Corporate Office Properties Trust – ‘S-4’ on 2/5/98

As of:  Thursday, 2/5/98   ·   Accession #:  1047469-98-3671   ·   File #:  333-45649

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Registration of Securities Issued in a Business-Combination Transaction   —   Form S-4
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: S-4         Registration of Securities Issued in a               148    848K 
                          Business-Combination Transaction                       
 2: EX-4.1      Instrument Defining the Rights of Security Holders     4     14K 
 3: EX-5.1      Opinion re: Legality                                   6     21K 
 4: EX-8.1      Opinion re: Tax Matters                                3     15K 
 9: EX-10.10    Material Contract                                     88    249K 
10: EX-10.11    Material Contract                                     59±   217K 
 5: EX-10.6     Material Contract                                     52    175K 
 6: EX-10.7     Material Contract                                     46    163K 
 7: EX-10.8     Material Contract                                     46    161K 
 8: EX-10.9     Material Contract                                     67    214K 
11: EX-13.1     Annual or Quarterly Report to Security Holders        20    114K 
12: EX-13.2     Annual or Quarterly Report to Security Holders        13     72K 
13: EX-21       List of Subsidiaries                                   1      6K 
14: EX-23.2     Consent of Coopers & Lybrand                           1      9K 
15: EX-99.1     Proxy Card                                             2     11K 

S-4   —   Registration of Securities Issued in a Business-Combination Transaction
Document Table of Contents

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 5, 1998

                                                 REGISTRATION NO. 333-
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------

FORM S-4
REGISTRATION STATEMENT
UNDER 
THE SECURITIES ACT OF 1933
------------------------

CORPORATE OFFICE PROPERTIES TRUST 
(Exact name of Registrant as specified in its charter)

                                                                [Download Table]
                                                                                  
            MARYLAND                         6798                   23-2947217    
(State or other jurisdiction of  (Primary Standard Industrial     (IRS Employer   
 incorporation or organization)  Classification Code Number)   Identification No.)

------------------------

ONE LOGAN SQUARE
SUITE 1105
PHILADELPHIA, PA 19103
(215) 567-1800
(Address, including zip code, and telephone number, including 
area code, of Registrant's principal executive offices) 
------------------------------

CLAY W. HAMLIN, III 
CORPORATE OFFICE PROPERTIES TRUST 
ONE LOGAN SQUARE
SUITE 1105
PHILADELPHIA, PA 19103
(215) 567-1800
(Name, address, including zip code, and telephone number, including 
area code, of agent for service)
------------------------------

COPIES TO:

GERALD TANENBAUM, ESQ.
CAHILL GORDON & REINDEL 
80 PINE STREET
NEW YORK, NY 10005
(212) 701-3000

   APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective and all other   
conditions to the merger (the "Merger") of Corporate Office Properties Trust,   
Inc. (the "Company"), indirectly, with and into the Registrant pursuant to the  
Merger Agreement described herein have been satisfied or are waived.            

If the securities being registered on this Form are being offered in    
connection with the formation of a holding company and there is compliance with 
General Instruction G, check the following box. / /                             

If this Form is filed to register additional securities for an offering 
pursuant to Rule 462(b) under the Securities Act, check the following box and   
list the Securities Act registration statement number of the earlier effective  
registration statement for the same offering. / /...............................

If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act   
registration statement number of the earlier effective registration statement   
for the same offering. / /......................................................

CALCULATION OF REGISTRATION FEE 

                                                        [Enlarge/Download Table]

                                                           AMOUNT                                                          
                                                           TO BE     PROPOSED MAXIMUM   PROPOSED MAXIMUM      AMOUNT OF    
                 TITLE OF EACH CLASS OF                  REGISTERED   OFFERING PRICE       AGGREGATE       REGISTRATION FEE
              SECURITIES TO BE REGISTERED                   (1)        PER UNIT(2)     OFFERING PRICE (2)        (3)       
                                                                                                                           
Common Shares of Beneficial Interest, $0.01 par value                                                                      
  per share............................................. 2,341,083        $10.00           23,410,830         $6,906.19    

(1) The amount of common shares of beneficial interest, $0.01 par value per     
share, of the Registrant (the "Common Shares") to be registered has been
   determined based on the maximum number of shares of common stock, $0.01 par
   value per share, of the Company (the "Common Stock") to be exchanged in the
  Merger, assuming the exercise prior to the effective time of the Merger of
all stock options (whether or not currently exercisable).               

(2) Estimated solely for the purpose of calculating the registration fee in     
 accordance with Rule 457(c) under the Securities Act of 1933, as amended,
 based on the average of the high and low last reported sale prices of the
  Common Stock as reported on the Nasdaq Small Cap Market tier of the Nasdaq
Stock Market on February 3, 1998.                                       

(3) In accordance with Rule 457(b), the total registration fee of $6,906.19 has 
   been reduced by $4,996.52, which was previously paid on January 22, 1998 at
    the time of filing under the Securities Exchange Act of 1934, as amended, of
a preliminary copy of the Company's proxy materials included herein.    
------------------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION       
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF  
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME     
EFFECTIVE ON SUCH DATE AS THE COMMISSION ACTING PURSUANT TO SAID SECTION 8(A),  
MAY DETERMINE.                                                                  

--------------------------------------------------------------------------------
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[COPT LOGO OR LETTERHEAD] 

                                                               February 11, 1998

Dear Shareholder:                                                               

You are cordially invited to attend a Special Meeting of Shareholders of
Corporate Office Properties Trust, Inc., a Minnesota corporation (the           
"Company"), to be held at 10:30 a.m., local time, on March 12, 1998 at Room 803,
Four Seasons Hotel, One Logan Square, Philadelphia, Pennsylvania.               

At the Special Meeting, you will be asked to consider and vote upon a   
proposal to reform the Company (the "Reformation") as a Maryland real estate    
investment trust ("REIT"). The Company is proposing the Reformation in order to 
change its domicile to that of a state which is recognized by REIT analysts and 
investors as a domicile of choice for REITs and to achieve greater              
organizational and investment flexibility. The Reformation provides the         
structure the Company needs to execute on its growth plans. There are also      
certain state and local tax benefits that will also inure to the Company. As a  
result, management of the Company believes that this new structure will benefit 
all shareholders and should enhance the long-term value of their investment.    

The Company will be reformed as a Maryland REIT, which will be named    
Corporate Office Properties Trust, pursuant to two consecutive mergers, (a) of  
the Company into a newly formed, wholly owned subsidiary corporation of the     
Company and (b) of the former subsidiary corporation into a newly formed, wholly
owned subsidiary Maryland real estate investment trust (the "Trust"), and the   
conversion of each outstanding share of common stock of the Company into one    
common share of beneficial interest of the Trust. Approval of the Reformation   
will constitute approval of all of the provisions set forth in the Declaration  
of Trust and the Bylaws of the Trust, including a classified board of trustees, 
the members of which are the same as the current directors of the Company. The  
Company believes the use of staggered terms for the trustees enhances the       
continuity and stability of the board of trustees.                              

The Reformation is more fully described in the accompanying Proxy       
Statement/Prospectus. We urge you to review carefully the Proxy                 
Statement/Prospectus and accompanying Appendices. A copy of the Agreement and   
Plan of Merger and the Declaration of Trust and the Bylaws of the Trust are     
attached as Appendices A, B and C, respectively, to the accompanying Proxy      
Statement/Prospectus.                                                           

   In addition to voting on the Reformation, you will be asked to consider and
vote upon the adoption of the 1998 Long Term Incentive Plan (the "Plan"). The   
Company believes that a long-term, equity-based incentive plan is important to  
the retention of its senior management team, and also aligns the economic       
interests of its senior management team with the economic interests of its      
shareholders. A copy of the Plan is attached as Appendix D to the accompanying  
Proxy Statement/Prospectus.                                                     

  The Company's Board of Directors recommends a vote FOR the Reformation and
the Plan.                                                                       

   Your vote is important to the Company. Failure to return your proxy card or
vote would have the same effect as a vote against the Reformation. Please       
complete, date and sign the enclosed proxy card and return it in the            
accompanying postage-paid envelope.                                             

Sincerely,                                                                      

       Chairman of the Board     President and Chief Executive Officer

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CORPORATE OFFICE PROPERTIES TRUST, INC. 
ONE LOGAN SQUARE, SUITE 1105
PHILADELPHIA, PENNSYLVANIA 19103

NOTICE OF SPECIAL MEETING 
TO BE HELD MARCH 12, 1998 

   NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the "Special
Meeting") of Corporate Office Properties Trust, Inc., a Minnesota corporation   
(the "Company"), will be held on March 12, 1998 at 10:30 a.m., local time, at   
Room 803, Four Seasons Hotel, One Logan Square, Philadelphia, Pennsylvania, to  
consider and vote upon the following matters more fully described in the        
accompanying Proxy Statement/Prospectus:                                        

  1. A proposal to approve the reformation of the Company as a Maryland real
estate investment trust, which will be named Corporate Office Properties Trust, 
pursuant to two consecutive mergers, (a) of the Company into a newly formed,    
wholly owned subsidiary corporation of the Company and (b) of the former        
subsidiary corporation into a newly formed, wholly owned subsidiary Maryland    
real estate investment trust (the "Trust"), and the conversion of each          
outstanding share of common stock of the Company into one common share of       
beneficial interest of the Trust, which approval shall constitute approval of   
all the provisions set forth in the Declaration of Trust and the Bylaws of the  
Trust, including a classified board of trustees, the members of which are the   
same as the current directors of the Company, and the more flexible operational 
and investment policies permitted thereunder.                                   

2. The adoption of the 1998 Long Term Incentive Plan.                   

   3. Such other business that may properly come before the Special Meeting or
any adjournment or postponement thereof.                                        

   The Board of Directors has fixed the close of business on February 11, 1998
as the record date (the "Record Date") for the determination of shareholders    
entitled to notice of and to vote at the Special Meeting and any adjournment or 
postponement thereof. A list of such shareholders will be available for         
inspection at the offices of the Company, One Logan Square, Suite 1105,         
Philadelphia, Pennsylvania, at least ten days prior to the Special Meeting.     

                                       By order of the Board of Directors.
             Secretary

WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, PLEASE COMPLETE, SIGN AND
DATE THE ENCLOSED PROXY CARD AND MAIL IT PROMPTLY IN THE ENCLOSED POSTAGE PAID  
ENVELOPE. IF YOU ATTEND THE SPECIAL MEETING, YOU MAY VOTE IN PERSON IF YOU WISH 
TO DO SO EVEN IF YOU HAVE PREVIOUSLY SENT IN YOUR PROXY.                        

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PROXY STATEMENT/PROSPECTUS
CORPORATE OFFICE PROPERTIES TRUST, INC. 
PROXY STATEMENT 
SPECIAL MEETING OF SHAREHOLDERS 
MARCH 12, 1998
------------------------

CORPORATE OFFICE PROPERTIES TRUST 

PROSPECTUS

UP TO 2,341,083 COMMON SHARES OF BENEFICIAL INTEREST, 
PAR VALUE $0.01 PER SHARE, OF CORPORATE OFFICE PROPERTIES TRUST 

This Proxy Statement/Prospectus is furnished to the shareholders of     
Corporate Office Properties Trust, Inc., a Minnesota corporation ("COPT" or the 
"Company"), previously named Royale Investments, Inc. ("Royale"), in connection 
with the solicitation of proxies on behalf of the Board of Directors (the       
"Board") for use at the Special Meeting of Shareholders of the Company (the     
"Special Meeting") to be held on March 12, 1998, at 10:30 a.m., local time, at  
Room 803, Four Seasons Hotel, One Logan Square, Philadelphia, Pennsylvania, and 
at any adjournment or postponement thereof. The approximate date on which this  
Proxy Statement/Prospectus and form of proxy solicited on behalf of the Board   
will first be sent to the Company's shareholders is on or about February 11,    
1998.                                                                           

   At the Special Meeting, holders of record (the "Shareholders") of shares of
common stock, par value $0.01 per share (the "Common Stock"), of the Company    
will consider and vote upon (i) the reformation of the Company as a Maryland    
real estate investment trust, which will be named Corporate Office Properties   
Trust, pursuant to two consecutive mergers, (a) of the Company into a newly     
formed, wholly owned subsidiary corporation of the Company and (b) of the former
subsidiary corporation into a newly formed, wholly owned subsidiary Maryland    
real estate investment trust (the "Trust"), and the conversion of each          
outstanding share of Common Stock into one common share of beneficial interest, 
par value $0.01 per share (the "Common Shares"), of the Trust (the              
"Reformation") pursuant to the terms of an Agreement and Plan of Merger (the    
"Merger Agreement"), which approval shall constitute approval of the Merger     
Agreement and all of the provisions set forth in the Amended and Restated       
Declaration of Trust (the "Declaration of Trust") and the Bylaws (the "Maryland 
Bylaws") of the Trust, including a classified board of trustees (the "Board of  
Trustees"), the members of which are the same as the current directors of the   
Company, and the more flexible operating and investment policies permitted      
thereunder, (ii) the adoption of the 1998 Long Term Incentive Plan (the "Plan") 
and (iii) such other business as may properly come before the Special Meeting or
any adjournment or postponement thereof. A copy of the Merger Agreement, the    
Declaration of Trust, the Maryland Bylaws and the Plan are attached hereto as   
Appendices A, B, C and D, respectively. The Board recommends a vote FOR the     
Reformation and a vote FOR the adoption of the Plan. See "Proposal              
1--Reformation of the Company" and "Proposal 2--Adoption of the Plan."          
                                                        (CONTINUED ON NEXT PAGE)

  SEE "RISK FACTORS" COMMENCING ON PAGE 9 OF THIS PROXY STATEMENT/PROSPECTUS
FOR A DISCUSSION OF CERTAIN FACTORS THAT SHAREHOLDERS SHOULD CONSIDER WITH      
RESPECT TO THE REFORMATION AND THE SECURITIES BEING OFFERED HEREBY.             
--------------------- 

   This Proxy Statement/Prospectus is accompanied by a copy of Royale's Annual
Report on Form 10-KSB, as amended, for the year ended December 31, 1996,        
Quarterly Report on Form 10-QSB for the period ended September 30, 1997 and     
Current Report on Form 8-K filed January 20, 1998.                              
------------------------

THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED UPON OR          
ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION    
TO THE CONTRARY IS UNLAWFUL.
------------------------

THE SECURITIES ISSUABLE IN THE REFORMATION HAVE NOT BEEN APPROVED OR  
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE  
SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR 
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY  
OF THIS PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE 
CONTRARY IS A CRIMINAL OFFENSE. 
------------------------

THE DATE OF THIS PROXY STATEMENT/PROSPECTUS IS FEBRUARY   , 1998. 

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(CONTINUED FROM PREVIOUS PAGE)                                                  

 The close of business on February 11, 1998 has been fixed by the Board as
the record date for the determination of Shareholders entitled to notice of and 
to vote at the Special Meeting. On February 11, 1998, the Company had           
outstanding 2,268,583 shares of Common Stock. The Common Stock is the Company's 
only class of voting securities and each share entitles the holder to one vote  
on all matters to come before the meeting. There is no cumulative voting. Under 
Minnesota law, the affirmative vote of a majority of the outstanding shares of  
Common Stock is required to approve the Reformation. The adoption of the Plan   
requires the affirmative vote of a majority of the shares of Common Stock       
represented and entitled to vote, in person or by proxy, at the Special Meeting.
Presence at the Special Meeting, in person or by proxy, of holders of a majority
of the shares of Common Stock outstanding and entitled to vote will constitute a
quorum for the transaction of business at the Special Meeting.                  

Unless contrary instructions are indicated on the proxy, all shares of  
Common Stock represented by valid proxies received pursuant to this solicitation
(and not revoked before they are voted) will be voted at the Special Meeting FOR
the Reformation and FOR the adoption of the Plan. With respect to any other     
business which may properly come before the Special Meeting and be submitted to 
a vote of shareholders, proxies received by the Board of Directors will be voted
in the discretion of the designated proxy holders. A Shareholder may revoke his 
or her proxy at any time before exercise by delivering to the Secretary of the  
Company a written notice of such revocation, by filing with the Secretary of the
Company a duly executed proxy bearing a later date or by voting in person at the
Special Meeting. Attendance at the Special Meeting will not by itself be        
sufficient to revoke a proxy.                                                   

    Votes cast by proxy or in person at the Special Meeting will be tabulated by
the election inspector appointed for the meeting. The election inspector will   
treat abstentions as shares that are present and entitled to vote for purposes  
of determining the presence of a quorum, but as unvoted for purposes of         
determining the approval of any matter upon which the Shareholder has abstained.
Broker non-votes with respect to a given proposal will not be counted as either 
"for" or "against" it. If a broker indicates on the proxy that it does not have 
discretionary authority as to certain shares to vote on a particular matter,    
those shares will not be considered as present and entitled to vote with respect
to that matter.                                                                 

If the Special Meeting is postponed or adjourned for any reason, at any 
subsequent reconvening of the Special Meeting all proxies will be voted in the  
same manner as such proxies would have been voted at the original convening of  
the Special Meeting (except for any proxies that have theretofore effectively   
been revoked or withdrawn).                                                     

    The cost of preparing, assembling and mailing the Notice of Special Meeting,
this Proxy Statement/ Prospectus and the form of proxy, including the           
reimbursement of banks, brokers and other nominees for forwarding proxy         
materials to beneficial owners, will be borne by the Company. Proxies may also  
be solicited personally or by telephone by directors and officers of the        
Company, who will receive no additional compensation.                           

    This Proxy Statement/Prospectus also constitutes the prospectus of the Trust
filed with the Securities and Exchange Commission (the "Commission") as a part  
of a Registration Statement on Form S-4 (the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act"), relating to the      
Common Shares to be issued to Shareholders of the Company upon consummation of  
the Reformation.                                                                

The Company's Common Stock is listed for trading on the Nasdaq Small Cap
Market tier of the Nasdaq Stock Market ("NASDAQ") under the symbol COPT. On     
February 3, 1998, the last sale price for the Company's Common Stock as reported
on NASDAQ was $10.00 per share.                                                 

No person has been authorized to give any information or to make any    
representations not contained in this Proxy Statement/Prospectus and, if given  
or made, such information or representations must not be relied upon as having  
been authorized by the Company or the Trust. This Proxy Statement/Prospectus    
does not constitute an offer to sell, or a solicitation of an offer to buy, any 
securities, or the solicitation of a proxy, in any jurisdiction to any person to
whom it is unlawful to make such offer or solicitation. Neither the delivery of 
this Proxy Statement/Prospectus nor any sale made hereunder shall under any     
circumstances create any implication that there has been no change in the       
affairs of the Company or the Trust subsequent to the date hereof.              

ii

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CONTENTS

                                                        [Enlarge/Download Table]

                                                                                                              PAGE   
                                                                                                            ---------
                                                                                                                     
AVAILABLE INFORMATION......................................................................................         1
INCORPORATION OF DOCUMENTS BY REFERENCE....................................................................         1
SUMMARY....................................................................................................         2
  Summary Historical Consolidated Financial Data of the Company............................................         6
  Market Price and Distribution Information................................................................         8
RISK FACTORS...............................................................................................         9
  Reliance on Major Tenants................................................................................         9
  Lack of Geographical Diversity...........................................................................         9
  Risk of Inability to Sustain Distribution Level..........................................................         9
  Effects of Ownership Limit, Classified Board and Power to Issue Additional Shares........................         9
  Tax Risks................................................................................................        11
  Conflicts of Interest....................................................................................        13
  Real Estate Investment Risks.............................................................................        14
  Real Estate Financing Risks..............................................................................        17
  Possible Adverse Effect of Shares Available for Future Sale on Price of Common Shares....................        18
  Control of Management; Limits on Change of Control.......................................................        18
  Possible Changes in Policies Without Shareholder Approval; No Limitation on Debt.........................        19
  Dependence on Key Personnel..............................................................................        19
  Possible Adverse Effect on Price of Common Shares........................................................        19
  Risks Associated with Reliance on Forward-Looking Statements.............................................        19
PROPOSAL 1--REFORMATION OF THE COMPANY.....................................................................        20
  General..................................................................................................        20
  Board Recommendation; Reasons for the Reformation........................................................        20
  Vote Required............................................................................................        20
  Reformation..............................................................................................        21
  The Merger Agreement.....................................................................................        21
  Certain Consequences of the Mergers......................................................................        22
  Accounting Treatment of the Mergers......................................................................        23
  Rights of Dissenting Shareholders........................................................................        23
  Description of Shares of Beneficial Interest.............................................................        25
  Comparison of Rights of Shareholders of the Company and Shareholders of the Trust........................        29
THE COMPANY................................................................................................        40
  General..................................................................................................        40
  Business Objectives and Growth Strategies................................................................        40
  Capitalization Strategy..................................................................................        41
PROPERTIES.................................................................................................        43
  The Suburban Office Properties...........................................................................        43
  The Retail Properties....................................................................................        48
  Tenants..................................................................................................        49
  Lease Expiration--Portfolio Total........................................................................        50
  Lease Expirations by Property............................................................................        51
DISTRIBUTION POLICY........................................................................................        54
POLICIES WITH RESPECT TO CERTAIN ACTIVITIES................................................................        54
  Investment Policies......................................................................................        54
  Financing Policies.......................................................................................        55
  Conflict of Interest Policies............................................................................        56
  Working Capital Reserves.................................................................................        57
OPERATING PARTNERSHIP AGREEMENT............................................................................        58

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                                                                                                              PAGE   
                                                                                                            ---------
                                                                                                                     
  General..................................................................................................        58
  Management...............................................................................................        58
  Conversion and Redemption................................................................................        59
  Liability and Indemnification............................................................................        59
  Capital Contributions....................................................................................        59
  Tax Matters..............................................................................................        60
  Operations...............................................................................................        60
  Term.....................................................................................................        60
MANAGEMENT.................................................................................................        61
  Executive Officers and Trustees..........................................................................        61
  Certain Information Regarding the Board of Trustees and Committees.......................................        64
  Executive Compensation...................................................................................        64
  Employment Agreement.....................................................................................        65
  Existing Plan............................................................................................        65
SECURITY OWNERSHIP OF MANAGEMENT AND OTHERS................................................................        66
  The Company..............................................................................................        66
  The Operating Partnership................................................................................        67
  Registration Rights......................................................................................        67
CERTAIN TRANSACTIONS.......................................................................................        68
  The Transactions.........................................................................................        68
  Management Agreement.....................................................................................        69
  Other....................................................................................................        69
DESCRIPTION OF PROPERTY FINANCING..........................................................................        69
FEDERAL INCOME TAX CONSIDERATIONS..........................................................................        70
  Taxation of the Trust....................................................................................        71
  Tax Aspects of the Trust's Investments in Partnerships...................................................        75
  Taxation of Shareholders.................................................................................        76
  Other Tax Considerations.................................................................................        78
PROPOSAL 2--ADOPTION OF THE PLAN...........................................................................        80
  Description of the Plan..................................................................................        80
  Board Recommendation.....................................................................................        80
  Vote Required............................................................................................        81
  Federal Income Tax Consequences..........................................................................        82
INDEPENDENT ACCOUNTANTS....................................................................................        82
SHAREHOLDER PROPOSALS FOR THE 1999 ANNUAL MEETING OF SHAREHOLDERS..........................................        82
OTHER MATTERS..............................................................................................        82
LEGAL MATTERS..............................................................................................        82
EXPERTS....................................................................................................        83
INDEX TO FINANCIAL STATEMENTS..............................................................................       F-1

Appendix A--Agreement and Plan of Merger...................................................................       A-1
Appendix B--Amended and Restated Declaration of Trust of the Trust.........................................       B-1
Appendix C--Maryland Bylaws of the Trust...................................................................       C-1
Appendix D--1998 Long Term Incentive Plan..................................................................       D-1
Appendix E--Sections 302A.471 and 302A.473 of the Minnesota Business Corporation Act.......................       E-1

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AVAILABLE INFORMATION 

  The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance        
therewith files reports and other information with the Commission relating to   
its business, financial position, results of operations and other matters. Such 
reports, proxy statements and other information can be inspected and copied at  
the Public Reference Section maintained by the Commission at Judiciary Plaza,   
450 Fifth Street, N.W., Washington, D.C. 20549 and at its Regional Offices      
located at The Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,   
Illinois 60661-2511, and 7 World Trade Center, New York, New York 10048. Copies 
of such material also can be obtained from the Public Reference Section of the  
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed     
rates. The Common Stock is listed for trading on the NASDAQ. Such reports, proxy
statements and other information can also be inspected at the offices of the    
Nasdaq Stock Market, 1735 K Street, N.W., Washington, D.C. 20006. Such reports, 
proxy statements and other information can be reviewed through the Commission's 
Electronic Data Gathering Analysis and Retrieval System, which is publicly      
available through the Commission's web site (http://www.sec.gov).               

