<PAGE>


                                                                   Exhibit 10.35


               MODIFICATION TO LOAN AGREEMENT AND OTHER DOCUMENTS

         This Modification to Loan Agreement and Other Documents (this
"MODIFICATION"), dated as of December 20, 1999, is made by and among BURNHAM
PACIFIC OPERATING PARTNERSHIP, L.P., a Delaware limited partnership ("BPOP"),
BPP/Cameron Park, L.P., a California limited partnership and BPP/RILEY, L.P., a
California limited partnership (each, individually, a "BORROWER" and
collectively, "BORROWERS"), BURNHAM PACIFIC PROPERTIES, INC., a Maryland
corporation ("BPPI", and together with Borrowers, each, individually, a "LOAN
PARTY" and collectively, the "LOAN PARTIES"), and CMF CAPITAL COMPANY, LLC, a
Delaware limited liability company ("CMF"), successor-in-interest to General
Electric Capital Corporation, as Administrative Agent for the Lenders (as
hereinafter defined, and in such capacity, together with its successors and
assigns in such capacity, the "ADMINISTRATIVE AGENT") and the Lender.

                                R E C I T A L S :

         WHEREAS, Borrowers have (i) executed and delivered to the
Administrative Agent that certain Loan Agreement (the "ORIGINAL LOAN AGREEMENT";
capitalized terms used but not otherwise defined herein shall have the meanings
set forth in the Original Loan Agreement, as amended hereby), dated as of
November 19, 1999, among Borrowers, as borrowers, the Administrative Agent, as
administrative agent for itself and certain financial institutions signatory
thereto, as lenders (the "LENDERS") and the Lenders, pursuant to which the
Lenders have agreed to make certain loans (the "LOANS") to Borrowers, and (ii)
executed and delivered to each applicable Lender, Revolving Loan Notes (the
"ORIGINAL REVOLVING LOAN NOTES") and Term Loan Notes (the "ORIGINAL TERM LOAN
NOTES"), as the case may be, in the aggregate principal amount of $202,800,000
evidencing the Loans (collectively, the "ORIGINAL NOTES");

         WHEREAS, as additional security for the Loans, Burnham Pacific
Employees LLC, a Delaware limited liability company ("BPE"), BPAC Texas, Inc., a
Delaware corporation ("BPAC TEXAS", and together with BPE, individually, a "JV
PLEDGOR" and collectively, the "JV PLEDGORS") have executed and delivered to the
Administrative Agent that certain Pledge and Security Agreement (the "JV PLEDGE
AGREEMENT"), dated as of November 19, 1999, pursuant to which, among other
things, the JV Pledgors have granted to the Administrative Agent (on behalf of
the Lenders), a security interest in each JV Pledgor's rights to receive
distributions and proceeds from BPP Retail, LLC, a Delaware limited liability
company ("BPP RETAIL") and BPAC Texas GP, LLC, a Delaware limited liability
company ("BPAC TEXAS GP", and together with BPP Retail, the "JV ENTITIES");

         WHEREAS, as additional security for the Loans, BPOP and J. David
Martin, Daniel B. Platt, Joseph W. Byrne, James W. Gaube and Scott C. Verges
(collectively, the "KEY PERSONNEL" and together with BPOP, individually, a "BPE
PLEDGOR" and collectively, the "BPE


<PAGE>


PLEDGORS"), have executed and delivered to the Administrative Agent that certain
Pledge and Security Agreement (the "BPE PLEDGE AGREEMENT"), dated as of November
19, 1999, pursuant to which, among other things, the BPE Pledgors have granted
to the Administrative Agent (on behalf of the Lenders), a security interest in
all of the right, title and interest of each BPE Pledgor as a member or manager,
as the case may be, of BPE;

         WHEREAS, as additional security for the Loans, BPOP and BPPI (each,
individually, a "P&V PLEDGOR" and collectively, the "P&V PLEDGORS") have
executed and delivered to the Administrative Agent that certain Pledge and
Security Agreement (the "P&V SALE PLEDGE AGREEMENT"), dated as of November 19,
1999, pursuant to which, among other things, the P&V Pledgors have granted to
the Administrative Agent (on behalf of the Lenders), a security interest in each
P&V Pledgor's rights to receive, directly or indirectly, distributions and
proceeds from the P&V Owners and from the sale of the P&V Sale Properties;

         WHEREAS, in order to induce the Lenders to make the Loans, the JV
Pledgors executed and delivered to the Administrative Agent that certain
Guaranty Agreement (the "JV GUARANTY"), dated as of November 19, 1999, pursuant
to which, among other things, the JV Pledgors guaranteed on a nonrecourse basis,
all of Borrowers' obligations and liabilities under the Original Loan Agreement,
Original Notes and other Loan Documents;

         WHEREAS, in order to induce the Lenders to make the Loans, BPPI
executed and delivered to the Administrative Agent that certain Guaranty
Agreement (the "BPPI GUARANTY", and together with the JV Guaranty, the
"GUARANTIES"), dated as of November 19, 1999, pursuant to which, among other
things, BPPI guaranteed on a recourse basis, all of Borrowers' obligations and
liabilities under the Original Loan Agreement, Original Notes and other Loan
Documents;

         WHEREAS, Borrowers have informed the Lenders and the Administrative
Agent that BPP Retail desires to amend its operating agreement pursuant to a
certain Second Amendment to Operating Agreement (the "AMENDMENT"), dated as of
December 15, 1999, between the State of California Public Employees' Retirement
System and BPE, pursuant to which, among other things, (a) BPE's Percentage
Interest (as defined in the Operating Agreement) in BPP Retail shall be
decreased to 1%, (b) BPE shall transfer to BPOP all of its right, title and
interest with respect to the shopping center commonly known as Bell Gardens
located in the City of Bell Gardens, California (the "BELL GARDENS PROJECT") and
(c) BPP Retail shall make certain cash distributions to BPE (the "CASH
DISTRIBUTION");

         WHEREAS, subject to the terms and provisions of this Modification,
Borrowers desire to paydown the outstanding principal balance of the Revolving
Loans and a portion of the outstanding principal balance of the Term Loans
concurrently with the receipt of the proceeds of such Cash Distribution (the
"PREPAYMENT");

         WHEREAS, Borrowers and Lender desire to amend the Loan Agreement and
the other Loan Documents to reflect such Prepayment and certain other changes;
and


                                       2
<PAGE>


         WHEREAS, in order to induce the Administrative Agent and the Lenders to
enter into this Modification, the Loan Parties have agreed to confirm and ratify
their respective obligations and liabilities under the Loan Documents as amended
hereby.

