FIRST AMENDMENT TO CREDIT AGREEMENT


               This First Amendment to Credit Agreement (the "First
          Amendment") is made as of August ___, 1998 and among ASSOCIATED
          ESTATES REALTY CORPORATION ("Borrower"); NATIONAL CITY BANK, as
          Managing Agent (the "Managing Agent"), for itself and on behalf
          of the Existing Banks (defined below); and FIRSTMERIT BANK, N.A.
          ("FirstMerit") and SOUTHTRUST BANK, N.A. ("SouthTrust";
          FirstMerit and SouthTrust are sometimes collectively referred to
          as the "New Banks").

                                       RECITALS

               A.   Pursuant to a Credit Agreement (the "Credit
          Agreement"), dated as of June 30, 1998, by and among Borrower,
          the Managing Agent, the Documentation Agent and the Banks
          identified on Schedule 1 thereof (the "Existing Banks"), the
          Existing Banks agreed to provide Borrower with a credit facility
          in the aggregate principal amount not to exceed Two Hundred
          Million Dollars ($200,000,000).

               B.   Section 2.1(c) of the Credit Agreement provides that
          Borrower may request that the maximum principal amount of the
          credit facility provided by the Credit Agreement be increased to
          a principal amount not to exceed Two Hundred Fifty Million
          Dollars ($250,000,000) on the terms and subject to the conditions
          set forth therein.

               C.   Borrower has requested an increase in the maximum
          principal amount of the credit facility provided by the Credit
          Agreement in accordance with the applicable requirements of the
          Credit Agreement, and FirstMerit and SouthTrust have agreed to
          become additional Banks under the Credit Agreement as
          contemplated by Section 2.1(c).

               NOW, THEREFORE, for Ten Dollars ($10.00) and other valuable
          consideration, the receipt and sufficiency of which are hereby
          acknowledged, the parties to this First Amendment agree as
          follows:

               1.   Incorporation of Recitals; Capitalized Terms.  The
          foregoing recitals to this First Amendment are incorporated
          herein by this reference.  Capitalized terms which are used but
          not defined herein shall have the respective meanings ascribed to
          such terms in the Credit Agreement.

               2.   Inclusion of FirstMerit as a Bank; Credit Commitment
          and the Maximum Commitment.  (a)  From and after August __, 1998
          (the "Effective Date"), each of the New Banks shall be a Bank
          under the Credit Agreement; FirstMerit's Credit Commitment shall
          be in the amount of Ten Million Dollars ($10,000,000), and
          SouthTrust's Credit Commitment shall be in the amount of Twenty-
          Five Million Dollars ($25,000,000).  Each of the New Banks
          acknowledges its receipt and approval of the Credit Agreement,
          and agrees that from and after the Effective Date it shall
          observe and perform all of the duties and obligations of a Bank
          in accordance with the requirements of the Credit Agreement. 

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          Without limiting the generality of the foregoing, each New Bank
          hereby appoints National City Bank to serve as its Managing Agent
          under the Credit Agreement and the other Loan Documents, and to
          administer the Credit Agreement and the other Loan Documents as
          provided in the Credit Agreement.  

               (b) FirstMerit's address and facsimile number for the
          delivery of notices under the Credit Agreement are as follows:

                    FirstMerit Bank, N.A.
                    123 West Prospect Avenue
                    Cleveland, Ohio  44115-1070
                    Facsimile No.: (216) 621-3201
                    Attn:  Peter D. Collins, Vice-President

               (c)  SouthTrust's address and facsimile number for the
          delivery of notices under the Credit Agreement are as follows:

                    SouthTrust Bank, National Association
                    Sam Boroughs
                    Attn:  Corporate Banking - 11th Floor Tower
                    420 North 20th Street
                    Birmingham, Alabama  35203
                    Facsimile No.: (205) 254-8270

               (d)  Giving effect to the inclusion of the New Banks as
          Banks as provided in this First Amendment, the term "Maximum
          Commitment", as used in the Credit Agreement, shall from and
          after the Effective Date mean the lesser of (i) Two Hundred
          Thirty-Five Million Dollars ($235,000,000), or (ii) the sum of
          the Credit Commitments, subject to increase in accordance with
          Section 2.1(c) of the Credit Agreement to an amount not to exceed
          Two Hundred Fifty Million Dollars ($250,000,000).  From and after
          the Effective Date, Schedule 1 of the Credit Agreement shall be
          deleted in its entirety and shall be replaced with Schedule 1,
          attached to this First Amendment and made a part hereof by this
          reference.

               3.   Certain Documents to be Executed by Borrower.  Borrower
          shall, not later than the Effective Date, execute and deliver (a)
          to FirstMerit, a Ratable Promissory Note in the form attached
          hereto as Exhibit A and made a part hereof by this reference and
          a Competitive Bid Note in the form attached hereto as Exhibit B
          and made a part hereof by this reference; (b) to SouthTrust, a
          Ratable Note in the form attached hereto as Exhibit C and made a
          part hereof by this reference and a Competitive Bid Note in the
          form attached hereto as Exhibit D and made a part hereof by this
          reference; and (c) to each Existing Bank, a Substitute
          Competitive Bid Note in the  respective forms attached hereto as
          Exhibits E-1 through E-7.  Promptly after its receipt of such
          Substitute Competitive Bid Note, each Existing Bank shall legend
          the Competitive Bid Note presently held by it to reflect the
          replacement thereof by the Substitute Competitive Bid Note
          delivered to it as provided by this First Amendment.

