<PAGE>

                                  Exhibit 3.1



                      ARTICLES OF AMENDMENT AND RESTATEMENT

                                        OF

                             PRIME GROUP REALTY TRUST


Prime Group Realty Trust, a Maryland real estate investment trust (the "Trust"),
certifies as follows:

     FIRST:  the Trust desires to amend and restate its Declaration of Trust as
currently in effect as hereinafter provided.

     SECOND:  the following provisions are all the provisions of the Declaration
of Trust as currently in effect.


1.   THE TRUST.

     1.1.  NAME.  The name of the trust (the "Trust") is Prime Group Realty
Trust.  So far as may be practicable, the business of the Trust shall be
conducted and transacted under that name.  Under circumstances in which the
Trustees determine that the use of the name "Prime Group Realty Trust" is not
practicable, they may use any other designation or name for the Trust.

     1.2.  FORMATION.  The Trust is a real estate investment trust (a "REIT")
within the meaning under Title 8 of the Corporations and Associations Article
of the Annotated Code of Maryland (the "Maryland REIT law").  The Trust shall
not be deemed to be a general partnership, limited partnership, joint
venture, joint stock company or a corporation (but nothing herein shall
preclude the Trust from being treated for tax purposes as an association
under the Internal Revenue Code of 1986, as amended (the "Code")).

     1.3.  PURPOSES AND POWERS.  The Trust is organized as a real estate
investment trust under the Maryland REIT law for the purpose of engaging in
any activity permitted to real estate investment trusts generally by the
Maryland REIT law and shall have all further powers consistent with law and
appropriate to attain its

<PAGE>

purposes, including, without limitation or obligation, engaging in business
as a REIT under the Code.

     1.4.  RESIDENT AGENT AND PRINCIPAL OFFICE.  The name and address of the
Trust's initial resident agent in the State of Maryland is The Corporation
Trust Inc., 32 South Street, 2nd Floor, Baltimore, Maryland 21202, which is a
resident of the State of Maryland.  The address of the Trust's principal
office is 77 West Wacker Drive, Suite 3900, Chicago, Illinois 60601.  The
Trust may have such other offices and places of business within or outside
the State of Maryland as the Board of Trustees may from time to time
determine.

     1.5.  DEFINITIONS.  For purposes of this Declaration of Trust, the
following terms shall have the meanings indicated:

          "Beneficial Ownership" shall mean ownership of Equity Shares or
options to acquire Equity Shares by a Person who would be treated as an owner
of such Equity Shares under Section 542(a)(2) of the Code either directly or
constructively through the application of Section 544 of the Code, as
modified by Section 856(h)(1)(B) of the Code but without regard to Section
856(h)(3) of the Code.  The terms "Beneficial Owner," "Beneficially Owns,"
"Beneficially Own" and "Beneficially Owned" shall have the correlative
meanings.

          "Beneficiary" shall mean a beneficiary of the Trust as determined
in accordance with the provisions of Section 4.8 hereof.

          "Business Day" shall mean any day, other than a Saturday or Sunday,
that is neither a legal holiday nor a day on which banking institutions in
New York City, New York are authorized or required by law, regulation or
executive order to close.

          "Call Date" shall mean the date specified in the notice to holders
required under Section 3.3.3(d) hereof as the Call Date.

          "Change of Control" shall have the meaning set forth in Section
3.3.4(a) hereof.

          "Closing Date of the Initial Public Offering" shall mean the time
and date of payment for and delivery of Common Shares issued pursuant to the
Initial Public Offering, excluding the Common Shares issuable upon exercise
of the over-allotment option granted in connection with the Initial Public
Offering.

<PAGE>

          "Common Shares" shall have the meaning set forth in Section 3.1
hereof.

          "Constituent Person" shall have the meaning set forth in Section
3.3.4(e) hereof.

          "Constructive Ownership" shall mean ownership of Equity Shares or
options to acquire Equity Shares by a Person who would be treated as an owner
of such Equity Shares either directly or indirectly through the application
of Section 318 of the Code, as modified by Section 856(d)(5) of the Code.
The terms "Constructive Owner," "Constructively Owns," "Constructively Own"
and "Constructively Owned" shall have correlative meanings.

          "Conversion Date" shall have the meaning set forth in Section
3.3.4(a) hereof.

          "Conversion Price" shall mean the conversion price per Common Share
for which the Convertible Preferred Shares are convertible, as such
Conversion Price may be adjusted pursuant to Section 3.3.4 hereof.  The
initial conversion price shall be $20.00.

          "Convertible Preferred Shares" shall have the meaning set forth in
Section 3.1 hereof.

          "Current Market Price" of publicly traded Common Shares or any
other class of shares of beneficial interest or other security of the Trust
or any other issuer for any day shall mean the last reported sales price,
regular way on such day, or, if no sale takes place on such day, the average
of the reported closing bid and asked prices on such day, regular way, in
either case as reported on the New York Stock Exchange ("NYSE") or, if such
security is not listed or admitted for trading on the NYSE, on the principal
national securities exchange on which such security is listed or admitted for
trading or, if not listed or admitted for trading on any national securities
exchange, on the NASDAQ Stock Market ("NASDAQ") or, if such security is not
quoted on such National Market System, the average of the closing bid and
asked prices on such day in the over-the-counter market as reported by NASDAQ
or, if bid and asked prices for such security on such day shall not have been
reported through NASDAQ, the average of the bid and asked prices on such day
as furnished by any NYSE member firm regularly making a market in such
security selected for such purpose by the Board of Trustees.


                                      -3-

<PAGE>

          "Dividend Payment Date" shall mean (i) for any Dividend Period with
respect to which the Trust pays a dividend on the Common Shares, the date on
which such dividend is paid, or (ii) for any Dividend Period with respect to
which the Trust does not pay a dividend on the Common Shares, a date to be
set by the Board of Trustees, which date shall not be later than the 45th
calendar day after the end of the applicable Dividend Period.

          "Dividend Periods" shall mean quarterly dividend periods commencing
on January 1, April 1, July I and October 1 of each year and ending on and
including the day preceding the first day of the next succeeding Dividend
Period with respect to any Convertible Preferred Shares (other than the
initial Dividend Period, which shall commence on the Issue Date for such
Convertible Preferred Shares and end on and include the last day of the
calendar quarter immediately following such Issue Date, and other than the
Dividend Period during which any Convertible Preferred Shares shall be
redeemed pursuant to Section 3.3.3 hereof or converted pursuant to Section
3.3.4 hereof, which shall end on and include the Call Date with respect to
the Convertible Preferred Shares being redeemed).

          "Equity Shares" shall mean any of the Common Shares, the Preferred
Shares or the Convertible Preferred Shares, or any combination thereof, that
have been issued and are outstanding.  The term "Equity Shares" shall include
all of the Common Shares, the Preferred Shares and the Convertible Preferred
Shares that are held as Excess Shares in accordance with the provisions of
Section 4.2 hereof.

          "Excess Shares" shall have the meaning set forth in Section 4.2
hereof.

          "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.

          "Expiration Time" shall have the meaning set forth in Section
3.3.4(d)(iv) hereof.

          "Fair Market Value" shall mean (except in Section 3.3.3(e) hereof)
as of any day the average of the daily Current Market Prices of a Common
Share on the five (5) consecutive Trading Days selected by the Trust
commencing not more than 20 Trading Days before, and ending not later than,
the earlier of the day in question and the day before the "ex date," with
respect to the issuance or distribution requiring such computation.  The term
"ex date," when used with respect to any issuance or distribution, means the
first day on which the Common Shares trade regular way,


                                      -4-

<PAGE>

without the right to receive such issuance or distribution, on the exchange
or in the market, as the case may be, used to determine that day's Current
Market Price.

          "Fully Junior Shares" shall mean the Common Shares and any other
class or series of shares of beneficial interest of the Trust now or
hereafter issued and outstanding over which the Convertible Preferred Shares
have preference or priority in both (i) the payment of dividends and (ii) the
distribution of assets on any liquidation, dissolution or winding up of the
Trust.

          "Funds from Operations" shall mean net income (loss) (computed in
accordance with generally accepted accounting principles) excluding gains (or
losses) from debt restructuring, and distributions in excess of earnings
allocated to other Operating Partnership interests or minority interests (as
reflected in the financial statements of the Trust) plus
depreciation/amortization of assets unique to the real estate industry, all
computed in a manner consistent with the revised definition of Funds From
Operations adopted by the National Association of Real Estate Investment
Trusts, in its White Paper dated March 1995, as such definitions may be
modified from time to time, as determined by the Trust in good faith.

          "Initial Public Offering" shall mean the sale of Common Shares
pursuant to the Trust's first effective registration statement for such
Common Shares filed under the Securities Act.

          "Issue Date" shall mean the date on which the Convertible Preferred
Shares are issued.

          "Issue Price" shall be $20.00.

          "Junior Shares" shall mean the Common Shares and any other class or
series of shares of beneficial interest of the Trust now or hereafter issued
and outstanding over which the Convertible Preferred Shares have preference
or priority in the payment of dividends or in the distribution of assets on
any liquidation, dissolution or winding up of the Trust.

          "Market Price" on any date shall mean the average of the Closing
Price for the five (5) consecutive Trading Days ending on such date.  The
"Closing Price" on any date shall mean the last sale price, regular way, or,
in case no such sale takes place on such day, the average of the closing bid
and asked prices, regular way, in either case as reported on the NYSE or, if
the Equity Shares are not listed or admitted for trading on the NYSE, on the


                                      -5-

<PAGE>

principal national securities exchange on which the Equity Shares are listed
or admitted for trading or, if not listed or admitted for trading on any
national securities exchange, on NASDAQ or, if the Equity Shares are not
quoted on such National Market System, the average of the closing bid and
asked prices on such day in the over-the-counter market as reported by NASDAQ
or, if bid and asked prices for the Equity Shares on such day shall not have
been reported through NASDAQ, the average of the bid and asked prices on such
day as furnished by any NYSE member firm regularly making a market in the
Equity Shares selected for such purpose by the Board of Trustees.

          "Non-Electing Share" shall have the meaning set forth in Section
3.3.4(e) hereof.

          "Operating Partnership" shall mean Prime Group Realty, L.P., a
Delaware limited partnership.

          "Ownership Limit" shall initially mean 9.9%, in number of shares or
value, of the outstanding Equity Shares.  The number and value of shares of
the outstanding Equity Shares of the Trust shall be determined by the
Trustees in good faith, which determination shall be conclusive for all
purposes hereof.

          "Parity Shares" shall have the meaning set forth in Section
3.3.7(b) hereof.

          "Permitted Transferee" shall mean any Person designated as a
Permitted Transferee in accordance with the provisions of Section 4.8(e)
hereof.

          "Person" shall mean an individual, corporation, partnership,
estate, trust, a portion of a trust permanently set aside for or to be used
exclusively for the purposes described in Section 642(c) of the Code,
association, private foundation within the meaning of Section 509(a) of the
Code, joint stock company or other entity and also includes a "group" as that
term is used for purposes of Section 13(d)(3) of the Exchange Act and shall
include any successor (by merger or otherwise) of such entity or group; but
does not include an underwriter which participated in any public offering
registered under the Securities Act of any shares of the Trust for a period
of 90 days following the purchase by such underwriter of the Equity Shares;
PROVIDED, that the restrictions contained in Section 4.1 hereof will not be
violated following the distribution by such underwriter of such shares.


                                      -6-

<PAGE>

          "Preferred Shares" shall have the meaning set forth in Section 3.1
hereof.

          "Prohibited Transferee" shall mean, with respect to any purported
Transfer, any Person who, but for the provisions of Section 4.1 hereof, would
own record title to Equity Shares.

          "Purchased Shares" shall have the meaning set forth in Section
3.3.4(d)(iv) hereof.

          "REIT Termination Event" shall mean the earliest to occur of:

          (i)   the filing of a federal income tax return by the Trust for any
     taxable year on which the Trust does not elect to be taxed as a real estate
     investment trust;

          (ii)  the approval by the shareholders of the Trust of a proposal for
     the Trust to cease to qualify as a real estate investment trust;

          (iii) a determination by the Board of Trustees of the Trust, based on
     the advice of counsel, that the Trust has ceased to qualify as a real
     estate investment trust; or

          (iv)  a "determination" within the meaning of Section 1313(a) of the
     Code that the Trust has ceased to qualify as a real estate investment
     trust.

          "Restriction Termination Date" shall mean the first day on which
the Board of Trustees of the Trust determines that it is no longer in the
best interests of the Trust to attempt to, or continue to, qualify as a REIT.

          "Securities" and "Security" shall have the meanings set forth in
Section 3.3.4(d)(iii) hereof.

          "Securities Act" shall mean the Securities Act of 1933, as amended.

          "Set apart for payment" shall be deemed to include, without any
action other than the following, the recording by the Trust in its accounting
ledgers of any accounting or bookkeeping entry which indicates, pursuant to a
declaration of dividends or other distribution by the Board of Trustees, the
allocation of funds to be so paid on any series or class of shares of
beneficial interest of the Trust; PROVIDED, HOWEVER, that if any funds for
any


                                      -7-

<PAGE>

class or series of Junior Shares or any class or series of shares of
beneficial interest ranking on a parity with the Convertible Preferred Shares
as to the payment of dividends are placed in a separate account of the Trust
or delivered to a disbursing, paying or other similar agent, then "set apart
for payment" with respect to the Convertible Preferred Shares shall mean
placing such funds in a separate account or delivering such funds to a
disbursing, paying or other similar agent.

          "Share Trust" shall mean any separate trust created pursuant to
Section 4.2 hereof and administered in accordance with the terms of Section
4.8 hereof, for the exclusive benefit of any Beneficiary.

          "Share Trustee" shall mean any person or entity unaffiliated with
both the Trust and any Prohibited Transferee, such Share Trustee to be
designated by the Trust to act as trustee of any Share Trust, or any
successor trustee thereof.

          "Trading Day" shall mean any day on which the securities in
question are traded on the NYSE, or if such securities are not listed or
admitted for trading on the NYSE, on the principal national securities
exchange on which such securities are listed or admitted, or if not listed or
admitted for trading on any national securities exchange, on the National
Market System of NASDAQ, or if such securities are not quoted on such
National Market System, in the securities market in which the securities are
traded.

          "Transaction" shall have the meaning set forth in Section 3.3.4(e)
hereof.

          "Transfer" shall mean any sale, transfer, gift, assignment, devise
or other disposition of Equity Shares (including (i) the granting of any
option or entering into any agreement for the sale, transfer or other
disposition of Equity Shares or (ii) the sale, transfer, assignment or other
disposition of any securities or rights convertible into or exchangeable for
Equity Shares), whether by operation of law or otherwise.  The terms
"Transfers" and "Transferred" shall have the correlative meanings.

          "Transfer Agent" shall mean the Trust, or such other agent or
agents of the Trust as may be designated by the Board of Trustees or their
designee as the transfer agent, registrar and dividend disbursing agent for
the Convertible Preferred Shares.

