

        (d)  Notwithstanding Lender's rights under this Article,
Lender will not be liable for any loss, damage or injury resulting
from the inadequacy or lack of any insurance coverage.

        (e)  Borrower will comply with the provisions of the
Policies and with the requirements, notices and demands imposed by the
Insurers and applicable to Borrower or the Property.

        (f)  Borrower will pay the Insurance Premiums for each
Policy not less than 5 days before the expiration date of the Policy
being replaced or renewed and will deliver to Lender an original or,
if a blanket policy, a certified copy of each Policy marked "Paid" not
less than 15 days prior to the expiration date of the Policy being
replaced or renewed.

        (g)  Borrower will not carry separate insurance concurrent
in kind or form or contributing in the event of loss with any other
insurance carried by Borrower.

        (h)  Borrower will not carry any of the insurance required
under this Section on a blanket or umbrella policy without in each
instance Lender's prior approval which may be withheld in Lender's
sole discretion.  If Lender approves, Borrower will deliver to Lender
a certified copy of the blanket policy which will allocate to the
Property the amount of coverage required under this Section and
otherwise will provide the same coverage and protection as would a
separate policy insuring only the Property.  Lender shall be deemed to
have approved the policy if it has not responded within 30 days of
receipt of Borrower's written request to the Lender at the addresses
set forth herein.

        (i)  Borrower will give the Insurers prompt notice of any
change in ownership or occupancy of the Property.  This subsection
does not abrogate the prohibitions on transfers set forth in this Deed
of Trust.

        (j)  If the Property is sold at a foreclosure sale or
otherwise is transferred so as to extinguish the Obligations, all of
Borrower's right, title and interest in and to the Policies then in
force will be transferred automatically to the purchaser or
transferee.

   Section 7.2.   Casualty and Condemnation.

        (a)  Borrower will give Lender notice of any Casualty
promptly after it occurs and will give Lender notice of any
Condemnation Proceeding promptly after Borrower receives notice of
commencement or notice that such a Condemnation Proceeding will be
commencing.   Borrower promptly will deliver to Lender copies of all
documents Borrower delivers or receives relating to the Casualty or
the Condemnation Proceeding, as the case may be.

        (b)  Borrower authorizes Lender, at Lender's option, to act
on Borrower's behalf to collect, adjust and compromise any claims for
loss, damage or destruction under the Policies on such terms as Lender
determines in Lender's sole discretion.  If there is no Event of
Default which remains uncured within the applicable cure period,
Lender shall consult with Borrower before collecting, adjusting or
compromising said claims.  Borrower authorizes Lender to act, at
Lender's option, on Borrower's behalf in connection with any
Condemnation Proceeding.  Borrower will execute and deliver to Lender
all documents requested by Lender and all documents as may be required
by Law to confirm such authorizations.  Nothing in this Section will
be construed to limit or prevent Lender from joining with Borrower
either as a co-defendant or as a co-plaintiff in any Condemnation
Proceeding.

        (c)  If Lender elects not to act on Borrower's behalf as
provided in this Section, then Borrower promptly will file and
prosecute all claims (including Lender's claims) relating to the
Casualty and will prosecute or defend (including defense of Lender's
interest) any Condemnation Proceeding.  Borrower will have the
authority to settle or compromise the claims or Condemnation
Proceeding, as the case may be, provided that Lender has approved in
Lender's sole discretion any compromise or settlement that exceeds
$250,000.00.  Any check for Insurance Proceeds or Condemnation Awards,
as the case may be (the "Proceeds") will be made payable to Lender and
Borrower.  Borrower will endorse the check to Lender immediately upon
Lender presenting the check to Borrower for endorsement or if Borrower
receives the check first, will endorse the check immediately upon
receipt and forward it to Lender.  If any Proceeds are paid to
Borrower, Borrower immediately will deposit the Proceeds with Lender,
to be applied or disbursed in accordance with the provisions of this
Deed of Trust.  Lender will be responsible for only the Proceeds
actually received by Lender.

   Section 7.3.   Application of Proceeds.  After deducting any
third party and out-of-pocket costs incurred by Lender in collecting
the Proceeds, Lender may, in its sole discretion, (i) apply the
Proceeds as a credit against any portion of the Debt selected by
Lender in its sole discretion of the Debt; (ii) apply the Proceeds to
restore the Improvements, provided that Lender will not be obligated
to see to the proper application of the Proceeds and provided further
that any amounts released for Restoration will not be deemed a payment
on the Debt; or (iii) deliver the Proceeds to Borrower.

   Section 7.4.   Conditions to Availability of Proceeds for
Restoration.   Notwithstanding the preceding Section, after a Casualty
or a Condemnation (a "Destruction Event"), Lender will make the
Proceeds (less any third party and out-of-pocket costs incurred by
Lender in collecting the Proceeds) available for Restoration in
accordance with the conditions for disbursements set forth in the
Section entitled "Restoration", provided that the following conditions
are met:

             (i)  Bedford Property Investors, Inc. or the
                  transferee under a Permitted Transfer, if any,
                  continues to be Borrower at the time of the
                  Destruction Event and at all times thereafter
                  until the Proceeds have been fully disbursed;

             (ii) no monetary default under the Loan Documents
                  exists at the time of the Destruction Event and
                  no Event of Default has occurred during the 12
                  months prior to the Destruction Event;

             (iii)     all Leases in effect immediately prior to
                       the Destruction Event and all Property
                       Documents in effect immediately prior to
                       the Destruction Event that are essential to
                       the use and operation of the Property
                       continue in full force and effect
                       notwithstanding the Destruction Event;

             (iv) if the Destruction Event is a Condemnation,
                  Borrower delivers to Lender evidence reasonably
                  satisfactory to Lender that the Improvements can
                  be restored to an economically and
                  architecturally viable unit;

             (v)  Borrower delivers to Lender evidence reasonably
                  satisfactory to Lender that the Proceeds are
                  sufficient to complete Restoration or if the
                  Proceeds are insufficient to complete
                  Restoration, Borrower first deposits with Lender
                  funds ("Additional Funds") that when added to
                  the Proceeds will be sufficient to complete
                  Restoration;

             (vi) if the Destruction Event is a Casualty, Borrower
                  delivers to Lender evidence reasonably
                  satisfactory to Lender that the Insurer under
                  each affected Policy has not denied liability
                  under the Policy as to Borrower or the insured
                  under the Policy;

             (vii)     Lender is reasonably satisfied that the
                       proceeds of any business interruption
                       insurance in effect together with other
                       available gross revenues from the Property
                       are sufficient to pay Debt Service Payments
                       after paying the Impositions, Insurance
                       Premiums, reasonable and customary
                       operating expenses and capital expenditures
                       until Restoration is complete;

             (viii)    Lender is reasonably satisfied that
                       Restoration will be completed on or before
                       the date (the "Restoration Completion
                       Date") that is the earliest of:  (A) 12
                       months prior to the Maturity Date; (B) 12
                       months after the Destruction Event; (C) the
                       earliest date required for completion of
                       Restoration under any Lease or any Property
                       Document; or (D) any date required by Law;
                       and

             (ix) the annual Rents (excluding security deposits)
                  under Leases in effect on the date of the
                  Destruction Event are providing debt service
                  coverage for the annual Debt Service Payments of
                  1.15 after payment of annual Insurance Premiums,
                  Impositions and operating expenses of the
                  Property (including ground rent, if any),
                  provided that, if the Rents do not provide such
                  debt service coverage, then Borrower expressly
                  authorizes and directs Lender to apply an amount
                  from the Proceeds to reduction of Principal in
                  order to reduce the annual Debt Service Payments
                  sufficiently for such debt service coverage to
                  be achieved.  The reduced debt service payments
                  will be calculated using the Fixed Interest Rate
                  and an amortization schedule that will achieve
                  the same proportionate amortization of the
                  reduced Principal over the then remaining Term
                  as would have been achieved if the Principal and
                  the originally scheduled Debt Service Payments
                  had not been reduced.  Borrower will execute any
                  documentation that Lender deems reasonably
                  necessary to evidence the reduced Principal and
                  debt service payments.

   Section 7.5.   Restoration.

        (a)  If the total Proceeds for any Destruction Event are
$250,000.00 or less and Lender elects or is obligated by Law or under
this Article to make the Proceeds available for Restoration, Lender
will disburse to Borrower the entire amount received by Lender and
Borrower will commence Restoration promptly after the Destruction
Event and complete Restoration not later than the Restoration
Completion Date.

        (b)  If the Proceeds for any Destruction Event exceed
$250,000.00 and Lender elects or is obligated by Law or under this
Article to make the Proceeds available for Restoration, Lender will
disburse the Proceeds and any Additional Funds (the "Restoration
Funds") upon Borrower's request as Restoration progresses, generally
in accordance with normal construction lending practices for
disbursing funds for construction costs, provided that the following
conditions are met:

             (i)  Borrower commences Restoration promptly after
                  the Destruction Event and completes Restoration
                  on or before the Restoration Completion Date;

             (ii) if Lender requests, Borrower delivers to Lender
                  prior to commencing Restoration, for Lender's
                  approval, plans and specifications and a
                  detailed budget for the Restoration;

             (iii)     Borrower delivers to Lender reasonably
                       satisfactory evidence of the costs of
                       Restoration incurred prior to the date of
                       the request, and such other documents as
                       Lender may request including mechanics'
                       lien waivers and title insurance
                       endorsements;

             (iv) Borrower pays all costs of Restoration whether
                  or not the Restoration Funds are sufficient and,
                  if at any time during Restoration, Lender
                  determines that the undisbursed balance of the
                  Restoration Funds is insufficient to complete
                  Restoration, Borrower shall either:  (1) deposit
                  with Lender, as part of the Restoration Funds,
                  an amount equal to the deficiency within 30 days
                  of receiving notice of the deficiency from
                  Lender or (2) provide Lender with a letter of
                  credit, in form and content satisfactory to
                  Lender, in an amount equal to the deficiency
                  within 30 days of receiving notice of the
                  deficiency from Lender; and

             (v)  there is no default under the Loan Documents at
                  the time Borrower requests funds or at the time
                  Lender disburses funds.

        (c)  If an Event of Default occurs at any time after the
Destruction Event, then Lender will have no further obligation to make
any remaining Proceeds available for Restoration and may apply any
remaining Proceeds as a credit against any portion of the Debt
selected by Lender in its sole discretion.

        (d)  Lender may elect at any time prior to commencement of
Restoration or while work is in progress to retain, at Borrower's
expense, an independent engineer or other consultant to review the
plans and specifications, to inspect the work as it progresses and to
provide reports.  If any matter included in a report by the engineer
or consultant engaged by Lender is not in compliance with approved
plans and specifications, Lender may suspend disbursement of the
Restoration Funds until the matters contained in the report are
resolved to Lender's satisfaction.

        (e)  If Borrower fails to commence and complete Restoration
in accordance with the terms of this Article, then in addition to the
Remedies, Lender may elect to restore the Improvements on Borrower's
behalf and reimburse itself out of the Restoration Funds for costs and
expenses incurred by Lender in restoring the Improvements, or Lender
may apply the Restoration Funds as a credit against any portion of the
Debt selected by Lender in its sole discretion.

        (f)  Lender may commingle the Restoration Funds with its
general assets and will not be liable to pay any interest or other
return on the Restoration Funds unless otherwise required by Law.
Lender will not hold any Restoration Funds in trust.  Lender may elect
to deposit the Restoration Funds with a depositary satisfactory to
Lender under a disbursement and security agreement satisfactory to
Lender.

        (g)  Borrower will pay all of Lender's out-of-pocket and
third party expenses incurred in connection with a Destruction Event
or Restoration.  If Borrower fails to do so, then in addition to the
Remedies, Lender may from time to time reimburse itself out of the
Restoration Funds.

        (h)  Any excess Proceeds, excluding any proceeds from
business interruption insurance maintained by Borrower, remaining
after Restoration less than $100,000 shall be delivered to Borrower.
If the excess Proceeds remaining after Restoration are more than
$100,000, Lender may elect, in its sole discretion to apply any excess
as a credit against any portion of the Debt as selected by Lender in
its sole discretion or to deliver the excess to Borrower.