    The Trust has filed with the Commission the Registration Statement under the
Securities Act with respect to the Common Shares offered hereby. This Proxy     
Statement/Prospectus does not contain all the information set forth in the      
Registration Statement, certain parts of which are omitted in accordance with   
the rules and regulations of the Commission. Reference is made to the           
Registration Statement and to the exhibits relating thereto for further         
information with respect to the Company, the Trust and the Common Shares offered
hereby.                                                                         

INCORPORATION OF DOCUMENTS BY REFERENCE 

  The following documents filed with the Commission by the Company (File No.
0-20047) pursuant to the Exchange Act are incorporated by reference in this     
Proxy Statement/Prospectus:                                                     

1. The Company's Annual Report on Form 10-KSB for the year ended
December 31, 1996 (other than the audited financial information of the  
Company set forth therein);                                             

       2. The Company's Quarterly Reports on Form 10-QSB for the periods ended
March 31, 1997, June 30, 1997 and September 30, 1997; and               

    3. The Company's Current Reports on Form 8-K filed October 29, 1997,
November 6, 1997, December 24, 1997 and January 20, 1998.               

    Any statement contained in a document incorporated by reference herein shall
be deemed to be modified or superseded for purposes of this Proxy               
Statement/Prospectus to the extent that a statement contained herein or in any  
other subsequently filed document which also is incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or        
superseded shall not be deemed, except as so modified or superseded, to         
constitute a part of this Proxy Statement/Prospectus.                           

 THIS PROXY STATEMENT/PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH
ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. SUCH DOCUMENTS (OTHER THAN      
EXHIBITS TO SUCH DOCUMENTS UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY
REFERENCE) ARE AVAILABLE, WITHOUT CHARGE, TO ANY PERSON, INCLUDING ANY          
BENEFICIAL OWNER, TO WHOM THIS PROXY STATEMENT/PROSPECTUS IS DELIVERED, ON      
WRITTEN OR ORAL REQUEST TO CORPORATE OFFICE PROPERTIES TRUST, INC., ONE LOGAN   
SQUARE, SUITE 1105, PHILADELPHIA, PENNSYLVANIA 19103, ATTN: DENISE J. LISZEWSKI 
(TELEPHONE NUMBER (215) 567-1800). IN ORDER TO ENSURE TIMELY DELIVERY OF THE    
INCORPORATED DOCUMENTS, REQUESTS SHOULD BE RECEIVED PRIOR TO FEBRUARY 28, 1998. 

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SUMMARY 

THE FOLLOWING IS A SUMMARY OF CERTAIN INFORMATION CONTAINED ELSEWHERE IN
THIS PROXY STATEMENT/PROSPECTUS AND IS QUALIFIED IN ITS ENTIRETY BY THE MORE    
DETAILED INFORMATION AND FINANCIAL STATEMENTS CONTAINED AND INCORPORATED BY     
REFERENCE IN THIS PROXY STATEMENT/PROSPECTUS. UNLESS THE CONTEXT OTHERWISE      
REQUIRES, THE "COMPANY" REFERS TO ROYALE PRIOR TO OCTOBER 14, 1997, AND         
THEREAFTER INCLUDES ITS SUBSIDIARY CORPORATE OFFICE PROPERTIES HOLDINGS, INC., A
DELAWARE CORPORATION FORMERLY NAMED FCO HOLDINGS, INC. ("HOLDINGS"), AND        
CORPORATE OFFICE PROPERTIES, L.P., FORMERLY NAMED FCO, L.P. (THE "OPERATING     
PARTNERSHIP"), TOGETHER WITH THE DELAWARE AND PENNSYLVANIA LIMITED PARTNERSHIPS 
IN WHICH THE COMPANY, THROUGH HOLDINGS AND THE OPERATING PARTNERSHIP, HAS       
INTERESTS. UNLESS THE CONTEXT OTHERWISE REQUIRES, THE DESCRIPTION OF THE TRUST  
ASSUMES THE REFORMATION HAS OCCURRED. CERTAIN CAPITALIZED TERMS WHICH ARE USED  
HEREIN BUT NOT DEFINED IN THIS SUMMARY ARE DEFINED ELSEWHERE IN THIS PROXY      
STATEMENT/PROSPECTUS.                                                           

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The Company.................. The Company is a self-administered real estate investment   
                              trust ("REIT") which focuses principally on the ownership,  
                              acquisition and management of suburban office properties in 
                              high growth submarkets in the United States. The Company    
                              currently owns interests in ten suburban office buildings in
                              Pennsylvania and New Jersey containing approximately 1.5    
                              million rentable square feet (the "Shidler Acquisition      
                              Properties") and seven retail properties located in the     
                              Midwest containing approximately 370,000 rentable square    
                              feet. As of December 31, 1997, the Company's properties were
                              over 99% leased.                                            

                              The Company was formed in 1988 as Royale Investments, Inc.  
                              to own and acquire retail properties and subsequently became
                              an externally advised REIT. On October 14, 1997, the        
                              Company, as part of a series of transactions, acquired the  
                              Mid-Atlantic suburban office operations of The Shidler      
                              Group, a national real estate firm (the "Transactions"). As 
                              a result of the Transactions, the Company relocated its     
                              headquarters from Minneapolis to Philadelphia and became    
                              internally administered. Further, Jay Shidler became the    
                              Company's Chairman of the Board and Clay Hamlin became the  
                              Company's President and Chief Executive Officer. On January 
                              1, 1998, the Company changed its name to Corporate Office   
                              Properties Trust, Inc.                                      

The Trust.................... A newly formed Maryland REIT. The Trust expects to continue 
                              the Company's qualification as a REIT for federal income tax
                              purposes.                                                   

The Transactions............. On October 14, 1997, the Company completed a number of      
                              transactions in connection with the acquisition of the      
                              Mid-Atlantic suburban office operations of The Shidler Group
                              pursuant to the Formation/Contribution Agreement dated      
                              September 7, 1997, as amended (the "Formation Agreement").  
                              Although the Transactions involved a number of properties   
                              and partnerships and were effected by a series of           
                              intermediate steps, the Transactions, in effect, constituted
                              the acquisition by the Company of an interest in the        
                              Operating Partnership formed to acquire (the "Acquisition") 
                              the Shidler Acquisition Properties. See "Certain            
                              Transactions--The Transactions."                            

The Special Meeting.......... The Special Meeting will be held on March 12, 1998 at 10:30 
                              a.m., local time, at Room 803, Four Seasons Hotel, One Logan
                              Square, Philadelphia, Pennsylvania. The purpose of the      
                              Special Meeting is to                                       

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                              consider and vote upon (i) the Reformation, (ii) the Plan   
                              and (iii) such other business as may properly come before   
                              the Special Meeting.                                        

                              Only holders of record of the Common Stock at the close of  
                              business on February 11, 1998 (the "Record Date") will be   
                              entitled to vote at the Special Meeting or any postponement 
                              or adjournment thereof. As of the Record Date, there were   
                              2,268,583 shares of Common Stock outstanding and entitled to
                              vote at the Special Meeting.                                

                              The directors and officers of the Company and their         
                              affiliates owned as of the Record Date 864,892 outstanding  
                              shares of Common Stock representing approximately 38% of the
                              outstanding Common Stock entitled to vote at the Special    
                              Meeting. All such persons have indicated their present      
                              intention to vote their shares in favor of the Reformation  
                              and to adopt the Plan.                                      

Required Vote................ Under Minnesota law, the affirmative vote of a majority of  
                              the outstanding shares of Common Stock is required to       
                              approve the Reformation. The adoption of the Plan requires  
                              the affirmative vote of a majority of the shares of Common  
                              Stock represented and entitled to vote, in person or by     
                              proxy, at the Special Meeting.                              

Recommendations of the                                                                    
Board........................ The Board, including the independent directors, who         
                              constitute a majority of the Board, has unanimously approved
                              the Merger Agreement and has determined that the Reformation
                              is fair to, and in the best interests of, the Company and   
                              its Shareholders. THE BOARD UNANIMOUSLY RECOMMENDS THAT THE 
                              SHAREHOLDERS VOTE FOR APPROVAL OF THE REFORMATION. The      
                              Company is proposing the Reformation in order to domicile in
                              a state which is recognized by REIT analysts and investors  
                              as a domicile of choice for REITs and to achieve            
                              organizational and investment flexibility. The Reformation  
                              provides the structure the Company needs to execute on its  
                              growth plans. There are also certain state and local tax    
                              benefits that will also inure to the Company. For a further 
                              discussion of the reasons for the Reformation and the       
                              factors considered by the Board in approving the Merger     
                              Agreement, see "Proposal 1--Reformation of the              
                              Company--Board Recommendation; Reasons for the Reformation."

                              The Board also unanimously recommends that the Shareholders 
                              adopt the Plan. The Company believes that a long-term,      
                              equity-based incentive plan is important to the retention of
                              its senior management team, and also aligns the economic    
                              interests of its senior management team with the economic   
                              interests of its shareholders. See "Proposal 2--Adoption of 
                              the Plan--Board Recommendation."                            

Revocability of Proxies...... A Shareholder may revoke his or her proxy at any time before
                              exercise by delivering to the Secretary of the Company a    
                              written notice of such revocation, by filing with the       
                              Secretary of the Company a duly executed proxy bearing a    
                              later date or by voting in person at the Special Meeting.   

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The Reformation.............. The reformation of the Company as a Maryland real estate    
                              investment trust accomplished through the Mergers (as       
                              hereinafter defined).                                       

The Mergers.................. The merger of the Company into a newly formed Maryland      
                              corporation (the "Company Merger"), which shall be the      
                              surviving corporation, followed by the merger of the        
                              surviving corporation into the Trust with the Trust         
                              surviving (the "Trust Merger" and, together with the Company
                              Merger, the "Mergers"), in each case pursuant to the Merger 
                              Agreement. The Reformation is taking the form of this       
                              two-step merger because Minnesota law does not permit the   
                              direct merger of a Minnesota corporation into a Maryland    
                              real estate investment trust. See "Proposal 1--Reformation  
                              of the Company-- Reformation."                              

Consequences of the                                                                       
Mergers...................... As a result of the Mergers, each share of Common Stock will 
                              be converted into one Common Share. The Trust will succeed  
                              to all of the assets and liabilities of the Company. See    
                              "Proposal 1-- Reformation of the Company--Certain           
                              Consequences of the Mergers."                               

Effective Time of the                                                                     
Mergers...................... If the Reformation is approved, the effective time of the   
                              Mergers will be the later of the filing of the Articles of  
                              Merger with the Secretary of State of the State of Minnesota
                              and the acceptance for record of the Articles of Merger by  
                              the State Department of Assessments and Taxation of         
                              Maryland. See "Proposal 1--Reformation of the               
                              Company--Certain Consequences of the Mergers--Effective     
                              Time."                                                      

Conditions to the Mergers.... The Merger Agreement provides that, among others, the       
                              following are conditions to the Mergers: (i) the approval of
                              the Merger Agreement by the Shareholders at the Special     
                              Meeting; (ii) holders of less than 5.0% of the outstanding  
                              shares of Common Stock shall have exercised their           
                              dissenter's rights; and (iii) no order to restrain or enjoin
                              the consummation of the Mergers shall have been entered.    
                              Certain of the conditions may be waived. The Merger         
                              Agreement also provides that the parties may terminate the  
                              Merger Agreement before or after the Special Meeting. See   
                              "Proposal 1--Reformation of the Company--The Merger         
                              Agreement."                                                 

Accounting Treatment......... The Reformation will be accounted for as if it were a       
                              pooling of interests with no adjustment to the carrying     
                              value of the underlying assets and liabilities. See         
                              "Proposal 1--Reformation of the Company--Accounting         
                              Treatment of the Mergers."                                  

Certain Federal Income Tax                                                                
Consequences................. The Company believes that the Reformation will be tax-free  
                              under the Internal Revenue Code of 1986, as amended (the    
                              "Code"). Accordingly, (i) no gain or loss will be recognized
                              under the Code by holders of shares of Common Stock who     
                              exchange such shares for Common Shares as a result of the   
                              Reformation, and (ii) no gain or loss will be recognized    
                              under the Code by the Company or the Trust as a result of   
                              the Reformation. See "Proposal 1--Reformation of the        
                              Company--Certain Consequences of the Mergers--Federal Income
                              Tax Consequences."                                          

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Dissenters' Rights........... Shareholders who comply with the specific requirements of   
                              Section 302A.471 of the Minnesota Business Corporation Act  
                              (the "MBCA") will have certain dissenters' rights in        
                              connection with the Mergers. It is a condition to the       
                              Mergers that holders of less than 5.0% of the outstanding   
                              shares of Common Stock shall have exercised such rights. For
                              a description of these rights and the procedures that must  
                              be followed by shareholders to obtain these rights, see     
                              "Proposal 1-- Reformation of the Company--Rights of         
                              Dissenting Shareholders."                                   

Comparison of Shareholder                                                                 
Rights....................... At the effective time of the Mergers, the Company's         
                              shareholders will automatically become holders of beneficial
                              interests in the Trust and their rights as shareholders will
                              be governed by Maryland law and by the Declaration of Trust 
                              and the Maryland Bylaws. The rights of shareholders of the  
                              Trust differ from the rights of shareholders of the Company 
                              with respect to a number of important matters. For a summary
                              of these differences, see "Proposal 1--Reformation of the   
                              Company--Comparison of Rights of Shareholders of the Company
                              and Shareholders of the Trust."                             

Risk Factors................. Shareholders should carefully consider certain risk factors 
                              in evaluating the Reformation. See "Risk Factors."          

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SUMMARY HISTORICAL CONSOLIDATED 
FINANCIAL DATA OF THE COMPANY 

  The following summary financial information of the Company for each of the
fiscal years ended December 31, 1992, 1993, 1994, 1995 and 1996 has been derived
from the Company's audited financial statements contained in its Annual Reports 
on Form 10-K for the years ended December 31, 1992 and 1993 and its Current     
Report on Form 8-K filed for the years ended December 31, 1994, 1995 and 1996   
and is qualified in its entirety by such documents. The summary financial       
information of the Company for the nine months ended September 30, 1996 and 1997
has been derived from unaudited consolidated financial statements contained in  
its Quarterly Report on Form 10-Q for the period ended September 30, 1997 (and  
is qualified in its entirety by such documents), and, in the opinion of the     
Company's management, includes all adjustments, consisting only of normal       
recurring adjustments, necessary for a fair presentation of such information for
the unaudited interim periods. The operating results for the nine months ended  
September 30, 1997 are not necessarily indicative of results for the full fiscal
year. This information should be read in conjunction with Management's          
Discussion and Analysis of Financial Condition and Results of Operations of the 
Company and the Consolidated Financial Statements and the Notes thereto of the  
Company incorporated by reference in this Proxy Statement/Prospectus.           

The financial data set forth below do not reflect the effect of the     
Transactions, which closed on October 14, 1997. This information should be read 
in conjunction with the Combined Financial Statements of the Shidler Acquisition
Properties and the Unaudited Pro Forma Condensed Consolidating Financial        
Statements of the Company contained in the Company's Current Report on Form 8-K 
dated December 24, 1997 incorporated by reference in this Proxy                 
Statement/Prospectus.                                                           

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ROYALE INVESTMENTS, INC.
SUMMARY FINANCIAL DATA

                                                        [Enlarge/Download Table]

                                                                                                      NINE MONTHS ENDED   
                                                             YEAR ENDED DECEMBER 31,                    SEPTEMBER 30,     
                                              -----------------------------------------------------  -------------------- 
                                                                                                                          
                                                1992       1993       1994       1995       1996       1996       1997    
                                              ---------  ---------  ---------  ---------  ---------  ---------  --------- 


                                                                                                         (UNAUDITED)      
                                                          (IN THOUSANDS, EXCEPT PER SHARE AND PROPERTY DATA)              
                                                                                                                          
OPERATING DATA:                                                                                                           

Revenue:                                                                                                                  
  Rental income.............................. $     518  $   1,074  $   2,038  $   2,436  $   2,477  $   1,844  $   1,881 
  Other......................................       119         70        217         49         32         25         18 
                                              ---------  ---------  ---------  ---------  ---------  ---------  --------- 
      Total revenue..........................       637      1,144      2,255      2,485      2,509      1,869      1,899 
                                              ---------  ---------  ---------  ---------  ---------  ---------  --------- 
Expenses:                                                                                                                 
  Interest...................................       243        461      1,098      1,267      1,246        937        920 
  Depreciation and amortization..............       125        256        476        567        567        425        425 
  Property expenses..........................        99        204        345        344        361        269        255 
  General and administrative.................        36         42         35         35         42         24         36 
                                              ---------  ---------  ---------  ---------  ---------  ---------  --------- 
      Total expenses.........................       503        963      1,954      2,213      2,216      1,655      1,636 
                                              ---------  ---------  ---------  ---------  ---------  ---------  --------- 
Net income................................... $     134  $     181  $     301  $     272  $     293  $     214  $     263 
                                              ---------  ---------  ---------  ---------  ---------  ---------  --------- 
                                              ---------  ---------  ---------  ---------  ---------  ---------  --------- 
Net income per share......................... $    0.19  $    0.17  $    0.21  $    0.19  $    0.21  $    0.15  $    0.19 
                                              ---------  ---------  ---------  ---------  ---------  ---------  --------- 
                                              ---------  ---------  ---------  ---------  ---------  ---------  --------- 
Cash distributions declared.................. $     639  $     923  $   1,207  $     710  $     710  $     533  $     533 
                                              ---------  ---------  ---------  ---------  ---------  ---------  --------- 
                                              ---------  ---------  ---------  ---------  ---------  ---------  --------- 
Cash distributions per share................. $    0.90  $    0.88  $    0.85  $    0.50  $    0.50  $    0.38  $    0.38 
                                              ---------  ---------  ---------  ---------  ---------  ---------  --------- 
                                              ---------  ---------  ---------  ---------  ---------  ---------  --------- 
BALANCE SHEET DATA (AS OF PERIOD END):                                                                                    

Real estate investments, net of accumulated                                                                               
  depreciation............................... $   9,931  $  15,110  $  24,179  $  23,624  $  23,070  $  23,209  $  22,654 
Total assets.................................    10,798     18,882     25,647     24,779     24,197     24,252     23,686 
Mortgages payable............................     4,800      7,450     15,153     14,918     14,658     14,718     14,448 
Total liabilities............................     5,235      7,950     15,620     15,191     15,026     14,982     14,784 
Shareholders' equity.........................     5,563     10,932     10,026      9,588      9,171      9,270      8,902 

OTHER DATA:                                                                                                               
Cash flows provided by (used in):                                                                                         
  Operating activities....................... $     534  $     358  $     690  $     678  $     841  $     552  $     613 
  Investing activities.......................    (9,278)    (5,461)    (9,511)      (551)       127         64        368 
  Financing activities.......................     4,062      7,829      8,357     (1,001)      (967)      (730)      (742)
Funds from Operations (a)....................       259        437        768        827        847        630        679 
Weighted average shares outstanding..........       710      1,065      1,420      1,420      1,420      1,420      1,420 

PROPERTY DATA (AS OF PERIOD END):                                                                                         
Number of properties owned...................         2          4          7          7          7          7          7 
Total net rentable square feet owned (in                                                                                  
  thousands).................................       135        215        370        370        370        370        370 

------------------------                                                        

(a) Management generally considers Funds from Operations ("FFO") to be a useful 
measure of the operating performance of an equity REIT because, together
 with net income and cash flows, FFO provides investors with an additional
basis to evaluate the ability of a REIT to incur and service debt and to
    fund acquisitions and other capital expenditures. FFO does not represent net
income or cash flows from operations as defined by generally accepted   
  accounting principles ("GAAP") and does not necessarily indicate that cash
   flows will be sufficient to fund cash needs. It should not be considered as
an alternative to net income as an indicator of the Company's operating 
 performance or to cash flows as a measure of liquidity. FFO also does not
represent cash flows generated from operating, investing or financing   
   activities as defined by GAAP. Further, FFO as disclosed by other REITs may
not be comparable to the Company's calculation of FFO. The Company has  
    adopted the National Association of Real Estate Investment Trusts definition
  of FFO and has used it for all periods presented. FFO is calculated as net
  income (loss) (computed in accordance with GAAP) adjusted for depreciation
  and amortization expense attributable to capitalized leasing costs, tenant
  allowances and improvements, and extraordinary and nonrecurring items less
minority interests.                                                     

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MARKET PRICE AND DISTRIBUTION INFORMATION 

   The Company's Common Stock is listed for trading on NASDAQ under the symbol
"COPT" and prior to January 1, 1998 was listed under the symbol "RLIN." The     
following table sets forth the range of the high and low last reported sale     
prices as reported on NASDAQ as well as the quarterly distributions declared per
share of Common Stock. The quotations shown represent interdealer prices without
adjustment for retail markups, markdowns or commissions, and may not reflect    
actual transactions.                                                            

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                                                                                     LOW       HIGH     DISTRIBUTION
                                                                                  ---------  ---------  ----------- 
                                                                                                                    
1996                                                                                                                

First Quarter.................................................................... $   4.750  $   5.375   $   0.125  
Second Quarter...................................................................     4.875      5.750       0.125  
Third Quarter....................................................................     4.875      5.750       0.125  
Fourth Quarter...................................................................     4.750      5.500       0.125  

1997                                                                                                                

First Quarter....................................................................     4.500      6.000       0.125  
Second Quarter...................................................................     4.500      5.625       0.125  
Third Quarter....................................................................     5.000      7.875       0.125  
Fourth Quarter...................................................................     6.813     11.750       0.125  

1998                                                                                                                

First Quarter                                                                                                       
  (through February 3, 1998).....................................................     9.750     11.500      --      

 On September 5, 1997, the last trading day before the announcement of the
Transactions, the last sale price of the Common Stock, as reported on NASDAQ,   
was $5-9/16. On September 8, 1997, the date on which the Transactions were first
announced, the last sale price for the Common Stock, as reported on NASDAQ, was 
$7-7/8 per share. On October 13, 1997, the day before the Transactions were     
consummated, the last sale price for the Common Stock, as reported on NASDAQ,   
was $7-5/8 per share. On February 3, 1998, the last sale price for the Common   
Stock, as reported on NASDAQ, was $10.00 per share. The approximate number of   
holders of record of the shares of the Common Stock was 234 as of February 3,   
1998.                                                                           

In early 1995, the Company established a distribution policy of basing  
future distributions on funds from operations, which the Trust intends to       
continue. The Trust's ability to pay cash distributions in the future will be   
dependent upon (i) amounts distributed by the Operating Partnership from        
properties or interests held by it, (ii) income from the properties held        
directly by the Company and (iii) cash generated by financing transactions. The 
ability of the Trust to make cash distributions will also be limited by the     
terms of the limited partnership agreement of the Operating Partnership (the    
"Operating Partnership Agreement") and the Property Financing (as hereinafter   
defined) as well as limitations imposed by state law and the agreements         
governing any future indebtedness of the Trust or the Operating Partnership. See
"Distribution Policy," "Certain Transactions --The Transactions" and "Federal   
Income Tax Considerations--Taxation of the Trust--Annual Distribution           
Requirements."                                                                  

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RISK FACTORS

AN INVESTMENT IN THE COMMON SHARES INVOLVES VARIOUS RISKS AND           
CONSIDERATIONS. SHAREHOLDERS SHOULD CAREFULLY CONSIDER THE FOLLOWING INFORMATION
IN CONJUNCTION WITH THE OTHER INFORMATION CONTAINED AND INCORPORATED BY         
REFERENCE IN THIS PROXY STATEMENT/PROSPECTUS IN EVALUATING THE REFORMATION      
BEFORE MAKING A DECISION WITH RESPECT TO THE COMMON SHARES OFFERED HEREBY.      

RELIANCE ON MAJOR TENANTS                                                       

 The Trust's two major tenants, Unisys Corporation ("Unisys") and Teleport
Communications Group Inc. ("TCG," which has recently announced the intention to 
merge with a subsidiary of AT&T), accounted for 39.6% and 15.5% of Total Rental 
Revenue (as hereinafter defined) as of February 1, 1998, respectively. The      
Trust's top five tenants accounted for 78.0% of Total Rental Revenue as of such 
date. See "Properties--Tenants." In the event that one or more of these tenants 
experiences financial difficulties, or defaults on its obligation to make rental
payments to the Trust, the Trust's financial performance and ability to make    
expected distributions to shareholders would be materially adversely affected.  

LACK OF GEOGRAPHICAL DIVERSITY                                                  

A substantial portion of the Trust's properties are located in the      
Philadelphia region and, to a lesser extent, the Princeton region. Over 74.3% of
Total Rental Revenue as of February 1, 1998 was derived from office properties  
in the Philadelphia and Princeton markets. As a result, the Trust does not have 
the benefits of portfolio geographic diversity and is subject to any issues     
selectively affecting these regions. Therefore, in the long-term, based upon the
properties currently owned directly or indirectly by the Trust, the Trust's     
financial performance and ability to make expected distributions to shareholders
is dependent upon the Philadelphia and Princeton markets. There can be no       
assurance as to the stability or growth conditions of the Philadelphia and      
Princeton markets.                                                              

RISK OF INABILITY TO SUSTAIN DISTRIBUTION LEVEL                                 

The Trust initially intends to maintain the distribution level of the   
Company. However, the level of distributions is based on a number of            
assumptions, including assumptions relating to future operations of the Trust.  
These assumptions concern, among other matters, continued property occupancy and
profitability of tenants, distributions received from the Operating Partnership,
the amount of future capital expenditures and expenses relating to the Trust's  
properties, the level of leasing activity and future rental rates, the strength 
of the commercial real estate market, competition, the costs of compliance with 
environmental and other laws, the amount of uninsured losses and decisions by   
the Trust to reinvest rather than distribute cash available for distribution.   
The Trust currently expects to maintain its initial distribution level          
throughout 1998. A number of the assumptions described above, however, are      
beyond the control of the Trust. Accordingly, no assurance can be given that the
Trust will be able to maintain its distribution level.                          

