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

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

                                   ARTICLE I
                         THE TRUST; CERTAIN DEFINITIONS

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

                              GROVE PROPERTY TRUST

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

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

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

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

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

    "BOARD OF TRUST MANAGERS" means the Board of Trust Managers of the Trust.

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

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

    "DECLARATION"  or  "DECLARATION  OF TRUST"  means  this  Declaration  Trust,
including any amendments or supplements hereto.

    "EXECUTIVE OFFICERS" means Damon D. Navarro, Brian Navarro, Edmund Navarro,
Joseph LaBrosse and Gerald McNamara.

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

    "PERSON"  means  an  individual,  corporation,  partnership,  estate,  trust
(including a trust  qualified under Section 401(a) or 501(c)(17) of the Code), a
portion of a trust permanently set aside for or to be used

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exclusively  for  the  purposes   described  in  Section  642(c)  of  the  Code,
association,  private  foundation  within the  meaning of Section  508(a) of the
Code,  joint stock  company or other  entity,  or any  government  and agency or
political subdivision thereof.

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

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

    "SECURITIES OF THE TRUST" means any securities issued by the Trust.

    "SHAREHOLDERS" means holders of record of Shares.

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

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

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

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

                                   ARTICLE II
                                 TRUST MANAGERS

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

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

    SECTION 2.2 Term. At each Annual Meeting of Shareholders,  the successors to
the class of Trust  Managers whose term expires at such Meeting shall be elected
to hold office for a term expiring at the annual Meeting of Shareholders held in
the third year following the year of their election and the other Trust Managers
shall continue in office.

    SECTION 2.3  Resignation,  Removal or Death. Any Trust Manager may resign by
written  notice to the remaining  Trust  Managers,  effective upon execution and
delivery to the Trust of such written  notice or upon any future date  specified
in the notice.  A Trust Manager may be removed,  only with Cause (as hereinafter
defined),  at a Meeting  of the  Shareholders  called for that  purpose,  by the
affirmative  vote of the holders of not less than  two-thirds of the Shares then
outstanding  and entitled to vote in the  election of Trustees.  As used herein,
"CAUSE"  shall mean (a)  material  theft,  fraud or  embezzlement  or active and
deliberate  dishonesty  by a Trust  Manager;  (b) habitual  neglect of duty by a
Trust Manager having a material and adverse  significance  to the Trust;  or (c)
the conviction of a Trust Manager of a felony or of

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

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

                                  ARTICLE III
                            POWERS OF TRUST MANAGERS

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

                                   ARTICLE IV
                               INVESTMENT POLICY

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

                                   ARTICLE V
                                     SHARES

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

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

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

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

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

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

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

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

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

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

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

    SECTION 6.4 Related Party Transactions.

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

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

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

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

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

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

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

                                  ARTICLE VII
                     RESTRICTIONS ON OWNERSHIP AND TRANSFER
                            TO PRESERVE TAX BENEFIT

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

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

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

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

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

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

    "DEFERRED  STOCK  GRANT"  means a grant,  pursuant to the Trust's 1996 Share
Incentive Plan of Common Shares.

    "EQUITY SHARES" shall mean Common Shares and/or Preferred Shares.

    "EXECUTIVE OFFICERS" shall mean Damon Navarro, Brian Navarro, Edmund
Navarro, Joseph LaBrosse and Gerald McNamara.

    "EXECUTIVE  OFFICER  OWNERSHIP  LIMIT"  means  20% (by value or by number of
Shares,  whichever is more restrictive) of the outstanding  Equity Shares of the
Trust.

    "INITIAL  PUBLIC  OFFERING" shall mean the sale of Common Shares pursuant to
the Trust's first effective  registration statement for such Common Shares filed
under the Securities Act of 1933, as amended, on Form SB-2 in June 1994.

    "IRS" means the United States Internal Revenue Service.

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

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

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

    "PARTNERSHIP  AGREEMENT" shall mean the Agreement of Limited  Partnership of
Grove Operating,  L.P., of which the Trust is the sole general partner, dated as
of , 1996, as such agreement may be amended from time to time.

