LOAN AGREEMENT


         THIS AGREEMENT is made effective as of December 1, 1998, and is entered
into by and  between  AIOP LOST  DUTCHMAN  NOTES,  L.L.C.,  a  Delaware  limited
liability company ("Borrower"),  ASSET INVESTORS OPERATING PARTNERSHIP,  L.P., a
Delaware  limited  partnership   ("Operating   Partnership"),   ASSET  INVESTORS
CORPORATION,  a Maryland corporation  ("Corporation") (Operating Partnership and
Corporation are  individually  and collectively the "Guarantor" or "Guarantors")
and U.S. BANK NATIONAL ASSOCIATION (the "Bank").

                                    RECITALS

         This  Agreement is entered into upon the basis of the  following  facts
and circumstances:

         A. Borrower has applied to the Bank for a loan to be made available for
the  refinance  of  certain  existing  debt upon the terms  and  subject  to the
conditions set forth herein.

         B.  Guarantors are directly  benefited by the loan to be made available
by the Bank to Borrower.

         NOW,  THEREFORE,  in  consideration  of the foregoing  Recitals and the
covenants and conditions,  representations and warranties  contained herein, the
parties hereto agree as follows:

                                   ARTICLE 1.
                                   DEFINITIONS

         The following terms when used in this Agreement shall, except where the
context otherwise requires,  have the following meanings (such definitions to be
equally applicable to the singular and the plural forms thereof):

         1.1 "Affiliate"  shall mean, with respect to any Loan Party, any entity
controlled by the Loan Party,  any entity which controls the Loan Party,  or any
entity under common control with the Loan Party.

         1.2 "Agreement" shall mean this Agreement as originally executed and as
amended, extended, supplemented or restated from time to time.

         1.3 "Assignment of Membership  Interests"  shall mean the assignment by
Operating Partnership of 100% of its membership interests in Borrower.

         1.4  "Authorized  Officer"  shall  mean  one  of the  following  senior
officers of the Corporation: Chief Executive Officer, President, Chief Financial
Officer or Treasurer  or any officer of the  Borrower  certified by the Borrower
and Guarantors to the Bank for the purpose of making certifications  required by
this Agreement.

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         1.5  "Business  Day" shall mean every day except a Saturday,  Sunday or
public  holiday  under the laws of the United States or the State of Colorado on
which banks are required or authorized to close in Denver, Colorado.

         1.6 "Change of Control"  shall mean the  occurrence,  after the Closing
Date, of a sale,  assignment,  conveyance or transfer of any equity  interest in
the  Borrower  so that the entire  equity  interest  therein is not one  hundred
percent  (100%) owned by Operating  Partnership  and any pledge,  hypothecation,
encumbrance or sale, assignment, conveyance or transfer for security purposes by
which the legal or beneficial ownership of the Borrower would, upon the exercise
of its  remedies  by the  transferee,  become  vested in the  transferee  or the
occurrence,  after  the  Closing  Date,  of a sale,  assignment,  conveyance  or
transfer of any equity  interest  in  Operating  Partnership  so that the equity
interest  of  Corporation  in  Operating  Partnership  is less than 78% owned by
Corporation  and any pledge,  hypothecation,  encumbrance  or sale,  assignment,
conveyance  or transfer for security  purposes by which the legal or  beneficial
ownership of Operating  Partnership by Corporation  would,  upon the exercise of
its  remedies  by the  transferee  and the  vesting of such legal or  beneficial
ownership in the transferee, be less than seventy-eight percent (78%).

         1.7  "Closing  Date" shall mean any Business Day selected by United and
Bank for the closing of the Loan; provided that all the conditions  precedent to
the obligation of Bank to make the Loan have been, or, on the Closing Date, will
be, satisfied.

         1.8 "Code"  shall mean the Internal  Revenue  Code of 1986,  as amended
from time to time.

         1.9  "Collateral"  shall  mean,  individually  or  collectively,   each
Mortgage Loan and all promissory notes, documents, agreements, guarantees, deeds
of trust, security agreements, pledges, assignments of leases and rents, letters
of credit,  chattel  paper and  similar  instruments,  money,  real or  personal
property evidencing or securing a Mortgage Loan or executed and delivered by any
Person obligated in respect of such Mortgage Loan,  including without limitation
the documents and instruments listed on Exhibit A attached hereto, and the title
policies  insuring the Borrower  with  respect to the  Mortgages,  and any other
documents  and  instruments  included  in the  mortgage  file  relating  to such
Mortgage Loans and all proceeds,  products,  rents, profits,  income,  benefits,
substitutions  and  replacements  of or associated  with or proceeding  from the
Mortgage  Loans and the documents and  instruments  evidencing  and securing the
Mortgage Loans.

         1.10  "Collateral  Assignment of Mortgage Loan Documents" shall mean an
assignment to Bank of Borrower's right,  title and interest in the Mortgage Loan
Documents.

         1.11  "Collateral   Security   Documents"  shall  mean  the  collective
reference to the Security Agreement, the Assignment of Membership Interests, the
Collateral  Assignment  of  Mortgage  Loan  Documents,  and the UCC-1  financing
statements and any other  agreement or instrument now or hereafter  entered into
by a Borrower or any other Person which secures any of the Obligations.

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         1.12 "Default"  shall mean any event which if continued  uncured would,
with notice or lapse of time or both, constitute an Event of Default.

         1.13 "ERISA" shall mean The Employee  Retirement Income Security Act of
1974, as amended.

         1.14 "ERISA Affiliate" shall mean any trade or business (whether or not
incorporated)  that is a member of a group of trades or  business  under  common
control of which  Borrower or either  Guarantor is a member and which is treated
as a single employer under Section 414 of the Code.

         1.15 "Event of Default"  shall mean any Event of Default  described  in
Section 7.1.

         1.16 "GAAP" shall mean  generally  accepted  accounting  principles 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 or in any  other
statements  by any other entity as may be approved by a  significant  segment of
the accounting  profession,  which are applicable to the circumstances as of any
date of determination.  Whenever any accounting term is used herein which is not
otherwise defined, it shall be interpreted in accordance with GAAP.

         1.17  "Governmental  Entity"  shall mean any federal,  state,  or local
governmental  or  quasi-governmental   entity,  agency,  board,   commission  or
organization  having jurisdiction over any Collateral or Person relevant to this
Agreement.

         1.18 "Governmental  Requirements" shall mean all laws, statutes, codes,
ordinances,  and governmental rules,  regulations and requirements applicable to
Borrower, Guarantor, Bank and/or any Collateral.

         1.19  "Guarantee"  shall  mean  that  certain  guarantee  of even  date
pursuant to which each Guarantor has, jointly and severally, unconditionally and
irrevocably guaranteed the Obligations of Borrower hereunder.

         1.20  "Guarantor"   shall  mean,   jointly  and  severally,   Operating
Partnership and Corporation.

         1.21  "Lien" or  "Liens"  mean each and all of the  following:  (1) any
lease or other right to use; (2) any assignment as security,  conditional  sale,
grant in trust,  lien,  mortgage,  pledge,  security  interest,  title retention
arrangement,  other encumbrance, or other interest or right securing the payment
of money or the  performance  of any  other  liability  or  obligation,  whether
voluntarily or involuntarily created and whether arising by agreement, document,
or instrument, under any law, ordinance, regulation, or rule (federal, state, or
local), or otherwise not approved in advance by Bank; and (3) any option,  right
of first refusal, or other interest or right.

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         1.22  "Loan"  shall  mean  the term  loan in the  principal  amount  of
$8,500,000.00 to be made by Bank to Borrower pursuant to this Agreement.

         1.23 "Loan  Amount" shall mean the amount of Eight Million Five Hundred
Thousand and 00/100 Dollars ($8,500,000.00).

         1.24 "Loan Documents" shall mean the Note, this Agreement and any other
documents or instruments executed or delivered to further evidence or secure the
Loan,  including the Collateral  Security  Documents and the other documents and
instruments  described  in  Section  3.2  below,  as the same  may be  modified,
amended, extended, supplemented or restated.

         1.25 "Loan Party" shall mean  Borrower,  each  Guarantor and each other
Person that from time to time is or becomes obligated to the Bank under any Loan
Document.

         1.26  "Material  Adverse  Occurrence"  shall  mean  any  occurrence  of
whatsoever nature (including,  without limitation,  any adverse determination in
any litigation,  arbitration or governmental  investigation or proceeding) which
in Bank's reasonable  judgment  materially  adversely affects (i) the present or
prospective  financial  condition  or  operations  of a Loan  Party  or (ii) the
ability of a Loan Party to perform  its  obligations  under the Loan  Documents,
including  without  limitation,  the  occurrence of any event of  dissolution or
termination of any Loan Party, or (iii) the operations or value of the Mortgaged
Properties,  and remains  unsatisfied or is not  discharged or eliminated  after
thirty (30) days following written notice from the Bank.

         1.27  "Maturity  Date"  shall  mean the  earlier  of (i) a date six (6)
months after the date hereof,  unless  extended in  accordance  with Section 2.2
below or (ii) the date on which the Loan is  accelerated  as a consequence of an
Event of Default.

         1.28 "Mortgages" shall mean, individually and collectively,  mortgages,
deeds of trust,  and assignments of leases and rents executed in connection with
or securing  any  Mortgage  Loan or  Mortgage  Note listed on Exhibit A attached
hereto, as the same may from time to time be extended, renewed or modified.

         1.29   "Mortgage   Loan   Documents"   shall  mean,   individually   or
collectively, the Mortgage Notes, the Mortgages, and all other promissory notes,
documents,  agreements,  mortgages,  deeds of trust,  assignments  of leases and
rents and security  agreements,  collateral  assignments,  guarantees,  pledges,
letters or credit,  chattel paper and similar instruments evidencing or securing
or delivered in connection with a Mortgage Loan.

         1.30  "Mortgage  Loan"  shall  mean any of those  certain  loans in the
initial principal amount of $4,601,566.14,  made by Lost Dutchman Parks, LLC, to
the order of Operating  Partnership,  evidenced by the Mortgage  Note dated July
30,  1997,   and  that  certain  loan  in  the  initial   principal   amount  of
$5,500,000.00,  made by Norman Andrus to the order of Eastrich Multiple Investor
Fund,  L.P.,  evidenced  by the  Mortgage  Note dated April 15,  1994,  and that
certain  loan in the  initial  principal  amount  of  $600,000.00,  made by Lost


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Dutchman Parks, LLC, to the order of AIOP Lost Dutchman Notes,  L.L.C.,  each as
more particularly described in Exhibit A attached hereto.

         1.31 "Mortgage Loan Borrower" shall mean Lost Dutchman  Parks,  LLC, an
Arizona  limited  liability  company,  the fee  simple  owner  of the  Mortgaged
Property,  and its  permitted  successors  and assigns  under the Mortgage  Loan
Documents.

         1.32 "Mortgage  Notes" shall mean  individually and  collectively,  the
promissory  notes  evidencing  the  Mortgage  Loans made by various  persons and
entities and endorsed to the order of the Borrower  listed on Exhibit A attached
hereto as the same may from time to time be extended, renewed or modified.

         1.33  "Mortgaged  Properties"  shall mean any of the real  property and
improvements  described on Exhibit B attached hereto which are encumbered by the
Mortgage Loan Documents.

         1.34 "Multiemployer Plan" shall mean a multiemployer plan, as that term
is defined in Section  4001(a)(3) of ERISA,  which is maintained (on the Closing
Date, within the five years preceding the Closing Date, or at any time after the
Closing Date) for employees of any Borrower and/or any ERISA Affiliate.

         1.35 "Note" shall mean the Promissory  Note dated as of the date hereof
executed by Borrower  payable to the order of the Bank in an amount equal to the
Loan  Amount,  evidencing  the  Loan,  as the  same  may be  modified,  amended,
extended, supplemented or restated.

         1.36   "Obligations"   shall  mean  the   obligations  of  payment  and
performance  by Borrower in  connection  with the Loan as evidenced by the Note,
this Agreement, and the Loan Documents.

         1.37  "PBGC"  shall  mean the  Pension  Benefit  Guaranty  Corporation,
established  pursuant  to  Subtitle  A of Title IV of ERISA,  and any  successor
thereto or to the functions thereof.

         1.38  "Person"  shall mean any  natural  person,  corporation,  limited
liability  company,  partnership,  joint  venture,  firm,  association,   trust,
unincorporated  organization,  government  or  governmental  agency or political
subdivision or any other entity,  whether acting in an individual,  fiduciary or
other capacity.

         1.39 "Plan" shall mean each employee benefit plan (whether in existence
on the  Closing  Date or  thereafter  instituted),  as that term is  defined  in
Section 3 of  ERISA,  maintained  for the  benefit  of  employees,  officers  or
directors of Borrower and/or of any ERISA Affiliate.

         1.40  "Prohibited  Transaction"  shall  mean  the  respective  meanings
assigned to that term in Section 4975 of the Code and Section 406 of ERISA.