         NOW, THEREFORE, in consideration of Ten Dollars ($10.00) and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows, effective as of the date
hereof:

     1.  PREPAYMENT; REDUCTION IN TERM LOAN COMMITMENT AND INCREASE IN REVOLVING
LOAN COMMITMENT. (a) On the date hereof, Borrowers shall (i) repay a portion of
the outstanding principal balance of the Term Loans in an amount equal to
$25,000,000 and all interest outstanding thereon (the "TERM LOAN REPAYMENT
AMOUNT") and (ii) repay the entire outstanding principal balance of the
Revolving Loans and all interest outstanding thereon (the "REVOLVING LOAN
PREPAYMENT AMOUNT"). Borrowers covenant that any portion of the Cash
Distribution remaining after application toward the Term Loan Prepayment Amount,
the Revolving Loan Prepayment Amount and any other amounts required to be paid
by Borrowers under this Modification shall be used by Borrowers for working
capital prior to Borrowers requesting any Additional Advances of the Revolving
Loans.

         (b) Notwithstanding anything to the contrary contained in SECTION 2.01
of the Loan Agreement, the maximum aggregate principal amount available under
the Term Loan Commitments is hereby reduced to One Hundred Fifty-One Million Two
Hundred Sixty-Two Thousand Eight Hundred Sixty-Seven Dollars ($151,262,867). On
the date hereof, Borrowers shall execute and deliver to each applicable Lender
making a Term Loan Commitment, an Amended And Restated Term Loan Promissory
Note, dated the date hereof, amending and restating the Original Term Loan Notes
to reflect such permanent reduction in the Term Loan Commitments.
Notwithstanding anything to the contrary contained in SECTION 2.01 of the Loan
Agreement, but subject to Part E of SCHEDULE 2.1 of the Loan Agreement, the
maximum aggregate principal amount available under the Revolving Loan
Commitments is hereby increased from Twenty Million Dollars ($20,000,000) to
Twenty-Five Million Dollars ($25,000,000). On the date hereof, Borrowers shall
execute and deliver to each applicable Lender making a Revolving Loan
Commitment, an Amended and Restated Revolving Loan Promissory Note, dated the
date hereof, amending and restating the Original Revolving Loan Note to reflect
such increase in the Revolving Loan Commitments.

         (c) The Administrative Agent and the Lenders acknowledge and agree that
the Borrowers shall not be required to pay the repayment fee in the amount of
 .6% of the outstanding principal balance of the Loans set forth in SECTION
2.03(4) of the Credit Agreement in connection with the Prepayment.

     2.  ACQUISITION OF BELL GARDENS PROJECT. (a) Concurrently herewith, BPP
Retail shall transfer to BPOP all of its right, title and interest in the Bell
Gardens Project. Within a reasonable period of time after the date hereof, but
in no event later than February 29, 2000 (the "BELL GARDENS OUTSIDE CLOSING
DATE"), Borrowers shall (i) satisfy all of the conditions, deliveries


                                       3
<PAGE>


and requests set forth on SCHEDULE 1 attached hereto with respect to the Bell
Gardens Project (the "BELL GARDENS CLOSING CONDITIONS") as determined by the
Administrative Agent (ii) execute and deliver to the Administrative Agent (on
behalf of the Lenders) to further evidence or secure or to otherwise support the
Loans, (A) a leasehold deed of trust, security agreement and fixture filing, in
form and substance similar to the Mortgages and constituting a Lien encumbering
BPOP's leasehold estate in the Bell Gardens Project (the "BELL GARDENS
MORTGAGE"), (B) an assignment of rents and leases, in form and substance similar
to the Assignment of Rents and pertaining to leases or subleases of space at the
Bell Gardens Project (the "BELL GARDENS ASSIGNMENT OF RENTS"), (C) an assignment
of contracts, licenses, permits, agreements, warranties and approvals, in form
and substance similar to the Assignments of Contracts and pertaining to an
assignment of all of BPOP's right, title and benefits under and otherwise
pertaining to any third party management agreement and all other operating and
service agreements, license agreements, permits (including, building and
occupancy permits), approvals, operating contracts, trade names, signage
agreements and all service, supply and maintenance contracts relating to the
Bell Gardens Project, unless prohibited by law, (D) a hazardous materials
indemnity agreement, in form and substance similar to the Hazardous Materials
Indemnity, (E) such other documents, instruments, certificates, assignments or
financing statements, requested by the Administrative Agent in order to further
evidence and secure the Loans or to protect any Liens or other security granted
to the Administrative Agent and the Lenders with respect to the Bell Gardens
Project and any other Project, and (F) amendments to the Loan Documents as
necessary or appropriate in connection with the addition of the Bell Gardens
Project as security for the Loans, including, without limitation, an amendment
to SCHEDULE 3 to the Loan Agreement to provide for an "Allocated Loan Amount"
for the Bell Gardens Project as determined by the Administrative Agent. All
documents required to be delivered under this paragraph (collectively, the "BELL
GARDENS CLOSING DOCUMENTS") shall be subject to the approval of the
Administrative Agent. In addition, based on its due diligence review (including
the review of any materials or deliveries set forth on SCHEDULE 1 attached
hereto) and underwriting of the Bell Gardens Project, the Administrative Agent
(on behalf of the Lenders) shall have the right to require the Borrowers to make
such additional representations, warranties and/or covenants as it may require,
or impose such additional conditions, deliveries and requirements in connection
with the addition of the Bell Gardens Project as additional security for the
Loans. All determinations, requirements and approvals made by the Administrative
Agent and the Lenders under this paragraph shall be made in the sole discretion
of the Administrative Agent and the Lenders.