                           ARTICLE VIII

                COMPLIANCE WITH LAW AND AGREEMENTS

   Section 8.1.   Compliance with Law.  Borrower, the Property and
the use of the Property comply and will continue to comply with Law
and with all agreements and conditions necessary to preserve and
extend all rights, licenses, permits, privileges, franchises and
concessions (including zoning variances, special exceptions and non-
conforming uses) relating to the Property or Borrower.  Borrower will
notify Lender of the commencement of any investigation or Proceeding
relating to a possible violation of Law immediately after Borrower
receives notice thereof and, will deliver promptly to Lender copies of
all documents Borrower receives or delivers in connection with the
investigation or Proceeding.  Borrower will not alter the Property in
any manner that would increase Borrower's responsibilities for
compliance with Law.

   Section 8.2.   Compliance with Agreements.  There are no
defaults, events of defaults or events which, with the passage of time
or the giving of notice, would constitute an event of default under
the Property Documents.  Borrower will pay and perform all of its
obligations under the Property Documents as and when required by the
Property Documents.  Borrower will cause all other parties to the
Property Documents to pay and perform their obligations under the
Property Documents as and when required by the Property Documents.
Borrower will not amend or waive any provisions of the Property
Documents; exercise any options under the Property Documents; give any
approval required or permitted under the Property Documents that would
adversely affect the Property or Lender's rights and interests under
the Loan Documents; cancel or surrender any of the Property Documents;
or release or discharge or permit the release or discharge of any
party to or entity bound by any of the Property Documents, without, in
each instance, Lender's prior approval (excepting therefrom all
service contracts or other agreements entered into in the normal
course of business that are cancelable upon not more than 30 days
notice).   Lender shall be deemed to have approved the same if it has
not responded within 90 days of receipt of Borrower's written request
to Lender at the addresses set forth herein.  Borrower will deliver
promptly to Lender copies of any notices of default or of termination
that Borrower receives or delivers relating to any Property Document.

   Section 8.3.   ERISA Compliance.

        (a)  Borrower is not and will continue not to be an
"employee benefit plan" as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974 ("ERISA") that is subject to
Title I of ERISA or a "plan" as defined in Section 4975(e)(1) of the
Code that is subject to Section 4975 of the Code, and Borrower's
assets do not and will not constitute "plan assets" of one or more
such plans for purposes of Title I of ERISA or Section 4975 of the
Code.

        (b)  Borrower is not and will continue not to be a
"governmental plan" within the meaning of Section 3(32) of ERISA, and
transactions by or with Borrower are not and will not be subject to
any Laws regulating investments of and fiduciary obligations with
respect to governmental plans.

        (c)  Borrower will not engage in any transaction which
would cause any obligation or any action under the Loan Documents,
including Lender's exercise of the Remedies, to be a non-exempt
prohibited transaction under ERISA.

   Section 8.4.   Section 6045(e) Filing.  Borrower will supply or
cause to be supplied to Lender either (i) a copy of a completed Form
1099-B, Statement for Recipients of Proceeds from Real Estate, Broker
and Barter Exchange Proceeds prepared by Borrower's attorney or other
person responsible for the preparation of the form, together with a
certificate from the person who prepared the form to the effect that
the form has, to the best of the preparer's knowledge, been accurately
prepared and that the preparer will timely file the form; or (ii) a
certification from Borrower that the Loan is a refinancing of the
Property or is otherwise not required to be reported to the Internal
Revenue Service pursuant to Section 6045(e) of the Code.  Under no
circumstances will Lender or Lender's counsel be obligated to file the
reports or returns.


                            ARTICLE IX

                          ENVIRONMENTAL

   Section 9.1.   Environmental Representations and Warranties.

   Except as disclosed in the Environmental Report and to
Borrower's knowledge as of the date of this Deed of Trust:

             (i)  no Environmental Activity has occurred or is
                  occurring on the Property other than the use,
                  storage, and disposal of Hazardous Substances
                  which (A) is in the ordinary course of business
                  consistent with the Permitted Use; (B) is in
                  compliance with all Environmental Laws and (C)
                  has not resulted in Material Environmental
                  Contamination of the Property; and

             (ii) no Environmental Activity has occurred or is
                  occurring on any property in the vicinity of the
                  Property which has resulted in Material
                  Environmental Contamination of the Property.

   Section 9.2.   Environmental Covenants.

        (a)  Borrower will not cause or permit any Material
Environmental Contamination of the Property.

        (b)  No Environmental Activity will occur on the Property
other than the use, storage and disposal of Hazardous Substances which
(A) is in the ordinary course of business consistent with the
Permitted Use; (B) is in compliance with all Environmental Laws; and
(C) does not create a risk of Material Environmental Contamination of
the Property.

        (c)  Borrower will notify Lender promptly upon Borrower
becoming aware of (i) any Material Environmental Contamination of the
Property or (ii) any Environmental Activity with respect to the
Property that is not in accordance with the preceding subsection (b).
Borrower promptly will deliver to Lender copies of all documents
delivered to or received by Borrower regarding the matters set forth
in this subsection, including notices of Proceedings or investigations
concerning any Material Environmental Contamination of the Property or
Environmental Activity or concerning Borrower's status as a
potentially responsible party (as defined in the Environmental Laws).
Borrower's notification of Lender in accordance with the provisions of
this subsection will not be deemed to excuse any default under the
Loan Documents resulting from the violation of Environmental Laws or
the Material Environmental Contamination of the Property or
Environmental Activity that is the subject of the notice.  If Borrower
receives notice of a suspected violation of Environmental Laws in the
vicinity of the Property that poses a risk of Material Environmental
Contamination of the Property, Borrower will give Lender notice and
copies of any documents received relating to such suspected violation.


        (d)  From time to time at Lender's request, Borrower will
deliver to Lender any information known and documents available to
Borrower relating to the environmental condition of the Property.

        (e)  Lender may perform or engage an independent consultant
to perform an assessment of the environmental condition of the
Property and of Borrower's compliance with this Section on an annual
basis or at any time for reasonable cause or after an Event of
Default.  In connection with the assessment:  (i) Lender or consultant
may enter and inspect the Property and perform tests of the air, soil,
ground water and building materials; (ii) Borrower will cooperate and
use best efforts to cause tenants and other occupants of the Property
to cooperate with Lender or consultant; (iii) Borrower will receive a
copy of any final report prepared after the assessment, to be
delivered to Borrower not more than 10 days after Borrower requests a
copy and executes Lender's standard confidentiality and waiver of
liability letter; (iv) Borrower will accept custody of and arrange for
lawful disposal of any Hazardous Substances required to be disposed of
as a result of the tests; (v) Lender will not have liability to
Borrower with respect to the results of the assessment; (vi) Lender
will not be responsible for any damage to the Property resulting from
the tests described in this subsection and Borrower will look solely
to the consultants to reimburse Borrower for any such damage; and
(vii) Borrower acknowledges that the results of the assessment are to
be solely for Lender's benefit and Borrower may not rely on such
results for any purpose.  The consultant's assessment and reports will
be at Borrower's expense (i) if the reports disclose any material
adverse change in the environmental condition of the Property from
that disclosed in the Environmental Report or any environmental report
previously ordered by Lender; (ii) if Lender engaged the consultant
when Lender had reasonable cause to believe Borrower was not in
compliance with the terms of this Article and, after written notice
from Lender, Borrower failed to provide promptly reasonable evidence
that Borrower is in compliance; or (iii) if Lender engaged the
consultant or after the occurrence of an Event of Default.

        (f)  If Lender has reasonable cause to believe that there
is Environmental Activity at the Property, Lender may elect in its
sole discretion to direct the Trustee to reconvey any portion of the
Property affected by the Environmental Activity and Borrower will
accept the reconveyance.


                            ARTICLE X

                       FINANCIAL REPORTING

   Section 10.1.  Financial Reporting.

        (a)  Borrower will deliver to Lender within 90 days after
the close of each Fiscal Year an annual financial statement, certified
by the chief financial officer of Borrower (the "Annual Financial
Statement") for the Property for the Fiscal Year, which will include a
comparative balance sheet, a cash flow statement, an income and
expense statement, a detailed breakdown of all receipts and expenses
and all supporting schedules.   Upon request of Lender, Borrower will
also deliver to Lender within 90 days after the close of each Fiscal
Year the Form 10-K Annual Report to the Security and Exchange
Commission for Borrower.  The Annual Financial Statement for the
Property will be:

              (i) accompanied by an opinion of the CPA that, in
   all material respects, the Annual Financial Statement fairly
   presents the financial position of Borrower;

              (ii)     accompanied by an opinion of the chief
   financial officer of Borrower that, in all material respects,
   the Annual Financial Statement fairly presents the financial
   position of the Property; and

             (iii)     separate and distinct from any consolidated
   statement or report for Borrower or any other entity or any
   other property.

   Section 10.2.  Annual Budget.  Not less than 30 days prior to
the end of each Fiscal Year, Borrower will deliver to Lender, a
detailed comparative budget (the "Budget") for the Property for the
next succeeding Fiscal Year showing anticipated operating expenses,
Insurance Premiums, Impositions, leasing commissions, capital
improvement costs, tenant improvement costs and any other information
Lender requests.  Unless Lender notifies Borrower within 60 days after
Lender receives the Budget that Lender disputes information in the
Budget, the Budget as submitted will constitute the Budget for the
next succeeding Fiscal Year.  If Lender concludes in good faith that a
Budget needs material revision, Borrower will submit a revised Budget
to Lender, together with a detailed explanation of the revisions.
Borrower waives any defense or right of offset to the Obligations, and
any claim or counterclaim against Lender, arising out of any
discussions between Borrower and Lender regarding any Budget or
revised Budget delivered to Lender or the resolution of any
disagreements relating to a Budget or revised Budget including any
defense, right of offset, claim or counterclaim alleging in substance,
that by virtue of such delivery, discussions or resolution, Lender has
interfered with, influenced or controlled Borrower or the operations
at the Property.


                            ARTICLE XI

                   EXPENSES AND DUTY TO DEFEND

   Section 11.1.  Payment of Expenses.

        (a)  Borrower is obligated to pay all fees and expenses
(the "Expenses") incurred by Lender, Trustee or that are otherwise
payable in connection with the Loan, the Property or Borrower,
including attorneys' fees and expenses and any fees and expenses
relating to (i) the preparation, execution, acknowledgment, delivery
and recording or filing of the Loan Documents; (ii) any Proceeding or
other claim asserted against Lender; (iii) any inspection, assessment,
survey and test permitted under the Loan Documents; (iv) any
Destruction Event; (v) the preservation of Trustee's title, Lender's
security and the exercise of any rights or remedies available at Law,
in equity or otherwise; and (vi) the Leases and the Property
Documents.

        (b)  Borrower will pay the Expenses promptly on demand,
together with any applicable interest, premiums or penalties.  If
Lender pays any of the Expenses, Borrower will reimburse Lender the
amount paid by Lender promptly upon demand, together with interest on
such amount at the Fixed Interest Rate from the date Lender paid the
Expenses through the fifth day after demand.  Interest on such amount
will be at the Default Interest Rate from the sixth day after demand
through and including the date Borrower reimburses Lender.  The
Expenses together with any applicable interest, premiums or penalties
constitute a portion of the Debt secured by this Deed of Trust.

   Section 11.2.  Duty to Defend.  If Lender or any of its
trustees, officers, participants, employees or affiliates is a party
in any Proceeding relating to the Property, Borrower or the Loan,
Borrower will indemnify and hold harmless the party and will defend
the party with attorneys and other professionals retained by Borrower
and approved by Lender.  Lender may elect to engage its own attorneys
and other professionals, at Borrower's expense, to defend or to assist
in the defense of the party.  In all events, case strategy will be
determined by Lender if Lender so elects and no Proceeding will be
settled without Lender's prior approval which may be withheld in its
sole discretion.  Lender shall be deemed to have approved if it has
not yet responded within 30 days of receipt of Borrower's written
request to Lender at the addresses set forth herein, provided however,
Lender shall not incur any liability or costs relating to any
settlement pursuant to this Section 11.2.


