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                                                               Exhibit 10.30





                                 LOAN AGREEMENT

                                     BETWEEN

                  THE PRUDENTIAL INSURANCE COMPANY OF AMERICA,

                                    AS LENDER
                                       AND

                   REAL ESTATE INVESTMENT TRUST OF CALIFORNIA,

                                   AS BORROWER

                                       RE:

                             $55,000,000 TERM LOAN 

                          DATED AS OF JANUARY 31, 1994


                              LOAN NO. 6-100-525


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                   REAL ESTATE INVESTMENT TRUST OF CALIFORNIA,



                                 LOAN AGREEMENT


          THIS LOAN AGREEMENT (this "Agreement") is made as of this 31st day of
January, 1994 by and between THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, a New
Jersey corporation ("Lender") and REAL ESTATE INVESTMENT TRUST OF CALIFORNIA, a
California real estate investment trust ("Borrower").

                              W I T N E S S E T H:

          WHEREAS, Borrower desires to borrow from Lender, and Lender is willing
to make to Borrower, a term loan in the principal amount of $55,000,000 upon the
terms and conditions contained herein.

          NOW THEREFORE, in consideration of the foregoing, and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:

                                   ARTICLE 1.

                               GENERAL DEFINITIONS
     1.1  GENERAL TERMS.  When used herein, the following terms shall have the
following meanings:

          "AFFILIATE" as applied to any Person, means any other Person directly
     or indirectly controlling, controlled by, or under direct or indirect
     common control with, that Person.  For the purposes of this definition,
     "control" (including with correlative meanings, the terms "controlling",
     "controlled by" and under "common control with") as applied to any Person,
     means the possession, directly or indirectly, of the power to direct or
     cause the direction of the management and policies of that Person, whether
     through the ownership of voting securities or by contract or otherwise.

          "AGREEMENT" means this Loan Agreement, as it may be amended,
     supplemented or otherwise modified from time to time.

          "AMORTIZATION PAYMENTS" is defined in Section 2.4.A hereof.

          "ANCHOR LEASES" means a lease of all or any portion of a Facility
     covering an amount of space greater than or equal to 20,000 square feet,
     together with any other lease designated as an Anchor Lease by Lender.

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          "ANNUAL FINANCIALS" has the meaning assigned to that term in Section
     3.l.D.

          "APPROVED INDEBTEDNESS" means collectively, (i) the Sanwa Line of
     Credit (including amounts borrowed thereunder after the Closing Date in
     compliance with the terms hereof), (ii) the Union Line of Credit (including
     amounts borrowed thereunder after the Closing Date in compliance with the
     terms hereof), (iii) debt incurred in the ordinary course of business to
     acquire goods, supplies, services or merchandise on normal trade credit,
     (iv) surety bonds which are obtained in the ordinary course of business,
     and (v) Capital Lease Obligations in an amount not to exceed, at any time,
     $1,000,000; provided, however, that in any and all events, such Approved
     Indebtedness shall be subject to, and included within the calculations
     relating to, the financial covenants set forth in Section 6.9 hereof.

          "APPROVED LIENS" means the Sanwa Liens and the Union Liens, and liens
     for real property taxes described in Section 6.2(i) hereof.

          "BANKRUPTCY CODE" means Title 11 U.S. Code or any similar federal or
     state laws for the relief of debtors.

          "BORROWER" means Real Estate Investment Trust of California, a
     California real estate investment trust.

          "BUSINESS DAY" means any day other than a Saturday, a Sunday, a legal
     holiday under the laws of the State of California or a day on which
     commercial banks in such state are authorized or required by law or other
     governmental action to be closed.

          "CAPITALIZED LEASE OBLIGATIONS, means any rental obligation which, in
     conformity with GAAP, is or will be required to be capitalized on the books
     of Borrower, taken at the amount thereof accounted for as indebtedness (net
     of interest expense) in conformity with GAAP.

          "CLOSING DATE" means the date that the Loan is disbursed, which shall
     be on a date on or before March 15, 1994.

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

          "COMPLIANCE CERTIFICATE" means a Compliance Certificate substantially
     in the form of EXHIBIT A attached hereto. 

          "CONSOLIDATED BOOK VALUE" at any date of determination means the sum
     of (i) the aggregate amount shown on Borrower's consolidated balance sheet
     opposite the 

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     Facilities  (whether owned by Borrower or the Consolidated Partnership) 
     designated as "property, plants and equipment" less accumulated 
     depreciation for all such Facilities, (ii) all (a) cash, (b) other cash 
     equivalents then held by Borrower or the Consolidated Partnership and 
     invested in Permitted Investments, and (c) all expenses which are 
     prepaid by Borrower or the Consolidated Partnership, (iii) with respect 
     to Borrower's interest in the Unconsolidated Partnership, the book value 
     of such interest in such Unconsolidated Partnership less an amount equal 
     to a pro rata share (based upon Borrower's pro rata equity interest in 
     the Unconsolidated Partnership) of any and all indebtedness or other 
     liabilities secured in whole or in part by the property or assets owned 
     by the Unconsolidated Partnership, and (iv) with respect to the 
     Leasehold Projects, the sum of (A) the aggregate book value of the 
     Finance Leases, and (B) the aggregate book value of  the promissory 
     notes secured by the Existing Purchase Money Mortgages; provided, 
     however that such aggregate book value of such notes shall only be 
     included within the calculation of this clause (B) if the maker thereof 
     is not in default in the payment of any obligations under such notes); 
     less, in each case  all applicable accumulated depreciation and all 
     Intangible Assets relating to the assets included within the definition 
     of Consolidated Book Value or otherwise; in each case determined on a 
     consolidated basis pursuant to the Financials and in accordance with 
     GAAP using the lesser of cost or market in carrying assets. 
     
          "CONSOLIDATED PARTNERSHIP" means REIT - Santa Maria Properties, a
     California limited partnership.

          "CONTINGENT OBLIGATIONS", as applied to any Person, means any direct,
     indirect and/or vicarious liability, contingent or otherwise, of that
     Person with respect to any indebtedness, lease, dividend, letter of credit
     or other obligation of any other Person which provides assurance to the
     obligee of such obligation of such other Person that such obligation of
     another will be paid or discharged, or that any agreements relating thereto
     will be complied with, or that the holders of such obligation will be
     protected (in whole or in part) against loss in respect thereof. 
     Contingent Obligations shall include, without limitation, (i) the direct or
     indirect guaranty, endorsement (other than for collection or deposit in the
     ordinary course of business), co-making, discounting with recourse or sale
     with recourse by such Person of the obligation of another, and (ii) any
     liability of such Person for the obligations of another through any
     agreement (contingent or otherwise) (a) to purchase, repurchase or
     otherwise acquire such obligation or any security therefor or to provide
     funds for the payment or discharge of such obligation (whether in the form
     of loans, advances, stock purchases, capital contributions or otherwise),
     (b) to maintain the solvency or 

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     any balance sheet item, level of income or financial condition of 
     another or (c) to make take-or-pay or similar payments if required 
     regardless of non-performance by any other party or parties to an 
     agreement, if in the case of any agreement described under subclauses 
     (a), (b) or (c) of this sentence the primary purpose or intent thereof 
     is as described in the preceding sentence.  The amount of any Contingent 
     Obligation shall be equal to the amount of the obligation so guaranteed 
     or otherwise supported.

          "CONTRACTUAL OBLIGATION", as applied to any Person, means any
     provision of any instrument, document or security issued by that Person or
     of any indenture, mortgage, deed of trust, contract, undertaking, agreement
     or other instrument to which that Person is a party or by which any of its
     properties is bound or to which it or any of its properties is subject.

          "DEBT SERVICE COVERAGE"  means, with respect to any period of Net
     Operating Income being measured, the ratio, as calculated by Lender, of
     (a) Net Operating Income for the applicable period, to (b) the sum of
     (i) the interest payments on the Loan for such period (excluding, when
     applicable, the Amortization Payments), and (ii) the interest payments on
     all other Indebtedness for such period (collectively, "Debt Service").

          "DISCOUNT RATE" means the rate which, when compounded monthly, is
     equivalent to the Treasury Rate.

          "EMPLOYEE BENEFIT PLAN" means any employee benefit plan within the
     meaning of Section 3(3) of ERISA which is maintained for employees of
     Borrower or any of its ERISA Affiliates.

          "ENVIRONMENTAL CLAIM" means any notice of violation, claim, demand,
     abatement order or other order or direction (conditional or otherwise) by
     any governmental authority or any Person for any damage, including, without
     limitation, personal injury (including sickness, disease or death),
     tangible or intangible property damage, contribution, indemnity, indirect
     or consequential damages, damage to the environment, nuisance, pollution,
     contamination or other adverse effects on the environment, or for fines,
     penalties or restrictions, resulting from or based upon (i) the existence
     of a Release (whether sudden or nonsudden or accidental or non-accidental),
     of, or exposure to, any Hazardous Material, in, into or onto the
     environment at, in, by, from or related to any Facility, (ii) the presence,
     use, handling, transportation, storage, treatment or disposal of Hazardous
     Materials in connection with the ownership or operation of any Facility, or
     (iii) the violation, or alleged violation, of any statutes, ordinances,
     orders, rules, regulations, permits, authorizations or licenses of 

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     or from any governmental authority, agency or court relating to 
     environmental matters connected with the Facilities.

          "ENVIRONMENTAL LAWS" means all laws relating to environmental matters
     or Hazardous Materials, including those relating to fines, orders,
     injunctions, penalties, damages, contribution, cost recovery, compensation,
     losses or injuries resulting from the Release or threatened Release of
     Hazardous Materials and to the presence, generation, use, storage,
     transportation, or disposal of Hazardous Materials, including, without
     limitation, the Comprehensive Environmental Response, Compensation, and
     Liability Act (42 U.S.C. Section 9601 ET SEQ.), the Hazardous Material
     Transportation Act (49 U.S.C. Section 1801 ET SEQ.), the Resource
     Conservation and Recovery Act (42 U.S.C. Section 6901 ET SEQ.), the Federal
     Water Pollution Control Act (33 U.S.C. Section 1251 ET SEQ.), the Clean Air
     Act (42 U.S.C. Section 7401 ET SEQ.), the Toxic Substances Control Act (15
     U.S.C. Section 2601 ET SEQ.), the Occupational Safety and Health Act (29
     U.S.C. Section 651 ET SEQ.), and the Emergency Planning and Community
     Right-to-Know Act (42 U.S.C. Section 11001 ET SEQ.), each as amended or
     supplemented, and any analogous future or present local, state and federal
     rules, orders, statutes and regulations promulgated pursuant thereto, each
     as in effect as of the date of determination.

          "ENVIRONMENTAL PERMIT" means any permit, license, approval, or other
     authorization with respect to any activities, operations, or businesses
     conducted on or in relation to the Facilities under any applicable
     Environmental Laws.

          "ERISA" means the Employee Retirement Income Security Act of 1974, as
     amended from time to time and any successor statute.

          "ERISA AFFILIATE", as applied to any Person, means any trade or
     business (whether or not incorporated) which is a member of a group of
     which that Person is a member and which is under common control within the
     meaning of Sections 414(b) and (c) of the Code.

          "EVENT OF DEFAULT" means each of the events specified in Article 7.

          "EXISTING FACILITIES" means those Facilities owned by Borrower or the
     Consolidated Partnership as of the Closing Date as described in EXHIBIT F
     hereof.

          "EXISTING PURCHASE MONEY MORTGAGES" means collectively, the existing
     notes and deeds of trust held by Borrower, as holder and beneficiary, with
     respect to the Leasehold Projects.

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          "FACILITIES" means any and all real property, (including, without
     limitation, all buildings, fixtures or other improvements located thereon)
     now or hereafter owned in fee simple by Borrower or the Consolidated
     Partnership (including, without limitation, the Existing Facilities and the
     New Facilities, but excluding the Leasehold Projects and the equity
     interest of Borrower in the Unconsolidated Partnership).

          "FINANCE LEASES" means the ground leases, with respect to which
     Borrower constitutes the ground lessor, relating to Leasehold Projects.

          "FINANCIALS" has the meaning assigned to that term in Section 3.1.D.

          "GAAP" means generally accepted accounting principles, consistently
     applied, as set forth in the opinions and pronouncements of the Accounting
     Principles Board of the American Institute of Certified Public Accountants
     and statements and pronouncements of the Financial Accounting Standards
     Board that are applicable to the circumstances as of the date of
     determination.

          "HAZARDOUS MATERIALS" means any (i) oil, flammable substances,
     explosives, radioactive materials, hazardous wastes or substances, toxic
     wastes or substances or any other wastes, materials or pollutants; (ii)
     asbestos in any form which is or could become friable, urea formaldehyde
     foam insulation, transformers or other equipment which contain dielectric
     fluid containing levels of polychlorinated byphenyls, or radon gas; (iii)
     chemical, material or substance defined as or included in the definition of
     "hazardous substances", "hazardous wastes", "hazardous materials",
     "extremely hazardous waste", "restricted hazardous waste", or "toxic
     substances" or words of similar import under any applicable local, state or
     federal law or under the regulations adopted or publications promulgated
     pursuant thereto, including, but not limited to, the Comprehensive
     Environmental Response, Compensation and Liability Act of 1980, as amended,
     42 U.S.C. Section 9601, ET SEQ.; the Hazardous Materials Transportation
     Act, as amended, 49 U.S. U.S.C. Section 1801, ET SEQ.; the Federal Water
     Pollution Control Act, as amended, 33 U.S.C. Section 1251, ET SEQ.;
     Sections 25115, 25117, 25122.7, 25140, 25249.8, 25281, 25316, 25501, and
     25316 of the California Health and Safety Code; and Article 9 or Article 11
     of Title 22 of the Administrative Code, Division 4, Chapter 20; (iv) other
     chemical, material or substance, exposure to which is prohibited, limited
     or regulated by any governmental authority or may or could pose a hazard to
     the health and safety of the occupants of the Facility or 
     the owners and/or occupants of property adjacent to or surrounding the 
     Facility, or any other Person coming upon the Facility or 


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     adjacent property; and (v) other chemicals, materials or substance which 
     may or could pose a hazard to the environment.

          "INDEBTEDNESS" at any date of determination means: (i) all obligations
     of Borrower and the Consolidated Partnership (including, without
     limitation, all indebtedness of Borrower to Lender) which in accordance
     with GAAP would be shown on the balance sheet of Borrower and/or the
     Consolidated Partnership as a liability (including, without limitation,
     obligations for borrowed money and for the deferred purchase price of
     property or services, trade debt payable, accruals and other liabilities,
     and obligations evidenced by bonds, debentures, notes or other similar
     instruments); (ii) all Capitalized Lease Obligations; (iii) all Contingent
     Obligations of Borrower and or the Consolidated Partnership in respect of,
     or obligations to purchase or otherwise acquire or to assure payment of,
     Indebtedness of others; and (iv) all Indebtedness of others secured by any
     Lien upon property owned by Borrower or the Consolidated Partnership,
     whether or not assumed.

          "INTANGIBLE ASSETS" means treasury stock, unamortized debt discount
     and expense, unamortized deferred charges, capitalized start-up costs or
     other organizational or developmental expenses, covenants not to compete,
     good will, trademarks, licenses, brand names, patents and other intangible
     assets and any write-up of the value of any assets, all as determined in
     accordance with GAAP.

          "LEASEHOLD PROJECTS"  shall mean, any one of or collectively all of,
     the Lucky Center located in Orange, California, the Hawthorne/Del Amo
     retail project located in Torrance, California, and the Grossman's
     Warehouse located in Ventura, California.

          "LENDER" means The Prudential Insurance Company of America, a New
     Jersey corporation.

          "LIEN" means any mortgage, deed of trust, pledge, security interest,
     encumbrance, lien or charge of any kind (including any agreement to give
     any of the foregoing, any conditional sale or other title retention
     agreement, any lease in the nature thereof, and/or the filing of or
     agreement to give any financing statement under the Uniform Commercial Code
     of any jurisdiction).

          "LOAN" means the loan to Borrower provided hereby as more particularly
     described in Section 2.1 hereof.

          "LOAN DOCUMENTS" means this Agreement, the Note, any Compliance
     Certificate, and any other document or certificate executed and delivered
     by Borrower to Lender in connection with the transactions contemplated
     hereby.

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          "MARGIN STOCK" has the meaning assigned to that term in Regulation U
     of the Board of Governors of the Federal Reserve System as in effect from
     time to time.

          "MATERIAL ADVERSE CHANGE" means any change, event or occurrence which
     produces a Material Adverse Effect.

          "MATERIAL ADVERSE EFFECT" means (i) a material adverse effect upon the
     business, operations, structure or form of operations, properties, assets,
     prospects or condition (financial or otherwise) of Borrower or (ii) an
     impairment of the ability of Borrower to perform or of Lender to enforce
     the Obligations.

          "MATURITY DATE" means the date ten (10) years after the Closing Date.

          "MULTIEMPLOYER PLAN" means a "multiemployer plan" as defined in
     Section 4001(a)(3) of ERISA which is maintained for employees of Borrower
     or any of its ERISA Affiliates.

          "NET OPERATING INCOME" means, for any date of determination, the gross
     income realized from operations of the Facilities and any other earnings
     derived from any other asset included within the definition of Consolidated
     Book Value (but not including repayments of principal under the notes
     secured by the Purchase Money Mortgages) for the fiscal quarter just ended
     and the three previous fiscal quarters (to the extent Lender reasonably
     projects such gross income and earnings will continue for the immediately
     succeeding twelve (12) month period and in any and all events excluding all
     capital gains from sales and other extraordinary income), subtracting
     therefrom all necessary and ordinary operating expenses (both fixed and
     variable) as reasonably projected by Lender for the next succeeding twelve
     (12) month period, including, but not limited to, utilities,
     administrative, cleaning, landscaping, security, repairs and maintenance,
     management fees, reserves for replacements, real estate and other taxes,
     assessments and insurance, but excluding therefrom, deductions for federal,
     state and other income taxes, Debt Service expense and depreciation (all as
     determined in accordance with GAAP). Gross income shall not be anticipated
     for any greater time period than that approved by GAAP nor shall ordinary
     operating expenses be prepaid.

          "NEW FACILITIES" means those Facilities acquired after the Closing
     Date.

          "NOTE" means that certain Promissory Note dated as of even date
     herewith in the principal amount of $55,000,000 executed by Borrower, as
     maker, in favor of Lender, as Holder, and any and all extensions, renewals,
     replacements, 

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     and modifications thereof, and/or amendments thereto.

