GROVE PROPERTY TRUST

                             Articles Supplementary



          GROVE  PROPERTY  TRUST, a Maryland real estate  investment  trust (the
"Trust"),  hereby  certifies to the Maryland State Department of Assessments and
Taxation that:

          FIRST: Pursuant to authority expressly vested in the Board of Trustees
of the  Trust by the  Third  Amended  and  Restated  Declaration  of Trust  (the
"Declaration of Trust"),  the Board of Trustees has duly reclassified  3,999,000
Preferred  Shares (par value $0.01 per share) of the Trust as  3,999,000  Common
Shares  (par  value  $0.01 per  share) of the  Trust  and has  provided  for the
issuance of such shares.

          SECOND: The reclassification increases the number of shares classified
as   Common   Shares   from   10,000,000   shares   immediately   prior  to  the
reclassification  to 13,999,000 shares  immediately after the  reclassification.
The  reclassification  decreases  the number of shares  classified  as Preferred
Shares from 4,000,000 shares immediately prior to the  reclassification to 1,000
shares immediately after the reclassification.

          THIRD:  The  description  of the  preferences,  conversion  and  other
rights, voting powers, restrictions, limitations as to dividends, qualifications
and terms and conditions of the Common Shares and Preferred  Shares contained in
the Declaration of Trust is not altered by these Articles Supplementary.

          IN WITNESS WHEREOF,  GROVE PROPERTY TRUST has caused these presents to
be  signed in its name on its  behalf  by its  President  and  witnessed  by its
Secretary on October 23, 1997,


WITNESS:                                   GROVE PROPERTY TRUST


/s/ Joseph R. LaBrosse                     By: /s/ Damon P. Navarro
-----------------------------              ---------------------------------
Joseph R. LaBrosse                         Damon P. Navarro
Secretary                                  President



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          THE  UNDERSIGNED,  President of GROVE PROPERTY TRUST,  who executed on
behalf of the Trust the Articles Supplementary of which this certificate is made
a part,  hereby  acknowledges  in the  name  and on  behalf  of said  Trust  the
foregoing  Articles  Supplementary  to be the  corporate  act of said  Trust and
hereby certifies that the matters and facts set forth herein with respect to the
authorization  and approval thereof are true in all material  respects under the
penalties of perjury.


                                                  /s/ Damon P. Navarro
                                                  ----------------------------
                                                  Damon P. Navarro











                          GROVE REAL ESTATE ASSET TRUST
                           THIRD AMENDED AND RESTATED
                              DECLARATION OF TRUST
                              Dated March 14, 1997



         THIS  THIRD  AMENDED  AND  RESTATED  DECLARATION  OF  TRUST  is made in
conformity with the provisions of Section 12.5 hereof,  as of the date set forth
above by the undersigned Trust Managers.

                                    ARTICLE I
                         THE TRUST; CERTAIN DEFINITIONS


         SECTION 1.1 Name. The name of the trust (the "Trust") is:

                              GROVE PROPERTY TRUST

         SECTION 1.2 Resident Agent.  The name and address of the resident agent
of the Trust in the State of Maryland is the CT Corporation System, Maryland, 32
South  Street,  Baltimore,  Maryland  21202.  The Trust may have such offices or
places of business  within or without the State of Maryland as the  Trustees may
from time to time determine.

         SECTION  1.3  Nature of Trust.  The Trust is a real  estate  investment
trust within the meaning of "Title 8", defined below.

         SECTION 1.4 Powers.  The Trust shall have all of the powers  granted to
real estate  investment trusts generally by Title 8 and shall have any other and
further powers as are not inconsistent with Title 8 or other applicable law.

         SECTION 1.5  Definitions.  As used in this  Declaration  of Trust,  the
following terms shall have the following  meanings unless the context  otherwise
requires:

         "Affiliate" or "Affiliated" means, as to any corporation,  partnership,
trust or other  association  (other than the  Trust),  any Person (i) that holds
beneficially,  directly or indirectly,  5% or more of the  outstanding  stock or
equity interests thereof or (ii) who is an officer, director, partner or trustee
thereof or of any Person which  controls,  is controlled  by, or is under common
control with, such corporation, partnership, trust or other association or (iii)
which  controls,  is  controlled  by,  or is under  common  control  with,  such
corporation, partnership, trust or other association.

         "Board of Trust  Managers"  means the  Board of Trust  Managers  of the
Trust.

         "Bylaws" means the Bylaws of the Trust, as amended.

         "Code" means the Internal Revenue Code of 1986, as amended.

         "Declaration" or "Declaration of Trust" means this  Declaration  Trust,
including any amendments or supplements hereto.

         "Executive  Officers"  means Damon D. Navarro,  Brian  Navarro,  Edmund
Navarro, Joseph LaBrosse and Gerald McNamara.

         "Independent  Trust  Manager"  means a  member  of the  Board  of Trust
Managers of the Trust which is not employed by or  affiliated  with the Trust or
an Affiliate of the Trust.

         "Person" means an individual,  corporation,  partnership, estate, trust
(including a trust  qualified under Section 401(a) or 501(c)(17) of the Code), 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



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the meaning of Section 508(a) of the Code,  joint stock company or other entity,
or any government and agency or political subdivision thereof.

         "REIT Provisions of the Code" means Section 856 through 860 of the Code
and  any  other  successor  provisions  of the  Code  relating  to  real  estate
investment  trust  (including  provisions as to the  attribution of ownership of
beneficial interests therein) and the regulations promulgated thereunder.

         "Securities" means Shares (defined below),  any stock,  shares or other
evidences of equity,  beneficial or other interests,  voting trust certificates,
bonds,  debentures,  notes  or  other  evidences  of  indebtedness,  secured  or
unsecured, convertible, subordinated or otherwise, or in general any instruments
commonly  known as  "securities"  or any  certificates  of  interest,  shares or
participations  in,  temporary  or  interim   certificates  for,  receipts  for,
guarantees  of, or  warrants,  options or rights to  subscribe  to,  purchase or
acquire, any of the foregoing.

         "Securities of the Trust" means any securities issued by the Trust.

         "Shareholders" means holders of record of Shares.

         "Shares" means transferable  shares of beneficial interest of the Trust
of any class or series.

         "Title 8" means Title 8 of the Corporations and Associations Article of
the Annotated Code of Maryland, or any successor statute.

         "Trust  Manager"  means,  individually,  an  individual,  and  "  Trust
Managers"  means,  collectively,  the  individuals,  in each  case,  as named in
Section 2.2 of this  Declaration  so long as they continue in office and any and
all other  individuals  who have been duly elected and qualify as Trust Managers
of the Trust hereunder.

         "Trust  Property"  means  any  and  all  property,  real,  personal  or
otherwise, tangible or intangible, which is transferred or conveyed to the Trust
or  the  Trust  Managers  (including  all  rents,  income,   profits  and  gains
therefrom),  which is owned or held by, or for the  account of, the Trust or the
Trust Managers.

                                   ARTICLE II
                                 TRUST MANAGERS

         SECTION 2.1 Number, Composition. The number of Trust Managers initially
shall be five,  which  number may  thereafter  be  increased or decreased by the
Trust  Managers then in office from time to time;  however,  the total number of
Trust  Managers shall be not less than two and not more than 15. No reduction in
the number of Trust  Managers shall cause the removal of any Trust Managers from
office prior to the expiration of his term.

         At all times after the date of closing of the Initial  Public  Offering
(as  defined  herein),  the  composition  of the Board of Trust  Managers  shall
consist of a majority of Independent Trust Managers.

         SECTION  2.2  Term.  At  each  Annual  Meeting  of  Shareholders,   the
successors  to the class of Trust  Managers  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 and the
other Trust Managers shall continue in office.

         SECTION 2.3 Resignation, Removal or Death. Any Trust Manager may resign
by written notice to the remaining Trust Managers,  effective upon execution and
delivery to the Trust of such written  notice or upon any future date  specified
in the notice.  A Trust Manager may be removed,  only with Cause (as hereinafter
defined),  at a Meeting  of the  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 in the  election of Trustees.  As used herein,
"Cause"  shall mean (a)  material  theft,  fraud or  embezzlement  or active and
deliberate  dishonesty  by a Trust  Manager;  (b) habitual  neglect of duty by a
Trust Manager having a material and adverse  significance  to the Trust;  or (c)
the  conviction of a Trust Manager of a felony or of any crime  involving  moral
turpitude. Upon the incapacity, death, resignation or removal of any Trust


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Manager,  or his otherwise ceasing to be a Trust Manager, he shall automatically
cease to have any right,  title or  interest  in and to the Trust  Property  and
shall execute and deliver such documents as the remaining Trust Managers require
for the  conveyance of any Trust Property held in his name, and shall account to
the remaining  Trust Managers as they require for all property which he holds as
Trust Manager.