                           ARTICLE XII

                TRANSFERS, LIENS AND ENCUMBRANCES

   Section 12.1.  Prohibitions on Transfers, Liens and
Encumbrances.

        (a)  Borrower acknowledges that in making the Loan, Lender
is relying to a material extent on the business expertise and net
worth of Borrower and Borrower's general partners, members or
principals and on the continuing interest that each of them has,
directly or indirectly, in the Property.  Accordingly, except as
specifically set forth in this Deed of Trust, Borrower (i) will not,
and will not permit its partners, members or principals to, effect a
Transfer without Lender's prior approval, which may be withheld in
Lender's sole discretion and (ii) will keep the Property free from all
liens and encumbrances other than the lien of this Deed of Trust and
the Permitted Exceptions.  Lender shall be deemed to have approved a
Transfer if it has not responded within 90 days of receipt of
Borrower's written request providing any information required by
Lender as to the proposed Transfer to the Lender at the addresses set
forth herein.  A "Transfer" is defined as any sale, grant, lease
(other than bona fide third-party space leases with tenants),
conveyance, assignment or other transfer of, or any encumbrance or
pledge against, the Property, any interest in the Property, any
interest of Borrower's partners, members or principals in the
Property, or any change in Borrower's composition, in each instance
whether voluntary or involuntary, direct or indirect, by operation of
law or otherwise and including the grant of an option or the execution
of an agreement relating to any of the foregoing matters.  A Transfer
shall not include the public trading of shares of the Borrower in
accordance with applicable law.

        (b)  Borrower represents, warrants and covenants that:

             (i)  Borrower is a publically traded Maryland
                  corporation whose five largest shareholders as
                  of March 1999 (the "Existing Shareholders") are:
                  Bed Preferred No. 1 Limited Partnership, Lend
                  Lease Rosen Real Estate Securities LLC, PRA
                  Securities Advisors LP, Heitman PRA Securities
                  Advisors LLC and Peter B. Bedford.

   Section 12.2.  Permitted Transfers.

        (a)  Notwithstanding the prohibitions regarding Transfers,
a Permitted Transfer (as defined in (b) below) may occur, provided
that the following conditions are met:

             (i)  at least 30 days prior to the proposed Permitted
                  Transfer, Borrower delivers to Lender a notice
                  that is sufficiently detailed to enable Lender
                  to determine that the proposed Permitted
                  Transfer complies with the terms of this
                  Section;

             (ii) there is no default under the Loan Documents
                  either when Lender receives the notice or when
                  the proposed Permitted Transfer occurs;

             (iii)     the proposed Permitted Transfer will not
                       result in a violation of any of the
                       covenants contained in the Section
                       entitled, "ERISA Compliance" and Borrower
                       will deliver to Lender such documentation
                       of compliance as Lender requests in its
                       sole discretion;

             (iv) when Lender receives the notice and when the
                  proposed Permitted Transfer occurs, the
                  transferee has never been an adverse party to
                  Lender in any litigation to which Lender was a
                  party; the transferee has never defaulted on a
                  loan from Lender or on any contract or other
                  agreement with Lender; the transferee has never
                  threatened litigation against Lender; and the
                  transferee is free from bankruptcy (for purposes
                  of this subsection "transferee" includes the
                  transferee's constituent entities at all levels
                  and "Lender" includes Lender's subsidiaries);

             (v)  Borrower pays all of Lender's expenses relating
                  to the Transfer including Lender's attorneys'
                  fees regardless of whether or not the proposed
                  Transfer is consummated; and

             (vi) Lender is satisfied that the Property will
                  continue to be managed by a manager satisfactory
                  to Lender.

        (b)  Upon compliance with the conditions set forth in the
preceding subsection, the following Transfers (the "Permitted
Transfers") may occur without Lender's prior consent as provided for
in Section 12.1:

             (i)  Transfers of shares in Borrower among the
             Existing Shareholders;

             (ii) Public trading of shares in Borrower in
             accordance with applicable law (for public trading of
             Borrower's shares, Borrower will not be required to
             notify Lender in the event of trading in its shares
             and Borrower shall not be required to reimburse the
             Lender for the review of trades); and
             (iii)     A one-time sale of the Property together
             with the Property as defined in the Deed of Trust,
             Assignment of Leases and Rents, Security Agreement and
             Fixture Filing (Bedford Portfolio #3 - Arizona
             Property) dated the date of this Deed of Trust,
             executed by Borrower and which also secures the Note
             ("Portfolio #3 Arizona Property") to one,
             unaffiliated, bona fide purchaser, provided that the
             following conditions are met:

                  (A)  the transferee has a net worth of at least
        $25,000,000;

                  (B)  the transferee is (i) an Institutional
        Investor or (ii) a developer or manager of first-class
        commercial real estate comparable to the Property and
        having a reputation in the industry at least equivalent to
        that of Borrower as of the date of this Deed of Trust;

                  (C)  the transferee has expressly assumed the
        obligations of Borrower under the Property Documents and
        under the Loan Documents; and

                  (D)  subsequent to the Transfer, the Property is
        managed by a property manager satisfactory to Lender; and

                  (E)  Borrower pays to Lender a transfer fee of
                  one-half percent
        (0.5%) of the outstanding Principal; provided, however, if,
        in a single transaction there is a Transfer to the same
        third-party approved by Lender, of the Property, and the
        Portfolio #3 Arizona Property  together with the properties
        described in the Deeds of Trust, Assignments of Leases and
        Rents, Security Agreements and Fixture Filings which secure
        the Promissory Note - Bedford Portfolio #1 in the original
        principal amount of $43,450,000 dated the date of this Deed
        of Trust executed by Borrower pursuant to Lender's Loan
        Application and Commitment Agreement #VR-5 for Lender's
        Mortgage Number M-000462300 ("Bedford Portfolio #1 Loan")
        and the properties described in the Deeds of Trust,
        Assignment of Leases and Rents, Security Agreements and
        Fixture Filings which secure the Promissory Note - Bedford
        Portfolio #2 in the original principal amount of
        $37,200,000 dated the date of this Deed of Trust executed
        by Borrower pursuant to Lender's Loan Application and
        Commitment Agreement #VR-7 for Lender's Mortgage Number M-
        000462600 ("Bedford Portfolio #2 Loan"), then Borrower pays
        to Lender a transfer fee of one-fourth percent (.25%) of
        the combined outstanding principal for the Loan, the
        Bedford Portfolio #1 Loan and the Bedford Portfolio #2
        Loan.

   Section 12.3.  Right to Contest Liens.  Borrower, at its own
expense, may contest the amount, validity or application, in whole or
in part, of any mechanic's, materialmen's or environmental liens in
which event Lender will refrain from exercising any of the Remedies,
provided that the following conditions are met:

             (i)  Borrower delivers to Lender notice of the
                  proposed contest not more than 30 days after the
                  lien is filed;

             (ii) the contest is by a Proceeding promptly
                  initiated and conducted in good faith and with
                  due diligence;

             (iii)     there is no Event of Default other than the
                       Event of Default arising from the filing of
                       the lien;

             (iv) the Proceeding suspends enforcement of
                  collection of the lien, imposition of criminal
                  or civil penalties and sale or forfeiture of the
                  Property and Lender will not be subject to any
                  civil suit;

             (v)  the Proceeding is permitted under and is
                  conducted in accordance with the Leases and the
                  Property Document;

             (vi) Borrower sets aside reserves or furnishes a bond
                  or other security satisfactory to Lender, in
                  either case in an amount sufficient to pay the
                  claim giving rise to the lien, together with all
                  interest and penalties, or Borrower pays the
                  contested lien under protest; and

             (vii)     with respect to an environmental lien,
                       Borrower is using best efforts to mitigate
                       or prevent any deterioration of the
                       Property resulting from the alleged
                       violation of any Environmental Laws or the
                       alleged Environmental Activity.

   Section 12.4.  Reconveyance Rights. Borrower may obtain the
reconveyance from Trustee of the property listed in Exhibit A-1 or
Exhibit A-2 and the property listed in Exhibit A-1, Exhibit A-2 or
Exhibit A-3 of the Deed of Trust, Assignment of Leases and Rents,
Security Agreement, and Fixture Filing (Bedford Portfolio #3 - Arizona
Property) dated the date  of this Deed of Trust and which also secures
the Note (each of the five described properties being referred to as a
"Release Parcel") at any time more than 24 months after the execution
of this Deed of Trust, provided that the following conditions are met
for each reconveyance:

             (i)  Borrower shall not be entitled to the
                  reconveyance of more than two Release Parcels;
                  one reconveyance of a Release Parcel shall be
                  solely for the purpose of a sale and a transfer
                  of the Release Parcel to a bona fide purchaser.
                  The reconveyance of any Release Parcel shall
                  occur simultaneously with the addition of one or
                  more new properties to secure the Loan, in
                  accordance with the provisions of Section 12.5
                  of this Deed of Trust and the securing of the
                  lien of the Lender's mortgage to encumber the
                  Substitution Property (as defined in Section
                  12.5);

             (ii)      not less than 60 days prior to the proposed
                       date of reconveyance, Borrower delivers to
                       Lender a notice setting forth (A) the
                       proposed date of the reconveyance, (B) the
                       name of the proposed transferee (if the
                       Release Parcel is adjacent to a property
                       still covered by this Deed of Trust); (C)
                       the intended use of the Release Parcel; and
                       (D) any other information reasonably
                       necessary for Lender to analyze the terms
                       of the reconveyance.   Not less than 30
                       days prior to the proposed reconveyance,
                       Borrower will deliver to Lender a copy of
                       the contract of sale or ground lease;

             (iii)     on the date Borrower delivers to Lender
                       notice of the proposed reconveyance and on
                       the date of the reconveyance, there is no
                       default under the Loan Documents on either
                       the notice date or the release date;

             (iv) Borrower delivers to Lender evidence
                  satisfactory to Lender that Borrower has
                  complied with any requirements of the Property
                  Documents or the Leases applicable to the
                  reconveyance, that the reconveyance does not
                  violate any of the provisions of the Property
                  Documents or the Leases and, to the extent
                  necessary to comply with the Property Documents
                  or the Leases, that the transferee has assumed
                  all of Borrower's obligations relating to the
                  Release Parcel under the Property Documents;

             (v)  Borrower delivers to Lender an endorsement to
                  Lender's title insurance policy satisfactory to
                  Lender that (A) extends the effective date of
                  the policy to the effective date of the
                  reconveyance; (B) confirms no change in the
                  priority of the lien of Lender's Deed of Trust
                  on the balance of the Property and on the
                  Portfolio #3 Arizona Property or in the amount
                  of coverage; (C) consents to the reconveyance;
                  (D) waives any defense resulting from the
                  reconveyance; (E) to the extent of the value of
                  the Release Parcel, waives any right of
                  subrogation; and (F) includes the Substitution
                  Property (as defined in Section 12.5) or in the
                  alternative a separate title insurance policy
                  that affects the foregoing;

             (vi) not less than 10 days prior to the date of the
                  reconveyance, Borrower delivers to Lender
                  consents to the reconveyance and substitution by
                  entities holding liens affecting the Property or
                  holding any other interest in the Property that
                  would be affected by the reconveyance and
                  substitution, including parties to any Property
                  Documents or to any Leases;

             (vii)     Borrower pays all expenses relating to the
                       reconveyance of the Release Parcel and the
                       addition of the Substitution Property,
                       including Lender's reasonable attorney's
                       fees if outside counsel is engaged by
                       Lender;

             (viii)    Borrower delivers to Lender copies of the
                       executed documents evidencing the transfer
                       of the Release Parcel as provided in
                       subsection (i) above;

             (ix) Borrower delivers to Lender any other
                  information, approvals and documents reasonably
                  required by Lender relating to the reconveyance
                  and the substitution;

             (x)  The remaining Property together with the
                  remaining Portfolio #3 Arizona Property together
                  with the Substitution Property must have a loan
                  to value ratio of no more than 70% and provide a
                  debt service coverage ratio of at least 1.50
                  times the debt service coverage (in a manner
                  reasonably determined by Lender); and

             (xi) Borrower must prepay 110% of the difference
                  between the Principal of the Loan allocable to
                  the Release Parcel that is being released and
                  70% of the appraised value for the Substitution
                  Property with a prepayment premium equal to the
                  Prepayment Percentage (as defined in the Note)
                  times the resulting difference.  For purposes of
                  this Subsection 12.4 (xi) only, if the
                  prepayment premium payable hereunder is
                  calculated on the Discounted Value (defined in
                  the Note), then the discount rate used to
                  calculate the prepayment premium shall equal the
                  Discount Rate (defined in the Note) plus 50
                  basis points.  Allocation of the original
                  outstanding principal balance will be determined
                  by Lender's appraisal at Closing.  The
                  additional 10% principal proceeds from a
                  prepayment pursuant to this Subsection 12.4(xi)
                  shall be applied at par to a pro-rata reduction
                  of the Principal balance of the Loan allocated
                  among the remaining Property, the remaining
                  Portfolio #3 Arizona Property and the
                  Substitution Property.