EFFECTS OF OWNERSHIP LIMIT, CLASSIFIED BOARD AND POWER TO ISSUE ADDITIONAL      
SHARES                                                                      

 POTENTIAL EFFECTS OF OWNERSHIP LIMITATION.  For the Trust to maintain its
qualification as a REIT under the Code, not more than 50% in value of the       
outstanding shares of beneficial interest of the Trust may be owned, directly or
indirectly, by five or fewer persons (defined in the Code to include certain    
entities) at any time during the last half of any taxable year. See "Federal    
Income Tax Considerations--Taxation of the Trust." The Declaration of Trust     
authorizes the Board of Trustees, subject to certain exceptions, to take such   
actions as may be necessary or desirable to preserve its qualification as a REIT
and to limit any person to direct or indirect ownership of no more than (i) 9.8%
of the Trust's number of issued and outstanding shares of beneficial interest,  
or (ii) 9.8% of the total equity value of such shares of beneficial interest    
(the "Ownership Limit"). The Board of Trustees, upon such conditions as the     
Board of Trustees, in                                                           

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its sole discretion, may establish (which may include receipt of an appropriate 
ruling from the Internal Revenue Service (the "Service") or an opinion of       
counsel), may exempt a proposed transferee from the Ownership Limit. However,   
the Board of Trustees may not grant an exemption from the Ownership Limit to any
proposed transferee whose ownership, direct or indirect, of shares of beneficial
interest of the Trust in excess of the Ownership Limit would result in the      
termination of the Trust's status as a REIT. The Board of Trustees has exempted 
the Common Shares to be issued in the Reformation in exchange for the shares of 
Common Stock originally issued in the Transactions from the Ownership Limit, as 
well as the Common Shares to be issued following redemption of the units of     
limited partnership interest in the Operating Partnership ("Units") issued in   
the Transactions. For an indication of the number of such Common Shares, see    
"Security Ownership of Management and Others" and "Certain Transactions--The    
Transactions." A transfer of Common Shares in violation of the above limits may 
result in the constructive transfer of the Common Shares to a trust administered
for charitable purposes and/or trigger the Trust's right to repurchase such     
Common Shares. The foregoing restrictions on transferability and ownership will 
continue to apply until the Board of Trustees determines that it is no longer in
the best interests of the Trust to attempt to qualify, or to continue to        
qualify, as a REIT. The Ownership Limit may have the effect of delaying,        
deferring or preventing a change in control of the Trust or other transaction   
that might involve a premium over the then prevailing market price for the      
Common Shares or other attributes that the shareholders may consider to be      
desirable. See "Proposal 1--Reformation of the Company--Description of Shares of
Beneficial Interest--Restrictions on Transfer."                                 

    POTENTIAL EFFECTS OF STAGGERED ELECTIONS OF TRUSTEES.  If the Reformation is
approved by Shareholders, the Board of Trustees will assume the responsibilities
currently exercised by the Board. The Board of Trustees is divided into three   
classes of trustees (the "Trustees"). The initial terms of the first, second and
third classes of the Trustees will expire in 1999, 2000 and 2001, respectively. 
Beginning in 1999, Trustees of each class will be chosen for three-year terms   
upon the expiration of their current terms and one class of Trustees will be    
elected by the shareholders each year. The staggered terms of the Trustees may  
reduce the possibility of a tender offer or an attempt to change control of the 
Trust, even though a tender offer or change in control might be considered by   
the shareholders to be desirable. See "Proposal 1--Reformation of the           
Company--Comparison of Rights of Shareholders of the Company and Shareholders of
the Trust-- Classified Board."                                                  

POTENTIAL EFFECTS OF ISSUANCE OF ADDITIONAL SHARES; OTHER MATTERS.  The 
Trust's Declaration of Trust authorizes the Board of Trustees to (i) amend the  
Declaration of Trust, without shareholder approval, to increase or decrease the 
aggregate number of shares of beneficial interest of any class, including Common
Shares, that the Trust has the authority to issue, (ii) cause the Trust to issue
additional authorized but unissued Common Shares or preferred shares of         
beneficial interest, par value $0.01 per share (the "Preferred Shares"), and    
(iii) classify or reclassify any unissued Common Shares and Preferred Shares and
to set the preferences, rights and other terms of such classified or            
unclassified shares. See "Proposal 1-- Reformation of the Company--Description  
of Shares of Beneficial Interest." The Company is presently considering issuing 
in the near term for cash, either in a private placement or through a public    
offering, a significant amount of Common Shares. In addition, the Company is    
likely to issue directly, or through the issuance of Units by the Operating     
Partnership, a substantial number of Common Shares, or Units redeemable or      
exchangeable for Common Shares, in connection with acquisitions. The Company is 
presently exploring a number of potential acquisitions, some of which could be  
material and a number of which could be effected in the near term in the event  
the Company's explorations are successful. In addition, although the Board of   
Trustees has no intention to do so at the present time, it will be authorized   
pursuant to these provisions to establish a class or series of shares of        
beneficial interest that could, depending on the term of such series, delay,    
defer or prevent a change in control of the Trust or other transaction that     
might involve a premium over the then prevailing market price for the Common    
Shares or other attributes that the shareholders may consider to be desirable.  
The Declaration of Trust, the Maryland Bylaws and Maryland law also contain     
other provisions that may have the effect of delaying, deferring or preventing a
change in control of the Trust or other transaction that might involve a premium

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over the then prevailing market price for the Common Shares or other attributes 
that the shareholders may consider to be desirable. See "Proposal 1--Reformation
of the Company--Comparison of Rights of Shareholders of the Company and         
Shareholders of the Trust--Removal of Directors and Trustees," "-- Control Share
Acquisitions" and "--Advance Notice of Nominations and New Business."           

    Holders of Units have the right to cause the Operating Partnership to redeem
their Units on the occurrence of certain events, including a transaction        
resulting in a group becoming the beneficial owner of 20% or more of the Common 
Shares (other than Permitted Holders, as defined in the Operating Partnership   
Agreement) or a merger or consolidation involving the Trust. The Trust has the  
option to deliver cash or Common Shares in satisfaction of such redemption      
obligation. See "Certain Transactions-- The Transactions." This redemption      
provision may have the effect of delaying, deferring or preventing a change in  
control of the Trust or other transaction that might involve a premium over the 
then prevailing market price for the Common Shares or other attributes that the 
shareholders may consider to be desirable. In addition, there is no limit on the
ability of the Operating Partnership to issue additional Units, which Units may 
be convertible or redeemable for Common Shares. See "--Possible Adverse Effect  
of Shares Available for Future Sale on Price of Common Shares." Existing        
shareholders will have no preemptive right to acquire any such equity           
securities, and any such issuance of equity securities could result in dilution 
of an existing shareholder's investment in the Trust.                           

    The issuance of Common Shares or Preferred Shares discussed above could have
a dilutive effect on shareholders.                                              

TAX RISKS                                                                       

  FAILURE TO QUALIFY AS A REIT.  The Company was organized and has operated,
and the Trust intends to operate, so as to qualify as a REIT for federal income 
tax purposes. The Trust has not requested, and does not expect to request, a    
ruling from the Service that it qualifies as a REIT. The Trust has received an  
opinion of its counsel that, based upon certain assumptions and representations,
the Company has so qualified and the Trust will continue to so qualify.         
Shareholders should be aware, however, that opinions of counsel are not binding 
on the Service or any court. The REIT qualification opinion only represents the 
view of counsel to the Trust based upon such counsel's review and analysis of   
existing law, which includes no controlling precedent. Furthermore, both the    
validity of the opinion and the qualification of the Trust as a REIT will depend
on the Trust's continuing ability to meet various requirements concerning, among
other things, the ownership of its outstanding stock, the nature of its assets, 
the sources of its income and the amount of its distributions to its            
shareholders. There can be no assurance that the Trust will do so successfully. 
See "Federal Income Tax Considerations--Taxation of the Trust."                 

If the Trust were to fail to qualify as a REIT for any taxable year, the
Trust would not be allowed a deduction for distributions to its shareholders in 
computing its taxable income and would be subject to federal income tax         
(including any applicable minimum tax) on its taxable income at regular         
corporate rates. Unless entitled to relief under certain Code provisions, the   
Trust also would be disqualified from treatment as a REIT for the four taxable  
years following the year during which qualification was lost. As a result, cash 
available for distribution would be reduced for each of the years involved.     
Although management intends to operate the Trust in a manner designed to meet   
the REIT qualification requirements, it is possible that future economic,       
market, legal, tax or other considerations may cause the Board of Trustees to   
revoke the REIT election. See "Federal Income Tax Considerations."              

   To qualify as a REIT, a company must establish, among other things, that it
is not "closely held" (i.e., during the last half of each taxable year, not more
than 50% in value of a company's outstanding stock may have been owned, actually
or constructively, by five or fewer individuals (as defined in the Code to      
include certain entities)). In order to ascertain the actual ownership of a     
company's outstanding shares, Treasury Regulations require that the company     
demand from certain shareholders written statements disclosing the              

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actual owners of the company's stock. The Company unintentionally made required 
demands for shareholder statements later than the time permitted by the         
regulations for its taxable years 1994 through 1996 (and failed to make such    
demands for its taxable years 1992 and 1993, which are generally closed years   
for purposes of the assessment of federal income tax). As a consequence, the    
Service may contend that the Company failed to qualify as a REIT for some or all
of such years. The Company, however, believes that it has substantially complied
with the purposes of the shareholder demand regulation. At its own initiative,  
the Company requested that the Service enter into a closing agreement with the  
Company whereby the Service would agree not to treat the Company as failing to  
qualify as a REIT because of the Company's failure strictly to comply with the  
shareholder demand regulation. The Service has not yet advised the Company      
whether it will enter into such closing agreement, although the Company has been
advised that the Service has in some cases agreed to enter into such agreements 
under similar circumstances. The Service has given no indication that it intends
to challenge the Company's qualification as a REIT for a failure to make the    
shareholder demands. If such a challenge were successfully made, the Company    
believes that any liability for income taxes and interest for the taxable years 
1994 through 1996 could be material. If the Service were successful in          
challenging the Company's REIT status for failure to satisfy the shareholder    
demand regulation, the Company's qualification as a REIT for 1997 would depend  
on the Company's ability to prove that its failure to make the shareholder      
demands was due to reasonable cause and not due to willful neglect. Otherwise,  
the Company and the Trust could not elect REIT status, potentially until 1999.  
The Company estimates that if it were unable to elect REIT status until 1999,   
the Company's and the Trust's aggregate liability for income taxes and interest 
for the years 1994 through 1996 would be approximately $165,000 plus applicable 
interest. An additional tax liability could also fall due with respect to tax   
years 1997 and 1998.                                                            

 OTHER TAX LIABILITIES.  Even if the Trust qualifies as a REIT, it will be
subject to certain state and local taxes on its income and property, and may be 
subject to certain federal taxes. In connection with the Reformation, the Trust 
will be formed as a Maryland business trust and treated as a corporation for tax
purposes. Generally, all corporations operating in Pennsylvania are subject to  
the Pennsylvania Corporate Net Income Tax ("CNI") and the Pennsylvania Capital  
Stock/Foreign Franchise Tax ("CS/FF") apportioned to Pennsylvania based on that 
corporation's activities within the Commonwealth. However, a foreign business   
trust that confines its activities in Pennsylvania to the maintenance,          
administration and management of intangible investments and qualifies as a REIT 
under Section 856 of the Code or a qualified REIT subsidiary under Section      
856(i) of the Code is not subject to the CS/FF or CNI. If the Trust were to fail
to qualify as REIT for any tax year, the Trust would be subject to CNI and CS/FF
based upon the Trust's income and equity apportioned to Pennsylvania.           

    In the Transactions, the transfers of partnership interests to the Operating
Partnership relating to the properties located in Pennsylvania were structured  
as transfers of 89% of the capital interests with the remaining interests to be 
acquired by the Operating Partnership not later than December 2000. This        
structure is intended to comply with informal advice from the Pennsylvania      
Department of Revenue that such transfers are not subject to Pennsylvania real  
estate transfer taxes. However, the Trust has not obtained a formal ruling from 
the Pennsylvania Department of Revenue on this issue. If the Pennsylvania       
Department of Revenue were to successfully challenge this structure, or the     
remaining interests were required to be transferred for financing or other      
purposes prior to October 14, 2000, the Operating Partnership would be subject  
to Pennsylvania state and local transfer taxes of approximately $2.7 million.   

 REIT MINIMUM DISTRIBUTION REQUIREMENTS; POSSIBLE INCURRENCE OF ADDITIONAL
DEBT.  In order to qualify as a REIT, the Trust generally will be required each 
year to distribute to its shareholders at least 95% of its net taxable income   
(excluding any net capital gain). In addition, the Trust will be subject to a 4%
nondeductible excise tax on the amount, if any, by which certain distributions  
paid by it with respect to any calendar year are less than the sum of (i) 85% of
its ordinary income for that year, (ii) 95% of its capital gain net income for  
that year and (iii) 100% of its undistributed taxable income from prior years.  
The Trust intends to make distributions to its shareholders to comply with the  
95% distribution requirement and to                                             

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avoid the nondeductible excise tax. The Trust's income will consist primarily of
its share of the income of the Operating Partnership and, to a significantly    
lesser extent, from the properties it owns directly, and the cash available for 
distribution by the Trust to its shareholders will consist of its share of cash 
distributions from the Operating Partnership and, to a significantly lesser     
extent, cash flow from the properties it owns directly together with funds      
available to it from borrowings. Differences in timing between (i) the actual   
receipt of income and actual payment of deductible expenses and (ii) the        
inclusion of such income and deduction of such expenses in arriving at taxable  
income of the Trust could require the Trust, directly or indirectly through the 
Operating Partnership, to borrow funds on a short-term basis to meet the 95%    
distribution requirement and to avoid the nondeductible excise tax. See "--Real 
Estate Financing Risks."                                                        

CONFLICTS OF INTEREST                                                           

RISKS RELATING TO STRUCTURE.  The Company currently owns its retail     
properties directly and its interest in the office properties indirectly through
its interests in the Operating Partnership and the Properties Partnerships (as  
hereinafter defined). Certain of the Trustees and the Company's directors,      
including Messrs. Shidler and Hamlin, are limited partners of the Operating     
Partnership ("Limited Partners") and are limited partners in certain of the     
Properties Partnerships. Certain Trustees and directors also own Preferred Units
(as defined in the Operating Partnership Agreement) which receive a priority    
return to the Partnership Units (as defined in the Operating Partnership        
Agreement) held by the Company, and it is anticipated that additional Preferred 
Units will be sold in the future. See "Certain Transactions--The Transactions." 
As a result, there are basically two pools of assets in which the Company has   
differing interests and conflicts of interest may arise concerning, among other 
things, the allocation of resources (financial or otherwise) between asset      
pools, assets sales and the reduction of indebtedness.                          

  The Trust, as the general partner (the "General Partner") of the Operating
Partnership, may have fiduciary duties to the Limited Partners, the discharge of
which may conflict with interests of the Trust shareholders. Pursuant to the    
Operating Partnership Agreement, however, the Limited Partners have acknowledged
that the Trust is acting both on behalf of the Trust shareholders and, in its   
capacity as General Partner, on behalf of the Limited Partners. The Limited     
Partners have agreed that the Trust will discharge its fiduciary duties to the  
Limited Partners by acting in the best interests of the Trust's shareholders.   
Limited Partners will also have the right to vote on amendments to the Operating
Partnership Agreement, many of which will require the vote of holders (other    
than the Trust) of a majority of the Partnership Units and the Preferred Units, 
voting separately, and individually to approve certain amendments that will     
adversely affect their rights. These voting rights may be exercised in a manner 
that conflicts with the interests of the Trust's shareholders.                  

 In addition, distributions from the Operating Partnership and income from
the retail properties may not be sufficient to both pay the Trust's current     
overhead expenses and maintain the current level of distributions to            
shareholders. To the extent that there continues to be a mismatch between       
expenses and shareholder distributions, on the one hand, and Operating          
Partnership distributions and rental income, on the other hand, the Trust would 
be required to seek discretionary distributions or loans from the Operating     
Partnership, to incur additional indebtedness in order to fund operating        
expenses and distributions or to decrease shareholder distributions. See "--Real
Estate Financing Risks." Alternatively, the Trust may seek to issue additional  
Common Shares, although the proceeds from such issuance would be required to be 
contributed to the Operating Partnership absent a waiver by the Limited         
Partners.                                                                       

In connection with the Transactions, the Company negotiated to receive  
allocations in excess of those which it would have been allocated as a result of
its ownership of Partnership Units until December 31, 2000 ("Excess             
Allocations"). See "Certain Transactions--The Transactions." However, the       
distributions from the Operating Partnership are generally PRO RATA, based upon 
each party's interest. As a result, the Trust may be allocated taxable income in
excess of the distributions it receives from the Operating Partnership. Although
the Trust anticipates that it will be able to sustain distributions sufficient  
to comply with the REIT annual distribution requirements in the Code from cash  
available from properties it owns                                               

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directly, additional discretionary distributions from the Operating Partnership 
or the incurrence of indebtedness, there can be no assurance that such          
distributions will be possible.                                                 

RISKS RELATED TO OUTSIDE INVESTMENTS.  Mr. Shidler, the Chairman of the 
Board, also has interests in a number of other real estate investments,         
including First Industrial Realty Trust, Inc., a REIT, of which he is Chairman  
of the Board. As a result, Mr. Shidler will only spend a portion of his time on 
the Trust's business. Instances may arise in which Mr. Shidler's interests with 
respect to his overall activities, or a given investment opportunity, may be    
inconsistent with the interests of the Trust. Mr. Hamlin, President, Chief      
Executive Officer and a director of the Company, also has interests in a number 
of other real estate investments, including First Industrial Realty Trust, Inc. 
and TriNet Corporate Realty Trust, Inc. and other REITs. Although Mr. Hamlin has
entered into an employment agreement with the Company which contains a          
non-compete clause, there can be no assurance that instances would not arise    
which present conflicts of interest. See "Management--Executive Officers and    
Trustees."                                                                      

Entities controlled by Mr. Shidler and Mr. Hamlin also own undeveloped  
property contiguous to certain of the Trust's properties. Although all such     
entities will grant the Trust an option to acquire these properties at fair     
market value, there can be no assurance that the Trust will acquire these       
properties. These properties could be developed and compete with the Trust for  
tenants.                                                                        

REAL ESTATE INVESTMENT RISKS                                                    

   GENERAL RISKS.  Real property investments are subject to varying degrees of
risk. The yields available from equity investments in real estate depend in     
large part on the amount of rental income earned and capital appreciation       
generated, as well as property operating and other expenses incurred. If the    
Trust's properties do not generate revenues sufficient to meet operating        
expenses of the Operating Partnership and the Trust, including debt service,    
tenant improvements, leasing commissions and other capital expenditures, the    
Operating Partnership or the Trust may have to borrow additional amounts to     
cover fixed costs, and the Trust's financial performance and ability to make    
distributions to its shareholders may be adversely affected.                    

The Trust's revenues and the value of its properties may be adversely   
affected by a number of factors, including (i) the national, state and local    
economic climate and real estate conditions (such as oversupply of or reduced   
demand for space and changes in market rental rates), (ii) the perceptions of   
prospective tenants of the attractiveness, convenience and safety of the Trust's
properties, (iii) the ability of the Trust to provide adequate management,      
maintenance and insurance, (iv) the ability to collect all rent from tenants on 
a timely basis, (v) the expense of periodically renovating, repairing and       
reletting spaces and (vi) increasing operating costs (including real estate     
taxes and utilities) to the extent that such increased costs cannot be passed   
through to tenants. Certain significant costs associated with investments in    
real estate (such as mortgage payments, real estate taxes, insurance and        
maintenance costs) generally are not reduced when circumstances cause a         
reduction in rental revenues from the property and vacancies result in loss of  
the ability to receive tenant reimbursements of operating costs customarily     
borne by commercial real estate tenants. In addition, real estate values and    
income from properties are also affected by such factors as compliance with laws
applicable to real property, including environmental and tax laws, interest rate
levels and the availability of financing. Furthermore, the amount of available  
rentable square feet of commercial property is often affected by market         
conditions and may therefore fluctuate over time.                               

TENANT DEFAULTS AND BANKRUPTCY.  Substantially all of the Trust's income
will be derived, directly or through distributions from the Operating           
Partnership, from rental income from properties. The distributable cash flow and
ability to make expected distributions to shareholders would be adversely       
affected if a significant number of the Trust's tenants failed to meet their    
lease obligations. Tenants may seek the protection of the bankruptcy laws, which
could result in delays in rental payments or in the rejection and termination of
such tenant's lease and thereby cause a reduction in the Trust's cash flow and  
the amounts available for distributions to its shareholders. No assurance can be
given that tenants will not file for                                            

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bankruptcy protection in the future or, if any tenants file, that they will     
affirm their leases and continue to make rental payments in a timely manner. In 
addition, a tenant, from time to time, may experience a downturn in its business
which may weaken its financial condition and result in the failure to make      
rental payments when due. If tenant leases are not affirmed following           
bankruptcy, or if a tenant's financial condition weakens, the Trust's results of
operations and the amounts available for distribution to its shareholders may be
adversely affected.                                                             

   OPERATING RISKS.  The Trust's properties will be subject to operating risks
common to commercial real estate in general, any and all of which may adversely 
affect occupancy and rental rates. Such properties will be subject to increases 
in operating expenses such as cleaning, electricity, heating, ventilation and   
air conditioning, maintenance, insurance and administrative costs, and other    
general costs associated with security, landscaping, repairs and maintenance.   
While the Trust's current tenants generally are obligated to pay a portion of   
these escalating costs, there can be no assurance that tenants will agree to pay
all or a portion of such costs upon renewal or that new tenants will agree to   
pay such costs. If operating expenses increase, the local rental market may     
limit the extent to which rents may be increased to meet increased expenses     
without decreasing occupancy rates. While the Trust implements cost-saving      
incentive measures at each of its properties, the Trust's results of operations 
and ability to make distributions to shareholders could be adversely affected if
operating expenses increase without a corresponding increase in revenues,       
including tenant reimbursements of operating costs. In addition, when tenant    
leases expire, the Trust may incur significant retenanting costs for leasing    
commissions and tenant improvements.                                            

COMPETITION; RISK OF NOT MEETING TARGETED LEVEL OF LEASING ACTIVITY,    
ACQUISITIONS AND DEVELOPMENT. Numerous commercial properties compete with the   
Trust's properties in attracting tenants to lease space, and additional         
properties can be expected to be built in the markets in which the Trust's      
properties are located. The number and quality of competitive commercial        
properties in a particular area will have a material effect on the Trust's      
ability to lease space at its current properties or at newly acquired properties
and on the rents charged. Some of these competing properties may be newer or    
better located than the Trust's properties. In addition, the commercial real    
estate market is highly competitive particularly within the Mid-Atlantic region 
in which the Trust presently operates. There are a significant number of buyers 
of commercial property, including other publicly traded commercial REITs, many  
of which have significant financial resources. This has resulted in increased   
competition in acquiring attractive commercial properties. See "--Real Estate   
Investment Risks--Risks Associated with Acquisition, Development and            
Construction Activities." Accordingly, it is possible that the Trust may not be 
able to meet its targeted level of property acquisitions and developments due to
such competition or other factors which may have an adverse effect on the       
Trust's expected growth in operations.                                          

   POSSIBLE ENVIRONMENTAL LIABILITIES.  Under various federal, state and local
environmental laws, ordinances and regulations, a current or previous owner or  
operator of real property may be liable for the costs of removal or remediation 
of hazardous or toxic substances on, under or in such property. Such laws often 
impose liability whether or not the owner or operator knew of, or was           
responsible for, the presence of such hazardous or toxic substances. In         
addition, the presence of hazardous or toxic substances, or the failure to      
remediate such property properly, may adversely affect the owner's ability to   
borrow using such real property as collateral. Persons who arrange for the      
disposal or treatment of hazardous or toxic substances may also be liable for   
the costs of removal or remediation of hazardous substances at the disposal or  
treatment facility, whether or not such facility is or ever was owned or        
operated by such person. Certain environmental laws and common law principles   
could be used to impose liability for release of and exposure to hazardous      
substances, including asbestos-containing materials ("ACMs"), into the air, and 
third parties may seek recovery from owners or operators of real properties for 
personal injury or property damage associated with exposure to released         
hazardous substances, including ACMs. As the owner of real properties, the Trust
may be potentially liable for any such costs.                                   