          "Voting Preferred Shares" shall have the meaning set forth in
Section 3.3.6 hereof.


                                      -8-

<PAGE>

          "Weighted Average Trading Price" shall mean, for any period, the
number obtained by dividing (i) the sum of the products, for each sale of
Common Shares on each Trading Day in such period, of (a) the sale price per
Common Share and (b) the number of Common Shares sold by (ii) the total
number of Common Shares sold during such period.

2.   BOARD OF TRUSTEES.

     2.1.  POWERS.

           (a)  Subject to the limitations herein or in the Bylaws of the
Company (the "Bylaws"), (i) the business and affairs of the Trust shall be
managed under the direction of the Board of Trustees and (ii) the Board of
Trustees shall have full, exclusive and absolute power, control and authority
over the property of the Trust and over the business of the Trust.  The Board
of Trustees may take any actions as in its sole judgment and discretion are
necessary or desirable to conduct the business of the Trust.  This
Declaration of Trust shall be construed with a presumption in favor of the
grant of power and authority to the Board of Trustees.  Any construction of
this Declaration of Trust or determination made in good faith by the Board of
Trustees concerning its powers and authority hereunder shall be conclusive.
The enumeration and definition of particular powers of the Board of Trustees
included in this Declaration of Trust or in the Bylaws shall in no way be
construed or deemed by inference or otherwise in any manner to exclude or
limit the powers conferred upon the Board of Trustees under the general laws
of the State of Maryland or any other applicable laws.

           (b)  Except as otherwise provided in the Bylaws, the Board of
Trustees, without any action by the shareholders of the Trust, shall have and
may exercise, on behalf of the Trust, without limitation, the power to adopt,
amend and repeal Bylaws; to elect officers in the manner prescribed in the
Bylaws; to solicit proxies from holders of shares of beneficial interest of
the Trust; and to do any other acts and deliver any other documents necessary
or appropriate to the foregoing powers.

           (c)  It is intended that the Board of Trustees will ensure that
the Trust satisfies the requirements for qualification as a REIT under the
Code, including, but not limited to, the ownership of outstanding shares of
its beneficial interest, the nature of its assets, the sources of its income
and the amount and timing of its distributions to its shareholders.  The
Board of


                                      -9-

<PAGE>

Trustees shall take no action to disqualify the Trust as a REIT or to
otherwise revoke the Trust's election to be taxed as a REIT without the
affirmative vote of two-thirds of the shares of beneficial interest entitled
to vote on such matter at a meeting of the shareholders.

     2.2.  CLASSIFICATION AND NUMBER.

           (a)  The Trustees of the Trust (the "Trustees") shall be
classified, with respect to the terms for which they severally hold office,
into three classes, as nearly equal in number as possible, one class ("Class
I") to hold office initially for a term expiring at the first annual meeting
of shareholders, another class ("Class II") to hold office initially for a
term expiring at the second annual meeting of shareholders and another class
("Class III") to hold office initially for a term expiring at the third
annual meeting of shareholders, with the Trustees of each class to hold
office until their successors are duly elected and qualified.  At each annual
meeting of shareholders, the successors to the class of Trustees whose term
expires at such meeting shall be elected to hold office for a term expiring
at the annual meeting of shareholders held in the third year following the
year of their election.  Shareholder votes to elect Trustees shall be
conducted in the manner provided in the Bylaws.

           (b)  The number of Trustees shall be seven (7), which number may
be increased or decreased pursuant to the Bylaws and increased pursuant to
Section 3.3.8 hereof, but shall not be less than three (3).  The name and
class of the Trustees serving at the time of adoption of this amendment and
restatement and who shall serve until their successors are duly elected and
qualified are:

Name                                              Class
----                                              -----

Michael W. Reschke                                Class I

Richard S. Curto                                  Class II

Stephen J. Nardi                                  Class III

James R. Thompson                                 Class III

Christopher J. Nassetta                           Class II

Thomas J. Saylak                                  Class III

Jacque M. Ducharme                                Class I


                                     -10-

<PAGE>

It shall not be necessary to list in this Declaration of Trust the names of
any Trustees hereinafter elected.

           (c)  If a vacancy in the Board of Trustees shall occur or be
created (whether arising through death, retirement, resignation or removal or
through an increase in the number of Trustees), the vacancy shall be filled
by the affirmative vote of a majority of the remaining Trustees, at any
regular meeting or any special meeting called for that purpose, even though
less than a quorum of the Board of Trustees may exist.

     2.3.  RESIGNATION OR REMOVAL.  Any Trustee may resign by written notice
to the Board, effective upon execution and delivery to the Trust of such
written notice or upon any future date specified in the notice.  Subject to
the rights of holders of one or more classes or series of Preferred Shares to
elect one or more Trustees, a Trustee may be removed at any time, with cause
only, at a meeting of the shareholders, by the affirmative vote of the
holders of not less than two-thirds of the shares of beneficial interest then
outstanding and entitled to vote generally in the election of Trustees.

     2.4.  PERFORMANCE OF DUTIES AS A TRUSTEE.  A Trustee shall perform his
or her duties as a Trustee: (i) in good faith, (ii) in a manner he or she
reasonably believes to be in the best interest of the Trust and (iii) with
the care that an ordinarily prudent person in a like position would use under
similar circumstances.  In performing his or her duties, a Trustee is
entitled to rely on any information, opinion, report or statement, including
any financial statement or other financial data, prepared or presented by,
(i) an officer or employee of the Trust whom the Trustee reasonably believes
to be reliable and competent in the matters presented, (ii) a lawyer,
certified public accountant or other person, as to matters which the Trustee
reasonably believes to be within the person's professional competence, or
(iii) a committee of the Board of Trustees on which the Trustee does not
serve, as to matters within its designated authority, if the Trustee
reasonably believes the committee to merit confidence.

3.   SHARES OF BENEFICIAL INTEREST.

     3.1.  AUTHORIZED SHARES AND PAR VALUE.  The beneficial interest in the
Trust shall be divided into shares (the "Shares").  The total number of
shares of beneficial interest which the Trust has authority to issue is
195,000,000 shares, consisting of (i)


                                      -11-

<PAGE>

30,000,000 preferred shares having a par value of $0.01 per share (the
"Preferred Shares"), amounting to an aggregate par value of $300,000, of
which 2,000,000 shares shall be designated as 7.0% Series A Cumulative
Convertible Redeemable Preferred Shares of Beneficial Interest (the
"Convertible Preferred Shares"), (ii) 65,000,000 excess shares having a par
value of $0.01 per share (the "Excess Shares"), amounting to an aggregate par
value of $650,000, and (iii) 100,000,000 common shares of beneficial interest
having a par value of $0.01 per share (the "Common Shares"), amounting to an
aggregate par value of $1,000,000.  The aggregate par value of all the shares
that the Trust shall have authority to issue is $1,950,000.  In addition, the
Trustees may amend this Declaration of Trust to create and authorize from
time to time additional types, series or classes of securities or to increase
or decrease the aggregate number of shares of any class that the Trust is
authorized to issue, without any action of the shareholders of the Trust.

     3.2.  COMMON SHARES.

           (a)  VOTING RIGHTS.  Subject to the voting rights of the
Convertible Preferred Shares, any additional Preferred Shares and the Excess
Shares, holders of Common Shares shall be entitled to vote on all matters
(for which holders of Common Shares shall be entitled to vote thereon) at all
meetings of the shareholders of the Trust and shall be entitled to one vote
for each Common Share entitled to vote at such meeting.  Holders of Common
Shares may not engage in cumulative voting in the election of Trustees.

           (b)  RIGHTS UPON LIQUIDATION.  Subject to the preferential rights
upon liquidation of the Convertible Preferred Shares, any additional
Preferred Shares and the Excess Shares, holders of Common Shares shall be
entitled to share ratably in the assets of the Trust legally available for
distribution to the shareholders in the event of the liquidation, dissolution
or winding-up of the Trust after payment of, or adequate provision for, all
known debts and liabilities of the Trust.

           (c)  GENERAL NATURE OF COMMON SHARES.  Holders of Common Shares
shall have no conversion, sinking fund, redemption, exchange, preference,
appraisal (except as provided by Maryland law) or preemptive rights.

     3.3.  CONVERTIBLE PREFERRED SHARES.

           3.3.1.   DIVIDENDS.


                                      -12-

<PAGE>

           (a)  Subject to the preferential rights of the holders of any
Preferred Shares that rank senior in the payment of dividends to the
Convertible Preferred Shares, the holders of Convertible Preferred Shares
shall be entitled to receive, when, as and if declared by the Board of
Trustees, out of funds legally available for the payment of dividends,
cumulative preferential dividends payable in cash in an amount per share
equal to the greater of (i) (x) an annual rate equal to the product of the
Issue Price multiplied by 0.07 for Dividend Periods ending before November
17, 1998 and (y) an annual rate equal to the product of the Issue Price
multiplied by  0.075 for Dividend Periods ending after November 17, 1998 or
(ii) the regular cash dividends (determined on each Dividend Payment Date) on
the Common Shares, or portion thereof, into which a Convertible Preferred
Share is convertible.  The dividends referred to in clause (ii) of the
preceding sentence shall equal the number of Common Shares, or portion
thereof, into which a Convertible Preferred Share will be convertible on or
after the Conversion Date, multiplied by the most current quarterly dividend
on a Common Share on or before the applicable Dividend Payment Date.  If the
Trust pays a regular cash dividend on the Common Shares with respect to a
Dividend Period after the date on which the Dividend Payment Date is declared
pursuant to clause (ii) of the definition of Dividend Payment Date and the
dividend calculated pursuant to clause (ii) of this paragraph (a) with
respect to such Dividend Period is greater than the dividend previously
declared on the Convertible Preferred Shares with respect to such Dividend
Period, the Trust shall pay an additional dividend to the holders of the
Convertible Preferred Shares on the date on which the dividend on the Common
Shares is paid, in an amount equal to the difference between (y) the dividend
calculated pursuant to clause (ii) of this paragraph (a) and (z) the amount
of dividends previously declared on the Convertible Preferred Shares with
respect to such Dividend Period.  The dividends shall begin to accrue and
shall be fully cumulative from the first day of the applicable Dividend
Period, whether or not in any Dividend Period or Periods there shall be funds
of the Trust legally available for the payment of such dividends, and shall
be payable quarterly, when, as and if declared by the Board of Trustees, in
arrears on Dividend Payment Dates.  Each such dividend shall be payable in
arrears to the holders of record of Convertible Preferred Shares as they
appear in the records of the Trust at the close of business on such record
dates, not less than 10 nor more than 50 days preceding such Dividend Payment
Dates thereof, as shall be fixed by the Board of Trustees.  Accrued and
unpaid dividends for any past Dividend Periods may be declared and paid at
any time and for such interim periods, without reference to any regular
Dividend Payment Date, to holders of record on such date, not less than 10
nor more than 50


                                      -13-

<PAGE>

days preceding the payment date thereof, as may be fixed by the Board of
Trustees.  Any dividend payment made on Convertible Preferred Shares shall
first be credited against the earliest accrued but unpaid dividend due with
respect to Convertible Preferred Shares which remains payable.

           (b)  The amount of dividends referred to in clause (i) of Section
3.3.1(a) payable for each full Dividend Period on the Convertible Preferred
Shares, other than the Dividend Period commencing October 1, 1998, shall be
computed by dividing the annual dividend rate by four.  For the Dividend
Period commencing October 1, 1998, the amount of dividends through November
17, 1998 on the Convertible Preferred Shares shall be computed by dividing
Issue Price times 0.07 by 365 and multiplying the result by the number of
days from October 1, 1998 through November  17, 1998 and dividends from
November 18, 1998 through December 31, 1998 on the Convertible Preferred
Shares shall be computed by dividing the Issue Price times 0.075 by 365 and
multiplying the result by the number of days from November 18, 1998 through
December 31, 1998.  The initial Dividend Period for the Convertible Preferred
Shares will include a partial dividend for the period from the Issue Date
until the last day of the calendar quarter immediately following such Issue
Date.  The amount of dividends payable for such period, or any other period
shorter than a full Dividend Period, on the Convertible Preferred Shares
shall be computed by dividing the number of days in such period by 365 and
multiplying the result by the product of the annual dividend rate multiplied
by the Issue Price.  Holders of Convertible Preferred Shares shall not be
entitled to any dividends, whether payable in cash, property or shares, in
excess of cumulative dividends, as herein provided, on the Convertible
Preferred Shares.  No interest, or sum of money in lieu of interest, shall be
payable in respect of any dividend payment or payments on the Convertible
Preferred Shares which may be in arrears.

           (c)  So long as any Convertible Preferred Shares are outstanding,
no dividends, except as described in the immediately following sentence,
shall be declared or paid or set apart for payment on any class or series of
Parity Shares for any period unless full cumulative dividends have been or
contemporaneously are declared and paid or declared and a sum sufficient for
the payment thereof set apart for such payment on the Convertible Preferred
Shares for all Dividend Periods terminating on or prior to the dividend
payment date on such class or series of Parity Shares.  When dividends are
not paid in full or a sum sufficient for such payment is not set apart, as
aforesaid, all dividends declared upon Convertible Preferred Shares and all
dividends declared upon any


                                      -14-

<PAGE>

other class or series of Parity Shares shall be declared ratably in
proportion to the respective amounts of dividends accumulated and unpaid on
the Convertible Preferred Shares and accumulated and unpaid on such Parity
Shares.

           (d)  So long as any Convertible Preferred Shares are outstanding,
no dividends (other than dividends or distributions paid solely in shares of,
or options, warrants or rights to subscribe for or purchase shares of, Fully
Junior Shares) shall be declared or paid or set apart for payment or other
distribution shall be declared or made or set apart for payment upon Junior
Shares, nor shall any Junior Shares be redeemed, purchased or otherwise
acquired (other than a redemption, purchase or other acquisition of Common
Shares made for purposes of an employee incentive or benefit plan of the
Trust or any subsidiary) for any consideration (or any moneys be paid to or
made available for a sinking fund for the redemption of any Junior Shares) by
the Trust, directly or indirectly (except by conversion into or exchange for
Fully Junior Shares), unless in each case (i) the full cumulative dividends
on all outstanding Convertible Preferred Shares and any other Parity Shares
of the Trust shall have been or contemporaneously are declared and paid or
declared and set apart for payment for all past Dividend Periods with respect
to the Convertible Preferred Shares and all past dividend periods with
respect to such Parity Shares and (ii) sufficient funds shall have been or
contemporaneously are declared and paid or declared and set apart for the
payment of the dividend for the current Dividend Period with respect to the
Convertible Preferred Shares and the current dividend period with respect to
such Parity Shares.

           (e)  No distributions on Convertible Preferred Shares shall be
declared by the Board of Trustees or paid or set apart for payment by the
Trust at such time as the terms and provisions of any agreement of the Trust,
including any agreement relating to its indebtedness, prohibits such
declaration, payment or setting apart for payment or provides that such
declaration, payment or setting apart for payment would constitute a breach
thereof or a default thereunder, or if such declaration or payment shall be
restricted or prohibited by law.