   Section 12.5.  Substitution.  In conjunction with the
reconveyance of a Release Parcel (described in Section 12.4),
Borrower shall provide to Lender, as security for the Loan, the
replacement and substitution of one or more new properties to secure
the Loan, as provided herein (the "Substitution Property").  In
connection with providing the Substitution Property, Borrower shall,
at Borrower's expense, execute and deliver to Lender loan documents,
including an additional deed of trust or mortgage, an assignment of
leases, a UCC-1 financing statement, and any other document, including
title policy, that Lender may require, in form and content acceptable
to Lender in Lender's sole discretion, necessary in order to add the
Substitution Property as collateral for the Loan.  Borrower shall also
provide for the Substitution Property all items required for the
Property by the Loan Application and Commitment Agreement dated
February 26, 1999 by and between Lender and Borrower for the Loan.
Lender shall have the sole and absolute discretion to either approve
or disapprove any proposed substitution, provided that such approval
shall not be unreasonably withheld so long as the Substitution
Property is (i) of comparable quality as the Release Parcel being
replaced, and (ii) Borrower demonstrates to Lender's satisfaction that
the Substitution Property has a fair market value of no less than 90%
of the fair market value of the Release Parcel immediately prior to
substitution.  Lender shall be deemed to have approved the proposed
substitution if it has not responded within 90 days of Borrower's
written request providing all information required by Lender as to the
proposed substitution at the addresses set forth herein.  In all
cases, Lender shall have 90 days to respond from the date of Lender's
receipt of the last information provided by Borrower.  Any
substitutions shall be on terms and conditions acceptable to Lender
and shall be subject to Lender's internal approval process.  The
Substitution Property together with the other properties comprising
the Property and the Portfolio #3 Arizona Property shall be subject to
a maximum loan-to-value ratio of 70%, have, at a minimum, a debt
service coverage ratio equal to 1.50, and a lease expiration profile
acceptable to Lender.  Furthermore, Lender will not approve a
substitution that would negatively impact the loan portfolio with
regard to its geographic diversity, credit risk, leasing pro formas,
tenant quality, lease expiration risk and other similar factors,
including the ability to legally cross-default and cross-collateralize
the Substitution Property with the remainder of the portfolio, to be
determined in Lender's sole discretion. Borrower shall provide Lender
with such information and documentation (including leases and other
property documents) as Lender shall deem necessary to make an informed
decision and properly evaluate the proposed substitution.  The
Substitution Property will be required to have a value of not less
than 90% of the fair market value of the Release Parcel to be
reconveyed.  Borrower shall be responsible for all costs and expenses,
including, without limitation, reasonable attorney's fees (if outside
counsel is engaged by Lender), incurred by Lender in connection with
any proposed transaction along with title insurance premium and
engineering, environmental and appraisal reports associated with such
substitution.


                           ARTICLE XIII

       ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS

   Section 13.1.  Further Assurances.

        (a)  Borrower will execute, acknowledge and deliver to
Lender or to any other entity Lender designates any additional or
replacement documents and perform any additional actions that Lender
determines are reasonably necessary to evidence, perfect or protect
Lender's first lien on and prior security interest in the Property or
to carry out the intent or facilitate the performance of the
provisions of the Loan Documents.

        (b)  Borrower appoints Lender as Borrower's attorney-in-
fact to perform, at Lender's election, any actions and to execute and
record any of the additional or replacement documents referred to in
this Section, in each instance only at Lender's election and only to
the extent Borrower has failed 3 days after written notice to Borrower
to comply with the terms of this Section.

   Section 13.2.  Estoppel Certificates.

        (a)  Within 10 days of Lender's request, but in no case
more often that twice in any 18 month period, except where Lender is
selling all or part of the Loan Borrower will deliver to Lender or to
any entity Lender designates a certificate certifying (i) the original
principal amount of the Note; (ii) the unpaid principal amount of the
Note; (iii) the Fixed Interest Rate; (iv) the amount of the then
current Debt Service Payments; (v) the Maturity Date; (vi) the date a
Debt Service Payment was last made; (vii) that, except as may be
disclosed in the statement, there are no defaults or events which,
with the passage of time or the giving of notice, would constitute an
Event of Default; and (viii) there are no offsets or defenses against
any portion of the Obligations except as may be disclosed in the
statement.

        (b)  If Lender requests, Borrower promptly will deliver to
Lender or to any entity Lender designates a certificate from each
party to any Property Document, certifying that the Property Document
is in full force and effect with no defaults or events which, with the
passage of time or the giving of notice, would constitute an event of
default under the Property Document and that there are no defenses or
offsets against the performance of its obligations under the Property
Document.

        (c)  If Lender requests, Borrower promptly will deliver to
Lender, or to any entity Lender designates, a certificate from each
tenant under a Lease then affecting the Property, certifying to any
facts regarding the Lease as Lender may require, including that the
Lease is in full force and effect with no defaults or events which,
with the passage of time or the giving of notice, would constitute an
event of default under the Lease by any party, that the rent has not
been paid more than one month in advance and that the tenant claims no
defense or offset against the performance of its obligations under the
Lease.


                           ARTICLE XIV

                      DEFAULTS AND REMEDIES

   Section 14.1.  Events of Default.  The term "Event of Default"
means the occurrence of any of the following events:

             (i)  if Borrower fails to pay any amount due, as and
                  when required, under any Loan Document and the
                  failure continues for a period of 5 days;

             (ii) if Borrower makes a general assignment for the
                  benefit of creditors or generally is not paying,
                  or is unable to pay, or admits in writing its
                  inability to pay, its debts as they become due;
                  or if Borrower or any other party commences any
                  Proceeding (A) relating to bankruptcy,
                  insolvency, reorganization, conservatorship or
                  relief of debtors, in each instance with respect
                  to Borrower; (B) seeking to have an order for
                  relief entered with respect to Borrower; (C)
                  seeking attachment, distraint or execution of a
                  judgment with respect to Borrower; (D) seeking
                  to adjudicate Borrower as bankrupt or insolvent;
                  (E) seeking reorganization, arrangement,
                  adjustment, winding-up, liquidation,
                  dissolution, composition or other relief with
                  respect to Borrower or Borrower's debts; or (F)
                  seeking appointment of a Receiver, trustee,
                  custodian, conservator or other similar official
                  for Borrower or for all or any substantial part
                  of Borrower's assets, provided that if the
                  Proceeding is commenced by a party other than
                  Borrower or any of Borrower's general partners
                  or members, Borrower will have 120 days to have
                  the Proceeding dismissed or discharged before an
                  Event of Default occurs;

             (iii)     if Borrower is in default beyond any
                       applicable grace and cure period under any
                       other mortgage, deed of trust, deed to
                       secure debt or other security agreement
                       encumbering the Property whether junior or
                       senior to the lien of this Deed of Trust;

             (iv) if Borrower is in default beyond any applicable
                  grace and cure period under the loan documents
                  described in the Deed of Trust, Assignment of
                  Leases and Rents, Security Agreement and Fixture
                  Filing (Bedford Portfolio #3 - Arizona Property)
                  evidencing and securing the Loan made by Lender
                  in favor of Borrower pursuant to the Note and
                  encumbering the Portfolio #3 - Arizona Property;

             (v)  if a Transfer occurs except in accordance with
                  the provisions of this Deed of Trust;

             (vi) if Borrower abandons the Property or ceases to
                  conduct its business at the Property;

             (vii)     if there is a default in the performance of
                       any other provision of any Loan Document or
                       if there is any inaccuracy or falsehood in
                       any representation or warranty contained in
                       any Loan Document which is not remedied
                       within 30 days after Borrower receives
                       notice thereof, provided that if the
                       default, inaccuracy or falsehood is of a
                       nature that it cannot be cured within the
                       30-day period and during that period
                       Borrower commences to cure, and thereafter
                       diligently continues to cure, the default,
                       inaccuracy or falsehood, then the 30-day
                       period will be extended for a reasonable
                       period not to exceed 120 days after the
                       notice to Borrower; or

             (vii)     if Borrower fails to provide Lender with
                       the Leasing Letter of Credit (defined
                       below) or if Borrower fails to renew the
                       Leasing Letter of Credit; the "Leasing
                       Letter of Credit" shall mean the Letter of
                       Credit in the amount of Two Million Seven
                       Hundred Thousand and No/100 Dollars
                       ($2,700,000) that Borrower is required to
                       provide and renew pursuant to Section 6.4
                       of the Deed of Trust, Assignment of Leases
                       and Rents, Security Agreement and Fixture
                       Filing Statement (Bedford Portfolio #1 -
                       Colorado Properties) dated the date of this
                       Deed of Trust, executed by Borrower for the
                       benefit of Lender pursuant to TIAA
                       Application #VR-5, M-000462300.

   Section 14.2.  Remedies.

        (a)  If an Event of Default occurs, Lender may take any of
the following actions (the "Remedies") without notice to Borrower:

             (i)  declare all or any portion of the Debt
                  immediately due and payable ("Acceleration");

             (ii) pay or perform any Obligation;

             (iii)     institute a Proceeding for the specific
                       performance of any Obligation;

             (iv) apply for and obtain the appointment of a
                  Receiver to be vested with the fullest powers
                  permitted by Law, without bond being required,
                  which appointment may be made ex parte, as a
                  matter of right and without regard to the value
                  of the Property, the amount of the Debt or the
                  solvency of Borrower or any other person liable
                  for the payment or performance of any portion of
                  the Obligations;

             (v)  directly, by its agents or representatives or
                  through a Receiver appointed by a court of
                  competent jurisdiction, enter on the Land and
                  Improvements, take possession of the Property,
                  dispossess Borrower and exercise Borrower's
                  rights with respect to the Property, either in
                  Borrower's name or otherwise;

             (vi) institute a Proceeding for the foreclosure of
                  this Deed of Trust or, if applicable, sell by
                  power of sale all or any portion of the
                  Property, in any court of competent
                  jurisdiction;

             (vii)     institute proceedings for the partial
                       foreclosure of this Deed of Trust for the
                       portion of the Debt then due and payable,
                       subject to the continuing lien of this Deed
                       of Trust for the balance of the Debt not
                       then due;

             (viii)    deliver to Trustee a declaration of default
                       and demand for sale and a notice of default
                       and election to cause Borrower's interest
                       in the Property to be sold, which notice
                       Trustee or Lender will file in the official
                       records of the county in which the Property
                       is located;

             (ix) exercise any and all rights and remedies granted
                  to a secured party under the Uniform Commercial
                  Code; and

             (x)  pursue any other right or remedy available to
                  Lender at Law, in equity or otherwise.

        (b)  If an Event of Default occurs, the license granted to
Borrower in the Loan Documents to collect Rents will terminate
automatically without any action required of Lender.

   Section 14.3.  General Provisions Pertaining to Remedies.