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<PAGE>

         1.41  "Reportable  Event" shall mean a  reportable  event as defined in
Section  4043 of ERISA and the  regulations  issued  under  such  Section,  with
respect  to a Plan,  excluding,  however,  the  events  as to which  the PBGC by
regulation  has waived the  requirement  of Section  4043(a) of ERISA that it be
notified within 30 days of the occurrence of such event, provided that a failure
to meet the minimum funding  standards of Section 412 of the Code and of Section
302 of ERISA  shall be a  Reportable  Event  regardless  of the  issuance of any
waivers in accordance with Section 412(d) of the Code.

         1.42   "Security   Agreement"   shall  mean  that  certain   Collateral
Assignment,  Pledge and Security  Agreement executed by Borrower for the benefit
of Bank,  granting the Bank a first lien  interest in the  Collateral  described
therein.

         Other terms  defined  herein  shall have the  meaning  ascribed to them
herein.

                                   ARTICLE 2.
                                    THE LOAN

         In reliance upon the representations  and warranties  contained in this
Agreement,  and subject to the terms and  conditions  of this  Agreement and the
Loan  Documents,   Bank  hereby  agrees  to  loan  to  the  Borrower  a  sum  of
$8,500,000.00  under the terms set forth herein, to be advanced and disbursed by
the Bank in accordance with this Agreement.

         2.1 The Loan.

             (a) Type of Loan:  The Loan shall be for the  purposes  of allowing
Borrower to refinance approximately  $8,500,000.00 in existing debt. The Loan is
a non-revolving,  single-advance,  loan. Amounts advanced under the Loan may not
be reborrowed after being repaid.

             (b) Term: The Loan shall have a term which commences as of the date
hereof and expires on the Maturity Date,  unless extended in accordance with the
terms of Section 2.2 below.

             (c)  Interest  and  Payment:  The Loan shall bear  interest  on the
outstanding  principal  balance at the interest rate  described in the Note, and
shall be  payable  as  further  provided  in the  Note.  Any  prepayment  of the
principal  balance  of the Note in excess of the  scheduled  principal  payments
shall  be  subject  to  the  prepayment  indemnity  described  in the  Note,  if
applicable.

             (d) Evidence of Obligations Under Loan.  Amounts  outstanding under
the Loan and the Borrower's  Obligations to the Bank in connection with the Loan
shall be evidenced by the Note and this Agreement.  All documentation evidencing
the foregoing shall be in form and substance satisfactory to the Bank.

         2.2 Extension Period.  Borrower is entitled to extend the Maturity Date
to April 15, 2001,  ("Extension  Period") upon  satisfaction  of the  conditions
precedent set forth in this  section.  From and after the first (1st) day of the


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Extension  Period (the  "Conversion  Date"),  the principal  balance of the Note
shall bear  interest at the Adjusted  Eurodollar  Rate as defined in and further
described in the Note.  Interest shall be payable monthly in arrears  commencing
on the first (1st) day of the month immediately following the month in which the
Conversion  Date  occurs  and  continuing  on the first  (1st) day of each month
thereafter,  and concurrently  with such interest  payments,  principal shall be
payable as provided in the Note.  On the last day of the  Extension  Period (the
"Extended Maturity Date"), the entire outstanding principal balance of the Note,
together  with all accrued but unpaid  interest and all other sums due under the
Note,  this Agreement or the other Loan  Documents,  shall be due and payable in
full.

             (a) At least thirty (30) days prior to the Maturity Date,  Borrower
shall give Bank written notice that Borrower desires to extend the Maturity Date
of the Loan;

             (b) On the Conversion Date, no Event of Default shall have occurred
and be  continuing  or which with notice or lapse of time (or both) would become
an Event of Default shall have occurred and be continuing;

             (c) On the  Conversion  Date,  there  shall  have been no  Material
Adverse Occurrence which is continuing;

             (d) On the Conversion  Date, there shall have been no breach in the
Financial  Covenants  (set  forth  in  Article  6)  which  has  occurred  and is
continuing;

             (e) On the Conversion  Date,  there shall have been no downgrade in
the  investment  rating of  Corporation by Moody's or Standard and Poor's or any
other national investment rating service;

             (f) On or prior to the Conversion  Date,  Borrower shall pay to the
Bank an extension fee in an amount equal to one-quarter of one percent (.25%) of
the  principal  balance  of the  Loan as of the  Conversion  Date,  which,  upon
payment, shall be fully earned by the Bank and nonrefundable to Borrower.

         2.3  Default  Rate/Late  Charges.  Upon the  occurrence  of an Event of
Default under the Loan, the Bank shall have the right to collect interest on the
outstanding  principal balance under the Loan at a rate of interest equal to the
greater of (i)  eighteen  percent  (18%) per annum or (ii) five percent (5%) per
annum in excess of the Base Rate ("Default Rate"); provided that any interest at
the  Default  Rate  which  has  accrued  shall  be paid at the  time of and as a
condition  precedent to the curing of any Default  under the Loan.  In the event
any payment of principal, interest, or other sum due in connection with the Loan
is not made  within  five (5) days  after  the due date,  the Bank  may,  at its
option,  require the payment of a late charge in the amount of four percent (4%)
of the delinquent sum ("Late Charge").


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                                   ARTICLE 3.
                         CONDITIONS PRECEDENT TO CLOSING

         The Bank's  obligation  to make the Loan and to enter into and  perform
its agreements  under this  Agreement  shall be subject to the full and complete
satisfaction  of the  following  conditions  precedent,  including  receipt  and
approval by the Bank of the following  agreements,  documents  and  instruments,
each in form and substance  satisfactory to the Bank, in each case as determined
by the Bank in its sole and absolute  discretion,  at the time of closing of the
Loan ("Closing") and subsequently:

         3.1  Representations and Warranties  Accurate.  The representations and
warranties by each Loan Party in the Loan  Documents  shall be correct on and as
of the date of this Agreement.

         3.2 Loan  Documents.  The Bank shall have  received and approved  fully
executed  copies of the  following  Loan  Documents  which  shall have been duly
authorized,  executed (and, where appropriate,  acknowledged),  and delivered by
the parties  thereto and any and all other documents as Bank may deem reasonably
necessary with respect to the Loan;

             (a) Agreement. This Agreement, duly executed by Bank and Borrower;

             (b) Note. The Note, duly executed by Borrower;

             (c) Security Agreement.  The Security  Agreement,  duly executed by
Borrower, encumbering the Collateral.

             (d)   Assignment  of  Membership   Interests.   The  Assignment  of
Membership Interests, duly executed by Operating Partnership.

             (e)  Collateral   Assignment  of  Mortgage  Loan   Documents.   The
Collateral Assignment of Mortgage Loan Documents, duly executed by Borrower.

             (f) Guarantee. The Guarantee, duly executed by each Guarantor.

             (g) Financing  Statements.  The UCC-1 financing statements required
to perfect the Bank's first lien interest in the  Collateral as evidenced by the
Collateral Security Documents.

             (h) Original Documents.  The original Mortgage Notes, together with
an Allonge  executed  by  Borrower  to the order of the Bank,  and the  original
Mortgage Loan Documents.

             (i) Other Documents.  Such other  collateral  documents as Bank may
from time to time reasonably  require to further  evidence or perfect the Bank's
security  interests  in the  Collateral  or the  grant  to the Bank of a lien or
security interest in subsequently acquired Collateral.

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<PAGE>

         3.3 Review  Items.  The Bank  shall  have  received  and  approved  the
following:

             (a) Financial  Statements.  Certified  financial  statements of the
Borrower and Guarantors, as specified in Section 5.1 below.

             (b) Opinions.  Legal  opinions  ("Legal  Opinions") of  independent
counsel  for each Loan Party with  respect  to the Loan  Documents,  in form and
substance  satisfactory  to the Bank opining that (i) that each Borrower is duly
organized,  existing, and in good standing under the laws of the jurisdiction in
which it is  incorporated  and has duly  qualified  to transact  business in all
states in which it transacts business or its property is located,  (ii) that the
transaction  described  in the opinion  and the  execution  and  delivery of the
documentation  evidencing  such  transaction  and the performance of obligations
thereunder  have been duly authorized by all necessary  parties,  (iii) that the
transaction  documents  are legal,  valid and binding in  accordance  with their
terms, subject to customary exceptions, (iv) concerning such other legal matters
as the Bank may require  regarding the specific  transaction  and the absence of
conflicts  with the  governing  documents of the entity or any other  agreement,
instrument or governmental  order or rule to which the entity is subject and the
absence of any material  litigation  against the entity  which would  materially
adversely affect the entity's ability to perform its legal obligations under the
transaction documents, and (v) such other opinions specific to the entity or the
transaction as the Bank may reasonably require.

             (c) Certification of Mortgage Loan Borrower. A certification by the
Mortgage  Loan  Borrower  regarding the  outstanding  principal  balance of each
Mortgage  Note,  the absence of defaults by the holder of the Mortgage Notes and
rights of offset against the holder of the Mortgage Notes,  certain  information
regarding  the  Mortgaged  Properties  and the  income and  expenses  associated
therewith, and other information reasonably required by the Bank to evaluate the
status of the Mortgaged Properties.

             (d)  Environmental  Audits.  A Phase I  environmental  audit of the
Mortgaged   Properties   prepared  by  an  environmental   engineering   company
satisfactory to the Bank and in substance  satisfactory  to the Bank,  regarding
the environmental  conditions affecting the Mortgaged  Properties,  which audits
shall be prepared for the Bank or shall be accompanied  by a reliance  letter in
favor of the Bank.

             (e) Zoning. Evidence of compliance of the Mortgaged Properties with
zoning  restrictions,  which evidence may include a zoning  certificate from the
applicable  Governmental  Entity in form and  substance  acceptable  to the Bank
and/or  a  zoning  opinion  from  independent  counsel  for  Borrower  regarding
compliance of the Mortgaged Properties with zoning laws.

             (f) Appraisal.  A current  appraisal of the Property  ("Appraisal")
prepared  by an  appraiser,  licensed  by the State of  Arizona,  engaged by and
acceptable  to Bank,  which  appraisal  shall  determine the market value of the
Property in its current  as-is  condition  and shall comply with (1) Title XI of
the Federal Financial  Institution Reform,  Recovery and Enforcement Act of 1989
(FIRREA);  (2) the OCC Appraisal  Standards of 12 CFR, part 34; and (3) the Code


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<PAGE>

of Professional  Ethics and Standards of  Professional  Practice of the American
Institute of Real Estate Appraisers and the Guidelines for Real Estate Appraisal
Policies and Review  Procedures  adopted by the bank supervision  offices of the
Federal Deposit Insurance  Corporation,  the Office of Thrift Supervision (OTS),
Board  of  Governors  of the  Federal  Reserve  System  and  the  Office  of the
Comptroller  of the  Currency as of  December  14, 1987 and shall be in form and
substance satisfactory to the Bank;

             (g) Taxes.  Borrower  shall provide a treasurer's  tax  certificate
disclosing  that no general and special  taxes or  assessments  encumbering  the
Mortgaged  Properties are delinquent ("Tax  Certificate").  All taxes,  fees and
other charges in connection  with the  execution,  delivery and recording of the
Loan Documents  shall have been paid, and all delinquent  taxes,  assessments or
other governmental charges or liens affecting the Mortgaged Properties,  if any,
shall have been paid.

         3.4 Title and Other  Matters.  Title to the Mortgaged  Properties,  the
legal  description  of the  Mortgaged  Properties,  and all  documents and other
matters  relating in any way to the Loan or to the Mortgaged  Properties must be
to the satisfaction of Bank. At Borrower's expense,  Borrower shall furnish Bank
with a 1992 ALTA  Mortgagee's  Policy of Title Insurance (Form 1970 or Form 1992
Revised  10-23-92  with the  exclusion  for  creditors  rights  and  arbitration
requirements  deleted)  (the  "Title  Policy"),  in the face amount of the Loan,
insuring the deed(s) of trust  encumbering  the Mortgaged  Properties as a first
lien on a good and  marketable  fee simple  title to the  Mortgaged  Properties,
together with endorsements as Bank may require, including 110.7 (Variable Rate),
deletion of standard exceptions 1 through 4, containing no exceptions other than
those Bank  approves,  issued in substance and in form by a company or companies
acceptable  to  Bank.   Alternatively,   the  Bank  will  consider   appropriate
endorsements  to any existing Title Policies  covering the Mortgaged  Properties
insuring the present interests of Borrower.