          "OBLIGATIONS" means all obligations of every nature of Borrower from
     time to time owed to Lender under the Note and other Loan Documents.

          "OFFICERS' CERTIFICATE" means a certificate signed in the name of
     Borrower by a Trustee Officer; provided that every Officers' Certificate
     delivered to Lender with respect to the compliance with a covenant or term
     hereof shall include: (i) a statement that the Trustee Officer making or
     giving such Officers' Certificate shall have read such covenant or term and
     any definitions or other provisions contained in this Agreement relating
     thereto, (ii) a statement that such Trustee Officer has made or has caused
     to be made such examination or investigation as is reasonably necessary to
     enable them to express an informed opinion as to whether or not such
     condition has been complied with, and (iii) a favorable statement as to
     compliance with such condition.

          "PENSION PLAN" means any employee plan, other than a Multiemployer
     Plan, which is subject to the provisions of Title IV of ERISA and which is
     maintained for employees of Borrower or any of its ERISA Affiliates.

          "PERMITTED INVESTMENTS" means (i) marketable direct obligations issued
     or unconditionally guaranteed by the full faith and credit of the United
     States of America maturing within one year from the date of acquisition
     thereof, (ii) marketable direct obligations issued by any state of the
     United States of America maturing within one year from the date of
     acquisitions thereof and having the highest rating obtainable from Standard
     & Poor's Ratings Group, (iii) certificates of deposit maturing within one
     year from the date of acquisition thereof issued by one or more financial
     institutions rated not less than "A" by Standard & Poor's Rating Group  and
     in each case fully insured by the FDIC, (iv) mutual funds invested solely
     in the investments described in clauses (i), (ii) and/or (iii) hereof, or
     (v) an amount not to exceed $3,000,000 in the stock of publicly traded real
     estate investment trusts which are qualified as a REIT.

          "PERSON" means and includes natural persons, corporations, limited
     partnerships, general partnerships, joint stock companies, joint ventures,
     associations, companies, trusts, banks, trust companies, land trusts,
     business trusts, real estate investment trusts or other organizations,
     whether or not legal entities, and governments and agencies and political
     subdivisions thereof.

          "POTENTIAL EVENT OF DEFAULT" means a condition or event that, after
     the giving of notice or lapse of time, or both, 

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     would constitute an Event of Default hereunder.

          "PREPAYMENT" means the payment of all or part of the principal of a
     Loan prior to its Maturity Date.

          "PREPAYMENT AMOUNT" means the amount of the Loan being prepaid on a
     Prepayment Date.

          "PREPAYMENT DATE" has the meaning assigned to that term in Section
     2.4.D.

          "PREPAYMENT PREMIUM" has the meaning assigned to that term in Section
     2.4.D.

          "PRESENT VALUE OF THE PREPAYMENT AMOUNT" shall be determined by
     discounting all scheduled payments of principal and interest remaining from
     the Prepayment Date to the Maturity Date of the Loan being prepaid,
     attributable to the amount being prepaid, at the Discount Rate.  If a
     Prepayment occurs on a date other than a regularly scheduled interest
     payment date, the actual number of days remaining from the Prepayment Date
     to the next regularly scheduled interest payment date will be used to
     discount within this period.

          "QUARTERLY FINANCIALS" has the meaning assigned to that term in
     Section 3.l.D.

          "REIT" means real estate investment trust, as defined under Section
     856 of the Code.

          "RELEASE" means any release, spills emission, leaking, pumping,
     pouring, injection, escaping, deposit, disposal, discharge, dispersal,
     leaching, or migration into the indoor or outdoor environment (including,
     without limitation, the abandonment or disposal of any barrels, containers
     or closed receptacles containing any Hazardous Materials), or into or out
     of any Facility, including the movement of any Hazardous Material through
     the air, soil, surface water, groundwater or property.

          "RENT ROLL" means a comprehensive list of the Facilities and each of
     the leases pertaining thereto and containing the following information: (i)
     each tenant's name and location, (ii) the net rentable square footage of
     the Facilities covered by each lease, (iii) the annual rental rate per
     square foot per tenant, (iv) the aggregate annual base rent per tenant and
     for the Facilities, (v) all items of additional rent, (vi) the term and the
     commencement and expiration dates of each lease, (vii) any option(s) to
     renew and/or any option(s) to terminate granted to any tenant, (viii) the
     security deposit held for each lease, (ix) any free rent, moving allowances
     or other tenant concessions granted to any tenant and any obligations of
     such tenant 

                                       - 10 -
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     assumed by Borrower (x) any landlord environmental indemnity in favor of 
     the tenant, and (xi) any right of first refusal or any right or option 
     to purchase all or any portion of the Facilities granted thereunder; 
     which such Rent Roll shall be certified to be true, correct and complete 
     by a Trustee Officer.
     
          "SANTA FE FACILITY" means Santa Fe Springs Plaza located in Santa Fe
     Springs, California.

          "SANWA LINE OF CREDIT" means that certain secured line of credit in
     the maximum principal amount of Twenty-Nine  Million Dollars ($29,000,000)
     established by Sanwa Bank California ("Sanwa Bank") in favor of Borrower
     which is secured by the Sanwa Liens, and any replacement line(s) of credit
     therefor which comply with the provisions of Section 6.12 hereof.

          "SANWA LIENS" means those certain liens in favor of Sanwa Bank to
     secure the Sanwa Line of Credit and encumbering those certain real
     properties set forth in EXHIBIT B attached hereto (the "Sanwa Properties").

          "SUBSIDIARY" means the Consolidated Partnership, together with any
     corporation, association, partnership or other business entity of which
     more than 50% of the total voting power of shares of stock or partnership
     shares entitled to vote in the election of directors, managers or trustees
     thereof is at the time owned or controlled, directly or indirectly, by any
     Person or one or more of the other Subsidiaries of that Person or a
     combination thereof.

          "TANGIBLE NET WORTH" means with respect to any date of determination,
     (i) Consolidated Book Value, minus (ii) total liabilities of Borrower and
     the Consolidated Partnership, both current and long term (including,
     without limitation, (a) any balance sheet liability with respect to a
     Pension Plan recognized pursuant to Financial Accounting Standards Board
     Statements 87 or 88, (b) any withdrawal liability under Section 4201 of
     ERISA with respect to a withdrawal from a Multiemployer Plan, as such
     liability may be set forth in a notice of withdrawal liability under
     Section 4219 of ERISA (and as adjusted from time to time subsequent to the
     date of such notice), and (c) any asset, liability, contingency and other
     appropriate reserves, including reserves for accrued or deferred income
     taxes), calculated on a consolidated basis determined in accordance with
     GAAP.

          "TERMINATION EVENT" means (i) a "Reportable Event" described in
     Section 4043 of ERISA and the regulations issued thereunder (other than a
     "Reportable Event" not subject to the provisions for 30-day notice to the
     Pension Benefit Guaranty Corporation under such regulations), or (ii) the
     withdrawal of Borrower or any of its ERISA 

                                       - 11 -
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     Affiliates from a Pension Plan during a plan year in which it was a 
     "substantial employer" as defined in Section 4001(a)(2) or 4068(f) of 
     ERISA, or (iii) the filing of a notice of intent to terminate a Pension 
     Plan or the treatment of a Pension Plan amendment as a termination under 
     Section 4041 of ERISA, or (iv) the institution of proceedings to 
     terminate a Pension Plan by the Pension Benefit Guaranty Corporation, or 
     (v) any other event or condition which would constitute grounds under 
     Section 4042(a) of ERISA for the termination of, or the appointment of a 
     trustee to administer, any Pension Plan, or (vi) the imposition of a 
     lien pursuant to Section 412(n) of the Code.

          "TREASURY RATE" means the semi-annual yield on the Treasury Constant
     Maturity series with maturity equal to the remaining weighted average life
     of the Loan, for the week prior to the Prepayment Date, as reported in
     Federal Reserve Statistical release H.15 - Selected Interest Rates,
     conclusively determined by Lender (absent manifest error) on the Applicable
     Date.  The rate will be determined by linear interpolation between the
     yields reported in Release H.15, if necessary. (In the event Release H.15
     is no longer published, Lender shall select a comparable publication to
     determine the Treasury Rate.)

          "TRUSTEE OFFICER" means either Jay W. Pauly, the President/Chief
     Executive Officer of Borrower, or Leroy E. Carlson, the Vice President/CFO
     of Borrower, acting alone.

          "UNCONSOLIDATED PARTNERSHIP" means Chateau De Ville, Ltd., a
     California limited partnership.

          "UNION LINE OF CREDIT" means that certain secured line of credit in
     the maximum principal amount of Seven Million Five Hundred Thousand Dollars
     ($7,500,000) established by Union Bank in favor of Borrower which is
     secured by the Union Liens and any replacement line(s) of credit therefor
     which comply with the provisions of Section 6.12 hereof.

          "UNION LIENS" means those certain liens in favor of Union Bank to
     secure the Union Line of Credit and encumbering that certain real property
     more commonly referred to as Lakeview Apartments located in San Diego,
     California (the "Union Property").


     1.2  OTHER TERMS.  Any accounting terms used in this Agreement which are
not specifically defined shall have the meanings assigned to them in conformity
with GAAP.  References to "Articles" and "Sections" shall be to Articles and
Sections, respectively, of this Agreement unless otherwise specifically
provided.  Any of the terms defined in Section 1.1 or elsewhere herein may,
unless the context otherwise requires, be used in the singular or the plural
depending on the reference.

                                       - 12 -
<PAGE>

     1.3  COMPUTATION OF TIME PERIODS.  In this Agreement in the computation of
periods of time from a specified date to a later specified date, the word "from"
means "from and including" and the words "to" and "until" each means "to but
excluding".



                                   ARTICLE 2.

                                   LOAN TERMS

     2.1  LOAN.

          A.  LOAN.  Subject to the terms and conditions of this Agreement, and
in reliance upon the representations and warranties of Borrower herein set
forth, Lender agrees to make to Borrower, and Borrower agrees to accept from
Lender, a loan in the principal amount FIFTY-FIVE MILLION DOLLARS ($55,000,000)
(the "Loan"). 

          B.  NOTE.  Borrower shall execute and deliver to Lender, on or before
the Closing Date, the Note evidencing the Loan. Borrower agrees to repay the
indebtedness evidenced by the Note in accordance with the terms thereof and the
terms hereof.

          C.  TERM OF LOAN.  Subject to Article 7 hereof, the Loan shall mature,
and the then outstanding principal balance of the Loan shall be due and payable,
on the Maturity Date.

          D.  DISBURSEMENT OF FUNDS.  Upon satisfaction of the conditions
precedent specified in Section 3.1 hereof, on the Closing Date, Lender shall
disburse the full proceeds of the Loan, in same day funds, to or on behalf of
Borrower, as follows: (i) to Sanwa Bank, an amount sufficient to repay in full
the then outstanding principal amount of the Sanwa Line of Credit, (ii) to Union
Bank, an amount sufficient to repay in full the then outstanding principal
amount of the Union Line of Credit, and (iii) the balance of the Loan in an
amount which when taken together with the amounts set forth in clauses (i) and
(ii) hereof will not exceed $55,000,000, to be deposited into Borrower's
operating account pursuant to the wiring instructions attached hereto as
EXHIBIT C, such funds to be used in accordance with the terms of Sections 2.5
and 5.10 hereof.


     2.2  INTEREST RATE ON THE LOAN.

          A.  RATE OF INTEREST.    The Loan shall bear interest on the unpaid
principal amount thereof from the Closing Date until repaid in full at an
interest rate per annum equal to seven and forty-four one-hundredths percent
(7.44%).

                                       - 13 -
<PAGE>

          B.  INTEREST PAYMENTS.  Subject to Section 2.2.D hereof, interest on
the Loan shall be payable monthly in arrears on the first (1st) day of each
month during the term of such Loan, upon any prepayment of such Loan (to the
extent accrued on the amount being prepaid, and together with any Prepayment
Premium due in connection therewith) and on the Maturity Date of such Loan.

          C.  LATE CHARGE.  If Borrower fails timely to pay any sum due and
payable under the Loan on or before the date due, a late charge equal to four
cents ($.04) for each dollar ($1.00) of each such late payment (the "Late
Charge") shall be immediately due and payable.  Borrower acknowledges and agrees
that its failure to make timely payments will result in Lender incurring
additional expense in servicing the Loan, and that it is extremely difficult and
impractical to ascertain the extent of such damages and that the Late Charge
represents a fair and reasonable estimate, considering all of the circumstances
existing on the date of the execution of this Agreement, of the costs that
Lender will incur by reason of such late payment.  Acceptance of any Late Charge
shall not constitute a waiver of the default with respect to the late payment,
and shall not prevent Lender from exercising any of the other rights or remedies
available hereunder, at law or in equity.

          D.  SECONDARY INTEREST.  Borrower further acknowledges and agrees that
during the time that any payment of principal, interest or other amount due
under the Note or this Agreement shall be delinquent (including, without
limitation, the entire principal amount of the Loan on maturity or in connection
with an acceleration of the Loan as provided herein and in the Loan Documents),
Lender will incur additional costs and expenses attributable to its loss of use
of the money due and to the adverse impact on Lender's ability to meet its other
obligations and avail itself of other opportunities.  Borrower agrees that it is
extremely difficult and impractical to ascertain the extent of such expenses,
and Borrower therefore agrees that interest at a rate of eighteen percent (18%)
per annum  (the "Secondary Interest Rate") shall accrue on any delinquent
payments of principal, interest or other amounts due under any Loan Document 
(including, without limitation, the entire principal amount of the Loan on
maturity or in connection with an acceleration of the Loan as provided herein
and in the Loan Documents) from the date such payments were due and for so long
as non-payment continues, regardless of whether or not there has been an
acceleration of the Indebtedness evidenced by the Note.

          E.  COMPUTATION OF INTEREST.  Interest on the Loan shall be computed
on the basis of a year of three hundred sixty (360) days consisting of twelve
(12) thirty (30) day months, regardless of the actual time elapsed. 

     2.3  FEES.

                                       - 14 -
<PAGE>

          A.  PROCESSING FEE. Lender acknowledges that in connection with fixing
the rate of interest on the Loan, Borrower has paid to Lender a processing fee
in the amount of Fifty-Five Thousand Dollars ($55,000). Borrower agrees that
such processing fee is fully earned by Lender as of the date of receipt thereof
and shall not be returned or refunded to Borrower regardless of whether the Loan
is ever funded or made.

          B.   OTHER FEES AND COSTS. In addition to the fees described in
Section 2.3.A hereof, Borrower agrees to pay the fees and expenses of Lender set
forth in Section 8.2 hereof.


     2.4  PAYMENTS AND PREPAYMENTS.

          A.   PRINCIPAL AMORTIZATION. In addition to the interest only payments
due under the Note as described in Section 2.2.B hereof, Borrower agrees to make
to Lender, without payment of any Prepayment Premium, the following regularly
scheduled principal amortization payments: (i) on the date six (6) years after
the Closing Date, an amount equal to Ten Million Dollars ($10,000,000), (ii) on
the date seven (7) years after the Closing Date, an amount equal to Ten Million
Dollars ($10,000,000), (iii) on the date eight (8) years after the Closing Date,
an amount equal to Ten Million Dollars ($10,000,000), and (iv) on the date nine
(9) years after the Closing Date, an amount equal to Ten Million Dollars
($10,000,000) (collectively, the "Amortization Payments").

          B.  PAYMENTS.  All payments to Lender shall be made without setoff or
counterclaim not later than 12:00 noon (New York time) on the day when due in
lawful money of the United States by electronic funds  transfer of immediately
available funds to Lender at Morgan Guaranty Trust Company, 23 Wall Street, New
York, New York 10019, Account No. 05-054-493 or at such other place or places as
Lender may designate from time to time in writing to Borrower.

          C.  PAYMENTS ON BUSINESS DAYS.  Whenever any payment to be made
hereunder or under the Note shall be stated to be due on a day that is not a
Business Day, such payment shall be made on the next succeeding Business Day and
such extension of time shall be included in the computation of the payment of
interest hereunder or under the Note.

          D.  PREPAYMENTS.  Subject to payment of the Prepayment Premium
referred to below and all accrued interest and other sums due with respect to
the Loan, if any, Borrower shall have the right to prepay all or any part of the
outstanding principal balance of the Loan on any regularly scheduled interest
payment date, with a minimum Prepayment Amount of Five Million Dollars
($5,000,000), upon giving not less than thirty (30) days prior written notice to
Lender of its intention to prepay the Loan.  Except as set forth below, if the
Loan is prepaid in whole or in 

                                       - 15 -
<PAGE>

part for any reason on a date prior to the Maturity Date (provided no such 
Prepayment Premium shall be due with respect to an Amortization Payment), 
whether voluntarily, involuntarily or by operation of law, or after 
acceleration by Lender upon an Event of Default, Borrower shall pay to 
Lender, together with the subject Prepayment Amount and any nupaid accrued 
interest on the Prepayment Amount, as liquidated damages, a prepayment charge 
(the "Prepayment Premium") equal to the greater of:

          (i)  the product of (a) one percent (1%) of the principal amount of
     the Loan being prepaid (the "Prepayment Amount") multiplied by (b) a
     fraction the numerator of which is the number of full months remaining to
     the Maturity Date of the Loan being prepaid as of the date on which the
     Prepayment will be made (hereinafter called the "Prepayment Date") and the
     denominator of which is the number of full months comprising the term of
     such Loan; or,

          (ii)  the Present Value of the Prepayment Amount less the sum of (a)
     the Prepayment Amount and (b) the unpaid accrued interest, if any,
     calculated as of the Prepayment Date;

          Lender shall notify Borrower of the amount and basis of determination
of the Prepayment Premium (reflecting therein the calculation thereof).  On or
before the Prepayment Date, Borrower shall pay to Lender the Prepayment Premium
together with the Prepayment Amount and all accrued interest and other sums due
with respect to the Prepayment Amount being prepaid and Lender shall not be
obligated to accept any Prepayment Amount unless such Prepayment Amount is so
accompanied by the Prepayment Premium and all accrued interest and other sums
due with respect thereto.  Any such Prepayment by Borrower shall not affect,
impair, delay or reduce Borrower's obligation to make Amortization Payments set
forth in Section 2.4.A hereof.