         SECTION 2.4 Legal  Title.  Legal title to all Trust  Property  shall be
vested in the Trust,  but the Trust may cause legal title to any Trust  Property
to be held by or in the name of any or all of the  Trust  Managers  or any other
Person as nominee.  Any right, title or interest of the Trust Managers in and to
the Trust Property shall  automatically  vest in successor and additional  Trust
Managers upon their  qualification  and acceptance of election or appointment as
Trust  Managers,  and they shall thereupon have all the right and obligations of
Trust  Managers,  whether or not  conveyancing  documents have been executed and
delivered  pursuant  to  Section  2.3  or  otherwise.  Written  evidence  of the
qualification  and  acceptance  of  election or  appointment  of  successor  and
additional Trust Managers may be filed with the records of the Trust and in such
other  offices,  agencies  or  places as the  Trust or Trust  Managers  may deem
necessary or desirable.

                                   ARTICLE III
                            POWERS OF TRUST MANAGERS

         Subject to the express  limitations  herein or in the  Bylaws,  (1) the
business  and affairs of the Trust shall be managed  under the  direction of the
Board of Trust Managers and (2) the Trust  Managers  shall have full,  exclusive
and absolute  power,  control and authority over the Trust Property and over the
business  of the Trust as if they,  in their  own  right,  were the sole  owners
thereof.  The  Trustees  may take any  actions  as in their  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  Trust  Managers.  Any  construction  of  this
Declaration or determination made in good faith by the Trust Managers concerning
their powers and  authority  hereunder  shall be  conclusive.  The powers of the
Trust  Managers  shall in no way be limited or  restricted  by  reference  to or
inference from the terms of this or any other  provision of this  Declaration or
construed  or deemed by inference or otherwise in any manner to exclude or limit
the powers conferred upon the Trust Managers under the general laws of the State
of Maryland as now or hereafter in force.

                                   ARTICLE IV
                                INVESTMENT POLICY

         The fundamental  investment  policy of the Trust is to make investments
in such a manner as to comply with the REIT  Provisions of the Code and with the
requirements  of  Title  8 with  respect  to  the  composition  of  the  Trust's
investments and the derivation of its income.  Subject to Section 6.7, the Trust
Managers shall use their best efforts to carry out this  fundamental  investment
policy and to conduct  the  affairs of the Trust in such a manner as to continue
to qualify the Trust for the tax  treatment  provided in the REIT  Provisions of
the Code; provided,  however, that no Trust Manager,  officer, employee or agent
of the Trust shall be liable for any action or omission resulting in the loss of
tax benefits under the Code,  except to the extent provided in Section 11.2. The
Trust  Managers  may  change  from  time to time,  either  by  resolution  or by
amendment to the Bylaws of the Trust, such investment policies as they determine
to be in the best interest of the Trust,  including prohibitions or restrictions
upon certain types of investments.

                                    ARTICLE V
                                     SHARES


         SECTION 5.1  Authorized  Shares.  The total  number of Shares which the
Trust has  authority to issue is  14,000,000  shares,  of which  10,000,000  are
Common  Shares,   $.01  par  value  per  share  (each,  a  "Common  Share  "  or
collectively,  "Common Shares"),  and 4,000,000 are Preferred  Shares,  $.01 par
value per share (each a "Preferred Share" or collectively, "Preferred Shares").


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         SECTION 5.2 Common  Shares.  Subject to the  provisions  of Article VII
regarding  Excess  Shares (as such term is defined  therein),  each Common Share
shall entitle the holder thereof to one vote. Holders of Common Shares shall not
be entitled to cumulative voting.

         SECTION 5.3 Preferred Shares. Preferred Shares may be issued, from time
to time, in one or more series,  as  authorized by the Board of Trust  Managers.
Prior to  issuance  of  Preferred  Shares  of each  series,  the  Board of Trust
Managers,  by resolution,  shall  designate  that series of Preferred  Shares to
distinguish  it from all other  series and classes of  Preferred  Shares,  shall
specify the number of Preferred Shares to be included in the series and, subject
to the provisions of Article VII regarding  Excess Shares,  shall set the terms,
preferences,   conversion  and  other  rights,   voting  powers,   restrictions,
limitations as to dividends or other distributions,  qualifications and terms or
conditions of redemption.

         SECTION 5.4  Classification  or  Reclassification  of Unissued  Shares.
Subject to the express  terms of any series of Preferred  Shares or any class of
Common Shares outstanding at the time and notwithstanding any other provision of
the  Declaration of Trust,  the Board of Trust Managers may increase or decrease
the number of, alter the  designation  of or classify or reclassify any unissued
Shares by setting or changing,  in any one or more  respects,  from time to time
before  issuing  the  Shares,  and  subject to the  provisions  of  Article  VII
regarding Excess Shares,  the terms,  preferences,  conversion and other rights,
voting powers, restrictions, limitations as to dividends or other distributions,
qualifications  or terms or  conditions  of redemption of any series or class of
Shares.

         SECTION 5.5  Declaration  of Trust and Bylaws.  All persons who acquire
Shares shall acquire the same subject to the  provisions of this  Declaration of
Trust and the Bylaws.

         SECTION  5.6  Exchange  of OP Units.  So long as the Trust  remains the
general partner of Grove Operating,  L.P., the board of trust managers is hereby
expressly  vested with  authority  (subject to the  restrictions  on  ownership,
transfer  and  redemption  of Equity  Shares set forth in Article VII hereof) to
issue,  and shall  issue to the extent  provided in the  Partnership  Agreement,
Common  Shares in exchange  for the units into which  partnership  interests  in
Grove Operating,  L.P. ("OP Units") are divided, as the same may be adjusted, as
provided in the Partnership Agreement.

         SECTION 5.7  Reservation of Shares.  Pursuant to the obligations of the
Trust under the Partnership  Agreement to issue Common Shares in exchange for OP
Units,  the board of trust managers is hereby  required to reserve and authorize
for issuance a sufficient  number of  authorized  but unissued  Common Shares to
permit the Trust to issue  Common  Shares in  exchange  for OP Units that may be
exchanged  for or converted  into Common  Shares as provided in the  Partnership
Agreement.

                                   ARTICLE VI
                        PROVISIONS FOR DEFINING, LIMITING
                      AND REGULATING CERTAIN POWERS OF THE
                TRUST AND OF THE SHAREHOLDERS AND TRUST MANAGERS


         SECTION  6.1  Authorization  by Board of Share  Issuance.  The Board of
Trust  Managers may  authorize  the issuance  from time to time of Shares of any
class,  whether now or hereafter  authorized,  or  securities  convertible  into
Shares of any class, whether now or hereafter authorized, for such consideration
as the Board of Trust Managers may deem advisable,  subject to such restrictions
or limitations,  if any, as may be set forth in this  Declaration of Trust or in
the  Bylaws or in the  general  corporation  laws or other  laws of the State of
Maryland affecting or having application to real estate investment trusts.

         SECTION 6.2 Preemptive and Appraisal Rights.  Except as may be provided
by the Board of Trust Managers in authorizing  the issuance of Preferred  Shares
pursuant to Section 5.3, no holder of Shares shall, as such holder, (a) have any
preemptive right to purchase or subscribe for any additional Shares or any other
security  of the Trust  which  the  Trust  may  issue or sell or (b),  except as
expressly  required  by Title 8, have any right to require  the Trust to pay him
the fair value of his Shares in an appraisal or similar proceeding.