           3.3.2.   LIQUIDATION PREFERENCE.

           (a)  In the event of any liquidation, dissolution or winding up of
the Trust, whether voluntary or involuntary, subject to the prior preferences
and other rights of any series of shares of beneficial interest ranking
senior to the Convertible Preferred Shares upon liquidation, dissolution or
winding up of the Trust,


                                      -15-

<PAGE>

before any payment or distribution of the assets of the Trust (whether
capital or surplus) shall be made to or set apart for the holders of Junior
Shares, the holders of the Convertible Preferred Shares shall be entitled to
receive twenty dollars ($20.00) (the "Liquidation Preference") per
Convertible Preferred Share plus an amount equal to all dividends (whether or
not earned or declared) accrued and unpaid thereon to the date of final
distribution to such holders; but such holders shall not be entitled to any
further payment; PROVIDED, that the dividend payable with respect to the
Dividend Period containing the date of final distribution shall be equal to
the greater of (i) the dividend provided in Section 3.3.1(a)(i) hereof or
(ii) the dividend determined pursuant to Section 3.3.1(a)(ii) hereof for the
preceding Dividend Period.  If, upon any liquidation, dissolution or winding
up of the Trust, the assets of the Trust, or proceeds thereof, distributable
among the holders of the Convertible Preferred Shares shall be insufficient
to pay in full the preferential amount aforesaid and liquidating payments on
any other shares of any class or series of Parity Shares, then such assets,
or the proceeds thereof, shall be distributed among the holders of
Convertible Preferred Shares and any such other Parity Shares ratably in
accordance with the respective amounts that would be payable on such
Convertible Preferred Shares and any such other Parity Shares if all amounts
payable thereon were paid in full.  For the purposes of this Section 3.3.2,
(i) a consolidation or merger of the Trust with one or more corporations,
real estate investment trusts or other entities, (ii) a sale, lease or
conveyance of all or substantially all of the Trust's property or business or
(iii) a statutory share exchange shall not be deemed to be a liquidation,
dissolution or winding up, voluntary or involuntary, of the Trust.

           (b)  Subject to the rights of the holders of shares of any series
or class or classes of shares of beneficial interest ranking on a parity with
or prior to the Convertible Preferred Shares upon liquidation, dissolution or
winding up, upon any liquidation, dissolution or winding up of the Trust,
after payment shall have been made in full to the holders of the Convertible
Preferred Shares, as provided in this Section 3.3.2, the holders of
Convertible Preferred Shares shall have no other claim to the remaining
assets of the Trust and any other series or class or classes of Junior Shares
shall, subject to the respective terms and provisions (if any) applying
thereto, be entitled to receive any and all assets remaining to be paid or
distributed, and the holders of the Convertible Preferred Shares shall not be
entitled to share therein.

           3.3.3.   REDEMPTION AT THE OPTION OF THE TRUST.


                                      -16-

<PAGE>

           (a)  Except as provided in Section 3.3.3(e) below, the Convertible
Preferred Shares shall not be redeemable by the Trust prior to November 17,
2007.  On and after November 17, 2007, the Trust, at its option, may redeem
the Convertible Preferred Shares, in whole at any time or from time to time
in part out of funds legally available therefor at a redemption price payable
in cash equal to 100% of the Liquidation Preference per Convertible Preferred
Share (plus all accumulated, accrued and unpaid dividends as provided below).

           (b)  Upon any redemption of Convertible Preferred Shares pursuant
to this Section 3.3.3, the Trust shall pay all accrued and unpaid dividends,
if any, thereon to the Call Date, without interest.  If the Call Date falls
after a dividend payment record date and prior to the corresponding Dividend
Payment Date, then each holder of Convertible Preferred Shares at the close
of business on such dividend payment record date shall be entitled to the
dividend payable on such shares on the corresponding Dividend Payment Date
notwithstanding any redemption of such shares before such Dividend Payment
Date.  Except as provided above, the Trust shall make no payment or allowance
for unpaid dividends, whether or not in arrears, on Convertible Preferred
Shares called for redemption.

           (c)  If full cumulative dividends on the Convertible Preferred
Shares and any other class or series of Parity Shares have not been declared
and paid or declared and set apart for payment, the Convertible Preferred
Shares may not be redeemed under this Section 3.3.3 in part and the Trust may
not purchase or acquire Convertible Preferred Shares, otherwise than pursuant
to a purchase or exchange offer made on the same terms to all holders of
Convertible Preferred Shares.

           (d)  Notice of the redemption of any Convertible Preferred Shares
under this Section 3.3.3 (other than paragraph (e)) shall be mailed by
first-class mail to each holder of record of Convertible Preferred Shares to
be redeemed at the address of each such holder as shown on the Trust's
records, not less than 30 nor more than 90 days prior to the Call Date.
Neither the failure to mail any notice required by this paragraph (d), nor
any defect therein or in the mailing thereof, to any particular holder, shall
affect the sufficiency of the notice or the validity of the proceedings for
redemption with respect to the other holders.  Each such mailed notice shall
state, as appropriate: (1) the Call Date; (2) the number of Convertible
Preferred Shares to be redeemed and, if fewer than all the shares held by
such holder are to be


                                      -17-

<PAGE>

redeemed, the number of such shares to be redeemed from such holder; (3) the
redemption price; (4) the place or places at which certificates for such
shares are to be surrendered; (5) the then-current Conversion Price; and (6)
that dividends on the shares to be redeemed shall cease to accrue on such
Call Date except as otherwise provided herein.  Notice having been mailed as
aforesaid, from and after the Call Date (unless the Trust shall fail to make
available an amount of cash necessary to effect such redemption), (i) except
as otherwise provided herein, dividends on the Convertible Preferred Shares
so called for redemption shall cease to accrue, (ii) such shares shall no
longer be deemed to be outstanding and (iii) all rights of the holders
thereof as holders of Convertible Preferred Shares shall cease (except the
rights to convert and to receive the cash payable upon such redemption,
without interest thereon, upon surrender and endorsement of their
certificates if so required and to receive any dividends payable thereon).
The Trust's obligation to provide cash in accordance with the preceding
sentence shall be deemed fulfilled if, on or before the Call Date, the Trust
shall deposit with a bank or trust company (which may be an affiliate of the
Trust) that has an office in the Borough of Manhattan, City of New York, and
that has, or is an affiliate of a bank or trust company that has, capital and
surplus of at least $50,000,000, necessary for such redemption, in trust,
with irrevocable instructions that such cash be applied to the redemption of
the Convertible Preferred Shares so called for redemption.  No interest shall
accrue for the benefit of the holders of Convertible Preferred Shares to be
redeemed on any cash so set aside by the Trust.  Subject to applicable
escheat laws, any such cash unclaimed at the end of two years from the Call
Date shall revert to the general funds of the Trust, after which reversion
the holders of such shares so called for redemption shall look only to the
general funds of the Trust for the payment of such cash.

           As promptly as practicable after the surrender in accordance with
such notice of the certificates for any such shares so redeemed (properly
endorsed or assigned for transfer, if the Trust shall so require and if the
notice shall so state), such shares shall be exchanged for any cash (without
interest thereon) for which such shares have been redeemed.  If fewer than
all the outstanding Convertible Preferred Shares are to be redeemed, shares
to be redeemed shall be selected by the Trust from outstanding Convertible
Preferred Shares not previously called for redemption pro rata (as nearly as
may be), by lot or by any other method determined by the Trust in its sole
discretion to be equitable.  If fewer than all the Convertible Preferred
Shares represented by any certificate are redeemed, then new certificates
representing the


                                      -18-

<PAGE>

unredeemed shares shall be issued without cost to the holder thereof.

           (e)  Notwithstanding anything herein to the contrary, beginning on
June 17, 1998 and ending on September 17, 1998, the Trust, at its option, may
redeem all, but not less than all, of the Convertible Preferred Shares at a
premium (the "Special Redemption Price") calculated to result in a total
internal rate of return to the holder (including the receipt of dividends and
calculated on an annual compounded basis as if the holder had owned the
shares since the Issue Date) of 20.0%.  The Special Redemption Price may be
paid, at the Trust's option, in any combination of (i) cash and (ii) Common
Shares valued at Fair Market Value; PROVIDED, that the cash portion of the
Special Redemption Price shall equal at least 75% of the Special Redemption
Price.  For purposes of this Section 3.3.3(e), Fair Market Value shall mean
the Weighted Average Trading Price for the Common Shares for the 20 Trading
Days preceding the date of the special redemption (the "Special Redemption
Call Date").

           Notice of the redemption of any Convertible Preferred Shares under
this Section 3.3.3(e) shall be mailed by first-class mail to each holder of
record of Convertible Preferred Shares to be redeemed at the address of each
such holder as shown on the Trust's records, not less than 30 nor more than
90 days prior to the Special Redemption Call Date.  Neither the failure to
mail any notice required by this paragraph (e), nor any defect therein or in
the mailing thereof, to any particular holder, shall affect the sufficiency
of the notice or the validity of the proceedings for redemption with respect
to the other holders.  Each such mailed notice shall state, as appropriate:
(1) the Special Redemption Call Date; (2) the Special Redemption Price
(including the amount of the Special Redemption Price consisting of cash and
the amount of the Special Redemption Price consisting of Common Shares,
together with calculations supporting the determination of the number Common
Shares constituting a portion of the Special Redemption Price); (3) the place
or places at which certificates for such shares are to be surrendered; and
(4) that dividends on the shares to be redeemed shall cease to accrue on such
Call Date except as otherwise provided herein.  Notice having been mailed as
aforesaid, from and after the Special Redemption Call Date (unless the Trust
shall fail to make available an amount of cash necessary to effect such
redemption), (i) except as otherwise provided herein, dividends on the
Convertible Preferred Shares so called for redemption shall cease to accrue,
(ii) such shares shall no longer be deemed to be outstanding and (iii) all
rights of the holders thereof as holders of Convertible Preferred Shares
shall cease (except the right to


                                      -19-

<PAGE>

receive the Special Redemption Price, without interest thereon, upon
surrender and endorsement of their certificates if so required).  The Trust's
obligation to provide cash and Common Shares in accordance with the preceding
sentence shall be deemed fulfilled if, on or before the Special Redemption
Call Date, the Trust shall deposit with a bank or trust company (which may be
an affiliate of the Trust) that has an office in the Borough of Manhattan,
City of New York, and that has, or is an affiliate of a bank or trust company
that has, capital and surplus of at least $50,000,000, necessary for such
redemption, in trust, with irrevocable instructions that such cash and/or
Common Shares be applied to the redemption of the Convertible Preferred
Shares so called for redemption.  No interest shall accrue for the benefit of
the holders of Convertible Preferred Shares to be redeemed on any cash so set
aside by the Trust.  Subject to applicable escheat laws, any such cash or
Common Shares unclaimed at the end of two years from the Special Redemption
Call Date shall revert to the general funds of the Trust, after which
reversion the holders of such shares so called for redemption shall look only
to the general funds of the Trust for the payment of such cash or Common
Shares.

           As promptly as practicable after the surrender in accordance with
such notice of the certificates for any such shares so redeemed (properly
endorsed or assigned for transfer, if the Trust shall so require and if the
notice shall so state), such shares shall be exchanged for any cash (without
interest thereon) and Common Shares for which such shares have been redeemed.

           3.3.4.   CONVERSION.  Holders of Convertible Preferred Shares
shall have the right to convert all or a portion of such shares into Common
Shares, as follows:

           (a)  Subject to and upon compliance with the provisions of this
     Section 3.3.4, a holder of Convertible Preferred Shares shall have the
     right, at his or her option, upon the earliest to occur of (i) September
     17, 1998, (ii) the first day on which a Change of Control occurs, (iii) the
     occurrence of a REIT Termination Event or (iv) such date as determined by
     the Trust (the "Conversion Date"), to convert all or any portion of such
     shares (or such shares as determined by the Trust if pursuant to clause
     (iv) above) into the number of fully paid and non-assessable Common Shares
     obtained by dividing the aggregate Liquidation Preference of such shares
     (inclusive of accrued but unpaid dividends) by the Conversion Price (as in
     effect at the time and on the date provided for in the last paragraph of
     paragraph (b) of this Section 3.3.4) by surrendering such shares to be
     converted, such surrender to


                                      -20-

<PAGE>

     be made in the manner provided in paragraph (b) of this Section 3.3.4;
     PROVIDED, HOWEVER, that the right to convert shares called for
     redemption pursuant to Section 3.3.3 hereof shall terminate at the close
     of business on the fifth Business Day prior to the Call Date fixed for
     such redemption, unless the Trust shall default in making payment of the
     cash payable upon such redemption under Section 3.3.3.

           "Change of Control" means each occurrence of any of the following:
(i) the acquisition, directly or indirectly, by any individual or entity or
group (as such term is used in Section 13(d)(3) of the Exchange Act) of
beneficial ownership (as defined in Rule 13d-3 under the Exchange Act, except
that such individual or entity shall be deemed to have beneficial ownership
of all shares that any such individual or entity has the right to acquire,
whether such right is exercisable immediately or only after passage of time)
of more than 25% of the Trust's outstanding shares of beneficial interest
with voting power, under ordinary circumstances, to elect Trustees of the
Trust; (ii) other than with respect to the election, resignation or
replacement of any trustee designated, appointed or elected by the holders of
the Convertible Preferred Shares (each a "Preferred Trustee"), during any
period of two consecutive years, individuals who at the beginning of such
period constituted the Board of Trustees (together with any new trustees
whose election by such Board of Trustees or whose nomination for election by
the shareholders of the Trust was approved by a vote of 66-2/3% of the
Trustees (excluding Preferred Trustees) then still in office who were either
Trustees at the beginning of such period, or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of the Board of Trustees then in office; and (iii) (A) the Trust
consolidating with or merging into another entity or conveying, transferring
or leasing all or substantially all of its assets (including, but not limited
to, real property investments) to any individual or entity or (B) any
corporation consolidating with or merging into the Trust, which in either
event (A) or (B) is pursuant to a transaction in which the outstanding voting
shares of beneficial interest of the Trust are reclassified or changed into
or exchanged for cash, securities or other property; PROVIDED, HOWEVER, that
the events described in clause (iii) above shall not be deemed to be a Change
of Control (a) if the sole purpose of such event is that the Trust is seeking
to change its domicile or to change its form of organization from a trust to
a corporation or (b) if the holders of the exchanged securities of the Trust
immediately after such transaction beneficially own at least a majority of
the securities of the


                                      -21-

<PAGE>

merged or consolidated entity normally entitled to vote in elections of
trustees.