         (b) Section E of SCHEDULE 2.1 of the Loan Agreement is hereby deleted
in its entirety and replaced with the following:

                     "PART E. UNSATISFIED CLOSING CONDITIONS

                  The maximum aggregate outstanding principal amount of the
         Revolving Loans shall not exceed $13,397,496 until satisfaction of the
         following conditions to the satisfaction of Administrative Agent in its
         sole discretion. Subject to paragraphs 3 and 4 below, the maximum
         outstanding amount under the Revolving Loans shall increase by the
         holdback amounts (each, a "HOLDBACK AMOUNT") indicated in the following
         conditions


                                       4
<PAGE>


         upon satisfaction thereof; provided, however, that in no event shall
         the aggregate principal amount outstanding for the Revolving Loans at
         any time exceed $25,000,000. For any conditions that have not been
         satisfied prior to the date that is 6 months after the date hereof, the
         maximum availability under the Revolving Loans shall be reduced
         permanently by the applicable Holdback Amount set forth below.

                  1. Receipt by Administrative Agent of estoppel certificates
         from the landlords under the following Leasehold Property Leases and
         from the subtenants for the Projects described under clauses (b)
         through (d) below:

                           (a)      Mission Plaza. Holdback Amount: $2,841,474

                           (b)      Ernst-Bear Creek. Holdback Amount:
                                    $2,091,882

                           (c)      Ernst-James Village. Holdback Amount:
                                    $1,133,103

                           (d)      Ernst-Brickyard. Holdback Amount: $536,045

                  2. With respect to the Hilltop Plaza Project, receipt by
         Administrative Agent of satisfactory evidence in its sole discretion
         (i) that a lease with a cinema tenant has been fully executed and (ii)
         that the tenant under the Barnes and Noble Lease has entered into a
         written waiver of (A) the cotenancy covenants with respect to the
         cinema tenant and (B) the covenant giving the tenant the right to
         terminate its lease if it does not earn revenues from operations at the
         site of over $4,000,000 in the third year after the commencement date.
         Holdback Amount: $5,000,000.

                  3. In the event that the Administrative Agent (on behalf of
         the Lenders) determines in its sole discretion (a) in accordance with
         the Administrative Agent's customary underwriting practices in effect
         at the time of such determination for assets similar to the Bell
         Gardens Project, that the value of the Bell Gardens Project is at least
         $10,000,000 and (b) the Bell Gardens Closing Conditions and any other
         additional requirements, conditions and deliveries required by the
         Administrative Agent in its sole discretion as a result of its
         underwriting or due diligence review of the Bell Gardens Project
         (including, without limitation, the delivery of the Bell Gardens
         Closing Documents) have been satisfied by the Borrowers by the Bell
         Gardens Outside Closing Date, the maximum outstanding amount under the
         Revolving Loans shall increase by an amount equal to 50% of the
         Holdback Amounts remaining at such time, on a property by property
         basis. Notwithstanding anything to the contrary set forth in this
         Section E, in the event that (x) the Administrative Agent determines in
         its sole discretion (in accordance with the Administrative Agent's
         customary underwriting practices in effect at the time of such
         determination for assets similar to the Bell Gardens Project) that the
         value of the Bell Gardens Project is less than $10,000,000 or (y) the
         Bell Gardens Project is not included as additional collateral for the
         Loans by the Bell Gardens Outside Closing Date,


                                       5
<PAGE>


         the maximum availability under the Revolving Loans shall be reduced
         permanently by $5,801,252.

                  4. Until such time as the Administrative Agent determines in
         its sole discretion (in accordance with the Administrative Agent's
         customary underwriting practices in effect at the time of such
         determination for assets similar to the Bell Gardens Project) that the
         value of the Bell Gardens Project is greater than $10,000,000 and the
         Bell Gardens Closing Conditions and any other additional requirements,
         conditions and deliveries required by the Administrative Agent in its
         sole discretion as a result of its underwriting or due diligence review
         of the Bell Gardens Project (including, without limitation, the
         delivery of the Bell Gardens Closing Documents) have been satisfied by
         the Borrowers, notwithstanding any contrary provision of this Section
         E, upon the satisfaction of the applicable conditions for release set
         forth in paragraphs 1 and 2 above, the maximum outstanding amount under
         the Revolving Loans shall only be increased by 50% of the applicable
         Holdback Amount with respect to any Project described in paragraphs 1
         or 2 above.

         (c) Without limiting the provisions of paragraph 2(a) above, the Bell
Gardens Mortgage shall be cross-defaulted and cross-collateralized with all
other Mortgages previously executed or hereafter made by any Borrower in favor
of the Administrative Agent (on behalf of the Lenders) in connection with the
Loans and the Bell Gardens Assignment of Rents shall be cross-defaulted and
cross-collateralized with all other Assignments of Rents and Leases previously
executed or hereafter made by any Borrower in favor of the Administrative Agent
(on behalf of the Lenders) in connection with the Loans.