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         SECTION 6.3 Advisor or Property Management Agreements.  Subject to such
approval of the Shareholders and other conditions, if any, as may be required by
any  applicable  statute,  rule or  regulation,  the Board of Trust Managers may
authorize the execution and  performance by the Trust of one or more  agreements
with any person, corporation,  association, company, trust, partnership (limited
or  general) or other  organization,  whether or not an  Affiliate  of the Trust
(each,  an "Advisor"),  whereby,  subject to the  supervision and control of the
Board of Trust Managers,  any such Advisor shall render or make available to the
Trust managerial,  investment,  advisory and/or related services,  office space,
and property management services,  and other services and facilities (including,
if  deemed  advisable  by  the  Board  of  Trust  Managers,  the  management  or
supervision  of the  investments of the Trust) upon such terms and conditions as
may be provided in such agreement or agreements  (including,  if deemed fair and
equitable by the Board of Trust Managers, the compensation payable thereunder by
the Trust), subject to the provisions of Section 11.6.

         SECTION 6.4 Related Party Transactions.

         (a) Without limiting any other procedures available by law or otherwise
to the Trust,  the Board of Trust  Managers may  authorize  any agreement of the
character  described in Section 6.3 or any other  transaction  with any Advisor,
although  one or more of the Trust  Managers  or  officers of the Trust may be a
party to such agreement or may be an officer, director, stockholder or member of
such Advisor,  and no such  agreement or  transaction  shall be  invalidated  or
rendered  void or  voidable  solely  by  reason  of the  existence  of any  such
relationship  if the  existence  is  disclosed  or known  to the  Board of Trust
Managers,  and the  contract  or  transaction  is approved by the Board of Trust
Managers  (including the affirmative vote of a majority of the Independent Trust
Managers,  even if they constitute  less than a quorum of the Board).  Any Trust
Manager who is also a director, officer,  stockholder or member of an Advisor or
other  entity with whom the Trust  proposes to engage in business may be counted
in  determining  the  existence of a quorum at any meeting of the Board of Trust
Managers considering such matter.

         (b) Subsequent to the Closing Date (as defined herein), the affirmative
vote of a majority of the  Independent  Trust Managers (even if they  constitute
less than a quorum of the Board)  shall be required  to approve the  purchase by
the  Trust or its  subsidiaries  of any  multifamily  residential  or  mixed-use
properties,  the  ownership of which is under the control,  whether  directly or
indirectly,  of Messrs.  Damon D.  Navarro and Joseph R.  LaBrosse or any of the
Executive Officers of the Trust, or their respective Affiliates.

         SECTION 6.5 Determinations by Board. The determination as to any of the
following  matters,  made in good faith by, or pursuant to the direction of, the
Board of Trust  Managers  consistent  with this  Declaration of Trust and in the
absence of actual receipt of an improper benefit in money,  property or services
or active and deliberate  dishonesty  established by a court, shall be final and
conclusive  and shall be binding upon the Trust and every holder of Shares:  (a)
the  amount of the net  income of the Trust  for any  period  and the  amount of
assets at any time legally available for the payment of dividends, redemption of
Shares or the payment of other  distributions  with  respect to Shares;  (b) the
amount of  paid-in  surplus,  net  assets,  other  surplus,  annual or other net
profit, net assets in excess of capital,  undivided profits or excess of profits
over  losses on sales of assets;  (c) the  amount,  purpose,  time of  creation,
increase or decrease,  alteration or cancellation of any reserves or charges and
the propriety thereof (whether or not any obligation or liability for which such
reserves or charges shall have been created shall have been paid or discharged);
(d) the fair value, or any sale, bid or asked price to be applied in determining
the fair  value,  of any asset  owned or held by the Trust;  and (e) any matters
relating to the acquisition, holding and disposition of any assets by the Trust.

         The affirmative  vote of a majority of the Independent  Trust Managers,
even if they constitute less than a quorum, shall be required to approve any and
all  matters for which  approval  by the Board of Trust  Managers is required by
this Declaration of Trust.

         SECTION 6.6 Reserved Powers of Board. The enumeration and definition of
powers of the Board of Trust  Managers  included in this  Article VI shall in no
way be limited or restricted by reference to or inference  from the terms of any
other clause of this or any other provision of the Declaration of Trust, or


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construed  or deemed by inference or otherwise in any manner to exclude or limit
the powers  conferred upon the Board of Trust Managers under the general laws of
the State of Maryland as now or hereafter in force.

         SECTION 6.7 REIT  Qualification.  The Board of Trust Managers shall use
its reasonable  best efforts to cause the Trust and the  Shareholders to qualify
for federal income tax treatment in accordance  with the REIT  Provisions of the
Code. In furtherance of the foregoing, the Board of Trust Managers shall use its
reasonable best efforts to take such actions as are necessary, and may take such
actions as in its sole judgment and discretion  are  desirable,  to preserve the
status  of the  Trust  as a REIT,  including  amending  the  provisions  of this
Declaration of Trust as provided in Article IX; provided,  however,  that if the
Board of Trust Managers determines that it is no longer in the best interests of
the Trust for it to continue to qualify as a REIT,  the Board of Trust  Managers
may revoke or otherwise terminate the Trust's REIT election.

                                   ARTICLE VII
                     RESTRICTIONS ON OWNERSHIP AND TRANSFER
                             TO PRESERVE TAX BENEFIT


         SECTION 7.1  Definitions.  For the  purposes of this  Article  VII, the
following terms shall have the following meanings:

         "Beneficial  Ownership"  shall  mean  ownership  of Equity  Shares by a
Person  who is or would be  treated  as an owner of such  Equity  Shares  either
actually or  constructively  through the application of Section 544 of the Code,
as modified by Section  856(h)(1)(B) of the Code. The terms "Beneficial  Owner,"
"Beneficially Own," "Beneficially Owns" and "Beneficially  Owned" shall have the
correlative meanings.

         "Charitable  Beneficiary"  shall  mean one or more  beneficiaries  of a
Special Trust as determined pursuant to Section 7.3(f) of this Article VII.

         "Closing  Date"  shall  mean the time and date of the  payment  for and
delivery of Common Shares issued pursuant to the Initial Public Offering.

         "Code"  shall mean the Internal  Revenue Code of 1986,  as amended from
time to time, or any successor statute.

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

         "Deferred  Stock  Grant"  means a grant,  pursuant to the Trust's  1996
Share Incentive Plan of Common Shares.

         "Equity Shares" shall mean Common Shares and/or Preferred Shares.

         "Executive  Officers" shall mean Damon Navarro,  Brian Navarro,  Edmund
Navarro, Joseph LaBrosse and Gerald McNamara.

         "Executive Officer Ownership Limit" means 20% (by value or by number of
Shares,  whichever is more restrictive) of the outstanding  Equity Shares of the
Trust.

         "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 of 1933, as amended, on Form SB-2 in June 1994.

         "IRS" means the United States Internal Revenue Service.


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         "Market Price" shall mean the last reported sales price reported on the
Emerging Company Marketplace of the American Stock Exchange,  Inc. (the "AMEX"),
or otherwise on the AMEX, of the Common Shares, or Preferred Shares, as the case
may be, on the trading day  immediately  preceding the relevant  date, or if not
then traded on the AMEX, the last reported sales price of the Common Shares,  or
Preferred Shares,  as the case may be, on the trading day immediately  preceding
the relevant date as reported on any exchange or quotation system over which the
Common Shares, or Preferred Shares, as the case may be, may be traded, or if not
then traded over any exchange or quotation system,  then the market price of the
Common Shares,  or Preferred Shares, as the case may be, on the relevant date as
determined in good faith by the Board of Trust Managers.

         "Option"  means an option,  granted  pursuant to the Trust's 1994 Share
Option Plan or 1996 Share Incentive Plan, to acquire Common Shares.

         "Ownership  Limit"  shall  mean 5.0% (by value or by number of  shares,
whichever is more restrictive) of the outstanding Equity Shares of the Trust.

         "Partnership Agreement" shall mean the Agreement of Limited Partnership
of Grove Operating,  L.P., of which the Trust is the sole general partner, dated
as of March 14, 1997, as such agreement may be amended from time to time.

         "Person" shall mean an individual,  corporation,  partnership,  limited
liability  company,  estate,  trust  (including a trust  qualified under Section
401(a) or 501(c)(17) of the Code),  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;  but does not  include an
underwriter  acting in a  capacity  as such in a public  offering  of the Common
Shares,  or Preferred Shares, as the case may be, provided that the ownership of
Common  Shares,  or Preferred  Shares,  as the case may be, by such  underwriter
would not result in the Trust being "closely held" within the meaning of Section
856(h) of the Code,  or  otherwise  result in the Trust  failing to qualify as a
REIT.