         3.5 Insurance.  Borrower shall maintain or cause Mortgage Loan Borrower
to maintain and shall  deposit or cause to be deposited  with the Bank  original
certificates of insurance  policies  issued by insurance  companies with current
Best's  Key  Ratings  of not less  than  A/V and  written  in form  and  content
acceptable  to  Bank,  with  appropriate  mortgagee  clauses  in  favor of Bank,
providing the following minimum insurance coverages:

             (a) Commercial general public liability  insurance in an amount not
less than  $2,000,000.00  (combined  single limit for bodily injury and property
damage) and an  umbrella  excess  liability  coverage in an amount not less than
$10,000,000.00  shall  be in  shall  be in  effect  with  the  Bank  named as an
additional  insured.  Such liability policy must provide  comprehensive  general
liability  insurance  with coverages for Property and  Operations,  Products and
Completed Operations,  Blanket Contractual Liability, Personal Injury Liability,
Broad Form Property Damage (including completed  operations),  Explosion Hazard,
Collapse  Hazard and Underground  Property Damage Hazard.  Such policies must be
written on an occurrence basis so as to provide blanket  contractual  liability,
broad form  property  damage  coverage,  and coverage for products and completed
operations.  Liability  insurance  under this  paragraph may be provided under a


                                       10
<PAGE>

blanket policy which specifically refers to the Mortgaged Properties.

             (b) Worker's Compensation Insurance covering all persons engaged in
the operation of the Mortgaged Properties.

             (c) If the Mortgaged Properties, or any part thereof, lies within a
"special  flood hazard area" as designated on maps prepared by the Department of
Housing and Urban Development,  a National Flood Insurance  Association standard
flood insurance  policy,  plus insurance from a private  insurance  carrier,  if
necessary,  for the  duration  of the Loan in the  amount of the full  insurable
value of the completed Improvements.

             (d)  Fire  and  extended   coverage   property  damage   insurance,
including, but not limited to all risk insurance, in an amount equal to the full
replacement  value of the  improvements  located  on the  Mortgaged  Properties,
without  coinsurance  or  deducting  for  depreciation,  containing  a waiver of
subrogation  clause and a deductible  amount  acceptable to Bank,  with the Bank
named as an additional insured and as a loss payee;

             (e)  Business  interruption  or rent  loss  insurance  in an amount
satisfactory to Bank;

             (f) Boiler and machinery  insurance when risks covered  thereby are
present and Bank requires such insurance;

             (g)  Such  other  insurance  coverages  and/or  increased  coverage
amounts as may be required by the Bank.

Notwithstanding  the above,  both  Borrower and  Mortgage  Loan  Borrower  shall
maintain  and provide to Bank  original  certificates  of  insurance  evidencing
comprehensive  general public  liability  coverage and umbrella excess liability
coverage as described in 3.5(a)  above.  Each of the  foregoing  policies  shall
contain a clause  requiring  thirty  (30) day  notice  to Bank of  cancellation,
termination or material  modification.  Borrower shall provide proof of premiums
paid and,  throughout  the term of the Loan,  shall provide  evidence to Bank no
later than thirty (30) days prior to expiration of each annual policy of payment
of renewal premiums and continuation of insurance coverage.

         3.6  Survey.  Borrower  shall have  furnished  to Bank,  at  Borrower's
expense,  a  current   improvement  survey  plat  ("Survey")  of  the  Mortgaged
Properties  acceptable to Bank and the title insurance company issuing the Title
Policy  (the  "Title  Company")   indicating,   without  limitation,   that  all
foundations or other  improvements  currently  constructed,  if any, are located
within  the  lot  lines,  without  infringement  on  established   easements  or
rights-of-way and not in violation of any ordinance  including zoning ordinances
which impose lot line setback requirements and parking requirements.  The survey
shall  show the legal  description  of the  Mortgaged  Properties  as it will be
insured  by the Title  Company,  the  courses  and  distances  of the  Mortgaged
Properties lot lines, all appurtenant and servient easements, setbacks, building
lines and width of abutting streets,  distance to nearest  intersecting  streets


                                       11
<PAGE>

affording  ingress  and  egress to and from the  Mortgaged  Properties,  and the
location  and  dimensions  of all  encroachments,  improvements,  above or below
ground  easements and utilities,  and designated  parking  spaces.  The surveyor
shall also  certify  whether or not any portion of the  Improvements  is located
within a Federal Emergency  Management  Agency identified  flood-prone area of a
community  and if located  thereon,  state the map number and whether or not the
Mortgaged  Properties  appears in the "Flood  Hazard  Area." The survey  must be
certified as accurate by a licensed surveyor in the State of Arizona and contain
a certificate  imprinted thereon in the form approved by the American Land Title
Association  stating that the survey is made for the benefit of the Bank and the
Title Company.

         3.7 Corporation,  Limited Liability Company,  or Operating  Partnership
Documents. If any Loan Party is a corporation, a limited liability company, or a
partnership, certified copies of i) resolutions of its board of directors or, if
all managers or all general partners do not sign the Loan Documents, resolutions
of the managers of the limited liability company or partners of the partnership,
as the case may be, authorizing such Loan Party to execute, deliver, and perform
its obligations under the Loan Documents and certifying the names and signatures
of the officer(s),  member(s), manager(s), or partner(s), as the case may be, of
such  Loan  Party  authorized  to  execute  the  Loan  Documents  and,  ii)  the
certificate of incorporation  and bylaws,  limited  liability  company operating
agreement,  or partnership agreement, as the case may be, of such Loan Party and
all amendments thereto, iii) if any Loan Party is a general partnership or joint
venture,  the filed or recorded  fictitious name certificate for such Loan Party
and all amendments thereto, iv) if any Loan Party is a limited partnership,  the
filed or recorded  certificate of limited partnership of such Loan Party and all
amendments  thereto,  and v) a certificate  of good  standing as a  corporation,
limited liability company, or limited partnership,  as the case may be, from the
jurisdiction  of  formation  or  organization  of such Loan  Party,  and if such
jurisdiction is not the State of Colorado,  a certificate of  qualification as a
foreign corporation,  limited liability company, or limited partnership,  as the
case may be, authorized to transact business in the State of Colorado.

         3.8 Loan Costs.  Borrower shall have produced evidence  satisfactory to
Bank of the payment of all fees, assessments and charges incurred under the Loan
and in connection with the  negotiation,  documentation,  analysis or funding of
the Loan, including,  but not limited to, the loan fees agreed herein to be paid
to the Bank; any other charges for appraisals,  surveys,  environmental  audits,
title  insurance and  endorsement  premiums and recording  fees,  and attorneys'
fees,  (including the fees of Gorsuch Kirgis LLP,  (counsel for Bank) (the "Loan
Costs").

         3.9 Original  Mortgage Loan  Documents.  Borrower  shall deliver to the
Bank the  original  Mortgage  Loan  Documents  assigned  and  pledged  under the
Collateral Security Documents.

         3.10 Other Actions.  The Borrower and  Guarantors  shall have performed
such other actions as the Bank may reasonably require.


                                       12
<PAGE>





                                   ARTICLE 4.
                    REPRESENTATIONS, WARRANTIES AND COVENANTS

         In order to induce Bank to make the Loan, each Loan Party,  for itself,
represents, warrants and covenants as follows, which representations, warranties
and  covenants  shall be true and correct as of the  execution  hereof and shall
survive the execution and delivery of the Loan Documents:

         4.1  Organization  of Loan Party;  Authority  to Enter into  Agreement.
Borrower is a limited  liability  company,  duly formed and validly in existence
and in  good  standing  under  the  laws of the  State  of  Delaware.  Operating
Partnership is a limited  partnership,  duly formed and validly in existence and
in good  standing  under the laws of the  State of  Delaware.  Corporation  is a
corporation, duly formed and validly in existence and in good standing under the
laws of  Maryland.  Each Loan Party is duly  qualified  to do business and is in
good standing in each  jurisdiction  where the nature of its business makes such
qualification  necessary  and  where  the  failure  to  so  qualify  permanently
precludes the Loan Party from enforcing its contracts.  Each Loan Party has full
power  and  authority  to  enter  into  this  Agreement,   to  borrow  money  as
contemplated  herein and to  execute  and carry out the  provisions  of the Loan
Documents.  The execution,  delivery and  performance of the Loan Documents have
been duly  authorized by all necessary  action of each Loan Party,  and no other
action of the Loan Party is required for the execution, delivery and performance
of the Loan Documents. The Loan Documents which have been executed and delivered
pursuant to this  Agreement  constitute,  or, if not yet executed or  delivered,
will when so executed and delivered, constitute valid and binding obligations of
the Loan Party,  each enforceable in accordance with its respective  terms. Each
Loan Party holds all certificates of authority,  licenses and permits  necessary
to carry on its business as presently conducted in each jurisdiction in which it
is carrying on such business.

         4.2 No  Violation  of Other  Agreements;  No  Default.  The  execution,
delivery and  performance  by the Loan Party of the Loan  Documents will not (a)
violate  any  provision  of any  Governmental  Regulation  or any  order,  writ,
judgment,  injunction, decree, determination or award of any court, governmental
agency or arbitrator presently in effect having applicability to the Loan Party,
(b) violate or contravene any provision of the constituent documents of the Loan
Party,  or (c) result in a breach of or constitute an event of default under any
indenture, deed of trust, mortgage, loan or credit agreement, note or, except as
specifically  identified to the Bank in writing,  any other agreement,  lease or
instrument  to  which  the  Loan  Party  is a party or by which it or any of its
properties  may be bound  or  result  in the  creation  of any lien or  security
interest  thereunder.  The Loan Party is not in default under or in violation of
any such Governmental Requirement,  order, writ, judgment,  injunction,  decree,
determination or award or any such indenture,  loan or credit agreement or other
agreement,  lease or  instrument in any case in which the  consequences  of such
default  or  violation  could have a material  adverse  effect on the  business,
operations, properties, assets or condition (financial or otherwise) of the Loan
Party.

                                       13
<PAGE>

         4.3 Economic  Benefit.  The  execution and delivery by Bank of the Loan
Agreement  and the  extension of credit by the Bank  thereunder  constitutes  an
economic  benefit to each Loan Party at least equal to the amount of each of its
obligations  hereunder and each Loan Party has received fair equivalent value by
the extension of the credit facility described in this Agreement and the funding
of the Loan in  exchange  for the Liens  granted  by the Loan  Party to the Bank
under the Collateral Security Documents.

         4.4  Government  Consents.  No  order,  consent,   approval,   license,
authorization  or validation of, or filing,  recording or registration  with, or
exemption by, any Governmental  Entity is required on the part of any Loan Party
to authorize,  or is required in  connection  with the  execution,  delivery and
performance of, or the legality,  validity, binding effect or enforceability of,
the Loan  Documents,  except for any necessary  filing or recordation of or with
respect to any of the Collateral Security Documents.

         4.5  Solvency.  The fair value of each Loan  Party's  assets is greater
than its debts,  and the fair value of each Loan Party's assets will continue to
be  greater  than its debts  after  the  transactions  contemplated  in the Loan
Documents.

         4.6 Good Faith;  Bankruptcy.  This Loan  Agreement  is executed in good
faith by each Loan  Party  and is not  given or  intended  to  hinder,  delay or
defraud any creditor or to contravene any of the  bankruptcy  laws of the United
States (11 U.S.C. Section 101, et seq.), or any other applicable laws. As of the
date of the execution of this Loan Agreement,  no Loan Party is the subject of a
pending  bankruptcy  case. No Loan Party is aware of any  threatened  bankruptcy
case, nor is any Loan Party presently intending to file such a case.

         4.7 Financial Statements. Any loan applications,  financial statements,
supporting schedules,  and financial reports heretofore delivered to the Bank in
connection  with the Loan  Documents by or on behalf of each Loan Party are true
and correct in all  material  respects,  and,  as to each Loan Party,  have been
prepared in accordance with GAAP, consistently applied, and fairly represent the
respective  financial conditions of the subjects thereof as of the dates thereof
and for the periods  covered  thereby,  and no Material  Adverse  Occurrence has
occurred in the financial  conditions  presented  therein  since the  respective
dates thereof.  Each Loan Party agrees to promptly notify Bank in the event that
any such  documentation  or information is later discovered by the Loan Party to
be materially inaccurate.

         4.8 No Litigation.  There are no actions, suits or proceedings pending,
or to the knowledge of the Loan Party  threatened  against or affecting the Loan
Party,  or any of the property or assets of the Loan Party,  in any court at law
or in equity,  or before or by any  governmental  or municipal  authority  which
might  materially  adversely affect the ability of the Loan Party to perform its
respective obligations hereunder or under any of the Loan Documents to which the
Loan Party is a party.

         4.9 Marketable  Title. Each Loan Party has good and marketable title to
all of its assets  which  secure  repayment  of the Note,  free and clear of all
Liens securing or evidencing a monetary  obligation or containing  provisions by


                                       14
<PAGE>

which title could be divested by an event of default or the passage of time.

         4.10 Compliance  With Documents.  As of the date hereof and for so long
as the Loan  Documents  remain in effect,  each Loan Party is and will remain in
full  compliance  with all of the terms and conditions of this Agreement and the
Loan Documents, and no Default has or shall have occurred or shall have occurred
and be  continuing,  which,  with the lapse of time or the giving of notice,  or
both, would constitute an Event of Default under the foregoing.