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   Phase I environmental site assessments ("ESAs") were obtained in connection
with the Property Financing for each of the Trust's properties. The purpose of  
Phase I ESAs is to identify potential sources of contamination for which a      
company may be responsible and to assess the status of environmental regulatory 
compliance. Where recommended in the Phase I ESA, invasive procedures, such as  
soil sampling and testing or the installation and monitoring of groundwater     
wells, were subsequently performed. The Phase I ESAs, including subsequent      
procedures where applicable, have not revealed any environmental liability that,
after giving effect to indemnification available to the Trust, the Trust        
believes would have a material adverse effect on the Trust's business, assets or
results of operations, nor is the Trust aware of any such material environmental
liability. Nevertheless, it is possible that the indemnification would be       
unavailable at the time the Trust sought to make a claim thereunder, the Phase I
ESAs relating to any one of its properties have not revealed all environmental  
liabilities or that there are material environmental liabilities of which the   
Trust is unaware. Moreover, there can be no assurance that (i) future laws,     
ordinances or regulations will not impose any material environmental liability  
or (ii) the current environmental condition of the Trust's properties will not  
be affected by tenants, by the condition of land or operations in the vicinity  
of such properties (such as the presence of underground storage tanks) or by    
third parties unrelated to the Trust.                                           

EFFECT OF AMERICANS WITH DISABILITIES ACT COMPLIANCE ON CASH FLOW AND   
DISTRIBUTIONS.  Under the Americans with Disabilities Act of 1990 (the "ADA"),  
all public accommodations and commercial facilities are required to meet certain
federal requirements related to access and use by disabled persons. Existing    
commercial properties generally are subject to provisions requiring that        
buildings be made accessible to people with disabilities. Compliance with the   
ADA requirements could require removal of access barriers, and non-compliance   
could result in imposition of fines by the U.S. government or an award of       
damages to private litigants. While the amounts of such compliance costs, if    
any, are not currently ascertainable, they are not expected to have a material  
effect on the Trust.                                                            

 CHANGES IN LAWS.  Because increases in income or service taxes may not be
passed through to tenants under some leases, such increases may adversely affect
the Trust's results of operations and its ability to make distributions to      
shareholders. In addition, the Trust's properties are subject to various        
federal, state and local regulatory requirements and to state and local fire and
lifesafety requirements. Failure to comply with these requirements could result 
in the imposition of fines by governmental authorities or awards of damages to  
private litigants. The Trust believes that its properties currently are in      
material compliance with all such regulatory requirements. However, there can be
no assurance that these requirements will not be changed or that new            
requirements will not be imposed which would require significant unanticipated  
expenditures by the Trust and could have an adverse effect on the Trust's cash  
flow and ability to make expected distributions to shareholders.                

UNINSURED LOSSES.  The Trust will generally carry commercial general    
liability insurance, standard "all-risk" property insurance, and flood and      
earthquake (where appropriate) and rental loss insurance with respect to its    
properties with policy terms and conditions customarily carried for similar     
properties. No assurance can be given, however, that material losses in excess  
of insurance proceeds will not occur in the future which would adversely affect 
the business of the Trust and its financial condition and results of operations.
In addition, certain types of losses may be either uninsurable or not           
economically insurable. Should an uninsured loss or a loss in excess of insured 
limits occur, the Trust could lose its capital invested in a property, as well  
as the anticipated future revenue from such property, and would continue to be  
obligated on any mortgage indebtedness or other obligations related to the      
property.                                                                       

RISKS ASSOCIATED WITH ILLIQUIDITY OF REAL ESTATE.  Equity real estate   
investments are relatively illiquid. Such illiquidity will tend to limit the    
ability of the Trust to vary its portfolio promptly in response to changes in   
economic or other conditions. In addition, the Code limits the ability of a REIT
to sell properties held for fewer than four years, which may affect the Trust's 
ability to sell properties without adversely affecting returns to holders of    
Common Shares.                                                                  

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RISKS ASSOCIATED WITH ACQUISITION, DEVELOPMENT AND CONSTRUCTION         
ACTIVITIES.  The Trust intends to acquire existing commercial properties to the 
extent that they can be acquired on advantageous terms and meet the Trust's     
investment criteria. Acquisitions of such properties entail general investment  
risks associated with any real estate investment, including the risk that       
investments will fail to perform in accordance with expectations or that        
estimates of the costs of improvements to bring an acquired property up to the  
Trust's standards may prove inaccurate.                                         

 The Trust also intends to grow in part through the selective development,
redevelopment and construction of commercial properties, including build-to-suit
properties and speculative development, as suitable opportunities arise.        
Additional risks associated with such real estate development and construction  
activities include the risk that the Trust may abandon development activities   
after expending significant resources to determine their feasibility; the       
construction cost of a project may exceed original estimates; occupancy rates   
and rents at a newly completed property may not be sufficient to make the       
property profitable; financing may not be available on favorable terms for      
development of a property; and the construction and lease up of a property may  
not be completed on schedule (resulting in increased debt service and           
construction costs). Development activities are also subject to risks relating  
to inability to obtain, or delays in obtaining, necessary zoning, land-use,     
building occupancy and other required governmental permits and authorizations.  
If any of the above occur, the Trust's results of operations and ability to make
expected distributions to shareholders could be adversely affected. In addition,
new development activities, regardless of whether they are ultimately           
successful, may require a substantial portion of management's time and          
attention.                                                                      

REAL ESTATE FINANCING RISKS                                                     

As of December 31, 1997, on a pro forma basis after giving effect to the
Reformation, the Trust and the Operating Partnership would have had             
approximately $14 million and $100 million of outstanding indebtedness,         
respectively, all of which is secured. The indebtedness of the Trust is in the  
form of mortgage notes which are non-recourse to any property of the Trust,     
other than the specific retail store property or properties collateralizing the 
mortgage note, and are subject to prepayment penalties. The Property Financing  
matures in October 2000 (subject to an ability, under certain circumstances, to 
extend for two additional years). For a description of the indebtedness         
outstanding to the Properties Partnerships, see "Description of Property        
Financing." The Trust intends to continue to operate in the near term with      
higher debt levels than most other REITs. The Declaration of Trust does not     
limit the amount of indebtedness that the Trust may incur. In addition, as a    
result of, among other things, the annual income distribution requirements      
applicable to REITs under the Code, the Trust will be required to rely on       
borrowings, either directly or through the Operating Partnership, and other     
external sources of financing to fund the costs of new property acquisitions,   
capital expenditures and other items. Accordingly, the Trust and the Operating  
Partnership will be subject to real estate financing risks, including changes   
from period to period in the availability of such financing, the risk that the  
Trust's or the Operating Partnership's cash flow may not be sufficient to cover 
both required debt service payments and distributions to shareholders and the   
risk that indebtedness secured by properties will not be able to be refinanced  
or that the terms of such refinancing will not be as favorable as the terms of  
existing indebtedness. Each of the Trust's properties, whether directly owned or
owned through the Operating Partnership, has been mortgaged to secure           
indebtedness. If the Trust or the Operating Partnership becomes unable to meet  
its required mortgage payment obligations, the property or properties subject to
such mortgage indebtedness could be foreclosed upon by or otherwise transferred 
to the mortgagee, with a consequent loss of income and asset value to the Trust.

   In addition, to the extent the Operating Partnership was unable to meet its
debt service obligations, cash distributions to the Trust could be reduced or   
eliminated. The Property Financing contains provisions that could restrict the  
ability of the Operating Partnership to make distributions to the Trust. Not    
only does the Property Financing specifically limit certain distributions and   
contain financial covenants the practical effect of which may require cash to be
retained by the Operating Partnership, but in the event of a default            

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by the Operating Partnership, the lender under the Property Financing could     
require the Operating Partnership to significantly curtail or eliminate all     
distributions. Any indebtedness incurred in the future by the Operating         
Partnership may contain similar limitations and covenants. There can be no      
assurance that the lenders under the Property Financing or such future          
indebtedness would grant waivers of these provisions. Any reduction in          
distributions from the Operating Partnership could require the Trust to reduce  
distributions to shareholders or incur debt to maintain the current level of    
distributions.                                                                  

POSSIBLE ADVERSE EFFECT OF SHARES AVAILABLE FOR FUTURE SALE ON PRICE OF COMMON  
SHARES                                                                      

   Sales of a substantial number of Common Shares, or the perception that such
sales could occur, could adversely affect the prevailing market price of the    
Common Shares. Sales or issuances of Common Shares could have a dilutive effect 
on existing shareholders. In addition to the Common Shares offered by the Trust,
2,899,310 Partnership Units and 1,913,545 Preferred Units were outstanding as of
December 31, 1997 which were as of such date convertible under certain          
circumstances into an aggregate of 2,899,310 and 6,834,035 Common Shares,       
respectively. Holders of the Retained Interests (as hereinafter defined) were   
also entitled, as of December 31, 1997, to receive Partnership Units convertible
into 282,508 Common Shares and Preferred Units convertible into 665,905 Common  
Shares. Subject to compliance with the Operating Partnership Agreement, the     
holders of the Partnership Units (the "Unit Holders") have the right to require 
the Operating Partnership to redeem all or a portion of such Partnership Units  
beginning on September 1, 1998 for cash. The Operating Partnership has the      
option to pay such redemption price in Common Shares, which option it currently 
anticipates exercising in the event any Units are redeemed. Each Preferred Unit 
is convertible into 3.5714 Partnership Units, subject in turn to the right of   
redemption referred to above, beginning on October 1, 1999. Upon the issuance of
Common Shares in satisfaction of the Operating Partnership's redemption         
obligations, the Common Shares may be sold in the public market pursuant to     
shelf registration statements which the Trust is obligated to file on behalf of 
the Unit Holders or pursuant to any available exemptions from registration. See 
"Certain Transactions--The Transactions."                                       

Options to purchase a total of 75,000 shares of Common Stock have been  
issued by the Company under its existing Stock Option Plan for Directors (the   
"Existing Plan") which options will be assumed by the Trust. Following the      
adoption of the Plan, the Trust does not intend to issue additional options     
under the Existing Plan. See "Proposal 1--Reformation of the Company--Certain   
Consequences of the Mergers--Existing Plan." In addition, if approved, up to ten
percent of the Common Shares outstanding from time to time will be available for
grant under the Plan. See "Proposal 2--Adoption of the Plan."                   

The Trust intends to cause the Operating Partnership to offer additional
Preferred Units and Partnership Units in exchange for property or otherwise.    
Existing shareholders will have no preemptive right to acquire any such equity  
securities, and any such issuance of equity securities could result in dilution 
of an existing shareholder's investment in the Trust. No prediction can be made 
concerning the effect that future sales of any of such Common Shares will have  
on the market prices of shares.                                                 

CONTROL OF MANAGEMENT; LIMITS ON CHANGE OF CONTROL                              

Trustees and executive officers of the Trust, as a group, beneficially  
owned, as of December 31, 1997, approximately 40% of the total issued and       
outstanding Common Shares (approximately 70% assuming issuance of Common Shares 
in satisfaction of the redemption obligations with respect to the Partnership   
Units and the Preferred Units owned and to be owned, following contribution of  
the Retained Interests to the Operating Partnership in exchange for Units, by   
such group, which Common Shares may be issued beginning September 1, 1998 (in   
the case of the Partnership Units) and October 1, 1999 (in the case of the      
Preferred Units)). See "Security Ownership of Management and Others." The Trust 
currently expects that, if permitted under the Operating Partnership Agreement  
provisions designed to maintain the Trust's REIT status, in the event of any    
redemption, it will elect to deliver Common Shares for such Units. Accordingly, 
such Trustees and executive officers will have substantial influence on the     
Trust, which influence might not                                                

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be consistent with the interests of all other shareholders, and may in the      
future have a substantially greater influence on the outcome of any matters     
submitted to the Trust's shareholders for approval following redemption of the  
Units. Officers and directors who beneficially owned, as of December 31, 1997,  
40% of the outstanding Common Stock have indicated that they intend to vote     
these shares in favor of the Reformation and the Plan. This significant         
ownership interest by Trustees and executive officers may have the effect of    
delaying, deferring or preventing a change in control of the Trust or other     
transaction that might involve a premium over the then prevailing market price  
for the Common Shares or other attributes that the shareholders may consider to 
be desirable. See "--Conflicts of Interest."                                    

POSSIBLE CHANGES IN POLICIES WITHOUT SHAREHOLDER APPROVAL; NO LIMITATION ON DEBT

The Trust's investment, financing and distribution policies, and its    
policies with respect to all other activities, including growth, capitalization 
and operations, will be determined by the Board of Trustees. The organizational 
documents of the Trust do not contain any limitation on the amount of           
indebtedness the Trust may incur. Although the Trust's Board of Trustees has no 
present intention to do so, these policies may be amended or revised at any time
and from time to time at the discretion of the Board of Trustees without a vote 
of the Trust's shareholders. A change in these policies could adversely affect  
the Trust's financial condition, results of operations or the market price of   
the Common Shares. See "Policies with Respect to Certain Activities."           

DEPENDENCE ON KEY PERSONNEL                                                     

The Trust is dependent on the efforts of its trustees and executive     
officers, including the Trust's Chairman of the Board of Trustees, President and
Chief Executive Officer, and Vice President and Chief Investment Officer,       
respectively. Although Messrs. Hamlin and Bernheim have each entered into       
employment agreements with the Company, there can be no assurance that either of
these individuals will not elect to terminate their agreement. The loss of any  
of their services could have an adverse effect on the operations of the Trust.  
See "Management."                                                               

POSSIBLE ADVERSE EFFECT ON PRICE OF COMMON SHARES                               

One of the factors that is expected to influence the market price of the
Common Shares is the annual distribution rate on the Common Shares. An increase 
in market interest rates may lead prospective purchasers of the Common Shares to
demand a higher annual distribution rate from future distributions. Such an     
increase in the required distribution rate may adversely affect the market price
of the Common Shares. Moreover, numerous other factors, such as regulatory      
action and changes in tax laws, could have a significant impact on the future   
market price of the Common Shares. There also can be no assurances that,        
following listing, the Trust will continue to meet the criteria for continued   
listing of the Common Shares on the NASDAQ.                                     

RISKS ASSOCIATED WITH RELIANCE ON FORWARD-LOOKING STATEMENTS                    

This Proxy Statement/Prospectus contains "forward-looking statements"   
relating to, without limitation, future economic performance, plans and         
objectives of management for future operations and projections of revenue and   
other financial items, which can be identified by the use of forward-looking    
terminology such as "may," "will," "should," "expect," "anticipate," "estimate,"
"believe" or "continue" or the negative thereof or other variations thereon or  
comparable terminology. The Trust's actual results may differ significantly from
the results discussed in such "forward-looking statements." Factors that could  
cause such differences include, but are not limited to, the risks described in  
this Risk Factors section of this Proxy Statement/Prospectus.                   

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PROPOSAL 1--
REFORMATION OF THE COMPANY

GENERAL                                                                         

The Board has unanimously approved a proposal to reform the Company as a
Maryland real estate investment trust. The Company believes that after the      
Reformation, the Trust will be organized and will operate in such a manner as to
continue the Company's qualification for taxation as a REIT under Sections 856  
through 860 of the Code for its taxable year ending December 31, 1998, and the  
Trust intends to operate in such a manner in the future. The Board believes that
the Reformation is in the best interests of the Company and its shareholders.   
See "--Board Recommendation; Reasons for the Reformation."                      

 A number of changes will be effected as a result of the Reformation. Such
changes are described below under the headings "--Certain Consequences of the   
Mergers" and "--Comparison of Rights of Shareholders of the Company and         
Shareholders of the Trust."                                                     

In the event this proposal is not adopted, the Company will continue to 
operate as a Minnesota corporation.                                             

BOARD RECOMMENDATION; REASONS FOR THE REFORMATION                               

    The Board believes that the Reformation constitutes a necessary precondition
to its implementation of the next steps in the growth of the Company. The Board 
believes that the terms of the Reformation are fair to and in the best interests
of the Company and its shareholders. In reaching this determination, the Board  
consulted with management as well as financial and legal advisors, and          
considered the following factors, among others. The Board is presenting the     
Reformation in order to change the Company's domicile to Maryland because       
Maryland is recognized by REIT analysts and investors as a domicile of choice   
for REITs because in part, Maryland has a separate statute for REITs formed as  
trusts. Maryland law and the Declaration of Trust provide the Trust much greater
organizational and investment flexibility when compared to the Minnesota law and
the Company's organizational documents. The Board also believes that there are  
certain state and local tax benefits which will inure to the Trust. These tax   
benefits include the exemption from Pennsylvania capital stock and corporate net
income tax available to REITs organized as business trusts. The new Declaration 
of Trust and Bylaws enhance the likelihood of continuity and stability in the   
composition of the Board of Trustees and in the policies they formulate. The    
Board believes that those changes will allow the Board of Trustees to adapt its 
policies as the business of the Trust evolves and to more effectively represent 
the interests of all shareholders. The Board considered a number of potentially 
negative factors in its deliberations concerning the Reformation. It was noted  
that the Declaration of Trust includes a number of provisions that may have the 
effect of making it less likely that the Trustees may be removed. In addition,  
the Declaration of Trust includes provisions which may have the effect of       
delaying, deferring or preventing a change in control of the Trust or other     
transaction that might involve a premium over the then prevailing market price  
for the Common Shares or other attributes that the shareholders may consider to 
be desirable. However, the Trust has elected to "opt out" of certain of these   
provisions of Maryland law. The Board believes that the new Trust structure will
benefit all shareholders as it provides greater market acceptance, greater      
likelihood of continuity and stability and a firm base for future growth.       

 The foregoing discussion of the information and factors considered by the
Board is not intended to be exhaustive. In reaching the determination to approve
and recommend the Reformation, in view of the wide variety of factors considered
in connection with its evaluation of the proposed Reformation, the Board did not
find it practical to, and did not, quantify or otherwise attempt to assign any  
relative or specific weight to the foregoing factors, and individual directors  
may have given different weights to different factors.                          

VOTE REQUIRED                                                                   

  Under Minnesota law, the affirmative vote of a majority of the outstanding
shares of each class of the Company's capital stock entitled to vote on the     
proposal is required for approval of the Reformation. The                       

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Common Stock is the only class of the Company's capital stock of which shares   
are outstanding and is the only class of stock entitled to vote on the proposal 
to approve the Reformation. Abstentions and broker non-votes will have the      
effect of votes against the proposal to approve the Reformation. The Reformation
may be abandoned or the Merger Agreement may be amended (with certain           
exceptions), either before or after shareholder approval has been obtained, if  
in the opinion of the Board, circumstances arise that make such action          
advisable.                                                                      

A vote FOR the Reformation proposal will constitute approval of (i) the 
Merger Agreement, (ii) the change in the Company's state of formation through   
the Mergers, (iii) the Declaration of Trust and (iv) the Maryland Bylaws.       

    THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL OF THE
PROPOSAL TO REFORM THE COMPANY AS A MARYLAND REAL ESTATE INVESTMENT TRUST.      

REFORMATION                                                                     

 The proposed Reformation would be accomplished by (i) merging the Company
into a newly formed Maryland subsidiary corporation (the "Maryland Company")    
which will be the surviving corporation of the merger and (ii) immediately      
thereafter merging the Maryland Company into the Trust, a newly formed Maryland 
subsidiary trust, in each case, pursuant to the Merger Agreement. The Maryland  
Company was incorporated in Maryland on January 21, 1998 and the Trust was      
formed in Maryland on January 21, 1998, specifically for purposes of the        
Reformation, and each has conducted no business and has no material assets or   
liabilities. The Reformation is being accomplished through the Company Merger   
followed by the Trust Merger because Minnesota law does not permit the direct   
merger of a Minnesota corporation into a Maryland real estate investment trust. 
The Maryland Company's and the Trust's principal executive offices are each     
located at One Logan Square, Suite 1105, Philadelphia, Pennsylvania. The        
Reformation would not result in any change in the Company's business, assets or 
liabilities and would not result in any relocation of management or other       
employees.                                                                      

THE MERGER AGREEMENT                                                            

The following is a brief summary of certain provisions of the Merger    
Agreement. This summary is qualified in its entirety by reference to the Merger 
Agreement which is attached as Appendix A to this Proxy Statement/Prospectus and
is incorporated herein by reference in its entirety.                            

The Merger Agreement, which has been signed by the Company, the Maryland
Company and the Trust, contains no representations or warranties. The Merger    
Agreement does, however, provide that the Trust will use its reasonable best    
efforts to have the Common Shares approved for listing on the NASDAQ and will   
provide certain indemnification to directors and officers of the Company. In    
addition, the obligations of each party to effect the Mergers are subject to the
following conditions: the Registration Statement of which this Proxy            
Statement/Prospectus is a part shall have been declared effective in accordance 
with the Securities Act; the Merger Agreement shall have been approved by the   
requisite vote of Shareholders at the Special Meeting; holders of not more than 
5.0% of the Common Stock issued and outstanding on the Record Date shall have   
exercised their rights under Section 302A.471 of the MBCA; the Common Shares    
shall have been authorized for trading on NASDAQ, subject to official notice of 
issuance; no order to restrain, enjoin or otherwise prevent the consummation of 
the Mergers shall have been entered by any court or governmental body; and the  
Company shall have obtained all necessary consents. Certain of these provisions 
may be waived at the direction of the Company.                                  

The Merger Agreement may be terminated by the parties thereto and the   
Mergers abandoned by action of the Board, the Board of Trustees and the board of
directors of the Maryland Company, at any time prior to the Effective Time (as  
hereinafter defined), before or after the approval by the Shareholders. Subject 
to applicable law, the Merger Agreement may also be amended or modified by      
agreement of the parties at any time prior to the Effective Time, with respect  
to any terms contained therein; PROVIDED,                                       

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HOWEVER, that after the Reformation has been approved by the Shareholders, no   
amendment or modification will change the amount or form of the consideration to
be received by the Shareholders in the Mergers.                                 

CERTAIN CONSEQUENCES OF THE MERGERS                                             

 EFFECTIVE TIME.  Following approval of the Mergers, the Company will file
appropriate Articles of Merger with the Secretary of State of Minnesota and the 
State Department of Assessments and Taxation of Maryland (the "State            
Department"), and the Trust will file (i) appropriate Articles of Merger with   
the State Department. The Mergers will become effective upon the later of (i)   
the filing of the Articles of Merger with the Secretary of State of the State of
Minnesota and (ii) the acceptance for record of the two Articles of Merger by   
the State Department (such time, the "Effective Time"). These filings are       
anticipated to be made as soon as practicable after the Reformation proposal is 
approved by the shareholders of the Company. As a result, the Company Merger and
the Trust Merger will become effective simultaneously and, at the Effective     
Time, the separate corporate existence of the Company and the Maryland Company  
will cease and shareholders of the Company will become holders of Common Shares.

  MANAGEMENT AFTER THE MERGERS.  Immediately after the Mergers, the Trustees
will be composed of the current members of the Board; however, the Trustees of  
the Trust will have staggered terms, as described below under "Comparison of    
Rights of Shareholders of the Company and Shareholders of the Trust-- Classified
Board." Immediately after the Mergers, the officers of the Company will be the  
officers of the Trust with the same duties and responsibilities presently       
enjoyed.                                                                        

  SHAREHOLDER RIGHTS.  Certain differences in shareholder rights exist under
the MBCA and Title 8 of the Corporations and Associations Article of the        
Annotated Code of Maryland, as amended (the "Maryland REIT Law") and the        
organizational documents of the Company and the Trust. See "-- Comparison of    
Rights of Shareholders of the Company and Shareholders of the Trust" for a more 
complete discussion of the effects of the differences between the rights of     
shareholders under the MBCA and the Maryland REIT Law and the respective        
organizational documents of the Company and the Trust.                          

CONVERSION OF COMMON STOCK.  As a result of the Reformation, each       
outstanding share of Common Stock of the Company will automatically be converted
into one Common Share. Because of various differences between Minnesota and     
Maryland law and between the Minnesota Articles and Minnesota Bylaws (each as   
defined below) and the Declaration of Trust and Maryland Bylaws (see            
"--Comparison of Rights of Shareholders of the Company and Shareholders of the  
Trust"), the rights and obligations of holders of the Common Stock will change  
in material respects as a result of the Reformation. The Common Shares will be  
listed for trading on NASDAQ under the same symbol as the Company's Common      
Stock.                                                                          

EXCHANGE OF COMMON STOCK.  Promptly after the Effective Time, the Trust 
shall mail to each record holder, as of the Effective Time, of an outstanding   
certificate or certificates which immediately prior to the Effective Time       
represented shares of Common Stock (the "Certificates") a form letter of        
transmittal and instructions for use in effecting the surrender of the          
Certificates for exchange. SHAREHOLDERS SHOULD NOT SEND IN THEIR CERTIFICATES   
UNTIL THEY RECEIVE A TRANSMITTAL FORM. Upon surrender to the Trust of a         
Certificate, together with such letter of transmittal duly executed and any     
other required documents, the holder such Certificate shall be entitled to      
receive from the Trust in exchange therefor a certificate representing the      
number of Common Shares equal to the number of shares of Common Stock           
represented by the Certificate, and such Certificate shall forthwith be         
canceled. If any Common Shares are to be issued to a person other than the      
person in whose name the Certificate surrendered is registered, it shall be a   
condition of exchange that the Certificate so surrendered shall be properly     
endorsed or otherwise be in proper form for transfer and that the person        
requesting such exchange shall pay any transfer or other taxes required by      
reason of the exchange of the Certificate surrendered to a person other than the
registered holder or such person shall establish to the satisfaction of the     
Trust that such tax has been paid or is not                                     

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applicable. Until surrendered, each Certificate shall represent, for all        
purposes, the right to receive one Common Share for each share of Common Stock  
evidenced by such Certificate, without any interest thereon. Failure of a       
shareholder to surrender his or her Certificates shall not result in the        
forfeiture of the right to receive distributions or to vote the Common Shares   
issuable to such shareholder.                                                   

NUMBER OF COMMON SHARES OUTSTANDING.  The number of outstanding Common  
Shares immediately following the Reformation will equal the number of shares of 
Common Stock of the Company outstanding immediately prior to the Effective Time.