        (a)  The Remedies are cumulative and may be pursued by
Lender or Trustee concurrently or otherwise; at such time and in such
order as Lender or Trustee may determine in their sole discretion and
without presentment, demand, protest or further notice of any kind,
all of which are expressly waived by Borrower.

        (b)  The enumeration in the Loan Documents of specific
rights or powers will not be construed to limit any general rights or
powers or impair Lender's or Trustee's rights with respect to the
Remedies.

        (c)  If Lender or Trustee exercises any of the Remedies,
Lender will not be deemed a mortgagee-in-possession unless Lender has
elected affirmatively to be a mortgagee-in-possession.

        (d)  Lender and Trustee will not be liable for any act or
omission of Lender or Trustee in connection with the exercise of the
Remedies.

        (e)  Lender's and Trustee's right to exercise any Remedy
will not be impaired by any delay in exercising or failure to exercise
the Remedy and the delay or failure will not be construed as extending
any cure period or constitute a waiver of the default or Event of
Default.

        (f)  If an Event of Default occurs, Lender's payment or
performance or acceptance of payment or performance will not be deemed
a waiver or cure of the Event of Default.

        (g)  Lender's acceptance of partial payment or receipt of
Rents will not extend or affect any grace period or constitute a
waiver of a default or Event of Default or constitute a rescission of
Acceleration.

   Section 14.4.  Foreclosure by Power of Sale.

        (a)  Should Lender elect, following an Event of Default, to
foreclose this Deed of Trust by exercise of the power of sale
contained in this Deed of Trust, Lender will notify Trustee and
deposit, if required by Trustee, with Trustee this Deed of Trust, the
Note and such of the other Loan Documents as Trustee may require.

        (b)  Upon receipt of the notice from Lender, Trustee will
have recorded, published and delivered to Borrower any notice of
default as is then required by Law.  Trustee will, without demand on
Borrower after lapse of any time as may then be required by Law and
after notice of sale having been given as required by Law, sell the
Property at the time and place of sale fixed by it in the notice of
sale, either as a whole, or in separate lots or parcels or items and
in such order as Lender may direct Trustee so to do, at public auction
to the highest bidder as provided by Law.  Trustee will deliver to the
purchaser of the Property a good and sufficient deed or deeds
conveying the Property so sold, but without any covenant or warranty,
express or implied.  The recitals in the deed of any matter or fact
will be conclusive proof of the truthfulness of the recitals.  Any
person, including Borrower, Trustee or Lender may purchase at the
sale, and Borrower will warrant and defend the title of the purchaser.

        (c)  After deducting all costs, fees and expenses of Lender
and Trustee, including costs of evidence of title in connection with
sale, Lender will apply the proceeds of sale in the following
priority, to payment of (i) first, all sums expended under the terms
of the Loan Documents, not then repaid, with accrued interest at the
Default Rate; (ii) second, the Debt in such order as Lender
determines; and (iii) the remainder, if any to the person or persons
legally entitled to it.

        (d)  Trustee may postpone sale of all or any portion of the
Property as permitted by Law, and without further notice make such
sale at the time fixed by the last postponement, or may, in its
discretion, give a new notice of sale.

        (e)  A sale of less than the whole of the Property or any
defective or irregular sale made under this Deed of Trust will not
exhaust the power of sale provided for in this Deed of Trust; and
subsequent sales may be made until the Obligations have been
satisfied, or the entire Property sold, without defect or
irregularity.

   Section 14.5.  General Provisions Pertaining to Mortgagee-in-
Possession or Receiver.

        (a)  If an Event of Default occurs and without notice to
Borrower, any court of competent jurisdiction will, upon application
by Lender, appoint a Receiver as designated in the application and
issue an injunction prohibiting Borrower from interfering with the
Receiver, collecting Rents, disposing of any Rents or any part of the
Property, committing waste or doing any other act that will tend to
affect the preservation of the Leases, the Rents and the Property and
Borrower approves the appointment of the designated Receiver or any
other Receiver appointed by the court.  By execution of this Deed of
Trust, Borrower irrevocably consents to the appointment of a receiver
to be made ex parte and as a matter of right to Lender or Trustee,
either before or after sale of the Property, without further notice,
and without regard to the solvency or insolvency, at the time of
application for the Receiver, of the person or persons, if any, liable
for the payment of any portion of the Debt and the performance of any
portion of the Obligations and without regard to the value of the
Property or whether the Property is occupied as a homestead and
without bond being required of the applicant.

        (b)  The Receiver will be vested with the fullest powers
permitted by Law including all powers necessary or usual in similar
cases for the protection, possession and operation of the Property and
all the powers and duties of Lender as a mortgagee-in-possession as
provided in this Deed of Trust and may continue to exercise all the
usual powers and duties until the Receiver is discharged by the court.

        (c)  In addition to the Remedies and all other available
rights, Lender or the Receiver may take any of the following actions:

             (i)  take exclusive possession, custody and control
                  of the Property and manage the Property so as to
                  prevent waste;

             (ii) require Borrower to deliver to Lender or the
                  Receiver all keys, security deposits, operating
                  accounts, prepaid Rents, past due Rents, the
                  Books and Records and all original counterparts
                  of the Leases and the Property Documents;

             (iii)     collect, sue for and give receipts for the
                       Rents and, after paying all expenses of
                       collection, including reasonable
                       receiver's, broker's and attorney's fees,
                       apply the net collections to any portion of
                       the Debt selected by Lender in its sole
                       discretion,

             (iv) enter into, modify, extend, enforce, terminate,
                  renew or accept surrender of Leases and evict
                  tenants except that in the case of a Receiver,
                  such actions may be taken only with the written
                  consent of Lender as provided in this Deed of
                  Trust and in the Assignment;

             (v)  enter into, modify, extend, enforce, terminate
                  or renew Property Documents except that in the
                  case of a Receiver, such actions may be taken
                  only with the written consent of Lender as
                  provided in this Deed of Trust and in the
                  Assignment;

             (vi) appear in and defend any Proceeding brought in
                  connection with the Property and bring any
                  Proceeding to protect the Property as well as
                  Borrower's and Lender's respective interests in
                  the Property (unless any such Proceeding has
                  been assigned previously to Lender in the
                  Assignment, or if so assigned, Lender has not
                  expressly assigned such Proceeding to the
                  Receiver and consented to such appearance or
                  defense by Receiver); and

             (vii)     perform any act in the place of Borrower
                       that Lender or the Receiver deems necessary
                       (A) to preserve the value, marketability or
                       rentability of the Property; (B) to
                       increase the gross receipts from the
                       Property; or (C) otherwise to protect
                       Borrower's and Lender's respective
                       interests in the Property.

        (d)  Borrower appoints Lender as Borrower's attorney-in-
fact, at Lender's election, to perform any actions and to execute and
record any instruments necessary to effectuate the actions described
in this Section, in each instance only at Lender's election and only
to the extent Borrower has failed to comply with the provisions of
this Section.

   Section 14.6.  General Provisions Pertaining to Foreclosures
and the Power of Sale.  The following provisions will apply to any
Proceeding to foreclose and to any sale of the Property by power of
sale or pursuant to a judgment of foreclosure and sale:

             (i)  Lender's or Trustee's right to institute a
                  Proceeding to foreclose or to sell by power of
                  sale will not be exhausted by a Proceeding or a
                  sale that is defective or not completed or by
                  conducting separate sales of portions of the
                  Property;

             (ii) any sale may be postponed or adjourned by Lender
                  by public announcement at the time and place
                  appointed for the sale without further notice;

             (iii)     with respect to sale pursuant to a judgment
                       of foreclosure and sale, the Property may
                       be sold as an entirety or in parcels, at
                       one or more sales, at the time and place,
                       on terms and in the order that Lender deems
                       expedient in its sole discretion;

             (iv) if a portion of the Property is sold pursuant to
                  this Article, the Loan Documents will remain in
                  full force and effect with respect to any
                  unmatured portion of the Debt and this Deed of
                  Trust will continue as a valid and enforceable
                  first lien on and security interest in the
                  remaining portion of the Property, subject only
                  to the Permitted Exceptions, without loss of
                  priority and without impairment of any of
                  Lender's or Trustee's rights and remedies with
                  respect to the unmatured portion of the Debt;

             (v)  Lender may bid for and acquire the Property at a
                  sale and, in lieu of paying cash, may credit the
                  amount of Lender's bid against any portion of
                  the Debt selected by Lender in its sole
                  discretion after deducting from the amount of
                  Lender's bid the expenses of the sale, costs of
                  enforcement and other amounts that Lender is
                  authorized to deduct at Law, in equity or
                  otherwise; and

             (vi) Lender's receipt of the proceeds of a sale will
                  be sufficient consideration for the portion of
                  the Property sold and Lender will apply the
                  proceeds as set forth in this Deed of Trust.

   Section 14.7.  Application of Proceeds.  Lender may apply the
proceeds of any sale of the Property pursuant to a judgment of
foreclosure and sale and any other amounts collected by Lender in
connection with the exercise of the Remedies to payment of the Debt in
such priority and proportions as Lender may determine in its sole
discretion or in such priority and proportions as required by Law.

   Section 14.8.  Power of Attorney.  Borrower appoints Lender as
Borrower's attorney-in-fact to perform any actions necessary and
incidental to exercising the Remedies.

   Section 14.9.  Tenant at Sufferance.  If Lender, Trustee or a
Receiver enters the Property in the exercise of the Remedies and
Borrower is allowed to remain in occupancy of the Property, Borrower
will pay to Lender, Trustee or the Receiver, as the case may be, in
advance, a reasonable rent for the Property occupied by Borrower.  If
Borrower fails to pay the rent, Borrower may be dispossessed by the
usual Proceedings available against defaulting tenants.


                            ARTICLE XV

                     LIMITATION OF LIABILITY

   Section 15.1.  Limitation of Liability.

        (a)  Notwithstanding any provision in the Loan Documents to
the contrary, except as set forth in subsections (b) and (c), if
Lender seeks to enforce the collection of the Debt, Lender will
foreclose this Deed of Trust instead of instituting suit on the Note.
If a lesser sum is realized from a foreclosure of this Deed of Trust
and sale of the Property than the then outstanding Debt, Lender will
not institute any Proceeding against Borrower or Borrower's general
partners, if any, for or on account of the deficiency, except as set
forth in subsections (b) and (c).

        (b)  The limitation of liability in subsection (a) will not
affect or impair (i) the lien of this Deed of Trust or Lender's other
rights and Remedies under the Loan Documents, including Lender's right
as mortgagee or secured party to commence an action to foreclose any
lien or security interest Lender has under the Loan Documents; (ii)
the validity of the Loan Documents or the Obligations; (iii) Lender's
rights under any Loan Document that are not expressly non-recourse; or
(iv) Lender's right to present and collect on any letter of credit or
other credit enhancement document held by Lender in connection with
the Obligations.