          Borrower agrees that the Prepayment Premium represents the reasonable
estimate of Lender and Borrower of a fair average compensation for the loss that
may be sustained by Lender due to any Prepayment; and Borrower agrees that
Lender's agreement to enter into this transaction on the terms set forth in this
Agreement and in the other Loan Documents constitutes adequate and valuable
consideration, given individual weight by Borrower for this Agreement.  Such
Prepayment Premium shall be paid without prejudice to the right of Lender to
collect any other amounts provided to be paid as set forth in this Agreement or
the other Loan Documents.  Lender shall not be obligated to actually reinvest
any Prepayment Amount in any U.S. Government Treasury obligations as a condition
to receiving the Prepayment Premium.

          2.5  USE OF PROCEEDS.

          The proceeds of the Loan shall be used as specified in Section 5.10
hereof. No portion of the proceeds of the Loan shall be used for the purpose of
"purchasing" or "carrying" any Margin 

                                       - 16 -
<PAGE>

Stock or used in any manner which might cause the borrowing or the 
application of such proceeds to violate Regulation G, Regulation U, 
Regulation T or Regulation X of the Board of Governors of the Federal Reserve 
System or any other regulations of the Board of Governors of the Federal 
Reserve System or to violate the Securities Exchange Act, in each case as in 
effect on the Closing Date and date or dates of the use of such proceeds.

          2.6  FAILED FUNDING.

          Borrower recognizes that Lender may suffer damages, including loss 
of bargain, if the Loan is not disbursed.  In the event Borrower fails to 
satisfy the conditions to closing and receive disbursement of the Loan on or 
before the Closing Date in accordance with the terms hereof for any reason 
(other than Lender's breach of the terms of the Loan Commitment or Borrower's 
failure to fulfill the conditions of closing solely as a result of a failed 
condition precedent under Section 3.1.O hereof), Borrower shall pay to 
Prudential a termination fee equal to the sum of the Unwind Fee and the Loss 
of Yield Fee (as such terms are hereinafter defined) (collectively, the 
"Termination Fee"), in order to compensate Lender for any loss of yield in 
connection with the re-investment by Lender of the Loan funds. As used 
herein, the "Unwind Fee" shall be an amount equal to (i) the Percentage Price 
Increase (as hereinafter defined), if any, in a treasury note with a face 
coupon of 7.5%, yielding 5.72%, due in the month of November in the year of 
2001, with a closing bid price of 111.01 as of January 4, 1994 (the "Treasury 
Note"), multiplied by (ii) $55,000,000. As used herein, the "Percentage Price 
Increase" shall be an amount equal to the quotient of (A) the difference 
between (x) the bid price of the Treasury Note as described above (the 
"Original Bid Price"), and (y) the bid price of the Treasury Note as of the 
Closing Date, as determined by Lender, divided by (B) the Original Bid Price. 
In the event the Percentage Price Increase is less than or equal to zero (0) 
because the bid price of the Treasury Note did not increase, the amount of 
the Unwind Fee shall also be zero (0). As used herein, the "Loss of Yield 
Fee" shall mean an amount equal to the (a) the number of days from January 4, 
1994 to the Closing Date, inclusive, expressed as a percentage of 360 days, 
multiplied by (b) $55,000,000, and thus further multiplied by (c) the 
difference between the interest rate of 7.44% and the Treasury Note yield of 
5.72%. Lender shall notify Borrower of the amount and the basis of 
determination of the Termination Fee. Within five (5) days after Borrower 
receives such notification, Borrower shall remit to Lender the Termination 
Fee, together with all other amounts due Lender hereunder. Borrower agrees 
that Lender shall not be obligated to actually reinvest the undisbursed Loan 
amount in any Treasury obligations as a condition to receiving the 
Termination Fee.

          2.7  NO RECOURSE TO PERSONAL ASSETS OF SHAREOWNERS.

          Notwithstanding any term or provision contained in the Loan 
Documents, no shareowner of Borrower shall be personally 

                                       - 17 -
<PAGE>

liable as such for the Obligations thereunder, whether such Obligations arose 
before or after such shareowner became owner or holder of its shares in 
Borrower; provided, however, that in seeking repayment for such Obligations, 
nothing contained herein shall limit Lender's recourse against (i) Borrower, 
(ii) any of Borrower's assets or properties, or (iii) any assets or 
properties of Borrower which are wrongfully or fraudulently distributed to 
any shareowner. 

                                   ARTICLE 3.

                               CONDITIONS TO LOAN

     3.1  CONDITION PRECEDENT TO FUNDING OF LOAN.

          On or before the date at least thirty (30) business days prior to the
Closing Date (or by such other date as may be specifically provided below),
Borrower shall submit to Lender for its review the following documents,
evidence, agreements and information.  As a condition precedent to its
obligation to close the Loan and disburse the Loan proceeds, (i) Lender must be
satisfied with the form, substance and findings of all such documents, evidence,
agreements and information, and (ii) Borrower must satisfy and fulfill each of
the following conditions precedent to closing, to the satisfaction of Lender (in
its sole and absolute discretion) on or before the Closing Date:

          A.   LOAN DOCUMENTS. On or before the Closing Date, Borrower shall
deliver to Lender the following, each, unless otherwise noted, dated as of the
Closing Date, and in form and substance satisfactory to Lender, in its sole and
absolute discretion:

          (i)  This Agreement; and

          (ii) The Note.

          B.  BORROWER ORGANIZATIONAL DOCUMENTS.  On or before the date at least
ten (10) days prior to the Closing Date, Borrower shall deliver to Lender the
following:

          (i)   Certified copies of its Declaration of Trust and all other
     agreements or documents relating to its formation as an unincorporated
     association (the "Trust Agreement"), each to be dated a recent date prior
     to the Closing Date;

          (ii)  Copies of any other organizational documents or board of trustee
     rules or regulations (collectively, the "Bylaws"), certified as of the
     Closing Date as true, correct and complete by a Trustee Officer;

          (iii)  Resolutions of Borrower's Board of Trustees 

                                       - 18 -
<PAGE>

     approving and authorizing the execution, delivery and performance of 
     this Agreement and the execution, delivery and payment of the Note, 
     certified as of the Closing Date by a Trustee Officer as being in full 
     force and effect without modification or amendment;

          (iv)  Signature and incumbency certificates of each Trustee Officer
     executing this Agreement and the Note; 

          (v)  With respect to the Consolidated Partnership and, the
     Unconsolidated Partnership, such charter and partnership documents,
     authorization documents, and incumbency certificates relating to such
     entities as Lender may require; and

          (vi)  Such other documents, instruments, agreements, contracts or
     other information as Lender may reasonably request.

          C.  HAZARDOUS MATERIALS.  On or before the date at least thirty (30)
days prior to the Closing Date, Borrower shall submit, at its own expense, any
and all reports, investigations, inquiries and other data relating to Hazardous
Materials that Borrower has commissioned, received, or otherwise reviewed or
obtained with respect to each Facility.  Such information shall establish that
with respect to the Facilities covered thereby, (i) there are no Hazardous
Materials stored or otherwise present on, in or about any such Facilities except
for Approved Materials (as hereinafter defined); (ii) there are no underground
tanks located on, in or about any such Facilities;  (iii) there exists no
Environmental Claims or other material environmental risks, problems or hazards
affecting any such Facilities, and (iv) all activities conducted on any such
Facilities have been conducted in compliance with all Environmental Laws.

          D.  FINANCIALS.  On or before the date at least thirty (30) days prior
to the Closing Date, Borrower shall deliver to Lender audited consolidated
annual financial statements (including, without limitation, balance sheets,
income statements, cash flow statements and changes in owner's equity) for
Borrower and the Consolidated Partnership for the most recently available fiscal
year, prepared by Kenneth Leventhal & Co. or other certified public accountants
approved by Lender (the "Annual Financials"), and consolidated quarterly
financial statements (including, without limitation, balance sheets, income
statements, cash flow statements and changes in owner's equity) for Borrower and
the Consolidated Partnership for each fiscal quarter of the then current fiscal
year, certified by the Trustee Officer of Borrower as being consistently
prepared on a consolidated basis in accordance with GAAP and otherwise true,
correct and complete in all respects (the "Quarterly Financials") (the Annual
Financials and the Quarterly Financials are referred to herein collectively as
the "Financials").

                                       - 19 -
<PAGE>

          E.   TITLE. On or before the date at least twenty (20) days prior to
the Closing Date, Borrower shall deliver to Lender evidence satisfactory to
Lender that title to all of the Facilities is one hundred percent (100%) vested
fee simple in Borrower (with the exception of the Facility owned by the
Consolidated Partnership which shall be one hundred percent (100%) vested fee
simple in the Consolidated Partnership) and is good and marketable in all
aspects, free and clear of all Liens and other defects other than Approved
Liens.

          F.  CONFIRMATION OF REIT STATUS.  On the date five (5) days prior to
the Closing Date, Lender shall have received a letter from Borrower's
independent accountants or attorneys confirming that Borrower has been a
qualified REIT from its inception through the most recent fiscal quarter just
ended. In addition, Borrower shall deliver to Lender evidence that  Borrower has
in excess of 110 shareholders and that in no event do seven (7) or fewer Persons
control, directly or indirectly, fifty percent (50%) or more of the outstanding
shares of Borrower.

          G.  LENDER STATEMENT AND AGREEMENT.  On or before the date at least
ten (10) days prior to the Closing Date, Borrower shall have delivered to Lender
a statement by each of Sanwa Bank and Union Bank, certifying with respect to the
applicable lines of credit made by such parties to Borrower, as to the
following:

          (i)  The amount of the unpaid balance of the applicable line of credit
     and the interest rate applicable thereto, together with the total amounts,
     if any, of all overdue installments of either principal or interest, or
     both;

          (ii)  The amounts of periodic payments, if any;

          (iii) The date on which the applicable line of credit expires or is
     otherwise due in whole or in part;

          (iv)  The nature and, if known, the amount of any additional charges,
     costs, or expenses payable by Borrower; and

In addition, Borrower shall notify each of Sanwa Bank and Union Bank in writing
(with a copy to Lender) that Borrower has, pursuant to the terms of loan
documents relating to such lines of credit, elected to change its address for
notice thereunder such that all such notices to Borrower shall be delivered to
Borrower at the address of Borrower set forth on the signature page hereof, with
a copy to Lender at the address of Lender set forth on the signature page
hereof.

          H.  OTHER DEBT.  As of the Closing Date and after payment of the Loan
proceeds in accordance with the terms of Section 2.1.D hereof, neither Borrower
nor the Consolidated Partnership (i) shall be indebted to any Person for
borrowed 

                                       - 20 -
<PAGE>

money on an unsecured basis, (ii) other than the Sanwa Line of Credit and the 
Union Line of Credit (which shall each have a zero (0) balance as of the 
Closing Date, but which may be redrawn upon after the Closing Date in 
accordance with the terms hereof), shall be indebted to any Person for 
borrowed money, nor liable for any other obligation, in each case secured in 
whole or in part by any Facility, and (iii) shall have incurred any other 
Indebtedness other than Approved Indebtedness.

          I.  OPINIONS OF BORROWER COUNSEL.  On or before the Closing Date,
Lender shall have received an originally executed copy of one or more favorable
written opinions of Nordman, Cormany, Hair & Compton, counsel for Borrower and
the Consolidated Partnership, in form and substance reasonably satisfactory to
Lender and its counsel, dated as of the Closing Date, and setting forth
substantially the matters in the opinion set forth in EXHIBIT D attached hereto.

          J.  PERFORMANCE OF AGREEMENTS.  As of the Closing Date, Borrower shall
have performed in all material respects all agreements which this Agreement
provides shall be performed on or before the Closing Date.

          K.  ADVERSE FINANCIAL CHANGE.  On the Closing Date, Borrower shall
deliver to Lender a certificate of the Trustee Officer of Borrower to the effect
that, as of the Closing Date, (i) the then Tangible Net Worth of Borrower and
the Consolidated Partnership is not less than $100,000,000 and (ii) there has
been no Material Adverse Change since the date of the last Quarterly Financials.

          L.  COMPLIANCE CERTIFICATE.  On or before the Closing Date, Borrower
shall have delivered to Lender a Compliance Certificate which shall certify,
among other things, as of the Closing Date and upon giving effect to the funding
of the Loan, (i) that each of the representations and warranties of Borrower
contained in the Loan Documents is true, correct and complete, (ii) that no
Event of Default or Potential Event of Default exists under the Loan Documents,
(iii) as to the outstanding principal balance of all Indebtedness of Borrower
and the Consolidated Partnership, including but not limited to, the Sanwa Line
of Credit and the Union Line of Credit (which shall each have an outstanding
principal balance of zero (0)), and (iv) that Borrower and the Consolidated
Partnership is in compliance with each of the financial covenants applicable to
them set forth in the Loan Documents (and which shall set forth in detail
satisfactory to Lender the methodology used to determine such compliance).

          M.   TRUTH OF REPRESENTATIONS AND WARRANTIES.  The representations and
warranties contained herein and in the other Loan Documents shall be true,
correct and complete in all material respects on the Closing Date.

                                       - 21 -
<PAGE>

          N.   NO DEFAULT.  As of the Closing Date, no event shall have occurred
or would result from the funding of the Loan that would constitute an Event of
Default or a Potential Event of Default.

          O.  NO RESTRAINT. As of the Closing Date, no order, judgment or decree
of any court, arbitrator or governmental authority shall purport to enjoin or
restrain Lender from making the Loan, no hearing to cause an injunction or other
restraining order to be issued shall be pending or noticed seeking to enjoin or
otherwise prevent the consummation of this Agreement or the making of the Loan
hereunder, and the making of the Loan shall not violate any applicable law, rule
or regulation, including, without limitation, Regulation G, Regulation T,
Regulation U or Regulation X of the Board of Governors of the Federal Reserve
System and/or Sections 260.140.93(e) and/or 260.140.103 of the California Code
of Regulations, nor subject Lender to any material tax, penalty, liability or
other onerous condition under any applicable law or regulation.

          P.   NO PROCEEDINGS.  As of the Closing Date, there shall not have
been filed by or against Borrower or the Consolidated Partnership or the
Unconsolidated Partnership (i) a petition in bankruptcy, (ii) a petition or
answer seeking assignment for the benefit of creditors, (iii) a petition or
answer seeking the appointment of a receiver, trustee or liquidator with respect
to Borrower or any of the aforementioned parties, or any substantial portion of
Borrower's or such parties' property, or (iv) any reorganization, arrangement,
liquidation or dissolution or similar relief under the Federal bankruptcy laws
or any state law.

          Q.   APPLICATION OF PROCEEDS.  Lender shall have received evidence
satisfactory to it that the proceeds of the Loan will be disbursed in accordance
with Section 2.1.D hereof and will be used in compliance with Sections 2.5 and
5.10 hereof.

          R.   NO LITIGATION. Except for those matters disclosed in EXHIBIT E
which shall be satisfactory to Lender (in its sole and absolute discretion), as
of the Closing Date, there shall not be any pending or threatened action, suit,
proceeding, governmental investigation or arbitration against or affecting
Borrower or the Consolidated Partnership or any Facility.  

          S.   NO DAMAGE OR CONDEMNATION. As of the Closing Date, (i) none of
the Facilities shall have suffered any uninsured damage by fire or other
casualty, (ii) not more than 3 Facilities shall have suffered any damage by fire
or other casualty, whether or not insured, and (iii) none of the Facilities
shall have become, in whole or in part, the subject of any actual or threatened
condemnation action or proceeding or the exercise of the power of eminent
domain.

          T.   LEASES AND OTHER DOCUMENTS.  On or before the date 

                                       - 22 -
<PAGE>

at least twenty (20) days prior to the Closing Date, Borrower shall submit to 
Lender copies of (i) all Anchor Leases and any other lease or sublease 
identified by Lender, (ii) all relevant documentation relating to the Sanwa 
Line of Credit and the Union Line of Credit, (iii) all relevant documentation 
relating to the Leasehold Project (including all ground leases and the 
Existing Purchase Money Mortgages), including, in each case, all amendments 
and modifications thereto, certified by the Trustee Officer of Borrower as 
true, correct and complete.

          U.   CERTIFIED RENT ROLL.  On or before the Closing Date, Borrower
shall deliver to Lender a current Rent Roll covering all Existing Facilities,
certified by the Trustee Officer of Borrower as being true, correct and
complete.

          V.   UCC SEARCH.    On or before the date at least twenty (20) days
prior to the Closing Date, Borrower shall submit to Lender UCC searches relating
to the Facilities, Borrower and the Consolidated Partnership for each state in
which such Facilities are located or with respect to which such entities do
business. The UCC searches must provide that other than the Approved Liens, no
Person shall hold a security interest in any of the assets of Borrower or the
Consolidated Partnership.

          W.   PROPERTY MANAGEMENT PLAN.     On or before the date at least ten
(10) days prior to the Closing Date, Borrower shall submit to Lender a detailed
property management plan with respect to the use, operation and ownership of the
Facilities, and a plan detailing Borrower's proposed investments and
acquisitions of New Facilities in the current fiscal year.

          X.   MINIMUM RATING.     On or before the Closing Date, Borrower shall
have received a letter rating for this transaction of not less than "BBB" by
Standard & Poor's Ratings Group.

          Z.   ASBESTOS PROGRAM. On or before the Closing Date, Borrower shall
institute and place in operation an Asbestos Operations and Maintenance Program
(satisfactory to Lender) for any Facilities which contain asbestos or asbestos
containing materials.

          AA.  REQUEST FOR NOTICE OF DEFAULT. On or before the Closing Date,
there shall be recorded in favor of Lender, Requests for Notice of Default with
respect to the Sanwa Properties and the Union Property.

          AB.  PAYMENT OF ALL FEES AND COSTS.  Borrower shall pay all fees,
costs and expenses of Lender due as of the Closing Date as provided in
Section 8.2 hereof.

          AC.  PAY-OFF OF SANTA FE SPRINGS.  Borrower shall have delivered
evidence to Prudential that Borrower shall have repaid in full the indebtedness
secured by the mortgage or deed of trust encumbering the Santa Fe Facility and
effected a reconveyance or 

                                       - 23 -
<PAGE>

release of the mortgage or deed of trust encumbering such Santa Fe Facility.

          AD.  REQUEST FOR DISBURSEMENT.     At least five (5) business days
prior to the Closing Date, Borrower shall have delivered to Lender a written
request for disbursement of the Loan in the form attached hereto as EXHIBIT H.

          AE.  DISBURSEMENT ON OR BEFORE THE CLOSING DATE.  The disbursement of
the Loan must occur on or before the Closing Date.

          AF.  EVIDENCE OF INSURANCE. At least ten (10) days prior to the
Closing Date, delivery to Lender of certificates or other evidence of the
insurance policies required under Section 5.5 hereof.