    "PERSON"  shall  mean  an  individual,  corporation,   partnership,  limited
liability  company,  estate,  trust  (including a trust  qualified under Section
401(a) or 501(c)(17) of the Code),  a portion of a trust  permanently  set aside
for or to be used  exclusively  for the purposes  described in Section 642(c) of
the Code,  association,  private foundation within the meaning of Section 509(a)
of the Code,  joint  stock  company  or other  entity;  but does not  include an
underwriter  acting in a  capacity  as such in a public  offering  of the Common
Shares,  or Preferred Shares, as the case may be, provided that the ownership of
Common  Shares,  or Preferred  Shares,  as the case may be, by such  underwriter
would not result in the Trust being "closely held" within the meaning of Section
856(h) of the Code,  or  otherwise  result in the Trust  failing to qualify as a
REIT.

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

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

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

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

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

    "TRANSFER" shall mean any sale, transfer, gift, assignment,  devise or other
disposition  of Equity  Shares,  including  (i) the  granting  of any  option or
entering  into any  agreement  for the sale,  transfer or other  disposition  of
Equity Shares or (ii) the sale, transfer, assignment or other disposition of any
securities  (or rights  convertible  into or  exchangeable  for Equity  Shares),
whether  voluntary  or  involuntary,   whether  of  record  or  beneficially  or
Beneficially  or  Constructively  (including  but not  limited to  transfers  of
interests  in  other   entities   which  result  in  changes  in  Beneficial  or
Constructive  Ownership  of Equity  Shares),  and whether by operation of law or
otherwise.

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

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    Section 7.2 Restrictions on Ownership and Transfers.

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

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

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

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

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

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

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

                                      I-8
<PAGE>
    SECTION 7.3 Transfers of Equity Shares in Trust

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

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

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

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

                                      I-9
<PAGE>
have been sold on behalf of the  Special  Trust and (ii) to the extent  that the
Purported  Record  Transferee  received  an amount for such  Equity  Shares that
exceeds the amount that such Purported Record Transferee was entitled to receive
pursuant to this subparagraph  (3)(d),  such excess shall be paid to the Trustee
upon demand.

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

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

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

    SECTION  7.5 Notice of  Restricted  Transfer.  Any Person  who  acquires  or
attempts to acquire  Equity  Shares in  violation of Section 7.2 of this Article
VII or any Person who is a Purported  Transferee such that an automatic transfer
to a Special  Trust  results  under  Section  7.2(b) of this Article VII,  shall
immediately  give written notice to the Trust of such event and shall provide to
the Trust such other  information as the Trust may request in order to determine
the effect, if any, of such Transfer or attempted Transfer on the Trust's status
as a REIT.

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

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

                                      I-10
<PAGE>
to ensure  compliance with the Ownership Limit, the Executive  Officer Ownership
Limit,  or such other limit as provided  from time to time in this Third Amended
and  Restated  Declaration  of Trust or as  otherwise  permitted by the Board of
Trust Managers.

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

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

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

    SECTION 7.9 Exceptions.

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

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

                                      I-11
<PAGE>
reasonably  necessary  to ascertain  this fact and agrees that any  violation or
attempted  violation will result in such Equity Shares being  transferred to the
Trust in accordance with Section 7.2(b) of this Article VII. Notwithstanding the
foregoing, the inability of a Person to make the certification described in this
Section  7.9(b)  shall  not  prevent  the Board of Trust  Managers,  in its sole
discretion,  from  exempting  such  Person  from  the  limitation  on  a  Person
Constructively  Owning Equity Shares in excess of 9.8% of the outstanding Equity
Shares if the Board of Trust Managers determines that the resulting  application
of Section  856(d)(2)(B) of the Code would affect the  characterization  of less
than 0.5% of the gross income (as such term is used in Section  856(c)(2) of the
Code) of the Trust in any taxable year,  after taking into account the effect of
this  sentence  with respect to all other Equity  Shares to which this  sentence
applies.