        (c)  The following are excluded and excepted from the
limitation of liability in subsection (a) and Lender may recover
personally against Borrower and its general partners, if any, for the
following:

             (i)  all losses suffered and liabilities and expenses
                  incurred by Lender relating to any fraud or
                  intentional misrepresentation or omission by
                  Borrower or any of Borrower's partners, members,
                  officers, directors, shareholders or principals
                  in connection with (A) the performance of any of
                  the conditions to Lender making the Loan; (B)
                  any inducements to Lender to make the Loan; (C)
                  the execution and delivery of the Loan
                  Documents; (D) any certificates, representations
                  or warranties given in connection with the Loan
                  (including, but not limited to, Estoppel
                  Certificates executed by Borrower and
                  representations made by Borrower related to
                  Property); or (E) Borrower's performance of the
                  Obligations;

             (ii) all Rents derived from the Property after a
                  default under the Loan Documents which default
                  is a basis of a Proceeding by Lender to enforce
                  collection of the Debt and all moneys that, on
                  the date such a default occurs, are on deposit
                  in one or more accounts used by or on behalf of
                  Borrower relating to the operation of the
                  Property, except to the extent properly applied
                  to payment of Debt Service Payments,
                  Impositions, Insurance Premiums and any
                  reasonable and customary expenses incurred by
                  Borrower in the operation, maintenance and
                  leasing of the Property or delivered to Lender;

             (iii)     the cost of remediation of any
                       Environmental Activity affecting the
                       Property, any diminution in the value of
                       the Property arising from any Environmental
                       Activity affecting the Property and any
                       other losses suffered and liabilities and
                       expenses incurred by Lender relating to a
                       default under the Article entitled
                       "Environmental";

             (iv) all security deposits collected by Borrower or
                  any of Borrower's predecessors and not refunded
                  to Tenants in accordance with their respective
                  Leases, applied in accordance with the Leases or
                  Law or delivered to Lender, and all advance
                  rents collected by Borrower or any of Borrower's
                  predecessors and not applied in accordance with
                  the Leases or delivered to Lender;

             (v)  the replacement cost of any Fixtures or Personal
                  Property removed from the Property after a
                  default occurs;

             (vi) all losses suffered and liabilities and expenses
                  incurred by Lender relating to any acts or
                  omissions by Borrower that result in waste
                  (including economic and non-physical waste) on
                  the Property;

             (vii)     all protective advances and other payments
                       made by Lender pursuant to express
                       provisions of the Loan Documents to protect
                       Lender's security interest in the Property
                       or to protect the assignment of the
                       property described in and effected by the
                       Assignment, but only to the extent that the
                       Rents would have been sufficient to permit
                       Borrower to make the payment and Borrower
                       failed to do so;

             (viii)    all mechanics' or similar liens relating to
                       work performed on or materials delivered to
                       the Property prior to a foreclosure sale of
                       the Property, but only to the extent Lender
                       had advanced funds to pay for the work or
                       materials;

             (ix) all Proceeds that are not applied in accordance
                  with this Deed of Trust or not paid to Lender as
                  required under this Deed of Trust;

             (x)  all losses suffered and liabilities and expenses
                  incurred by Lender relating to a Transfer that
                  is not permitted under the Section entitled
                  "Permitted Transfers";

             (xi) all losses suffered and liabilities and expenses
                  incurred by Lender relating to forfeiture or
                  threatened forfeiture of the Property to the
                  Government; and

             (xii)     all losses suffered and liabilities and
                       expenses incurred by Lender relating to any
                       default by Borrower under any of the
                       provisions of this Deed of Trust relating
                       to ERISA including the prohibition on any
                       Transfer that results in a violation of
                       ERISA.

        (d)  Nothing under subsection (a) above will be deemed to
be a waiver of any right which Lender may have under Section 506(a),
506(b), 1111(b) or any other provisions of the Bankruptcy Code or
under any other Law relating to bankruptcy or insolvency to file a
claim for the full amount of the Debt or to require that all
collateral will continue to secure all of the Obligations in
accordance with the Loan Documents.


                           ARTICLE XVI

                             WAIVERS

   Section 16.1.  WAIVER OF STATUTE OF LIMITATIONS.  BORROWER
WAIVES THE RIGHT TO CLAIM ANY STATUTE OF LIMITATIONS AS A DEFENSE TO
BORROWER'S PAYMENT AND PERFORMANCE OF THE OBLIGATIONS.

   Section 16.2.  WAIVER OF NOTICE.  BORROWER WAIVES THE RIGHT TO
RECEIVE ANY NOTICE FROM LENDER OR TRUSTEE WITH RESPECT TO THE LOAN
DOCUMENTS EXCEPT FOR THOSE NOTICES THAT LENDER OR TRUSTEE IS EXPRESSLY
REQUIRED TO DELIVER PURSUANT TO THE LOAN DOCUMENTS.

   Section 16.3.  WAIVER OF MARSHALLING AND OTHER MATTERS.
BORROWER WAIVES THE BENEFIT OF ANY RIGHTS OF MARSHALLING OR ANY OTHER
RIGHT TO DIRECT THE ORDER IN WHICH ANY OF THE PROPERTY WILL BE (i)
SOLD; OR (ii) MADE AVAILABLE TO ANY ENTITY IF THE PROPERTY IS SOLD BY
POWER OF SALE OR PURSUANT TO A JUDGMENT OF FORECLOSURE AND SALE.
BORROWER ALSO WAIVES THE BENEFIT OF ANY LAWS RELATING TO APPRAISEMENT,
VALUATION, STAY, EXTENSION, REINSTATEMENT, MORATORIUM, HOMESTEAD AND
EXEMPTION RIGHTS OR A SALE IN INVERSE ORDER OF ALIENATION.

   Section 16.4.  WAIVER OF TRIAL BY JURY.  BORROWER WAIVES TRIAL
BY JURY IN ANY PROCEEDING BROUGHT BY, OR AGAINST, OR COUNTERCLAIM OR
CROSS-COMPLAINT ASSERTED BY OR AGAINST, LENDER OR TRUSTEE RELATING TO
THE LOAN, THE PROPERTY DOCUMENTS OR THE LEASES.

   Section 16.5.  WAIVER OF COUNTERCLAIM.  BORROWER WAIVES THE
RIGHT TO ASSERT A COUNTERCLAIM OR CROSS-COMPLAINT, OTHER THAN
COMPULSORY OR MANDATORY COUNTERCLAIMS OR CROSS-COMPLAINTS, IN ANY
PROCEEDING LENDER OR TRUSTEE BRINGS AGAINST BORROWER RELATING TO THE
LOAN, INCLUDING ANY PROCEEDING TO ENFORCE REMEDIES.

   Section 16.6.  WAIVER OF JUDICIAL NOTICE AND HEARING.  BORROWER
WAIVES ANY RIGHT BORROWER MAY HAVE UNDER LAW TO NOTICE OR TO A
JUDICIAL HEARING PRIOR TO THE EXERCISE OF ANY RIGHT OR REMEDY PROVIDED
BY THE LOAN DOCUMENTS TO LENDER AND BORROWER WAIVES THE RIGHTS, IF
ANY, TO SET ASIDE OR INVALIDATE ANY SALE DULY CONSUMMATED IN
ACCORDANCE WITH THE PROVISIONS OF THE LOAN DOCUMENTS ON THE GROUND (IF
SUCH BE THE CASE) THAT THE SALE WAS CONSUMMATED WITHOUT A PRIOR
JUDICIAL HEARING.

   Section 16.7.  WAIVER OF SUBROGATION.  BORROWER WAIVES ALL
RIGHTS OF SUBROGATION TO LENDER'S RIGHTS OR CLAIMS RELATED TO OR
AFFECTING THE PROPERTY OR ANY OTHER SECURITY FOR THE LOAN UNTIL THE
LOAN IS PAID IN FULL AND ALL FUNDING OBLIGATIONS UNDER THE LOAN
DOCUMENTS HAVE BEEN TERMINATED.

   Section 16.8.  GENERAL WAIVER.  BORROWER ACKNOWLEDGES THAT (i)
BORROWER AND BORROWER'S PARTNERS, MEMBERS OR PRINCIPALS, AS THE CASE
MAY BE, ARE KNOWLEDGEABLE BORROWERS OF COMMERCIAL FUNDS AND
EXPERIENCED REAL ESTATE DEVELOPERS OR INVESTORS WHO UNDERSTAND FULLY
THE EFFECT OF THE ABOVE PROVISIONS; (ii) LENDER WOULD NOT MAKE THE
LOAN WITHOUT THE PROVISIONS OF THIS ARTICLE; (iii) THE LOAN IS A
COMMERCIAL OR BUSINESS LOAN UNDER THE LAWS OF THE STATE OR
COMMONWEALTH WHERE THE PROPERTY IS LOCATED NEGOTIATED BY LENDER AND
BORROWER AND THEIR RESPECTIVE ATTORNEYS AT ARMS LENGTH; AND (iv) ALL
WAIVERS BY BORROWER IN THIS ARTICLE HAVE BEEN MADE VOLUNTARILY,
INTELLIGENTLY AND KNOWINGLY, AFTER BORROWER FIRST HAS BEEN  INFORMED
BY COUNSEL OF BORROWER'S OWN CHOOSING AS TO POSSIBLE ALTERNATIVE
RIGHTS, AND HAVE BEEN MADE AS AN INTENTIONAL RELINQUISHMENT AND
ABANDONMENT OF A KNOWN RIGHT AND PRIVILEGE. THE FOREGOING
ACKNOWLEDGMENT IS MADE WITH THE INTENT THAT LENDER AND ANY SUBSEQUENT
HOLDER OF THE NOTE WILL RELY ON THE ACKNOWLEDGMENT.


                           ARTICLE XVII

                             NOTICES


   Section 17.1.  Notices.  All acceptances, approvals, consents,
demands, notices, requests, waivers and other communications (the
"Notices") required or permitted to be given under the Loan Documents
must be in writing and (a) delivered personally by a process server
providing a sworn declaration evidencing the date of service, the
individual served, and the address where the service was made; (b)
sent by certified mail, return receipt requested; or (c) delivered by
nationally recognized overnight delivery service that provides
evidence of the date of delivery, with all charges prepaid (for next
morning delivery if sent by overnight delivery service), addressed to
the appropriate party at its address listed below:


If to Lender:          Teachers Insurance and Annuity
             Association of America
             730 Third Avenue
             New York, New York  10017
             Attention:  Director Portfolio
             Management
             Mortgage and Real Estate
             Application #VR-6
             Mortgage #000462400

with a courtesy
copy to:          Teachers Insurance and Annuity
             Association of America
             730 Third Avenue
             New York, New York  10017
             Attention:  Vice President and Chief
             Counsel - Mortgage and Real Estate Law
             Application #VR-6
             Mortgage #000462400

If to Borrower:
             Bedford Property Investors, Inc.
             270 Lafayette Circle
             Lafayette, California 94549
             Attn:  Ms. Hanh Kihara
             Chief Financial Officer and Senior Vice President
             Application #VR-6
             Mortgage #000462400


with a courtesy copy to:
             Sherman & Sterling
             555 California Street, 20th Floor
             San Francisco, California 94104
             Attn:     Emery Mitchell, Esq.
                  Barbara J.S. McKee, Esq.
             Application #VR-6
             Mortgage #000462400

If to Trustee:         First American Title Insurance Company
             1850 Mt. Diablo Boulevard, Suite 300
             Walnut Creek, California 94596
             Attention: Pamela Nicolini

Lender and Borrower each may change from time to time the address to
which Notices must be sent, by notice given in accordance with the
provisions of this Section.  All Notices given in accordance with the
provisions of this Section will be deemed to have been received on the
earliest of (i) actual receipt; (ii) Borrower's rejection of delivery;
or (iii) 3 Business Days after having been deposited in any mail
depository regularly maintained by the United States postal service,
if sent by certified mail, or 1 Business Day after having been
deposited with a nationally recognized overnight delivery service, if
sent by overnight delivery or on the date of personal service, if
served by a process server.

   Section 17.2.  Change in Borrower's Name or Place of Business.
Borrower will immediately notify Lender in writing of any change in
Borrower's name or the place of business set forth in the beginning of
this Deed of Trust.


                          ARTICLE XVIII

                          MISCELLANEOUS


   Section 18.1.  Applicable Law.  The Loan Documents shall be
governed by and will be construed in accordance with the Laws of the
State of New York, without regard to conflicts of laws principles,
except as set forth below.  The parties acknowledge that the State of
New York is the principal place of business of Lender and has a
substantial relationship to the underlying transactions relating to
the Loan and to parties involved.  Notwithstanding the foregoing,
Borrower and Lender agree that the laws of the State in which the
Property is located shall govern the creation and perfection of liens
on the Property and the procedures for enforcing remedies directly
related to the Property including the appointment of trustees, the
foreclosure or foreclosure sale of the Property, the appointment of
receiver and any other remedy with respect to the Property.