     3.  TERMINATION OF JV COLLATERAL. Subject to the satisfaction of the
Modification Conditions, from and after the date hereof, the JV Pledge Agreement
and JV Guaranty shall be terminated and of no further force and effect and the
JV Pledgors shall be released of all liability and obligation thereunder except
as otherwise expressly set forth therein. Subject to the satisfaction of the
Modification Conditions, from and after the date hereof, the BPE Pledge
Agreement shall be terminated and of no further force and effect and the BPE
Pledgors shall be released of all liability and obligation thereunder except as
otherwise expressly set forth therein.

     4.  MODIFICATION CONDITIONS. This Modification shall not become effective
until the date on which all of the following conditions are satisfied in the
sole discretion of the Administrative Agent (collectively, THE "MODIFICATION
CONDITIONS"):

                  (a)      The Administrative Agent shall have received from
                           each Loan Party that is a party thereto executed
                           counterparts of this Modification, and, with respect
                           to each Project, and in recordable form, the
                           Modification of Deeds of Trust (hereafter defined)
                           and the Modification of Assignments of Rents
                           (hereafter defined).


                                       6
<PAGE>


                  (b)      Borrowers' payment to the Administrative Agent of (i)
                           the Revolving Loan Prepayment Amount and the Term
                           Loan Prepayment Amount, together with any LIBOR
                           breakage costs, (ii) the Unused Line Fee due and
                           payable pursuant to the terms and provisions of
                           SECTION 2.03(4) of the Loan Agreement for the portion
                           of the calendar quarter in which such prepayment
                           occurs and (iii) all reasonable costs and expenses of
                           the Administrative Agent and the Lenders in
                           connection with, or arising out of the negotiation,
                           execution and delivery of this Modification
                           (including the reasonable fees and expenses of
                           counsel) and the consummation of the transactions
                           contemplated by this Modification (including all
                           title insurance charges and recording fees).

                  (c)      The Borrowers shall deliver to the Administrative
                           Agent (on behalf of the Lenders) such endorsements to
                           the existing Title Policies and amendments to the
                           Loan Documents as the Administrative Agent may
                           reasonably request to protect its interests or to
                           confirm the validity and priority of the Mortgages
                           and any other Liens or collateral granted to
                           Administrative Agent (on behalf of the Lenders) in
                           connection with the Loans.

                  (d)      The Administrative Agent shall have determined to its
                           satisfaction (provided, however, that such
                           determination shall be consistent with, and similar
                           in substance to, the determination of such
                           calculation as of the date of the Loan Agreement)
                           that the Projects generate an annualized Net
                           Operating Income sufficient to produce (a) an
                           aggregate Cash on Cash Return of at least 12%; (b) an
                           aggregate Debt Service Coverage of at least 1.25 to
                           1.00 and (c) a Portfolio LTV equal to, or less than,
                           77%.

                  (e)      The Administrative Agent shall have determined to its
                           satisfaction (provided, however, that such
                           determination shall be consistent with, and similar
                           in substance to, the determination of such
                           calculation as of the date of the Loan Agreement)
                           that the REIT Net Cash Flow Test and the REIT Net
                           Worth Test have been satisfied as of the date of this
                           Modification.

                  (f)      No event of default (or any event or condition which,
                           with the giving of notice, the passage of time or
                           both, would constitute an event of default) under the
                           Chase Loan Facility has occurred and is continuing.

                  (g)      The delivery by Borrowers to the Administrative Agent
                           of evidence satisfactory to the Administrative Agent
                           that the lenders under the Chase Loan Facility have
                           consented to the Amendment.

                  (h)      The Administrative Agent shall have received such
                           other documents and certificates (including opinions
                           from counsel to the Loan Parties) as the
                           Administrative Agent or its counsel may reasonably
                           request relating to the


                                       7
<PAGE>


                           organization, existence and good standing of the Loan
                           Parties, the continued enforceability of the Loan
                           Documents as modified by this Modification, the
                           authorization of this Modification or the
                           consummation of the transactions described therein
                           and herein, all in form reasonably satisfactory to
                           the Administrative Agent.

By entering into this Modification, each Loan Party shall be deemed to represent
and warrant on the date hereof that each of the Modification Conditions has been
satisfied.

         5.  DEFINED TERMS; ADDITIONAL AMENDMENTS.

             5.1 The following definitions are hereby added and made a part of
SECTION 1.01 of the Loan Agreement:

             "Modification of Deeds of Trust" means those certain Modification
to Deeds of Trust, Security Agreement and Fixture Filing and Modification to
Leasehold Deeds of Trust, Security Agreement and Fixture Filing, dated as of
December 15, 1999, executed by the applicable Borrower in favor of the
Administrative Agent (on behalf of the Lenders), together with all future
amendments, modifications and supplements thereto."

             "Modification of Assignments of Rents" means those certain
Modification to Assignments of Rents and Leases and Modification to Assignment
of Rents and Subleases, dated as of December 15, 1999, executed by the
applicable Borrower in favor of the Administrative Agent (on behalf of the
Lenders), together with all future amendments, modifications and supplements
thereto."

             5.2 From and after the date hereof, the definition of "Mortgages"
shall be amended to refer to the Mortgages as amended by the applicable
Modification of Deeds of Trust.

             5.3 From and after the date hereof, the definition of "Assignments
of Rents and Leases" shall be amended to refer to the Assignments of Rents and
Leases as amended by the applicable Modification of Assignments of Rents.

             5.4 The following definitions shall be deleted in their entirety
from SECTION 1.01 of the Loan Agreement and all references to such terms in the
Loan Agreement and any other Loan Documents shall be amended accordingly to
reflect such deletion: "BPE", "JV Book Value", "JV Entities", "JV Pledge
Agreement", "JV Properties", "Key Personnel".

             5.5 The last sentence in the definition of "Revolving Loan
Commitment" set forth in SECTION 1.01 of the Loan Agreement is hereby deleted in
its entirety and replaced with the following: "The initial aggregate principal
amount of the Revolving Loan Commitments is $25,000,000."