  EXISTING PLAN.  The Existing Plan will be continued by the Trust following
the Reformation. Approval of the proposed Reformation will constitute approval  
of the adoption and assumption of the Existing Plan by the Trust. All options   
outstanding under the Existing Plan will be converted into options or rights to 
acquire Common Shares.                                                          

   FEDERAL INCOME TAX CONSEQUENCES.  The Company believes that the Reformation
will be tax-free under the Code. Accordingly, (i) no gain or loss will be       
recognized by the holders of shares of Common Stock who exchange such shares for
Common Shares as a result of the Reformation, and (ii) no gain or loss will be  
recognized by the Company or the Trust as a result of the Reformation. Each     
former holder of shares of Common Stock will have the same tax basis in the     
Common Shares received by such holder pursuant to the Reformation as such holder
has in the shares of Common Stock held by such holder at the Effective Time.    
Each shareholder's holding period with respect to the Common Shares will include
the period during which such holder held the shares of Common Stock, so long as 
the latter were held by such holder as a capital asset at the Effective Time.   
The Company has not obtained, and does not intend to obtain, a ruling from the  
Service with respect to the tax consequences of the Reformation.                

   The foregoing is only a summary of certain federal income tax consequences.
Shareholders should consult their own tax advisors regarding the federal tax    
consequences of the Reformation, and the consequences of dissenting from the    
Reformation, as well as any tax consequences arising under the laws of any other
jurisdiction.                                                                   

ACCOUNTING TREATMENT OF THE MERGERS                                             

  Upon consummation of the merger, all assets and liabilities of the Company
will be transferred to the Trust at book value because the Reformation will be  
accounted for as if it were a pooling of interests.                             

RIGHTS OF DISSENTING SHAREHOLDERS                                               

   THE COMPANY MERGER.  Section 302A.471 of the MBCA grants any shareholder of
the Company of record on February 11, 1998 and certain beneficial owners on such
date who object to the Company Merger the right to have the Company purchase the
shares of Common Stock owned by the dissenting shareholder at their fair value  
at the effective time of the Company Merger. It is a condition to the Mergers   
that shareholders holding less than 5.0% of the outstanding Common Stock shall  
have exercised their dissenter's rights. It is the present intention of the     
Company to abandon the Reformation in the event shareholders exercise           
dissenter's rights and the Company becomes obligated to make a substantial      
payment to said dissenting shareholders.                                        

 To be entitled to payment, the dissenting shareholder must file, prior to
the vote for the proposed Reformation, a written notice of intent to demand     
payment of the fair value of the shares and must not vote in favor of the       
proposed Reformation; provided, that such demand shall be of no force and effect
if the proposed Reformation is not effected. A beneficial owner must also submit
a consent from the record shareholder. The submission of a blank proxy will     
constitute a vote in favor of the Reformation and a waiver of dissenter's       
rights. The Company's liability to dissenting shareholders for the fair value of
the shares shall also be the liability of the Trust when and if the Reformation 
is consummated. Any shareholder contemplating the exercise of these dissenter's 
rights should review carefully the provisions of Sections 302A.471 and 302A.473 
of the MBCA, particularly the procedural steps required to perfect such rights. 

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SUCH RIGHTS WILL BE LOST IF THE PROCEDURAL REQUIREMENTS OF SECTIONS 302A.471 AND
302A.473 ARE NOT FULLY AND PRECISELY SATISFIED. A COPY OF SECTIONS 302A.471 AND 
302A.473 IS ATTACHED AS APPENDIX E.                                             

 Shareholders of the Company who do not demand payment for their shares as
provided above and in Section 302A.473 of the MBCA shall be deemed to have      
assented to the Reformation. A vote against the Reformation, however, is not    
necessary to entitle dissenting shareholders to require the Company to purchase 
their shares.                                                                   

If and when the proposed Reformation is approved by shareholders of the 
Company and the Merger Agreement is not abandoned by the Board of Directors, the
Company shall notify all shareholders who have properly dissented as provided   
above of:                                                                       

       (1) the address to which demand for payment and certificates for shares
   must be sent to obtain payment and the date by which they must be received;

        (2) any restriction on transfer of uncertificated shares that will apply
after the demand for payment is received;                               

      (3) a form to be used to certify the date on which the shareholder, or
   the beneficial owner on whose behalf the shareholder dissents, acquired the
shares or an interest in them and to demand payment; and                

    (4) a copy of Sections 302A.471 and 302A.473 of the MBCA and a brief
  description of the procedures to be followed to obtain payment of the fair
value for their shares.                                                 

To receive the fair value of the shares, a dissenting shareholder must  
demand payment and deposit share certificates within 30 days after the notice   
was given, but the dissenter retains all other rights of a shareholder until the
proposed action takes effect. Under Minnesota law, notice by mail is given by   
the Company when deposited in the United States mail, postage prepaid. A        
shareholder who fails to make demand for payment and to deposit certificates    
will lose the right to receive the fair value of the shares notwithstanding the 
timely filing of the first notice of intent to demand payment. After the        
Effective Time, the Company shall remit to the dissenting shareholders who have 
complied with the above-described procedures the amount the Company estimates to
be the fair value of such shareholder's shares, plus interest. Payment must be  
accompanied by certain information, including prescribed financial statements, a
statement of the method used in arriving at the estimate of fair value and a    
copy of Sections 302A.471 and 302A.473.                                         

    If a dissenter believes that the amount remitted by the Company is less than
the fair value of the shares, with interest, the shareholder may give written   
notice to the Company of the dissenting shareholder's estimate of fair value,   
with interest, within 30 days after the Company mails such remittance and demand
payment of the difference. UNLESS A SHAREHOLDER MAKES SUCH A DEMAND WITHIN SUCH 
THIRTY-DAY PERIOD, THE SHAREHOLDER WILL BE ENTITLED ONLY TO THE AMOUNT REMITTED 
BY THE COMPANY.                                                                 

   Within 60 days after the Company receives such a demand from a shareholder,
it will be required either to pay the shareholder the amount demanded or agreed 
to after discussion between the shareholder and the Company or to file in court 
a petition requesting that the court determine the fair value of the shares,    
with interest. All shareholders who have demanded payment for their shares, but 
have not reached agreement with the Company, will be made parties to the        
proceeding. The court will then determine whether the shareholders in question  
have fully complied with the provisions of Section 302A.473 and will determine  
the fair value of the shares, taking into account any and all factors the court 
finds relevant (including the recommendation of any appraisers that may have    
been appointed by the court), computed by any method that the court, in its     
discretion, sees fit to use, whether or not used by the Company or a            
shareholder. The costs and expenses of the court proceeding will be assessed    
against the Company, except that the court may assess part or all of those costs
and expenses against a shareholder whose action in demanding payment is found to
be arbitrary, vexatious or not in good faith.                                   

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 The fair value of the Company's shares means the fair value of the shares
immediately before the effectiveness of the Company Merger. Under Section       
302A.471, a shareholder of the Company has no right at law or equity to set     
aside the consummation of the Merger, except if such consummation is fraudulent 
with respect to such shareholder or the Company.                                

  Any shareholder making a demand for payment of fair value may withdraw the
demand at any time prior to the determination of the fair value of the shares by
filing written notice of such withdrawal with the Company.                      

   The foregoing summary of the applicable provisions of Sections 302A.471 and
302A.473 of the MBCA is not intended to be a complete statement of such         
provisions and is qualified in its entirety by reference to such sections, the  
full texts of which are attached as Appendix D to this Proxy Statement.         

    THE TRUST MERGER.  Maryland law does not provide shareholders with appraisal
rights with respect to the Mergers.                                             

DESCRIPTION OF SHARES OF BENEFICIAL INTEREST                                    

  The following summary of the terms of the shares of beneficial interest of
the Trust does not purport to be complete and is subject to and qualified in its
entirety by reference to the Declaration of Trust and Maryland Bylaws, copies of
which are attached hereto as Appendices B and C, respectively.                  

  GENERAL.  The Declaration of Trust provides that the Trust may issue up to
45,000,000 Common Shares and 5,000,000 Preferred Shares. Upon the consummation  
of the Reformation, assuming no exercise of outstanding options and before      
giving effect to the redemption of Units, 2,268,583 Common Shares will be issued
and outstanding and no Preferred Shares will be issued and outstanding. As      
permitted by the Maryland REIT Law, the Declaration of Trust contains a         
provision permitting the Board of Trustees, without any action by the           
shareholders of the Trust, to amend the Declaration of Trust to increase or     
decrease the aggregate number of shares of beneficial interest or the number of 
shares of any class of shares of beneficial interest that the Trust has         
authority to issue. The Trust believes that the power of the Board of Trustees  
to issue additional shares of beneficial interest will provide the Trust with   
increased flexibility in structuring possible future financings and acquisitions
and in meeting other needs that might arise. The additional shares of beneficial
interest, possibly including Common Shares, will be available for issuance      
without further action by the Trust's shareholders, unless action by the        
shareholders is required by applicable law or the rules of any stock exchange or
automated quotation system on which the Trust's securities may be listed or     
traded. Although the Board of Trustees currently has no intention of doing so,  
it could authorize the Trust to issue a class or series of shares that could,   
depending on the terms of such class or series, delay, defer or prevent a change
in control of the Trust or other transaction that might involve a premium over  
the then prevailing market price for the Common Shares or other attributes that 
the shareholders may consider to be desirable.                                  

    Both the Maryland REIT Law and the Trust's Declaration of Trust provide that
no shareholder of the Trust will be personally liable for any obligation of the 
Trust solely as a result of such shareholder's status as a shareholder of the   
Trust. The Trust's Declaration of Trust further provides that the Trust shall   
indemnify each shareholder against any claim or liability to which the          
shareholder may become subject by reason of such shareholder's being or having  
been a shareholder or former shareholder, subject to such shareholder providing 
notice to the Trust, and that the Trust shall pay or reimburse each shareholder 
or former shareholder for all legal and other expenses reasonably incurred by   
such shareholder in connection with any claim or liability unless it is         
established by a court that such claim or liability arose out of such           
shareholder's bad faith, willful misconduct or gross negligence. Inasmuch as the
Trust carries public liability insurance which it considers adequate, any risk  
of personal liability to shareholders is limited to situations in which the     
Trust's assets plus its insurance coverage would be insufficient to satisfy the 
claims against the Trust and its shareholders.                                  

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 COMMON SHARES.  All Common Shares will be duly authorized, fully paid and
nonassessable. Subject to the preferential rights of any other shares or series 
of beneficial interest and to the provisions of the Trust's Declaration of Trust
regarding the restriction on transfer of Common Shares, holders of Common Shares
are entitled to receive dividends on such shares if, as and when authorized and 
declared by the Board of Trustees of the Trust out of assets legally available  
therefor and to share ratably in the assets of the Trust legally available for  
distribution to its shareholders in the event of its liquidation, dissolution or
winding-up after payment of, or adequate provision for, all known debts and     
liabilities of the Trust.                                                       

    Each outstanding Common Share entitles the holder thereof to one vote on all
matters submitted to a vote of shareholders, including the election of Trustees,
and, except as provided with respect to any other class or series of shares of  
beneficial interest, the holders of such Common Shares possess the exclusive    
voting power. There is no cumulative voting in the election of Trustees, which  
means that the holders of a majority of the outstanding Common Shares can elect 
all of the Trustees then standing for election and the holders of the remaining 
shares will not be able to elect any Trustees.                                  

Holders of Common Shares have no preference, conversion, sinking fund,  
redemption or appraisal rights and have no preemptive rights to subscribe for   
any securities of the Trust. Subject to the provisions of the Declaration of    
Trust regarding the restriction on transfer of Common Shares, the Common Shares 
have equal dividend, distribution, liquidation and other rights.                

Under the Maryland REIT Law, a Maryland real estate investment trust    
generally cannot amend its declaration of trust or merge unless approved by the 
affirmative vote of shareholders holding at least two-thirds of the shares      
entitled to vote on the matter unless a lesser percentage (but not less than a  
majority of all the votes entitled to be cast on the matter) is set forth in the
real estate investment trust's declaration of trust. The Trust's Declaration of 
Trust provides for approval by a majority of the votes cast at a shareholder    
meeting by holders of Common Shares entitled to vote on the matter in all       
situations permitting or requiring action by the shareholders, except with      
respect to: (i) the election of Trustees (which requires a plurality of all the 
votes cast at a meeting of shareholders of the Trust at which a quorum is       
present), (ii) the removal of Trustees (which requires the affirmative vote of  
the holders of two-thirds of the outstanding shares of beneficial interest of   
the Trust entitled to vote generally in the election of Trustees, which action  
can only be taken for cause by vote at a shareholder meeting), (iii) the merger 
or sale (or other disposition) of all or substantially all of the assets of the 
Trust (which requires the affirmative vote of the holders of two-thirds of the  
outstanding shares entitled to vote on the matter, which action can only be     
taken by vote at a shareholder meeting), (iv) the amendment of the Declaration  
of Trust by shareholders (which requires the affirmative vote of two-thirds of  
all the votes entitled to be cast on the matter) and (v) the dissolution of the 
Trust (which requires the affirmative vote of two-thirds of the outstanding     
shares entitled to vote on the matter). As allowed under the Maryland REIT Law, 
the Trust's Declaration of Trust permits (a) the Trustees by a two-thirds vote  
to amend the Declaration of Trust from time to time to qualify as a real estate 
investment trust under the Code or the Maryland REIT Law without the approval of
the shareholders and (b) the Trustees by a majority vote, without any action by 
the shareholders of the Trust, to amend the Declaration of Trust to increase or 
decrease the aggregate number of shares of beneficial interest or the number of 
shares of any class of shares of beneficial interest that the Trust has         
authority to issue.                                                             

CLASSIFICATION OR RECLASSIFICATION OF COMMON SHARES OR PREFERRED        
SHARES.  The Declaration of Trust authorizes the Board of Trustees to classify  
any unissued Preferred Shares and to reclassify any previously classified but   
unissued Preferred Shares of any series from time to time in one or more series,
as authorized by the Board of Trustees. Prior to issuance of shares of each     
series, the Board of Trustees is required by the Maryland REIT Law and the      
Trust's Declaration of Trust to set for each such series, subject to the        
provisions of the Trust's Declaration of Trust regarding the restriction on     
transfer of shares of beneficial interest, the terms, the preferences,          
conversion or other rights, voting powers, restrictions, limitations as to      
dividends or other distributions, qualifications and terms or conditions of     
redemption for each such series. Thus, the Board of Trustees could authorize the
issuance of Preferred Shares with terms                                         

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and conditions which could have the effect of delaying, deferring or preventing 
a change in control of the Trust or other transaction that might involve a      
premium over the then prevailing market price for Common Shares or other        
attributes that the shareholders may consider to be desirable. As of the date   
hereof, no Preferred Shares are outstanding.                                    

RESTRICTIONS ON TRANSFER.  For the Trust to qualify as a REIT under the 
Code, its shares of beneficial interest generally must be beneficially owned by 
100 or more persons during at least 335 days of a taxable year of twelve months 
or during a proportionate part of a shorter taxable year. Also, not more than   
50% of the value of the outstanding shares of beneficial interest may be owned, 
directly or indirectly, by five or fewer individuals (as defined in the Code to 
include certain entities) during the last half of a taxable year (other than the
first year for which an election to be a REIT has been made).                   

 The Declaration of Trust, subject to certain exceptions, contains certain
restrictions on the number of shares of beneficial interest of the Trust that a 
person may own. The Declaration of Trust provides that no person may own, or be 
deemed to own by virtue of the attribution provisions of the Code, more than    
9.8% (the "Aggregate Share Ownership Limit") of the number or value of the      
outstanding shares of beneficial interest of the Trust. In addition, the        
Declaration of Trust prohibits any person from acquiring or holding, directly or
indirectly, Common Shares in excess of 9.8% (in value or in number of shares,   
whichever is more restrictive) of the aggregate of the outstanding Common Shares
(the "Common Share Ownership Limit").                                           

The Board of Trustees, in its sole discretion, may exempt a proposed    
transferee from the Aggregate Share Ownership Limit and the Common Share        
Ownership Limit (an "Excepted Holder"). However, the Board of Trustees may not  
grant such an exemption to any person if such exemption would result in the     
Trust being "closely held" within the meaning of Section 856(h) of the Code or  
otherwise would result in the Trust failing to qualify as a REIT. In order to be
considered by the Board of Trustees as an Excepted Holder, a person also must   
not own, directly or indirectly, an interest in a tenant of the Trust (or a     
tenant of any entity owned or controlled by the Trust) that would cause the     
Trust to own, directly or indirectly, an interest in a tenant of the Trust (or a
tenant of any entity owned or controlled by the Trust) that would cause the     
Trust to own, directly or indirectly, more than a 9.9% interest in such a       
tenant. The person seeking an exemption must represent to the satisfaction of   
the Board of Trustees that it will not violate the two aforementioned           
restrictions. The person also must agree that any violation or attempted        
violation of any of the foregoing restrictions will result in the automatic     
transfer of the shares of stock causing such violation to the Share Trust (as   
defined below). The Aggregate Share Ownership Limit and the Common Share        
Ownership Limit do not apply to the Common Shares to be issued in the           
Reformation in exchange for Common Stock originally issued in the Transactions, 
as well as Common Shares to be issued following redemption of Units issued in   
the Transactions. The Board of Trustees may require a ruling from the Service or
an opinion of counsel, in either case in form and substance satisfactory to the 
Board of Trustees, in its sole discretion, in order to determine or ensure the  
Trust's status as a REIT.                                                       

   The Declaration of Trust further prohibits (a) any person from beneficially
or constructively owning shares of beneficial interest of the Trust that would  
result in the Trust being "closely held" under Section 856(h) of the Code or    
otherwise cause the Trust to fail to qualify as a REIT and (b) any person from  
transferring shares of beneficial interest of the Trust if such transfer would  
result in shares of beneficial interest of the Trust being owned by fewer than  
100 persons. Any person who acquires or attempts or intends to acquire          
beneficial or constructive ownership of shares of beneficial interest of the    
Trust that will or may violate any of the foregoing restrictions on             
transferability and ownership, or any person who would have owned shares of the 
beneficial interest of the Trust that resulted in a transfer of shares to the   
Share Trust, is required to give notice immediately to the Trust and provide the
Trust with such other information as the Trust may request in order to determine
the effect of such transfer on the Trust's status as a REIT. The foregoing      
restrictions on transferability and ownership will not apply if the Board of    
Trustees determines that it is no longer in the best interests of the Trust to  
attempt to qualify, or to continue to qualify, as a REIT.                       

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   If any transfer of shares of beneficial interest of the Trust occurs which,
if effective, would result in any person beneficially or constructively owning  
shares of beneficial interest of the Trust in excess or in violation of the     
above transfer or ownership limitations (a "Prohibited Owner"), then that number
of shares of beneficial interest of the Trusts, the beneficial or constructive  
ownership of which otherwise would cause such person to violate such limitations
(rounded to the nearest whole share), shall be automatically transferred to a   
trust (the "Share Trust") for the exclusive benefit of one or more charitable   
beneficiaries (the "Charitable Beneficiary"), and the Prohibited Owner shall not
acquire any rights in such shares. Such automatic transfer shall be deemed to be
effective as of the close of business on the Business Day (as defined in the    
Declaration of Trust) prior to the date of such violative transfer. Shares of   
beneficial interest held in the Share Trust shall be issued and outstanding     
shares of beneficial interest of the Trust. The Prohibited Owner shall not      
benefit economically from ownership of any shares of beneficial interest held in
the Share Trust, shall have no rights to dividends and shall not possess any    
other rights attributable to the shares of beneficial interest held in the Share
Trust. The trustee of the Share Trust (the "Share Trustee") shall have all      
voting rights and rights to dividends or other distributions with respect to    
shares of beneficial interest held in the Share Trust, which rights shall be    
exercised for the exclusive benefit of the Charitable Beneficiary. Any dividend 
or other distribution paid prior to the discovery by the Trust that shares of   
beneficial interest have been transferred to the Share Trustee shall be paid by 
the recipient of such dividend or distribution to the Share Trustee upon demand,
and any dividend or other distribution authorized but unpaid shall be paid when 
due to the Share Trustee. Any dividend or distribution so paid to the Share     
Trustee shall be held in Share Trust for the Charitable Beneficiary. The        
Prohibited Owner shall have no voting rights with respect to shares of          
beneficial interest held in the Share Trust and, subject to Maryland law,       
effective as of the date that such shares of beneficial interest have been      
transferred to the Share Trust, the Share Trustee shall have the authority (at  
the Share Trustee's sole discretion) (i) to rescind as void any vote cast by a  
Prohibited Owner prior to the discovery by the Trust that such shares have been 
transferred to the Share Trust and (ii) to recast such vote in accordance with  
the desires of the Share Trustee acting for the benefit of the Charitable       
Beneficiary. However, if the Trust has already taken irreversible action, then  
the Share Trustee shall not have the authority to rescind and recast such vote. 

   Within 20 days of receiving notice from the Trust that shares of beneficial
interest of the Trust have been transferred to the Share Trust, the Share       
Trustee shall sell the shares of beneficial interest held in the Share Trust to 
a person, designated by the Share Trustee, whose ownership of the shares will   
not violate the ownership limitations set forth in the Declaration of Trust.    
Upon such sale, the interest of the Charitable Beneficiary in the shares sold   
shall terminate and the Share Trustee shall distribute the net proceeds of the  
sale to the Prohibited Owner and to the Charitable Beneficiary as follows. The  
Prohibited Owner shall receive the lesser of (i) the price paid by the          
Prohibited Owner for the shares or, if the Prohibited Owner did not give value  
for the shares in connection with the event causing the shares to be held in the
Share Trust (e.g., a gift, devise or other such transaction), the Market Price  
(as defined in the Declaration of Trust) of such shares on the day of the event 
causing the shares received by the Share Trustee from the sale or other         
disposition of the shares held in the Share Trust and (ii) the price per share  
received by the Share Trustee from the sale or other disposition of the Common  
Shares to be held by the Share Trust. Any net sale proceeds in excess of the    
amount payable to the Prohibited Owner shall be paid immediately to the         
Charitable Beneficiary. If, prior to the discovery by the Trust that shares of  
beneficial interest have been transferred to the Share Trust, such shares are   
sold by a Prohibited Owner, then (i) such shares shall be deemed to have been   
sold on behalf of the Share Trust and (ii) to the extent that the Prohibited    
Owner received an amount for shares that exceeds the amount that such Prohibited
Owner was entitled to receive pursuant to the aforementioned requirement, such  
excess shall be paid to the Share Trustee upon demand.                          

 In addition, shares of beneficial interest of the Trust held in the Share
Trust shall be deemed to have been offered for sale to the Trust, or its        
designee, at a price per share equal to the lesser of (i) the price per share in
the transaction that resulted in such transfer to the Share Trust (or, in the   
case of a devise or gift, the Market Price at the time of such devise or gift)  
and (ii) the Market Price on the date the Trust, or its designee, accepts such  
offer. The Trust shall have the right to accept such offer until the Share      
Trustee has                                                                     

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sold the shares of beneficial interest held in the Share Trust. Upon such a sale
to the Trust, the interest of the Charitable Beneficiary in the shares sold     
shall terminate and the Share Trustee shall distribute the net proceeds of the  
sale to the Prohibited Owner.                                                   

   All certificates representing Common Shares will bear a legend referring to
the restrictions described above.                                               

Every owner of more than 5% (or such other percentage as required by the
Code or the regulations promulgated thereunder) of all classes or series of the 
Trust's shares of beneficial interest, including Common Shares, within 30 days  
after the end of each taxable year, is required to give written notice to the   
Trust stating the name and address of such owner, the number of shares of each  
class and series of shares of beneficial interest of the Trust which the owner  
beneficially owns and a description of the manner in which such shares are held.
Each such owner shall provide to the Trust such additional information as the   
Trust may request in order to determine the effect, if any, of such beneficial  
ownership on the Trust's status as a REIT and to ensure compliance with the     
Aggregate Share Ownership Limit. In addition, each shareholder shall upon demand
be required to provide to the Trust such information as the Trust may request,  
in good faith, in order to determine the Trust's status as a REIT and to comply 
with the requirements of any taxing authority or governmental authority or to   
determine such compliance.                                                      

These ownership limitations could delay, defer or prevent a change in   
control of the Trust or other transaction that might involve a premium over the 
then prevailing market price for the Common Shares or other attributes that the 
shareholders may consider to be desirable.                                      

TRANSFER AGENT AND REGISTRAR.  The transfer agent and registrar for the 
Common Shares is Norwest Bank Minnesota, N.A.                                   