   Section 18.2.  Usury Limitations.   Borrower and Lender intend
to comply with all Laws with respect to the charging and receiving of
interest.  Any amounts charged or received by Lender for the use or
forbearance of the Principal to the extent permitted by Law, will be
amortized and spread throughout the Term until payment in full so that
the rate or amount of interest charged or received by Lender on
account of the Principal does not exceed the Maximum Interest Rate.
If any amount charged or received under the Loan Documents that is
deemed to be interest is determined to be in excess of the amount
permitted to be charged or received at the Maximum Interest Rate, the
excess will be deemed to be a prepayment of Principal when paid,
without premium, and any portion of the excess not capable of being so
applied will be refunded to Borrower.  If during the Term the Maximum
Interest Rate, if any, is eliminated, then for purposes of the Loan,
there will be no Maximum Interest Rate.

   Section 18.3.  Lender's Discretion.  Wherever under the Loan
Documents any matter is required to be satisfactory to Lender, Lender
has the right to approve or determine any matter or Lender has an
election, Lender's approval, determination or election will be made in
Lender's reasonable discretion unless expressly provided to the
contrary.

   Section 18.4.  Unenforceable Provisions.  If any provision in
the Loan Documents is found to be illegal or unenforceable or would
operate to invalidate any of the Loan Documents, then the provision
will be deemed expunged and the Loan Documents will be construed as
though the provision was not contained in the Loan Documents and the
remainder of the Loan Documents will remain in full force and effect.

   Section 18.5.  Survival of Borrower's Obligations.  Borrower's
representations, warranties and covenants contained in the Loan
Documents will continue in full force and effect and survive (i)
satisfaction of the Obligations; (ii) reconveyance of the lien of the
Property by Trustee; (iii) assignment or other transfer of all or any
portion of Lender's interest in the Loan Documents or the Property;
(iv) Lender's or Trustee's exercise of any of the Remedies or any of
Lender's or Trustee's other rights under the Loan Documents; (v) a
Transfer; (vi) amendments to the Loan Documents; and (vii) any other
act or omission that might otherwise be construed as a release or
discharge of Borrower.

   Section 18.6.  Relationship Between Borrower and Lender; No
Third Party Beneficiaries.
        (a)  Lender is not a partner of or joint venturer with
Borrower or any other entity as a result of the Loan or Lender's
rights under the Loan Documents; the relationship between Lender and
Borrower is strictly that of creditor and debtor.  Each Loan Document
is an agreement between the parties to that Loan Document for the
mutual benefit of the parties and no entities other than the parties
to that Loan Document will be a third party beneficiary or will have
any claim against Lender or Borrower by virtue of the Loan Document.
As between Lender and Borrower, any actions taken by Lender under the
Loan Documents will be taken for Lender's protection only, and Lender
has not and will not be deemed to have assumed any responsibility to
Borrower or to any other entity by virtue of Lender's actions.

        (b)  All conditions to Lender's performance of its
obligations under the Loan Documents are imposed solely for the
benefit of Lender.  No entity other than Lender will have standing to
require satisfaction of the conditions in accordance with their
provisions or will be entitled to assume that Lender will refuse to
perform its obligations in the absence of strict compliance with any
of the conditions.

   Section 18.7.  Partial Reconveyances or Releases, Extensions,
Waivers.  Lender may: (i) permit the reconveyance of any part of the
Property or release any entity obligated for the Obligations; (ii)
extend the time for payment or performance of any of the Obligations
or otherwise amend the provisions for payment or performance by
agreement with any entity that is obligated for the Obligations or
that has an interest in the Property; (iii) accept additional security
for the payment and performance of the Obligations; and (iv) waive any
entity's performance of an Obligation, release any entity or
individual now or in the future liable for the performance of the
Obligation or waive the exercise of any Remedy or option.  Lender may
exercise any of the foregoing rights without notice, without regard to
the amount of any consideration given, without affecting the priority
of this Deed of Trust, without releasing any entity not specifically
released from its obligations under the Loan Documents, without
releasing any guarantor(s) or surety(ies) of the Obligations, without
effecting a novation of the Loan Documents and, with respect to a
waiver, without waiving future performance of the Obligation or
exercise of the Remedy waived.

   Section 18.8.  Service of Process.  Borrower irrevocably
consents to service of process by registered or certified mail,
postage prepaid, return receipt requested, to Borrower at its address
set forth in the Article entitled "Notices" or any other address to
which such address has been changed as permitted hereunder.

   Section 18.9.  Entire Agreement.  Oral agreements or
commitments between Borrower and Lender to lend money, to extend
credit or to forbear from enforcing repayment of a debt, including
promises to extend or renew the debt, are not enforceable.  Any
agreements among Borrower, Lender and Trustee relating to the Loan are
contained in the Loan Documents, which contain the complete and
exclusive statement of the agreements among Borrower, Lender and
Trustee, except as Borrower, Lender and, if applicable, Trustee may
later agree in writing to amend the Loan Documents.  The language of
each Loan Document will be construed as a whole according to its fair
meaning and will not be construed against the draftsman.

   Section 18.10.  No Oral Amendment.  The Loan Documents may not
be amended, waived or terminated orally or by any act or omission made
individually by Borrower, Lender or Trustee but may be amended, waived
or terminated only by a written document signed by the party against
which enforcement of the amendment, waiver or termination is sought.

   Section 18.11. Severability.  The invalidity, illegality or
unenforceability of any provision of any of the Loan Documents will
not affect any other provisions of the Loan Documents, which will be
construed as if the invalid, illegal or unenforceable provision never
had been included.

   Section 18.12. Covenants Run with the Land.  Subject to the
restrictions on transfer contained in the Article entitled "TRANSFERS,
LIENS AND ENCUMBRANCES", all of the covenants of this Deed of Trust
and the Assignment run with the Land, will bind all parties hereto and
all tenants and subtenants of the Land or the Improvements and their
respective heirs, executors, administrators, successors and assigns,
and all occupants and subsequent owners of the Property, and will
inure to the benefit of Lender and all subsequent holders of the Note
and this Deed of Trust.

   Section 18.13. Time of the Essence.  Time is of the essence
with respect to Borrower's payment and performance of the Obligations.

   Section 18.14. Subrogation.  If the Principal or any other
amount advanced by Lender is used directly or indirectly to pay off,
discharge or satisfy all or any part of an encumbrance affecting the
Property, then Lender is subrogated to the encumbrance and to any
security held by the holder of the encumbrance, all of which will
continue in full force and effect in favor of Lender as additional
security for the Obligations.

   Section 18.15.  Joint and Several Liability.  If Borrower
consists of more than one person or entity, the obligations and
liabilities of each such person or entity under this Deed of Trust are
joint and several.

   Section 18.16. Successors and Assigns.  The Loan Documents bind
the parties to the Loan Documents and their respective successors,
assigns, heirs, administrators, executors, agents and representatives
and inure to the benefit of Lender and its successors, assigns, heirs,
administrators, executors, agents and representatives and to the
extent applicable inure to the benefit of Trustee and its successors,
assigns, heirs, administrators, executors, agents and representatives.

   Section 18.17.  Duplicates and Counterparts.  Duplicate
counterparts of any of the Loan Documents, other than the Note, may be
executed and together will constitute a single original document.


                           ARTICLE XIX

                        TRUSTEE PROVISIONS

   Section 19.1   Acceptance of Trust.

        (a)  Trustee accepts this Trust upon recordation of this
Deed of Trust as provided by Law.  Except as provided by Law, Trustee
is not obligated to notify any party of a pending sale under this Deed
of Trust or of a Proceeding in which Borrower, Lender or Trustee is a
party.

        (b)  Lender may from time to time unilaterally substitute a
successor to Trustee pursuant to a recordable instrument that complies
with Law for substitution of Trustees.  The recorded substitution will
be conclusive proof of proper substitution of trustee who will,
without conveyance from predecessor trustee, succeed to all of the
predecessor trustee's title, estate, rights, powers and duties.

   IN WITNESS WHEREOF, Borrower has executed and delivered this
Deed of Trust as of the date first set forth above.


                            BEDFORD PROPERTY INVESTORS, INC.,
                            a Maryland corporation


                            By: /s/ Hanh Kihara

                                 Hanh Kihara, Senior Vice President

                         ACKNOWLEDGMENTS




STATE OF               )
                  )    SS:
COUNTY OF              )


On ____________________, before me, the undersigned, a Notary Public
in and for said State, personally appeared _____________________,
personally 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 executed the same in his
authorized capacity, and that by his signature on the instrument the
person, or the entity upon behalf of which the person acted, executed
the instrument.

WITNESS my hand and official seal.

Signature:

______________________________
Name (Typed or Printed)



STATE OF               )
                  )    SS:
COUNTY OF              )


On ____________________, before me, the undersigned, a Notary Public
in and for said State, personally appeared _____________________,
personally 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 executed the same in his
authorized capacity, and that by his signature on the instrument the
person, or the entity upon behalf of which the person acted, executed
the instrument.

WITNESS my hand and official seal.

Signature:

______________________________
Name (Typed or Printed)

                            Exhibit A

                        LEGAL DESCRIPTION

                           Exhibit A-1

                 Legal Description of Property #1
   Fujitsu Building, 598 Gibraltar Drive, Milpitas, California

                           Exhibit A-2

                 Legal Description of Property #2

           201-215 Fourier Avenue, Fremont, California

                            Exhibit B

                           DEFINITIONS


"Acceleration" is defined in Section 14.2(a)(i).

"Accumulations" is defined in Section 2.1(xii).

"Accumulations Depositary" is defined in Section 6.2(a).

"Additional Funds" is defined in Section 7.4(v).

"Annual Financial Statement" is defined in Section 10.1(a).

"Assessments" is defined as all assessments now or hereafter levied,
assessed or imposed against the Property.

"Assignment" is defined as the Assignment of Leases and Rents dated of
even date with this Deed of Trust made by Borrower for the benefit of
Lender.

"Bankruptcy Code" means Title 11 of the United States Code.

"Books and Records" is defined in Section 2.1(xi).

"Borrower" is defined in the introductory paragraph.

"Budget" is defined in Section 10.2.

"Business Days" is defined as any day on which commercial banks are
not authorized or required by Law to close in New York, New York.

"Casualty" is defined as damage to or destruction of the Property by
fire or other casualty.

"Code" is defined as the Internal Revenue Code of 1986, as amended and
the regulations promulgated thereunder.

"Condemnation" is defined as the permanent or temporary taking of all
or any portion of the Property, or any interest therein or right
accruing thereto, by the exercise of the right of eminent domain
(including any transfer in lieu of or in anticipation of the exercise
of the right), inverse condemnation or any similar injury or damage to
or decrease in the value of the Property, including severance and
change in the grade of any streets

"Condemnation Awards" is defined in Section 2.1(viii).

"Condemnation Proceeding" is defined as a Proceeding that could result
in a Condemnation.

"CPA" is defined as an independent certified public accountant
satisfactory to Lender.

"Debt" is defined in Section 3.1.

"Debt Service Payments" is defined as the monthly installments of
principal and interest payable by Borrower to Lender as set forth in
the Note.

"Deed of Trust" is defined as this Deed of Trust, Assignment of Leases
and Rents, Security Agreement and Fixture Filing Statement.

"Default Interest Rate" is defined as the lower of 5% per annum over
the Fixed Interest Rate or the Maximum Interest Rate, if any.

"Destruction Event" is defined in Section 7.4.

"Environmental Activity" is defined as any actual, suspected or
threatened abatement, cleanup, disposal, generation, handling,
manufacture, possession, release, remediation, removal, storage,
transportation, treatment or use of any Hazardous Substances.  The
actual, suspected or threatened presence of any Hazardous Substances,
or the actual, suspected or threatened noncompliance with any
Environmental Laws, will be deemed Environmental Activity.

"Environmental Laws" is defined as all Laws pertaining to health,
safety, protection of the environment, natural resources,
conservation, wildlife, waste management, Environmental Activities and
pollution.

"Environmental Report" is defined as the report prepared by ICF
Kaiser, dated April 28, 1999 as to the Property described in Exhibit
A-2 and dated April 27, 1999 as to the Property described in Exhibit
A-1, all as amended.

"ERISA" is defined in Section 8.3(a).

"Event of Default" is defined in Section 14.1.

"Existing Shareholder" is defined in Section 12.1(b).

"Expenses" is defined in Section 11.1(a).