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

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

                                 CLASS OF STOCK

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

                     RESTRICTION ON OWNERSHIP AND TRANSFER

       THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON
       BENEFICIAL AND CONSTRUCTIVE OWNERSHIP AND TRANSFER FOR THE PURPOSE OF THE
       TRUST'S MAINTENANCE OF ITS STATUS AS A REAL ESTATE INVESTMENT TRUST UNDER
       THE INTERNAL  REVENUE CODE OF 1986, AS AMENDED (THE  "CODE").  SUBJECT TO
       CERTAIN  FURTHER  RESTRICTIONS  AND EXCEPT AS  EXPRESSLY  PROVIDED IN THE
       TRUST'S CHARTER,  (I)(A) NO PERSON (EXCEPT FOR AN EXECUTIVE  OFFICER) MAY
       BENEFICIALLY OWN IN EXCESS OF 5.0% OF THE

                                      I-12
<PAGE>
       OUTSTANDING  EQUITY SHARES OF THE TRUST (BY VALUE OR BY NUMBER OF SHARES,
       WHICHEVER IS MORE  RESTRICTIVE) AND (B) NO EXECUTIVE OFFICER MAY, NOR MAY
       THE EXECUTIVE OFFICERS,  IN THE AGGREGATE,  BENEFICIALLY OWN IN EXCESS OF
       20% OF THE OUTSTANDING  EQUITY SHARES OF THE TRUST (BY VALUE OR BY NUMBER
       OF  SHARES,   WHICHEVER  IS  MORE   RESTRICTIVE);   (II)  NO  PERSON  MAY
       CONSTRUCTIVELY  OWN IN EXCESS OF 9.8% OF THE OUTSTANDING EQUITY SHARES OF
       THE  TRUST  (BY  VALUE  OR  BY  NUMBER  OF  SHARES,   WHICHEVER  IS  MORE
       RESTRICTIVE);  (III) NO PERSON MAY  BENEFICIALLY  OR  CONSTRUCTIVELY  OWN
       EQUITY SHARES THAT WOULD RESULT IN THE TRUST BEING  "CLOSELY  HELD" UNDER
       SECTION  856(h)  OF THE  CODE OR  OTHERWISE  CAUSE  THE  TRUST TO FAIL TO
       QUALIFY AS A REIT; AND (IV) NO PERSON MAY TRANSFER  EQUITY SHARES IF SUCH
       TRANSFER  WOULD  RESULT IN THE CAPITAL  STOCK OF THE TRUST BEING OWNED BY
       FEWER THAN 100 PERSONS.  ANY PERSON WHO  BENEFICIALLY  OR  CONSTRUCTIVELY
       OWNS OR ATTEMPTS TO  BENEFICIALLY  OR  CONSTRUCTIVELY  OWN EQUITY  SHARES
       WHICH CAUSES OR WILL CAUSE A PERSON TO BENEFICIALLY OR CONSTRUCTIVELY OWN
       EQUITY SHARES IN EXCESS OF THE ABOVE LIMITATIONS MUST IMMEDIATELY  NOTIFY
       THE TRUST.  IF ANY OF THE  RESTRICTIONS  ON  TRANSFER  OR  OWNERSHIP  ARE
       VIOLATED,  THE EQUITY  SHARES  REPRESENTED  HEREBY WILL BE  AUTOMATICALLY
       TRANSFERRED  TO A TRUSTEE  OF A SPECIAL  TRUST FOR THE  BENEFIT OF ONE OR
       MORE CHARITABLE  BENEFICIARIES.  IN ADDITION, THE TRUST MAY REDEEM SHARES
       UPON THE TERMS AND CONDITIONS SPECIFIED BY THE BOARD OF TRUST MANAGERS IN
       ITS  SOLE  DISCRETION  IF THE  BOARD OF TRUST  MANAGERS  DETERMINES  THAT
       OWNERSHIP  OR A TRANSFER  OR OTHER  EVENT MAY  VIOLATE  THE  RESTRICTIONS
       DESCRIBED  ABOVE.  FURTHERMORE,  UPON THE  OCCURRENCE OF CERTAIN  EVENTS,
       ATTEMPTED TRANSFERS IN VIOLATION OF THE RESTRICTIONS  DESCRIBED ABOVE MAY
       BE VOID AB  INITIO.  ALL TERMS IN THIS  LEGEND  THAT ARE  DEFINED  IN THE
       DECLARATION  OF  TRUST  HAVE  THE  MEANINGS   ASCRIBED  TO  THEM  IN  THE
       DECLARATION  OF TRUST OF THE TRUST,  AS THE SAME MAY BE AMENDED FROM TIME
       TO TIME,  A COPY OF WHICH,  INCLUDING  THE  RESTRICTIONS  ON TRANSFER AND
       OWNERSHIP,  WILL BE FURNISHED TO EACH HOLDER OF EQUITY  SHARES ON REQUEST
       AND  WITHOUT  CHARGE.  REQUESTS  FOR SUCH A COPY MAY BE  DIRECTED  TO THE
       SECRETARY OF THE TRUST, AT THE TRUST'S PRINCIPAL OFFICE."