         4.11  Mortgage Loan  Document  Representations.  Borrower and Guarantor
hereby represent the following with respect to the Mortgage Loan Documents:

             (a) As of  December  28,  1998,  the  total  outstanding  principal
balance of Note # 1 (defined in Exhibit A) is  $5,007,972.82,  including accrued
but  unpaid  interest  at the Pay  Rate  (defined  in Note #1) and  accrued  but
capitalized  interest in the amount of the difference  between  interest paid at
the Pay Rate of nine percent (9%) per annum and interest accrued but capitalized
at the note  rate of  fifteen  percent  (15%)  per  annum  as more  particularly
described in Note #1;

             (b) As of  December  28,  1998,  the  total  outstanding  principal
balance of Note # 2 (defined in Exhibit A) is  $5,440,421.68,  including accrued
but unpaid  interest at the rate of ten percent (10%) per annum  pursuant to the
Assumption Agreement and Note Modification, dated July 30, 1997.

             (c) As of  December  28,  1998,  the  total  outstanding  principal
balance of Note #3 (defined in Exhibit A) is $262,432.40,  including accrued but
unpaid interest at the rate of fifteen percent (15%) per annum.

             (d) As of the date hereof, (a) the provisions of the Mortgage Notes
and the Mortgage  Loan  Documents are in full force and effect and have not been
amended or changed in any manner, (b) there are no defaults or events of default
now  existing  under  the  terms  of the  Mortgage  Notes or any  Mortgage  Loan
Documents,  and (c) Mortgage  Loan  Borrower has no defenses,  claims or offsets
against full  enforcement  of the Mortgage  Notes and  Mortgage  Loan  Documents
according to their terms.

             (e) There are no unwritten or oral  agreements  with respect to the
Mortgage Loan Documents,  except the oral waiver by Operating Partnership or its
agent of Mortgage Loan Borrower's  obligations under the Loan, Security and Lock
Box  Agreement,  dated July 30, 1997,  as amended by Amended and Restated  Loan,
Security and Lockbox  Agreement  dated December 1, 1998,  described on Exhibit A
regarding  payment of rents into a lockbox account for the benefit of the holder
of the Mortgage Notes.

         4.12 Responsible Parties.  Each Loan Party acknowledges and agrees that
the acts of the Authorized  Officer are the acts of each Loan Party and that the
representations,  warranties,  covenants and agreements of each Borrower in this
Agreement and the Loan  Documents  shall be deemed to be those of the other Loan
Parties.

                                       15
<PAGE>

         4.13 Use of  Proceeds.  The  proceeds  of the Loan  will be used by the
Borrower solely for the purposes permitted under this Agreement. The proceeds of
the Loan shall not be used to make loans to, or investments  in, or purchases of
any corporation, partnership, joint venture, or third party.

         4.14 Margin Stock. No part of the proceeds of the Loan shall be used at
any time by the Borrower to purchase or carry  margin stock  (within the meaning
of  Regulation U  promulgated  by the Board of Governors of the Federal  Reserve
System) or to extend  credit to others for the purpose of purchasing or carrying
any margin  stock.  The  Borrower is not engaged  principally,  or as one of its
important  activities,  in the business of  extending  credit for the purpose of
purchasing  or carrying  any such margin  stock.  No part of the proceeds of the
Loan hereunder will be used by the Borrower for any purpose which  violates,  or
which  is  inconsistent  with,  any  regulations  promulgated  by the  Board  of
Governors of the Federal Reserve System.

         4.15 Taxes. Each Loan Party has filed all federal,  state and local tax
returns  required  to be filed and has paid or made  provision  (as  required by
GAAP) for the payment of all taxes due and payable  pursuant to such returns and
pursuant to any assessments made against it or any of its property and all other
taxes,  fees and  other  charges  imposed  on it or any of its  property  by any
Governmental Entity (other than taxes, fees or charges the applicability, amount
or validity of which is currently  being  contested in good faith by appropriate
proceedings and with respect to which reserves in accordance with GAAP have been
provided on the books of each Loan  Party).  No tax liens have been filed and no
material  claims are being  asserted  with  respect to any such  taxes,  fees or
charges.  The charges,  accruals and reserves on the books of each Loan Party in
respect of taxes and other  governmental  charges  are  adequate,  and each Loan
Party  knows of no  proposed  material  tax  assessment  against it or any basis
therefor.

         4.16 Trademarks,  Patents.  Each Borrower possesses or has the right to
use all of the patents,  trademarks,  trade names, service marks and copyrights,
and applications therefor, and all technology,  know-how, processes, methods and
designs  used in or necessary  for the conduct of its  business,  without  known
conflict with the rights of others.

         4.17 Accuracy of  Information.  All factual  information  heretofore or
herewith  furnished  by or on behalf of each Loan Party to the Bank for purposes
of or in connection with this Agreement or any transaction  contemplated  hereby
is, and all other such factual  information  hereafter furnished by or on behalf
of each Loan  Party to the Bank will be,  true and  accurate  in every  material
respect on the date as of which such  information  is dated or certified  and no
such  information  contains any  misstatement of fact or omits to state any fact
necessary to make the statements contained therein not misleading.

         4.18   Representations   and  Warranties  Upon  Delivery  of  Financial
Statements,  Documents and Other  Information.  Each delivery by a Loan Party to
Bank of financial statements,  other documents, or information after the date of


                                       16
<PAGE>

this  Agreement  shall be a  representation  and  warranty  that such  financial
statements,  other  documents,  or  information  is correct and  complete in all
material  respects,  that there are no omissions  therefrom  that result in such
financial  statements,   other  documents,   or  information  being  incomplete,
incorrect,  or  misleading in any material  respect as of the date thereof,  and
that such financial  statements  accurately present the financial  condition and
results of operations of the Loan Party in all material respects as at the dates
thereof and for the periods covered thereby.

         4.19 Single Purpose Entity. Borrower is a single purpose entity and has
no ownership interest, directly or indirectly, in any other Person.

         4.20 Survival of Representations.  All representations,  warranties and
covenants contained in this Article 4 shall survive the delivery of the Note and
the Loan  Documents,  and the  making  of the  Loan  evidenced  thereby  and any
investigation  at any time made by or on behalf of the Bank  shall not  diminish
its rights to rely on all of such representations and warranties.

         4.21 Year 2000  Compliance.  The Borrower has reviewed and assessed its
business  operations and computer  systems and applications to address the "year
2000 problem"  (that is, that computer  applications  and equipment  used by the
Borrower,  directly  or  indirectly  through  third  parties,  may be  unable to
properly perform  date-sensitive  functions before,  during and after January 1,
2000).  The  Borrower  reasonably  believes  that the year 2000 problem will not
result  in a  material  adverse  change  in the  Borrower's  business  condition
(financial  or  otherwise),  operations,  properties  or prospects or ability to
repay any indebtedness due to Bank.

         The Borrower agrees that this  representation  will be true and correct
on each date the  Borrower  requests a loan or Advance or  delivers  information
under any credit agreement between Bank and Borrower.

         In  addition to the Events of Default in any of  Borrower's  agreements
with Bank, it will be an Event of Default  under each such  agreement if (a) any
representation in this Section 4.21 is false or misleading when made, or becomes
false or misleading  at any time  thereafter;  (b) Borrower  fails to perform or
comply with any term,  condition or obligation set forth herein; or (c) there is
any material  adverse  change in  Borrower's  business  condition  (financial or
otherwise),  operations,  prospects or ability to repay Bank which relates to or
results from the year 2000 problem.  The Borrower agrees to promptly  deliver to
Bank such information  relating to this  representation as Bank may request from
time to time.

                                   ARTICLE 5.
                                GENERAL COVENANTS

         Each Loan Party agrees with the Bank that, so long as the Loan shall be
outstanding,  unless the Bank shall otherwise consent in writing, each Guarantor
covenants and agrees as follows:

                                       17
<PAGE>

         5.1  Financial  Information.  The Loan Parties will furnish to the Bank
copies of such of its financial  statements,  reports and  information as may be
requested by the Bank,  including,  without limitation,  the following financial
statements,  reports  and  information,  each of which  shall be  prepared  on a
consolidated and  consolidating  basis for which no additional  request shall be
required:

             (a) As soon as available, and in any event within 120 calendar days
after  the end of each  fiscal  year of each  Guarantor,  a copy of its  audited
annual financial reports,  and the 10K filing of Corporation with the Securities
and  Exchange  Commission;  

             (b) As soon as available,  and in any event within  forty-five (45)
calendar days after the end of each fiscal quarter of each Guarantor,  a copy of
its unaudited  financial  statement and the  Corporation's 10Q report filed with
the Securities and Exchange Commission;

             (c)  Within  ten  (10)  days  after  filing,  a copy of any  filing
available to the public made by  Corporation  with the  Securities  and Exchange
Commission.

             (d) As soon as available,  and in any event within  forty-five (45)
days after the end of each fiscal quarter, a compliance certificate ("Compliance
Certificate")  signed by the Authorized  Officer.  Each  Compliance  Certificate
shall be in the form and  substance  satisfactory  to the  Bank,  shall  contain
detailed  calculations of the financial  covenants referred to in Article 6, and
shall contain statements by the Authorized Officer to the effect that, except as
explained in reasonable detail in such Compliance Certificate,  (i) the attached
financial statements are complete and correct in all material respects (subject,
in the case of financial  statements other than annual, to normal year-end audit
adjustments)  and have  been  prepared  in  accordance  with  GAAP  and  applied
consistently  throughout  the periods  covered  thereby  and with prior  periods
(except as disclosed therein), (ii) all of the representations and warranties of
the Loan Parties  contained in this  Agreement and other Loan Documents are true
and  correct  as of the date of such  certification  is given as if made on such
date,  and (iii)  there is no Default  or Event of  Default.  If any  Compliance
Certificate delivered to the Bank discloses that a representation or warranty is
not true and  correct,  or that  there is a Default  or Event of  Default,  such
Compliance Certificate shall state what action Borrower has taken or proposes to
take with respect thereto.

         5.2  Accounting  System.  Each  Borrower  shall  maintain  a system  of
accounting established and administered in accordance with GAAP.

         5.3 Security  Interests.  Borrower shall not create,  incur,  assume or
allow to exist any Liens  upon all or any part of the  Collateral,  now owned or
hereafter  acquired,  except  the  Liens  in  favor  of the  Bank  securing  the
Obligations.

         5.4 Notices.  Each Loan Party,  each for itself or himself,  as soon as
practicable, shall give notice to the Bank of:

                                       18
<PAGE>

             (a) The  commencement  of any  uninsured  litigation  in  excess of
$1,000,000.00  relating  to any  Loan  Party  or  relating  to the  transactions
contemplated by this Agreement;

             (b) The  commencement  of any material  arbitration or governmental
investigation  or proceeding not  previously  disclosed by the Loan Party to the
Bank in  writing  which has been  instituted  or, to the  knowledge  of the Loan
Party,  threatened  against any Loan Party or to which its  properties or assets
are subject which, if determined  adversely to the Loan Party would constitute a
Material Adverse Occurrence;

             (c)  Any  adverse  development  which  occurs  in  any  litigation,
arbitration or governmental  investigation or proceeding previously disclosed by
any Loan Party to the Bank  which,  if  determined  adversely  to any Loan Party
would constitute a Material Adverse Occurrence;

             (d)  Any  Event  of  Default  under  this  Agreement  or  the  Loan
Documents.

         5.5 Books and Records,  Periodic Audits. Each Borrower shall keep books
and  records  reflecting  all  of  its  business  affairs  and  transactions  in
accordance with GAAP and permit the Bank, and its  representatives and agents at
reasonable  times and intervals and upon reasonable  notice to the Borrower,  to
visit all of its offices,  discuss its  financial  matters with  officers of the
Borrower and its  Independent  Public  Accountants  (and by this  provision  the
Borrower  authorizes its Independent  Public  Accountants to participate in such
discussions) and examine any of its books and other corporate records.

         5.6  Corporate  Existence.  Each  Borrower  shall  maintain  its  legal
existence in good standing under the laws of its  jurisdiction of  incorporation
and its qualification to transact business in each jurisdiction where failure to
qualify would permanently preclude the Loan Party from enforcing its rights with
respect to any  material  asset or would  expose the Loan Party to any  material
liability.

         5.7  Inconsistent  Agreements.  No Loan  Party  shall  enter  into  any
agreement  containing  any provision  which would be violated or breached by the
Loan Party in the performance of its obligations under any Loan Document.

         5.8 Compliance  with Laws.  Each Loan Party shall carry on its business
activities in substantial  compliance with all Governmental  Regulations and all
applicable  rules,  regulations and orders of all  Governmental  Entities having
power to regulate or supervise its business activities.

         5.9 Conduct of  Business.  Each Loan Party shall  maintain and keep its
assets,  property and equipment in good repair,  working order and condition and
from time to time make or cause to be made all needed renewals, replacements and
repairs.

         5.10  Maintain  Business.  Each Loan  Party  shall  continue  to engage
primarily in the business being conducted on the date of this Agreement.