                                    ARTICLE 4

                         REPRESENTATIONS AND WARRANTIES

          All representations and warranties of Borrower contained in this
Agreement shall survive the execution, delivery and acceptance thereof by the
parties hereto and the Closing Date.  In order to induce Lender to enter into
this Agreement and to make the Loan, Borrower represents and warrants to Lender
that the following statements are true, correct and complete:   

     4.1  ORGANIZATION, POWERS, GOOD STANDING, AND BUSINESS.

          Borrower is a California real estate investment trust duly formed, 
validly existing and in good standing under the laws of the State of 
California. Borrower is validly qualified as a REIT. Borrower is duly 
qualified to do business in California, Arizona and every other state in 
which it does business. The Consolidated Partnership is a limited partnership 
duly organized, validly existing and in good standing under the laws of the 
State of California. Borrower and the Consolidated Partnership each have the 
trust or partnership power, as the case may be, and authority to own and 
operate their properties, to carry on their business as now conducted and 
proposed to be conducted, and Borrower has all requisite authority to enter 
into each Loan Document, to issue the Note and to carry out the transactions 
contemplated hereby and thereby. Borrower is duly qualified as a foreign 
unincorporated association to do business in, and is in good standing in 
every jurisdiction in which the nature of the business conducted or 
properties owned by it makes such qualification necessary.  Borrower is not a 
"foreign person" within the meaning of Section 1445 and 7701 of the Code.

     4.2  AUTHORIZATION OF BORROWING, ETC.

          A.  AUTHORIZATION OF BORROWING.  The execution delivery 

                                       - 24 -
<PAGE>

and performance of the Loan Documents and the issuance, delivery and payment 
of the Note have been duly authorized by all necessary trust action by 
Borrower.

          B.  NO CONFLICT.  The execution, delivery and performance by Borrower
of each Loan Document to which it is a party and the issuance, delivery and
performance of the Note by Borrower do not and will not (i) violate any
provision of law applicable to Borrower, the Trust Agreement or other
organization documents or Bylaws of Borrower, or any order, judgment or decree
of any court or other agency of government binding on Borrower; (ii) conflict
with, result in a breach of or constitute (with due notice or lapse of time or
both) a default under any Contractual Obligation of Borrower; (iii) result in or
require the creation or imposition of any Lien, charge or encumbrance of any
nature whatsoever upon any of Borrower's or the Consolidated Partnership's
properties or assets; or (iv) require any approval or consent of any Person
under any Contractual Obligation of Borrower.

          C.  GOVERNMENTAL CONSENTS.  The execution, delivery and performance by
Borrower of each Loan Document to which it is a party and the issuance, delivery
and payment of the Note by Borrower do not and will not require any registration
with, consent or approval of, or notice to, or other action to, with or by, any
Federal, state or other governmental authority or regulatory body or other
Person.

          D.  BINDING OBLIGATION.  The Note and each other Loan Document is the
legally valid and binding obligations of Borrower, enforceable against Borrower
in accordance with their respective terms, except as enforcement may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar laws relating
to or limiting creditors' rights generally.

     4.3  FINANCIAL CONDITION.

          Borrower has furnished Lender with the most recent Annual Financials
and Quarterly Financials of Borrower.  Such financial statements (including any
related schedules and/or notes) are true, correct and complete in all material
respects and have been prepared in conformity with GAAP and show all
liabilities, direct and contingent, of Borrower and the Consolidated Partnership
required to be shown in accordance with GAAP.  The balance sheets fairly present
the condition of Borrower and the Consolidated Partnership as at the dates
thereof, and the statements of income and statements of changes in financial
position fairly present the results of the operations of Borrower and the
Consolidated Partnership for the periods indicated.  There has been no change in
the business, condition or operations (financial or otherwise) of Borrower or
the Consolidated Partnership since the last Quarterly Financials and since that
date no event or change has occurred that has caused or evidences, either in any
case or in the aggregate,

                                       - 25 -
<PAGE>

a Material Adverse Effect other than as disclosed in this Agreement.

     4.4  ACTIONS PENDING.

          There is no action, suit, investigation, proceeding or arbitration at
law or in equity or before or by any Federal, State, municipal or other
governmental agency or instrumentally, domestic or foreign, pending or,
threatened against or affecting Borrower or the Consolidated Partnership, or any
properties or rights of Borrower or the Consolidated Partnership which might
result in any Material Adverse Change in the business, condition, properties,
assets or operations of Borrower or the Consolidated Partnership, or could
reasonably be expected to result in a Material Adverse Effect.

     4.5  TITLE TO FACILITIES; LIENS.

          Borrower and the Consolidated Partnership has good and marketable
title to its Facilities and good title to all of its other properties and
assets, including other properties and assets reflected in the Financials
referred to in Section 4.3.  All the Facilities and all such properties and
assets are free and clear of all Liens of any kind except Approved Liens. All
leases necessary in any material respect for the conduct of the business of
Borrower and the Consolidated Partnership or for the realization of Net
Operating Income are valid and subsisting and are in full force and effect.  The
ground leases relating to the Leasehold Projects and the Existing Purchase Money
Mortgages are valid and subsisting and are in full force and effect.

     4.6  TAXES.

          All tax returns and reports of Borrower and the Consolidated
Partnership required to be filed by it have been timely filed, and all taxes,
assessments, fees and other governmental charges upon Borrower and the
Consolidated Partnership and upon their respective properties, assets, income
and franchises which are due and payable have been paid when due and payable,
except to the extent that such taxes, assessments and/or fees are being disputed
in good faith by appropriate proceedings for which adequate reserves have been
established in accordance with GAAP.  Except as specifically disclosed in
writing to Lender, Borrower knows of no proposed tax assessment against it or
the Consolidated Partnership.
 
     4.7  CONFLICTING AGREEMENTS AND OTHER MATTERS.

          Neither Borrower nor the Consolidated Partnership is a party to any
contract or agreement or subject to any charter or other restriction that is
reasonably expected to result in a Material Adverse Effect.  Neither Borrower
nor the Consolidated Partnership is a party to, or otherwise subject to any
provisions contained in, any instrument evidencing Indebtedness of Borrower or
the Consolidated Partnership, any agreement relating thereto 

                                       - 26 -
<PAGE>

or any other Contractual Obligation (including its Trust Agreement) which 
restricts Borrower from entering into this Agreement and borrowing the Loan 
proceeds evidenced by the Note.  Neither Borrower nor the Consolidated 
Partnership is in default in the performance, observance or fulfillment of 
any of the obligations, covenants or conditions contained in any Contractual 
Obligation, and no condition exists which, with the giving of notice or the 
lapse of time or both, would constitute such a default thereunder.

     4.8  REGULATION G, ETC.

          Neither Borrower nor the Consolidated Partnership owns or has any 
present intention of acquiring any  Margin Stock.  Neither Borrower nor the 
Consolidated Partnership is engaged in the business of extending credit for 
the purpose of purchasing or carrying any Margin Stock.  None of the proceeds 
of the Loan will be used, directly or indirectly, for the purpose of 
purchasing or carrying any Margin Stock or for the purpose of reducing or 
retiring any indebtedness which was originally incurred to purchase or carry 
any Margin Stock or for any other purpose which might constitute this 
transaction a "purpose credit" within the meaning of such Regulation G. 
Neither Borrower nor the Consolidated Partnership nor any agent acting on 
behalf of any of them has taken or will knowingly take any action which, at 
the time the action is taken, might cause the Loan Documents or the Note to 
violate Regulation G, Regulation T or any other regulation of the Board of 
Governors of the Federal Reserve System or to violate the Securities Exchange 
Act of 1934, as amended, in each case as in effect now or as the same may 
hereafter be in effect.

     4.9  ERISA.

          Borrower is in compliance in all material respects with any applicable
provisions of ERISA and the regulations and published interpretations thereunder
with respect to all Employee Benefit Plans.  No accumulated funding deficiency
(as defined in section 302 of ERISA and section 412 of the Code), whether or not
waived, exists with respect to any Employee Benefit or Pension Plan (other than
a Multiemployer Plan).  No liability to the Pension Benefit Guaranty Corporation
has been or is expected by Borrower to be incurred with respect to any Employee
Benefit or Pension Plan (other than a Multiemployer Plan) by Borrower which
could reasonably be expected to result in a Material Adverse Effect.  Borrower
has not incurred nor expects to incur any withdrawal liability under Title IV of
ERISA with respect to any Multiemployer Plan which could reasonably be expected
to result in a Material Adverse Effect.  The execution and delivery of the Loan
Documents and the issuance of the Note will not involve any transaction which is
subject to the prohibitions of section 406 of ERISA or in connection with which
a tax could be imposed pursuant to section 4975 of the Code.  No Termination
Event has occurred or is reasonably expected to occur with respect to any
Pension Plan which has had or will have a Material Adverse 

                                       - 27 -
<PAGE>

Effect.

     4.10 CERTAIN FEES.

          Other than fees payable hereunder or under the transactions
contemplated hereby (including those payable by Borrower to Kemper Securities,
Inc., Borrower's attorneys and consultants and the title company), no fee
(including without limitation, broker's or finder's fees or commissions) will be
payable with respect to the offer, issue and sale of the Note or any of the
transactions contemplated hereby, and Borrower hereby indemnifies Lender against
and agrees that it will hold Lender harmless from any claim, demand or liability
for any such fees alleged to have been incurred in connection with any such
offer, issue and sale, or any of the other transactions contemplated hereby and
any expenses, including reasonable legal fees, arising in connection with any
such claim, demand or liability.

     4.11 DISCLOSURE.

          No representation or warranty of Borrower contained in this Agreement,
any Loan Document, or any other document, certificate or written statement
furnished to Lender by Borrower for use in connection with the transactions
contemplated by this Agreement contains any untrue statement of a material fact
or omits to state a material fact necessary in order to make the statements
contained herein or therein not misleading in light of circumstances then
existing.  There is no fact known to Borrower which could be expected to have a
Material Adverse Effect which has not been disclosed to Lender.
 
     4.12 GOVERNMENTAL REGULATION

          Neither Borrower nor the Consolidated Partnership is a (i) "holding
company," a "subsidiary holding company" of a holding company" or an "affiliate"
of a "holding company" or of a "subsidiary holding company" of a "holding
company," as such terms are defined in the Public Utility Holding Company Act of
1935, as amended, or (ii) public utility within the meaning of the Federal Power
Act, as amended. Neither Borrower nor the Consolidated Partnership is an
"investment company" or a company "controlled" by an "investment company" within
the meaning of the Investment Company Act of 1940, as amended, or an "investment
adviser" within the meaning of the Investment Advisers Act of 1940, as amended. 
Neither Borrower nor the Consolidated Partnership is subject to any federal or
state statute or regulation limiting its ability to incur Indebtedness for money
borrowed; other than the provisions of Sections 260.140.93(e) and 260.140.103 of
the California Code of Regulations (the "California Reit Regulations"), and
execution, delivery and performance by Borrower of the Loan Documents, the
making of the Loan, and Borrower's use of the proceeds thereof as contemplated
hereby, in each case, is in full compliance with the provisions of the
California Reit Regulations and the terms of Borrower's Trust Agreement.

                                       - 28 -
<PAGE>

     4.13 ENVIRONMENTAL MATTERS.

          Except as disclosed in EXHIBIT I attached hereto or in the hazardous
materials reports delivered to Lender pursuant to Section 3.1.C hereof: (i) the
Facilities and the operations of Borrower and the Consolidated Partnership
(including, without limitation, all operations and conditions at or in the
Facilities) comply in all material respects with all Environmental Laws; (ii)
Borrower and the Consolidated Partnership have obtained all Environmental
Permits necessary under Environmental Laws applicable to their respective
operations and Facilities, and all such permits are in full force and effect,
and Borrower and the Consolidated Partnership are in compliance with all
material terms and conditions of such Environmental Permits; (iii) neither
Borrower nor the Consolidated Partnership has received (a) any notice or claim
to the effect that it is or may be liable to any person as a result of the
Release or threatened Release of any Hazardous Materials or (b) any letter or
request for information under Section 104 of the Comprehensive Environmental
Response, Compensation, and Liability Act (42 U.S.C. Section  9604) or
comparable state laws, and none of the operations of Borrower or the
Consolidated Partnership is the subject of any Federal or state investigation
evaluating whether any remedial action is needed to respond to a Release or
threatened Release of any Hazardous Material at any of the Facilities or at any
other location; (iv) none of the Facilities nor the operations of Borrower or
the Consolidated Partnership is subject to any judicial or administrative
proceeding alleging the violation of or liability under any Environmental Laws;
(v) neither Borrower nor the Consolidated Partnership nor any of their
Facilities or operations are subject to any outstanding written order or
agreement with any governmental authority or private party respecting any
Environmental Claims; (vi) neither Borrower nor the Consolidated Partnership has
any contingent liability in connection with any Release of any Hazardous
Materials by Borrower or the Consolidated Partnership or any other Person; (vii)
neither Borrower nor the Consolidated Partnership or any predecessor of Borrower
or of the Consolidated Partnership nor any Person has filed any notice under any
Environmental Law indicating past or present treatment, or disposal of Hazardous
Materials at any of the Facilities, and none of Borrower's or the Consolidated
Partnership's operations or the operations of any Person in relation to the
Facilities involves the generation, transportation, treatment, storage, or
disposal of hazardous waste, as defined under 40 C.F.R. Part  260270 or any
applicable state equivalent; (viii) other than Approved Materials, no Hazardous
Materials exist on, under or about any Facility and neither Borrower nor the
Consolidated Partnership nor any Person has filed any notice or report of a
Release of any Hazardous Materials; (ix) neither Borrower nor the Consolidated
Partnership (or any of their predecessors) has disposed of Hazardous Materials
in a manner that may reasonably be expected to give rise to an Environmental
Claim; (x) no underground storage tanks 

                                       - 29 -
<PAGE>

or surface impoundments are on or at the Facilities; and (xi) no Lien in 
favor of any Person for (a) any liability under Environmental Laws, or (b) 
damages arising from or costs incurred by any such Person in response to 
Hazardous Materials has been filed or has attached to the Facilities.

     4.14 LAND USE.

      Except as provided in EXHIBIT G attached hereto, to the best of Borrower's
knowledge, the Facilities and the uses thereof comply with all applicable
zoning, building, environmental and land use laws, ordinances, rules,
regulations and other similar restrictions, and that there is no action or
proceeding pending before any court, quasi-judicial body or administrative
agency relating thereto.  Except as provided in EXHIBIT G attached hereto, to
the best of Borrower's knowledge, Borrower has obtained all unconditional
certificates of occupancy and all other certificates, permits, licenses and
other items which are required by or are to be obtained from any board, agency
or department, whether governmental or otherwise for the use and occupancy of
the Facilities as presently used and occupied or as contemplated to be used and
occupied.

     4.15 NO SUBSIDIARIES OR AFFILIATES.

     Other than the Consolidated Partnership, Borrower has no Subsidiaries or
Affiliates.

     4.16 FOREIGN ASSETS CONTROL REGULATIONS.

     Neither the making of the Loan nor Borrower's use of the proceeds thereof
as contemplated by this Agreement will violate any of the regulation
administered by the Office of Foreign Assets Control, United States Department
of the Treasury, as amended, or any of the rules or regulations issued
thereunder. 


                                   ARTICLE 5.

                              AFFIRMATIVE COVENANTS

          Borrower covenants and agrees that, so long as this Agreement shall be
in effect and until payment in full of the Loan and the Note, Borrower shall
perform, and shall cause the Consolidated Partnership to perform, all of the
covenants in this Article 5.

     5.1  FINANCIAL STATEMENTS AND OTHER REPORTS

          A.  Borrower will maintain, and cause the Consolidated Partnership to
maintain, a system of accounting established and administered in accordance with
sound business practices to permit preparation of financial statements in
conformity with GAAP.  Borrower shall not, without Lender's prior written

                                       - 30 -
<PAGE>

consent, modify or otherwise change its method of accounting from that set forth
in the Financial delivered as of the Closing Date. Borrower will deliver to
Lender:

          (i)  Within ninety (90) days after the close of each fiscal year of
     Borrower (a) audited consolidated annual financial statements (including,
     without limitation, balance sheets, income statements, cash flow statements
     and changes in owner's equity) substantially in the form of the Annual
     Financials prepared by Kenneth Leventhal & Co. or other certified public
     accountants approved by Lender, certified without qualification by such
     certified public accountants, each in form and substance satisfactory to
     Lender, including all elements of income and expenses for the operation of
     the Facilities and (b) a Compliance Certificate;

          (ii)  Within forty-five (45) days after the close of each fiscal
     quarter of Borrower (a) consolidated quarterly financial statements
     certified by the Trustee Officer of Borrower substantially in the form of
     the Quarterly Financials, or, if Lender has reason to believe that there
     has occurred a Material Adverse Change, then audited consolidated quarterly
     financial statements prepared by Kenneth Leventhal & Co. or other certified
     public accountants acceptable to Lender, each in form and substance
     satisfactory to Lender, showing all elements of income and expenses for the
     operation of the Facilities and (b) a Compliance Certificate;

          (iii)  Within five (5) years after Lender's receipt of any statement,
     Lender may, upon at least five (5) days' prior notice to Borrower,
     (i) inspect and make copies of Borrower's books, records and income tax
     returns with respect to the Facilities, for the purpose of verifying any
     such statement and/or (ii) audit, at Borrower's expense, the books and
     records of Borrower; provided, however, that in the event such audit
     reveals a discrepancy of less than 3% from the statements so audited,
     Lender shall pay the cost of such audit;

          (iv)  Promptly upon transmission thereof, copies of all such financial
     statements, proxy statements, notices and reports as Borrower shall send to
     their public shareowners/stockholders and copies of all registration
     statements (without exhibits) and all reports which it files with the
     Securities and Exchange Commission (or any governmental body or agency
     succeeding to the functions of the Securities and Exchange commission);

          (v)  Promptly upon receipt thereof, a copy of each other report
     submitted to Borrower by independent accountants in connection with any
     annual, interim or special audit made by them of the books of Borrower;

          (vi)  Within thirty (30) days of the end of each fiscal 

                                       - 31 -
<PAGE>

     quarter of Borrower during the term of the Loan, if requested by Lender, 
     a current Rent Roll covering all Facilities, certified by a Trustee 
     Officer of Borrower as true, correct and complete, and a plan for 
     acquisition.

          (vii) With reasonable promptness, such other information or financial
     data as Lender may reasonably request.

