AMENDMENT NO. 1
                         TO WAREHOUSING CREDIT AGREEMENT

                         (American Finance Group, Inc.)

                  THIS AMENDMENT NO. 1 TO WAREHOUSING  CREDIT AGREEMENT dated as
of December 10, 1999 (the  "Amendment"),  is entered into by and among  AMERICAN
FINANCE GROUP, INC., a Delaware corporation  ("Borrower"),  the banks, financial
institutions  and  institutional  lenders  from time to time  party  hereto  and
defined as Lenders  herein and FIRST UNION  NATIONAL  BANK  ("FUNB") as agent on
behalf  of  Lenders  (not in its  individual  capacity,  but  solely  as  agent,
"Agent").  Capitalized terms used herein without  definition shall have the same
meanings herein as given to them in the Credit Agreement.

                                    RECITALS

         A.  Borrower,  Lenders and Agent entered into that  Warehousing  Credit
Agreement  dated as of December 15, 1998 (the "Credit  Agreement"),  pursuant to
which  Lenders  have agreed to extend and make  available  to  Borrower  certain
advances of money.

         B.  Borrower  desires  to amend the  Credit  Agreement  to  extend  the
Commitment  Termination  Date to April 21,  2000 and to decrease  the  aggregate
Commitments set forth on Schedule A to the Credit  Agreement from $60,000,000 to
$50,000,000.

         C. Subject to the  representations  and warranties of Borrower and upon
the terms and  conditions  set forth in this  Amendment,  Lenders  and Agent are
willing to so amend the Credit Agreement.

                                    AGREEMENT

         NOW,  THEREFORE,   in  consideration  of  the  foregoing  Recitals  and
intending to be legally bound, the parties hereto agree as follows:

         Section 1.  Amendments.

                            1.1 COMMITMENT.  The definition of "Commitment"  set
forth in Section 1.1 of the Credit  Agreement is amended by deleting  Schedule A
in its entirety and  replacing  such  schedule with a new Schedule A in the form
attached to this Amendment as Attachment I.

                            1.2 COMMITMENT  TERMINATION  DATE. The definition of
"Commitment  Termination  Date" set forth in Section 1.1 of the Credit Agreement
is deleted in its entirety and is replaced with the following:

         "Commitment Termination Date" means April 21, 2000.

         SECTION 2.  LIMITATIONS ON  AMENDMENTS.

                            2.1 The  amendments  set forth in Section 1,  above,
are effective  for the purposes set forth herein and shall be limited  precisely
as written and shall not be deemed to (i) be a consent to any amendment,  waiver
or  modification  of any other term or  condition  of any Loan  Document or (ii)
otherwise  prejudice  any right or remedy which Lenders or Agent may now have or
may have in the future under or in connection with any Loan Document.

                           2.2 This Amendment  shall be construed in connection
with  and  as  part  of  the  Loan   Documents   and  all   terms,   conditions,
representations,  warranties,  covenants  and  agreements  set forth in the Loan
Documents, except as herein amended, are hereby ratified and confirmed and shall
remain in full force and effect.

          SECTION 3. REPRESENTATIONS AND WARRANTIES.  In order to induce Lenders
and Agent to enter into this Amendment, Borrower represents and warrants to each
Lender and Agent as follows:

                            (a)   Immediately   after  giving   effect  to  this
Amendment (i) the representations and warranties contained in the Loan Documents
(other than those which  expressly  speak as of a different  date which shall be
true as of such different date) are true,  accurate and complete in all material
respects  as of the date  hereof and (ii) no Event of  Default,  or event  which
constitutes a Potential Event of Default, has occurred and is continuing;

                            (b) Borrower has the  corporate  power and authority
to execute and deliver this Amendment and to perform its  Obligations  under the
Credit  Agreement,  as  amended  by this  Amendment,  and each of the other Loan
Documents to which it is a party;

                            (c) The certificate of incorporation of Borrower and
the bylaws of Borrower delivered to each Lender as a condition  precedent to the
effectiveness of the Credit  Agreement are true,  accurate and complete and have
not been  amended,  supplemented  or restated and are and continue to be in full
force and effect;