                                       19
<PAGE>

         5.11  Payment of Taxes and  Claims.  Each Loan Party shall file all tax
returns  and reports  which are  required by law to be filed by it and shall pay
before they become  delinquent all taxes,  assessments and governmental  charges
and levies imposed upon it or its property and all claims or demands of any kind
(including  but  not  limited  to  those  of  suppliers,   mechanics,  carriers,
warehouses,  landlords and other like Persons) which, if unpaid, might result in
the creation of a Lien upon its property; provided that the foregoing items need
not  be  paid  if  they  are  being  contested  in  good  faith  by  appropriate
proceedings,  and as long as each  Loan  Party's  title to its  property  is not
materially  adversely affected,  its use of such property in the ordinary course
of its business is not  materially  interfered  with and adequate  reserves with
respect thereto have been set aside on its books in accordance with GAAP.

         5.12 ERISA. Each Loan Party shall maintain each Plan in compliance with
all  applicable  requirements  of ERISA  and of the  Code and with all  material
applicable  rulings and regulations  issued under the provisions of ERISA and of
the Code and will not, and will not permit any of the ERISA  Affiliates  to, (a)
engage in any  transaction in connection with which the Loan Party or any of the
ERISA Affiliates would be subject to either a civil penalty assessed pursuant to
Section  502(i) of ERISA or a tax imposed by Section 4975 of the Code, in either
case in an amount exceeding  $50,000,  (b) fail to make full payment when due of
all amounts which, under the provisions of any Plan, the Loan Party or any ERISA
Affiliate is required to pay as  contributions  thereto,  or permit to exist any
accumulated  funding deficiency (as such term is defined in Section 302 of ERISA
and Section 412 of the Code), whether or not waived, with respect to any Plan in
an aggregate amount exceeding  $25,000.00 or (c) fail to make any payments in an
aggregate amount exceeding  $25,000.00 to any  Multiemployer  Plan that the Loan
Party or any of the ERISA Affiliates may be required to make under any agreement
relating to such Multiemployer Plan or any law pertaining thereto.

         5.13 Prohibition of Transfers in Violation of ERISA. In addition to the
prohibitions  set  forth  in  this  Agreement,  and not in  limitation  thereof,
Borrower shall not assign,  sell,  pledge,  encumber,  transfer,  hypothecate or
otherwise  dispose  of its  interest  or  rights  in  this  Agreement  or in any
Collateral,  or  attempt  to do  any  of  the  foregoing  or  suffer  any of the
foregoing,  nor shall any party owning a direct or indirect interest in Borrower
assign, sell, pledge,  encumber,  transfer,  hypothecate or otherwise dispose of
any of its rights or interest  (direct or indirect)  in Borrower,  attempt to do
any of the foregoing or suffer any of the foregoing,  if such action would cause
the Loan, or the exercise of any of the Bank's  rights in connection  therewith,
to constitute a prohibited  transaction under ERISA or the Code (unless Borrower
furnishes to the Bank a legal opinion  reasonably  satisfactory to the Bank that
the  transaction is exempt from the prohibited  transaction  provisions of ERISA
and the Code) or  otherwise  result in the Bank being deemed in violation of any
applicable  provision of ERISA.  Borrower  agrees to indemnify and hold the Bank
free and  harmless  from and  against all losses,  costs  (including  reasonable
attorneys' fees and expenses),  taxes, damages (including consequential damages)
and  expenses  the Bank may suffer by reason of the  investigation,  defense and
settlement of claims and in obtaining any prohibited transaction exemption under
ERISA  necessary  or  desirable  in the Bank's  sole  judgment or by reason of a
breach of the foregoing prohibitions.

                                       20
<PAGE>

         5.14  Plans.  The Loan  Parties  shall not permit any event to occur or
condition  to  exist  which  would  permit  any  Plan  to  terminate  under  any
circumstances  which would cause the Lien  provided for in Section 4068 of ERISA
to  attach to any  assets of the Loan  Parties;  and the Loan  Parties  will not
permit the  underfunded  amount of Plan  benefits  guaranteed  under Title IV of
ERISA to exceed $25,000.00 with respect to any Plan.

         5.15 Loan Proceeds. No Loan Party shall use any part of the proceeds of
the  Loan or any  Advance  directly  or  indirectly,  and  whether  immediately,
incidentally or ultimately, (a) to purchase or carry margin stock (as defined in
Regulation  U of the  Board) or to extend  credit to others  for the  purpose of
purchasing  or  carrying  margin  stock  or to  refund  Indebtedness  originally
incurred for such purpose,  or (b) for any purpose which entails a violation of,
or which is  inconsistent  with,  the provisions of Regulations G, U or X of the
Board.

         5.16  Consolidation,  Merger,  Sale or Disposal of Assets. A Loan Party
shall not without the prior written approval from the Bank:

             (a) acquire, consolidate or merge into or with any other entity; or

             (b) sell,  (other than sales of inventory in the ordinary course of
business) transfer, lease, or otherwise dispose of all, or substantially all, of
its assets during the term of this Agreement.

         5.17 Indebtedness.  Borrower shall not create,  incur, assume, or allow
to exist any Indebtedness of any kind or description, except the following:

             (a) Indebtedness to trade creditors incurred in the ordinary course
of business,  to the extent that it is not overdue past the original due date by
more than ninety (90) days.

             (b) The Obligations.

         5.18 Sales,  Mergers, and other Fundamental  Changes.  Except as may be
permitted by the Bank in its sole and absolute discretion, Operating Partnership
and Corporation shall not cause, suffer or permit, voluntarily or involuntarily,
Borrower or  Operating  Partnership  to enter into or offer or agree to: (a) any
change  in the  legal  or  beneficial  ownership  of  Operating  Partnership  or
Borrower;  (b) any sale,  lease,  sublease,  assignment,  transfer,  conveyance,
exchange,  spin off or other  disposition  of,  individually  or in a series  of
related  transactions,  assets or properties of Borrower;  (c) any sale,  lease,
sublease,  assignment,   transfer,  conveyance,  exchange,  spin  off  or  other
disposition of any asset,  including,  without  limitation,  any contract right,
general  intangible  or  chose in  action,  which is  material  to the  business
operations of Borrower; (d) any purchase or other acquisition by Borrower of all
or substantially all of the business,  property or assets of, or equity interest
in, any  Person or (e) a Change of  Control.  For  purposes  of this  Agreement,
"change in the legal or beneficial ownership" shall include any transfer,  sale,
assignment,  conveyance,  exchange,  transfer  in  connection  with a pledge  or
hypothecation  or the  foreclosure  of a pledge or  hypothecation,  transfer  in
connection with a grant of rights or warrants or options or proxies with respect


                                       21
<PAGE>

to such ownership interests, merger, consolidation, reorganization, dissolution,
liquidation  or winding up of such  entity,  creation of  additional  classes of
stock or equity  interests,  change in the  rights  associated  with  classes of
preferred  stock to permit  conversion  to  common  or voting  stock or to grant
voting  rights,  or any other act that  would  have the  effect of  altering  or
diminishing  the legal or  beneficial  ownership  or any  rights or duties  with
respect thereto.  Notwithstanding the foregoing,  Operating Partnership shall be
entitled to changes in its legal or beneficial  ownership  provided that no such
changes  shall  impair  or  diminish  the  voting  and  managerial   control  by
Corporation of Operating Partnership.

         5.19 Returned  Payments.  Each Loan Party agrees that, in the event any
payment made by or on behalf of any Loan Party  respecting any  Obligations,  or
any portion  any such  payment,  shall at any time be returned by the  recipient
thereof for any reason,  including  pursuant to any order (whether or not final)
by a court  of  competent  jurisdiction,  any  provision  of the  United  States
Bankruptcy Code as now existing or hereafter  amended,  or any other  applicable
federal or state law or  because of acts or  omissions  of any Loan  Party,  the
Obligations  shall not be deemed to have  been  satisfied  to the  extent of the
returned  payment,  and the obligations of each Loan Party shall be deemed to be
reinstated automatically and to continue in full force and effect.

         5.20 Modification of Mortgage Loan Documents.  Borrower shall not enter
into any  agreement,  written or verbal,  purporting  to modify,  amend,  waive,
defer,  or release (in whole or in part) any  obligations  of the Mortgage  Loan
Borrower under the Mortgage Loan Documents or any collateral for any obligations
under  the  Mortgage  Loan  Documents  or any  provision  of the  Mortgage  Loan
Documents  without the prior written  consent of the Bank,  which consent may be
withheld in the Bank's sole and absolute discretion.

         5.21  Lock-Box  Account.  Pursuant  to a Loan,  Security  and  Lock Box
Agreement,  dated  July 30,  1997,  by and  among  Mortgage  Loan  Borrower  and
Operating Partnership ("Original Lock Box Agreement"), Mortgage Loan Borrower is
obligated to make or cause  certain  payments to be made into an account for the
benefit  of  Operating  Partnership.  The Loan  Parties  and the  Mortgage  Loan
Borrower  have  represented  to the Bank that,  by oral  waiver,  Mortgage  Loan
Borrower  is not  currently  obligated  to  comply  with the  provisions  of the
Original Lock Box Agreement  and,  instead,  Mortgage Loan Borrower is currently
making payments due under the Mortgage Loan Documents directly to Borrower.  The
Original  Lock Box  Agreement  has been  amended by Amended and  Restated  Loan,
Security and Lockbox Agreement dated December 1, 1998 by and among Mortgage Loan
Borrower,  Borrower  and Thomas  Rhodes,  as  servicer  (the  "Amended  Lock Box
Agreement").  Pursuant to the Amended Lock Box Agreement, Mortgage Loan Borrower


                                       22
<PAGE>

is  obligated to make  payments of gross income to the Servicer  (defined in the
Amended Lock Box Agreement) for  distribution in the manner  described  therein.
The Loan  Parties  agree that the  rights,  benefits  and  remedies  of the Loan
Parties  are  being  assigned  to Bank  under the Loan  Documents,  and upon the
occurrence of an Event of Default,  Bank shall be entitled at its sole option to
require the Mortgage Loan Borrower to comply with the provisions of the Original
Lock Box  Agreement or,  alternately,  to require  substitution  of the Servicer
under the Amended Lock Box  Agreement and to require that Mortgage Loan Borrower
continue to comply with the provisions of the Amended Lock Box Agreement.

         5.22 Further Assurances. Each Loan Party will at any time and from time
to time upon request of the Bank take or cause to be taken any action,  execute,
acknowledge,  deliver  or  record  any  further  documents,  opinions  or  other
instruments or obtain such additional  insurance as Bank in its discretion deems
necessary or appropriate to carry out the purposes of this Agreement.

         5.23  Mergers;  Acquisitions.  Neither  Guarantor  shall merge with any
other  entity or dispose of any of its  current  subsidiaries  without the prior
written consent of the Bank.

         5.24 Operating  Partnership Debt. Operating Partnership shall not incur
or assume any debts or other liabilities or obligations, other than the Loan and
other credit agreements with the Bank, non-recourse first mortgage loans on real
property owned by Operating  Partnership,  or  indebtedness  to trade  creditors
incurred  in the  ordinary  course of  business,  to the  extent  that it is not
overdue past the original due date by more than ninety (90) days.

                                   ARTICLE 6.
                               FINANCIAL COVENANTS

         6.1 Special  Definitions.  In this Article,  the following  terms shall
have the following meanings as to Operating Partnership:

             (a) "Capital  Expenditure"  shall mean an expenditure  for an asset
that must be depreciated or amortized under GAAP, for goodwill, or for any asset
that under GAAP must be treated as a capital  asset,  including  payments  under
Capital Leases.

             (b) "Capital Lease" shall mean any lease that has been or should be
capitalized under GAAP.

             (c)  "Current  Assets"  shall have the  meaning  given that term in
accordance with GAAP.

             (d) "Current Liabilities" shall have the meaning given that term in
accordance with GAAP,  excluding,  however, any outstanding  principal under the
Loan or under any loan or credit  facility to any Loan Party  existing as of the
date of this Loan Agreement.

             (e)  "Current  Ratio"  shall  mean the ratio of  Current  Assets to
Current Liabilities.

             (f) "Debt  Service  Coverage  Ratio" shall mean,  as of any date of
determination, the quotient of (i) actual Net Operating Income for the Mortgaged
Properties  for a period of twelve (12)  calendar  months  prior to such date of
determination, divided by (ii) the amount of all principal and interest payments
required  to be made  during  such  period in  respect  of a loan that (x) has a


                                       23
<PAGE>

principal balance that is (1) equal to the outstanding  principal balance of the
Loan as of such date of  determination,  and (2) fully  payable in equal monthly
installments  over an amortization  period of twenty (20) years  commencing upon
the date of  determination,  and (y) bears  interest  at an annual rate of eight
percent (8%).

             (g) "EBITDA" means, for any period of calculation,  an amount equal
to the sum of (i) Net Income, (ii) federal,  state and local income tax expense,
(iii) Interest Expense,  (iv) losses on the sale or other disposition of assets,
(v) depreciation and  amortization,  and (vi)  extraordinary  losses,  minus (a)
gains on the sale or other disposition of assets,  and (b) extraordinary  gains,
each calculated for such period.