COMPARISON OF RIGHTS OF SHAREHOLDERS OF THE COMPANY AND SHAREHOLDERS OF THE     
TRUST                                                                       

The Company is organized as a corporation under the laws of the State of
Minnesota, and the Trust is organized as a real estate investment trust under   
the laws of the State of Maryland. As a Minnesota corporation, the Company is   
subject to the MBCA, a general corporation statute dealing with a wide variety  
of matters, including election, tenure, duties and liabilities of directors and 
officers; dividends and other distributions; meetings of stockholders; and      
extraordinary actions, such as amendments to the certificate of incorporation,  
mergers, sales of all or substantially all of the assets and dissolution. The   
Company also is governed by its Amended and Restated Articles of Incorporation  
(the "Minnesota Articles") and Bylaws (the "Minnesota Bylaws"), which have been 
adopted pursuant to the MBCA. As a Maryland real estate investment trust, the   
Trust is governed by the Maryland REIT Law, certain provisions of the Maryland  
General Corporation Law (the "MGCL") and by the Declaration of Trust and the    
Maryland Bylaws. Certain differences between the MBCA, the Maryland REIT Law,   
the MGCL and among these various documents are summarized below.                

 This summary of the comparative rights of the shareholders of the Company
and the shareholders of the Trust does not purport to be complete and is subject
to and qualified in its entirety by reference to the MBCA, the Maryland REIT Law
and the MGCL and also to the Minnesota Articles, the Minnesota Bylaws, the      
Declaration of Trust and the Maryland Bylaws. The Declaration of Trust and the  
Maryland Bylaws will be substantially in the forms attached as Appendix B and   
Appendix C, respectively, to this Proxy Statement/Prospectus, and the Minnesota 
Articles and the Minnesota Bylaws may be obtained from the Company, without     
charge, by contacting Corporate Office Properties Trust, Inc., One Logan Square,
Suite 1105, Philadelphia, Pennsylvania 19103, attn: Denise J. Liszewski.        

 STANDARD OF CONDUCT FOR DIRECTORS AND TRUSTEES.  The MBCA provides that a
director shall discharge the director's duties in good faith, in a manner the   
director reasonably believes to be in the best interests of the corporation, and
with the care an ordinarily prudent person in a like position would have        
exercised                                                                       

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under similar circumstances. A director who so performs those duties may not be 
held liable by reason of being a director or having been a director of the      
corporation.                                                                    

   The Maryland REIT Law contains no similar provision concerning the standard
of conduct for trustees. However, Section 2-405.1 of the MGCL requires that a   
director of a Maryland corporation perform his duties in good faith, with a     
reasonable belief that the director's actions are in the best interests of the  
corporation and with the care of an ordinarily prudent person in a like position
under similar circumstances. These provisions may be applicable to the Trustees.

LIMITATION OF LIABILITY.  The MBCA provides that, if the articles of    
incorporation so provide, the personal liability of a director to the           
corporation or its shareholders for monetary damages for breach of fiduciary    
duty as a director may be eliminated or limited, but that the articles may not  
limit or eliminate such liability for (a) any breach of the director's duty of  
loyalty to the corporation or its shareholders, (b) acts or omissions not in    
good faith or that involve intentional misconduct or a knowing violation of law,
(c) the payment of unlawful dividends, stock repurchases or redemptions, (d) any
transaction in which the director received an improper personal benefit, (e)    
certain violations of the Minnesota securities laws and (f) any act or omission 
occurring prior to the date when the provision in the articles eliminating or   
limiting liability becomes effective. The Minnesota Articles contain a provision
eliminating the personal liability of directors to the corporation or its       
shareholders for monetary damages for breach of fiduciary duty as a director,   
subject to the foregoing limitations.                                           

The Maryland REIT Law permits a Maryland real estate investment trust to
include in its declaration of trust a provision limiting the liability of its   
trustees and officers to the trust and its shareholders for money damages except
for liability resulting from (i) actual receipt of an improper benefit or profit
in money, property or services or (ii) active and deliberate dishonesty         
established by a final judgment as being material to the cause of action. The   
Declaration of Trust contains such a provision limiting such liability to the   
maximum extent permitted by Maryland law. Because the exceptions from the       
limitation on liability are more extensive under the MBCA, trustees and officers
of the Trust may not be liable for money damages for certain actions for which  
they would have otherwise been liable under the MBCA.                           

    There is no pending or, to the Company's knowledge, threatened litigation to
which any of its directors or officers is a party in which the rights of the    
Company or its stockholders would be affected if the Company already were       
subject to the provisions of Maryland law rather than Minnesota law.            

   INDEMNIFICATION OF DIRECTORS AND OFFICERS.  The MBCA generally provides for
mandatory indemnification of persons acting in an official capacity on behalf of
the corporation if such a person acted in good faith, received no improper      
personal benefit, acted in a manner the person reasonably believed to be in or  
not opposed to the best interest of the corporation and, in the case of a       
criminal proceeding, had no reasonable cause to believe that the conduct was    
unlawful.                                                                       

  The Minnesota Articles and Minnesota Bylaws provide for indemnification of
officers and directors and others acting in an official capacity on behalf of   
the Company generally in a manner consistent with the MBCA; provided that the   
person indemnified determined, in good faith, that the course of conduct which  
caused the loss or liability was in or at least not opposed to the best         
interests of the Company and, in the case of criminal proceedings, such person  
had no reasonable cause to believe that the conduct was unlawful. Under the MBCA
and the Minnesota Bylaws, the Corporation may pay reasonable costs and advances 
in advance of a final disposition of a proceeding upon receipt of an affirmation
from the indemnified person that he or she in good faith believed that the      
criteria for indemnification had been met and an agreement to repay the advance 
if it is finally determined that he or she is not entitled to indemnification   
and the Board of Directors determines that known facts would not preclude       
indemnification.                                                                

The Declaration of Trust authorizes the Trust, to the maximum extent    
permitted by Maryland law, to obligate itself to indemnify and to pay or        
reimburse reasonable expenses in advance of final disposition of a              

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proceeding to (a) any present or former Trustee or officer or (b) any individual
who at the request of the Trust serves or has served another real estate        
investment trust, corporation, partnership, joint venture, trust, employee      
benefit plan or any other enterprise as a trustee, director, officer, partner,  
employee or agent of such entity from and against any claim or liability to     
which such person may become subject or which such person may incur by reason of
service in such capacity. The Maryland Bylaws obligate it, to the maximum extent
permitted by Maryland law, to indemnify and to pay or reimburse reasonable      
expenses in advance of final disposition of a proceeding to (i) any present or  
former Trustee or officer who is made a party to the proceeding by reason of his
service in that capacity or (ii) any such Trustee or officer who, at the request
of the Trust, serves or has served another real estate investment trust,        
corporation, partnership, joint venture, trust, employee benefit plan or any    
other enterprise as a trustee, director, officer, partner, employee or agent of 
such entity and who is made a party to the proceeding by reason of his service  
in that capacity against any claim or liability to which he may become subject  
by reason of such status. The Declaration of Trust and the Maryland Bylaws also 
permit the Trust to provide indemnification to any person who served a          
predecessor of the Trust in any of the capacities described above and to any    
employee or agent of the Trust or a predecessor of the Trust. The Maryland      
Bylaws require the Trust to indemnify a trustee or officer who has been         
successful, on the merits or otherwise, in the defense of any proceeding to     
which he or she is made a party by reason of his or her service in that         
capacity.                                                                       

The Maryland REIT Law permits a Maryland real estate investment trust to
indemnify, and to advance expenses to, its trustees and officers, to the same   
extent as permitted by the MGCL for directors and officers of Maryland          
corporations. The MGCL permits a corporation to indemnify its present and former
directors and officers, among others, against judgments, penalties, fines,      
settlements and reasonable expenses actually incurred by them in connection with
any proceeding to which they may be made a party by reason of their service in  
those or other capacities unless it is established that (i) the act or omission 
of the director or officer was material to the matter giving rise to the        
proceeding and (a) was committed in bad faith or (b) was the result of active   
and deliberate dishonesty, (ii) the director or officer actually received an    
improper personal benefit in money, property or services or (iii) in the case of
any criminal proceeding, the director or officer had reasonable cause to believe
that the act or omission was unlawful. However, a Maryland corporation may not  
indemnify for an adverse judgment in a suit by or in the right of the           
corporation or for a judgment of liability on the basis that personal benefit   
was improperly received, unless in either case a court orders indemnification   
and then only for expenses. In addition, the MGCL permits a corporation to      
advance reasonable expenses to a director or officer upon the corporation's     
receipt of (a) a written affirmation by the director or officer of his good     
faith belief that he has met the standard of conduct necessary for              
indemnification by the corporation and (b) a written undertaking by or on his or
her behalf to repay the amount paid or reimbursed by the corporation if it shall
ultimately be determined that the standard of conduct was not met. Under the    
MGCL, rights to indemnification and expenses are nonexclusive, in that they need
not be limited to those expressly provided by statute.                          

  The MBCA, the Maryland REIT Law and the Bylaws of both the Company and the
Trust may permit indemnification for liabilities arising under the Securities   
Act or the Exchange Act. The Board has been advised that, in the opinion of the 
Commission, indemnification for liabilities arising under the Securities Act or 
the Exchange Act is contrary to public policy and is therefore unenforceable,   
absent a decision to the contrary by a court of appropriate jurisdiction.       

   SHAREHOLDERS' MEETINGS.  The Minnesota Bylaws provide for an annual meeting
of shareholders upon reasonable notice and within a reasonable time, but not    
less than 30 days, following delivery of the annual report. Minnesota law       
provides that if a regular meeting of shareholders has not been held during the 
immediately preceding 15 months, a shareholder or shareholders holding 3% or    
more of the voting power of all shares entitled to vote may demand a regular    
meeting of shareholders. The Minnesota Bylaws provide that the chief executive  
officer, a majority of the Board or a majority of the Independent Directors or  
shareholders holding an aggregate of not less than 10% of the voting shares of  
the Company may call a special meeting. Minnesota law also provides that the    
chief financial officer and two or more directors may                           

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call a special meeting of the shareholders, except that a special meeting       
concerning a business combination must be called by 25% of the voting power of  
all shares entitled to vote.                                                    

  The Maryland REIT Law contains no provisions on shareholders meetings. The
Declaration of Trust and Maryland Bylaws provide for an annual meeting of       
shareholders to be held upon reasonable notice and within a reasonable period,  
but not less than 30 days, following delivery of the Trust's annual report, but 
in any event within six months after the end of each full fiscal year. Special  
meetings of shareholders may be called by a majority of the Trustees or by      
certain executive officers of the Trust and shall be called upon the written    
request of shareholders holding in the aggregate not less than a majority of the
outstanding shares of the Trust entitled to vote.                               

 ACTIONS BY WRITTEN CONSENT OF SHAREHOLDERS.  Under the MBCA, shareholders
may act by written consent in lieu of a shareholders' meeting. Under Minnesota  
law, any action required or permitted to be taken at a shareholders' meeting may
be taken without a meeting by unanimous written consent signed by each of the   
shareholders entitled to vote on such action. This power cannot be restricted by
a Minnesota corporation's articles. The Maryland REIT Law contains no similar   
provision to the MBCA regarding written consent of shareholders. The Declaration
of Trust permits the Maryland Bylaws to include a provision that permits any    
action which may be taken at a meeting of shareholders to be taken without a    
meeting if a written consent of the action is signed by each shareholder        
entitled to vote on the matter. The Maryland Bylaws permit any action which may 
be taken at a meeting of shareholders to be taken without a meeting if a consent
in writing, setting forth such action, is signed by each shareholder entitled to
vote on the matter, and any other shareholder entitled to notice of a meeting of
shareholders has waived in writing any right to dissent from such action, and   
such consent is filed with the minutes of proceedings of shareholders.          

   INSPECTION OF BOOKS AND RECORDS.  Under Minnesota law, any shareholder of a
publicly held corporation has an absolute right, upon written demand, to examine
and copy, in person or by a legal representative, at any reasonable time, the   
corporation's share register and other corporate records reasonably related to  
the purpose described in the demand upon demonstrating that such stated purpose 
is a proper purpose. The Maryland REIT law provides that shareholders have the  
same rights to inspect the records of a real estate investment trust as         
stockholders of a corporation have under the MGCL. Under the MGCL, persons who  
together have been stockholders of a Maryland corporation for more than six     
months and own at least five percent of the outstanding stock of any class of a 
Maryland corporation may inspect and copy the corporation's books of account and
stock ledger, request a written statement of the corporation's affairs and      
request a list of the corporation stockholders. In addition, any stockholder of 
a Maryland corporation may (a) inspect and copy the bylaws, minutes of the      
proceedings of stockholders and annual statements of affairs and (b) request the
corporation to provide a sworn statement showing all stock, as well as any other
securities, issued and all consideration received by the corporation during the 
preceding twelve months.                                                        

   INVESTMENT AND FINANCING POLICIES.  The Minnesota Bylaws contain investment
policies and restrictions which limit certain of the activities of the Company. 
In addition, the Minnesota Bylaws contain a restriction on indebtedness which   
limits the ability of the Company to incur indebtedness if, as a result, the    
consolidated indebtedness of the Company would exceed 300% of the Company's net 
assets, as defined in the Minnesota Bylaws. These policies may not be changed   
without the approval of a majority of the Independent Directors. The Maryland   
Bylaws do not contain the same investment policies and restrictions nor the same
indebtedness restriction. Instead, the Board of Trustees has adopted certain    
investment and financing policies. See "Policies with Respect to Certain        
Activities." The Board of Trustees may, without shareholder approval, amend or  
modify its current policies at any time.                                        

   CLASSIFIED BOARD.  The MBCA permits a corporation's bylaws to provide for a
classified board of directors and does not limit the number of classes. The     
Minnesota Bylaws do not provide for a classified board of directors. The        
Minnesota Bylaws currently provide for seven directors, all of whom are elected 
at                                                                              

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the annual meeting of stockholders and hold office until the next annual meeting
of stockholders or until their successors are elected and qualified.            

The Declaration of Trust provides for a staggered Board of Trustees. The
Maryland Bylaws provide that a majority of Trustees may establish, increase or  
decrease the number of Trustees. Upon the consummation of the Reformation, there
will be seven Trustees. The Trustees are divided into three classes, with terms 
of three years each and with one class to be elected at each annual meeting of  
shareholders. See "Management" below for the identity of the Class I, Class II  
and Class III Trustees and for their respective initial terms of office, which  
will range from one to three years. At each annual meeting of shareholders of   
the Trust, commencing in 1999, successors of the class of Trustees whose term   
expires at that annual meeting will be elected for a three-year term.           

    The Board believes that a classified board will be advantageous to the Trust
and its shareholders because three-year terms will enhance the likelihood of    
continuity and stability in the composition of the Trust's Board of Trustees and
in the policies formulated by its Board of Trustees. The Board believes that    
this, in turn, will permit the Board of Trustees more effectively to represent  
the interests of all shareholders. However, the classified Board of Trustees    
could have the effect of making the removal of incumbent Trustees time-consuming
and difficult, which could discourage a third party from making a tender offer  
or otherwise attempting to effect a change in control of the Trust or other     
transaction that might be beneficial to a majority of shareholders or to the    
Trust.                                                                          

With a classified Board of Trustees, it will generally take holders of a
majority of the voting power two annual meetings of stockholders to elect a     
majority of the Board of Trustees. As a result, a classified board may delay,   
defer or prevent a tender offer or change in control of the Trust, even though a
tender offer or change in control might involve a premium over the then         
prevailing market price for the Common Shares or other attributes that the      
shareholders may consider to be desirable. In addition, because under the       
Declaration of Trust a trustee may be removed, only for cause (as defined in the
Declaration of Trust) by the affirmative vote of the holders of two thirds of   
the outstanding shares entitled to vote in the election of trustees, the        
classified Board of Trustees would delay shareholders who do not agree with the 
policies of the Board of Trustees from replacing a majority of the Board of     
Trustees for two years, unless they can demonstrate that the trustee should be  
removed for cause and obtain the requisite vote. Under Minnesota law, in        
general, unless a corporation's articles provide otherwise (which the Minnesota 
Articles do not), a director may be removed with or without cause by the        
affirmative vote of a majority of the shareholders. See "--Removal of Directors 
and Trustees."                                                                  

  VACANCIES ON THE BOARDS OF DIRECTORS AND TRUSTEES.  Under the MBCA, unless
the articles or bylaws provide otherwise, (a) a vacancy on a corporation's board
of directors may be filled by the vote of a majority of directors then in       
office, although less than a quorum, (b) a newly created directorship resulting 
from an increase in the number of directors may be filled by the board of       
directors and (c) any director so elected shall hold office only until a        
qualified successor is elected at the next regular or special meeting of        
shareholders. The Minnesota Bylaws follow these provisions. The Maryland Bylaws 
also permit the trustees of the Trust to fill vacancies in the Board of         
Trustees. The Maryland Bylaws provide that any vacancy on the Board of Trustees 
for any cause shall be filled by a majority of the remaining trustees, even if  
such majority is less than a quorum.                                            

    REMOVAL OF DIRECTORS AND TRUSTEES.  Under the MBCA and the Minnesota Bylaws,
a director may be removed with or without cause by the affirmative vote of a    
majority of the shareholders. The Minnesota Bylaws do not limit the             
shareholders' ability to remove a director without cause. The Declaration of    
Trust provides that a Trustee may be removed only for cause upon the affirmative
vote of at least two-thirds, rather than a simple majority, of the votes        
entitled to be cast in the election of Trustees, but only by a vote taken at a  
shareholder meeting. This provision, when coupled with the provision in the     
Maryland Bylaws authorizing the Board of Trustees to fill vacant trusteeships,  
precludes shareholders from removing incumbent trustees, except upon the        
existence of cause for removal and a substantial affirmative vote, and filling  
the vacancies created by such removal with their own nominees.                  

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AUTHORIZED SHARES OF CAPITAL STOCK.  As of February 11, 1998, there were
50,000,000 shares of stock authorized, of which 2,268,583 shares of Common Stock
were issued and outstanding, and there were no shares of preferred stock        
authorized. The Minnesota Articles provide that preemptive rights shall not     
exist with respect to shares of stock of the Company. Upon approval of the      
Reformation, the Board of Trustees of the Trust will be authorized to issue up  
to 50,000,000 shares of beneficial interest from time to time in such           
combination as the Trustees shall determine. As permitted by Maryland REIT Law, 
the Declaration of Trust contains a provision permitting the Board of Trustees, 
without any action by the shareholders of the Trust, to amend the Declaration of
Trust to increase or decrease the aggregate number of shares of beneficial      
interest or the number of shares of any class of shares of beneficial interest  
that the Trust has the authority to issue. Unless specifically provided by the  
Board of Trustees, holders of shares will have no preemptive rights to purchase 
or subscribe for any additional shares of beneficial interest or any other      
security of the Trust which it may sell.                                        

   The Board of Trustees believes that the power to issue additional shares of
beneficial interest will provide the Trust with increased flexibility in        
structuring possible future financings and acquisitions and in meeting other    
needs that might arise. The additional shares of beneficial interest, including 
possible Common Shares, will be available for issuance without further action by
the Trust's shareholders, unless action by the shareholders is required by      
applicable law or the rules of any stock exchange or automated quotation system 
on which the Trust's securities may be listed or traded. Although the Board of  
Trustees currently has no intention of doing so, it could authorize the Trust to
issue a class or series that could, depending on the terms of such class or     
series, delay, defer or prevent a change in control of the Trust or other       
transaction that might involve a premium over the then prevailing market price  
for the Common Shares or other attributes that the shareholders may consider to 
be desirable.                                                                   

  DIVIDENDS AND OTHER DISTRIBUTIONS.  Generally, a Minnesota corporation may
pay a dividend if its board of directors determines that the corporation will be
able to pay its debts in the ordinary course of business after paying the       
dividend and if, among other things, the dividend payment does not reduce the   
remaining net assets of the corporation below the aggregate preferential amount 
payable in the event of liquidation to the holders of the shares having         
preferential rights, unless the payment is made to those shareholders in the    
order and to the extent of their respective priorities. The Maryland REIT Law   
contains no similar provision on dividends and other distributions. Under the   
Declaration of Trust, the Board of Trustees may from time to time authorize and 
declare such dividends or distribution in cash or other assets of the Trust or  
in securities of the Trust or from any other source as the Board of Trustees in 
its discretion may determine. The Declaration of Trust provides that the Board  
of Trustees shall endeavor to authorize, declare and cause the Trust to pay such
dividends and distributions as shall be necessary for the Trust to qualify as a 
real estate investment trust under the Code; however, shareholders shall have no
right to any dividend or other distribution unless and until authorized and     
declared by the Board of Trustees. The Company has historically paid quarterly  
cash distributions and the Trust plans to continue to do so. Because of the     
provisions of the Code applicable to REITs, the Company does not believe that   
the differences between Minnesota and Maryland law regarding dividends or       
distributions will result in any material differences between the past practice 
of the Company and the anticipated future practice of the Trust in the payment  
of dividends or distributions. See "Federal Income Tax Considerations--Taxation 
of the Trust--Annual Distribution Requirements."                                

CERTAIN BUSINESS COMBINATIONS.  MBCA Section 302A.673 provides that an  
issuing public corporation may not engage in certain business combinations with 
any person that acquires beneficial ownership of ten percent or more of the     
voting stock of that corporation (i.e., an "interested shareholder") for a      
period of four years following the date that that person became an interested   
shareholder (the "share acquisition date") unless, prior to the share           
acquisition date, a committee of the corporation's disinterested directors      
approve either the business combination or the acquisition of shares.           

Only defined types of "business combinations" are prohibited by the     
Minnesota statute. In general, the definition includes: any merger or exchange  
of securities of the corporation with the interested                            

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shareholder; certain sales, transfers or other dispositions of assets of the    
corporation to an interested shareholder; transfers by the corporation to       
interested shareholders of shares that have market value of five percent or more
of the value of all outstanding shares, except for a pro rata transfer made to  
all shareholders; any liquidation or dissolution of, or reformation in another  
jurisdiction of, the corporation which is proposed by the interested            
shareholder; certain transactions proposed by the interested shareholder or any 
affiliate or associate of the interested shareholder that would result in an    
increase in the proportion of shares entitled to vote owned by the interested   
shareholder; and transactions whereby the interested shareholder receives the   
benefit of loans, advances, guarantees, pledges or other financial assistance or
tax advances or credits from the corporation.                                   

For purposes of selecting a committee of "disinterested" directors a    
director or person is "disinterested" under the MBCA if the director or person  
is neither an officer nor an employee, nor has been an officer or employee      
within five years preceding the formation of the committee, of the issuing      
public corporation or of a related corporation. The committee must consider and 
act on any written, good faith proposal to acquire shares or engage in a        
business combination. The committee must consider and take action on the        
proposal and within 30 days render a decision in writing regarding the proposal.

Under the MGCL, as applicable to Maryland real estate investment trusts,
certain "business combinations" (including a merger, consolidation, share       
exchange or, in certain circumstances, an asset transfer or issuance or         
reclassification of equity securities) between a Maryland real estate investment
trust and any person who beneficially owns ten percent or more of the voting    
power of the trust's shares or an affiliate of the trust who, at any time within
the two-year period prior to the date in question, was the beneficial owner of  
ten percent or more of the voting power of the then outstanding voting stock of 
such trust (an "Interested Shareholder"), or an affiliate of such an Interested 
Shareholder, are prohibited for five years after the most recent date on which  
the Interested Shareholder becomes an Interested Shareholder. Thereafter, any   
such business combination must be recommended by the board of trustees of such  
trust and approved by the affirmative vote of at least (i) 80% of the votes     
entitled to be cast by holders of outstanding voting shares of beneficial       
interest of the trust and (ii) two-thirds of the votes entitled to be cast by   
holders of voting shares of the trust other than shares held by the Interested  
Shareholder with whom (or with whose affiliate) the business combination is to  
be effected, unless, among other conditions, the trust's common shareholders    
receive a minimum price (as defined in the MGCL) for their shares and the       
consideration is received in cash or in the same form as previously paid by the 
Interested Shareholder for its shares. These provisions of Maryland law do not  
apply, however, to business combinations that are approved or exempted by the   
board of trustees of the trust prior to the time that the Interested Shareholder
becomes an Interested Shareholder. The Board of Trustees has approved the       
acquisition of additional Common Shares by Messrs. Shidler and Hamlin upon      
redemption of their Units received in the Transactions.                         

  Both the Minnesota and Maryland provisions permit a corporation or a trust
to "opt out" of the business combination statute by electing to do so in its    
articles or declaration of trust or, in the case of Minnesota law, the bylaws   
or, in the case of Maryland law, by resolution of the Board of Trustees. Neither
the Minnesota Articles nor the Minnesota Bylaws contain such an "opt-out"       
provision. The Board of Trustees has opted out of this statute by resolution.   

CONTROL SHARE ACQUISITIONS.  The Minnesota control share acquisition    
statute, MBCA Section 302A.671 ("Section 671"), establishes various disclosure  
and shareholder approval requirements to be met by individuals or companies     
attempting a takeover of an "issuing public corporation." Section 671 provides  
that any person (an "acquiring person") proposing to make a "control share      
acquisition" must disclose certain information to the target corporation and the
target corporation's shareholders must thereafter approve the control share     
acquisition, or else certain of the shares acquired in the control share        
acquisition will not have voting rights and will be subject to redemption by the
target corporation for a specified period of time at the market value of such   
shares. A "control share acquisition" is an acquisition of shares of an issuing 
public corporation which results in the acquiring person's voting power         
increasing from its                                                             

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preacquisition level to one of the following levels of voting power: (i) at     
least 20% but less than 33 1/3%, (ii) at least 33 1/3% but less than or equal to
50% and (iii) over 50%. The definition of a "control share acquisition"         
specifically excludes acquisitions of shares from the corporation issuing such  
shares, and acquisitions pursuant to plans of merger or exchange which are      
approved by the shareholders of the corporation.                                