           (b)  In order to exercise the conversion right, the holder of each
     Convertible Preferred Share to be converted shall surrender the certificate
     representing such share, duly endorsed or assigned to the Trust or in
     blank, at the office of the Transfer Agent, accompanied by written notice
     to the Trust that the holder thereof irrevocably elects to convert such
     Convertible Preferred Shares.  Unless the shares issuable on conversion are
     to be issued in the same name as the name in which such Convertible
     Preferred Share is registered, each share surrendered for conversion shall
     be accompanied by instruments of transfer, in form satisfactory to the
     Trust, duly executed by the holder or such holder's duly authorized
     attorney and an amount sufficient to pay any transfer or similar tax (or
     evidence reasonably satisfactory to the Trust demonstrating that such taxes
     have been paid).

           Holders of Convertible Preferred Shares at the close of business on a
     dividend payment record date shall be entitled to receive the dividend
     payable on such shares on the corresponding Dividend Payment Date
     notwithstanding the conversion thereof following such dividend payment
     record date and prior to such Dividend Payment Date.  However, Convertible
     Preferred Shares surrendered for conversion during the period between the
     close of business on any dividend payment record date and the opening of
     business on the corresponding Dividend Payment Date (except shares
     converted after the issuance of notice of redemption with respect to a Call
     Date during such period, such Convertible Preferred Shares being entitled
     to such dividend on the Dividend Payment Date) must be accompanied by
     payment of an amount equal to the dividend payable on such shares on such
     Dividend Payment Date.  A holder of Convertible Preferred Shares on a
     dividend payment record date who (or whose transferee) tenders any such
     shares for conversion into Common Shares on the corresponding Dividend
     Payment Date will receive the dividend payable by the Trust on such
     Convertible Preferred Shares on such date, and the converting holder need
     not include payment of the amount of such dividend upon surrender of
     Convertible Preferred Shares for conversion.  Except as provided above, the
     Trust shall make no payment or allowance for unpaid dividends, whether or
     not in arrears, on converted shares or for dividends on the Common Shares
     issued upon such conversion.


                                      -22-

<PAGE>

           As promptly as practicable after the surrender of certificates for
     Convertible Preferred Shares as aforesaid, the Trust shall issue and shall
     deliver at such office to such holder, or on his or her written order, a
     certificate or certificates for the number of full Common Shares issuable
     upon the conversion of such shares in accordance with provisions of this
     Section 3.3.4, and any fractional interest in respect of a Common Share
     arising upon such conversion shall be settled as provided in paragraph (c)
     of this Section 3.3.4.

           Each conversion shall be deemed to have been effected immediately
     prior to the close of business on the date on which the certificates for
     Convertible Preferred Shares shall have been surrendered and such notice
     shall have been received by the Trust as aforesaid (and if applicable,
     payment of an amount equal to the dividend payable on such shares shall
     have been received by the Trust as described above), and the person or
     persons in whose name or names any certificate or certificates for Common
     Shares shall be issuable upon such conversion shall be deemed to have
     become the holder or holders of record of the shares represented thereby at
     such time on such date and such conversion shall be at the Conversion Price
     in effect at such time on such date unless the share transfer books of the
     Trust shall be closed on that date, in which event such person or persons
     shall be deemed to have become such holder or holders of record at the
     close of business on the next succeeding day on which such share transfer
     books are open, but such conversion shall be at the Conversion Price in
     effect on the date on which such shares shall have been surrendered and
     such notice received by the Trust.

           (c)  No fractional shares or scrip representing fractions of Common
     Shares shall be issued upon conversion of the Convertible Preferred Shares.
     Instead of any fractional interest in a Common Share that would otherwise
     be deliverable upon the conversion of a Convertible Preferred Share, the
     Trust shall pay to the holder of such share an amount in cash based upon
     the Current Market Price of the Common Shares on the Trading Day
     immediately preceding the date of conversion.  If more than one share shall
     be surrendered for conversion at one time by the same holder, the number of
     full Common Shares issuable upon conversion thereof shall be computed on
     the basis of the aggregate number of Convertible Preferred Shares so
     surrendered.


                                      -23-

<PAGE>

           (d)  The Conversion Price shall be adjusted from time to time as
     follows:

                (i)  If the Trust shall after the Issue Date (A) pay a dividend
           or make a distribution on its capital shares in Common Shares, (B)
           subdivide its outstanding Common Shares into a greater number of
           shares, (C) combine its outstanding Common Shares into a smaller
           number of shares or (D) issue any shares of beneficial interest by
           reclassification of its Common Shares, the Conversion Price in effect
           at the opening of business on the day following the date fixed for
           the determination of shareholders entitled to receive such dividend
           or distribution or at the opening of business on the Business Day
           next following the day on which such subdivision, combination or
           reclassification becomes effective, as the case may be, shall be
           adjusted so that the holder of any Convertible Preferred Share
           thereafter surrendered for conversion shall be entitled to receive
           the number of Common Shares that such holder would have owned or have
           been entitled to receive after the happening of any of the events
           described above as if such Convertible Preferred Shares had been
           converted immediately prior to the record date in the case of a
           dividend or distribution or the effective date in the case of a
           subdivision, combination or reclassification.  An adjustment made
           pursuant to this subparagraph (i) shall become effective immediately
           after the opening of business on the Business Day next following the
           record date (except as provided in paragraph (h) below) in the case
           of a dividend or distribution and shall become effective immediately
           after the opening of business on the Business Day next following the
           effective date in the case of a subdivision, combination or
           reclassification.

                (ii)  If the Trust shall issue after the Issue Date rights,
           options or warrants to all holders of Common Shares entitling them
           (for a period expiring within 45 days after the record date mentioned
           below) to subscribe for or purchase Common Shares at a price per
           share less than 94% (100% if a stand-by underwriter is used and
           charges the Trust a commission) of the Fair Market Value per Common
           Share on the record date for the determination of shareholders
           entitled to receive such rights, options or warrants, then the
           Conversion Price in effect at the opening of business on the Business
           Day next following such record date shall be adjusted to equal the
           price


                                      -24-

<PAGE>

           determined by multiplying (A) the Conversion Price in effect
           immediately prior to the opening of business on the Business Day next
           following the date fixed for such determination by (B) a fraction,
           the numerator of which shall be the sum of (x) the number of Common
           Shares outstanding on the close of business on the date fixed for
           such determination and (y) the number of shares that the aggregate
           proceeds to the Trust from the exercise of such rights, options or
           warrants for Common Shares would purchase at 94% of such Fair Market
           Value (or 100% in the case of a stand-by underwriting), and the
           denominator of which shall be the sum of (x) the number of Common
           Shares outstanding on the close of business on the date fixed for
           such determination and (y) the number of additional Common Shares
           offered for subscription or purchase pursuant to such rights, options
           or warrants.  Such adjustment shall become effective immediately
           after the opening of business on the day next following such record
           date (except as provided in paragraph (h) below).  In determining
           whether any rights, options or warrants entitle the holders of Common
           Shares to subscribe for or purchase Common Shares at less than 94% of
           such Fair Market Value (or 100% in the case of a stand-by
           underwriting), there shall be taken into account any consideration
           received by the Trust upon issuance and upon exercise of such rights,
           options or warrants, the value of such consideration, if other than
           cash, to be determined by the Board of Trustees.

                (iii)  If the Trust shall distribute to all holders of its
           Common Shares any securities of the Trust (other than Common Shares)
           or evidence of its indebtedness or assets (excluding cumulative cash
           dividends or distributions paid with respect to the Common Shares
           after December 31, 1996 which are not in excess of the following: the
           sum of (A) the Trust's cumulative undistributed Funds from Operations
           at December 31, 1996, plus (B) the cumulative amount of Funds from
           Operations, as determined by the Board of Trustees, after December
           31, 1996, minus (C) the cumulative amount of dividends accrued or
           paid in respect of the Convertible Preferred Shares or any other
           class or series of preferred shares of beneficial interest of the
           Trust after the Issue Date) or rights, options or warrants to
           subscribe for or purchase any of its securities (excluding those
           rights, options and warrants issued to all holders of Common


                                      -25-

<PAGE>

           Shares entitling them for a period expiring within 45 days after the
           record date referred to in subparagraph (ii) above to subscribe for
           or purchase Common Shares, which rights and warrants are referred to
           in and treated under subparagraph (ii) above) (any of the foregoing
           being hereinafter in this subparagraph (iii) collectively called the
           "Securities" and individually a "Security"), then in each such case
           the Conversion Price shall be adjusted so that it shall equal the
           price determined by multiplying (x) the Conversion Price in effect
           immediately prior to the close of business on the date fixed for the
           determination of shareholders entitled to receive such distribution
           by (y) a fraction, the numerator of which shall be the Fair Market
           Value per Common Share on the record date mentioned below less the
           then fair market value (as determined by the Board of Trustees, whose
           determination shall be conclusive), of the portion of the Securities
           or assets or evidences of indebtedness so distributed or of such
           rights, options or warrants applicable to one Common Share, and the
           denominator of which shall be the Fair Market Value per Common Share
           on the record date mentioned below.  Such adjustment shall become
           effective immediately at the opening of business on the Business Day
           next following (except as provided in paragraph (h) below) the record
           date for the determination of shareholders entitled to receive such
           distribution.  For the purposes of this subparagraph (iii), the
           distribution of a Security, which is distributed not only to the
           holders of the Common Shares on the date fixed for the determination
           of shareholders entitled to such distribution of such Security, but
           also is distributed with each Common Share delivered to a Person
           converting a Convertible Preferred Share after such determination
           date, shall not require an adjustment of the Conversion Price
           pursuant to this subparagraph (iii); PROVIDED, that on the date, if
           any, on which a person converting a Convertible Preferred Share would
           no longer be entitled to receive such Security with a Common Share
           (other than as a result of the termination of all such Securities), a
           distribution of such Securities shall be deemed to have occurred and
           the Conversion Price shall be adjusted as provided in this
           subparagraph (iii) (and such day shall be deemed to be "the date
           fixed for the determination of the shareholders entitled to receive
           such distribution" and "the record date" within the meaning of the
           two preceding sentences).


                                      -26-

<PAGE>

                (iv)  In case a tender or exchange offer (which term shall not
           include open market repurchases by the Trust) made by the Trust or
           any subsidiary of the Trust for all or any portion of the Common
           Shares shall expire and such tender or exchange offer shall involve
           the payment by the Trust or such subsidiary of consideration per
           Common Share having a fair market value (as determined in good faith
           by the Board of Trustees, whose determination shall be conclusive and
           described in a resolution of the Board of Trustees), at the last time
           (the "Expiration Time") tenders or exchanges may be made pursuant to
           such tender or exchange offer, that exceeds the Current Market Price
           per Common Share on the Trading Day next succeeding the Expiration
           Time, the Conversion Price shall be reduced so that the same shall
           equal the price determined by multiplying the Conversion Price in
           effect immediately prior to the effectiveness of the Conversion Price
           reduction contemplated by this subparagraph (iv) by a fraction of
           which the numerator shall be the number of Common Shares outstanding
           (including any tendered or exchanged shares) at the Expiration Time,
           multiplied by the Current Market Price per Common Share on the
           Trading Day next succeeding the Expiration Time, and the denominator
           shall be the sum of (A) the fair market value (determined as
           aforesaid) of the aggregate consideration payable to shareholders
           based upon the acceptance (up to any maximum specified in the terms
           of the tender or exchange offer) of all shares validly tendered or
           exchanged and not withdrawn as of the Expiration Time (the shares
           deemed so accepted, up to any maximum, being referred to as the
           "Purchased Shares") and (B) the product of the number of Common
           Shares outstanding (less any Purchased Shares) at the Expiration Time
           and the Current Market Price per Common Share on the Trading Day next
           succeeding the Expiration Time, such reduction to become effective
           immediately prior to the opening of business on the day following the
           Expiration Time.

                (v)  No adjustment in the Conversion Price shall be required
           unless such adjustment would require a cumulative increase or
           decrease of at least 1% in such price; PROVIDED, HOWEVER, that any
           adjustments that by reason of this subparagraph (v) are not required
           to be made shall be carried forward and taken into account in any
           subsequent adjustment until made; and PROVIDED,


                                      -27-

<PAGE>

           FURTHER, that any adjustment shall be required and made in accordance
           with the provisions of this Section 3.3.4 (other than this
           subparagraph (v)) not later than such time as may be required in
           order to preserve the tax-free nature of a distribution to the
           holders of Common Shares. Notwithstanding any other provisions of
           this Section 3.3.4, the Trust shall not be required to make any
           adjustment of the Conversion Price for the issuance of any Common
           Shares pursuant to any plan providing for the reinvestment of
           dividends or interest payable on securities of the Trust and the
           investment of additional optional amounts in Common Shares under such
           plan.  All calculations under this Section 3.3.4 shall be made to the
           nearest cent (with $0.005 being rounded upward) or to the nearest
           one-tenth of a share (with 0.05 of a share being rounded upward), as
           the case may be.  Anything in this paragraph (d) to the contrary
           notwithstanding, the Trust shall be entitled, to the extent permitted
           by law, to make such reductions in the Conversion Price, in addition
           to those required by this paragraph (d), as it in its discretion
           shall determine to be advisable in order that any share dividends,
           subdivision of shares, reclassification or combination of shares,
           distribution of rights or warrants to purchase shares or securities,
           or distribution of other assets (other than cash dividends) hereafter
           made by the Trust to its shareholders shall not be taxable.

           (e)  If the Trust shall be a party to any transaction (including,
     without limitation, a merger, consolidation, statutory share exchange, self
     tender offer for all or substantially all of its Common Shares, sale of all
     or substantially all of the Trust's assets or recapitalization of the
     Common Shares and excluding any transaction as to which subparagraph (d)(i)
     of this Section 3.3.4 applies) (each of the foregoing being referred to
     herein as a "Transaction"), in each case as a result of which all or
     substantially all of the Common Shares are converted into the right to
     receive shares, securities or other property (including cash or any
     combination thereof), each Convertible Preferred Share which is not
     redeemed or converted into the right to receive shares, securities or other
     property prior to such Transaction shall thereafter be convertible into the
     kind and amount of shares, securities and other property (including cash or
     any combination thereof) receivable upon the consummation of such
     Transaction by a holder of that number of Common Shares into which one
     Convertible Preferred Share was convertible


                                      -28-

<PAGE>

     immediately prior to such Transaction, assuming such holder of Common
     Shares (i) is not a Person with which the Trust consolidated or into
     which the Trust merged or which merged into the Trust or to which such
     sale or transfer was made, as the case may be ("Constituent Person"), or
     an affiliate of a Constituent Person and (ii) failed to exercise his rights
     of election, if any, as to the kind or amount of shares, securities and
     other property (including cash) receivable upon such Transaction (provided
     that if the kind or amount of shares, securities and other property
     (including cash) receivable upon such Transaction is not the same for each
     Common Share held immediately prior to such Transaction by other than a
     Constituent Person or an affiliate thereof and in respect of which such
     rights of election shall not have been exercised ("Non-Electing Share"),
     then for the purpose of this paragraph (e) the kind and amount of shares,
     securities and other property (including cash) receivable upon such
     Transaction by each Non-Electing Share shall be deemed to be the kind and
     amount so receivable per share by a plurality of the Non-Electing Shares).
     The Trust shall not be a party to any Transaction unless the terms of such
     Transaction are consistent with the provisions of this paragraph (e), and
     it shall not consent or agree to the occurrence of any Transaction until
     the Trust has entered into an agreement with the successor or purchasing
     entity, as the case may be, for the benefit of the holders of the
     Convertible Preferred Shares that will contain provisions enabling the
     holders of the Convertible Preferred Shares that remain outstanding after
     such Transaction to convert into the consideration received by holders of
     Common Shares at the Conversion Price in effect immediately prior to such
     Transaction.  The provisions of this paragraph (e) shall similarly apply
     to successive Transactions.