"Financial Books and Records" is defined as detailed accounts of the
income and expenses of the Property and of Borrower and all other
data, records and information that either are specifically referred to
in the Article entitled "FINANCIAL REPORTING" or are necessary to the
preparation of any of the statements, reports or certificates required
under such Article and includes all supporting schedules prepared or
used by the CPA in auditing the Annual Financial Statement or in
issuing its opinion.

"Fiscal Year" is defined as any calendar year or partial calendar year
during the Term.

"Fixed Interest Rate" is defined as 7.17% per annum.

"Fixtures and Personal Property" is defined in Section 2.1(iv).

"Government" is defined as any federal, state or municipal
governmental or quasi-governmental authority including executive,
legislative or judicial branch, division and any subdivision or agency
of any of them and any entity to which any of them has delegated
authority.

"Hazardous Substances" is defined as (i) any by product, chemical,
compound, material, mixture or substance that is now or hereafter
defined or listed in, or otherwise classified pursuant to, any
Environmental Laws, as a "hazardous substance", "hazardous material",
"hazardous waste", "extremely hazardous waste", infectious waste",
"toxic substance", "toxic pollutant", or any other formulation intended
to define, list, or classify substances by reason of deleterious
properties such as ignitability, corrosivity, reactivity,
carcinogenicity, toxicity, reproductive toxicity, or "EP toxicity",
(ii) any petroleum, natural gas, natural gas liquid, liquified natural
gas, synthetic gas usable for fuel (or mixtures of natural gas and
such synthetic gas), ash produced by a resource recovery facility
utilizing a municipal solid waste stream, and drilling fluids,
produced waters, and other wastes associated with the exploration,
development or production of crude oil, natural gas, or geothermal
resources, and (iii) any underground storage tanks.

"Imposition Penalty Date" is defined in Section 6.1(a).

"Impositions" is defined as all Taxes, Assessments, ground rent, if
any, water and sewer rents, fees and charges, levies, permit,
inspection and license fees and other dues, charges or impositions,
including all charges and license fees for the use of vaults, chutes
and similar areas adjoining the Land, maintenance and similar charges
and charges for utility services, in each instance whether now or in
the future, directly or indirectly, levied, assessed or imposed on the
Property or Borrower and whether levied, assessed or imposed as
excise, privilege or property taxes.

"Improvements" is defined in Section 2.1(ii).

"Individual Property" is defined in Recital D of the Assignment.

"Insurance Premiums" is defined as all present and future premiums and
other charges due and payable on policies of fire, rental value and
other insurance covering the Property and required pursuant to the
provisions of this Deed of Trust.

"Insurance Proceeds" is defined in Section 2.1(ix).

"Insurers" is defined in Section 7.1(c).

"Institutional Investor" is defined as any bank, savings institution,
charitable foundation, insurance company, real estate investment
trust, pension fund or investment advisor registered under the
Investment Advisors Act of 1940, as amended, and acting as trustee or
agent.

"Interest" is defined as the amount of fixed interest payable under
the Note at the Fixed Interest Rate and any other sums which could be
deemed to be interest under Law.

"Land" is defined in the Recitals.

"Late Charge" is defined in the Note.

"Law" is defined as all present and future codes, constitutions,
cases, opinions, rules, manuals, regulations, determinations, laws,
orders, ordinances, requirements and statutes, as amended, of any
Government that affect or that may be interpreted to affect the
Property, Borrower or the Loan, including amendments and all guidance
documents and publications promulgated thereunder.

"Leases" is defined as all present and future leases, subleases,
licenses and other agreements for the use and occupancy of the Land
and Improvements, any related guarantees and including any use and
occupancy arrangements created pursuant to Section 365 (h) of the
Bankruptcy Code or otherwise in connection with the commencement or
continuation of any bankruptcy, reorganization, arrangement,
insolvency, dissolution, receivership or similar Proceedings, or any
assignment for the benefit of creditors, in respect of any tenant or
other occupant of the Land and Improvements.

"Lender" is defined in the introductory paragraph.

"Loan" is defined in the Recitals.

"Loan Documents" is defined as the Note, this Deed of Trust, the Deed
of Trust, Assignment of Leases and Rents, Security Agreement and
Fixture Filing Statement (Bedford Portfolio #3 Arizona Property) dated
the date of this Deed of Trust and securing the Note, the Assignment,
the Assignment of Leases and Rents (Bedford Portfolio #3 - Arizona
Properties) dated the date of this Deed of Trust and securing the Note
and all documents now or hereafter executed by Borrower or held by
Lender or Trustee relating to the Loan, including all amendments.

"Material Environmental Contamination" is defined as contamination of
the Property with Hazardous Substances (i) that constitutes a
violation of one or more Environmental Laws; (ii) for which there is a
significant possibility that remediation will be required under
Environmental Laws; (iii) that results in a material risk of liability
or expense to Lender; or (iv) that diminishes the value of the
Property.

"Maturity Date" is defined in the Recitals.

"Maximum Interest Rate" is defined as the maximum rate of interest, if
any, permitted by Law to be charged with respect to the Loan as the
maximum rate may be increased or decreased from time to time.

"Note" is defined in the Recitals.

"Note Payments" is defined in the Note.

"Notices" is defined in Section 17.1.

"Obligations" is defined in Section 3.1.

"Permitted Exceptions" is defined as the matters shown in Schedule B,
Part 1 and 2 of the title insurance policy insuring the lien of this
Deed of Trust.

"Permitted Transfers" is defined in Section 12.2(b).

"Permitted Use" is defined as use as first-class commercial office
buildings with respect to the property described in Exhibit A-1, known
as 598 Gibraltar Drive, Milpitas, California and as a first-class
commercial office building and research and development building with
respect to the property described in Exhibit A-2 known as 201-215
Fourier Avenue, Fremont, California and uses incidentally and directly
related to such uses.

"Policies" is defined in Section 7.1(b).

"Prepayment Premium" is defined in the Note.

"Principal" is defined in the Recitals.

"Proceeding" is defined as a pending or threatened action, claim or
litigation before a legal, equitable or administrative tribunal having
proper jurisdiction.

"Proceeds" is defined in Section 7.2(c).

"Property" is defined in Section 2.1.

"Property Documents" is defined in Section 2.1(v).

"Receiver" is defined as a receiver, custodian, trustee, liquidator or
conservator of the Property.

"Release Parcel" is defined in Section 12.4.

"Remedies" is defined in Section 14.2(a).

"Rents" is defined as all present and future rents, prepaid rents,
percentage, participation or contingent rents, issues, profits,
proceeds, parking fees, revenues and other consideration accruing
under the Leases or otherwise derived from the use and occupancy of
the Land or the Improvements, including tenant contributions to
expenses, security deposits, royalties and contingent rent, if any,
all other fees, accounts, accounts receivable or payments paid to or
for the benefit of Borrower, including liquidated damages after a
default under a lease, any premium or other termination fee payable by
tenant after cancellation of a Lease and the proceeds of any rental
insurance, and any payments received pursuant to Section 502(b) of the
Bankruptcy Code or otherwise in connection with the commencement or
continuance of any bankruptcy, reorganization, arrangement,
insolvency, dissolution, receivership or similar proceedings, or any
assignment for the benefit of creditors, in respect of any tenant or
other occupant of the Land or the Improvements and all claims as a
creditor in connection with any of the foregoing.

"Restoration" is defined as the restoration of the Property after a
Destruction Event as nearly as possible to its condition immediately
prior to the Destruction Event, in accordance with the plans and
specifications, in a first-class workmanlike manner using materials
substantially equivalent in quality and character to those used for
the original improvements, in accordance with Law and free and clear
of all liens, encumbrances or other charges other than this Deed of
Trust and the Permitted Exceptions.

"Restoration Completion Date" is defined in Section 7.4(viii).

"Restoration Funds" is defined in Section 7.5(b).

"Substitution Property" is defined in Section 12.5.

"Taxes" is defined as all present and future real estate taxes levied,
assessed or imposed against the Property.

"Term" is defined as the scheduled term of this Deed of Trust
commencing on the date Lender makes the first disbursement of the Loan
and terminating on the Maturity Date.

"Transfer" is defined in Section 12.1(a).

"Uniform Commercial Code" is defined as the Uniform Commercial Code in
effect in the jurisdiction where the Land is located.

<PAGE>
                            Exhibit C

                      RULES OF CONSTRUCTION


   (a)  References in any Loan Document to numbered Articles or
Sections are references to the Articles and Sections of that Loan
Document.  References in any Loan Document to lettered Exhibits are
references to the Exhibits attached to that Loan Document, all of
which are incorporated in and constitute a part of that Loan Document.
Article, Section and Exhibit captions used in any Loan Document are
for reference only and do not describe or limit the substance, scope
or intent of that Loan Document or the individual Articles, Sections
or Exhibits of that Loan Document.

   (b)  The terms "include", "including" and similar terms are
construed as if followed by the phrase "without limitation".

   (c)  The terms "Land", "Improvements", "Fixtures and Personal
Property", "Condemnation Awards", "Insurance Proceeds" and "Property"
are construed as if followed by the phrase "or any part thereof".

   (d)  Any agreement by or duty imposed on Borrower in any Loan
Document to perform any obligation or to refrain from any act or
omission constitutes a covenant running with the ownership or
occupancy of the Land and the Improvements, which will bind all
parties hereto and their respective successors and assigns, and all
lessees, subtenants and assigns of same, and all occupants and
subsequent owners of the Property, and will inure to the benefit of
Lender and all subsequent holders of the Note and this Deed of Trust
and includes a covenant by Borrower to cause its partners, members,
principals, agents, representatives and employees to perform the
obligation or to refrain from the act or omission in accordance with
the Loan Documents.  Any statement or disclosure contained in any Loan
Document about facts or circumstances relating to the Property,
Borrower or the Loan constitutes a representation and warranty by
Borrower made as of the date of the Loan Document in which the
statement or disclosure is contained.

   (e)  The term "to Borrower's knowledge" is construed as meaning
to the best of Borrower's knowledge after diligent inquiry.

   (f)  The singular of any word includes the plural and the plural
includes the singular.  The use of any gender includes all genders.

   (g)  The terms "person", "party" and "entity" include natural
persons, firms, partnerships, limited liability companies and
partnerships, corporations and any other public or private legal
entity.

   (h)  The term "provisions" includes terms, covenants,
conditions, agreements and requirements.

   (i)  The term "amend" includes modify, supplement, renew,
extend, replace or substitute and the term "amendment" includes
modification, supplement, renewal, extension, replacement and
substitution.

   (j)  Reference to any specific Law or to any document or
agreement, including the Note, this Deed of Trust, any of the other
Loan Documents, the Leases and the Property Documents, includes any
future amendments to the Law, document or agreement, as the case may
be.

   (k)  No inference in favor of or against a party with respect to
any provision in any Loan Document may be drawn from the fact that the
party drafted the Loan Document.

   (l)  The term "certificate" means the sworn, notarized statement
of the entity giving the certificate, made by a duly authorized person
satisfactory to Lender affirming the truth and accuracy of every
statement in the certificate.  Any document that is "certified" means
the document has been appended to a certificate of the entity
certifying the document that affirms the truth and accuracy of
everything in the document being certified.  In all instances the
entity issuing a certificate must be satisfactory to Lender.

   (m)  Any appointment of Lender as Borrower's attorney-in-fact is
irrevocable and coupled with an interest.  Lender may appoint a
substitute attorney-in-fact.  Borrower ratifies all actions taken by
the attorney-in-fact but, nevertheless, if Lender requests, Borrower
will specifically ratify any action taken by the attorney-in-fact by
executing and delivering to the attorney-in-fact or to any entity
designated by the attorney-in-fact all documents necessary to effect
the ratification.

   (n)  Any document, instrument or agreement to be delivered by
Borrower will be in form and content satisfactory to Lender.

   (o)  All obligations, rights, remedies and waivers contained in
the Loan Documents will be construed as being limited only to the
extent required to be enforceable under the Law.

   (p)  The unmodified word "days" means calendar days.