    SECTION  7.11  Severability.  If any  provision  of this  Article VII or any
application  of any such provision is determined to be invalid by any Federal or
state court having  jurisdiction over the issues,  the validity of the remaining
provisions shall not be affected and other  applications of such provision shall
be affected  only to the extent  necessary to comply with the  determination  of
such court.

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

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

                                      I-13
<PAGE>
decrease)  the  Ownership  Limit and/or the Executive  Officer  Ownership  Limit
(including,  but not limited to, in connection  with the grant of Options and/or
Deferred Stock Grants to the Executive Officers).

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

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

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

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

                                  ARTICLE VIII
                                  SHAREHOLDERS

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

    SECTION 8.2 Voting Rights of Shareholders.  Subject to the provisions of any
class or series of Shares then outstanding,  the Shareholders  shall be entitled
to vote only on the  following  matters:  (a) the  election  or removal of Trust
Managers;  (b) the  amendment of this  Declaration  of Trust;  (c) the voluntary
dissolution or termination of the Trust;  (d) the  reorganization  of the Trust;
and  (e)  the  merger  or  consolidation  of the  Trust  or the  sale  or  other
disposition  of all or  substantially  all of the Trust  Property.  Except  with
respect to the foregoing  matters,  no action taken by the  Shareholders  at any
meeting shall in any way bind the Trust Managers.

                                   ARTICLE IX
                                   AMENDMENT

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

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

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

                                      I-14
<PAGE>
                                   ARTICLE X
                               DURATION OF TRUST

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

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

    SECTION 11.1 Limitation of Shareholder  Liability.  No Shareholder  shall be
liable for any debt,  claim,  demand,  judgment  or  obligation  of any kind of,
against or with respect to the Trust by reason of his being a  Shareholder,  nor
shall any Shareholder be subject to any personal liability whatsoever,  in tort,
contract or otherwise,  to any Person in connection  with the Trust  Property or
the affairs of the Trust.

    SECTION 11.2 Limitation of Trust Manager and Executive Officer Liability. To
the  maximum  extent  that  Maryland  law in effect  from  time to time  permits
limitations  of  the  liability  of  trustees  and  officers  of a  real  estate
investment  trust,  no Trust  Manager or officer of the Trust shall be liable to
the Trust or to any  Shareholder  for money  damages.  Neither the amendment nor
repeal of this Section,  nor the adoption or amendment of any other provision of
this  Declaration  of Trust  inconsistent  with this section,  shall apply to or
affect in any respect the  applicability of the preceding  sentence with respect
to any act or failure to act which occurred prior to such  amendment,  repeal or
adoption.  In the absence of any  Maryland  statute  limiting  the  liability of
trustees  and  officers  of a Maryland  real estate  investment  trust for money
damages in a suit by or on behalf of the Trust or by any  Shareholder,  no Trust
Manager or Executive Officer of the Trust shall be liable to the Trust or to any
Shareholder unless (a) that Trust Manager or Executive Officer actually received
an improper benefit or profit in money, property or services,  and then, for the
amount of the benefit of profit in money or services  actually received or (b) a
judgment or other final  adjudication  adverse to the Trust Manager or Executive
Officer is entered in a proceeding based on a finding in the proceeding that the
Trust Manager's or Executive  Officer's  action or failure to act was the result
of active and  deliberate  dishonesty  and was  material  to the cause of action
adjudicated  in  the  proceeding  or  (c)  otherwise,  in  accordance  with  the
provisions of an indemnification agreement between any of them and the Trust.