         "Purported  Beneficial  Transferee"  shall  mean,  with  respect to any
purported  Transfer which results in a transfer to a Special Trust,  as provided
in Section  7.2(b) of this Article VII, the purported  beneficial  transferee or
owner for whom the  Purported  Record  Transferee  would have  acquired or owned
Equity  Shares,  if such  Transfer had been valid under  Section  7.2(a) of this
Article VII.

         "Purported Record Transferee" shall mean, with respect to any purported
Transfer which results in a transfer to a Special Trust,  as provided in Section
7.2(b) of this  Article  VII,  the record  holder of the  Equity  Shares if such
Transfer had been valid under Section 7.2(a) of this Article VII.

         "REIT"  shall mean a real estate  investment  trust under  Sections 856
through 860 of the Code.

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

         "Special  Trust" shall mean each of the trusts  provided for in Section
7.3 of this Article VII.

         "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  voluntary  or  involuntary,   whether  of  record  or  beneficially  or
Beneficially  or  Constructively  (including  but not  limited to  transfers  of
interests  in  other   entities   which  result  in  changes  in  Beneficial  or
Constructive  Ownership  of Equity  Shares),  and whether by operation of law or
otherwise.

         "Trustee"  shall  mean any  Person  unaffiliated  with the  Trust,  the
Purported Beneficial  Transferee,  and the Purported Record Transferee,  that is
appointed by the Trust to serve as trustee of a Special Trust.


                                      -7-
<PAGE>


         Section 7.2 Restrictions on Ownership and Transfers.

         (a) From the  Closing  Date and  prior to the  Restriction  Termination
Date:

                  (i) except as provided in Section 7.9 of this Article VII, (i)
         no Person  (other than an Executive  Officer)  shall  Beneficially  Own
         Equity  Shares in excess of the  Ownership  Limit and (ii) no Executive
         Officer  shall,  nor  shall  all  of  the  Executive  Officers,  in the
         aggregate,  Beneficially  Own Equity  Shares in excess of the Executive
         Officer Ownership Limit;

                  (ii) except as provided in Section 7.9 of this Article VII, no
         Person  shall  Constructively  Own in  excess  of 9.8% (by  value or by
         number of shares,  whichever is more  restrictive)  of the  outstanding
         Equity Shares of the Trust; and

                  (iii) no  Person  shall  Beneficially  or  Constructively  Own
         Equity  Shares to the  extent  that  such  Beneficial  or  Constructive
         Ownership  would  result in the Trust being  "closely  held" within the
         meaning of Section 856(h) of the Code, or otherwise  failing to qualify
         as a REIT  (including,  but not limited to, ownership that would result
         in the Trust  owning  (actually  or  Constructively)  an  interest in a
         tenant that is  described  in Section  856(d)(2)(B)  of the Code if the
         income derived by the Trust (either directly or indirectly  through one
         or more partnerships) from such tenant would cause the Trust to fail to
         satisfy any of the gross income  requirements  of Section 856(c) of the
         Code).

         (b) If,  during the period  commencing on the Closing Date and prior to
the Restriction  Termination Date, any Transfer (whether or not such Transfer is
the result of a transaction  entered into through the facilities of the AMEX) or
other event occurs that, if effective,  would result in any Person  Beneficially
or  Constructively  Owning Equity Shares in violation of Section  7.2(a) of this
Article VII, (i) then that number of Equity  Shares that  otherwise  would cause
such Person to violate  Section  7.2(a) of this  Article VII  (rounded up to the
nearest whole share) shall be  automatically  transferred to a Special Trust for
the benefit of a Charitable Beneficiary,  as described in Section 7.3, effective
as of the  close  of  business  on the  business  day  prior to the date of such
Transfer  or  other  event,  and  such  Purported  Beneficial  Transferee  shall
thereafter have no rights in such Equity Shares or (ii) if, for any reason,  the
transfer  to a Special  Trust  described  in clause (i) of this  sentence is not
automatically   effective  as  provided  therein  to  prevent  any  Person  from
Beneficially  or  Constructively  Owning  Equity  Shares in violation of Section
7.2(a) of this  Article VII,  then the Transfer of that number of Equity  Shares
that otherwise would cause any Person to violate Section 7.2(a) shall be void AB
INITIO,  and the Purported  Beneficial  Transferee  shall have no rights in such
Equity Shares.

         (c) Subject to Section  7.12 of this  Article and  notwithstanding  any
other provisions  contained herein,  during the period commencing on the Closing
Date and prior to the  Restriction  Termination  Date,  any  Transfer  of Equity
Shares (whether or not such Transfer is the result of a transaction entered into
through the  facilities  of the AMEX) that,  if  effective,  would result in the
capital  stock of the Trust  being  beneficially  owned by less than 100 Persons
(determined  without  reference  to any rules of  attribution)  shall be void AB
INITIO,  and the  intended  transferee  shall  acquire no rights in such  Equity
Shares.

         (d) It is expressly  intended  that the  restrictions  on ownership and
Transfer  described  in this  Section  7.2 of  Article  VII  shall  apply to the
redemption/exchange  rights  provided in Section of the  Partnership  Agreement.
Notwithstanding any of the provisions of the Partnership  Agreement or any other
agreement between Grove Operating, L.P. and any of its partners to the contrary,
a partner of Grove  Operating,  L.P. shall not be entitled to effect an exchange
of an  interest in Grove  Operating,  L.P.  for Equity  Shares to the extent the
actual or  beneficial or  Beneficial  or  Constructive  ownership of such Equity
Shares would be prohibited under the provisions of this Article VII.


                                      -8-
<PAGE>


         SECTION 7.3 Transfers of Equity Shares in Trust

         (a) Upon any  purported  Transfer or other event  described  in Section
7.2(b) of this  Article  VII,  such Equity  Shares  shall be deemed to have been
transferred to the Trustee in his capacity as trustee of a Special Trust for the
exclusive benefit of one or more Charitable Beneficiaries.  Such transfer to the
Trustee  shall be deemed to be  effective  as of the  close of  business  on the
business  day prior to the  purported  Transfer or other event that results in a
transfer to a Special  Trust  pursuant to Section  7.2(b).  The Trustee shall be
appointed by the Trust and shall be a Person  unaffiliated  with the Trust,  any
Purported  Beneficial  Transferee,  and any Purported  Record  Transferee.  Each
Charitable  Beneficiary  shall be designated by the Trust as provided in Section
7.3(f) of this Article VII.

         (b) Equity Shares held by the Trustee  shall be issued and  outstanding
Common  Shares  or  Preferred  Shares  of the  Trust,  as the case  may be.  The
Purported  Beneficial  Transferee or Purported  Record  Transferee shall have no
rights in the  Equity  Shares  held by the  Trustee.  The  Purported  Beneficial
Transferee or Purported Record  Transferee shall not benefit  economically  from
ownership  of any  Equity  Shares  held in trust by the  Trustee,  shall have no
rights to  dividends  and shall not possess  any rights to vote or other  rights
attributable to the Equity Shares held in a Special Trust.

         (c) The Trustee  shall have all voting  rights and rights to  dividends
with  respect to Equity  Shares held in a Special  Trust,  which rights shall be
exercised for the exclusive benefit of the Charitable Beneficiary.  Any dividend
or distribution  paid prior to the discovery by the Trust that the Equity Shares
have been  transferred  to the Trustee shall be paid to the Trustee upon demand,
and any dividend or  distribution  declared but unpaid shall be paid when due to
the Trustee with respect to such Equity Shares.  Any dividends or  distributions
so  paid  over  to the  Trustee  shall  be held  in  trust  for  the  Charitable
Beneficiary. The Purported Record Transferee and Purported Beneficial Transferee
shall have no voting  rights with respect to the Equity Shares held in a Special
Trust and,  subject to Maryland law,  effective as of the date the Equity Shares
have been  transferred to the Trustee,  the Trustee shall have the authority (at
the  Trustee's  sole  discretion)  (i) to  rescind  as void any  vote  cast by a
Purported  Record  Transferee  with  respect to such Equity  Shares prior to the
discovery  by the Trust  that the Equity  Shares  have been  transferred  to the
Trustee  and (ii) to recast  such vote in  accordance  with the  desires  of the
Trustee acting for the benefit of the Charitable Beneficiary; provided, however,
that if the Trust has already taken irreversible action, then the Trustees shall
not have the  authority  to rescind  and recast such vote.  Notwithstanding  the
provisions of this Article VII, until the Trust has received  notification  that
the Equity Shares have been transferred into a Special Trust, the Trust shall be
entitled  to rely on its  share  transfer  and  other  stockholder  records  for
purposes  of  preparing  lists of  stockholders  entitled  to vote at  meetings,
determining the validity and authority of proxies and otherwise conducting votes
of stockholders.