Together with each delivery of audited financial statements when required by
this Section 5.1.A above, Borrower will deliver to Lender a certificate of such
accountants stating that, the scope of the audit conducted by such accountant
was sufficient to make the statements set forth in the certification, and that
in performing such audit,   they have (x) obtained no knowledge of any Event of
Default or Potential Event of Default, or, if they have obtained knowledge of
any Event of Default or Potential Event of Default, specifying the nature and
period of existence thereof and (y) have confirmed the accuracy and completeness
of the Compliance Certificate, or, if they have obtained knowledge of any such
inaccuracy or incompleteness, specifying the nature thereof.  Lender is hereby
authorized to deliver a copy of any financial statement delivered to it pursuant
to this Section 5.1 to any assignee or participant of or in the Loan or any
regulatory body having jurisdiction over Lender.

          B.  In addition to the foregoing, Borrower will deliver to Lender:

          (i)  promptly upon any Trustee Officer of Borrower obtaining knowledge
     (a) of any condition or event which constitutes an Event of Default or
     Potential Event of Default, (b) that any Person has given any notice to
     Borrower or the Consolidated Partnership or taken any other action with
     respect to a claimed default or event or condition of the type referred to
     in Section 7.2, (c) of the institution of any litigation involving an
     alleged liability of Borrower or the Consolidated Partnership equal to or
     greater than Five Hundred Thousand Dollars ($500,000) or any adverse
     determination in any litigation involving a potential liability of Borrower
     or the Consolidated Partnership equal to or greater than Five Hundred
     Thousand Dollars ($500,000), or (d) of the occurrence of a Material Adverse
     Change; an Officers' Certificate specifying the nature and period of
     existence of any such condition or event, or specifying the notice given or
     action taken by such holder or Person and the nature of such claimed
     default, Event of Default, Potential Event of Default, event or condition,
     and what action Borrower has taken, is taking and proposes to take with
     respect thereto;

          (ii)  promptly upon becoming aware of the occurrence of or forthcoming
     occurrence of any (a) Termination Event, or (b) "prohibited transaction,"
     as such term is defined in 

                                       - 32 -
<PAGE>

     Section 4975 of the Code or Section 406 of ERISA, in connection with any 
     Employee Benefit Plan or any trust created thereunder, a written notice 
     specifying the nature thereof, what action Borrower has taken, is taking 
     or proposes to take with respect thereto, and, when known, any action 
     taken or threatened by the Internal Revenue Service, the Department of 
     Labor, or the Pension Benefit Guaranty Corporation with respect thereto;

          (iii)  with reasonable promptness copies of (a) all notices received
     by Borrower or any of its ERISA Affiliates of the Pension Benefit Guaranty
     Corporation's intent to terminate any Pension Plan or to have a trustee
     appointed to administer any Pension Plan; (b) each Schedule B (Actuarial
     Information) to the annual report (Form 5500 Series) filed by Borrower or
     any of its ERISA Affiliates with the Internal Revenue Service with respect
     to each Pension Plan; and (c) all notices received by Borrower or any of
     its ERISA Affiliates from a Multiemployer Plan sponsor concerning the
     imposition or amount of withdrawal liability pursuant to Section 4202 of
     ERISA;

          (iv)  promptly upon request of Lender, such certifications or other
     evidence that (a) Borrower is not an "employee benefit plan" or a
     "governmental plan"; and (b) Borrower is not subject to state statutes
     regulating investments and fiduciary obligations with respect to
     governmental plans; and (c) one or more of the following circumstances is
     true:

          (1)  Equity interests in Borrower are publicly offered securities,
               within the meaning of 29 C.F.R. Section 2510.3101(b)(2);

          (2)  Less than twenty-five percent (25%) of all equity interests in
               Borrower are held by "benefit plan investors" within the meaning
               of 29 C.F.R. Section 2510.3101(f)(2); or

          (3)  Borrower qualifies as an "operating company" or a "real estate
               operating company" within the meaning of 29 C.F.R. Section
               2510.3-101(c) or (e).

          (v)  Promptly, and in any event within thirty (30) days after receipt
     thereof, a copy of any notice, summons, citation, directive, letter or
     other form of communication from any governmental authority or court in any
     way concerning any action or omission on the part of Borrower or the
     Consolidated Partnership in connection with any Hazardous Material or
     concerning the filing of a lien upon, against or in connection with
     Borrower or the Consolidated Partnership, or any of their leased or owned
     real or personal property, in connection with a Hazardous Substance
     Superfund or a Post-Closure Liability Fund as maintained pursuant to U.S.C.
     Section 9507; and

                                       - 33 -
<PAGE>

          (vi)  with reasonable promptness, such other information and data with
     respect to Borrower or the Consolidated Partnership as from time to time
     may be reasonably requested by Lender.

     5.2  INSPECTION.

          Borrower shall permit any Person designated by Lender in writing to
visit and inspect any of the Facilities to examine the corporate books and
financial records of Borrower and the Consolidated Partnership and make copies
thereof or extracts therefrom and to discuss the affairs, finances and accounts
of Borrower and the Consolidated Partnership with the principal officers of
Borrower and its independent public accountants, all at such reasonable times
and as often as Lender may reasonably request.

     5.3  QUALIFICATION AS REIT; PUBLICLY TRADED COMPANY.

          Borrower shall at all times cause to be done all things necessary to
maintain, preserve and renew its existence as a California real estate
investment trust, its qualification as a REIT pursuant to the Code and any
regulations promulgated thereunder, and its good standing in each state in which
it is doing business.  At all times Borrower shall cause to be done all things
necessary to maintain, preserve and renew its status as a publicly traded REIT
listed on the New York Stock Exchange and in compliance with the rules and
regulations of the Securities and Exchange Commission.

     5.4  MAINTENANCE OF FACILITIES.

          At its sole cost and expense, Borrower and the Consolidated
Partnership shall continue to use each of the Facilities for the same purpose as
such Facility was being used as of the Closing Date or, for any New Facilities,
at the time of its acquisition, and shall keep and maintain each of the
Facilities, including any parking, recreational and landscaped portions thereof,
in the same or better condition as such Facility is in as of the Closing Date
or, for New Facilities, at the time of its acquisition, and Borrower and the
Consolidated Partnership shall promptly make all necessary structural and non-
structural repairs to the Facilities.

     5.5  INSURANCE.

          Borrower shall at all times and at its own expense maintain, preserve
and keep in full force and effect, or cause to be maintained, preserved and kept
in full force and effect policies of insurance for its properties (including,
without limitation, the Facilities), assets and operations with reputable
companies and by such methods as shall be adequate in form, substance, and
amount against casualties, losses and liabilities, all in form and substance
satisfactory to Lender; provided, 

                                       - 34 -
<PAGE>

however, that Borrower shall not be required to provide earthquake insurance 
for the Facilities. 

     5.6  TAXES.

          Borrower will, and will cause the Consolidated Partnership, to duly
pay and discharge all taxes, assessments and other governmental charges or
levies imposed upon them, their income or any of their properties or assets, as
well as all claims of any kind, not later than the due date thereof, provided,
however, that nothing herein shall require Borrower or the Consolidated
Partnership to pay any such tax, assessment, charge, levy or claim so long as
Borrower or the Consolidated Partnership, as the case may be, in good faith
shall contest the amount, validity, or applicability thereof and shall, to the
extent required by GAAP, set aside on its books adequate reserves with respect
thereto, or if requested by Lender, provide other security or bond therefor.

     5.7  PAYMENT OF INDEBTEDNESS.

          A.  Borrower will, and will cause the Consolidated Partnership to, pay
punctually and discharge when due any Indebtedness heretofore or hereafter
incurred by Borrower and the Consolidated Partnership and discharge, perform and
observe the covenants, provisions and conditions to be performed, discharged and
observed on the part of Borrower and the Consolidated Partnership in connection
therewith, or in connection with any agreement or other instrument related
thereto, or in connection with any Lien existing at any time upon or in any of
the properties or assets of Borrower or the Consolidated Partnership; provided,
however, that Borrower's or the Consolidated Partnership's right to maintain or
incur Indebtedness or Liens shall be governed by and limited as provided in
Sections 6.2 and 6.8 hereof.

          B. On or before the Closing Date, Borrower will (i) cause to be repaid
all other Indebtedness, other than, except as set forth herein, the Approved
Indebtedness, and (ii) cause the outstanding balance of the Sanwa Line of Credit
and the Union Line of Credit to be zero (0); provided, however, that after the
Closing Date, Borrower shall, subject to the terms hereof, be entitled to draw
on such lines of credit in accordance with the terms thereof. 

     5.8  COMPLIANCE WITH LAWS.

          Borrower will, and will cause the Consolidated Partnership, to comply
with all laws, rules, regulations and orders of any governmental authority which
are applicable to Borrower, the Consolidated Partnership and/or any of the
Facilities.

     5.9  ENVIRONMENTAL MATTERS.

                                       - 35 -
<PAGE>

          A.   Borrower shall (i) comply and cause all tenants and other Persons
on or occupying any of the Facilities, to comply with all Environmental Laws;
(ii) without limiting the generality of clause (i), except for Hazardous
Materials used in accordance with applicable Environmental Laws and prudent
business practices which are reasonably necessary for the operation of the given
Facility as it is currently operated ("Approved Materials"), not install, use,
generate, manufacture, store, release or dispose of, nor permit the
installation, use, generation, storage, release or disposal of Hazardous
Materials on, under or about any of the Facilities, nor transport or permit the
transportation of Hazardous Materials to or from any of the Facilities, except
in accordance with applicable Environmental Laws and prudent business practices,
and as reasonably necessary for the operation of the given Facility as it is
currently operated; (iii) immediately advise Lender in writing of (a) any and
all Environmental Claims, (b) the presence of any Hazardous Materials on, under
or about any of the Facilities or any property adjoining any of the Facilities
(other than Approved Materials); (iv) provide Lender with copies of all reports,
analyses, notices, licenses, approvals, orders, correspondences or other written
materials relating to the environmental condition of any Facility or any
Environmental Claims immediately upon receipt, completion or delivery of such
materials; (v) not install or allow to be installed any underground tanks on any
of the Facilities; (vi) not create or permit to continue in existence any Lien
upon any of the Facilities imposed pursuant to any Environmental Laws; and
(vi) not materially change or alter the present use of any Facility unless
Borrower shall have notified Lender thereof in writing and Lender shall have
determined, in its sole and absolute discretion, that such change or
modif'ication will not result in the presence of Hazardous Materials on such
Facility in such a level that would increase the potential liability for
Environmental Claims.

          B.   Borrower shall promptly take or cause to be taken any and all
necessary remedial  work  ("Remedial Work") in response to any Environmental
Claims or the presence, storage, use, disposal, transportation, discharge or
release of any Hazardous Materials on, under or about any of the Facilities. 
All Remedial Work shall be conducted (i) in a diligent and timely fashion by
licensed contractors acting under the supervision of a consulting environmental
engineer; (ii) pursuant to a detailed written plan for the Remedial Work in
accordance with all Environmental Laws and approved by any public or private
agencies or persons with a legal or contractual right to such approval;
(iii) with such insurance coverage pertaining to liabilities arising out of the
Remedial Work as is then customarily maintained with respect to such activities;
and (iv) only following receipt of any required permits, licenses or approvals.
As a part of, or following completion of, such Remedial Work, Borrower shall
institute and place in operation a Hazardous Materials operations and
maintenance program to provide for continued environmental monitoring of the
applicable Facility.  

                                       - 36 -
<PAGE>

The selection of the Remedial Work contractors and consulting environmental 
engineer, the contracts entered into with such parties, any disclosures to or 
agreements with any public or private agencies or parties relating to 
Remedial Work and the written plan for the Remedial Work (and any changes 
thereto) each shall, at Lender's option, be subject to Lender's prior written 
approval, which approval shall not be unreasonably withheld or delayed. In 
addition, Borrower shall submit to Lender, promptly upon receipt or 
preparation, copies of any and all reports, studies, analyses, 
correspondence, governmental comments or approvals, proposed removal or other 
Remedial Work contracts and similar information prepared or received by 
Borrower in connection with any Remedial Work or Hazardous Materials relating 
to any Facility. Borrower acknowledges and agrees that in the event Hazardous 
Materials are caused to be removed from the Facilities, the Environmental 
Protection Agency number, manifest number or similar identification assigned 
to the Hazardous Materials so removed shall not name Lender, and Borrower 
shall assume all liability for such removed Hazardous Materials.  All costs 
and expenses of such Remedial Work shall be paid by Borrower, including, 
without limitation, the charges of the Remedial Work contractors and the 
consulting environmental engineer, any taxes or penalties assessed in 
connection with the Remedial Work and Lender's reasonable fees and costs 
incurred in connection with monitoring or review of such Remedial Work.  
Lender shall have the right but no obligation to join and participate in, as 
a party if it so elects, any legal proceedings or actions initiated in 
connection with any Environmental Claims. 

          C.   With respect to any Facility which contains asbestos or asbestos
containing materials, Borrower shall institute and place in operation an
Asbestos Operations and Maintenance Program satisfactory to Lender.

          D.   Borrower and the Consolidated Partnership shall give to Lender,
its agents and employees access to the Facilities, and hereby specifically grant
to Lender, its agents and employees, for the term of the Loan, a license,
subject to the rights of tenants of the Facilities, to enter upon the Facilities
for the purposes of conducting tests and investigations for Hazardous Materials,
and, in the event Borrower fails to comply with the terms of this Section 5.9,
to remove and remediate, at Borrower's sole cost and expense, any Hazardous
Materials.  Notwithstanding the provisions hereof, the Note or any other
provision in any Loan Document, Lender shall be entitled to bring an action for
specific performance against Borrower to compel Borrower to comply with the
terms of this Section 5.9.

          E.   Upon the occurrence of an Event of Default or Potential Event of
Default or upon Lender having reason to believe that a potential environmental
problem exists with respect to any Facility, and upon the request of Lender,
Borrower agrees to submit, at its own expense, hazardous materials report(s)
satisfactory to Lender, in its sole and absolute 

                                       - 37 -
<PAGE>

discretion, detailing and describing the past and current uses, operations 
and activities on or about such Facilities involving, directly or indirectly, 
the use, generation, treatment, storage or disposal of any Hazardous 
Materials.

          F.   Borrower shall protect, indemnify and hold Lender, and any
successors, assigns or participants in or to Lender's interest in the Loan, and
any successors and assigns of such Persons, and all directors, officers,
employees and agents of all of the aforementioned indemnified parties, harmless
from and against any and all actual or potential claims, liabilities, damages,
losses, fines, penalties, judgments, awards, costs and expenses (including,
without limitation, attorneys' fees and costs and expenses of investigation)
which arise out of or relate in any way to any Environmental Claims or any use,
handling, production, transportation, disposal, release or storage of any
Hazardous Materials in, under or on any Facility whether by Borrower or by any
tenant or any other Person, including, without limitation, (i) all foreseeable
and all unforeseeable consequential damages directly or indirectly arising out
of (a) Environmental Claims or the use, generation, storage, discharge or
disposal of Hazardous Materials by Borrower, any prior owner or operator of any
Facility or any Person on or about any Facility; (b) any residual contamination
affecting any natural resource or the environment; (iii) any exercise by Lender
of any of its rights and remedies hereunder; and (iv) Lender's reliance on any
representation or warranty made herein, if such representation or warranty
proves to be materially false or misleading; and (ii) the costs of any required
or necessary repair, cleanup, or detoxification of any Facility and the
preparation of any closure or other required plans.  All such claims,
liabilities, damages, losses, fines, penalties, judgments, awards, costs and
expenses heretofore described and/or referred to in this Section 5.9.F are
hereinafter referred to as "Expenses".  Borrower's liability to the
aforementioned indemnified parties shall arise upon the earlier to occur of
(x) discovery of any Hazardous Materials on, under or about any Facility, or
(y) the institution of any Environmental Claims, and not upon the realization of
loss or damage, and Borrower shall pay to Lender from time to time, immediately
upon Lender's request, an amount equal to such Expenses, as reasonably
determined by Lender.  This Section 5.9.F shall survive the repayment of the
Loan and the termination of the Loan Documents.

     5.10 USE OF PROCEEDS OF LOAN.  

          Borrower shall only use the proceeds of the Loan to pay in full (i)
the outstanding principal balance of the Sanwa Line of Credit and the Union Line
of Credit as of the Closing Date, (ii) transaction costs in connection with the
Loan; and (iii) the acquisition costs for New Facilities permitted hereunder and
other related working capital needs of Borrower. With respect to any proceeds of
the Loan used to repay or retire existing Indebtedness of Borrower or the
Consolidated Partnership, Lender shall have the right to fund such proceeds
directly to the holder 

                                       - 38 -
<PAGE>

of such debt being repaid or retired.

     5.11 COMPLIANCE WITH LAND USE RESTRICTIONS.

          Borrower will, and will cause the Consolidated Partnership to, comply
with all applicable zoning, building, environmental and land use laws,
ordinances, rules, regulations and other similar restrictions, and Borrower will
obtain and keep in full force and effect all certificates of occupancy and other
certificates, permits, licenses and other items which are required by or are to
be obtained from any board, agency or department, whether governmental or
otherwise for the use and occupancy of the Facilities as presently used and
occupied or as contemplated to be used and occupied.


                                   ARTICLE 6.

                               NEGATIVE COVENANTS

          Borrower covenants and agrees that, until payment in full of the Loan
and all other amounts owing hereunder, Borrower will perform, and shall cause
the Consolidated Partnership to perform, all of the covenants in this Article 6.


     6.1  ACQUISITIONS.

          Borrower shall only acquire New Facilities in its own name and for its
own behalf and not through the use of any partnership entity or any other
Subsidiary or Affiliate.  Borrower shall only acquire New Facilities which are
held by Borrower one hundred percent (100%) in fee simple and which are fully
operating income producing investment real property projects and Borrower shall
not invest in or acquire, directly or indirectly, any raw land; construction,
development, or rehabilitation projects (other than (x) those construction,
development, or rehabilitation projects which would not require completion of
construction obligations or other expenditures on capital improvements during
the term of the Loan in excess of $3,000,000 per project or (y) forward
commitments to acquire new construction projects which will be at least 80%
leased pursuant to market rate leases as of the date of acquisition thereof and
the cost of which do not exceed $10,000,000 per project); leasehold or other
sale/leaseback projects or transactions; or any other similar projects or
investments (collectively, "Nonapproved Projects").  At least five (5) days
prior to acquiring any such New Facility, Borrower shall, at its own expense,
deliver to Lender, with respect to such New Facility, (i) a hazardous material
report in form and substance satisfactory to Lender, and (ii) any Anchor Leases.
In the event such hazardous materials report indicates that Phase II testing
should be performed, or recommends any Remedial Work, Borrower shall not,
without the prior written approval of Lender, acquire any such New Facility, and
in no event will Borrower knowingly, 

                                       - 39 -
<PAGE>

after due investigation, purchase, demise, or otherwise acquire any Facility 
or any interest in Facility containing asbestos, or any other Hazardous 
Materials (other than Approved Materials) in levels or amounts which would 
increase the likelihood of Environmental Claims.  Borrower shall pay all 
Lender's fees costs and expenses (including, without limitation, reasonable 
attorneys fees) incurred in connection with the review of any materials or 
data submitted to Lender in connection with the acquisition of any New 
Facility.  