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

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

                                      I-15
<PAGE>
any other enterprise as a director, officer, Shareholder,  partner or trustee of
such corporation,  partnership,  joint venture,  trust, employee benefit plan or
other  enterprise,  from and  against all claims and  liabilities  to which such
person may become  subject and against all claims and  liabilities to which such
person may become  subject by reason of his being or having been a  Shareholder,
Trust  Manager or Executive  Officer.  The Trust shall have the power,  with the
approval of its Board of Trust  Managers,  to provide such  indemnification  and
advancement of expenses to a person who served a predecessor of the Trust in any
of the capacities  described in (a) or (b) above and to any employee or agent of
the Trust or a predecessor of the Trust.

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

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

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

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

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

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

                                  ARTICLE XII
                                 MISCELLANEOUS

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

                                      I-16
<PAGE>
    SECTION 12.2 Reliance by Third Parties.  Any certificate  shall be final and
conclusive as to any Person  dealing with the Trust if executed by an individual
who,  according to the records of the Trust or of any recording  office in which
this Third Amended and Restated Declaration of Trust may be recorded, appears to
be the Secretary or an Assistant Secretary of the Trust or a Trust Manager,  and
if certifying to: (a) the number or identity of Trust Managers,  officers of the
Trust  or  Shareholders;  (b)  the due  authorization  of the  execution  of any
document;  (c) any  action or vote  taken,  and the  existence  of a quorum at a
meeting of Trust Managers or Shareholders;  (d) a copy of this Declaration or of
the Bylaws as a true and  complete  copy as then in force;  (e) an  amendment to
this Declaration;  (f) the termination of the Trust; or (g) the existence of any
fact or facts which relate to the affairs of the Trust.  No  purchaser,  lender,
transfer agent or other Person shall be bound to make any inquiry concerning the
validity of any  transaction  purported to be made on behalf of the Trust by the
Trust Managers or by any officer, employee or agent of the Trust.

    SECTION 12.3 Provisions in Conflict With Law or Regulations.

    (a) The  provisions of this Third Amended and Restated  Declaration of Trust
are severable,  and if the Trust Managers  shall  determine,  with the advice of
counsel,  that any one or more of such  provisions are in conflict with the REIT
Provisions of the Code,  Title 8 or any other  applicable  federal or state law,
the conflicting  provisions  shall be deemed never to have constituted a part of
this  Declaration  of Trust,  even without any amendment of this  Declaration of
Trust pursuant to Article IX; PROVIDED,  HOWEVER, that such determination by the
Trust  Managers  shall not affect or impair any of the  remaining  provisions of
this  Declaration  of Trust or render  invalid or improper  any action  taken or
omitted prior to such determination. No Trust Manager shall be liable for making
or failing to make such a determination.

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

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

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

                                      I-17
<PAGE>
    IN WITNESS WHEREOF, this Third Amended and Restated Declaration of Trust has
been signed on this day of , 1997, by the undersigned  Trust  Managers,  each of
whom  acknowledge that this document is his free act and deed, that, to the best
of his knowledge, information and belief, the matters and facts set forth herein
are true in all  material  respects  and that this  statement  is made under the
penalties for perjury.

<TABLE>
<S>                     <C>                     <C>
/s/Harold Gorman            /s/Damon Navarro       /s/James F. Twaddell
- ---------------------   ---------------------   ---------------------
Harold Gorman           Damon D. Navarro        James F. Twaddell

/s/J. Joseph Garrahy       /s/Joseph R. LaBrosse
- ---------------------   ---------------------
J. Joseph Garrahy       Joseph R. LaBrosse
</TABLE>

                                      I-18