         (d)  Within 20 days of  receiving  notice  from the Trust  that  Equity
Shares have been  transferred to a Special Trust, the Trustee of a Special Trust
shall sell the Equity Shares held in a Special Trust to a person,  designated by
the Trustee, whose ownership of the Equity Shares will not violate the ownership
limitations  set forth in Section  7.2(a).  Upon such sale,  the interest of the
Charitable Beneficiary in the Equity Shares sold shall terminate and the Trustee
shall distribute the net proceeds of the sale to the Purported Record Transferee
and to the  Charitable  Beneficiary  as provided  in this  Section  7.3(d).  The
Purported  Record  Transferee  shall receive the lesser of (i) the price paid by
the Purported  Record  Transferee for the Equity Shares in the transaction  that
resulted in such transfer to the Special Trust (or, if the event which  resulted
in the  transfer to the Special  Trust did not involve a purchase of such Equity
Shares at Market Price, the Market Price of such Equity Shares on the day of the
event which  resulted in the transfer of the Equity Shares to the Special Trust)
and (ii) the price per share received by the Trustee (net of any commissions and
other expenses of sale) from the sale or other  disposition of the Equity Shares
held in the  Special  Trust.  Any net sales  proceeds  in  excess of the  amount
payable to the Purported  Record  Transferee  shall be  immediately  paid to the
Charitable  Beneficiary  together  with any  dividends  or  other  distributions
thereon.  If, prior to the  discovery by the Trust that such Equity  Shares have
been  transferred  to the  Trustee,  such Equity  Shares are sold by a Purported
Record Transferee then (i) such Equity Shares shall be deemed to


                                      -9-
<PAGE>




have been sold on behalf of the  Special  Trust and (ii) to the extent  that the
Purported  Record  Transferee  received  an amount for such  Equity  Shares that
exceeds the amount that such Purported Record Transferee was entitled to receive
pursuant to this subparagraph  (3)(d),  such excess shall be paid to the Trustee
upon demand.

         (e) Equity  Shares  transferred  to the Trustee shall be deemed to have
been offered for sale to the Trust, or its designee,  at a price per share equal
to the lesser of (i) the price paid by the Purported  Record  Transferee for the
Equity  Shares in the  transaction  that  resulted in such transfer to a Special
Trust (or, if the event which  resulted in the  transfer to a Special  Trust did
not involve a purchase of such Equity Shares at Market  Price,  the Market Price
of such Equity Shares on the day of the event which  resulted in the transfer of
the Equity Shares to a Special  Trust) 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 until the Trustee has sold the Equity Shares held in a Special
Trust pursuant to Section 7.3(d). Upon such a sale to the Trust, the interest of
the  Charitable  Beneficiary  in the Equity Shares sold shall  terminate and the
Trustee shall  distribute  the net proceeds of the sale to the Purported  Record
Transferee  and any  dividends or other  distributions  held by the Trustee with
respect  to such  Equity  Shares  shall  thereupon  be  paid  to the  Charitable
Beneficiary.

         (f) By written notice to the Trustee,  the Trust shall designate one or
more nonprofit organizations to be the Charitable Beneficiary of the interest in
a Special  Trust such that (i) the Equity  Shares held in a Special  Trust would
not violate the  restrictions  set forth in Section  7.2(a) in the hands of such
Charitable  Beneficiary and (ii) each Charitable  Beneficiary is an organization
described in Sections 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the Code.

         SECTION 7.4 Remedies for Breach.  If the Board of Trust Managers,  or a
committee thereof (or other designees if permitted by Maryland law) shall at any
time  determine  in good faith that a Transfer or other event has taken place in
violation  of  Section  7.2 of this  Article  VII or that a  Person  intends  to
acquire,   has  attempted  to  acquire  or  may  acquire  beneficial   ownership
(determined without reference to any rules of attribution), Beneficial Ownership
or  Constructive  Ownership  of any Equity  Shares of the Trust in  violation of
Section 7.2 of this  Article VII,  the Board of Trust  Managers,  or a committee
thereof (or other designees if permitted by Maryland law) shall take such action
as it deems  advisable to refuse to give effect to or to prevent such  Transfer,
including,  but not  limited  to,  causing  the Trust to redeem  Equity  Shares,
refusing  to  give  effect  to  such  Transfer  on the  books  of the  Trust  or
instituting  proceedings to enjoin such Transfer;  provided,  however,  that any
Transfers  (or,  in the case of  events  other  than a  Transfer,  ownership  or
Constructive  Ownership or Beneficial  Ownership) in violation of Section 7.2(a)
of this Article  VII,  shall  automatically  result in the transfer to a Special
Trust as  described  in Section  7.2(b) and any Transfer in violation of Section
7.2(c) shall  automatically  be void AB INITIO,  irrespective  of any action (or
non-action) by the Board of Trust Managers.

         SECTION 7.5 Notice of Restricted  Transfer.  Any Person who acquires or
attempts to acquire  Equity  Shares in  violation of Section 7.2 of this Article
VII or any Person who is a Purported  Transferee such that an automatic transfer
to a Special  Trust  results  under  Section  7.2(b) of this Article VII,  shall
immediately  give written notice to the Trust of such event and shall provide to
the Trust such 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.

         SECTION 7.6 Owners  Required to Provide  Information.  From the Closing
Date and prior to the Restriction Termination Date:

         (a)  Each  Person  who is a  beneficial  owner or  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  Beneficial
Owner or  Constructive  Owner shall,  on demand,  be required to disclose to the
Trust in writing such information as the Trust may request in order to determine
the effect, if any, of such shareholder's  actual and constructive  ownership of
Equity Shares on the the Trust's status as a REIT and



                                      -10-
<PAGE>




to ensure  compliance with the Ownership Limit, the Executive  Officer Ownership
Limit,  or such other limit as provided  from time to time in this Third Amended
and  Restated  Declaration  of Trust or as  otherwise  permitted by the Board of
Trust Managers.

         (b)  Each  Person  who is a  beneficial  owner or  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  Beneficial
Owner or Constructive  Owner shall, on demand,  provide to the Trust a completed
questionnaire  containing  the  information  regarding  their  ownership of such
Equity Shares,  as set forth in the regulations (as in effect from time to time)
of the U.S. Department of Treasury under the Code.

         SECTION 7.7 Remedies Not Limited. Nothing contained in this Article VII
(but subject to Sections 6.7 and 7.12 of the Charter)  shall limit the authority
of the Board of Trust  Managers to take such other action as it deems  necessary
or  advisable  to protect the Trust and the  interests  of its  shareholders  by
preservation of the Trust's status as a REIT.

         SECTION 7.8 Ambiguity.  In the case of an ambiguity in the  application
of any of the  provisions  of Sections  7.2 through  7.9,  7.13 and 7.14 of this
Article VII,  including  any  definition  contained in Section 7.1, the Board of
Trust  Managers  shall  have  the  power to  determine  the  application  of the
provisions  of  Sections  7.2  through  7.9,  7.13 and 7.14 with  respect to any
situation based on the facts known to it (subject, however, to the provisions of
Section  7.12 of this  Article).  In the event any of Sections  7.2 through 7.9,
7.13 or 7.14  requires an action by the Board of Trust  Managers  and this Third
Amended and Restated  Declaration  of Trust fails to provide  specific  guidance
with respect to such action, the Board of Trust Managers shall have the power to
determine  the action to be taken so long as such action is not  contrary to the
provisions  of such  Sections  7.2 through  7.9 of this  Article  VII.  Absent a
decision  to the  contrary  by the Board of Trust  Managers  (which the Board of
Trust Managers may make in its sole and absolute discretion),  if a Person would
have (but for the remedies set forth in Section 7.2(b))  acquired  Beneficial or
Constructive  Ownership of Equity  Shares in violation of Section  7.2(a),  such
remedies (as  applicable)  shall apply first to the Equity  Shares which but for
such  remedies,  would have been  actually  owned by such Person,  and second to
Equity Shares which, but for such remedies,  would have been Beneficially  Owned
or Constructively  Owned (but not actually owned) by such Person, pro rata among
the Persons who actually own such Equity  Shares based upon the relative  number
of the Equity Shares held by each such Person.