                            (d) The  execution  and delivery by Borrower of this
Amendment and the  performance by Borrower of its  Obligations  under the Credit
Agreement, as amended by this Amendment, and each of the other Loan Documents to
which it is a party have been duly authorized by all necessary  corporate action
on the part of Borrower;

                            (e) The  execution  and delivery by Borrower of this
Amendment and the  performance by Borrower of its  Obligations  under the Credit
Agreement, as amended by this Amendment, and each of the other Loan Documents to
which it is a party do not and will  not  contravene  (i) any law or  regulation
binding on or affecting Borrower, (ii) the certificate of incorporation, bylaws,
or other  organizational  documents  of Borrower,  (iii) any order,  judgment or
decree  of any  court or other  governmental  or public  body or  authority,  or
subdivision  thereof,  binding on Borrower or (iv) any  contractual  restriction
binding on or affecting Borrower;

                            (f) The  execution  and delivery by Borrower of this
Amendment and the  performance by Borrower of its  Obligations  under the Credit
Agreement, as amended by this Amendment, and each of the other Loan Documents to
which  it is a party do not  require  any  order,  consent,  approval,  license,
authorization  or validation of, or filing,  recording or registration  with, or
exemption  by any  governmental  or public  body or  authority,  or  subdivision
thereof, binding on Borrower, except as already has been obtained or made; and

                            (g)  This  Amendment  has  been  duly  executed  and
delivered by Borrower  and is the binding  Obligation  of Borrower,  enforceable
against it in accordance with its terms,  except as such  enforceability  may be
limited by bankruptcy, insolvency,  reorganization,  liquidation,  moratorium or
other similar laws of general  application and equitable  principles relating to
or affecting creditors' rights.

          SECTION 4.  REAFFIRMATION.  Borrower hereby  reaffirms its Obligations
under each Loan Document to which it is a party.

          SECTION 5.  EFFECTIVENESS.  This Amendment shall become effective upon
the last to occur of :

                            (a) The  execution  and delivery of this  Amendment,
whether the same or different copies, by Borrower and each Lender to Agent; and

                            (b) The  execution  and delivery by PLMI to Agent of
the  Acknowledgment  of Amendment and Reaffirmation of Guaranty attached to this
Amendment.

          SECTION 6.  GOVERNING  LAW.  THIS  AMENDMENT  SHALL BE GOVERNED BY AND
SHALL BE  CONSTRUED  AND  ENFORCED IN  ACCORDANCE  WITH THE LAWS OF THE STATE OF
CALIFORNIA.

          SECTION  7.  CLAIMS,  COUNTERCLAIMS,   DEFENSES,  RIGHTS  OF  SET-OFF.
BORROWER HEREBY  REPRESENTS AND WARRANTS TO AGENT AND EACH LENDER THAT IT HAS NO
KNOWLEDGE  OF ANY FACTS THAT  WOULD  SUPPORT A CLAIM,  COUNTERCLAIM,  DEFENSE OR
RIGHT OF SET-OFF.

          SECTION 8. COUNTERPARTS. This Amendment may be signed in any number of
counterparts, and by different parties hereto in separate counterparts, with the
same effect as if the  signatures  to each such  counterpart  were upon a single
instrument. All counterparts shall be deemed an original of this Amendment.

         IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed as of the date first written above.

BORROWER                       AMERICAN FINANCE GROUP, INC.


                               By: /s/Susan Santo

                                Title: Secretary

LENDERS                        FIRST UNION NATIONAL BANK

                               By:    /s/Bill A. Shirley
                               Title: Senior Vice President

                             EUROPEAN AMERICAN BANK

                               By:    /s/Robert W. Peck
                              Title: Vice President

                                  IMPERIAL BANK

                               By: /s/Kevin Coonan

                              Title: Vice President

                               MEES PIERSON, N.V.

                               By:   /s/B.M. Kool
                               Title:


AGENT                          FIRST UNION NATIONAL BANK , as Agent

                               By:     /s/Bill A. Shirley
                               Title:  Senior Vice President