             5.6 The last sentence in the definition of "Term Loan Commitment"
set forth in Section 1.01 of the Loan Agreement is hereby deleted in its
entirety and replaced with the


                                       8
<PAGE>


following: "The initial aggregate principal amount of the Term Loan Commitments
is $151,262,867."

             5.7 The definition of "Maximum Loan Amount" is hereby deleted in
its entirety and replaced with the following:

             "MAXIMUM LOAN AMOUNT" means $176,262,867.

             5.8 SECTION 2.01(2)(a) of the Loan Agreement is hereby deleted in
its entirety and replaced with the following:

             "(a) An amount equal to interest to accrue at the rate of 7.94% per
annum for the period commencing on the Closing Date to the first Business Day of
the next succeeding month, plus all other sums owing to the Lenders and the
Administrative described in Part A of SCHEDULE 2.1 attached hereto, shall be
disbursed to the Lenders and the Administrative Agent in payment of such sums."

             5.9 SECTION 2.01(6)(e) of the Loan Agreement shall be deleted in
its entirety and replaced with the following:

             "(e) The Administrative Agent (on behalf of the Lenders) shall have
determined to its satisfaction (provided, however, that such determination shall
be consistent with, and similar in substance to, the determination of such
funding criteria calculations as of the date of this Agreement) based on
information and documentation provided by the Borrowers to the Administrative
Agent (on behalf of the Lenders) at least five (5) Business Days prior to the
proposed date of the funding of the requested Additional Advance that after
giving effect to such Additional Advance, the Projects will generate an
annualized Net Operating Income sufficient to produce (i) an aggregate Cash on
Cash Return of at least 12%, (ii) an aggregate Debt Service Coverage of at least
1.50 to 1.00 (or, with respect to Additional Advances of the Revolving Loans,
1.25 to 1.00) and (iii) a Portfolio LTV equal to, or less than, 77%, in each
case, calculated based on the assumption that (x) with respect to any Advance
made prior to the occurrence of any Partial Release pursuant to SECTION 2.04
hereof, the full amount of the Loans have been disbursed and are outstanding,
less any undisbursed amounts allocated to phase II of the Fremont Additional
Advance (as more particularly described on the Budget) and/or SCHEDULE 5 annexed
hereto, and (y) with respect to any Advance made after the occurrence of a
Partial Release pursuant to SECTION 2.04 hereof, the Required Release Paydown
Amount has not been paid and is outstanding; provided, however, that for the
purposes of determining satisfaction of this condition, but not for the purposes
of determining satisfaction of the condition set forth in Paragraph C.4 of
SCHEDULE 2.1, the parties shall use the annualized Net Operating Income
determined as of the end of the most recently ended fiscal quarter."

             5.10 SECTION 2.04(a)(4) of the Loan Agreement is hereby deleted in
its entirety and replaced with the following:


                                       9
<PAGE>


             "(4) The Administrative Agent shall have determined to its
satisfaction (provided, however, that such determination shall be consistent
with, and similar in substance to, the determination of such calculations as of
the date of this Agreement) that after giving effect to such Partial Release,
the Projects will generate an annualized Net Operating Income sufficient to
produce (a) an aggregate Cash on Cash Return of at least 12%, (b) an aggregate
Debt Service Coverage of at least 1.50 to 1.00 and (c) a Portfolio LTV equal to,
or less than, 77%, in each case, calculated based on the assumption that, (i)
with respect to the first Partial Release made pursuant to this SECTION 2.04,
the full amount of the Loans have been disbursed (less any amounts allocated to
phase II of the Fremont Additional Advance) and (ii) with respect to all other
Partial Releases, the Required Release Paydown Amount with respect to such
Partial Release has not been paid and is outstanding;"

             5.11 Clause (d) of SECTION 3.02(2) is hereby deleted in its
entirety and replaced with the following:

         "(d) the Administrative Agent determines (based on leases which will
         remain in effect after restoration is complete) that after restoration
         (i) the Debt Service Coverage for the Projects will be at least equal
         to 1.50 to 1.00, (ii) the Cash on Cash Return for the Projects will be
         at least equal to 12% and (iii) the Portfolio LTV is equal to, or less
         than, 77%;"

             5.12 SECTION 7.11 of the Loan Agreement is hereby deleted in its
entirety and replaced with the following:

             "Section 7.11 PORTFOLIO COVENANTS. With respect to the Projects, as
of the end of each fiscal quarter (i) the Debt Service Coverage shall be at
least 1.25 to 1.00, (ii) the Cash on Cash Return shall be at least 12% and (iii)
the Portfolio LTV shall be equal to, or less than, 77%, in each case, as
determined by Administrative Agent (on behalf of the Lenders)."

             5.13 SECTION 7.12 of the Loan Agreement is hereby deleted in its
entirety.

             5.14 Paragraph C.4 of SCHEDULE 2.1 to the Loan Agreement is hereby
amended to delete the references to the phrase "eleven percent (11%)" and
substitute in lieu thereof the phrase "twelve percent (12%)."

             5.15 The Borrowers and the Lenders acknowledge and agree that
subject to the satisfaction of the Modification Conditions, SCHEDULE 3 to the
Loan Agreement is hereby deleted in its entirety and replaced with the schedule
attached hereto as SCHEDULE 3. From and after the date hereof, the term
"Allocated Loan Amount" as used in the Loan Agreement shall mean the Loan
amounts as set forth in the schedule attached to this Modification as SCHEDULE
3.

             5.16 EXHIBIT A-1 to the Loan Agreement is hereby deleted in its
entirety and replaced with the schedule attached hereto as EXHIBIT A-1.