         SECTION 7.9 Exceptions.

         (a) Subject to Section 7.2(a)(iii), the Board of Trust Managers, in its
sole  discretion,   may  exempt  a  Person  from  the  limitation  on  a  Person
Beneficially  Owning  Equity  Shares  in excess  of the  Ownership  Limit or the
Executive  Officers  Beneficially  Owning Equity Shares,  in the  aggregate,  in
excess of the  Executive  Officer  Ownership  Limit,  as the case may be, if the
Board of Trust Managers obtains such  representations and undertakings from such
Person or from such  Executive  Officer or Executive  Officers as are reasonably
necessary  to  ascertain  that  no  individual's  Beneficial  Ownership  or  the
Executive Officers' Beneficial Ownership,  in the aggregate, as the case may be,
of such Equity Shares will violate the Ownership Limit or the Executive  Officer
Ownership,  as the case may be,  or that any such  violation  will not cause the
Trust to fail to qualify as a REIT under the Code, and agrees that any violation
of such representations or undertaking (or other action which is contrary to the
restrictions  contained  in  Section  7.2 of  this  Article  VII)  or  attempted
violation will result in such Equity Shares being transferred to a Special Trust
in accordance with Section 7.2(b) of this Article VII.

         (b) Subject to Section 7.2(a)(iii), the Board of Trust Managers, in its
sole  discretion,   may  exempt  a  Person  from  the  limitation  on  a  Person
Constructively  Owning Equity Shares in excess of 9.8% (by value or by number of
Equity Shares,  whichever is more restrictive) of the outstanding  Equity Shares
of the Trust,  if such Person  does not,  and  represents  that it will not own,
actually or Constructively, an interest in a tenant of the Trust (or a tenant of
any entity owned in whole or in part by the Trust) that would cause the Trust to
own,  actually or  Constructively,  more than a 9.8%  interest  (as set forth in
Section  856(d)(2)(B)  of the Code) in such  tenant and the Trust  obtains  such
representations and undertakings from such Person as are


                                      -11-
<PAGE>


reasonably  necessary  to ascertain  this fact and agrees that any  violation or
attempted  violation will result in such Equity Shares being  transferred to the
Trust in accordance with Section 7.2(b) of this Article VII. Notwithstanding the
foregoing, the inability of a Person to make the certification described in this
Section  7.9(b)  shall  not  prevent  the Board of Trust  Managers,  in its sole
discretion,  from  exempting  such  Person  from  the  limitation  on  a  Person
Constructively  Owning Equity Shares in excess of 9.8% of the outstanding Equity
Shares if the Board of Trust Managers determines that the resulting  application
of Section  856(d)(2)(B) of the Code would affect the  characterization  of less
than 0.5% of the gross income (as such term is used in Section  856(c)(2) of the
Code) of the Trust in any taxable year,  after taking into account the effect of
this  sentence  with respect to all other Equity  Shares to which this  sentence
applies.

         (c) Prior to granting any exception  pursuant to Section  7.9(a) or (b)
of this Article  VII, the Board of Trust  Managers may require a ruling from the
Internal Revenue Service,  or an opinion of counsel,  in either case in form and
substance satisfactory to the Board of Trust Managers in its sole discretion, as
it may deem  necessary  or advisable in order to determine or ensure the Trust's
status as a REIT.

         SECTION 7.10  Legends.  Each  certificate  for Equity Shares shall bear
substantially the following legends:

                                 Class of Stock
                                 --------------

               "THE TRUST IS AUTHORIZED TO ISSUE CAPITAL STOCK OF
           MORE THAN ONE CLASS, CONSISTING OF COMMON STOCK AND ONE OR
          MORE CLASSES OF PREFERRED STOCK. THE BOARD OF TRUST MANAGERS
           IS AUTHORIZED TO DETERMINE THE PREFERENCES, LIMITATIONS AND
           RELATIVE RIGHTS OF ANY CLASS OF THE PREFERRED STOCK BEFORE
          THE ISSUANCE OF SHARES OF SUCH CLASS OF PREFERRED STOCK. THE
             TRUST WILL FURNISH, WITHOUT CHARGE, TO ANY STOCKHOLDER
            MAKING A WRITTEN REQUEST THEREFOR, A COPY OF THE TRUST'S
              CHARTER AND A WRITTEN STATEMENT OF THE DESIGNATIONS,
            RELATIVE RIGHTS, PREFERENCES, CONVERSION OR OTHER RIGHTS,
          VOTING POWERS, RESTRICTIONS, LIMITATIONS AS TO DIVIDENDS AND
          OTHER DISTRIBUTIONS, QUALIFICATIONS AND TERMS AND CONDITIONS
               OF REDEMPTION OF THE STOCK OF EACH CLASS WHICH THE
               CORPORATION HAS THE AUTHORITY TO ISSUE AND, IF THE
           CORPORATION IS AUTHORIZED TO ISSUE ANY PREFERRED OR SPECIAL
          CLASS AND SERIES, (i) THE DIFFERENCES IN THE RELATIVE RIGHTS
            AND PREFERENCES BETWEEN THE SHARES OF EACH SERIES TO THE
          EXTENT SET, AND (ii) THE AUTHORITY OF THE BOARD OF DIRECTORS
            TO SET SUCH RIGHTS AND PREFERENCES OF SUBSEQUENT SERIES.
           REQUESTS FOR SUCH WRITTEN STATEMENT MAY BE DIRECTED TO THE
          SECRETARY OF THE TRUST AT ITS PRINCIPAL OFFICE."

                      Restriction on Ownership and Transfer
                     -------------------------------------

                 THE SHARES REPRESENTED BY THIS CERTIFICATE ARE
             SUBJECT TO RESTRICTIONS ON BENEFICIAL AND CONSTRUCTIVE
              OWNERSHIP AND 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 AND EXCEPT
             AS EXPRESSLY PROVIDED IN THE TRUST'S CHARTER, (I)(A) NO
            PERSON (EXCEPT FOR AN EXECUTIVE OFFICER) MAY BENEFICIALLY
                          OWN IN EXCESS OF 5.0% OF THE


                                      -12-
<PAGE>




             OUTSTANDING EQUITY SHARES OF THE TRUST (BY VALUE OR BY
           NUMBER OF SHARES, WHICHEVER IS MORE RESTRICTIVE) AND (B) NO
            EXECUTIVE OFFICER MAY, NOR MAY THE EXECUTIVE OFFICERS, IN
             THE AGGREGATE, BENEFICIALLY OWN IN EXCESS OF 20% OF THE
             OUTSTANDING EQUITY SHARES OF THE TRUST (BY VALUE OR BY
            NUMBER OF SHARES, WHICHEVER IS MORE RESTRICTIVE); (II) NO
             PERSON MAY CONSTRUCTIVELY OWN IN EXCESS OF 9.8% OF THE
             OUTSTANDING EQUITY SHARES OF THE TRUST (BY VALUE OR BY
           NUMBER OF SHARES, WHICHEVER IS MORE RESTRICTIVE); (III) NO
           PERSON MAY BENEFICIALLY OR CONSTRUCTIVELY OWN EQUITY SHARES
            THAT WOULD RESULT IN THE TRUST BEING  "CLOSELY  HELD" UNDER  SECTION
           856(h) OF THE CODE OR OTHERWISE CAUSE THE TRUST TO FAIL TO QUALIFY AS
           A REIT;  AND  (IV) NO  PERSON  MAY  TRANSFER  EQUITY  SHARES  IF SUCH
           TRANSFER WOULD RESULT IN THE CAPITAL
            STOCK OF THE TRUST BEING OWNED BY FEWER THAN 100 PERSONS.
              ANY PERSON WHO BENEFICIALLY OR CONSTRUCTIVELY OWNS OR
          ATTEMPTS TO BENEFICIALLY OR CONSTRUCTIVELY OWN EQUITY SHARES
             WHICH CAUSES OR WILL CAUSE A PERSON TO BENEFICIALLY OR
             CONSTRUCTIVELY OWN EQUITY SHARES IN EXCESS OF THE ABOVE
          LIMITATIONS MUST IMMEDIATELY NOTIFY THE TRUST. IF ANY OF THE
             RESTRICTIONS ON TRANSFER OR OWNERSHIP ARE VIOLATED, THE
             EQUITY SHARES REPRESENTED HEREBY WILL BE AUTOMATICALLY
           TRANSFERRED TO A TRUSTEE OF A SPECIAL TRUST FOR THE BENEFIT
            OF ONE OR MORE CHARITABLE BENEFICIARIES. IN ADDITION, THE
              TRUST MAY REDEEM SHARES UPON THE TERMS AND CONDITIONS
              SPECIFIED BY THE BOARD OF TRUST MANAGERS IN ITS SOLE
            DISCRETION IF THE BOARD OF TRUST MANAGERS DETERMINES THAT
             OWNERSHIP OR A TRANSFER OR OTHER EVENT MAY VIOLATE THE
               RESTRICTIONS DESCRIBED ABOVE. FURTHERMORE, UPON THE
              OCCURRENCE OF CERTAIN EVENTS, ATTEMPTED TRANSFERS IN
          VIOLATION OF THE RESTRICTIONS DESCRIBED ABOVE MAY BE VOID AB
            INITIO. ALL TERMS IN THIS LEGEND THAT ARE DEFINED IN THE
           DECLARATION  OF  TRUST  HAVE  THE  MEANINGS  ASCRIBED  TO THEM IN THE
            DECLARATION  OF TRUST OF THE TRUST,  AS THE SAME MAY BE AMENDED FROM
            TIME TO TIME, A COPY OF WHICH, INCLUDING THE
          RESTRICTIONS  ON TRANSFER  AND  OWNERSHIP,  WILL BE  FURNISHED TO EACH
           HOLDER OF EQUITY SHARES ON REQUEST AND WITHOUT CHARGE.
          REQUESTS FOR SUCH A COPY MAY BE DIRECTED TO THE SECRETARY OF
                  THE TRUST, AT THE TRUST'S PRINCIPAL OFFICE."