             (h)  "Indebtedness"  shall mean, as to any Person at any particular
date, any contractual  obligation  enforceable  against such Person (i) to repay
borrowed money; (ii) to pay the deferred purchase price of property or services;
(iii) to make  payments  or  reimbursements  with  respect  to letters of credit
whether or not there have been  drawings  thereunder;  (v) with respect to which
there is any security interest in any property of such Person;  (vi) to make any
payment or contribution to a  Multi-Employer  Plan; (vii) that is evidenced by a
note, bond,  debenture or similar  instrument;  and (viii) under any conditional
sale agreement or title retention agreement.

             (i) "Indirect  Obligation"  shall mean,  as to any Person,  (a) any
guaranty by such Person of any  obligation of another  Person;  (b) any security
interest in any property of such Person that secures any  obligation  of another
person;  (c) any  enforceable  contractual  requirement  that  such  person  (i)
purchase an  obligation  of another  Person or any property that is security for
such  obligation;  (ii) advance or  contribute  funds to another  Person for the
payment  of an  obligation  of such  other  Person or to  maintain  the  working
capital, net worth or solvency of such other Person as required in any documents
evidencing  an  obligation  of  such  other  Person;  (iii)  purchase  property,
securities  or services  from  another  person for the  purpose of assuring  the
beneficiary  of any  obligation  of such other Person that such other Person has
the ability to timely pay or discharge  such  obligation;  (iv) grant a security
interest  in any  property of such  Person to secure any  obligation  of another
Person;  or (v)  otherwise  assure  or  hold  harmless  the  beneficiary  of any
obligation of another Person against loss in respect thereof;  and (d) any other
contractual  requirement  enforceable  against  such  person  that  has the same
substantive effect as any of the foregoing.  The term "Indirect Obligation" does
not, however,  include the endorsement by a Person of instruments for deposit or
collection  in the  ordinary  course of business or the  liability  of a general
partner of a partnership for obligations of such partnership.  The amount of any
Indirect Obligation of a Person shall be deemed to be the stated or determinable
amount of the  obligation in respect to which such  Indirect  Obligation is made
or, if not stated or determinable,  the maximum reasonable anticipated liability
in respect thereof as determined by such Person in good faith.

             (j) "Intangible Assets" means: (a) patents, copyrights, trademarks,
tradenames,   franchise,   license  agreements,   goodwill,  and  other  similar
intangibles; (b) unamortized debt discount and expenses; and (c) fixed assets to
the  extent  of  any  write-up  in  the  book  value  thereof  resulting  from a


                                       24
<PAGE>

revaluation effective after the date of this Loan Agreement.

             (k) "Interest  Expense" means,  for any period of calculation,  all
interest,  whether paid in cash or accrued as a liability,  without duplication,
on Indebtedness or Indirect Obligations of any Person during such period.

             (l)  "Liabilities"  shall  have  the  meaning  given  that  term in
accordance with GAAP.

             (m)  "Liquidity"  shall mean  available  unrestricted  cash or cash
equivalents,  but not including any  receivables of United or a Subsidiary  from
any other Subsidiary.

             (n) "Mandatory  Debt  Retirement  and Interest"  shall mean, at any
date of  determination,  the sum of all  mandatory  payments  of  principal  and
interest  (including  payments  due in  connection  with any Capital  Lease) due
during the period of twelve (12) months from the date of determination.

             (o)  "Net  Income"  shall  have  the  meaning  given  that  term in
accordance with GAAP.

             (p)  "Net  Operating   Income"  shall  mean,  as  of  any  date  of
determination,  the aggregate  actual  rental  income  received by Mortgage Loan
Borrower  during the prior  twelve  (12)  calendar  months  from leases or other
occupancy  agreements  regarding  the  Mortgaged  Properties,  less  the  actual
operating  expenses of the Mortgaged  Properties  paid or to be paid by Mortgage
Loan  Borrower  for  such  period   (including  annual  real  estate  taxes  and
assessments,  annual  insurance  premiums),  provided that Net Operating  Income
shall be determined without deduction for depreciation,  amortization,  Mortgage
Loan  Borrower's  income and  franchise  taxes,  Mortgage Loan  Borrower's  debt
service payments under the Mortgage Loans,  capital expenditures and other costs
and expenses which would not be expenses  deductible  from net operating  income
under GAAP.

             (q) "Tangible Net Worth" means as of any date,  total assets of the
Person as determined in accordance  with GAAP,  minus the sum of (i) Liabilities
and (ii) Intangible Assets.

         6.2  Guarantors'  Financial  Covenants.  As of the Conversion  Date and
until  the Loan and all  indebtedness  hereunder  has been  paid in full and all
Obligations hereunder have been fully discharged,  each Loan Party covenants and
agrees as follows:

             (a) Minimum Tangible Net Worth. The consolidated Tangible Net Worth
of Operating Partnership shall not fall below $70,000,000.00, at any time.

             (b) Ratio of Current  Assets to Current  Liabilities.  The ratio of
Current Assets to Current  Liabilities of Operating  Partnership  shall not fall
below 2.0 to 1, at any time.

                                       25
<PAGE>

             (c)  Cash  Flow   Coverage.   The  ratio  of  EBITDA  of  Operating
Partnership  to Mandatory  Debt  Retirement  and Interest  Payments of Operating
Partnership determined over the prior four (4) quarters shall not fall below 2.0
to 1, at any time.

             (d) Debt Service  Coverage Ratio.  The Debt Service  Coverage Ratio
for the Mortgaged Properties shall not fall below 1.25 at any time.

         6.3 Compliance Certificate. Within forty-five (45) days after the close
of each  calendar  quarter the  Authorized  Officer shall execute and deliver to
Bank a Compliance  Certificate,  in the form and substance  satisfactory  to the
Bank,  confirming and certifying  its continuing  compliance  with the financial
covenants set forth in this Section, as further described in Section 6.1 above.

ARTICLE 7.
                              DEFAULT AND REMEDIES

         7.1 Event of Default.  The  occurrence of any of the  following  events
shall constitute an Event of Default hereunder:

             (a) Monetary. The Borrower shall default in the payment when due of
any  Obligations  owing to Bank under the terms of the Note and such  failure to
make payment shall continue for a period of five (5) days or longer.

             (b)  Covenant.  A Default  shall occur in the due  performance  and
observance of any of the covenants and  conditions of this Agreement or the Loan
Documents, other than a monetary obligation, or an Event of Default specifically
set forth in this  Section,  which  breach  is not cured to Bank's  satisfaction
within the applicable cure period for breach of such covenant or condition, and,
if no specific  cure period is  provided,  within  thirty (30) days of notice of
such Default being sent by the Bank to Borrower;  provided, however, that if the
Default  cannot by its nature  reasonably  be cured within  thirty (30) days and
Borrower  commences cure within thirty (30) days,  Borrower shall be entitled to
an additional thirty (30) days to complete such cure.

             (c) Financial Covenant. A breach by any Loan Party of the financial
covenants  set  forth  in  Article  6 shall  occur  which  is not  cured  to the
satisfaction  of the Bank within thirty (30) days after written  notice from the
Bank of such Default .

             (d)  Representation  and  Warranties.  Any written  representation,
warranty or  disclosure  made by a Loan Party proves to be  materially  false or
misleading  as of the date when  made,  whether  or not such  representation  or
disclosure appears in this Agreement,  the Loan Documents, or items submitted by
the Loan Party in connection therewith.

             (e) Debt.  A Loan Party shall  generally  not pay its debts as such
debts  become  due, or shall  admit in writing  its  inability  to pay its debts
generally,  or shall make a general assignment for the benefit of creditors;  or
any  proceeding  shall be instituted by the Loan Party seeking to adjudicate the
Loan Party as  bankrupt  or  insolvent,  or  seeking  liquidation,  winding  up,


                                       26
<PAGE>

reorganization, arrangement, adjustment, protection, relief composition of it or
its debts under any law relating to bankruptcy,  insolvency or reorganization or
relief  of  debtors,  or  seeking  the  entry  of an  order  for  relief  or the
appointment of a custodian,  receiver, trustee, or other similar official for it
of for any  substantial  and material  part of its  property;  or the Loan Party
shall take any action to  authorize  any of the  actions set forth above in this
subsection.

             (f)  Third  Party  Proceeding.  The  commencement  of a  proceeding
against a Loan  Party  seeking to  adjudicate  it a bankrupt  or  insolvent,  or
seeking  liquidation,  winding  up,  reorganization,   arrangement,  adjustment,
protection,  relief, or composition of it or its debts under any law relating to
bankruptcy,  insolvency or reorganization  or relief of debtors,  or seeking the
entry of an order  for  relief  or the  appointment  of a  custodian,  receiver,
trustee,  or other similar  official for it of for any  substantial  part of its
property  that is not stayed or dismissed  within ninety (90) days after receipt
by a Loan Party of written notice thereof.

             (g) Material Adverse Occurrence.  There occurs any Material Adverse
Occurrence.

             (h) Other  Credit  Facilities.  A default  shall occur and continue
beyond  applicable  cure periods,  if any, in any other loan agreement or credit
facility between any Loan Party and the Bank, now or hereafter existing.

         Each Loan Party acknowledges and agrees that all material  non-monetary
Defaults  are  conclusively  deemed  to be and are  defaults  which  impair  the
security of the Loan Documents,  and that Bank shall be entitled to exercise any
appropriate  remedy,  including  without  limitation,  foreclosure  of the  Loan
Documents  upon the occurrence of any such material  non-monetary  default after
the expiration of any cure period, if applicable.

         7.2 Remedies.  Upon the occurrence of an Event of Default, Bank may, in
addition to any other  remedies  which Bank may have hereunder or under the Loan
Documents  or by law, at its option and without  prior demand or notice take any
or all of the following actions:

             (a)   Acceleration.   Declare  the   Obligations   under  the  Note
immediately due and payable.

             (b)  Realization.  Proceed to protect  and  enforce  its rights and
remedies  under the Loan Documents and avail itself of any other relief to which
the Bank may be legally or equitably entitled.

             (c)  Compelled  Return of Payments or Proceeds.  If Bank is for any
reason  compelled  to surrender  any payment or any  proceeds of the  Collateral
because  such  payment or the  application  of such  proceeds  is for any reason
invalidated,  declared  fraudulent,  set  aside,  or  determined  to be  void or
voidable as a  preference,  an  impermissible  setoff,  or a diversion  of trust
funds, then this Agreement and the Obligations to which such payment or proceeds
was applied or intended  to be applied  shall be revived as if such  application
were never made;  and each Loan Party shall be liable to pay to Bank,  and shall
indemnify  Bank for and hold Bank  harmless  from any loss with  respect  to the


                                       27
<PAGE>

amount of such payment or proceeds surrendered.  This Section shall be effective
notwithstanding  any contrary  action Bank may take in reliance upon its receipt
of any such payment or proceeds. Any such contrary action so taken by Bank shall
be without prejudice to Bank's right under this Agreement and shall be deemed to
have been  conditioned  upon the  application of such payment or proceeds having
become final and  irrevocable.  The provisions of this Section shall survive the
payment and satisfaction of all the Obligations.

             (d) Right of Set-off.  Upon the  occurrence of any Event of Default
and at any time and from time to time  thereafter,  Bank is  hereby  authorized,
without notice to Borrower (any such notice being expressly waived by Borrower),
to set off and apply against the  Obligations  any and all deposits  (general or
special,  time or demand,  provisional  or final) at any time held, or any other
Indebtedness  at any time owing by Bank to or for the  credit or the  account of
Borrower, irrespective of whether or not Bank has made any demand under the Loan
Documents and although  such  Obligations  may be unmatured,  but subject to the
rights of any Person for whom the Borrower is holding funds as escrow agent. The
right of Bank under this  Section are in addition to other  rights and  remedies
(including,  without  limitation,  other  rights  of  set-off)  which  Bank  may
otherwise have.

             (e) Exercise of Rights as Secured  Party.  Upon an Event of Default
and acceleration of the Obligations as provided herein, and at any time and from
time to time  thereafter: 

                 (i) The Bank may  exercise  its  rights  under  the  Collateral
Security Documents; and.

                 (ii) The Bank may  exercise any and all of its rights under the
Security Agreement as a secured party under the UCC and any other applicable law
or the terms thereof; and

                 (iii) The Bank may sell or  otherwise  dispose of any or all of
the  Collateral at public or private sale in a commercially  reasonable  manner,
for cash or  credit,  which  sale the Bank  may  postpone  from  time to time by
announcement  at the time and place of sale  stated in the  notice of sale or by
announcement  at any adjourned  sale without being required to give a new notice
of sale, all as the Bank deems  advisable.  The Bank may become the purchaser at
any such sale if  permissible  under  applicable  law,  and Bank may, in lieu of
actual  payment  of the  purchase  price,  offset  the  amount  thereof  against
Borrower's Obligations owing to Bank.