           (f)  If:

                (i)  the Trust shall declare a dividend (or any other
           distribution) on its Common Shares (other than cash dividends or
           distributions paid with respect to the Common Shares after December
           31, 1996 not in excess of the sum of the Trust's cumulative
           undistributed Funds from Operations at December 31, 1996, plus the
           cumulative amount of Funds from Operations, as determined by the
           Board of Trustees, after December 31, 1996, minus the cumulative
           amount of dividends accrued or paid in respect of the Convertible
           Preferred Shares or any other class or


                                      -29-

<PAGE>

           series of preferred shares of beneficial interest of the Trust
           after the Issue Date);

                (ii)  the Trust shall authorize the granting to all holders of
           Common Shares of rights, options or warrants to subscribe for or
           purchase any shares of any class or any other rights, options or
           warrants;

                (iii)  there shall be any reclassification of the Common Shares
           (other than an event to which subparagraph (d)(i) of this Section
           3.3.4 applies) or any consolidation or merger to which the Trust is a
           party (other than a merger in which the Trust is the surviving
           entity) and for which approval of any shareholders of the Trust is
           required, or a statutory share exchange, or a self tender offer by
           the Trust for all or substantially all of its outstanding Common
           Shares or the sale or transfer of all or substantially all of the
           assets of the Trust as an entirety; or

                (iv)  there shall occur the voluntary or involuntary
           liquidation, dissolution or winding up of the Trust;

     then the Trust shall cause to be filed with the Transfer Agent and shall
     cause to be mailed to the holders of Convertible Preferred Shares at their
     addresses as shown on the records of the Trust, as promptly as possible,
     but at least 10 days prior to the applicable date hereinafter specified, a
     notice stating (A) the date on which a record is to be taken for the
     purpose of such dividend, distribution or granting of rights, options or
     warrants, or, if a record is not to be taken, the date as of which the
     holders of Common Shares of record to be entitled to such dividend,
     distribution or rights, options or warrants are to be determined or (B) the
     date on which such reclassification, consolidation, merger, statutory share
     exchange, sale, transfer, liquidation, dissolution or winding up is
     expected to become effective, and the date as of which it is expected that
     holders of Common Shares of record shall be entitled to exchange their
     Common Shares for securities or other property, if any, deliverable upon
     such reclassification, consolidation, merger, statutory share exchange,
     sale, transfer, liquidation, dissolution or winding up.  Failure to give or
     receive such notice or any defect therein shall not affect the legality or
     validity of the proceedings described in this Section 3.3.4.


                                      -30-

<PAGE>

           (g)  Whenever the Conversion Price is adjusted as herein provided,
     the Trust shall promptly file with the Transfer Agent an officer's
     certificate setting forth the Conversion Price after such adjustment and
     setting forth a brief statement of the facts requiring such adjustment
     which certificate shall be conclusive evidence of the correctness of such
     adjustment absent manifest error.  Promptly after delivery of such
     certificate, the Trust shall prepare a notice of such adjustment of the
     Conversion Price setting forth the adjusted Conversion Price and the
     effective date of such adjustment and shall mail such notice of such
     adjustment of the Conversion Price to the holder of each Convertible
     Preferred Share at such holder's last address as shown on the records of
     the Trust.

           (h)  In any case in which paragraph (d) of this Section 3.3.4
     provides that an adjustment shall become effective on the day next
     following the record date for an event, the Trust may defer until the
     occurrence of such event (A) issuing to the holder of any Convertible
     Preferred Share converted after such record date and before the occurrence
     of such event the additional Common Shares issuable upon such conversion by
     reason of the adjustment required by such event over and above the Common
     Shares issuable upon such conversion before giving effect to such
     adjustment and (B) paying to such holder any amount of cash in lieu of any
     fraction pursuant to paragraph (c) of this Section 3.3.4.

           (i)  There shall be no adjustment of the Conversion Price in case of
     the issuance of any shares of beneficial interest of the Trust in a
     reorganization, acquisition or other similar transaction except as
     specifically set forth in this Section 3.3.4.  If any action or transaction
     would require adjustment of the Conversion Price pursuant to more than one
     paragraph of this Section 3.3.4, only one adjustment shall be made and such
     adjustment shall be the amount of adjustment that has the highest absolute
     value.

           (j)  If the Trust shall take any action affecting the Common Shares,
     other than action described in this Section 3.3.4, that in the opinion of
     the Board of Trustees would materially and adversely affect the conversion
     rights of the holders of the Convertible Preferred Shares, the Conversion
     Price for the Convertible Preferred Shares may be adjusted, to the extent
     permitted by law, in such manner, if any, and at such time, as the Board of
     Trustees, in its sole discretion, may determine to be equitable in the
     circumstances.

                                     -31-

<PAGE>

           (k)  The Trust covenants that it will at all times reserve and keep
     available, free from preemptive rights, out of the aggregate of its
     authorized but unissued Common Shares, for the purpose of effecting
     conversion of the Convertible Preferred Shares, the full number of Common
     Shares deliverable upon the conversion of all outstanding Convertible
     Preferred Shares not theretofore converted.  For purposes of this paragraph
     (k), the number of Common Shares that shall be deliverable upon the
     conversion of all outstanding Convertible Preferred Shares shall be
     computed as if at the time of computation all such outstanding shares were
     held by a single holder.

                The Trust covenants that any Common Shares issued upon
     conversion of the Convertible Preferred Shares shall be validly issued,
     fully paid and non-assessable.  Before taking any action that would cause
     an adjustment reducing the Conversion Price below the then-par value of the
     Common Shares deliverable upon conversion of the Convertible Preferred
     Shares, the Trust will take any action that, in the opinion of its counsel,
     may be necessary in order that the Trust may validly and legally issue
     fully paid and (subject to any customary qualification based upon the
     nature of a real estate investment trust) non-assessable Common Shares at
     such adjusted Conversion Price.

                The Trust shall endeavor to list the Common Shares required to
     be delivered upon conversion of the Convertible Preferred Shares, prior to
     such delivery, upon each national securities exchange, if any, upon which
     the outstanding Common Shares are listed at the time of such delivery.

                The Trust shall endeavor to comply with all federal and state
     securities laws and regulations thereunder in connection with the issuance
     of any securities that the Trust shall be obligated to deliver upon
     conversion of the Convertible Preferred Shares.  The certificates
     evidencing such securities shall bear such legends restricting transfer
     thereof in the absence of registration under applicable securities laws or
     an exemption therefrom as the Trust may in good faith deem appropriate.

           (l)  The Trust will pay any and all documentary stamp or similar
     issue or transfer taxes payable in respect of the issue or delivery of
     Common Shares or other securities or property on conversion of the
     Convertible Preferred Shares

                                     -32-

<PAGE>

     pursuant hereto; PROVIDED, HOWEVER, that the Trust shall not be required to
     pay any tax that may be payable in respect of any transfer involved in the
     issue or delivery of Common Shares or other securities or property in a
     name other than that of the holder of the Convertible Preferred Shares to
     be converted, and no such issue or delivery shall be made unless and until
     the person requesting such issue or delivery has paid to the Trust the
     amount of any such tax or established, to the reasonable satisfaction of
     the Trust, that such tax has been paid.

           3.3.5.   FIXED CHARGE COVERAGE; LIMITATION ON ISSUANCE OF ADDITIONAL
PREFERRED SHARES AND INDEBTEDNESS.

           (a)  Without the written consent of the holders of 66-2/3% of the
issued and outstanding Convertible Preferred Shares, none of the Trust, the
Operating Partnership or any of their subsidiaries may issue any additional
preferred securities of any such entity or incur any indebtedness (other than
trade payables or accrued expenses incurred in the ordinary course of business)
if, immediately following such issuance and after giving effect to such issuance
and the application of the net proceeds therefrom, such entity would be
reasonably expected to not satisfy one or both of the following ratios for the
fiscal quarter immediately preceding such issuance:

               (i)  Total Debt and liquidation value of non-convertible
     preferred shares of beneficial interest to Total Market Capitalization of
     less than .65 to 1.0 as of the end of the applicable fiscal quarter, or

               (ii)  Consolidated EBITDA to Consolidated Fixed Charges of at
     least 1.4 to 1.0 for the applicable fiscal quarter.

          (b)  In the event that the Trust fails to satisfy one or both of the
ratios in Section 3.3.5(a)(i) and (ii) above for two consecutive quarters, the
holders of Convertible Preferred Shares shall have the right to require that the
Trust, to the extent that the Trust shall have funds legally available therefor,
repurchase any or all of each holder's Convertible Preferred Shares at a
repurchase price payable in cash in an amount equal to 100% of the Liquidation
Preference thereof, plus accrued and unpaid dividends whether or not declared,
if any (the "Repurchase Payment"), to the date of repurchase or the date payment
is made available (the "Repurchase Date"), pursuant to the offer described in
paragraph (c) below (the "Repurchase Offer").

                                     -33-

<PAGE>

          (c)  Within 15 days following the second consecutive quarter that the
Trust fails to satisfy one or both of the ratios in Section 3.3.5(a)(i) and (ii)
above, the Trust shall mail by first class mail or overnight courier a notice to
all holders of Convertible Preferred Shares stating (i) that the Trust failed to
satisfy one or both of the tests (naming the test(s) failed), (ii) that the
holders of Convertible Preferred Shares have the right to require the Trust to
repurchase any or all Convertible Preferred Shares then held by such holder in
cash, (iii) the date of repurchase (which shall be a Business Day, no earlier
than 120 days and no later than 150 days from the date such notice is mailed, or
such later date as may be necessary to comply with the requirements of the
Exchange Act), (iv) the repurchase price for the repurchase and (v) the
instructions determined by the Trust, consistent with this paragraph (c), that
the holder must follow in order to have its Convertible Preferred Shares
repurchased.

          (d)  On the Repurchase Date, the Trust will, to the extent lawful,
accept for payment Convertible Preferred Shares or portions thereof tendered
pursuant to the Repurchase Offer and promptly mail by first class mail or
overnight courier or by wire transfer of immediately available funds to the
holder of Convertible Preferred Shares, as directed by such holder, payment in
an amount equal to the Repurchase Payment in respect of all Convertible
Preferred Shares or portions thereof so tendered.

          (e)  Notwithstanding anything else herein, to the extent they are
applicable to any Repurchase Offer, the Trust will comply with any federal and
state securities laws, rules and regulations and all time periods and
requirements shall be adjusted accordingly.

          (f)  "Total Debt" means the sum of (without duplication) any
indebtedness, whether or not contingent, in respect of borrowed money or
evidenced by bonds, notes, debentures, or similar instruments or letters of
credit (or reimbursement agreements in respect thereof) or representing the
balance deferred and unpaid of the purchase price of any property (including
pursuant to capital leases), except any such balance that constitutes an accrued
expense or trade payable, if and to the extent such indebtedness would appear as
a liability upon a balance sheet of such entity prepared on a consolidated basis
in accordance with Generally Accepted Accounting Principles ("GAAP"), and also
includes, to the extent not otherwise included, the guarantee of items which
would be included within this definition.

                                     -34-

<PAGE>

          (g)  "Total Market Capitalization" means the sum of: (a) the Fair
Market Value of the outstanding Common Shares, assuming (i) the full exchange of
outstanding partnership units (in each case not held by the Trust) of the
Operating Partnership for Common Shares and (ii) the conversion of the
outstanding shares of Convertible Preferred Shares into Common Shares; (b) the
aggregate liquidation value of any outstanding preferred shares of beneficial
interest other than the Convertible Preferred Shares; and (c) the Total Debt of
the Trust.

          (h)  "Consolidated EBITDA" for any period means the consolidated net
income of the Trust (before extraordinary income or gains) as reported in the
Trust's financial statements filed with the Securities and Exchange Commission
increased by the sum of the following (without duplication):

          a.   all income and state franchise taxes paid or accrued according to
               GAAP for such period (other than income taxes attributable to
               extraordinary, unusual or non-recurring gains or losses except to
               the extent that such gains were not included in Consolidated
               EBITDA),

          b.   all interest expense paid or accrued in accordance with GAAP for
               such period (including financing fees and amortization of
               deferred financing fees and amortization of original issue
               discount),

          c.   depreciation and depletion reflected in such reported net income,

          d.   amortization reflected in such reported net income, including,
               without limitation, amortization of capitalized debt issuance
               costs (only to the extent that such amounts have not been
               previously included in the amount of Consolidated EBITDA pursuant
               to clause (b) above), goodwill, other intangibles and management
               fees, and

          e.   any other non-cash charges or discretionary prepayment penalties,
               to the extent deducted from consolidated net income (including,
               but not limited to, income allocated to minority interests).

          (i)  "Consolidated Fixed Charges" for any period means the sum of:

                                     -35-

<PAGE>

          a.   all interest expense paid or accrued in accordance with GAAP for
               such period (including financing fees and amortization of
               deferred financing fees and amortization of original issue
               discount),

          b.   preferred shares of beneficial interest dividend requirements for
               such period, whether or not declared or paid, and

          c.   regularly scheduled amortization of principal during such period
               (other than any balloon payments at maturity).

          (j)  Notwithstanding the provisions of this Section 3.3.5, in no event
shall the Trust be required to repurchase any Convertible Preferred Shares at
any time that such repurchase is prohibited by this Declaration of Trust or the
Trust's debt instruments.

          3.3.6.    SHARES TO BE RETIRED.  All Convertible Preferred Shares
which shall have been issued and reacquired in any manner by the Trust shall be
restored to the status of authorized but unissued preferred shares of beneficial
interest, without distinction as to class or series, and subject to applicable
limitations set forth in this Declaration of Trust may thereafter be reissued as
shares of any series of preferred shares of beneficial interest.