     6.2  LIENS.

          Borrower and the Consolidated Partnership will not, directly or 
indirectly, create, assume, incur or suffer to be created, assumed or 
incurred or to exist, any Lien on or in any Facility or asset of any kind, 
real or personal, tangible or intangible, of Borrower and/or the Consolidated 
Partnership, except for (i) Liens for real property taxes (but excluding 
special assessments or bond assessment financing) not yet due or which are 
being actively contested in good faith by appropriate proceedings, provided 
adequate reserves with respect thereto are maintained on the books of 
Borrower in accordance with GAAP; (ii) other Liens incidental to the conduct 
of its business or the ownership of the properties and assets of Borrower and 
the Consolidated Partnership (such as mechanic's liens, materialmen's liens 
or vendor's liens) which were not incurred in connection with the borrowing 
of money or the obtaining of advances or credit, and which do not in the 
aggregate materially detract from the value of its properties or assets or 
materially impair the use thereof in the operation of its businesses or which 
would have a Material Adverse Effect; (iii) the Approved Liens; and/or (iv) 
other Liens approved in writing by Lender.  Borrower agrees to disclose the 
existence of this Section 6.2 in writing to any lien holder or potential lien 
holder other than a lien holder or potential lien holder described in clause 
(i) through (iii) above (excluding therefrom a new replacement lienholder of 
any Approved Lien in substitution for the existing holder of such Approved 
Lien). In the event Borrower at any time defaults in the performance or 
observance of this Section 6.2, then notwithstanding the terms of any such 
financing between Borrower and such other lien holder, the indebtedness of 
such other lien holder shall be junior and subordinate in payment and 
application to the indebtedness evidenced hereby and by the Note. Nothing in 
this Section 6.2 shall be deemed to constitute a Lien in favor of Lender, and 
the inclusion of this Section 6.2 does not evidence any intention to or 
contemplation of the creation of a Lien in favor of Lender.

                                    - 40 -

<PAGE>

     6.3  SALES, MERGER AND/OR CONSOLIDATION.

          Borrower and the Consolidated Partnership will not sell, lease 
(other than real property leases to tenants of the Facilities entered into in 
the ordinary course of business), transfer, abandon or otherwise dispose of 
all, or substantially all, of their property and/or assets to any other 
Person or consolidate with or merge into any other trust, entity, 
unincorporated association or corporation or permit any trust, entity, 
unincorporated association or corporation to merge with or into Borrower, or 
purchase, establish or acquire any new Subsidiary, Affiliate, or other entity 
or enterprise (other than a New Facility in accordance with the terms of 
Section 6.1 hereof); provided, however, that Borrower may, in any single 
fiscal year, sell a Nonsubstantial Portion of Borrower's Assets as long as, 
and as a condition precedent thereto, Borrower fully reinvests the net 
proceeds of such sale(s) in its business as presently conducted. As used 
herein "Nonsubstantial Portion of Borrower's Assets" shall mean a portion of 
Borrower's or the Consolidated Partnership's assets which are less than 15% 
of the Consolidated Book Value calculated at the end of the most recent 
fiscal quarter, and with respect to which such assets have generated less 
than 15% of Net Operating Income during the four most recent fiscal quarters 
as of the date of determination.

     6.4  FUNDAMENTAL CHANGES.

          Borrower will not, and will not permit the Consolidated Partnership 
to engage in any business other than substantially the same line of business 
as conducted by Borrower and the Consolidated Partnership on the Closing 
Date; or liquidate, wind up or dissolve, whether voluntarily or involuntarily 
(or suffer any such liquidation or dissolution); or make any material change 
in Borrower's Trust Agreement, capital structure or in any of its business or 
investment objectives, purposes and operations which might result in a 
Material Adverse Effect.

     6.5  TRANSACTIONS WITH AFFILIATES.

          Borrower will not, and will not permit the Consolidated Partnership 
to, enter into any transaction (including, without limitation, the purchase, 
sale, lease, disposition or exchange of property or the rendering of any 
service) with the Consolidated Partnership, the Unconsolidated Partnership, 
any Subsidiary or any Affiliate except in the ordinary course of business 
pursuant to the reasonable requirements of the business of Borrower and the 
Consolidated Partnership and upon fair and reasonable terms no less favorable 
to Borrower and the Consolidated Partnership than would be obtained in a 
comparable arms length transaction with a person not the Consolidated 
Partnership, the Unconsolidated Partnership, a Subsidiary, or an Affiliate.

     6.6  LOANS; INVESTMENTS.

                                    - 41 -
<PAGE>

          A.  Borrower will not, and will not permit the Consolidated 
Partnership to, make loans to, advances to or otherwise enter into Contingent 
Obligations on behalf of or investments in the stock or obligations of any 
Person (other than investment of cash or cash equivalents in Permitted 
Investments in the ordinary course of business).

          B.  Borrower will not, and will not permit the Consolidated 
Partnership to, invest in or acquire any Nonapproved Project and/or purchase 
money mortgages.  Notwithstanding the foregoing, Borrower may (i) continue to 
hold the Existing Purchase Money Mortgages, and (ii) hold additional purchase 
money mortgages obtained in sales of Facilities in the ordinary course of 
business and as otherwise allowed hereunder; provided that (a) the principal 
balance of any purchase money mortgage does not exceed seventy-five percent 
(75%) of the sales price of the applicable Facility sold, or have a term in 
excess of five (5) years, and (b) the aggregate amount of all such purchase 
money mortgages does not exceed, at any time, the sum of $10,000,000.

     6.7  LIMITATION ON LEASES AND LESSEES.

          Borrower will not permit more than 15% of Net Operating Income for 
any four consecutive fiscal quarters to be generated by, either directly or 
indirectly, any one Facility, lessee, operator or borrower, nor shall 
Borrower permit any one Facility or assets to constitute more than 15% of 
Consolidated Book Value.

     6.8  OTHER DEBT.

          Other than (i) the Approved Indebtedness and (ii) unsecured 
Indebtedness of Borrower incurred after the Closing Date and which, in any 
and all events, strictly complies with the terms of this Agreement 
(including, without limitation,  Section 6.9 hereof ("New Unsecured 
Indebtedness")), Borrower and the Consolidated Partnership shall not have 
outstanding any Indebtedness or create, assume, suffer to exist or incur any 
Indebtedness or lease obligations (other than the Loan from Lender and the 
leasing of its headquarters in the ordinary course of business), or become 
liable for the indebtedness of another, without the prior written consent of 
Lender. Prior to incurring any New Unsecured Indebtedness, Borrower shall 
notify Lender of the terms and conditions thereof. Borrower agrees to 
disclose the existence of this Section 6.8 in writing to any lender/creditor 
other than a lender/creditor holding Approved Indebtedness (excluding 
therefrom a new replacement lienholder of any Approved Lien in substitution 
for the existing holder of such Approved Lien).  In the event Borrower at any 
time defaults in the performance or observance of this Section 6.8, then 
notwithstanding the terms of any such financing between Borrower and such 
other lender/creditor, the indebtedness of such other lender/creditor shall 
be junior and subordinate in payment and application to the indebtedness 
evidenced hereby and by the Note.

                                    - 42 -
<PAGE>

     6.9  FINANCIAL COVENANTS.

          Borrower's shall at all time comply with the terms of this Section 
6.9 provided that compliance with the terms of this Section 6.9 shall be 
measured quarterly as of the last day of each fiscal quarter of Borrower.

          A.  TANGIBLE NET WORTH.  Borrower will not permit its Tangible Net 
Worth to be less than One Hundred Million Dollars ($100,000,000).

          B.  INDEBTEDNESS TO CONSOLIDATED BOOK VALUE.  Borrower and the 
Consolidated Partnership shall not create, incur, suffer or allow to exist 
Indebtedness (including, with respect to the Sanwa Line of Credit and the 
Union Line of Credit, only the funded portion of such line of credit 
indebtedness within the calculation of Indebtedness) in excess of fifty 
percent (50%) of Consolidated Book Value.

          C.  MAXIMUM SECURED DEBT.  Borrower and the Consolidated 
Partnership shall not create, incur, suffer or allow to exist Indebtedness 
secured in whole or in part by any of its properties (including, without 
limitation, the Facilities) or other assets (including, with respect to the 
Sanwa Line of Credit and the Union Line of Credit, only the funded portion of 
such line of credit indebtedness within the calculation of secured 
Indebtedness)  which at any time (i) exceeds the lesser of (a) $36,500,000 or 
(b) twenty percent (20%) of Consolidated Book Value, or (ii) is secured, in 
whole or in part, by any assets or properties of Borrower or the Consolidated 
Partnership, other than the Sanwa Properties and the Union Property.

          D.   DEBT SERVICE COVERAGE. Borrower and the Consolidated 
Partnership shall not permit or allow the Debt Service Coverage to be less 
than 2.5 to 1.0. 

     6.10 INTEREST RATE SWAP AGREEMENTS.

          Borrower and the Consolidated Partnership will not enter into any 
interest rate swap, collar hedge or other similar agreements with respect to 
the Loan or any other Indebtedness.

     6.11 CALCULATION OF CONSOLIDATED BOOK VALUE.

          Borrower shall, in calculating Consolidated Book Value, carry its 
assets on its books at the lesser of cost or market and shall not write-up 
Consolidated Book Value to reflect increased value based upon market.  
Borrower shall not otherwise  modify its method of calculating Consolidated 
Book Value from that employed in the preparation of Financials delivered to 
Lender in connection with the Loan.

     6.12 NO CHANGE IN COLLATERAL FOR LINES OF CREDIT.

                                    - 43 -
<PAGE>

          Borrower shall not, without the prior written consent of Lender, 
change, substitute or otherwise modify the make-up, mix or nature of the 
Sanwa Properties or any other property securing the Sanwa Line of Credit or 
the make-up, mix or nature of the Union Property or any other property 
securing the Union Line of Credit; provided, however, that Borrower shall be 
entitled to replace either the Sanwa Line of Credit and/or the Union Line of 
Credit with a new line of credit or lines of credit from one or more 
institutional lenders as long as (i) the terms thereof comply with the 
provisions of this Agreement (including, without limitation, Section 6.9 
hereof) and (ii) the only property serving as collateral or security for such 
line of credit or lines of credit is the Sanwa Properties and/or the Union 
Property.

     6.13 SURVIVAL OF OBLIGATIONS UPON TERMINATION OF AGREEMENT.

          Except as otherwise expressly provided for in this Agreement, no 
termination or cancellation (regardless of cause or procedure) of this 
Agreement shall in any way affect or impair the powers, obligations, duties, 
rights, and liabilities of Borrower or Lender relating to (i) any transaction 
or event occurring prior to such termination or cancellation, or (ii) any of 
the undertakings, agreements, covenants, indemnities, warranties and 
representations of Borrower or Lender contained in this Agreement.

                                   SECTION 7.

                     EVENTS OF DEFAULT; RIGHTS AND REMEDIES

          IF any of the following conditions or events ("Events of Default") 
shall occur and be continuing:

     7.1  FAILURE TO MAKE PAYMENTS WHEN DUE.

          Failure to pay any installment of principal of, or Prepayment 
Premium on, the Loan when due, whether at stated maturity, by acceleration, 
by notice or otherwise; or failure to pay any interest on the Loan or any 
other amount due under this Agreement within five (5) days after the date 
due; or

     7.2  DEFAULT IN OTHER AGREEMENTS.

          A.  FAILURE TO MAKE PAYMENTS.  Failure of Borrower or the 
Consolidated Partnership to pay when due any principal or interest on any 
Indebtedness (including, without limitation, the Sanwa Line of Credit or the 
Union Line of Credit) or Contingent Obligation (other than Indebtedness 
referred to in Section 7.1); or

          B.  BREACH OF ANY MATERIAL TERM.  Breach or default of Borrower or the
Consolidated Partnership with respect to any

                                    - 44 -
<PAGE>

other material term of (i) any evidence of any Indebtedness or Contingent 
Obligation (ii) any loan agreement, mortgage, indenture or other agreement 
relating thereto, if the effect of such failure, default or breach is to 
cause, or to permit the holder or holders of that Indebtedness or Contingent 
obligation (or a trustee on behalf of such holder or holders) then to cause, 
that Indebtedness or Contingent Obligation to become or be declared due prior 
to its stated maturity (or the stated maturity of any underlying obligation, 
as the case may be); or

     7.3  BREACH OF CERTAIN COVENANTS.

          Failure of Borrower to perform or comply with any term or condition 
contained in Sections 5.3, 5.9 or any of the negative covenants set forth in 
Sections 6.1 through 6.3, inclusive, hereof, Section 6.6 hereof, or Sections 
6.8 through 6.12, inclusive, hereof; or

     7.4  BREACH OF WARRANTY.

          Any representation, warranty, certification or other statement made 
by Borrower herein, in any Compliance Certificate, or in any other Loan 
Document or in any statement or certificate at any time given by such Person 
in writing pursuant hereto or in connection herewith or therewith shall be 
false, inaccurate or misleading in any material respect on the date as of 
which made; or

     7.5  OTHER DEFAULTS UNDER AGREEMENT OR LOAN DOCUMENTS.

          Borrower shall default in the performance of or compliance with any 
term contained in this Agreement or in the performance or compliance with any 
term contained in the other Loan Documents other than those referred to above 
in Sections 7.1, 7.3 or 7.4 hereof and such default shall not have been 
remedied within thirty (30) days after the occurrence of such default; or

     7.6  INVOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC.

          A.  A court having proper jurisdiction shall enter a decree or 
order for relief in respect of Borrower or the Consolidated Partnership in an 
involuntary case under the Bankruptcy Code or any applicable bankruptcy, 
insolvency or other similar law now or hereafter in effect, which decree or 
order is not stayed; or any other similar relief shall be granted under any 
applicable federal or state law; or

          B.  An involuntary case is commenced against Borrower or the
Consolidated Partnership under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect; or a decree or order of a court having
jurisdiction in the premises for the appointment of a receiver, liquidator,
sequestrator, trustee, custodian or other officer having similar powers over

                                    - 45 -
<PAGE>

Borrower or the Consolidated Partnership, or over all or a substantial part 
of its property, shall have been entered; or the involuntary appointment of 
an interim receiver, trustee or other custodian of Borrower or the 
Consolidated Partnership for all or a substantial part of its property; or 
the issuance of a warrant of attachment, execution or similar process against 
any substantial part of the property of Borrower or the Consolidated 
Partnership, and the continuance of any such event in this clause (B) for 
sixty (60) days unless dismissed, bonded or discharged; or

     7.7  VOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC.

          A.  Borrower, the Consolidated Partnership or any of its 
Subsidiaries shall have an order for relief entered with respect to it or 
commence a voluntary case under the Bankruptcy Code or any applicable 
bankruptcy, insolvency or other similar law now or hereafter in effect, or 
shall consent to the entry of an order for relief in an involuntary case, or 
to the conversion of an involuntary case to a voluntary case, under any such 
law, or shall consent to the appointment of or taking possession by a 
receiver, trustee or other custodian for all or a substantial part of its 
property; the making by Borrower or the Consolidated Partnership of any 
assignment for the benefit of creditors; or

          B.  The inability or failure of Borrower or the Consolidated 
Partnership, or the admission by Borrower or the Consolidated Partnership in 
writing of its inability, to pay its debts as such debts become due; or the 
Board of Trustees of Borrower (or any committee thereof) adopts any 
resolution or otherwise authorizes action to approve any of the actions 
referred to in clause (A) or this clause (B); or

     7.8  JUDGMENTS AND ATTACHMENTS.

          Any money judgment, writ or warrant of attachment, or similar 
process involving (i) in any individual case an amount in excess of $500,000 
or (ii) in the aggregate at any time an amount in excess of $1,000,000 (in 
either case not fully covered by insurance as to which the insurance company 
has acknowledged coverage) shall be entered or filed against Borrower or the 
Consolidated Partnership or any of their respective assets; or

     7.9  DISSOLUTION.

          Any order, judgment or decree shall be entered against Borrower or 
the Consolidated Partnership decreeing the dissolution or split up of 
Borrower or the Consolidated Partnership; or

     7.10 ERISA.

          A.   PENSION PLANS.

                                    - 46 -
<PAGE>

          (i)  Borrower or any of its ERISA Affiliates fails to make full 
     payment when due of all amounts which, under the provisions of any 
     Pension Plan or Section 412 of the Code, Borrower or any of its ERISA 
     Affiliates is required to pay as contributions thereto and such 
     failure results in a Material Adverse Effect;

          (ii)  Any accumulated funding deficiency occurs or exists, 
     whether or not waived, with respect to any Pension Plan and such 
     deficiency results in a Material Adverse Effect;

          (iii)  The excess of the actuarial present value of all benefit 
     liabilities under all Pension Plans over the fair market value of the 
     assets of such Pension Plans (excluding in such computation Pension 
     Plans with assets greater than benefit liabilities) allocable to such 
     benefit liabilities is greater than Five Hundred Thousand Dollars 
     ($500,000) but only if such excess is not reduced to Five Hundred 
     Thousand Dollars ($500,000) (or less) within thirty (30) days 
     following the earliest of (a) the date of the filing with the Pension 
     Benefit Guaranty Corporation of a notice of intent to terminate any 
     Pension Plan other than under a standard termination as defined in 
     Section 4041(b) of ERISA, or (b) the date a trustee is appointed by an 
     appropriate United States district court to administer any Pension 
     Plan, or (c) the Pension Benefit Guaranty Corporation institutes 
     proceedings to terminate any Pension Plan or to appoint a trustee to 
     administer any Pension Plan, or (d) the date coincident with or any 
     date following the date on which Borrower or any of its ERISA 
     Affiliates withdraws (under Section 4063 of ERISA) from any Pension 
     Plan if either Borrower or any of its ERISA Affiliates has a liability 
     greater than Five Million Dollars ($5,000,000) to the Pension Benefit 
     Guaranty Corporation, or any successor thereto, or to any other party 
     resulting from or otherwise associated with such withdrawal; or