The information that must be disclosed by the acquiring person includes,
among other things, the terms of the proposed control share acquisition, the    
source of funds, any plans to liquidate the corporation and any plans to move   
the location of its principal executive offices or business activities. If an   
acquiring person meets certain requirements set forth in Section 671, the target
corporation must call a meeting of its shareholders for the purpose of          
considering the proposed control share acquisition if the acquiring person so   
requests in writing. The notice of the shareholders' meeting must be accompanied
by the information statement and a statement of the position of the board of    
directors on the proposed control share acquisition. Unless the disclosure      
provisions and the shareholder approval provisions of Section 671 are met,      
including affirmative votes by holders of a majority of shares (excluding all   
interested shares), shares acquired in a control share acquisition that exceed  
the initial threshold of any of the new ranges of voting power described above  
(i.e., 20%, 33 1/3% or 50%) are denied voting rights and are subject to         
redemption by the target corporation. Any such shares denied voting rights      
regain those voting rights only upon transfer to a person other than the        
acquiring person or any affiliate or associate of the acquiring person. Such    
shares are subject to a call for redemption by the target corporation at a price
equal to the market value of such shares. The call for redemption must be given 
by the target corporation within 30 days after the event giving rise to the     
option to call the shares for redemption and must be redeemed within 60 days    
after the call is given.                                                        

   The MGCL, as applicable to Maryland real estate investment trusts, provides
that "Control Shares" (as defined below) of a Maryland real estate investment   
trust acquired in a "control share acquisition" (as defined below) have no      
voting rights except to the extent approved by a vote of two-thirds of the votes
entitled to be cast on the matter, excluding shares of beneficial interest owned
by the acquiror, by officers or by trustees who are employees of the trust.     
"Control Shares" are voting shares of beneficial interest which, if aggregated  
with all other such shares of beneficial interest previously acquired by the    
acquiror or in respect of which the acquiror is able to exercise or direct the  
exercise of voting power (except solely by virtue of a revocable proxy), would  
entitle the acquiror to exercise voting power in electing trustees within one of
the following ranges of voting power: (i) one-fifth or more but less than       
one-third, (ii) one-third or more but less than a majority or (iii) a majority  
or more of all voting power. Control Shares do not include shares the acquiring 
person is then entitled to vote as a result of having previously obtained       
shareholder approval. A "control share acquisition" means the acquisition of    
Control Shares, subject to certain exceptions.                                  

 Under the MGCL, a person who has made or proposes to make a control share
acquisition, upon satisfaction of certain conditions (including an undertaking  
to pay expenses), may compel the board of trustees of the trust to call a       
special meeting of shareholders to be held within 50 days of demand to consider 
the voting rights of the shares. If no request for a meeting is made, the trust 
may itself present the question at any shareholders meeting.                    

   If voting rights are not approved at the meeting or if the acquiring person
does not deliver an acquiring person statement as required by the statute, then,
subject to certain conditions and limitations, the trust may redeem any or all  
of the Control Shares (except those for which voting rights have previously been
approved) for fair value, determined without regard to the absence of voting    
rights for the Control Shares, as of the date of the last control share         
acquisition by the acquiror or of any meeting of shareholders at which the      
voting rights of such shares are considered and not approved. If voting rights  
for Control Shares are approved at a shareholders meeting and the acquiror      
becomes entitled to vote a majority of the shares entitled to vote, all other   
shareholders may exercise appraisal rights. The fair value of the shares as     

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determined for purposes of such appraisal rights may not be less than the       
highest price per share paid by the acquiror in the control share acquisition.  

   The control share acquisition statute does not apply (a) to shares acquired
in a merger, consolidation or share exchange if the trust is a party to the     
transaction or (b) to acquisitions approved or exempted by the declaration of   
trust or bylaws of the trust.                                                   

Both Minnesota and Maryland law permit a corporation to "opt out" of the
control share acquisition statute in the articles or bylaws. The Minnesota      
Articles and Minnesota Bylaws do not contain an "opt-out" provision. However,   
the Maryland Bylaws contain a provision exempting from the control share        
acquisition statute any and all acquisitions by any person of the Trust's shares
of beneficial interest. The Board of Trustees may, however, amend the Maryland  
Bylaws at any time to eliminate such provision, either prospectively or         
retroactively.                                                                  

OTHER ANTI-TAKEOVER PROVISIONS.  The MBCA includes four other provisions
relating to takeovers that are not included in the Maryland REIT Law or the     
MGCL. These provisions address a corporation's use of golden parachutes,        
greenmail, the standard of conduct of the board of directors in connection with 
the consideration of takeover proposals and the acquisition of shares following 
a tender offer.                                                                 

 The MBCA contains a provision which prohibits a publicly held corporation
from entering into or amending agreements (commonly referred to as "golden      
parachutes") that increase current or future compensation of any officer or     
director during any tender offer or request or invitation for tenders.          

    The MBCA also contains a provision which limits the ability of a corporation
to repurchase shares at a price above market value (commonly referred to as     
"greenmail"). The statute provides that a publicly held corporation is          
prohibited from purchasing or agreeing to purchase any shares from a person who 
beneficially owns more than five percent of the voting power of the corporation 
if the shares had been beneficially owned by that person for less than two      
years, and if the purchase price would exceed the market value of those shares. 
However, such a purchase will not violate the statute if the purchase is        
approved at a meeting of the shareholders by a majority of the voting power of  
all shares entitled to vote or if the corporation's offer is of at least equal  
value per share and to all holders of shares of the class or series and to all  
holders of any class or series into which the securities may be converted.      

The MBCA authorizes the board of directors, in considering the best     
interests of the corporation with respect to a proposed acquisition of an       
interest in the corporation, to consider the interest of the corporation's      
employees, customers, suppliers and creditors, the economy of the state and     
nation, community and social considerations and the long-term as well as        
short-term interests of the corporation and its shareholders, including the     
possibility that these interests may be best served by the continued            
independence of the corporation.                                                

  The MBCA prohibits a tender offeror (as defined) from acquiring additional
shares within two years following a tender offer unless the price and terms are 
substantially equivalent to those provided in the tender offer.                 

DISSOLUTION OF THE COMPANY AND THE TRUST.  The MBCA provides that a     
corporation may be dissolved by the voluntary action of holders of a majority of
a corporation's shares entitled to vote at a meeting called for the purpose of  
considering such dissolution.                                                   

 The Declaration of Trust permits (i) the termination of the Trust and the
discontinuation of the operations of the Trust by the affirmative vote of the   
holders of not less than two-thirds of the outstanding Common Shares entitled to
be cast on the matter at a meeting of shareholders or by written consent and    
(ii) the termination of the Trust's qualification as a REIT if such             
qualification, in the opinion of the Board of Trustees, is no longer            
advantageous to the shareholders.                                               

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JUDICIAL DISSOLUTION.  Under the MBCA, if a deadlock of the directors   
precludes corporate action, or if a division of the shareholders makes election 
of directors impossible, stockholders are permitted to seek judicial action. The
MBCA provides that a court may dissolve a publicly owned corporation in an      
action by a shareholder where: (a) the situation involves a deadlock in the     
management of corporate affairs and the shareholders cannot break the deadlock; 
(b) the directors have acted fraudulently, illegally, or in a manner unfairly   
prejudicial to the corporation; (c) the shareholders are divided in voting power
for two consecutive regular meetings to the point where successor directors are 
not elected; (d) there is a case of misapplication or waste of corporate assets;
or (e) the duration of the corporation has expired. The Maryland REIT Law       
contains no similar provisions.                                                 

 AMENDMENTS TO THE MINNESOTA ARTICLES AND THE DECLARATION OF TRUST.  Under
the MBCA, before the shareholders may vote on an amendment to the articles of   
incorporation, either a resolution to amend the articles must have been approved
by the affirmative vote of the majority of the directors present at the meeting 
where such resolution was considered, or the amendment must have been proposed  
by shareholders holding three percent or more of the voting power of the shares 
entitled to vote. Amending the articles of incorporation requires the           
affirmative vote of the holders of the majority of the voting power present and 
entitled to vote at the meeting (and of each class, if entitled to vote as a    
class), unless the articles of incorporation require a larger proportion. The   
MBCA provides that a proposed amendment may be voted upon by the holders of a   
class or series even if the articles of incorporation would deny that right, if 
among other things, the proposed amendment would increase or decrease the       
aggregate number of authorized shares of the class or series, change the rights 
or preferences of the class or series, create a new class or series of shares   
having rights and preferences prior and superior to the shares of that class or 
series or limit or deny any existing preemptive right of the shares of the class
or series. The Minnesota Articles require a majority vote for amendments other  
than in the case of a change in the terms or contract rights of any of its      
outstanding capital stock which requires the affirmative vote of not less than  
two-thirds of the aggregate number of votes entitled to be cast.                

    Under the Maryland REIT Law, a real estate investment trust generally cannot
amend its declaration of trust or merge unless approved by the affirmative vote 
of shareholders holding at least two-thirds of the shares entitled to vote on   
the matter unless a lesser percentage (but not less than a majority of all of   
the votes entitled to be cast on the matter) is set forth in the real estate    
investment trust's declaration of trust. The Trust's Declaration of Trust       
provides for a majority vote with respect to amendments. Under the Maryland REIT
Law, a declaration of trust may permit the trustees by a two-thirds vote to     
amend the declaration of trust from time to time to qualify as a real estate    
investment trust under the Code or the Maryland REIT Law without the affirmative
vote or written consent of the shareholders. The Trust's Declaration of Trust   
permits such action by the Board of Trustees.                                   

 AMENDMENTS TO THE BYLAWS.  The MBCA provides that, unless reserved by the
articles to the shareholders, the power to adopt, amend or repeal a             
corporation's bylaws is vested in the board of directors, subject to the power  
of the shareholders to adopt, repeal or amend the bylaws. After adoption of     
initial bylaws, the board of a Minnesota corporation cannot adopt, amend or     
repeal a bylaw fixing a quorum for meetings of shareholders, prescribing        
procedures for removing directors or filling vacancies in the board, or fixing  
the number of directors or their classifications, qualifications or terms of    
office, but may adopt or amend a bylaw to increase the number of directors. The 
Minnesota Bylaws reserve to a majority of the shareholders the right to amend   
the Minnesota Bylaws. Under the Maryland Bylaws, the Trustees have the exclusive
power to amend the Maryland Bylaws.                                             

   DENIAL OF VOTING RIGHTS.  The MBCA provides that holders of the outstanding
shares of a class of stock shall be entitled to vote as a class upon a proposed 
amendment to the certificate of incorporation, whether or not entitled to vote  
thereon by the certificate of incorporation, if the amendment would change the  
aggregate number of authorized shares or the par value of the class or would    
adversely affect the powers, preferences or special rights of the class. There  
is no similar provision in the Maryland REIT Law.                               

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    ADVANCE NOTICE OF NOMINATIONS AND NEW BUSINESS.  The Maryland Bylaws provide
that (i) with respect to an annual meeting of shareholders, nominations of      
persons for election to the Board of Trustees and the proposal of business to be
considered by shareholders may be made only (a) pursuant to the Trust's notice  
of the meeting, (b) by the Board of Trustees or (c) by a shareholder who is     
entitled to vote at the meeting and has complied with the advance notice        
procedures set forth in the Maryland Bylaws and (ii) with respect to special    
meetings of shareholders, only the business specified in the Trust's notice of  
meeting may be brought before the meeting of shareholders. Nominations of       
persons for election to the Board of Trustees may be made only (a) pursuant to  
the Trust's notice of the meeting, (b) by the Board of Trustees or (c) provided 
that the Board of Trustees has determined that Trustees shall be elected at such
meeting, by a shareholder who is entitled to vote at the meeting and has        
complied with the advance notice provisions set forth in the Maryland Bylaws.   

 The Minnesota Bylaws provide that with respect to both annual and special
meetings, the notice of the meeting shall state that no business other than that
provided in the notice may be conducted at the meeting.                         

RESTRICTIONS ON OWNERSHIP AND TRANSFER OF COMMON STOCK AND COMMON       
SHARES.  Under the Minnesota Articles, any transfer of shares that would result 
in the disqualification of the Company as a REIT under the Code is void AB      
INITIO to the fullest extent permitted by law, and the intended transferee of   
such shares is deemed never to have had an interest therein. The Minnesota      
Articles specifically prohibit any person or group of persons from holding,     
directly or indirectly, ownership of a number of shares in excess of 9.8% of the
outstanding capital stock. Shares owned by a person or group of persons in      
excess of such amounts are referred to in the Minnesota Articles as "excess     
shares." For this purpose, shares are deemed to be owned by a person if they are
constructively owned by such person under the provisions of Section 544 of the  
Code (as modified by Section 856(h) of the Code) or are beneficially owned by   
such person under the provisions of Rule 13d-3 promulgated under the Exchange   
Act, and the term "group" has the same meaning as that term has for purposes of 
Section 13(d)(3) of the Exchange Act. The above provisions in the Minnesota     
Articles are very similar to the ownership limit provisions set forth in the    
Declaration of Trust except that the Declaration of Trust specifically provides 
that, if any purported transfer of Common Shares would cause the Trust to be    
beneficially owned by fewer than 100 persons, such transfer will be null and    
void in its entirety and the intended transferee will acquire no rights to the  
stock. See "--Description of Shares of Beneficial Interest--Restrictions on     
Transfer."                                                                      

 The remedy provided in the Minnesota Articles arising from a violation of
the ownership limits described in the preceding paragraph is different from the 
remedy provided in the Declaration of Trust arising from a violation of the     
comparable provisions in the Declaration of Trust. Pursuant to the Minnesota    
Articles, the Board is authorized to refuse to transfer any shares to a person  
if, as a result of the transfer, that person would own excess shares. The       
Minnesota Articles also provide that in the event any person acquires excess    
shares, at the discretion of the Board such excess shares may be redeemed by the
Company. The redemption price for such excess shares is the closing price as    
reported on the NASDAQ System on the last business day prior to the redemption  
date or, if the shares are listed on an exchange, the closing price on the last 
business day prior to the redemption date or, if neither listed on an exchange  
nor quoted on the NASDAQ System, the net asset value of the shares as determined
in good faith by the Board, but in each case never greater than the net asset   
value of the shares as determined in good faith by the Board. The remedies      
available to the Trust in the Declaration of Trust include a constructive Trust 
for the shares in excess of the Ownership Limit, and the right to designate an  
alternative purchaser at a fixed price in addition to the right to repurchase   
the shares. The Share Trustee will vote all shares and receive all distributions
prior to disposition of the excess shares. For a more complete description of   
the remedies available to the Trust under the Declaration of Trust see          
"--Description of Shares of Beneficial Interest-- Restrictions on Transfer."    

  All certificates evidencing the Common Shares will bear a legend referring
to the restrictions set forth in the Declaration of Trust.                      

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Under both the Minnesota Articles and the Declaration of Trust, each    
shareholder may be required to disclose to the Company or the Trust in writing  
such information as the Company or the Trust may request in order to determine  
the effect, if any, of such shareholder's actual and constructive ownership of  
Common Stock or Common Shares on the status as a REIT and to ensure compliance  
with the ownership limits described above. In addition, under the Declaration of
Trust, every owner of a specified percentage (or more) of the outstanding shares
of Common Shares must file a completed questionnaire containing information     
regarding their ownership of such shares, as set forth in the Treasury          
Regulations. Under current Treasury Regulations, the percentage will be set     
between 0.5% and 5.0% depending upon the number of record holders of the shares.

The foregoing ownership limitations may have the effect of delaying,    
deferring or preventing a change of control of the Trust without the consent of 
the Board of Trustees.                                                          

ANNUAL REPORT.  Both the Minnesota Bylaws and the Declaration of Trust  
(pursuant to the Maryland REIT Law) require the Company and the Trust to deliver
to shareholders an annual report concerning its operations for the preceding    
fiscal year containing financial statements prepared in accordance with GAAP    
which are audited and reported on by independent certified public accountants.  
The report must include a balance sheet, an income statement and a surplus      
statement. Annual reports must be mailed or delivered to each shareholder and   
must be placed on file at the principal office of the Trust within the time     
prescribed by the Maryland REIT Law.                                            

 MARYLAND ASSET REQUIREMENTS.  To maintain its qualification as a Maryland
real estate investment trust, the Maryland REIT Law requires at least 75% of the
value of the Trust's assets to be held, directly or indirectly, in real estate  
assets, mortgages or mortgage related securities, government securities, cash   
and cash equivalent items, including high-grade short term securities and       
receivables. The Maryland REIT Law also prohibits the Trust from using or       
applying land for farming, agricultural, horticultural or similar purposes.     

The MBCA does not have an equivalent provision.                         

THE COMPANY 

GENERAL                                                                         

The Company is a self-administered REIT, headquartered in Philadelphia, 
Pennsylvania, which focuses principally on the ownership, acquisition and       
management of suburban office properties in high growth submarkets in the United
States. The Company currently owns interests in ten suburban office buildings in
Pennsylvania and New Jersey containing approximately 1.5 million rentable square
feet and seven retail properties located in the Midwest containing approximately
370,000 rentable square feet. As of December 31, 1997, the Company's properties 
were over 99% leased.                                                           

The Company was formed in 1988 to own and acquire retail properties and 
subsequently became an externally advised REIT. On October 14, 1997, the        
Company, as part of the Transactions, acquired the Mid-Atlantic suburban office 
operations of The Shidler Group, a national real estate firm. As a result of the
Transactions, the Company relocated its headquarters from Minneapolis to        
Philadelphia and became internally administered. Further, Jay Shidler became the
Company's Chairman of the Board and Clay Hamlin became the Company's President  
and Chief Executive Officer. On January 1, 1998 the Company changed its name to 
Corporate Office Properties Trust, Inc.                                         

BUSINESS OBJECTIVES AND GROWTH STRATEGIES                                       

The Company's primary business objectives are to achieve sustainable    
long-term growth in FFO per share and to maximize long-term shareholder value.  
The Company intends to achieve these objectives primarily through external      
growth and, to a lesser extent, through internal growth. The Company intends to 
focus its activities on acquiring, owning and operating suburban office         
properties in high growth                                                       

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submarkets throughout the United States. The Company does not intend to expand  
its existing investments in retail properties and, to the extent appropriate    
opportunities arise, it may contribute some or all of these properties to the   
Operating Partnership in exchange for additional Units or sell or exchange some 
or all of these properties and reinvest any net cash proceeds thereof in        
suburban office properties.                                                     

- SUBURBAN OFFICE FOCUS. Management believes office buildings currently 
  offer the strongest fundamentals of any real estate property type, and
suburban office properties offer the Company the most attractive    
investment opportunities. The three key factors driving the strong  
fundamentals of suburban office properties are (i) declining vacancy
      rates, (ii) positive net absorption and (iii) limited new supply of office
   product. Management believes that many companies are relocating to, and
  expanding in, suburban locations because of the lower occupancy costs,
proximity to residential housing and better quality of life than    
traditional central business districts.                             

- EXTERNAL GROWTH. The Company is actively pursuing the acquisition of  
  additional suburban office properties in United States submarkets with
strong fundamentals. The Company's three-part acquisition strategy  
    includes (i) entity transactions in which the Company enters new markets
 by acquiring significant portfolios along with their management, (ii)
portfolio property purchases and (iii) opportunistic acquisitions of
    individual properties in submarkets in which the Company has a presence.
 The Company believes that there are a significant number of potential
   acquisitions that could greatly benefit from management's experience in
  enhancing property cash flow and value by renovating and repositioning
properties.                                                         

 - INTERNAL GROWTH. Management believes that the Company's internal growth
will come from (i) proactive property management and leasing, (ii)  
     contractual rent increases, (iii) operating efficiencies achieved through
    increasing economies of scale and (iv) tenant retention and rollovers at
increased rents where market conditions permit.                     

The Company believes it has certain competitive advantages which will   
enhance its ability to identify and capitalize on acquisition opportunities,    
including: (i) management's national multiple market expertise in identifying,  
creatively structuring and closing acquisitions; (ii) management's experience in
successfully growing public real estate companies utilizing a                   
centralized/decentralized organizational structure; (iii) management's          
long-standing relationships with tenants, real estate brokers, and institutional
and other owners of commercial real estate, which help the Company to identify  
acquisition opportunities resulting in a large acquisition pipeline; (iv) the   
Company's fully integrated real estate operations, which allow it to respond    
quickly to acquisition opportunities; (v) the Company's access to capital as a  
public company; and (vi) the Company's ability to offer tax deferred exchanges  
to sellers of properties.                                                       

CAPITALIZATION STRATEGY                                                         

In conjunction with its growth strategies, the Company has developed a  
two-phase capital strategy. The Company intends that the first phase will be a  
rapid growth period, during which the Company plans to emphasize the issuance of
Units to facilitate entity and portfolio acquisitions. To accelerate growth in  
FFO per share during this period, the Company will utilize a cash flow to debt  
service coverage ratio of approximately 1.6 to 1 which is anticipated to equate 
to a debt to total market capitalization of between 40% and 60%. During the     
second phase, the Company's mature growth period, it plans to gradually reduce  
its debt as a percentage of total market capitalization while continuing to grow
FFO per share.                                                                  

The Company is presently considering issuing in the near term for cash, 
either in a private placement or through a public offering, a significant amount
of Common Shares. In addition, the Company is likely to issue directly, or      
through the issuance of Units by the Operating Partnership, a substantial number
of Common Shares, or Units redeemable or exchangeable for Common Shares, in     
connection with acquisitions. The Company is presently exploring a number of    
potential acquisitions, some of which could be material and a number of which   
could be effected in the near term in the event the Company's explorations are  
successful.                                                                     

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PROPERTIES

THE SUBURBAN OFFICE PROPERTIES                                                  

   Set forth below is certain information with respect to the Company's office
properties.                                                                     

                                                        [Enlarge/Download Table]

                                                       PERCENTAGE                   PERCENTAGE     TOTAL RENTAL 
                               YEAR       RENTABLE       LEASED         TOTAL           OF            REVENUE   
                              BUILT/       SQUARE        (AS OF        RENTAL      TOTAL RENTAL     PER SQUARE  
PROPERTY LOCATION           RENOVATED       FEET         2/1/98)     REVENUE(1)     REVENUE(1)        FOOT(1)   
-------------------------  ------------  -----------  -------------  -----------  ---------------  -------------
                                                                                                                
PHILADELPHIA REGION                                                                                             
  Unisys World Hdqtrs.                                                                                          
    751 Jolly Rd.           1966/1991       112,958         100.0%    $1,425,955           8.2%      $   12.62  
    753 Jolly Rd.          1960/1992-94     424,380         100.0     2,903,216           16.6            6.84  
                                         -----------                 -----------         -----                  
      Combined Total                        537,338                   4,329,171           24.8            8.06  
    760 Jolly Rd.           1974/1994       199,380         100.0     2,516,925           14.4           12.62  
  Merck Building                                                                                                
    785 Jolly Rd.           1970/1996       218,219         100.0     2,096,951           12.0            9.61  

HARRISBURG REGION                                                                                               
  Gateway Corporate Ctr.                                                                                        
    6385 Flank Dr.             1995          32,800         100.0       431,616            2.5           13.16  
  Commerce Court                                                                                                
    2601 Market Pl.            1989          67,377          98.3     1,071,348            6.1           16.19  
    2605 Interstate Dr.        1990          84,268         100.0     1,159,160            6.6           13.76  

PRINCETON REGION                                                                                                
  Teleport National                                                                                             
    Hdqtrs.                                                                                                     
    429 Ridge Rd.           1966/1996       142,385         100.0     2,508,824           14.4           17.62  
    437 Ridge Rd.           1962/1996        30,000         100.0       582,867            3.3           19.43  
  IBM Building                                                                                                  
    431 Ridge Rd.           1958/1967       170,000         100.0     2,767,414           15.9           16.28  
                                         -----------                 -----------         -----                  
    TOTAL/WEIGHTED                                                                                              
      AVERAGE                             1,481,767          99.8%   1$7,464,276         100.0%      $   11.80  
                                         -----------                 -----------         -----                  
                                         -----------                 -----------         -----                  


                                 MAJOR TENANTS                                                                  
                           (10% OR MORE OF RENTABLE                                                             
PROPERTY LOCATION                SQUARE FEET)                                                                   
-------------------------  -------------------------                                                            
                                                                                                                
PHILADELPHIA REGION                                                                                             
  Unisys World Hdqtrs.                                                                                          
    751 Jolly Rd.          Unisys Corp. (100%)                                                                  
    753 Jolly Rd.          Unisys Corp. (100%)                                                                  
      Combined Total                                                                                            
    760 Jolly Rd.          Unisys Corp. (100%)                                                                  
  Merck Building                                                                                                
    785 Jolly Rd.          Unisys Corp. with 50%                                                                
                             sublease to Merck & Co.                                                            
                             Inc.                                                                               
HARRISBURG REGION                                                                                               
  Gateway Corporate Ctr.                                                                                        
    6385 Flank Dr.         Cowles Magazines (35%)                                                               
                           Orion Capital (27%)                                                                  
  Commerce Court                                                                                                
    2601 Market Pl.        Penn State Geisinger                                                                 
                             (38%)                                                                              
                           Ernst & Young (27%)                                                                  
                           Texas-Eastern Gas                                                                    
                             Pipeline Co. (27%)                                                                 
    2605 Interstate Dr.    PA Emergency Mgmt. Agency                                                            
                             (55%)                                                                              
                           USF&G (23%)                                                                          
                           Health Central (16%)                                                                 
PRINCETON REGION                                                                                                
  Teleport National                                                                                             
    Hdqtrs.                                                                                                     
    429 Ridge Rd.          Teleport Communication                                                               
                             Group (100%)                                                                       
    437 Ridge Rd.          IBM Corporation with 100%                                                            
                             sublease to Teleport                                                               
                             Communication Group                                                                
  IBM Building                                                                                                  
    431 Ridge Rd.          IBM Corporation (100%)                                                               
    TOTAL/WEIGHTED                                                                                              
      AVERAGE                                                                                                   

------------------------                                                        
(1) Total Rental Revenue is the monthly contractual base rent as of February 1, 
  1998 multiplied by 12 plus the estimated annualized expense reimbursements
  under existing leases except for the Philadelphia Region properties, which
are triple net leases pursuant to which the tenant pays all operating   
expenses directly.                                                      

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PHILADELPHIA SUBURBAN MARKET.                                           

REGIONAL ANALYSIS:  Located along the Delaware and Schuylkill Rivers,   
Philadelphia is a cosmopolitan city situated at the crossroads of the Northeast 
Corridor, the most prosperous and densely populated region in the country. With 
a total population of over 5 million according to the 1990 U.S. Census, the     
Philadelphia Metropolitan Statistical Area ("MSA") is the fourth largest        
metropolitan area in the U.S. Philadelphia boasts a large, highly skilled       
workforce which forms the base of one of the most diverse economies in the      
nation. Although the Philadelphia metropolitan area is a market in itself, its  
location and extensive transportation system provide easy access to 25% of the  
U.S. population which lives within a 300-mile radius.                           