             5.17 EXHIBIT A-2 to the Loan Agreement is hereby deleted in its
entirety.


                                       10
<PAGE>


     6.  COVENANTS, REPRESENTATIONS AND WARRANTIES OF LOAN PARTIES.

         6.1 Each Loan Party hereby represents and warrants to the
Administrative Agent and the Lenders that (a) it has the legal power and
authority to enter into this Modification without consent or approval by any
third party and this Modification constitutes the legal, valid and binding
obligation of such Loan Party, enforceable against such Loan Party in accordance
with its terms, and (b) the execution and delivery by such Loan Party of this
Modification has been duly authorized by all requisite limited liability
company, partnership or corporate action, as the case may be, on the part of
such Loan Party, will not violate any provision of such Loan Party's
organizational documents, as applicable, does not contravene any law, rule or
regulation applicable to it or violate or create a default under any contractual
provision binding on it or affecting it or any of its properties or assets, and
(c) no consent of any Person is required in connection with the execution,
delivery and performance by the Loan Parties of this Modification (other than
any consents that have been obtained and are in full force and effect).

         6.2 Each Loan Party hereby represents and warrants to the
Administrative Agent and the Lenders that, as of the date hereof, (a) no
Potential Default or Event of Default has occurred and is continuing under any
applicable Loan Document executed by such Loan Party, (b) no Potential Default
or Event of Default will occur as a result of the execution, delivery and
performance by such Loan Party of this Modification, the Modification of Deeds
of Trust or Modification of Assignments of Rents to which such Loan Party is a
party, as applicable, (c) such Loan Party has not given any notice of any
uncured Potential Default to the Administrative Agent or any Lender, (d) there
are no legal proceedings commenced or threatened against the Administrative
Agent or any Lender by such Loan Party.

         6.3 Each Loan Party hereby confirms and acknowledges that such Loan
Party has no offsets, defenses, claims, counterclaims, setoffs, or other basis
for reduction with respect to any of Borrowers' indebtedness to the Lenders
under the Loans or any obligations or liabilities of such Loan Party to the
Administrative Agent and the Lenders under any Loan Document executed by such
Loan Party. Each Loan Party hereby confirms and acknowledges that all
representations and warranties made by such Loan Party in the Loan Documents to
which such Loan Party is a party to, are true and correct in all material
respects on and as of the date of this Modification.

         6.4 Each Borrower hereby agrees that a breach of any of the
representations warranties and covenants made herein (including, without
limitation, the covenants set forth in SECTION 3 hereof) shall constitute an
Event of Default under ARTICLE 9 of the Loan Agreement, subject to the notice
and cure provisions provided therein.

     7.  EFFECT UPON LOAN DOCUMENTS.

         7.1 Except as specifically set forth herein, the Loan Agreement and
Loan Documents shall remain in full force and effect and are hereby ratified and
confirmed by each applicable Loan Party signatory thereto. The parties hereto
acknowledge and agree that the


                                       11
<PAGE>


Original Loan Agreement, as hereby amended, is in full force and effect in
accordance with its terms and has not been supplemented, modified or otherwise
amended, canceled, terminated or surrendered, except pursuant to this
Modification. The Loan Agreement is binding and enforceable as against the
parties thereto in accordance with its terms. All references to the "Loan
Agreement" in the Loan Documents and to "this Agreement" in the Original Loan
Agreement shall mean and refer to the Original Loan Agreement as modified and
amended hereby.

         7.2 The execution, delivery and effectiveness of this Modification
shall not operate as a waiver of any right, power or remedy of the
Administrative Agent or the Lenders under the Loan Documents (except to the
extent expressly set forth herein), or any other document, instrument or
agreement executed and/or delivered in connection therewith.

     8.  GOVERNING LAW.

         8.1 THIS MODIFICATION SHALL BE CONSTRUED, INTERPRETED AND GOVERNED BY
THE LAW OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAWS
PRINCIPLES.

     9.  COUNTERPARTS.

         9.1 This Modification may be executed in any number of counterparts,
and all such counterparts shall together constitute the same agreement.

                     SIGNATURES COMMENCE ON FOLLOWING PAGE.


                                       12
<PAGE>


                  IN WITNESS WHEREOF, the parties hereto have caused this
Modification to be executed as of the day and year first above written.

                                 BURNHAM PACIFIC OPERATING
                                 PARTNERSHIP, L.P.,
                                 a Delaware limited partnership

                                 By: BURNHAM PACIFIC PROPERTIES,
                                      INC., a Maryland corporation,
                                      its general partner



                                      By:
                                         --------------------------------------
                                         Name:
                                         Title:



                                 BPP/CAMERON PARK, L.P.,
                                 a California limited partnership

                                 By: BURNHAM PACIFIC OPERATING
                                      PARTNERSHIP, L.P., a Delaware limited
                                      partnership, its managing member

                                      By:  BURNHAM PACIFIC PROPERTIES,
                                           INC., a Maryland corporation, its
                                           general partner



                                            By:
                                               --------------------------------
                                            Name:
                                            Title:


                                       13
<PAGE>


                                  BPP/RILEY, L.P.,
                                  a California limited partnership

                                  By: BURNHAM PACIFIC OPERATING
                                       PARTNERSHIP, L.P., a Delaware
                                       limited partnership, its general partner

                                       By:  BURNHAM PACIFIC PROPERTIES,
                                             INC., a Maryland
                                             corporation, its general partner


                                            By:
                                               ------------------------------
                                            Name:
                                               Title:


                                  BURNHAM PACIFIC PROPERTIES, INC., a
                                    Maryland corporation


                                  By:
                                     ------------------------------
                                      Name:
                                      Title:


                                  CMF CAPITAL COMPANY, LLC, a Delaware
                                      limited liability company, as
                                      Administrative Agent for the Lenders and
                                      as Lender