          (iv)  (a) Any Pension Plan maintained by Borrower or any of its 
     ERISA Affiliates shall be terminated within the meaning of Title IV of 
     ERISA, or (b) a trustee shall be appointed by an appropriate United 
     States district court to administer any Pension Plan, or (c) the 
     Pension Benefit Guaranty Corporation (or any successor thereto) shall 
     institute proceedings to terminate any Pension Plan or to appoint a 
     trustee to administer any Pension Plan, or (d) Borrower or any of its 
     ERISA Affiliates shall withdraw (under Section 4063 of ERISA) from a 
     Pension Plan, if as of the date of the event listed in subclauses 
     (a) - (d) above or any subsequent date, either Borrower or its ERISA 
     Affiliates has any liability (such liability to include, without 
     limitation, any liability to the Pension Benefit Guaranty Corporation, 
     or any successor thereto, or to any other party under Sections 4062, 
     4063 or 4064 of ERISA or any other provision of law) resulting from or 
     otherwise associated

                                    - 47 -
<PAGE>

     with the events listed in subclauses (a) - (d) above, and any such 
     event or events shall have a Material Adverse Effect;

          B.  MULTIEMPLOYER PLANS.  Either Borrower or any of its ERISA 
Affiliates as employers under one or more Multiemployer Plans shall have made 
a complete or partial withdrawal from such Multiemployer Plans and the plan 
sponsor of such Multiemployer Plans shall have notified such withdrawing 
employer that such employer has incurred a withdrawal liability requiring 
annual payments in an amount exceeding Five Hundred Thousand Dollars 
($500,000) (as used in this Section 7.10 the term "accumulated funding 
deficiency" has the meaning specified in Section 412 of the Code, and the 
terms "actuarial present value" and "benefit liabilities" have the meanings 
specified in Section 4001 of ERISA); or

     7.11 LITIGATION.

          Any lawsuit, lawsuits, other actions or proceedings are filed 
against Borrower or the Consolidated Partnership in an aggregate amount of 
$2,000,000 if such lawsuit(s), actions or proceedings are not (i) dismissed 
within sixty (60) days or (ii) fully covered by insurance where the insurer 
therefor has accepted tender of such claim without reservation; or

     7.12 CHANGE OF CONTROL.

          A.  Any Person shall have (i) acquired beneficial ownership (within 
the meaning of Rule 13d-3 of the Securities and Exchange Commission under the 
Securities Exchange Act of 1934) directly or indirectly, of shares or 
securities of Borrower (or other securities convertible into such 
securities), or (ii) acquired by contract or otherwise, or shall have entered 
into a contract or arrangement which upon consummation will result in its 
acquisition of, control over shares securities of Borrower (or other 
securities convertible into such securities), in either case, representing 
ten percent (10%) or more of the outstanding shares or securities of 
Borrower; or

          B.   Borrower shall have less than one hundred ten (110) 
shareholders/shareowners at any time; or

          C.  Any seven (7) or fewer Persons alone or acting in concert shall 
have (i) acquired beneficial ownership (within the meaning of Rule 13d-3 of 
the Securities and Exchange Commission under the Securities Exchange Act of 
1934) directly or indirectly, of shares or securities of Borrower (or other 
securities convertible into such securities), or (ii) acquired by contract or 
otherwise, or shall have entered into a contract or arrangement which upon 
consummation will result in its or their acquisition of, control over shares 
or securities of Borrower (or other securities convertible into such 
securities), in either case, representing fifty percent (50%) or more of the 
outstanding

                                    - 48 -
<PAGE>

shares or securities of Borrower; or

          D.   Any Share Purchase Rights (as defined in Borrower's Rights 
Agreement dated as of May 29, 1990 (the "Rights Agreement")) at any time 
become exercisable or transferrable under the Rights Agreement; or

     7.13 MATERIAL ADVERSE CHANGE.

          The occurrence of a Material Adverse Change;

          THEN (i) upon the occurrence of any Event of Default described in 
the foregoing Sections 7.6 or 7.7, the unpaid principal amount of and accrued 
interest on the Loan and all other Obligations (including, without 
limitation, any Prepayment Premium) shall automatically become immediately 
due and payable, without presentment, demand, protest or other requirements 
of any kind, all of which are hereby expressly waived by Borrower, and (ii) 
upon the occurrence of any other Event of Default, Lender may, by written 
notice to Borrower, declare all or any portion of the Loan (including, 
without limitation, any Prepayment Premium), and all or some of the other 
Obligations to be, and the same shall forthwith become, immediately due and 
payable, together with accrued interest thereon.

                                    ARTICLE 8

                                  MISCELLANEOUS

     8.1  ASSIGNMENTS AND PARTICIPATIONS IN LOAN AND NOTE.

          Lender may assign its rights and delegate its obligations under 
this Agreement and further may assign, or sell participations in, all or any 
part of the Loan, the Loan Documents, or the Loan commitments evidenced 
hereby or any other interest herein or in the Note to any Person; and to the 
extent of such assignment, Lender shall be relieved of its obligations with 
respect to the Loan and the assignee (the "Assignee") shall have, to the 
extent of such assignment, the same rights, benefits and obligations as it 
would if it were Lender hereunder and a holder of such Note.  Lender may 
furnish any information concerning Borrower, the Consolidated Partnership and 
any of the assets of either from time to time to (i) assignees and 
participants (including prospective assignees and participants), (ii) such 
assignees' and participants' officers, directors, employees, agents and 
consultants, (iii) to any transferee or potential transferee of such assignee 
or participant, (iv) any federal or state regulatory authority having 
jurisdiction over Lender or such assignees or participants, (iv) the National 
Association of Insurance Commissioners or any similar organization, or (v) 
any other Person to which such delivery or disclosure may be necessary or 
appropriate (a) in compliance with any law, rule, regulation or order, (b) in 
response to any subpoena or other legal process or formal investigative 
demand,

                                    - 49 -
<PAGE>

or (c) in connection with any litigation to which Lender or such assignees or 
participants are or could become a party.  Borrower hereby acknowledges and 
agrees that any participation will give rise to a direct obligation of 
Borrower to the participant and the participant shall for purposes of 
Sections 5.1, 8.4 and 8.5 be considered to be a "Lender".

     8.2  EXPENSES.

          Whether or not the transactions contemplated hereby shall be 
consummated, Borrower agrees to pay promptly (i) all the costs and expenses 
of preparation of the Loan Documents and all the costs of furnishing all 
opinions by counsel for any party hereto (including without limitation any 
opinions requested by Lender as to any legal matters arising hereunder), and 
of Borrower's and Lender's performance of and compliance with all agreements 
and conditions contained herein and or the other Loan Documents on its part 
to be performed or complied with; (ii) the reasonable fees, expenses and 
disbursements of counsel to Lender (including allocated costs of internal 
counsel) in connection with the negotiation, preparation, execution and 
administration of the Loan Documents and the Loan and any amendments, 
modifications or departures hereto or thereto; (iii) all other costs and 
expenses incurred by Lender (including reasonable attorneys' fees (including 
allocated costs of internal counsel)) in connection with the negotiation, 
preparation, execution and administration of the Loan, the Loan Documents and 
the transactions contemplated hereby; and (iv) all costs and expenses 
(including attorneys' fees, including allocated costs of internal counsel, 
and costs of settlement) incurred by Lender in enforcing, or in deciding how 
or whether to enforce, any Obligations of or in collecting any payments due 
from Borrower hereunder or under the Note, or any other Loan Document or in 
connection with any refinancing or restructuring of the credit arrangements 
provided under this Agreement in the nature of a "work-out" or of any 
insolvency or bankruptcy proceedings, or in responding to any subpoena or 
other legal process or formal investigative demand issued in connection with 
the Loan or this Agreement or the transactions contemplated hereby or by 
reason of any assignee or participant having acquired an interest herein or 
in the Loan.  All such expenses incurred and billed prior to the Closing Date 
shall be paid on the Closing Date.  All closing costs not billed by the 
Closing Date shall be paid on demand.  All legal fees and expenses incurred 
after the Closing Date shall be paid on a monthly basis as billed.  

     8.3  INDEMNITY.

          In addition to the payment of expenses pursuant to Section 8.2, 
whether or not the transactions contemplated hereby shall be consummated, 
Borrower agrees to indemnify, pay and hold Lender and the officers, 
directors, employees, agents, and affiliates of Lender, and any successors or 
assigns of Lender (collectively called the "Indemnities") harmless from and 

                                    - 50 -
<PAGE>

against: any and all liabilities, obligations, losses, damages, penalties, 
actions, judgments, suits, claims, costs, expenses and disbursements of any 
kind or nature whatsoever (including, without limitation, the reasonable fees 
and disbursements of counsel for such Indemnitee in connection with any 
investigative, administrative or judicial proceeding commenced or threatened, 
whether or not such Indemnitee shall be designated a party thereto), that may 
be imposed on, incurred by, or asserted against that Indemnitee, in any 
manner relating to or arising out of this Agreement or the other Loan 
Documents, Lender's agreement to make the Loan hereunder or the use or 
intended use of the proceeds of any of the Loan (the "Indemnified 
Liabilities"); PROVIDED that Borrower shall have no obligation to an 
Indemnitee hereunder with respect to Indemnified Liabilities arising from the 
gross negligence or willful misconduct of that Indemnitee.  To the extent 
that the undertaking to indemnify, pay and hold harmless set forth in the 
preceding sentence may be unenforceable because it is violative of any law or 
public policy, Borrower shall contribute the maximum portion that it is 
permitted to pay and satisfy under applicable law, to the payment and 
satisfaction of all Indemnified Liabilities incurred by the Indemnities or 
any of them.

     8.4  SET OFF.

          In addition to any rights now or hereafter granted under applicable 
law and not by way of limitation of any such rights, upon the occurrence of 
any Event of Default, Lender is hereby authorized by Borrower at any time or 
from time to time, without notice to such Person, or to any other Person, any 
such notice being hereby expressly waived, to set off and to appropriate and 
to apply any and all deposits (general or special, including, but not limited 
to, Indebtedness evidenced by certificates of deposit, whether matured or 
unmatured but not including trust accounts) and any other Indebtedness at any 
time held or owing by Lender to or for the credit or the account of Borrower, 
against and on account of the obligations and liabilities of Borrower to 
Lender under this Agreement, the Note, including, but not limited to, all 
claims of any nature or description arising out of or connected with this 
Agreement, the Note, or any other Loan Document, irrespective of whether or 
not (i) Lender shall have made any demand hereunder or (ii) the principal of 
or the interest on the Loan or Note, any obligations of Borrower in respect 
of and other amounts due hereunder shall have become due and payable pursuant 
to Article 7 and although said obligations and liabilities, or any of them, 
may be contingent or unmatured.

     8.5  RATABLE SHARING

          Lender and each subsequent holder of all or any portion of the Note 
by acceptance thereof agrees among themselves that if any of them shall, 
through the exercise of any right of counterclaim, set-off, banker's lien or 
otherwise or as adequate protection of a deposit treated as cash collateral 
under the

                                    - 51 -
<PAGE>

Bankruptcy Code, receive payment or reduction of a proportion of 
the aggregate amount of principal and interest then due with respect to the 
Note or portion thereof held by Lender or holder, the amount then due to that 
Lender or holder with respect to any participation therein or amounts due to 
Lender or holder in respect of fees due hereunder (collectively, the 
"Aggregate Amounts Due" to Lender or holder), which is greater than the 
proportion received by Lender or holder of the Note or portion thereof in 
respect to the Aggregate Amounts Due to such Lender or holder, then Lender or 
holder of the Note receiving such proportionately greater payment shall (i) 
notify each Lender or holder, as applicable, of such receipt and (ii) 
purchase participations (which it shall be deemed to have purchased from each 
seller simultaneously upon the receipt by such seller of its portion of such 
payment) in the Aggregate Amounts Due to Lender and holders so that all such 
recoveries of Aggregate Amounts Due shall be shared by Lender and holders of 
the Note or portion thereof in proportion to the Aggregate Amounts Due them; 
PROVIDED that if all or part of such proportionately greater payment received 
by such holder is thereafter recovered from such holder, those purchases 
shall be rescinded and the purchase prices paid for such participations shall 
be returned to the applicable holder to the extent of such recovery, but 
without interest.  Borrower expressly consents to the foregoing arrangement 
and agrees that any holder of a participation so purchased and any other 
subsequent holder of a participation in the Note or portion thereof otherwise 
acquired may exercise any and all rights of banker's lien, set-off or 
counterclaim with respect to any and all monies owing by Borrower to that 
holder as fully as if that holder were a holder of the Note or portion 
thereof, in the amount of the participation held by that holder.

     8.6  AMENDMENTS AND WAIVERS.

          No amendment, modification, termination or waiver of any provision 
of this Agreement or of the Note, or consent to any departure by Borrower 
therefrom, shall in any event be effective without the written concurrence of 
Lender and in the case of an amendment or modification hereto, Borrower.  Any 
waiver or consent shall be effective only in the specific instance and for 
the specific purpose for which it was given.  No notice to or demand on 
Borrower in any case shall entitle Borrower to any other or further notice or 
demand in similar or other circumstances.  Any amendment, modification, 
termination, waiver or consent effected in accordance with this Section 8.6 
shall be binding upon each holder of the Note at the time outstanding, each 
future holder of the Note, and on Borrower.

     8.7  INDEPENDENCE OF COVENANTS.

          All covenants hereunder shall be given independent effect so that 
if a particular action or condition is not permitted by any of such 
covenants, the fact that it would be permitted by an exception to, or be 
otherwise within the limitations of, another covenant shall not avoid the 
occurrence

                                    - 52 -
<PAGE>

of an Event of Default or Potential Event of Default if such action is taken 
or condition exists.

     8.8  NOTICES.

          Unless otherwise specifically provided herein, any notice or other 
communication herein required or permitted to be given shall be in writing 
and may be personally served, telecopied, telexed or sent by United States 
mail or courier service and shall be deemed to have been given when delivered 
in person, receipt of telecopy or telex or three Business Days after 
depositing it in the United States mail, registered or certified, with 
postage prepaid and properly addressed.  For the purposes hereof, the 
addresses of the parties hereto (until notice of a change thereof is 
delivered as provided in this Section 8.8) shall be as set forth under each 
party's name on the signature pages hereof.

     8.9  SURVIVAL OF WARRANTIES AND CERTAIN AGREEMENTS.

          A.  All agreements, indemnities, representations and warranties 
made herein shall survive the execution and delivery of this Agreement, the 
making of the Loan hereunder and the execution and delivery of the Note.

          B.  Notwithstanding anything in this Agreement or implied by law to 
the contrary, the agreements of Borrower set forth in Sections 5.9, 8.2 and 
8.3 shall survive the payment of the Loan, and the Note, and the termination 
of this Agreement.

     8.10 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE.

          No failure or delay on the part of Lender or any holder of the Note 
or portion thereof in the exercise of any power, right or privilege hereunder 
or under the Note shall impair such power, right or privilege or be construed 
to be a waiver of any default or acquiescence therein, nor shall any single 
or partial exercise of any such power, right or privilege preclude other or 
further exercise thereof or of any other right, power or privilege.  All 
rights and remedies existing under this Agreement and the Note are cumulative 
to, and not exclusive of, any rights or remedies otherwise available at law 
or in equity. All amounts due or to be due hereunder shall become and be 
forthwith due and payable, without presentment, demand, protest or further 
notice of any kind, all of which are hereby expressly waived by Borrower. 
Borrower expressly waives all right to the benefit of any statute of 
limitations and any moratorium, reinstatement, marshaling, forbearance, 
extension, redemption, or appraisement now or hereafter provided by the 
Constitution and the laws of the United States and of any state thereof, as a 
defense to any demand against Borrower to the fullest extent permitted by law.

     8.11 SEVERABILITY.

                                    - 53 -
<PAGE>

          In case any provision in or obligation under this Agreement or the 
Note shall be invalid, illegal or unenforceable in any jurisdiction, the 
validity, legality and enforceability of the remaining provisions or 
obligations, or of such provision or obligation in any other jurisdiction, 
shall not in any way be affected or impaired thereby.

     8.12 HEADINGS.

          Article and Section headings in this Agreement are included herein 
for convenience of reference only and shall not constitute a part of this 
Agreement for any other purpose or be given any substantive effect.

     8.13 APPLICABLE LAW.

     THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY, AND 
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE 
STATE OF CALIFORNIA, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.

     8.14 SUCCESSORS AND ASSIGNS; SUBSEQUENT HOLDERS OF NOTE.

          This Agreement shall be binding upon the parties hereto and their 
respective successors and assigns and shall inure to the benefit of the 
parties hereto and the successors and assigns of Lender.  The terms and 
provisions of this Agreement shall inure to the benefit of any assignee or 
transferee of the Note, and in the event of such transfer or assignment, the 
rights and privileges herein conferred upon Lender shall automatically extend 
to and be vested in such transferee or assignee, all subject to the terms and 
conditions hereof. Borrower's rights and obligations or any interest therein 
hereunder may not be assigned without the prior written consent of Lender, 
and any purported assignment shall be null and void AB INITIO. 