          3.3.7.    RANKING.  Any class or series of shares of beneficial
interest of the Trust shall be deemed to rank:

          (a)  prior to the Convertible Preferred Shares, as to the payment of
     dividends and as to distribution of assets upon liquidation, dissolution or
     winding up, if the holders of such class or series shall be entitled to the
     receipt of dividends or of amounts distributable upon liquidation,
     dissolution or winding up, as the case may be, in preference or priority to
     the holders of Convertible Preferred Shares;

          (b)  on a parity with the Convertible Preferred Shares, as to the
     payment of dividends and as to distribution of assets upon liquidation,
     dissolution or winding up, whether or not the dividend rates, dividend
     payment dates or redemption or liquidation prices per share thereof shall
     be different from those of the Convertible Preferred Shares, if the holders
     of such class or series and the Convertible Preferred Shares shall be
     entitled to the receipt of dividends and of amounts

                                     -36-

<PAGE>

     distributable upon liquidation, dissolution or winding up in proportion
     to their respective amounts of accrued and unpaid dividends per share or
     liquidation preferences, without preference or priority one over the
     other ("Parity Shares");

          (c)  junior to the Convertible Preferred Shares, as to the payment of
     dividends or as to the distribution of assets upon liquidation, dissolution
     or winding up, if such class or series shall be Junior Shares; and

          (d)  junior to the Convertible Preferred Shares, as to the payment of
     dividends and as to the distribution of assets upon liquidation,
     dissolution or winding up, if such class or series shall be Fully Junior
     Shares.

          3.3.8.    VOTING RIGHTS.  If and whenever (i) two consecutive
quarterly dividends payable on the Convertible Preferred Shares or any series or
class of Parity Shares shall be in arrears (which shall, with respect to any
such quarterly dividend, mean that any such dividend has not been paid in full),
whether or not earned or declared, or (ii) for two consecutive quarterly
dividend periods the Trust fails to pay dividends on the Common Shares in an
amount per share at least equal to $0.3375 (subject to adjustment consistent
with any adjustment of the Conversion Price pursuant to Section 3.3.4(d) hereof)
the number of Trustees then constituting the Board of Trustees shall be
increased by one (unless the then current Board of Trustees consists of more
than 10 Trustees in which case it shall be increased by two) and the holders of
Convertible Preferred Shares, together with the holders of shares of every other
series of Parity Shares (any such other series, the "Voting Preferred Shares"),
voting as a single class regardless of series, shall be entitled to elect the
one or two additional Trustees to serve on the Board of Trustees at any annual
meeting of shareholders or special meeting held in place thereof, or at a
special meeting of the holders of the Convertible Preferred Shares and the
Voting Preferred Shares called as hereinafter provided.  Whenever all arrears in
dividends on the Convertible Preferred Shares and the Voting Preferred Shares
then outstanding shall have been paid and dividends thereon for the current
quarterly dividend period shall have been paid or declared and set apart for
payment, or the Trust has paid dividends on the Common Shares in an amount per
share at least equal to $0.3375 (subject to adjustment consistent with any
adjustment of the Conversion Price pursuant to Section 3.3.4(d)) for two
consecutive quarters, then the right of the holders of the Convertible Preferred
Shares and the Voting Preferred Shares to elect such

                                     -37-

<PAGE>

additional Trustee(s) shall cease (but subject always to the same provision
for the vesting of such voting rights in the case of any similar future
arrearage in quarterly dividends), and the terms of office of all persons
elected as Trustee(s) by the holders of the Convertible Preferred Shares and
the Voting Preferred Shares shall forthwith terminate and the number of the
Board of Trustees shall be reduced accordingly. At any time after such voting
power shall have been so vested in the holders of Convertible Preferred
Shares and the Voting Preferred Shares, the Secretary of the Trust may, and
upon the written request of any holder of Convertible Preferred Shares
(addressed to the Secretary at the principal office of the Trust) shall, call
a special meeting of the holders of the Convertible Preferred Shares and of
the Voting Preferred Shares for the election of the Trustee(s) to be elected
by them as herein provided, such call to be made by notice similar to that
provided in the Bylaws for a special meeting of the shareholders or as
required by law.  If any such special meeting required to be called as above
provided shall not be called by the Secretary within 20 days after receipt of
any such request, then any holder of Convertible Preferred Shares may call
such meeting, upon the notice above provided, and for that purpose shall have
access to the records of the Trust.  The Trustee(s) elected at any such
special meeting shall hold office until the next annual meeting of the
shareholders or special meeting held in lieu thereof if such office shall not
have previously terminated as above provided.  If any vacancy shall occur
among the Trustee(s) elected by the holders of the Convertible Preferred
Shares and the Voting Preferred Shares, a successor shall be elected by the
Board of Trustees, upon the nomination of the then-remaining Trustee elected
by the holders of the Convertible Preferred Shares and the Voting Preferred
Shares or, if there is no such remaining Trustee, upon the nomination of the
holders of a majority of the voting power of the Convertible Preferred Shares
and the Voting Preferred Shares, to serve until the next annual meeting of
the shareholders or special meeting held in place thereof if such office
shall not have previously terminated as provided above.

          So long as any Convertible Preferred Shares are outstanding, in
addition to any other vote or consent of shareholders required by law or by this
Declaration of Trust, the affirmative vote of at least 66-2/3% of the votes
entitled to be cast by the holders of the Convertible Preferred Shares given in
person or by proxy, either in writing without a meeting or by vote at any
meeting called for the purpose, shall be necessary for effecting or validating:

                                     -38-

<PAGE>

          Any amendment, alteration or repeal of any of the provisions of this
Declaration of Trust that materially and adversely affects the voting powers,
rights or preferences of the holders of the Convertible Preferred Shares;
PROVIDED, HOWEVER, that the amendment of the provisions of this Declaration of
Trust so as to authorize or create, or to increase the authorized amount of, any
Fully Junior Shares, Junior Shares that are not senior in any respect to the
Convertible Preferred Shares or any Parity Shares shall not be deemed to
materially adversely affect the voting powers, rights or preferences of the
holders of Convertible Preferred Shares; or

          A share exchange that affects the Convertible Preferred Shares, a
consolidation with, or merger of the Trust into, another entity, or a
consolidation with, or merger of another entity into, the Trust, unless in each
such case each Convertible Preferred Share (i) shall remain outstanding without
a material and adverse change to its terms and rights or (ii) shall be converted
into or exchanged for convertible preferred shares of the surviving entity
having preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends, qualifications and term or conditions of redemption
thereof identical to that of a Convertible Preferred Share (except for changes
that do not materially and adversely affect the holders of the Convertible
Preferred Shares);

PROVIDED, HOWEVER, that no such vote of the holders of Convertible Preferred
Shares shall be required if, at or prior to the time when such amendment,
alteration or repeal is to take effect, or when the issuance of any such prior
shares or convertible security is to be made, as the case may be, provision is
made for the redemption of all Convertible Preferred Shares at the time
outstanding to the extent such redemption is authorized by Section 3.3.3 hereof.

          For purposes of the foregoing provisions of this Section 3.3.8, each
Convertible Preferred Share shall have one (1) vote per share, except that when
any other series of Preferred Shares shall have the right to vote with the
Convertible Preferred Shares as a single class on any matter, then the
Convertible Preferred Shares and such other series shall have with respect to
such matters one (1) vote per $20.00 (or less pursuant to Section 3.3.2(a)
hereof) of the stated liquidation preference.  Except as otherwise required by
applicable law or as set forth herein, the Convertible Preferred Shares shall
not have any relative, participating, optional or other special voting rights
and powers other than as set forth herein, and the consent of the holders
thereof shall not be required for the taking of any Trust action.

                                     -39-

<PAGE>

          3.3.9.    RECORD HOLDERS.  The Trust and the Transfer Agent may deem
and treat the record holder of any Convertible Preferred Shares as the true and
lawful owner thereof for all purposes, and neither the Trust nor the Transfer
Agent shall be affected by any notice to the contrary.

     3.4. ADDITIONAL PREFERRED SHARES.  The Trustees shall have power from time
to time to classify or reclassify unissued additional Preferred Shares in one or
more series and to establish for each series the terms, preferences, conversion
or other rights, voting powers, restrictions, distribution limitations,
qualifications and redemption terms and conditions, and to set or change the
number of shares in each series, and, in such event, the Trust shall file for
record with the State Department of Assessments and Taxation of the State of
Maryland (the "SDAT") articles supplementary to this Declaration of Trust in
substance and form as prescribed by Maryland law.

     3.5. AUTHORIZATION BY BOARD OF SHARE ISSUANCE.  The Board of Trustees may
authorize the issuance from time to time of Shares of any class or series,
whether now or hereafter authorized, or securities or rights convertible into
Shares of any class or series, whether now or hereafter authorized, for such
consideration (whether in cash, property, past or future services, obligation
for future payment or otherwise) as the Board of Trustees may deem advisable (or
without consideration in the case of a Share split or Share dividend), subject
to such restrictions or limitations, if any, as may be set forth herein or in
the Bylaws, and all Shares so issued will be fully paid and non-assessable.
Notwithstanding any other provision herein, no determination shall be made by
the Board of Trustees nor shall any transaction be entered into by the Trust
which would cause any Shares or other beneficial interest in the Trust not to
constitute "transferable shares" or "transferable certificates of beneficial
interest" under Section 856(a)(2) of the Code or which would cause any
distribution to constitute a preferential dividend as described in Section
562(c) of the Code.

     3.6. DIVIDENDS AND DISTRIBUTIONS.  Subject to the dividend rights and the
preferential rights upon liquidation of the Convertible Preferred Shares, any
additional Preferred Shares and the Excess Shares, holders of Common Shares will
participate equally in dividends payable to holders of Common Shares when and as
authorized and declared by the Board of Trustees and in net assets available for
distribution to holders of Common Shares upon liquidation or dissolution.  The
Board of Trustees may from time to time authorize and declare to shareholders
such dividends or

                                     -40-

<PAGE>

distributions, in cash or other assets of the Trust or in securities of the
Trust or from any other source as the Board of Trustees in its discretion
shall determine.  The Board of Trustees shall endeavor to declare and pay
such dividends and distributions as shall be necessary for the Trust to
qualify as a REIT under the Code; however, shareholders shall have no right
to any dividend or distribution unless and until authorized and declared by
the Board of Trustees.  The exercise of the powers and rights of the Board of
Trustees pursuant to this Section 3.6 shall be subject to the provisions of
any class or series of Shares at the time outstanding.

     3.7. GENERAL NATURE OF SHARES.  All Shares shall be personal property
entitling the shareholders only to those rights provided in this Declaration
of Trust.  The shareholders shall have no interest in the property of the
Trust and shall have no right to compel any partition, division, dividend or
distribution of the Trust or of the property of the Trust.  The death of a
shareholder shall not terminate the Trust.  The Trust is entitled to treat as
shareholders only those persons in whose names Shares are registered as
holders of Shares on the beneficial interest ledger of the Trust.

     3.8. FRACTIONAL SHARES.  The Trust may, without the consent or approval
of any shareholder, issue fractional Shares, eliminate a fraction of a Share
by rounding up or down to a full Share, arrange for the disposition of a
fraction of a Share by the person entitled to it, or pay cash for the fair
value of a fraction of a Share.

     3.9. DECLARATION OF TRUST AND BYLAWS.  All shareholders are subject to
the provisions of this Declaration of Trust and the Bylaws.

4.   RESTRICTIONS ON TRANSFER, ACQUISITION AND REDEMPTION OF EQUITY SHARES;
     EXCHANGE FOR EXCESS SHARES.

     4.1. RESTRICTIONS ON OWNERSHIP AND TRANSFER.

          (a)   Except as provided in Section 4.6 hereof, from and after the
Closing Date of the Initial Public Offering and prior to the Restriction
Termination Date, no Person shall Beneficially Own or Constructively Own
Equity Shares in excess of the Ownership Limit.

          (b)   Except as provided in Section 4.6 hereof, from and after the
Closing Date of the Initial Public Offering and prior to


                                      -41-

<PAGE>

the Restriction Termination Date, any Transfer that, if effective, would
result in any Person Beneficially Owning or Constructively Owning Equity
Shares in excess of the Ownership Limit shall be void AB INITIO as to the
Transfer of such Equity Shares which would be otherwise Beneficially Owned or
Constructively Owned by such Person in excess of the Ownership Limit, and
such Person shall acquire no rights in such Equity Shares.

          (c)   Except as provided in Section 4.6 hereof, from and after the
Closing Date of the Initial Public Offering and prior to the Restriction
Termination Date, any Transfer that, if effective, would result in the Equity
Shares being Beneficially Owned or Constructively Owned by less than 100
Persons (determined without reference to any rules of attribution) shall be
void AB INITIO as to the Transfer of such shares of Equity Shares which would
be otherwise Beneficially Owned or Constructively Owned by the transferee,
and the intended transferee shall acquire no rights in such Equity Shares;
PROVIDED, HOWEVER, that this Section 4.1(c) shall not apply to the Transfer
of Equity Shares from the Trust to the underwriters of the Initial Public
Offering.

          (d)   Except as provided in Section 4.6 hereof, from and after the
Closing Date of the Initial Public Offering and prior to the Restriction
Termination Date, any Transfer that, if effective, would result in the Trust
being "closely held" within the meaning of Section 856(h) of the Code shall
be void AB INITIO as to the Transfer of the shares of Equity Shares which
would cause the Trust to be "closely held" within the meaning of Section
856(h) of the Code or any successor statute, and the intended transferee
shall acquire no rights in such Equity Shares.

          4.2   CONVERSION TO EXCESS SHARES AND TRANSFER TO SHARE TRUST.

          (a)   If, notwithstanding the other provisions contained in this
Section 4, at any time from and after the Closing Date of the Initial Public
Offering and prior to the Restriction Termination Date, there is a purported
Transfer, change in the capital structure of the Trust or other event such
that any Person would Beneficially Own or Constructively Own Equity Shares in
excess of the applicable Ownership Limit, then, subject to Section 4.6 and
Section 4.7 hereof, such Equity Shares in excess of such Ownership Limit
(rounded up to the nearest whole share) shall be automatically converted into
an equal number of "Excess Shares" and, in accordance with the provisions of
this Section 4, be transferred automatically, by operation of law, to a Share
Trust to be held in accordance with this Section 4.  Such conversion and


                                      -42-

<PAGE>

transfer shall be effective as of the close of business on the Business Day
prior to the date of the purported Transfer, change in capital structure of
the Trust or other event.

          (b)   If, notwithstanding the other provisions contained in this
Section 4, at any time from and after the Closing Date of the Initial Public
Offering and prior to the Restriction Termination Date, there is a purported
Transfer, change in the capital structure of the Trust or other event which,
if effective, would (i) result in the Equity Shares being Beneficially Owned
or Constructively Owned by fewer than 100 Persons (determined without
reference to rules of attribution) or (ii) cause the Trust to become "closely
held" within the meaning of Section 856(h) of the Code or any successor
statute, then such number of Equity Shares (rounded up to the nearest whole
share) being transferred which would cause the Trust to be "closely held"
within the meaning of Section 856(h) of the Code or any successor statute
shall be automatically converted into an equal number of "Excess Shares" and,
in accordance with the provisions of this Section 4, be transferred
automatically, by operation of law, to a Share Trust to be held in accordance
with this Section 4.  Such conversion and transfer shall be effective as of
the close of business on the Business Day prior to the date of the purported
Transfer, change in capital structure or other event.