         All remedies of Bank provided for herein and in any other Loan Document
are  cumulative  and shall be in  addition  to all  other  rights  and  remedies
provided by law. The exercise of any right or remedy by Bank hereunder shall not
in any way  constitute a cure or waiver of default  hereunder or under any other
Loan Document or invalidate  any act done pursuant to any notice of default,  or
prejudice Bank in the exercise of any of its rights hereunder or under any other


                                       28
<PAGE>

Loan Documents unless, in the exercise of its rights,  Bank realizes all amounts
owed to it under such Loan Documents.

         7.3  Limitation of Liability;  Waiver.  The Bank shall not be liable to
Borrower as a result of any commercially  reasonable  possession,  repossession,
collection  or sale by the Bank and  Borrower  hereby  waives the benefit of all
valuation or appraisal  laws. If the Bank seeks to take possession of any of the
Collateral  by  replevin  or other  court  process  after  an Event of  Default,
Borrower  hereby  irrevocably  waives (i) the  posting of any bonds,  surety and
security relating thereto required by any statute, court rule or otherwise as an
incident to such  possession,  (ii) any demand for  possession of the Collateral
prior to the commencement of any suit of action to recover  possession  thereof,
(iii) any  requirement  that the Bank retain  possession  and not dispose of any
Collateral until after trial or final judgment, and (iv) to the extent permitted
by applicable law, all rights to notice and hearing prior to the exercise by the
Bank of its right to repossess the  Collateral  without  judicial  process or to
replevy,  attach or levy upon the Collateral without notice or hearing. The Bank
shall not have any obligation to preserve rights to the Collateral against prior
parties or to marshall any Collateral for the benefit of any Person.

         7.4 Notice.  Any notice of intended  action required to be given by the
Bank (including notice of a public or private sale of the Collateral),  if given
as provide in Section 9.3 at least ten (10) days prior to such proposed  action,
shall be effective and constitute reasonable and fair notice to Borrower

         7.5 No Duty to Protect Collateral.  Bank shall have no duty to Borrower
or  Guarantor  or  any  other  Person  as to the  collection  or  protection  of
Collateral held hereunder or any income therefrom, not as to the preservation of
any rights pertaining thereto,  beyond the reasonable care thereof. Such care as
Bank gives to the safekeeping of its own property of like kind shall  constitute
reasonable  care  of  Collateral  when in  Bank's  possession;  but  Bank is not
required to make presentment,  demand or protest,  or give notice,  and need not
take action to preserve any rights  against  prior  parties,  obligors,  account
debtors,   or  others,   in  connection  with  any  obligation  or  evidence  of
indebtedness held as Collateral or in connection with Borrower's obligations.

         7.6 Limitation;  Insolvency Laws. As used in this Section: (a) the term
"Applicable  Insolvency  Laws" means the laws of the United States of America or
of any state or other governmental unit relating to bankruptcy,  reorganization,
arrangement,  adjustment of debts, relief of debtors,  dissolution,  insolvency,
fraudulent  transfers or conveyances or other similar laws  (including,  without
limitation, 11 U.S.C. ss. 548, ss. 550 and other "avoidance" provisions of Title
11 of the United  States  Code) as  applicable  in any  proceeding  in which the
validity and/or enforceability of the Loan Documents or any Specified Lien is in
issue; and (b) "Specified Lien" means any security interest,  mortgage,  lien or
encumbrance securing the Obligations,  in whole or in part.  Notwithstanding any
other provision of this Agreement, if, in any proceeding against the Borrower, a
court of competent jurisdiction determines that the Obligations or any Specified
Lien would,  but for the  operation  of this  Section,  be subject to  avoidance
and/or recovery or be unenforceable against the Borrower by reason of Applicable


                                       29
<PAGE>

Insolvency Laws, the Obligations and each such Specified Lien shall be valid and
enforceable  only to the maximum extent that would not cause the Obligations and
such Specified Lien to be subject to avoidance, recovery or unenforceability. To
the extent that any payment to, or realization  by, the Bank on the  Obligations
exceeds the  limitations  of this Section and is otherwise  subject to avoidance
and recovery in any such  proceeding,  the amount subject to avoidance  shall in
all events be limited to the amount by which such actual  payment or realization
exceeds such  limitation,  and the  Obligations  as limited  shall in all events
remain in full force and effect and be fully  enforceable  against the Borrower.
This  Section is  intended  solely to reserve  the rights of the Bank  hereunder
against the  Borrower in such  proceedings  to the maximum  extent  permitted by
Applicable  Insolvency  Laws and neither the  Borrower nor any Person shall have
any right,  claim or defense  under this  Section  that would not  otherwise  be
available  under  Applicable  Insolvency  Laws  in  such  proceedings.   If  the
Obligations or any Specified  Lien are subject to avoidance or recovery,  or are
unenforceable,  with respect to the Borrower by reason of Applicable  Insolvency
Laws, or if the validity and  enforceability of the Obligations or any Specified
Lien are limited with respect to the Borrower pursuant to this Section 7.6, such
avoidance,  recovery,  unenforceability  or  limitation  shall  not  affect  the
validity or enforceability of the Obligations or any Specified Lien with respect
to any other Loan Party .

                                   ARTICLE 8.
                         RELATIONSHIP AMONG LOAN PARTIES

         8.1 Joint and Several  Liability.  BY SIGNING THIS AGREEMENT,  BORROWER
AND EACH OF THE GUARANTORS  AGREE THAT IT IS LIABLE,  JOINTLY AND SEVERALLY WITH
EACH OTHER LOAN PARTY, FOR THE PAYMENT OF THE NOTE AND ALL OTHER  OBLIGATIONS OF
THE BORROWER UNDER THIS  AGREEMENT,  AND THAT BANK CAN ENFORCE SUCH  OBLIGATIONS
AGAINST  ANY OF  BORROWER  OR EACH  GUARANTOR,  IN  BANK'S  SOLE  AND  UNLIMITED
DISCRETION.

         8.2 Bank's Right to  Administer  Credit.  Bank may at any time and from
time to time,  without  the consent  of, or notice to,  Borrower  or  Guarantor,
without  incurring   responsibility  to  Borrower  or  Guarantor,   and  without
affecting, impairing or releasing any of the obligations of Borrower hereunder:

             (a)  alter,  change,  modify,  extend,   release,   renew,  cancel,
supplement or amend in any manner this  Agreement or any of the Loan  Documents,
and the Borrower's and Guarantors' joint and several liability shall continue to
apply after giving effect to any alteration,  change,  modification,  extension,
release, renewal, cancellation, supplement of amendment.

             (b) sell,  exchange,  surrender,  realize  upon,  release  (with or
without consideration) or otherwise deal with in any manner and in any order any
property of any person or entity  mortgaged  to Bank or  otherwise  securing the
Borrower's and Guarantors' joint and several liability,  or otherwise  providing
recourse to Bank with respect thereto;

                                       30
<PAGE>

             (c) exercise or refrain from exercising any rights against Borrower
or any Guarantor or others with respect to the Borrower's or  Guarantors'  joint
and several liability, or otherwise act or refrain from acting;

             (d) settle or compromise any of the Borrower's or Guarantors' joint
and several  liability,  any security  therefor or other  recourse  with respect
thereto, or subordinate the payment or performance of all or any part thereof to
the payment of any  liability  (whether due or not) of Borrower or any Guarantor
to any creditor of Borrower or any Guarantor,  as applicable,  including without
limitation, Bank and Borrower or any Guarantor;

             (e) apply any sums  received  by Bank from any source in respect of
any liabilities of Borrower or any Guarantor to Bank to any of such liabilities,
regardless of whether the Note remains unpaid;

             (f) fail to set off  and/or  release,  in  whole  or in  part,  any
balance of any  account or any credit on its books in favor of  Borrower  or any
Guarantor, or of any other person, and extend credit in any manner whatsoever to
Borrower or any Guarantor, and generally deal with Borrower or any Guarantor and
any security for the  Borrower's or Guarantors'  joint and several  liability of
any recourse with respect thereto as Bank may see fit; and/or

             (g)  consent  to or waive any breach  of, or any act,  omission  or
default under,  this Agreement or any other Loan  Document,  including,  without
limitation,  any agreement providing  collateral security for the payment of the
Borrower's and Guarantors' joint and several liability or any other indebtedness
of any Borrower to Bank.

         8.3 Primary Obligation. No invalidity, irregularity or unenforceability
of all or any part of Borrower's or Guarantors'  joint and several  liability or
of any security  therefor or other  recourse with respect  thereto shall affect,
impair or be a defense to any other Loan  Party's  joint and several  liability,
and all obligations under the Note and this Agreement are primary obligations of
Borrower and each Guarantor.

         8.4 Payments  Recovered  From Bank.  Notwithstanding  any other term or
provision  hereof,  if claim is ever made upon Bank for repayment or recovery of
any amount or amounts  received by Bank from  Borrower,  Guarantor  or any other
person  or  entity  and  applied  in  payment  of or on  account  of  any of the
Borrower's or  Guarantors'  joint and several  liability and Bank is required to
repay all or any part of said  amount  or  amounts  by  reason of (i)  judgment,
decree or order of any court of  administrative  body having  jurisdiction  over
Bank or any of its  property,  or (ii) any  settlement or compromise of any such
claim effected by Bank with any such claimant (including Borrower or Guarantor),
then and in such event such judgment,  decree,  order,  settlement or compromise
shall  be  binding  upon  Borrower  and each  Guarantor  and  Borrower  and each
Guarantor  shall be and remain liable to Bank hereunder for the amount so repaid
or  recovered  to the same extent as if such  amount had never been  received by
Bank.

                                       31
<PAGE>

         8.5 No  Release.  Until the Note and all other  obligations  under this
Agreement  have been paid in full and each and  every one of the  covenants  and
agreements of this Agreement are fully  performed,  the  obligations of Borrower
and each Guarantor hereunder shall not be released,  in whole or in part, by any
action or thing which might, but for this provision of this Agreement, be deemed
a legal or  equitable  discharge of a surety or  guarantor,  or by reason of any
waiver, extension,  modification,  forbearance or delay or other act or omission
of Bank or its  failure to proceed  promptly or  otherwise,  or by reason of any
action  taken or  omitted by Bank  whether or not such  action or failure to act
varies or  increases  the risk of, or affects the rights or remedies of Borrower
or Guarantor, nor shall any modification of any of the Note or this Agreement or
release of any security  therefor by operation law or by the action of any third
party affect in any way the obligations of Borrower or Guarantor hereunder,  and
Borrower or each Guarantor hereby expressly waives and surrenders any defense to
its liability hereunder based upon any of the foregoing acts, omissions, things,
agreements  or waivers of any of them,  it being the  purpose  and intent of the
parties hereto that the Borrower's or  Guarantors'  joint and several  liability
constitute the direct and primary obligations of Borrower and each Guarantor and
that  the  covenants,  agreements  and all  obligations  of  Borrower  and  each
Guarantor hereunder be absolute, unconditional and irrevocable.

         8.6 No Marshalling.  Borrower and each Guarantor  hereby waives any and
all right to cause a marshalling  of any other Loan Party's  assets or any other
action by any court or other  governmental  body with respect thereto insofar as
the rights of Bank  hereunder are concerned or to cause Bank to proceed  against
any  security  for the Loan  Party's  joint and several  liability  or any other
recourse  which Bank may have with respect  thereto,  and further waives any and
all  requirements  that Bank  institute  any action or  proceeding  at law or in
equity  against  any other Loan Party or anyone  else,  or with  respect to this
Agreement,  the Loan Documents, or any collateral security for the Borrower's or
Guarantors' joint and several  liability,  as a condition  precedent to making a
demand  on, or  bringing  an action or  obtaining  and/or  enforcing  a judgment
against  Borrower or any Guarantor.  Borrower and each Guarantor  further waives
any requirement  that Bank seek performance by any other Loan Party or any other
person,  of any  obligation  under this  Agreement,  the Loan  Documents  or any
collateral  security  for  the  Borrower's  or  Guarantors'  joint  and  several
liability as a condition precedent to making a demand on, or bringing any action
or obtaining  and/or  enforcing a judgment  against,  Borrower or any Guarantor.
Neither  Borrower nor any Guarantor  shall have any right of setoff against Bank
with  respect to any of its  obligations  hereunder.  Any remedy or right hereby
granted which shall be found to be  unenforceable  as to any person or under any
circumstance,  for any reason,  shall in no way limit or prevent the enforcement
of such  remedy  or right as to any  person  or  circumstance,  nor  shall  such
unenforceability  limit or  prevent  enforcement  of any  other  remedy or right
hereby granted.