     8.15 CONSENT TO JURISDICTION AND SERVICE OF PROCESS; WAIVER OF JURY TRIAL.

          All judicial proceedings brought against Borrower arising out of or 
relating to this Agreement, the Note or other Loan Document or any Obligation 
may be brought in any state or Federal court of competent jurisdiction in the 
State of California and by execution and delivery of this Agreement, Borrower 
accepts for itself and in connection with its properties, generally and 
unconditionally, the nonexclusive jurisdiction of the aforesaid courts and 
waives any defense of forum non conveniens, and irrevocably agrees to be 
bound by any judgment rendered thereby in connection with this Agreement, 
such Note, such other Loan Document or such Obligation.  ALL PARTIES TO THIS 
AGREEMENT HEREBY AGREE THAT THIS SECTION 8.15 CONSTITUTES A WRITTEN CONSENT 
TO WAIVER OF TRIAL BY JURY, PURSUANT TO THE PROVISIONS OF CALIFORNIA CODE OF 
CIVIL PROCEDURE SECTION 631 IN ANY JUDICIAL PROCEEDING ARISING OUT OF OR 
RELATING TO THIS

                                    - 54 -
<PAGE>

AGREEMENT, THE NOTE OR ANY OBLIGATION AND, IN FURTHERANCE THEREOF, BORROWER 
DOES HEREBY CONSTITUTE AND APPOINT LENDER ITS TRUE AND LAWFUL 
ATTORNEY-IN-FACT, WHICH APPOINTMENT IS COUPLED WITH AN INTEREST, AND BORROWER 
DOES HEREBY AUTHORIZE AND EMPOWER LENDER IN THE NAME, PLACE AND STEAD OF 
BORROWER TO FILE THIS AGREEMENT WITH THE CLERK OR JUDGE OF ANY COURT OF 
COMPETENT JURISDICTION AS STATUTORY WRITTEN CONSENT TO WAIVER OF TRIAL BY 
JURY.  Borrower designates and appoints Leroy E. Carlson, Secretary of 
Borrower on the date hereof, with offices at Real Estate Investment Trust of 
California, 12011 San Vicente Boulevard, Suite 707, Los Angeles, California 
90049-4949, and such other Persons as may hereafter be selected by Borrower 
irrevocably agreeing in writing to so serve, as its agent to receive on its 
behalf service of all process in any such proceedings in any such court, such 
service being hereby acknowledged by Borrower to be effective and binding 
service in every respect.  A copy of any such process so served shall be 
mailed by registered mail to Borrower at its address provided in the 
applicable signature page hereto, except that unless otherwise provided by 
applicable law, any failure to mail such copy shall not affect the validity 
of service of process.  If any agent appointed by Borrower refuses to accept 
service, Borrower hereby agrees that service upon it by mail shall constitute 
sufficient notice.  Nothing herein shall affect the right to serve process in 
any other manner permitted by law or shall limit the right of Lender to bring 
proceedings against Borrower in the courts of any other jurisdiction.

     8.16 COUNTERPARTS.

          This Agreement and any amendments, waivers, consents or supplements 
may be executed in any number of counterparts and by different parties hereto 
in separate counterparts, each of which when so executed and delivered shall 
be deemed an original, but all such counterparts together shall constitute 
but one and the same Agreement.

     8.17 EXHIBITS AND SCHEDULES.

          The exhibits attached hereto are incorporated herein by this 
reference and shall be a part of this Agreement.

                                    - 55 -
<PAGE>

     8.18 ENTIRE AGREEMENT.  

          The Loan Documents set forth the entire understanding between 
Borrower and Lender relative to the Loan and the same supersedes all prior 
agreements and understandings relating to the subject matter hereof.

     8.19 LOSS OF NOTE.

          Upon receipt of written notice from the holder of the Note of the 
loss, theft, destruction or mutilation of such Note and, in the case of any 
such loss, theft, or destruction, upon receipt of such holder's satisfactory 
indemnity agreement (which in the case of Lender shall be an unsecured 
indemnity), or in the case of any such mutilation, upon surrender and 
cancellation of such Note, Borrower shall make and deliver a new Note, of 
like tenor, in lieu of the lost, stolen, destroyed or mutilated Note.

                                    - 56 -
<PAGE>

          IN WITNESS WHEREOF, this Agreement has been duly executed by a duly 
authorized officer of each of Borrower and Lander as of the date first above 
written.

                              BORROWER:

                              REAL ESTATE INVESTMENT TRUST OF
                              CALIFORNIA, a California real
                              estate investment trust


                              By:____________________________________________
                                 Jay W. Pauly
                                 President


                              By:____________________________________________
                                 Leroy E. Carlson
                                 Vice President


ATTEST:                       ADDRESS:

__________________________    Real Estate Investment Trust of
                              California
                              12011 San Vicente Boulevard
                              Suite 707
                              Los Angeles, California 90049-4949


                              LENDER:

                              THE PRUDENTIAL INSURANCE COMPANY 
                              OF AMERICA


                              By:____________________________________________


ATTEST:                       ADDRESS:


__________________________    Four Embarcadero Center, Suite 2700
                              San Francisco, California 94111
                              Attention: Regional Counsel

                                    - 57 -
<PAGE>

                                   Exhibit A


                             COMPLIANCE CERTIFICATE



The Prudential Insurance
  Company of America
Four Embarcadero Center, Suite 2700
San Francisco, California  94111
Attention:  Regional Counsel

Gentlemen:

          I, the undersigned, the _________________________ of Real Estate 
Investment Trust of California, a California real estate investment trust 
("Borrower"), do hereby certify, represent and warrant as follows: 

     1.   This Certificate is furnished pursuant to [Section 3.1.L] 
[Section 5.1.A.[(i)][(ii)]] of that certain Loan Agreement dated as of 
________________, 1994 (the "Loan Agreement", the terms defined therein being 
used herein as therein defined) by and between Borrower and The Prudential 
Insurance Company of America, a New Jersey corporation ("Lender").

     2.   SCHEDULE 1 attached hereto sets forth financial data and 
computations evidencing the Borrower's compliance with Section 6.9 of the 
Loan Agreement, all of which data and computations are complete, true and 
correct. 

     3.   No Event of Default or Potential Event of Default under the Loan 
Agreement or the other Loan Documents has occurred and is continuing. 

     4.   The representations and warranties set forth in Article 4 of the 
Loan Agreement are true and correct as of the date hereof as though made on 
and as of the date hereof.

     5.   The total credit commitments relating to, and the principal balance 
of, all Indebtedness of the Borrower and the Consolidated Partnership as of 
___________ __, 19__ are as follows:

     LENDER/CREDITOR     COMMITTED AMOUNT        PRINCIPAL BALANCE

     Prudential           $55,000,000             $_____________
     Sanwa                $29,000,000             $_____________
     Union                $ 7,500,000             $_____________
     _______________                              $_____________
     _______________                              $_____________

     6.   The total credit commitments relating to, and the

                                    - 58 -
<PAGE>

principal balance of, all secured Indebtedness of the Borrower and the 
Consolidated Partnership as of ___________ __, 19__ are as follows:

     LENDER/CREDITOR     COMMITTED AMOUNT        PRINCIPAL BALANCE

     Sanwa                $29,000,000             $_____________
     Union                $ 7,500,000             $_____________


          The only properties and/or assets serving as security for secured
Indebtedness of the Borrower and the Consolidated Partnership are the Sanwa
Properties and the Union Property.


     7.   The total credit commitments relating to, and the principal balance
of, all unsecured Indebtedness of the Borrower and the Consolidated Partnership
as of ___________ __, 19__ are as follows:

     LENDER/CREDITOR     COMMITTED AMOUNT        PRINCIPAL BALANCE

     Prudential           $55,000,000             $_____________
     _______________                              $_____________
     _______________                              $_____________



     Executed this ____ day of _____________, 19__. 



                         ______________________________________________________


                         Name:_________________________________________________


                         Title:________________________________________________

                                    - 59 -
<PAGE>

                                   Schedule 1
                                       To
                             Compliance Certificate
                For the _____________ Ended ______________, 19__



SECTION 6.9.A Tangible Net Worth                                   ($ Thousands)


A.   Consolidated Book Value:

     (i)       Facilities (net of accumulated
               depreciation), PLUS                                  $___________

     (ii)      Cash, PLUS                                           $___________

     (iii)     Permitted Investments, PLUS                          $___________

     (iv)      Prepaid Expenses, PLUS                               $___________

     (v)       Equity interest in Unconsolidated
               Partnership (net of Borrower's pro rata
               share of Unconsolidated Partnership's
               secured indebtedness), PLUS                          $___________

     (vi)      Leasehold Projects (sum of
               (A)(1), and (2))                                     $___________

               (1)  aggregate book value of
                    Finance Leases, PLUS                            $___________

               (2)  aggregate book value of all
                    outstanding Existing Purchase
                    Money Mortgages not in default                  $___________

     (vii)     Consolidated Book Value (sum of
               (A)(i) through (A)(vi), inclusive)                   $___________

B.   Consolidated total liabilities of
     Borrower and the Consolidated Partnership:                     $___________

C.   Tangible Net Worth (A(vii)-B):                                 $___________

D.   MINIMUM TANGIBLE NET WORTH ($ THOUSANDS):                          $100,000

                                    - 60 -
<PAGE>

SECTION 6.9.B INDEBTEDNESS TO CONSOLIDATED
BOOK VALUE                                                         ($ Thousands)


A.   Indebtedness:                                                  $___________

B.   Consolidated Book Value
     (from A(vi) above):                                            $___________

C.   Indebtedness to Consolidated
      Book Value (A/B):                                               ____: 1.00

D.   MAXIMUM INDEBTEDNESS TO CONSOLIDATED
     BOOK VALUE:                                                       .50: 1.00


SECTION 6.9.C MAXIMUM SECURED DEBT                                 ($ Thousands)


A.   Secured Indebtedness:                                          $___________

B.   MAXIMUM SECURED INDEBTEDNESS -
     (LESSER OF (i) $36,500 ($ THOUSANDS)
     OR (ii) 20% OF CONSOLIDATED BOOK VALUE
     (FROM A(vi) ABOVE):                                            $___________

                                    - 61 -
<PAGE>

SECTION 6.9.D. DEBT SERVICE COVERAGE                               ($ Thousands)

(All figures are for the period from
___________ __, 19__ to ____________ __, 19__,
inclusive)

A.   Net Operating Income:

     (i)       gross income derived from Facilities,
               PLUS                                             $___________

     (ii)      earnings derived from cash and
               cash equivalents, PLUS                           $___________

     (iii)     net earnings derived from Unconsolidated
               Partnership Interest, PLUS                       $___________

     (iv)      net rent from Leasehold Projects, PLUS           $___________

     (v)       interest payments on Existing Purchase
               Money Mortgages not in default                       $___________

     (vi)      Gross Income (sum of (i) through (v))                $___________

     (vii)     Operating Expenses                                   $___________

     (viii)    Administrative Expenses                              $___________

     (ix)      Net Operating Income ((vi)-((vii)+(viii))            $___________

B.   Debt Service

     (i)       Interest payments on Loan:                           $___________

     (ii)      Interest payments on all
               other Indebtedness:                                  $___________

     (iii)     Debt Service ((i)+(ii))                              $___________

C.   Debt Service Coverage Ratio ((A)(viii)/B(iii))                  ____ to 1.0

D.   MAXIMUM DEBT SERVICE COVERAGE RATIO:                             2.5 TO 1.0

                                    - 62 -
<PAGE>

                                   Exhibit B

                               [Sanwa Properties]











                                    - 63 -
<PAGE>

                                   Exhibit C

                       [Borrower's Wiring Instructions]












                                    - 64 -
<PAGE>

                                   Exhibit D


                             ______________ __, 1994


The Prudential Insurance Company
  of America
Four Embarcadero Center, Suite 2700
San Francisco, California  94111
Attention:  Regional Counsel

Re:U.S. $55,000,000 Loan Agreement (the "Agreement"), dated as of 
____________ __, 1994 by and between Real Estate Investment Trust of 
California, a California real estate investment trust ("Borrower") and The 
Prudential Insurance Company of America, a New Jersey corporation ("Lender")

Ladies and Gentlemen:

We are special counsel to Borrower and to REIT of Santa Maria Properties, a 
California general partnership (the "Partnership"), and, in this capacity, we 
have advised Borrower with respect to the negotiation and preparation of the 
Agreement, the Note, and the other Loan Documents.  This Opinion Letter is 
provided to you at the request of Borrower pursuant to Section 3.1.I of the 
Agreement.  Except as otherwise indicated herein, capitalized terms used in 
this Opinion Letter are defined as set forth in the Agreement.

               In connection with the foregoing we have examined:

               (1)  The Agreement;

               (2)  The Note;

               (3)  The Compliance Certificate (together with the Agreement and
                    the Note, collectively, the "Loan Documents");

               (4)  The other documents, instruments, agreements, reports and
                    other information furnished by Borrower pursuant to Section
                    3.1 of the Agreement;

               (5)  The Declaration of Trust of Borrower, as amended, together
                    with good standing certificates and tax clearance
                    certificates from the State of California and each other
                    state in which it conducts business or in which its
                    principal place of business is located (the "Trust
                    Agreement");

               (6)  The Trustee's Regulations of Borrower and all amendments
                    thereto (the "By-laws"); 

                                    - 65 -
<PAGE>

               (7)  The Partnership Agreement of the Partnership;

               (8)  Statement of Partnership of the Partnership recorded in the
                    Official Records of _____________ County, California; and

               (9)  Fictitious Name Statement of the Partnership recorded in the
                    Official Records of _____________ County, California.

               In addition, we have examined the originals, or copies 
certified to our satisfaction, of such other records of Borrower and the 
Partnership, certificates of public officials and of officers of Borrower and 
the Partnership, and agreements, instruments and other documents, as we have 
deemed necessary as a basis for the opinions expressed below.

               We are qualified to practice law in the State of California 
and we do not purport to be experts on any laws other than the laws of the 
State of California and the laws of the United States of America.

               Based upon the foregoing and upon such investigation as we 
have deemed necessary, we are of the following opinion:

               1.   Borrower is an unincorporated association duly organized,
                    validly existing and in good standing under the laws of the
                    State of California.

               2.   Borrower has been a qualified real estate investment trust
                    (as defined under Section 856 of the Internal Revenue Code
                    of 1986, as amended) from the date of its inception and is a
                    qualified real estate investment trust (as defined under
                    Section 856 of the Internal Revenue Code of 1986, as
                    amended) as of the date hereof.

               3.   The Partnership is a general partnership duly formed and
                    validly existing under the laws of the State of California.

               4.   The execution, delivery and performance by Borrower of the
                    Loan Documents are within Borrower's trust powers, have been
                    duly authorized by all necessary trust action, and do not
                    contravene (i) the Trust Agreement or the By-laws, (ii) any
                    order, writ, judgment, decree, determination, award, demand,
                    law, rule or regulation applicable to Borrower, or (iii) any
                    contractual or legal restriction contained in any document
                    to which Borrower or the Partnership is a party.

               5.   The Loan Documents have been duly executed and delivered to
                    Lender by and on behalf of Borrower.

                                    - 66 -
<PAGE>

               6.   The Loan Documents are legal, valid and binding obligations
                    of Borrower enforceable against Borrower in accordance with
                    their respective terms.

               7.   No authorization, approval, consent, license, filing,
                    recordation, declaration, registration or other action by,
                    and no notice to or filing with, any governmental authority
                    or regulatory body is required for the due execution,
                    delivery and performance by Borrower of the Loan Documents.

               8.   There are no pending or threatened suits, actions,
                    investigations or proceedings against Borrower or the
                    Partnership before any court, arbitrator or governmental
                    agency.

               9.   Borrower is not in default with respect to any judgement,
                    order, writ, injunction, decree, determination, award or
                    demand of any court, arbitrator or governmental agency.

               10.  Receipt by Lender of all principal, interest and fees
                    required to be paid pursuant to the terms of the Loan
                    Documents will not violate the usury laws of the Sate of
                    California.

               11.  Neither Borrower nor the Partnership is subject to
                    regulation under the Public Utility Holding Company Act of
                    1935, the Federal Power Act or the Investment Company Act of
                    1940 or to any federal or state statute or regulation
                    limiting its ability to incur indebtedness for money
                    borrowed; other than the provisions of
                    Sections 260.140.93(e) and 260.140.103 of the California
                    Code of Regulations (the "California Reit Regulations"), and
                    execution, delivery and performance by Borrower of the Loan
                    Documents, the making of the Loan, and Borrower's use of the
                    proceeds thereof as contemplated by the Loan Documents, in
                    each case, is in full compliance with the provisions of the
                    California Reit Regulations and the terms of Borrower's
                    Trust Agreement.

               12.  Neither the making of the Loan nor Borrower's use of the
                    proceeds thereof as contemplated by the Loan Documents will
                    violate any of the regulations administered by the Office of
                    Foreign Assets Control, United States Department of the
                    Treasury, as amended, or any of the rules or regulations
                    issued thereunder. 

               13.  Neither the making of the Loan nor the use of the

                                    - 67 -
<PAGE>

                    proceeds thereof as contemplated by the Loan Documents 
                    will violate or result in a violation of the rules of the 
                    Federal Reserve System, including, without limitation, 
                    Regulation G, Regulation T, Regulation U or Regulation X 
                    of the Board of Governors of the Federal Reserve System. 
                    
               14.  There are no sovereign immunity defenses available to
                    Borrower which would affect Lender's ability to enforce any
                    of its rights or remedies under the Loan Documents, at law
                    or in equity.


               This Opinion Letter is addressed to the Lender for the benefit 
of the Lender and its participants and assigns.

                                   Very truly yours,

                                    - 68 -
<PAGE>

                                   Exhibit E

                              [Pending Litigation]













                                    - 69 -
<PAGE>

                                   Exhibit F

                             [Existing Facilities]














                                    - 70 -
<PAGE>

                                   Exhibit G

                        [Land Use Compliance Disclosure]














                                    - 71 -
<PAGE>

                                   Exhibit H

                           [Request for Disbursement]


                             _________________, 1994


The Prudential Insurance Company of America
The Prudential Mortgage Capital, Inc.
Four Embarcadero Center, Suite 2700 
San Francisco, California  94111
Attention:  Regional Counsel


                        Loan No.:      6 100 525
                        Name:          Real Estate Investment Trust of
                                       California


Ladies and Gentlemen: 

     Pursuant to that certain Loan Agreement dated as of January 31, 1994 by 
and between you ("Lender") and the undersigned ("Borrower"), the Borrower 
does hereby request that you disburse the full amount of the Loan in the 
amount of $55,000,000 in accordance with the terms and provisions of the Loan 
Agreement (including without limitation, Section 2.1.D thereof) as provided 
in Schedule One attached hereto.

     It is understood that you will not see to, or be responsible for, the 
disbursement of the funds beyond payment thereof as above authorized, and it 
is agreed that payment to third parties as provided and allowed under the 
terms of the Loan Agreement shall constitute payment to us.  We understand 
and acknowledge that interest shall begin to accrue on all such funds upon 
such disbursement.

                                       REAL ESTATE INVESTMENT TRUST OF
                                       CALIFORNIA, a California real
                                       estate investment trust


                                       By:____________________________________
                                          Jay W. Pauly
                                          President


                                       By:____________________________________
                                          Leroy E. Carlson
                                          Vice President

                                    - 72 -
<PAGE>

















                                    - 73 -
<PAGE>

                     SCHEDULE ONE OF DISBURSEMENT REQUEST


















                                    - 74 -
<PAGE>

                                   Exhibit I

                     [Environmental Compliance Disclosure]

















                                    - 75 -