     4.3.   REMEDIES FOR BREACH.  If the Trustees or their designee shall at
any time determine in good faith that a Transfer has taken place in violation
of Section 4.1 hereof, or that a Person intends to acquire or has attempted
to acquire Beneficial Ownership or Constructive Ownership of any Shares of
the Trust in violation of Section 4.1, the Trustees or their designee shall
take such action as they deem advisable to refuse to give effect to or to
prevent such Transfer, including, but not limited to, refusing to give effect
to such Transfer on the books of the Trust, directing the Trust's transfer
agent and/or registrar to refuse to give effect to such Transfer on the books
of the Trust or instituting proceedings to enjoin such Transfer; PROVIDED,
HOWEVER, that any Transfer or attempted Transfer in violation of Section 4.1
shall automatically result in the conversion and transfer described in
Sections 4.2(a) and 4.2(b) hereof irrespective of any action (or non-action)
by the Trustees or their designee.

     4.4.   NOTICE TO TRUST OF RESTRICTED TRANSFER.  Any Person who acquires
or attempts to acquire shares in violation of Section 4.1 hereof, or any
Person who is a transferee such that Excess Shares result under Section 4.2
hereof, shall immediately give the Trust written notice of such event and
shall provide to the Trust such


                                      -43-

<PAGE>

other information as the Trust may request in order to determine the effect,
if any, of such Transfer or attempted Transfer on the Trust's status as a
REIT.

     4.5.   OWNERS REQUIRED TO PROVIDE INFORMATION FOR TRUST.  From and after
the Closing Date of the Initial Public Offering and prior to the Restriction
Termination Date:

            (a) Every Beneficial Owner or Constructive Owner of more than
5.0% (or such lower percentage as required pursuant to regulations under the
Code) of the number or value of outstanding Equity Shares of the Trust shall,
within 30 days after January 1 of each year, give a written statement or
affidavit to the Trust stating the name and address of such Beneficial Owner
or Constructive Owner, the number of Equity Shares Beneficially Owned or
Constructively Owned and a description of how such Equity Shares are held.
Each such Beneficial Owner shall provide to the Trust such additional
information as the Trust may reasonably request in order to determine the
effect, if any, of such Beneficial Ownership or Constructive Ownership on the
Trust's status as a REIT or to ensure compliance with the Ownership Limit.

            (b) Each Person who is a Beneficial Owner or Constructive Owner
of Equity Shares and each Person (including the shareholder of record) who is
holding Equity Shares for a Beneficial Owner or Constructive Owner shall
provide to the Trust a written statement or affidavit stating such
information as the Trust may reasonably request in order to determine the
Trust's status as a REIT or to ensure compliance with the Ownership Limit.

     4.6.   EXCEPTIONS TO OWNERSHIP LIMIT.  The Ownership Limit shall not
apply to the acquisition of Equity Shares by an underwriter that participates
in a public offering of such shares for a period of 90 days following the
purchase by such underwriter of such shares; PROVIDED, that the restrictions
contained in Section 4.1 hereof will not be violated following the
distribution by such underwriter of such shares.  In addition, the Board of
Trustees, upon receipt of a ruling from the Internal Revenue Service or an
opinion of counsel satisfactory to it, in each case to the effect that the
restrictions contained in Section 4.1 hereof will not be violated and that
REIT status will not otherwise be lost, and upon such other conditions as the
Trustees may direct, may in its discretion exempt a Person from, or provide
such Person with a limited exception to, the Ownership Limit if such Person
is not an individual for purposes of Section 542(a)(2) of the Code; PROVIDED,
HOWEVER, that (i) the Board of Trustees must obtain such representations and
undertakings from such Person as are reasonably


                                      -44-

<PAGE>

necessary to ascertain that no individual's Beneficial Ownership or
Constructive Ownership of Equity Shares will violate the Ownership Limit,
(ii) such Person agrees that any exemption or exception provided pursuant to
this Section 4.6 shall only apply to such Person and that any subsequent
Transfer by such Person which would cause any violation or attempted
violation of the Ownership Limit with respect to any other Person pursuant to
Section 4.1 shall cause the revocation of the exemption or exception and any
resulting Excess Shares will be transferred to the Share Trust pursuant to
Section 4.2 hereof and (iii) such Person agrees that the acquisition of the
Equity Shares that is the subject of the exemption or exception does not and
will not cause the Trust to actually or Constructively Own more than a
certain percentage interest (within the meaning of Section 856(d)(2)(B) of
the Code and as determined by the Board of Trustees but in no event more than
9.9%) in any tenant of the Trust's real property determined without regard to
any other interests in any such tenant which the Company may actually or
Constructively Own, provided that this  clause (iii) shall not apply if such
ownership would not cause the Trust to fail the income tests set forth in
Section 856(c) of the Code for any taxable year.

     4.7.   SETTLEMENTS ON A NATIONAL SECURITIES EXCHANGE.  Notwithstanding
any provision contained herein to the contrary, nothing in this Section 4
shall preclude the settlement of any transaction entered into through the
facilities of the NYSE.  The fact that the settlement occurs shall not negate
the effect of any other provision of this Section 4, and any transferee in
such a transaction and the Shares so transferred shall be subject to all of
the provisions and limitations set forth in this Section 4.

     4.8.   EXCESS SHARES AND SHARE TRUST.

            (a)  SHARE TRUST.  Any Equity Shares transferred to a Share Trust
and converted into Excess Shares pursuant to Section 4.2 hereof shall be held
for the exclusive benefit of the Beneficiary.  The Trust shall name a
Beneficiary of each Share Trust within five days after discovery of the
existence thereof. Any conversion of Equity Shares into Excess Shares and
transfer to a Share Trust pursuant to Section 4.2 shall be effective as of
the close of business on the Business Day prior to the date of the purported
Transfer, change in capital structure or other event that results in the
transfer to the Share Trust.  Excess Shares shall remain issued and
outstanding shares of the Trust and shall be entitled to the same rights and
privileges on identical terms and conditions as are all other issued and
outstanding Equity Shares of the same class and series as the class and
series from which such


                                       -45-

<PAGE>

Excess Shares were converted.  When transferred to a Permitted Transferee in
accordance with the provisions of Section 4.8(e) hereof, such Excess Shares
shall be automatically converted into shares of the class and series from
which they were converted into Excess Shares.

            (b)  DIVIDEND RIGHTS.  The Share Trustee shall be entitled to
receive all dividends and distributions with respect to Excess Shares as may
be declared by the Board of Trustees on the Equity Shares from which such
Excess Shares were converted and shall hold such dividends or distributions
in trust for the benefit of the Beneficiary.  The Prohibited Transferee with
respect to Excess Shares shall repay to the Share Trust the amount of any
dividends or distributions received by it that (i) are attributable to any
Equity Shares converted into Excess Shares and (ii) the record date for which
was on or after the date that such shares became Excess Shares.  The Trust
shall take all measures that it determines reasonably necessary to recover
the amount of any such dividend or distribution paid to a Prohibited
Transferee, including, if necessary, withholding any portion of future
dividends or distributions payable on Equity Shares purported to be
Beneficially Owned or Constructively Owned by the Person who, but for the
provisions of Section 4.1 hereof, would Constructively Own or Beneficially
Own the Excess Shares; and, as soon as reasonably practicable following the
Trust's receipt or withholding thereof, shall pay over to the Share Trust for
the benefit of the Beneficiary the dividends so received or withheld, as the
case may be.

            (c)  RIGHTS UPON LIQUIDATION FOR EXCESS SHARES.  In the event of
any voluntary or involuntary liquidation, dissolution or winding up of, or
any other distribution of all or substantially all of the assets of, the
Trust, each holder of Excess Shares shall be entitled to receive, ratably
with each other holder of Equity Shares of the same class and series as the
class and series from which such Excess Shares were converted, that portion
of the assets of the Trust available for distribution to the holders of such
class and series of Equity Shares.  The Share Trust shall distribute to the
Prohibited Transferee the amounts received upon such liquidation,
dissolution, winding up or distribution; PROVIDED, HOWEVER, that the
Prohibited Transferee shall not be entitled to receive amounts pursuant to
this Section 4.8(c) in excess of, (i) in the case of a purported Transfer in
which the Prohibited Transferee gave value for Equity Shares and which
Transfer resulted in the transfer of the shares to the Share Trust, the price
per share, if any, such Prohibited Transferee paid for the Equity Shares and,
(ii) in the case of a purported Transfer in


                                      -46-

<PAGE>

which the Prohibited Transfer did not give value for such shares (e.g., if
the shares were received through a gift or devise) and which purported
Transfer resulted in the transfer of shares to the Share Trust, the price per
share equal to the Market Price on the date of such purported Transfer.  Any
remaining amount in such Share Trust shall be distributed to the Beneficiary.

            (d)  VOTING RIGHTS FOR EXCESS SHARES.  The Share Trustee shall be
entitled to vote all Excess Shares, which Excess Shares shall have the same
voting rights as the Equity Shares of the class and series from which such
Excess Shares were converted.  Any vote by a Prohibited Transferee as a
holder of Equity Shares prior to the discovery by the Trust that the Equity
Shares are Excess Shares shall, subject to applicable law, be rescinded and
shall be void AB INITIO with respect to such Excess Shares and the Prohibited
Transferee shall be deemed to have given, as of the close of business on the
Business Day prior to the date of the purported Transfer that results in the
transfer to the Share Trust of Equity Shares under Section 4.2 hereof, an
irrevocable proxy to the Share Trustee, coupled with an interest, to vote the
Excess Shares in the manner in which the Share Trustee, in its sole and
absolute discretion, desires.

            (e)  DESIGNATION OF PERMITTED TRANSFEREE.  The Share Trustee
shall have the exclusive and absolute right, at any time after the 90-day
period referred to in Section 4.8(g) hereof, to designate a Permitted
Transferee of any and all Excess Shares.  In an orderly fashion so as not to
materially adversely affect the Market Price of the Excess Shares, the Share
Trustee shall designate any Person as Permitted Transferee; PROVIDED,
HOWEVER, that (i) the Permitted Transferee so designated purchases for
valuable consideration (whether in a public or private sale), at a price as
set forth in Section 4.8(g), the Excess Shares and (ii) the Permitted
Transferee so designated may acquire such Excess Shares without such
acquisition resulting in a transfer to a Share Trust and the redesignation of
such Equity Shares so acquired as Excess Shares under Section 4.2 hereof.
Upon the designation by the Share Trustee of a Permitted Transferee in
accordance with the provisions of this Section 4.8(e), (i) the Share Trustee
shall, upon receipt of consideration therefor, cause to be transferred to the
Permitted Transferee that number of Excess Shares acquired by the Permitted
Transferee, (ii) the Share Trustee shall cause to be recorded on the books of
the Trust that the Permitted Transferee is the holder of record of such
number of Equity Shares, (iii) such number of Excess Shares shall be
automatically converted into an equal number of Equity Shares of the class
and series from which such Excess Shares were converted and (iv) the Share
Trustee shall


                                      -47-

<PAGE>

distribute to the Beneficiary any and all amounts held with respect to the
Excess Shares after making the payment to the Prohibited Transferee pursuant
to Section 4.8(f) hereof.

            (f)  COMPENSATION TO RECORD HOLDER OF EQUITY SHARES THAT BECOME
EXCESS SHARES.  Any Prohibited Transferee shall be entitled (following
discovery of the Excess Shares and subsequent designation of the Permitted
Transferee in accordance with Section 4.8(e) hereof or following the
acceptance of the offer to purchase such shares in accordance with Section
4.8(g) hereof) to receive from the Share Trustee following the sale or other
disposition of such Excess Shares the lesser of (i) in the case of (a) a
purported Transfer in which the Prohibited Transferee gave value for Equity
Shares and which Transfer resulted in the transfer of the shares to the Share
Trust, the price per share such Prohibited Transferee paid for the Equity
Shares or (b) a Transfer in which the Prohibited Transferee did not give
value for such shares (e.g., if the shares were received through a gift or
devise) and which Transfer resulted in the transfer of shares to the Share
Trust, the Market Price on the date of such Transfer and (ii) the price per
share received by the Share Trustee from the sale or other disposition of
such Excess Shares in accordance with Section 4.8(e) or 4.8(g).  Any amounts
received by the Share Trustee in respect of such Excess Shares and in excess
of such amounts to be paid the Prohibited Transferee pursuant to this Section
4.8(f) shall be distributed to the Beneficiary in accordance with the
provisions of Section 4.8(e).  Each Beneficiary and Prohibited Transferee
waive any and all claims that they may have against the Share Trustee and the
Share Trust arising out of the disposition of Excess Shares, except for
claims arising out of the gross negligence or willful misconduct of, or any
failure to make payments in accordance with this Section 4.8 by, such Share
Trustee or the Trust.

            (g)  PURCHASE RIGHT IN EXCESS SHARES.  Excess Shares shall be
deemed to have been offered for sale by the Share Trustee to the Trust, or
its designee, at a price per share equal to the lesser of (i) the price per
share in the transaction that created such Excess Shares (or, in the case of
devise or gift, the Market Price at the time of such devise or gift) and (ii)
the Market Price on the date the Trust, or its designee, accepts such offer.
The Trust shall have the right to accept such offer for a period of 90 days
after the later of (i) the date of the purported Transfer which resulted in
such Excess Shares and (ii) the date the Trust determines in good faith that
a Transfer resulting in Excess Shares has occurred, if the Trust does not
receive a notice of such Transfer pursuant to Section 4.4 hereof.


                                      -48-

<PAGE>

     4.9.  REMEDIES NOT LIMITED.  Other than with respect to Section 4.7
hereof, nothing contained in this Section 4 shall limit the authority of the
Trustees to take such other action as they deem necessary or advisable to
protect the Trust and the interest of the shareholders by preservation of the
Trust's status as a REIT and to ensure compliance with the Ownership Limit.

     4.10.  AMBIGUITIES.  In the case of an ambiguity in the application of
any of the provisions of this Section 4, the Trustees shall have the power to
determine the application of the provisions of this Section 4 with respect to
any situation based on the facts known to the Trustees.

     4.11.  LEGEND.

            Each certificate for Common Shares, Preferred Shares and
Convertible Preferred Shares shall bear the following legend:

            "The Equity Shares represented by this certificate are
            subject to restrictions on transfer for the purpose of
            the Trust's maintenance of its status as a real estate
            investment trust under the Internal Revenue Code of
            1986, as amended (the "Code").  Subject to certain
            further restrictions, no Person may (i) Beneficially or
            Constructively Own Equity Shares in excess of 9.9% of
            the number of shares or value of outstanding Equity
            Shares, (ii) Beneficially or Constructively Own Equity
            Shares that would result in the Equity Shares being
            Beneficially or Constructively Owned by fewer than 100
            Persons (determined without reference to any rules of
            attribution) or (iii) Beneficially or Constructively Own
            Equity Shares that would result in the Trust being
            "closely held" under Section 856(h) of the Code, unless
            the conditions of Section 4.6 of the Trust's Declaration
            of Trust are satisfied.  Any Person who attempts to
            Beneficially or Constructively Own Equity Shares in
            excess of the above limitations must immediately notify
            the Trust in writing of such proposed or attempted
            Transfer.  If any restrictions described above are
            violated, the Equity Shares represented hereby will be
            converted automatically into Excess Shares which will be


                                      -49-

<PAGE>

            transferred automatically, by operation of law, to a
            Share Trust to be held for the exclusive benefit of a
            Beneficiary to be named by the Trust.  In addition, upon
            the occurrence of certain events, attempted Transfers in
            violation of the restrictions described above may be
            void AB INITIO.  All capitalized terms in this legend
            have the meanings defined in the Trust's Declaration of
            Trust, as the same may be further amended from time to
            time, a copy of which, including the restrictions on
            Transfer, will be sent without charge to each
            shareholder who so requests.  Such requests must be made
            to the Secretary of the Trust at its principal office."