         SECTION 7.11 Severability.  If any provision of this Article VII or any
application  of any such provision is determined to be invalid by any Federal or
state court having  jurisdiction over the issues,  the validity 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.

         SECTION  7.12 AMEX.  Nothing in this  Article  VII shall  preclude  the
settlement of any transaction entered into through the facilities of the AMEX or
any other  national  securities  exchange.  The fact that the  settlement of any
transaction is so permitted  shall not negate the effect of any other  provision
of this Article VII and any transferee in such a transaction shall be subject to
all the provisions and limitations of this Article VII.

         SECTION 7.13 Changes In Ownership Limit and Executive Officer Ownership
Limit.  Subject to the limitations  provided in Section 7.14, the Board of Trust
Managers may from time to time increase (or


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<PAGE>




decrease)  the  Ownership  Limit and/or the Executive  Officer  Ownership  Limit
(including,  but not limited to, in connection  with the grant of Options and/or
Deferred Stock Grants to the Executive Officers).

         SECTION  7.14  Limitations  on Changes In the  Ownership  Limit and the
Executive Officer Ownership Limit.

         (a) Neither the  Ownership  Limit nor the Executive  Officer  Ownership
Limit may be increased if, as a result of such increase,  five Beneficial Owners
of Equity Shares  (including all of the Executive  Officers) could  Beneficially
Own, in the  aggregate,  more than 50.0% (in number or value,  whichever is more
restrictive) of the then outstanding Equity Shares.

         (b) Prior to the  modification  of the Ownership Limit or the Executive
Officer  Ownership  Limit  pursuant to Section 7.13, the Board of Trust Managers
may require such opinions of counsel, affidavits,  undertakings or agreements as
it may deem  necessary  or advisable in order to determine or ensure the Trust's
status as a REIT.

         (c) The  Executive  Officer  Ownership  Limit shall not be reduced to a
percentage which is less than the Ownership Limit.

                                  ARTICLE VIII
                                  SHAREHOLDERS


         SECTION 8.1 Meetings of Shareholders.  There shall be an Annual Meeting
of the Shareholders, to be held at such time and place as shall be determined by
or in the manner prescribed in Article II of the Bylaws, at which Trust Managers
shall be elected  and any other  proper  business  may be  conducted.  Except as
otherwise   provided  in  this   Declaration  of  Trust,   special  meetings  of
Shareholders  may be called in the manner  provided in Article II of the Bylaws.
If there are no Trust Managers,  the President or any other officer of the Trust
shall promptly call a special meeting of the  Shareholders  entitled to vote for
the  election of successor  Trust  Managers.  Any meeting may be  adjourned  and
reconvened as the Trust  Managers  determine or as provided in Article II of the
Bylaws.

         SECTION 8.2 Voting Rights of Shareholders. 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) the election or removal of
Trust  Managers;  (b)  the  amendment  of this  Declaration  of  Trust;  (c) the
voluntary dissolution or termination of the Trust; (d) the reorganization of the
Trust;  and (e) the  merger or  consolidation  of the Trust or the sale or other
disposition  of all or  substantially  all of the Trust  Property.  Except  with
respect to the foregoing  matters,  no action taken by the  Shareholders  at any
meeting shall in any way bind the Trust Managers.

                                   ARTICLE IX
                                    AMENDMENT


         SECTION 9.1 By Shareholders.  Except as provided in Section 9.2 hereof,
this  Declaration  of Trust may be amended only by the  affirmative  vote of the
holders of not less than  two-thirds  of all the  Shares  then  outstanding  and
entitled to vote on the matter.

         SECTION 9.2 By Trust  Managers.  The Trust  Managers,  by a  two-thirds
vote,  may amend  provisions of this  Declaration  of Trust from time to time to
enable the Trust to qualify as a real estate  investment trust under the Code or
under Title 8.

         SECTION 9.3 No Other  Amendment.  This  Declaration of Trust may not be
amended except as provided in this Article IX.


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<PAGE>





                                    ARTICLE X
                                DURATION OF TRUST

         The Trust shall continue  perpetually unless terminated pursuant to any
applicable  provision  of Title 8. The Trust  may be  voluntarily  dissolved  or
reorganized  or its existence  terminated  only by the  affirmative  vote of the
holders of not less than  two-thirds  of all the  Shares  then  outstanding  and
entitled to vote on the matter.  The Trust may sell or otherwise  dispose of all
or  substantially  all of the Trust Property only by the affirmative vote of the
holders entitled to vote on the matter.

                                   ARTICLE XI
              LIABILITY OF SHAREHOLDERS, TRUST MANAGERS, OFFICERS,
                              EMPLOYEES AND AGENTS
                   AND TRANSACTIONS BETWEEN THEM AND THE TRUST


         SECTION 11.1 Limitation of Shareholder Liability.  No Shareholder shall
be liable for any debt,  claim,  demand,  judgment or obligation of any kind of,
against or with respect to the Trust by reason of his 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 Trust  Property or
the affairs of the Trust.

         SECTION  11.2  Limitation  of  Trust  Manager  and  Executive   Officer
Liability.  To the maximum  extent that Maryland law in effect from time to time
permits  limitations  of the liability of trustees and officers of a real estate
investment  trust,  no Trust  Manager 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,  nor the adoption or amendment of any other provision of
this  Declaration  of Trust  inconsistent  with this section,  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  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 Trust
Manager or Executive Officer of the Trust shall be liable to the Trust or to any
Shareholder unless (a) that Trust Manager or Executive Officer actually received
an improper benefit or profit in money, property or services,  and then, for the
amount of the benefit of profit in money or services  actually received or (b) a
judgment or other final  adjudication  adverse to the Trust Manager or Executive
Officer is entered in a proceeding based on a finding in the proceeding that the
Trust Manager's or Executive  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  or  (c)  otherwise,  in  accordance  with  the
provisions of an indemnification agreement between any of them and the Trust.

         SECTION 11.3 Express  Exculpatory  Clauses in Instruments.  Neither the
Shareholders nor the Trust Managers,  Executive 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 Trust  Property  for the
payment  of any  claim  under  or for the  performance  of the  instrument.  The
omission of the foregoing exculpatory clause in such instrument shall not render
any  Shareholder,  Trust Manager,  Executive  Officer,  employee or agent liable
thereunder  to any third  party,  nor shall the Trust  Manager or any  officers,
employees or agents of the Trust be liable to anyone for such  omission.  In the
event  of  a  conflict   between   the  terms  of  this   Declaration   and  any
indemnification  agreement,  the terms of the  indemnification  agreement  shall
control.