                                  By:
                                     --------------------------------
                                      Name:
                                      Title:


                                       14

<PAGE>


                                   SCHEDULE 1

                         Bell Gardens Closing Conditions

At Borrowers' sole cost and expense, Borrowers shall cause each of the following
to be executed, delivered, prepared, confirmed or issued to the Administrative
Agent (on behalf of the Lenders), each in form and content satisfactory to the
Administrative Agent (on behalf of the Lenders) in its sole discretion (unless
otherwise specified to the contrary):

         1. An ALTA (or equivalent) leasehold mortgagee policy of title
insurance in the maximum amount of the Allocated Loan Amount for the Bell
Gardens Project, with reinsurance or co-insurance and such endorsements as the
Administrative Agent may require, containing no exceptions to title (printed or
otherwise) which are unacceptable to the Administrative Agent, and insuring that
the Bell Gardens Mortgage is a first-priority Lien on the Bell Gardens Project
and related collateral. Without limitation, such policy shall (a) be in the 1970
ALTA (as amended 84) form or, if not available, ALTA 1992 form (deleting
arbitration and creditors' rights, if permissible) or, if not available, the
form commonly used in the state where the Bell Gardens Project is located,
insuring the Administrative Agent (on behalf of the Lenders) or any and its
successors and assigns; and (b) include the following endorsements and/or
affirmative coverages: (1) ALTA 9 Comprehensive, (2) Survey, (3) ALTA 3.1 Zoning
(with additional coverage for number and type of parking spaces), (4) Usury, (5)
Doing Business, (6) Access, (7) Separate Tax Lot, (8) Environmental Protection
Lien, (9) Subdivision, (10) Contiguity, (11) Tax Deed (as applicable), and (12)
Mortgage Recording Tax (as applicable).

         2. The Administrative Agent shall have received such endorsements to
the existing Title Policies and amendments to the existing Loan Documents as the
Administrative Agent may reasonably request to protect its interests or to
confirm the validity and priority of the Mortgages and any other Liens or
collateral granted to the Administrative Agent (on behalf of the Lenders) in
connection with the Loans.

         3. Documents and certificates evidencing the formation, organization,
valid existence, good standing, and due authorization of each Loan Party.
Evidence of each Loan Parties' qualification to do business in the state where
the Bell Gardens Project is located.

         4. Legal opinions issued by counsel for each Loan Party, opining as to
the due organization, valid existence and good standing of each Loan Party, and
the due authorization, execution, delivery, enforceability and validity of any
loan documents executed by such Loan Party (including any amendments or
modifications to any existing Loan Documents) and such other matters as the
Administrative Agent or its counsel reasonably may request.

         5. Current Uniform Commercial Code searches, and litigation, bankruptcy
and judgment reports as requested by the Administrative Agent, with respect to
the Borrowers, and any Loan Party, their principals, and such other persons
reasonably selected by the Administrative Agent.


                                       17
<PAGE>


         6. Evidence of insurance as required by the Loan Agreement for the Bell
Gardens Project, and conforming in all respects to the requirements of the
Administrative Agent.

         7. A current "as-built" survey of the Bell Gardens Project, dated or
updated to a date not earlier than thirty (30) days prior to the Bell Gardens
Outside Closing Date, certified to the Administrative Agent (on behalf of the
Lenders) and the issuer of the title insurance described in paragraph 1 above,
prepared by a licensed surveyor acceptable to the Administrative Agent and such
title insurance company, and conforming to the Administrative Agent's current
standard survey requirements, which may include certification to additional
participants, co-lenders and/or investors in a Secondary Market Transaction.
Without limitation, the minimum requirements for the survey shall be as set
forth in the 1997 Minimum Standard Detail Requirements for ALTA/ACSM Land Title
Surveys, "Urban Survey" classification, with the following additional items from
Table A, "Optional Survey Responsibilities and Specifications": "2" (vicinity
map showing nearby highway or major intersection), "3" (flood zone designation),
"4" (land area), "6" (setbacks, height and bulk restrictions), "8" (other
visible improvements), "9" (parking areas), "10" (access to public way, driveway
and curb cuts), "11" (utilities), and "13" (other significant observations).
Notwithstanding the foregoing, the Administrative Agent (on behalf of the
Lenders) shall accept the existing survey for the Bell Gardens Project provided
(a) such survey is recertified to the Administrative Agent and its successors
and assigns and the Title Company, (b) the title insurance policy described in
paragraph 1 above shall insure the Administrative Agent (on behalf of the
Lenders) for any state of facts not shown on any survey, (c) any indemnity
delivered by Borrowers to the Title Company with respect to the state of facts
not shown on any survey shall also be delivered to the Administrative Agent (on
behalf of the Lenders), (d) Borrowers shall certify to the Administrative Agent
(on behalf of the Lenders) and its successors and assigns and to the Title
Company that there has been no construction, demolition or other material
modification to the improvements located on the Bell Gardens Project since the
date of such survey other than tenant improvement work or such construction,
demolition or other material modification as to which such certificate shall
contain a detailed description of the nature, location and extent thereof, and
(e) the surveys were prepared by a licensed surveyor and would otherwise be
acceptable to a prudent lender upon the satisfaction of (a)-(d) above.

         8. A current engineering report or architect's certificate with respect
to the Bell Gardens Project, covering, among other matters, inspection of
heating and cooling systems, roof and structural details, showing no failure of
compliance in any material respect with building plans and specifications,
applicable legal requirements (including requirements of the Americans with
Disabilities Act) and fire, safety and health standards and reviewing and
approving, among other matters, soil tests, plans and specifications (including
heating, ventilation and cooling systems, roof and structural details,
mechanical and electrical systems), and compliance with local, state or federal
laws, regulations, codes, ETC., and containing a declaration satisfactory to the
Administrative Agent that there will be no asbestos in the Bell Gardens Project.
The engineer/architect preparing such report or certificate must be satisfied
that the Bell Gardens Project is in compliance with fire, safety and health
standards which such engineer/architect deems reasonable, in addition to
standards imposed by law, regulation or


                                       18
<PAGE>


codes. Such report shall also include an assessment of the Bell Gardens
Project's tolerance for earthquake and seismic activity.