     4.13.  SEVERABILITY.  If any provision of this Section 4 or any
application of any such provision is determined to be void, invalid or
unenforceable by any court having jurisdiction over the issue, the validity
and enforceability of the remaining provisions shall not be affected and
other applications of such provision shall be affected only to the extent
necessary to comply with the determination of such court.

5.   SHAREHOLDERS.

     5.1.  MEETINGS.  There shall be an annual meeting of the shareholders,
to be held on proper notice at such time (after the delivery of the annual
report) and convenient location as shall be determined by or in the manner
prescribed in the Bylaws, for the election of the Trustees, if required, and
for the transaction of any other business within the powers of the Trust.
Except as otherwise provided in this Declaration of Trust, special meetings
of shareholders may be called in the manner provided in the Bylaws.  If there
are no Trustees, the officers of the Trust shall promptly call a special
meeting of the shareholders entitled to vote for the election of successor
Trustees. Any meeting may be adjourned and reconvened as the Trustees
determine or as provided in the Bylaws.

     5.2.  VOTING RIGHTS.  Subject to the provisions of any class or series
of Shares then outstanding, the shareholders shall be entitled to vote only
on the following matters:  (a) termination of REIT status as provided in
Section 2.1(c) hereof; (b) election of Trustees as provided in Section 2.2(a)
hereof and the removal of Trustees as provided in Section 2.3 hereof; (c)
amendment of this Declaration of Trust as provided in Section 7 hereof; (d)


                                      -50-

<PAGE>

termination of the Trust as provided in Section 9.2 hereof; (e) merger or
consolidation of the Trust, or the sale or disposition of all or
substantially all of the property of the Trust, as provided in Section 8
hereof; (f) any matter for which a vote of shareholders is required by a
national securities exchange on which the Shares are traded; and (g) such
other matters with respect to which a vote of the shareholders is required by
applicable law or the Board of Trustees has adopted a resolution declaring
that a proposed action is advisable and directing that the matter be
submitted to the shareholders for approval or ratification. Except with
respect to the foregoing matters, no action taken by the shareholders at any
meeting shall in any way bind the Board of Trustees.

     5.3.  PREEMPTIVE AND APPRAISAL RIGHTS.  Except as may be provided by the
Board of Trustees in setting the terms of any class or series of Shares pursuant
to Section 3.5 hereof, no holder of Shares shall, as such holder: (a) have any
preemptive or preferential right to purchase or subscribe for any additional
Shares or any other security of the Trust which it may issue or sell or (b)
except as expressly required by Maryland law, have any right to require the
Trust to pay it the fair value of its Shares in an appraisal or similar
proceeding.


6.   LIABILITY LIMITATION AND INDEMNIFICATION.

     6.1.  LIMITATION OF SHAREHOLDER LIABILITY.  No shareholder shall be
personally liable for any debt, claim, demand, judgment or obligation of any
kind of, against or with respect to the Trust by reason of its being a
shareholder, nor shall any shareholder be subject to any personal liability
whatsoever, in tort, contract or otherwise, to any Person in connection with the
property of the Trust or the affairs of the Trust.

     6.2.  LIMITATION OF TRUSTEE AND OFFICER LIABILITY.  To the maximum extent
that Maryland law in effect from time to time permits limitation of the
liability of trustees and officers of a real estate investment trust, no Trustee
or officer of the Trust shall be liable to the Trust or to any shareholder for
money damages.  Neither the amendment nor repeal of this Section 6.2, nor the
adoption or amendment of any other provision of this Declaration of Trust
inconsistent with this Section 6.2, shall apply to or affect in any respect the
applicability of the preceding sentence with respect to any act or failure to
act which occurred prior to such amendment, repeal or adoption.  In the absence
of any Maryland statute limiting the liability of trustees

                             -51-

<PAGE>

and officers of a Maryland real estate investment trust for money damages in
a suit by or on behalf of the Trust or by any shareholder, no Trustee or
officer of the Trust shall be liable to the Trust or to any shareholder for
money damages except to the extent that (i) the Trustee or officer actually
received an improper benefit or profit in money, property or services, in
which case the liability shall not exceed the amount of the benefit or profit
in money, property or services actually received; or (ii) a judgment or other
final adjudication adverse to the Trustee or officer is entered in a
proceeding based on a finding in the proceeding that the Trustee's or
officer's action or failure to act was the result of active and deliberate
dishonesty and was material to the cause of action adjudicated in the
proceeding.

     6.3.  EXPRESS EXCULPATORY CLAUSES IN INSTRUMENTS.  Neither the shareholders
nor the Trustees, officers, employees or agents of the Trust shall be liable
under any written instrument creating an obligation of the Trust, and all
Persons shall look solely to the property of the Trust for the payment of any
claim under or for the performance of that instrument.  The omission of the
foregoing exculpatory language from any instrument shall not affect the validity
or enforceability of such instrument and shall not render any shareholder,
Trustee, officer, employee or agent liable thereunder to any third party, nor
shall the Trustees or any officer, employee or agent of the Trust be liable to
anyone for such omission.

     6.4.  INDEMNIFICATION AND ADVANCEMENT FOR EXPENSES.  The Trust shall
indemnify, to the fullest extent permitted by Maryland law, as applicable from
time to time, all persons who at any time were or are trustees or officers of
the Trust for any threatened, pending or completed action, suit or proceeding
(whether civil, criminal, administrative or investigative) relating to any
action alleged to have been taken or omitted in such capacity as a trustee or an
officer.  The Trust shall pay or reimburse all reasonable expenses incurred by a
present or former trustee or officer of the Trust in connection with any
threatened, pending or completed action, suit or proceeding (whether civil,
criminal, administrative or investigative) in which the present or former
trustee or officer is a party, in advance of the final disposition of the
proceeding, to the fullest extent permitted by, and in accordance with the
applicable requirements of, Maryland law, as applicable from time to time.  The
Trust may indemnify any other persons permitted but not required to be
indemnified by Maryland law, as applicable from time to time, if and to the
extent indemnification is authorized and determined to be appropriate, in each
case in accordance with applicable law, by the Board of Trustees, the majority
of the

                             -52-

<PAGE>

shareholders of the Trust entitled to vote thereon or special legal counsel
appointed by the Board of Trustees.  No amendment of this Declaration of
Trust or repeal of any of its provisions shall limit or eliminate any of the
benefits provided to trustees and officers under this Section 6.4 in respect
of any act or omission that occurred prior to such amendment or repeal.


7.   AMENDMENTS.

     7.1.  GENERAL.  The Trust reserves the right from time to time to make any
amendment to this Declaration of Trust, now or hereafter authorized by law,
including any amendment altering the terms or contract rights, as expressly set
forth in this Declaration of Trust, of any Shares.  All rights and powers
conferred by this Declaration of Trust on shareholders, Trustees and officers
are granted subject to this reservation.  All references to this Declaration of
Trust shall include all amendments thereto.

     7.2.  BY TRUSTEES.  The Trustees by a two-thirds vote may amend this
Declaration of Trust from time to time, in the manner provided by Maryland REIT
law, without any action by the shareholders, to qualify as a REIT under the Code
or under Maryland REIT law.

     7.3.  BY SHAREHOLDERS.  Other than amendments pursuant to Section 3.1 or
Section 7.2 hereof, any amendment to this Declaration of Trust shall be valid
only if approved by the affirmative vote of at least a majority of all the votes
entitled to be cast on the matter, except that any amendment to Section 2.1(c),
2.2(a) or 2.3 or this Section 7.3 of this Declaration of Trust shall be valid
only if approved by the affirmative vote of two-thirds of all the votes entitled
to be cast on the matter.

8.   MERGER, CONSOLIDATION OR SALE OF THE PROPERTY OF THE TRUST.

     Subject to the provisions of any class or series of Shares at the time
outstanding, the Trust may (a) merge with or into another entity, (b)
consolidate with one or more other entities into a new entity or (c) sell,
lease, exchange or otherwise transfer all or substantially all of the property
of the Trust.  Any such action must be approved by the Board of Trustees and,
after notice to all shareholders entitled to vote on the matter, by the
affirmative vote of a majority of all the votes entitled to be cast on the
matter.

                             -53-

<PAGE>

9.   DURATION AND TERMINATION OF TRUST.

     9.1.  DURATION OF TRUST.  The Trust shall continue perpetually unless
terminated pursuant to Section 9.2 hereof or pursuant to any applicable
provision of Maryland REIT law.

     9.2.  TERMINATION OF TRUST.

           (a)  Subject to the provisions of any class or series of Shares at
the time outstanding, the Trust may be terminated at any meeting of shareholders
called for that purpose by the affirmative vote of the holders of not less than
two-thirds of the Shares then outstanding and entitled to vote thereon.  Upon
the termination of the Trust:

                (i)   The Trust shall carry on no business except for the
purpose of winding up its affairs;

                (ii)  The Trustees shall proceed to wind up the affairs of the
Trust and all of the powers of the Trustees under this Declaration of Trust
shall continue, including the powers to fulfill or discharge the Trust's
contracts, collect its assets, sell, convey, assign, exchange, transfer or
otherwise dispose of all or any part of the remaining property of the Trust to
one or more Persons at public or private sale for consideration which may
consist in whole or in part of cash, securities or other property of any kind,
discharge or pay its liabilities and do all other acts appropriate to liquidate
its business; and

                (iii) After paying or adequately providing for the payment of
all liabilities, and upon receipt of such releases, indemnities and agreements
as they deem necessary for their protection, the Trustees may distribute the
remaining property of the Trust, in cash or in kind or partly each, among the
shareholders according to their respective rights, so that after payment in full
or the setting apart for payment of such preferential amounts, if any, to which
the holders of any Shares (other than Common Shares) at the time outstanding
shall be entitled, the remaining property of the Trust available for payment and
distribution to shareholders shall, subject to any participating or similar
rights of Shares (other than Common Shares) at the time outstanding, be
distributed ratably among the holders of Common Shares at the time outstanding.

           (b)  After termination of the Trust, the liquidation of its business
and the distribution to the shareholders as herein provided, a majority of the
Trustees shall execute and file with

                             -54-

<PAGE>

the Trust's records a document certifying that the Trust has been duly
terminated, and thereupon the Trustees shall be discharged from all
liabilities and duties hereunder, and the rights and interests of all
shareholders shall cease.

10.  MISCELLANEOUS.

     10.1.  GOVERNING LAW.  The rights of all parties and the validity,
construction and effect of every provision of this Declaration of Trust shall be
subject to and construed according to the laws of the State of Maryland without
regard to conflicts of laws provisions thereof.

     10.2  RELIANCE BY THIRD PARTIES.  Any certificate shall be final and
conclusive as to any Person dealing with the Trust if executed by an individual
who, according to the records of the Trust or of any recording office in which
this Declaration of Trust may be recorded, appears to be the Secretary or an
Assistant Secretary of the Trust or a Trustee, and if certifying to:  (a) the
number or identity of Trustees, officers of the Trust or shareholders; (b) the
due authorization of the execution of any document; (c) the action or vote
taken, and the existence of a quorum, at a meeting of the Board of Trustees or
shareholders; (d) a copy of this Declaration of Trust or of the Bylaws as a true
and complete copy as then in force; (e) an amendment to this Declaration of
Trust; (f) the termination of the Trust; or (g) the existence of any fact which
relates to the affairs of the Trust.  No purchaser, lender, transfer agent or
other Person shall be bound to make any inquiry concerning the validity of any
transaction purporting to be made on behalf of the Trust by the Trustees or by
any officer, employee or agent of the Trust.

     10.3.  SEVERABILITY.

           (a)  The provisions of this Declaration of Trust are severable, and
if the Board of Trustees shall determine, with the advice of counsel, that any
one or more of such provisions (the "Conflicting Provisions") are in conflict
with the REIT provisions of the Code, the Maryland REIT law or other applicable
federal or state laws, the Conflicting Provisions shall be deemed never to have
constituted a part of this Declaration of Trust, even without any amendment of
this Declaration of Trust pursuant to Section 7 hereof; PROVIDED, HOWEVER, that
such determination by the Board of Trustees shall not affect or impair any of
the remaining provisions of this Declaration of Trust or render invalid or
improper any

                             -55-

<PAGE>

action taken or omitted prior to such determination.  No Trustee shall be
liable for making or failing to make such a determination.

           (b)  If any provision of this Declaration of Trust shall be held
invalid or unenforceable in any jurisdiction, such holding shall not in any
manner affect or render invalid or unenforceable such provision in any other
jurisdiction or any other provision of this Declaration of Trust in any
jurisdiction.

     10.4.  CONSTRUCTION.  In this Declaration of Trust, unless the context
otherwise requires, words used in the singular or in the plural include both the
plural and singular and words denoting any gender include all genders.  The
title and headings of different parts are inserted for convenience and shall not
affect the meaning, construction or effect of this Declaration of Trust.

     10.5.  RECORDATION.  This Declaration of Trust and any amendment hereto
shall be filed for record with the SDAT and may also be filed or recorded in
such other places as the Trustees deem appropriate, but failure to file for
record this Declaration of Trust or any amendment hereto in any office other
than in the State of Maryland shall not affect or impair the validity or
effectiveness of this Declaration of Trust or any amendment hereto.  A restated
Declaration of Trust shall, upon filing, be conclusive evidence of all
amendments contained therein and may thereafter be referred to in lieu of the
original Declaration of Trust and the various amendments thereto.

     THIRD:  the amendment and restatement of the Declaration of Trust was
approved and advised by the Board of Trustees and approved by the sole
shareholder of the Trust in accordance with the Maryland REIT law.

                               [signature page follows]











                             -56-

<PAGE>

IN WITNESS WHEREOF, these Articles of Amendment and Restatement have been signed
on this 14th day of November, 1997, by the undersigned President of the Trust
who acknowledges that these Articles of Amendment and Restatement are the act of
the Trust and that, to the best of his knowledge, information and belief, the
matters and facts set forth herein are true in all material respects and that
the statement is made under the penalties for perjury.

                                 PRIME GROUP REALTY TRUST



                                 By:  /s/ Richard S. Curto           [Seal]
                                    ---------------------------
                                 Name:   Richard S. Curto
                                 Title:  President




ATTEST:



By: /s/ Robert J. Rudnik
  ---------------------------
Name:   Robert J. Rudnik
Title:  Secretary





                                  -57-