         SECTION 11.4 Indemnification and Advance for Expenses.  The Trust shall
have the power,  to the maximum extent  permitted by Maryland law in effect from
time  to  time,  to  obligate  itself  to  indemnify,  and to  pay or  reimburse
reasonable  expenses in advance of final disposition of a proceeding to, (a) any
individual who is a present or former  Shareholder,  Trust Manager or officer of
the Trust or (b) any  individual  who,  while a  Shareholder,  Trust  Manager or
officer of the Trust and at the  express  request  of the  Trust,  serves or has
served another corporation,  partnership, joint venture, trust, employee benefit
plan or


                                      -15-
<PAGE>




any other enterprise as a director, officer, Shareholder,  partner or trustee of
such corporation,  partnership,  joint venture,  trust, employee benefit plan or
other  enterprise,  from and  against all claims and  liabilities  to which such
person may become  subject and against all claims and  liabilities to which such
person may become  subject by reason of his being or having been a  Shareholder,
Trust  Manager or Executive  Officer.  The Trust shall have the power,  with the
approval of its Board of Trust  Managers,  to provide such  indemnification  and
advancement of expenses to a person who served a predecessor of the Trust in any
of the capacities  described in (a) or (b) above and to any employee or agent of
the Trust or a predecessor of the Trust.

         SECTION  11.5  Transactions  Between the Trust and its Trust  Managers,
Executive Officers,  Employees and Agents. Subject to any express restriction in
this  Declaration  of Trust,  including,  but not limited to,  Section  6.4, any
restriction adopted by the Trust Managers in the Bylaws or by resolution, and in
accordance  with the terms and  provisions of any  employment  agreement  and/or
non-competition  agreement  with any Trust Manager or Executive  Officer and the
Trust,  as  applicable,  the Trust may enter into any contract or transaction of
any kind (including, without limitation, for the purchase or sale of property or
for any type of services, including those in connection with the underwriting or
the offer or sale of  Securities  of the Trust) with any Person,  including  any
Trust Manager, Executive Officer, employee or agent of the Trust, whether or not
any of them has a financial interest in such transaction.

         SECTION  11.6  Limitation  on  Total  Operating  Expenses.   The  Total
Operating  Expenses  of the Trust  shall not  exceed  the  greater  of 2% of its
average  invested  assets or 25% of its net income in any fiscal year as defined
below. The Trust Managers will limit operating expenses to these levels unless a
majority of the Independent Trust Managers make a finding that, based on unusual
or non-recurring factors, a higher level of expenses is justified for that year.
Written records and supporting data shall be maintained by the Trust Managers in
this regard.

         Within  60 days  after the end of any  fiscal  quarter  in which  Total
Operating   Expenses  for  the  preceding   twelve  (12)  months  exceeded  this
limitation, the Trust will disclose this fact to the Shareholders, together with
an explanation of the factors upon which the  Independent  Trust Managers relied
in approving higher operating expenses.

         For purposes of this Section 11.6,  "Total  Operating  Expenses"  shall
include all cash operating expenses, including additional expenses paid directly
or indirectly  by the Trust to its  Affiliates or third parties based upon their
relationship  with  the  Trust,   including  loan   administration,   servicing,
engineering,  inspection  and all other  expenses paid by the Trust,  except the
expenses  related to raising  capital,  for interest,  taxes and direct property
acquisition, operation, maintenance and management costs.

         "Average invested  assets",  for purposes of this Section 11.6, for any
period,  shall mean the average of the aggregate book value of the assets of the
Trust,  invested,  directly  or  indirectly,  in equity  interests  and in loans
secured by real estate,  before reserves for  depreciation or bad debts or other
similar non-cash  reserves  computed by taking the average of such values at the
end of each month during such period.

         "Net income", for purposes of the calculation contained in this Section
11.6, shall mean total revenues applicable to such period,  other than additions
to reserves for depreciation or bad debts or other similar non-cash reserves.

                                   ARTICLE XII
                                  MISCELLANEOUS


         SECTION 12.1 Governing Law. This Third Amended and Restated Declaration
of Trust is  executed  by the  Trust  Managers  and  delivered  in the  State of
Maryland with  reference to the laws thereof,  and the rights of all parties and
the validity, construction and effect of every provision hereof shall be subject
to and construed  according to the laws of the State of Maryland  without regard
to conflict of law provisions thereof.


                                      -16-
<PAGE>




         SECTION 12.2 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 Third Amended and Restated  Declaration  of Trust may be recorded,
appears to be the  Secretary or an  Assistant  Secretary of the Trust or a Trust
Manager,  and if  certifying  to: (a) the number or identity of Trust  Managers,
officers  of the  Trust  or  Shareholders;  (b)  the  due  authorization  of the
execution of any document;  (c) any action or vote taken, and the existence of a
quorum  at a  meeting  of Trust  Managers  or  Shareholders;  (d) a copy of this
Declaration  or of the Bylaws as a true and complete copy as then in force;  (e)
an amendment to this  Declaration;  (f) the termination of the Trust; or (g) the
existence  of any fact or facts  which  relate 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  purported  to be made on
behalf of the Trust by the Trust  Managers or by any officer,  employee or agent
of the Trust.

         SECTION 12.3 Provisions in Conflict With Law or Regulations.

         (a) The  provisions of this Third Amended and Restated  Declaration  of
Trust are severable, and if the Trust Managers shall determine,  with the advice
of counsel,  that any one or more of such  provisions  are in conflict  with the
REIT Provisions of the Code,  Title 8 or any other  applicable  federal or state
law, 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 Article IX; provided,  however, that such determination by the
Trust  Managers  shall not affect or impair any of the  remaining  provisions of
this  Declaration  of Trust or render  invalid or improper  any action  taken or
omitted prior to such determination. No Trust Manager shall be liable for making
or failing to make such a determination.

         (b) If any provision of this Third Amended and Restated  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.

         Section  12.4   Construction.   In  this  Third  Amended  and  Restated
Declaration of Trust, unless the context requires  otherwise,  words used in the
singular  or in the  plural  include  both the  plural  and  singular  and words
denoting any gender include all genders.  Title and headings of different  parts
of this  Declaration  are  inserted  for  convenience  and shall not  affect the
meaning,  construction or effect hereof.  In defining or interpreting the powers
and duties of the Trust and its Trust  Managers and  officers,  reference may be
made, to the extent  appropriate and not inconsistent  with the Code or Title 8,
to  Titles 1 through  3 of the  Corporations  and  Associations  Article  of the
Annotated Code of Maryland (the  "Maryland  Code").  In  furtherance  and not in
limitation  of the  foregoing,  in  accordance  with the  provisions of Title 3,
Subtitles 6 and 7, of the Maryland Code, the Trust shall be included  within the
definition of "corporation" for purposes of such provisions.

         SECTION 12.5 Recordation.  This Third Amended and Restated  Declaration
of Trust and any amendment or  supplement  hereto shall be filed for record with
the State  Department  of  Assessments  and Taxation of Maryland and may also be
filed or recorded in such other places as the Trust  Managers deem  appropriate,
but failure to file for record this Third  Amended and Restated  Declaration  or
any  amendment  or  supplement  hereto in any office  other than in the State of
Maryland shall not affect or impair the validity or  effectiveness of this Third
Amended and Restated Declaration or any amendment hereto. This Third Amended and
Restated  Declaration,  and any subsequently  amended and restated  Declaration,
shall,  upon filing,  be conclusive  evidence of all  amendments or  supplements
contained  therein and may  thereafter  be  referred to in lieu of the  original
Declaration and the various amendments or supplements thereto.


                                      -17-
<PAGE>




         IN WITNESS  WHEREOF,  this Third  Amended and Restated  Declaration  of
Trust has been signed on this 14 day of March,  1997, by the  undersigned  Trust
Managers,  each of whom acknowledge that this document is his free act and deed,
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 this statement
is made under the penalties for perjury.


/s/ HAROLD GORMAN         /s/ DAMON D. NAVARRO           /s/ JAMES F. TWADELL
----------------------    --------------------------     -----------------------
Harold Gorman              Damon D. Navarro              James F. Twaddell

/s/ J. JOSEPH GARRAHY     /s/ JOSEPH R. LaBROSSE
----------------------    --------------------------
J. Joseph Garrahy          Joseph R. LaBrosse



                                      -18-
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