         8.7 Deficiencies.  Borrower and each Guarantor specifically agrees that
in the event of a  foreclosure  under any security  agreement  or other  similar
agreement  held by Bank  which  secures  any part or all of the  Borrower's  and
Guarantors'  joint  and  several  liability  and in the  event  of a  deficiency
resulting  therefrom,  Borrower  and each  Guarantor  shall  be,  and  hereby is
expressly  made,  liable  to  Bank  for  the  full  amount  of  such  deficiency
notwithstanding  any other  provision  of this  Agreement  or  provision of such
agreement, any document or documents evidencing the indebtedness secured by such


                                       32
<PAGE>

agreement or any other  document or any provision of applicable  law which might
otherwise  prevent  Bank  from  enforcing  and/or  collecting  such  deficiency.
Borrower and each  Guarantor  hereby waives any right to notice of a foreclosure
under any security  agreement or other  similar  agreement  given to Bank by any
other Loan Party which  secures any part or all of the Loan  Parties'  joint and
several liability.

         8.8 Bankruptcy.  Borrower and each Guarantor  expressly agrees that its
liability and obligations under the Note and this Agreement shall not in any way
be affected by the  institution  by or against any other Loan Party or any other
person or entity of any bankruptcy,  reorganization,  arrangement, insolvency or
liquidation  proceedings,  or any other similar proceedings for relief under any
bankruptcy law or similar law for the relief of debtors,  or any action taken or
not taken by Bank in connection therewith,  and that any discharge of Borrower's
or Guarantors'  joint and several  liability  pursuant to any such bankruptcy or
similar law or other law shall not discharge or otherwise  affect in any way the
obligations  of any other  Loan Party  under the Note,  the  Guarantee  and this
Agreement,  and that  upon or at any time  after the  institution  of any of the
above actions,  at Bank's sole discretion,  the Borrower's and Guarantors' joint
and several  obligations shall be enforceable  against Borrower or any Guarantor
that is not itself the subject of such proceedings.  Borrower and each Guarantor
expressly  waives any right to argue that  Bank's  enforcement  of any  remedies
against  Borrower or that  Guarantor  is stayed by reason of the pendency of any
such proceeding against any other Loan Party.

                                   ARTICLE 9.
                                  MISCELLANEOUS

         9.1 No  Waiver.  No waiver  of any  default  or breach by a Loan  Party
hereunder shall be implied from any failure by Bank to take action on account of
such default if such  default  persists or is  repeated,  and an express  waiver
shall not affect any default other than the default  specified in the waiver and
shall be operative only for the time and to the extent therein  stated.  Waivers
of any covenant,  term or condition contained herein shall not be construed as a
waiver of any  subsequent  breach of the same covenant,  term or condition.  The
consent or approval by Bank to, or of, any act by a Loan Party requiring further
consent  or  approval  shall not be deemed  to waive or render  unnecessary  the
consent or approval to, or of, any subsequent similar act.

         9.2 Successors and Assigns. This Agreement is made and entered into for
the sole protection and benefit of Bank and the Loan Parties,  their  successors
and  assigns,  and no other  person or  persons  shall  have any right of action
hereunder. The terms hereof shall be binding upon and shall inure to the benefit
of the parties hereto and the personal  representatives,  executors,  successors
and assigns of the parties hereto;  provided,  however,  that the interests of a
Loan Party  hereunder  cannot be assigned or otherwise  transferred  without the
prior consent of Bank.

                                       33
<PAGE>

         9.3  Subrogation  of Bank.  Bank shall be subrogated to the lien of any
previous  encumbrance  discharged  with  funds  advanced  by Bank under the Loan
Documents,  regardless of whether such previous encumbrance has been released of
record.

         9.4 Notices.  Any notice  required or permitted to be given by Borrower
or Bank under this  Agreement  shall be in writing and will be deemed  given (a)
upon personal  delivery or upon confirmed  transmission by telecopier or similar
facsimile  transmission  device,  (b) on the first business day after  receipted
delivery to a courier service which guarantees  next-business-day  delivery,  or
(c) on the third business day after mailing,  by registered or certified  United
States  mail,  postage  prepaid,  in any  case to the  appropriate  party at its
address set forth below:


         If to Borrower:
                  AIOP Lost Dutchman Notes, L.L.C.
                  c/o Asset Investors Corporation
                  3410 S. Galena Street, Suite 210
                  Denver, CO 80231
                  Attn:  Chief Financial Officer
                  Telecopy No.:  303-614-9401

         If to Guarantor:
                  Asset Investors Operating Partnership, L.P.
                  c/o Asset Investors Corporation
                  3410 S. Galena Street, Suite 210
                  Denver, CO 80231
                  Attn:  Chief Financial Officer
                  Telecopy No.:  303-614-9401

                  Asset Investors Corporation
                  3410 S. Galena Street, Suite 210
                  Denver, CO 80231
                  Attn: Chief Financial Officer
                  Telecopy No.:  303-614-9401

         If to Bank:
                  U.S. Bank National Association
                  918 Seventeenth Street
                  Denver, Colorado  80202
                  Attn:  Real Estate Banking
                  Chris Taylor, Vice President
                  Telecopy No.:  (303) 585-4198

         With copy to:
                  Gorsuch Kirgis LLP


                                       34
<PAGE>

                  Tower I, Suite 1000
                  1515 Arapahoe
                  Denver, Colorado 80202
                  Attn:  Connie B. Hyde, Esq.
                  Telecopy No.:  (303) 376-5001

         9.5  Authority  to  File  Notices.   Borrower   irrevocably   appoints,
designates and  authorizes  Bank as its agent (said agency being coupled with an
interest)  to send to any third party any other  notice or documents or take any
other  action that Bank deems  necessary  or  desirable  to protect its interest
hereunder,  or under the Loan Documents,  and will upon request by Bank, execute
such additional  documents as Bank may require to further  evidence the grant of
the aforesaid right to Bank.

         9.6 Time. Time is of the essence hereof.

         9.7 Amendments, etc. No amendment, modification,  termination or waiver
of any  provisions of this Agreement or of any of the Loan Documents nor consent
to any departure by Borrower  therefrom  shall in any event be effective  unless
the same shall be in writing and signed by Bank, and then such waiver or consent
shall be effective  only in the specific  instance and for the specific  purpose
for which given.

         9.8 Headings. The article and section headings in no way define, limit,
extend or interpret the scope of this Agreement or of any particular  article or
section.

         9.9 Number and Gender.  When the context in which the words are used in
this Agreement  indicate that such is the intent,  words in the singular  number
shall include the plural and vice-versa. References to any one gender shall also
include the other gender if applicable under the circumstances.

         9.10 Validity. In the event that any provisions of this Agreement shall
be held to be invalid,  the same shall not affect in any respect  whatsoever the
validity of the remainder of this Agreement.

         9.11 No Joint Venture; No Third Party Beneficiary. The Bank, on the one
hand,  and the Loan Parties,  on the other,  each have separate and  independent
rights and obligations  under this Agreement.  Nothing contained herein shall be
construed as creating,  forming or constituting any partnership,  joint venture,
merger or  consolidation  of the Loan Parties and the Bank for any purpose or in
any  respect.  Nothing in this  Agreement,  express or  implied,  is intended to
confer  upon any Person  other  than the  parties  hereto  and their  respective
successors  and  assigns  any  rights  and  remedies  under or by reason of this
Agreement.

         9.12 Governing  Law;  Venue.  This  Agreement  shall be governed by and
construed in accordance with the laws of the State of Colorado without regard to
principles of conflict of laws.

                                       35
<PAGE>

         9.13  Survival  of  Warranties.  All  agreements,  representations  and
warranties  made  herein  shall  survive  the  execution  and  delivery  of this
Agreement and of the Loan  Documents and the extension of the Loan hereunder and
continue in full force and effect until the  Obligations  of Borrower  hereunder
evidenced by the Note have been fully paid and satisfied.

         9.14  Automatic  Acceleration.  Should  there occur an Event of Default
which would, with the giving of notice, the passage of time, or both, constitute
an  Event of  Default  hereunder  and if a  petition  under  the  United  States
Bankruptcy  Code  thereafter  is filed by or against  Borrower  while such event
remains uncured,  all obligations  hereunder shall be automatically  accelerated
and due and payable and the Default  Rate of interest  provided  for in the Note
shall  automatically  apply as of the date of the first  occurrence of the event
which would, with the giving of notice, the passage of time, or both, constitute
an Event of Default,  without  any  notice,  demand or action of any type on the
part of Bank (including any action  evidencing the acceleration or imposition of
the default rate of interest).  The fact that the Bank has,  prior to the filing
of the voluntary  petition under the United States  Bankruptcy  Code, acted in a
manner which is inconsistent with the acceleration and imposition of the default
rate of interest provided for in the Note, shall not constitute a waiver of this
Section 9.13 or estop Bank from asserting or enforcing Bank's rights hereunder.

         9.15 Costs and Expenses.  The Loan Parties shall reimburse Bank for all
reasonable  attorneys'  fees and expenses  incurred by Bank in  connection  with
negotiation,  preparation, approval, review, execution, delivery, amendment, and
modification  of the  Loan and the  enforcement  of  Bank's  rights  under  this
Agreement and each of the other Loan Documents,  including,  without limitation,
reasonable attorneys' fees and reimbursements for trial,  appellate proceedings,
out-of-court  workouts and  settlements  and for enforcement of rights under any
state or federal statute, including,  without limitation,  reasonable attorneys'
fees incurred in bankruptcy  and  insolvency  proceedings  such as in connection
with seeking  relief from stay in a bankruptcy  proceeding  or  negotiating  and
documenting any amendment or  modification  of the Loan or reviewing  subsequent
submission  items  pertaining to the Loan.  The Loan Parties shall pay all costs
incurred by the Bank in negotiation,  preparation,  approval, review, execution,
delivery,  amendment, and modification of the Loan and the enforcing payment and
performance of the Loan,  exercising  rights and remedies of Bank under the Loan
Documents,  or  reviewing  submission  items  pertaining  to the Loan.  The Loan
Parties' reimbursement obligation shall be part of the indebtedness evidenced by
the Loan Documents.

         9.16 Severability; Titles. If any provision of this Agreement or of any
other Loan  Document  executed in  connection  with this  Agreement  is, for any
reason and to any extent,  invalid or unenforceable,  then neither the remainder
of the Loan Document in which such provision is contained, or the application of
the  provision  to other  persons,  entities  or  circumstances,  nor any  other
document referred to in this Agreement,  shall be affected by such invalidity or
unenforceability,  and there  shall be deemed  substituted  for the  invalid  or
unenforceable  provision  the most  similar  provision  which would be valid and
enforceable under applicable law.

                                       36
<PAGE>

         9.17 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which shall constitute the same
document.

         9.18  Waiver  of  Rights.  In  order to  avoid  delays  in time and any
prejudice that may arise from trial by jury and in light of the  complexities of
this transaction,  in the event of litigation arising out of or relating to this
Loan  Agreement,  the Note  and/or the other Loan  Documents,  and/or in any way
connected with or related or incidental to the dealings of the parties hereto or
any of them with respect to this Loan Agreement, the other Loan Documents and/or
any other instrument,  document or agreement executed or delivered in connection
herewith,  or the transaction  related hereto or thereto,  in each case, whether
sounding in contract, tort or otherwise, Bank, each Guarantor and Borrower, with
the prior advice of counsel,  knowingly,  intelligently  and as a bargained  for
matter,  waives its right to trial by jury and agree and consent that any claim,
demand, action or cause of action in respect to such litigation shall be decided
by a trial to the court without a jury.

         The written Loan Documents represent the final agreement by and between
the parties and may not be contradicted by evidence of prior, contemporaneous or
subsequent  oral  agreements  of  the  parties.  There  are  no  unwritten  oral
agreements of the parties.

         IN WITNESS  WHEREOF,  Borrower,  Guarantor  and Bank have executed this
Agreement  as of the  date  first  written  above  by  and  through  their  duly
authorized representatives.

                                      BANK:

                                      U.S. BANK NATIONAL ASSOCIATION


                                      By: /s/ Chris Taylor
                                          --------------------------------------
                                          Chris Taylor, Vice President




                                       37
<PAGE>






                                      BORROWER:

                                      AIOP LOST DUTCHMAN NOTES, L.L.C., a
                                      Delaware limited liability company

                                      BY: ASSET INVESTORS OPERATING PARTNERSHIP,
                                          L.P.,  a Delaware limited partnership,
                                          Sole Member and Manager

                                           BY: ASSET  INVESTORS  CORPORATION,  a
                                               Maryland corporation, General 
                                               Partner


                                               By: /s/David M. Becker
                                                  ------------------------------
                                               Name:  David M. Becker
                                               Title:  Chief Financial Officer


                                      GUARANTORS:

                                      ASSET INVESTORS OPERATING PARTNERSHIP, 
                                      L.P., a  Delaware limited partnership

                                           BY: ASSET  INVESTORS  CORPORATION, a
                                               Maryland corporation, General 
                                               Partner


                                               By: /s/David M. Becker
                                                  ------------------------------
                                               Name:  David M. Becker
                                               Title:  Chief Financial Officer


                                      ASSET INVESTORS CORPORATION, a Maryland
                                      corporation

                                      By:  /s/ David M. Becker
                                          --------------------------------------
                                      Name:  David M. Becker                    
                                      Title:  Chief Financial Officer           



                                       38