               4.   Ratification of the Credit Agreement.  (a)  Borrower
          warrants and represents to the New Banks, the Managing Agent and
          each Existing Bank that as of the Effective Date (i) the Credit

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          Agreement and each Loan Document is in full force and effect;
          (ii) there is no Default or Event of Default under the Credit
          Agreement; (iii) all of Borrower's representations and warranties
          under the Credit Agreement are true and correct; and (iv)
          Borrower has no offsets or claims against the Managing Agent or
          any Existing Bank under, in respect of, or in any way related to
          the Credit Agreement or any Loan Document.

               (b)  Borrower hereby ratifies and affirms the Credit
          Agreement, as amended hereby, and agrees that as so amended the
          Credit Agreement shall continue in full force and effect.

               5.   Execution by the Managing Agent.  The Managing Agent
          has executed this First Amendment in its capacity as Managing
          Agent and for and on behalf each of the Existing Banks in
          accordance with the authority granted to it for such purpose
          under Section 2.1(c) of the Credit Agreement.

               6.   Payment of Certain Costs and Fees.  Borrower shall, on
          the Effective Date, pay to the Managing Agent (a) for the benefit
          of FirstMerit (i) a Closing Fee in an amount equal to
          Thirty-Seven Thousand Five Hundred Dollars ($37,500,000), and
          (ii) a Facility Fee in respect of the initial year of the term of
          the Credit Agreement in the amount of Fifteen Thousand Dollars
          ($15,000); and (b) for the benefit of SouthTrust (i) a Closing
          Fee in the amount of Ninety-Three Thousand Seven Hundred Fifty
          Dollars ($93,750), and (ii) a Facility Fee in respect of the
          initial year of the term of the Credit Agreement in the amount of
          Thirty-Seven Thousand Five Hundred Dollars ($37,500).  Borrower
          shall, in addition, pay the costs and fees reasonably incurred by
          the Managing Agent in connection with this First Amendment,
          including but not limited to reasonable attorneys' fees.

                    7.   Counterparts.  This First Amendment may be
          executed in any number of counterparts, all of which taken
          together shall constitute one agreement, and any of the parties
          hereto may execute this Amendment by signing any such
          counterpart.

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


          ASSOCIATED ESTATES REALTY     NATIONAL CITY BANK,
          CORPORATION                     Managing Agent


          By:/s/ Martin A. Fishman      By:/s/ Gary L. Wimer        

          Print Name:Martin A. Fishman  Print Name:  Gary L. Wimer  

          Title:Vice President          Title:  Vice President      



                                        FIRSTMERIT BANK, N.A.

                                        By:/s/ Peter D. Collins      

                                        Print Name:  Peter D. Collins
                    
                                        Title:  Vice President       

                                        123 West Prospect Avenue
                                        Cleveland, Ohio  44115-1070
                                        (216) 621-3201



                                        SOUTHTRUST BANK, N.A.

                                        By:/s/ Samuel L. Boroughs      

                                        Print Name: Samuel L. Boroughs 

                                        Title: Commercial Loan Officer 
                    
                                        420 North 20th Street
                                        Birmingham, Alabama  35203
                                        (205) 254-5039                     

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                        ASSOCIATED ESTATES REALTY CORPORATION
                                 5025 Swetland Court
                             Cleveland, Ohio  44143-1467
                      Phone (216-261-5000) - Fax (216-473-8105)


          September 6, 1998

          Commerzbank AG, Chicago Branch
          Two World Trade Center
          New York, NY  10281-1050
          Attn:  Mr. Douglas Traynor

          Re:  Credit Agreement originally dated as of June 30, 1998, among
               Associated Estates Realty Corporation, National City Bank,
               as Managing Agent, Bank of America National Trust and
               Savings Association as Documentation Agent, and the Banks
               Identified Therein.                                         

          Gentlemen:

               Reference is made to the captioned credit agreement, as
          amended by Amendment No. 1 to Credit Agreement, dated as of
          August 6, 1998 (as so amended, the "Credit Agreement"). 
          Capitalized terms which are used but not defined herein shall
          have meanings set forth in the Credit Agreement.

               We understand that Commerzbank AG, Chicago Branch
          ("Commerzbank"), intends to become a Bank under the Credit
          Agreement pursuant to Section 2.1 (d) thereof, with a Credit
          Commitment in the amount of $25,000,000, and that in connection
          with such inclusion Commerzbank has requested clarification with
          respect to certain provisions of Section 2.10 of the Credit
          Agreement.  This letter will confirm that notwithstanding those
          provisions of Section 2.10(a) and 2.10(c) of the Credit
          Agreement, which extend the increased-cost protections set forth
          therein to "nationally chartered banking associations in the
          United States of America," Commerzbank (which you have advised us
          is a German banking corporation licensed to do business in the
          State of New York) will, from and after becoming a "Bank" under
          the Credit Agreement, be entitled to the benefits of the
          increased-cost protections afforded thereby to the same extent
          and upon the same terms and procedures as would apply if
          Commerzbank were a "nationally chartered banking association in
          the United States of America."

               Please feel free to contact the undersigned with any
          questions or comments.  Please note that effective March 14, my
          telephone number changed to 216/797-8780; my fax number changed
          to 216/797-8719.

          Sincerely,

          ASSOCIATED ESTATES REALTY CORPORATION

          By:/s/ Martin A. Fishman           
             Martin A. Fishman, Vice President


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