         9. All Appraisals, environmental reports, building condition reports
and Site Assessments delivered to the Lenders with respect to the Bell Gardens
Project shall be certified to the Administrative Agent (on behalf of the Lenders
and their successors and assigns) without modification or change thereto in the
form reasonably requested by the Administrative Agent which may include
certification to additional participants, co-lenders and/or investors in a
Secondary Market Transaction.

         10. A current rent roll for the Bell Gardens Project, certified by the
Borrowers. Such rent roll shall include the following information: (a) tenant
names; (b) unit/suite numbers; (c) area of each demised premises and total area
of such Project (stated in net rentable square feet); (d) rental rate (including
escalations) (stated in gross amount and in amount per net rentable square foot
per year); (e) Lease term (commencement, expiration and renewal options); (f)
expense pass-throughs; (g) cancellation/termination provisions; (h) security
deposit; and (i) material operating covenants and co-tenancy clauses. In
addition, the Borrowers shall provide the Administrative Agent with a copy of
the standard lease form to be used by the Borrowers in leasing space at the Bell
Gardens Project, and, at the Administrative Agent's request, true and correct
copies of all Leases at the Bell Gardens Project. As requested by the
Administrative Agent, the Borrowers shall deliver to the Administrative Agent
for its review (on behalf of the Lenders), copies of all existing Leases and
material service contracts.

         11. A copy of the third-party management agreement for the Bell Gardens
Project, certified by the Borrowers as being true, correct and complete.

         12. The Borrowers' deposit with the Administrative Agent of the amount
required by the Administrative Agent with respect to any maintenance, repairs
and/or remedial or corrective work required to be performed by the
Administrative Agent at the Bell Gardens Project and to fund any other required
escrows or reserves.

         13. Evidence that (a) the Bell Gardens Project and the operation
thereof comply with all legal requirements, including that all requisite
certificates of occupancy, building permits, and other licenses, certificates,
approvals or consents required by any governmental authority have been issued
without variance or condition, (b) following any casualty, the improvements
which form a part of the Bell Gardens Project may be reconstructed and the
current use thereof restored, and (c) that there is no litigation, action,
citation, injunctive proceedings, or like matter pending or threatened with
respect to the validity of such matters. At the Administrative Agent's request,
the Borrowers shall furnish the Administrative Agent with a zoning endorsement
to the Administrative Agent's title insurance policy, zoning letters from
applicable municipal agencies, and utility letters from applicable service
providers.

         14. No change shall have occurred in the financial condition of any
Borrower, or BPPI or in the Net Operating Income of the Projects (including, the
Bell Gardens Project), or


                                       19
<PAGE>


P&V Sale Properties, or in the financial condition of any major or anchor
tenant, which would have, in the Administrative Agent's or any Lender's
judgment, a material adverse effect on any of the Projects or on any Borrower's
or any Borrower Party's ability to repay the Loan or otherwise perform its
obligations under the Loan Documents.

         15. No condemnation or adverse zoning or usage change proceeding shall
have occurred or shall have been threatened against any Project (including the
Bell Gardens Project); no Project (including the Bell Gardens Project) shall
have suffered any significant damage by fire or other casualty which has not
been repaired; no structural change shall have occurred to any of the
improvements located at any Project (including the Bell Gardens Project); no
law, regulation, ordinance, moratorium, injunctive proceeding, restriction,
litigation, action, citation or similar proceeding or matter shall have been
enacted, adopted, or threatened by any governmental authority, which would have,
in the Administrative Agent's or any Lender's good faith judgment, a material
adverse effect on any Borrower, any Borrower Party or any Project (including the
Bell Gardens Project).

         16. All fees and commissions payable to real estate brokers, mortgage
brokers, or any other brokers or agents in connection with the Amendment or the
acquisition of the Bell Gardens Project by BPOP have been paid, such evidence to
be accompanied by any waivers or indemnifications deemed reasonably necessary by
the Administrative Agent.

         17. Payment of the Administrative Agent's reasonable costs and expenses
in underwriting and documenting the Bell Gardens Project, including reasonable
fees and expenses of the Administrative Agent's inspecting engineers,
consultants, and outside counsel.

         18. Estoppel certificates and subordination, non-disturbance and
attornment agreements (in form and substance satisfactory to the Administrative
Agent) from tenants under Leases of space at the Bell Gardens Project of at
least 10,000 gross leaseable square feet or occupying at least 80% of the gross
leaseable area at such Project. The Borrowers shall deliver to the
Administrative Agent consent and estoppel certificates (in form and substance
satisfactory to the Administrative Agent) from all lessors under any Leasehold
Property Lease covering the Bell Gardens Project.

         19. No Potential Default or Event of Default shall have occurred or
exist including, without limitation any defaults under the Chase Loan Facility.
All such defaults, if any, must be cured to the Administrative Agent's
satisfaction.

         20. The Administrative Agent shall have determined to its satisfaction
that the Projects (including the Bell Gardens Project) generate an annualized
Net Operating Income sufficient to produce (a) an aggregate Cash on Cash Return
of at least 12%; (b) an aggregate Debt Service Coverage of at least 1.25 to 1.00
and (c) a Portfolio LTV equal to, or less than, 77%.


                                       20
<PAGE>


         21. The Administrative Agent shall have determined to its satisfaction
that the REIT Net Cash Flow Test and the REIT Net Worth Test have been satisfied
as of the date of this Modification.












                                       21