 The greatest growth in the past fifteen years in the greater Philadelphia
region has occurred in the suburban counties as migration out of the central    
urban core has taken place. The Company's Philadelphia region properties are    
located in the Pennsylvania suburban counties within the Philadelphia MSA. The  
suburban counties have seen higher growth since 1980 in employment compared to  
the Philadelphia central business district as jobs moved from the central       
business district and new jobs emerged in the surrounding areas. Management     
believes the Pennsylvania suburban counties are well positioned for continued   
growth in both employment and population.                                       

PHILADELPHIA SUBURBAN OFFICE MARKET:  As of September 30, 1997, the     
Philadelphia Suburban Office Market contained approximately 44.2 million square 
feet and is divided into two overall markets, the Pennsylvania Suburban Market  
and the Southern New Jersey Market. The Company believes that current and       
projected economic trends favor the Pennsylvania Suburban Office Market and     
present advantageous conditions for commercial real estate.                     

   As of September 30, 1997, the Pennsylvania Suburban Market was comprised of
approximately 34.7 million square feet of non-owner occupied office space.      
Vacancy in the suburban markets increased in the late 1980's, but a significant 
improvement has occurred in the past few years. Vacancy at the end of the third 
quarter of 1997 stood at 9.3%, a slight increase from 9.2% at the end of 1996,  
and a decrease from 14.9% at the end of 1995. Leasing activity during the first 
three quarters of 1997 totaled 2,326,949 square feet with net absorption        
totaling 365,777 square feet during the period.                                 

 Within the Philadelphia Suburban Market, the Pennsylvania Suburban Market
consists of nine separate submarkets. The following table provides certain      
information with respect to office properties located in the Pennsylvania       
Suburban Market as of September 30, 1997.                                       

                                                        [Enlarge/Download Table]

                                                             OVERALL                                                
                                                            AVAILABLE                                               
                                                              SPACE         OVERALL         LEASING       WEIGHTED  
                                                TOTAL        (SQUARE        VACANCY        ACTIVITY      AVG. ASKING
SUBMARKET                                     INVENTORY       FEET)          RATE       THROUGH 9/30/97  RENTAL RATE
-------------------------------------------  ------------  ------------  -------------  ---------------  -----------
                                                                                                                    
Bala Cynwyd................................     2,827,907      210,181           7.4%         173,554     $   24.61 
Southern Bucks County......................     2,591,276      356,938          13.8          150,936         17.74 
Southern Route 202 Corridor................     3,766,383      685,461          18.2          340,132         20.51 
Lehigh & Northampton Counties..............     4,397,524      554,140          12.6          110,680         14.53 
Blue Bell/Plymouth Meeting/                                                                                         
  Ft. Washington...........................     4,856,811      272,493           5.6          327,104         19.38 
Main Line..................................     2,450,126      105,271           4.3          109,997         22.85 
Conshohocken...............................     1,094,018       37,281           3.4          102,058         20.54 
Horsham/Willow Grove/Jenkintown............     3,143,323      307,863           9.8          154,137         18.61 
King of Prussia/Valley Forge...............     9,590,937      713,885           7.4          858,351         19.65 
                                             ------------  ------------                 ---------------             
Pennsylvania Suburban Total................    34,718,305    3,243,513           9.3        2,326,949     $   18.96 
                                             ------------  ------------                 ---------------             
                                             ------------  ------------                 ---------------             

------------------------                                                        

Source:  Cushman & Wakefield                                                    

   Within the Philadelphia Suburban Market, the Company focuses on the western
and southern suburban markets located in Montgomery and Chester Counties. These 
markets include the King of                                                     

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Prussia/Valley Forge, Conshohocken, Blue Bell/Plymouth Meeting/Fort Washington, 
Southern Route 202 Corridor and the Bala Cynwyd submarkets. These markets       
benefit from excellent road networks and transportation systems, making these   
markets easily accessible and well positioned for future growth as jobs and the 
population exit the Philadelphia central business district.                     

  BLUE BELL/PLYMOUTH MEETING/FORT WASHINGTON SUBMARKET:  As of September 30,
1997, the Blue Bell/ Plymouth Meeting/Fort Washington submarket contained       
4,856,811 square feet of non-owner occupied office space. With the opening of   
I-476 connecting the Pennsylvania Turnpike to I-95 south of Philadelphia and    
connecting to I-76 into Philadelphia, the Blue Bell/Plymouth Meeting/Fort       
Washington submarket is located at the crossroads of the primary road network in
the region. As a result, the northern suburbs, especially the prime infill      
markets such as Blue Bell/Plymouth Meeting/Fort Washington, made a strong       
rebound from the recession and have seen rapidly rising rental rates in the past
year.                                                                           

The Company owns four properties in the Blue Bell/Plymouth Meeting/Fort 
Washington submarket. As of September 30, 1997, this submarket contains         
approximately 4.9 million square feet of commercial space and total vacancy for 
commercial office space was approximately 5.6%, down from 5.7% at the end of    
1996. Absorption of office space in this submarket for the first three quarters 
of 1997 totaled 33,697 square feet. Leasing activity through September 30, 1997 
totaled 327,104 square feet. The direct weighted average asking rental rate was 
$19.38 per square foot as of September 30, 1997, an increase of 9.0% from a rate
of $17.78 per square foot on December 31, 1996.                                 

THE MERCK BUILDING:  The Merck Building is a 218,219 square foot office 
building located on 28 acres at 785 Jolly Road in Blue Bell, Montgomery County, 
Pennsylvania. The building has a one-story lobby with a structural steel frame  
and brick exterior.                                                             

    The building is currently 50% occupied by Unisys and 50% occupied by Merck &
Co. Inc. ("Merck"), which will be taking the remainder of the building on       
January 1, 1999. The building is leased in its entirety to Unisys on a triple   
net basis through June 30, 2009 with the tenant responsible for the payment of  
all operating and capital improvement expenses of the property. The lease       
provides for 2% annual increases in the base rent. Merck has subleased one-half 
of the building from Unisys through June 30, 2009, the remainder of the Unisys  
lease term. The Merck sublease contains a call option under which Merck can take
the remainder of the space in the building and a put option under which Unisys  
can cause Merck to take the remaining space. Merck has exercised its option to  
become the sole occupant of the building on January 1, 1999. Under the sublease,
Merck has a direct obligation to pay the landlord if Unisys were to default on  
its obligations. The two-story brick building was constructed in 1970 as the    
Remington Rand Headquarters and was renovated by Merck in 1996.                 

UNISYS WORLD HEADQUARTERS:  The Unisys World Headquarters, located on 84
acres in Blue Bell, Montgomery County, Pennsylvania, consists of 736,718 square 
feet contained in three office buildings in a suburban office campus setting.   

    All of the buildings are leased to Unisys under separate leases which expire
June 30, 2009. The buildings are leased on a triple net basis though June 30,   
2009 with the tenant responsible for the payment of all operating and capital   
improvement expenses of the property. The leases provide for 2% annual increases
in the base rent.                                                               

- 751 Jolly Road: The first building comprising the Unisys World        
   Headquarters consists of 112,958 square feet in a two-story steel frame
facility. Exterior walls of glass and concrete panels enclose the   
     executive offices, boardroom, and worldwide telecommunications facilities
of this international corporation. The building was substantially   
renovated by Unisys in 1991.                                        

- 753 Jolly Road: The second building comprising the Unisys World       
     Headquarters is a single story office/flex building with structural steel
     frame and brick, block and glass exterior containing 424,380 square feet.
The building possesses the heavy power capabilities, fiber optics,  
    upgraded HVAC and telecommunications and electronic systems necessary to
  support this Fortune 500 technology company. The building contains the
primary software engineering and development divisions for          

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    Unisys, as well as general offices. Renovation of this building has been
     ongoing since 1993, during which time Unisys has expended over $6 million
in capital improvements on the building.                            

   Both 751 Jolly Road and 753 Jolly Road are leased under a single lease with
Unisys, which has posted a cash security deposit in the amount of $12.75
million under the lease.                                                

- 760 Jolly Road: The third building comprising the Unisys World        
   Headquarters is a 199,380 square foot office building situated on 29.67
 acres. This building serves as the headquarters for Unisys' worldwide
 marketing operations. The three-story building consists of structural
steel framing with brick and concrete panel exterior walls. This    
    technologically advanced building contains the latest telecommunications
and electronic systems, a high tech display center and a cafeteria. 

HARRISBURG, PENNSYLVANIA.                                               

REGIONAL ANALYSIS:  The Harrisburg Capital Region is the MSA composed of
Cumberland, Dauphin, Lebanon and Perry counties located midway between          
Philadelphia and Pittsburgh. At the center of the area is the city of           
Harrisburg, the capital of the Commonwealth of Pennsylvania and seat of Dauphin 
County.                                                                         

With its central location and convenient access to major markets (I-83, 
I-81, and the Pennsylvania Turnpike) along the East Coast, Harrisburg has       
recently become a fast growing area in the state. The region is strategically   
situated along major air, train, and highway arteries. The Company believes that
Harrisburg, which has become a new "edge city" to Philadelphia, is well         
positioned for long term growth and stability. The diverse economic base        
includes distribution, agriculture, retail and wholesale trade, light and heavy 
manufacturing, the federal military and state government activities.            

   Over the last decade, employment opportunities have increased by 20% in the
Harrisburg region with job growth in the private sector growing by 25% in the   
period from 1980 to 1990. The Harrisburg area's unemployment rate has           
consistently been lower than the state's and the nation's.                      

HARRISBURG OFFICE MARKET:  The Harrisburg office market, which as of    
September 30, 1997 consisted of 9.8 million square feet in 467 buildings, has   
continued a strong recovery with the overall office occupancy level of 91.2% at 
the end of the third quarter of 1997. Class A vacancy levels were 3.6% by the   
end of the third quarter of 1997. The Harrisburg office market positively       
absorbed over 90,000 square feet of office space in 1997. The Harrisburg office 
market consists of three primary submarkets: the Downtown Business District, the
West Shore Business District, and the East Shore Business District.             

                                                        [Enlarge/Download Table]

                                                                                                        AVERAGE                  
                                                                                                        CLASS A                  
                                                                            TOTAL        VACANCY      ASKING RATE      VACANCY   
                                                NUMBER OF      TOTAL      AVAILABLE    RATE (AS OF      (AS OF       RATE (AS OF 
SUBMARKET                                       BUILDINGS    INVENTORY   SQUARE FEET    9/30/97)       9/30/97)       12/31/96)  
--------------------------------------------  -------------  ----------  -----------  -------------  -------------  -------------
                                                                                                                                 
Downtown Business District..................          146     3,408,240     269,554           7.9%     $   17.25            8.7% 
East Shore..................................          145     2,389,964     264,734          11.1          17.50           11.4  
West Shore..................................          176     3,980,231     328,382           8.3          17.75            7.0  
                                                      ---    ----------  -----------                                             
    Total...................................          467     9,778,435     862,670           8.8                           8.7  
                                                      ---    ----------  -----------                                             
                                                      ---    ----------  -----------                                             

------------------------                                                        

Source:  Landmark Commercial Realty, Inc.                                       

The Company believes that the stability provided by the presence of the 
state capital coupled with the strong growth prospects due to Harrisburg's      
central location within the transportation network make Harrisburg an excellent 
market for commercial properties.                                               

   EAST SHORE SUBMARKET:  The East Shore submarket, which is the newest of the
three submarkets, contained 2,389,964 square feet of office space as of         
September 30, 1997. With limited new construction, the market has tightened and 
effective rents have recently increased.                                        

The Company owns three properties in the East Shore submarket. As of    
September 30, 1997, total vacancy for commercial office space in this submarket 
was approximately 11.0%, down from 11.4% at the                                 

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end of 1996. Absorption of office space in this submarket for the first three   
quarters of 1997 totaled 25,000 square feet. The Company has leased over 45,000 
square feet of space within its properties during the fourth quarter of 1997,   
bringing occupancy to 99.4%.                                                    

GATEWAY CORPORATE CENTER:  The Gateway Corporate Center is a corporate  
office park strategically located on the East Shore, just six and a half miles  
from downtown Harrisburg in Lower Paxton Township. Gateway Corporate Center,    
consisting of 67 landscaped acres, is Harrisburg's first comprehensive business 
park. The Gateway Corporate Center contains 335,000 rentable square feet in     
seven buildings with an overall occupancy of 99%. When completed, the park will 
have in excess of 410,000 rentable square feet.                                 

- 6385 Flank Drive: 6385 Flank Drive was built in 1995 and consists of a
  single-story brick and glass office building of 32,800 rentable square
     feet located in the Gateway Corporate Center. The building is occupied on
     a multi-tenant basis with lease up reaching 100% in 1997. Primary tenants
include Cowles Magazines, Orion Capital and Pitney Bowes.           

   COMMERCE PARK:  Commerce Park is a multiple ownership corporate office park
located at the intersection of I-81 and I-83 in the East Shore Market of        
Harrisburg. Commerce Park is three miles from downtown Harrisburg in Susquehanna
Township. When completed, the park will have in excess of 900,000 square feet on
150 acres.                                                                      

 - Commerce Court: Commerce Court is a four-story office building built in
 1989 and located on 8.5 acres in Commerce Park. The existing building
   contains 67,377 rentable square feet and consists of a structural steel
     frame with brick and reflective glass facade. Commerce Court is leased on
 a multi-tenant basis with Texas Eastern, Ernst & Young and Penn State
Geisinger Health Systems as primary tenants.                        

   - 2605 Interstate Drive: 2605 Interstate Drive is an 84,268 rentable square
     feet three-story office building and is located on 5.75 acres in Commerce
   Park. The building was constructed in 1990 and consists of a structural
      steel frame and concrete panel and reflective glass exterior. The building
is leased on a multi-tenant basis with the Pennsylvania Emergency   
Management Agency and USF&G as the primary tenants.                 

PRINCETON, NEW JERSEY.                                                  

    REGIONAL ANALYSIS:  Central New Jersey enjoys a premium location between the
major metropolitan areas of New York and Philadelphia. The central counties'    
(Middlesex, Mercer and Somerset) equidistant position between these cities,     
together with favorable demographics and high quality of life, have made them   
highly favorable for commercial properties. In fact, the three counties are the 
geographic center of the entire Northeastern Corridor, stretching from Boston to
Washington, DC, with both urban centers located within 250 miles.               

The Princeton Technology Center is included in a geographic region      
collectively referred to as "Princeton," which stretches southward from South   
Brunswick in Middlesex County to Hamilton in Mercer County. Since 1980, there   
has developed an image of prestige at being located in the Princeton area. The  
office real estate market has increased eightfold since 1980. Large corporations
such as Merrill Lynch, Bristol-Myers Squibb, AT&T, Johnson & Johnson, Dow Jones,
Raytheon, Rhone Poulenc Rorer and Wyeth Ayerst have relocated major divisions to
the area. The area's proximity to major roadways, including I-95 and the New    
Jersey Turnpike, make it a valuable distribution center.                        

The Princeton Technology Center is located in the southwestern corner of
Middlesex County, close to the border of Mercer County. Private sector          
non-agricultural employment increased in Middlesex County from 1981 to 1990,    
rising by 60,000 or 25.1%. The county population increased by 12.7% to a total  
of 671,780 over the same period. This growth has helped earn Central New Jersey 
the designation as second place in Money Magazine's "300 Best Areas to Live in  
America."                                                                       

    PRINCETON OFFICE MARKET:  The Princeton office market, which as of September
30, 1997 consisted of approximately 14.4 million square feet, experienced the   
corporate downsizing of the early 1990's, reaching a vacancy level of 21% in    
1993. However, the market has recovered, particularly the heart of the market,  

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the Route 1 corridor, and vacancy levels have dropped from 16.1% at December 31,
1996 to 8.2% at September 30, 1997.                                             

The Princeton office market consists of six submarkets:                 

                                                        [Enlarge/Download Table]

                                                                                                         AVERAGE                 
                                                  NUMBER                                   VACANCY       ASKING        VACANCY   
                                                    OF           TOTAL        TOTAL       RATE (AS      RATE PER      RATE (AS   
                                                 BUILDINGS     INVENTORY    AVAILABLE    OF 9/30/97)   SQUARE FOOT  OF 12/31/96) 
                                               -------------  ------------  ----------  -------------  -----------  -------------
                                                                                                                                 
Route 1 Corridor..............................         104       7,229,951     445,700          6.2%    $   20.45           9.3% 
Princeton--Route 206..........................          45       1,260,017      84,675          6.7         19.44          16.2  
Exit 8A--Cranbury.............................          43       1,877,006     148,616          7.9         18.03          40.0  
Hamilton--Windsor.............................          13         645,770     150,390         23.3         17.35          18.4  
Lawrenceville--Ewing..........................          44       1,833,167     262,321         14.3         18.63          16.3  
Trenton.......................................          13       1,615,422      92,054          5.7         19.50           7.5  
                                                       ---    ------------  ----------                                           
    Total.....................................         262      14,461,333   1,183,756          8.2                        16.1  
                                                       ---    ------------  ----------                                           
                                                       ---    ------------  ----------                                           

------------------------                                                        

Source:  Buschman Jackson-Cross                                                 

The Company believes that the strong growth prospects of the Princeton  
market make Princeton an excellent market for commercial properties. Princeton  
has become an attractive alternative to the New York/North Jersey office market.

Exit 8A--Cranbury Submarket: The Exit 8A--Cranbury submarket contains   
1,877,006 square feet of office space. The access to the New Jersey Turnpike,   
Route 1, and Route 130 has helped to establish the Exit 8A--Cranbury submarket  
as a premier distribution location since the early 1980s.                       

   The Company owns three properties in the Exit 8A--Cranbury submarket. As of
September 30, 1997, total vacancy for commercial office space was approximately 
7.9%, down from 40.0% at the end of 1996. Vacancy was distorted in 1996 when    
Continental Insurance put 500,000 square feet on the sublease market. This space
was re-absorbed in 1997.                                                        

 Princeton Technology Center: The Princeton Technology Center, a corporate
business park located on 18.8 acres in Dayton, New Jersey, consists of three    
parcels and 342,385 rentable square feet contained in three separate            
buildings--two office buildings and an office/flex building.                    

- 429 Ridge Road: The first of two buildings leased to TCG is a 142,385 
   rentable square feet three-story building on 14 acres. TCG is a rapidly
expanding, leading fiber optic based telecommunications company. In 
January 1998, AT&T announced its agreement to acquire TCG. This     
     three-story building has a structural steel frame with brick, metal panel
 and glass exterior. TCG operates a National Monitoring Center and its
national training headquarters at this location and has made a      
      multi-million dollar investment in the building. The initial term of TCG's
lease ends in 2008. The building was totally renovated in 1996 and  
  provides the latest in technologically advanced telecommunications and
electronics capabilities.                                           

 - 437 Ridge Road: The second of the buildings leased to TCG consists of a
 30,000 rentable square feet single-story building. The building has a
glass exterior along with a glass enclosed landscaped courtyard. TCG
     occupies the building under a sublease with IBM through April 2002, and a
     direct lease extending its occupancy through December 2006. This facility
houses the Chief Executive Officer and other executive officers. TCG
    totally renovated this building at a cost exceeding $2 million for TCG's
initial occupancy beginning November 1, 1996.                       

- 431 Ridge Road: 431 Ridge Road is a 170,000 rentable square feet      
     single-story office and research building which is leased in its entirety
    to IBM through March 31, 2002. The building has a structural steel frame
   with glass, metal panel and block exterior. The large floorplate, ample
    parking and ceiling height make the building highly adaptable for either
office or research uses.                                            

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THE RETAIL PROPERTIES.                                                          

   Set forth below is certain information with respect to the Company's retail
properties.                                                                     

                                                        [Enlarge/Download Table]

                                                      PERCENTAGE                   PERCENTAGE      TOTAL RENTAL  
                             YEAR                       LEASED         TOTAL        OF TOTAL          REVENUE    
                            BUILT/       RENTABLE       (AS OF        RENTAL         RENTAL         PER SQUARE   
PROPERTY LOCATION          RENOVATED    SQUARE FEET     2/1/98)     REVENUE(1)     REVENUE(1)         FOOT(1)    
-----------------------  -------------  -----------  -------------  -----------  ---------------  ---------------
                                                                                                                 
SUPERVALU STORES, INC.                                                                                           
  Indianapolis, IN                                                                                               
    5835 West 10th St.          1991        67,541         100.0%    $ 548,196           22.5%       $    8.12   
  Plymouth, MN                                                                                                   
    3550 Vicksburg Ln.          1991        67,510         100.0       522,813           21.4             7.74   

NASH-FINCH STORES                                                                                                
  Minot, ND                                                                                                      
    2100 S. Broadway            1993        46,134         100.0       305,774           12.5             6.63   
  Peru, IL                                                                                                       
    1351 38th St. North         1993        60,232         100.0       334,776           13.7             5.56   

FLEMING COMPANIES                                                                                                
  STORES                                                                                                         
  Delafield, WI                                                                                                  
    3265 Golf Rd.               1994        52,800         100.0       312,201           12.8             5.91   
  Glendale, WI                                                                                                   
    7601 N. Port                                                                                                 
      Washington Rd.            1992        36,248         100.0       168,300            6.9             4.64   
  Oconomowac, WI                                                                                                 
    630 E. Wisconsin                                                                                             
      Ave.                      1994        39,272         100.0       249,125           10.2             6.34   
                                        -----------                 -----------         -----                    

  TOTAL/WEIGHTED                                                                                                 
    AVERAGE                                369,737         100.0%    $2,441,185         100.0%       $    6.60   
                                        -----------                 -----------         -----                    
                                        -----------                 -----------         -----                    


PROPERTY LOCATION               TENANTS                                                                          
-----------------------  ----------------------                                                                  
                                                                                                                 
SUPERVALU STORES, INC.                                                                                           
  Indianapolis, IN                                                                                               
    5835 West 10th St.   SV Ventures                                                                             
  Plymouth, MN                                                                                                   
    3550 Vicksburg Ln.   Innsbruck Investments                                                                   
NASH-FINCH STORES                                                                                                
  Minot, ND                                                                                                      
    2100 S. Broadway     Nash-Finch Company                                                                      
  Peru, IL                                                                                                       
    1351 38th St. North  Nash-Finch Company                                                                      
FLEMING COMPANIES                                                                                                
  STORES                                                                                                         
  Delafield, WI                                                                                                  
                         Fleming Companies,                                                                      
    3265 Golf Rd.          Inc.                                                                                  
  Glendale, WI                                                                                                   
    7601 N. Port         Fleming Companies,                                                                      
      Washington Rd.       Inc.                                                                                  
  Oconomowac, WI                                                                                                 
    630 E. Wisconsin     Fleming Companies,                                                                      
      Ave.                 Inc.                                                                                  
  TOTAL/WEIGHTED                                                                                                 
    AVERAGE                                                                                                      

------------------------                                                        
(1) Total Rental Revenue is the monthly contractual base rent as of February 1, 
1998 multiplied by 12.                                                  

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TENANTS                                                                         

The following table sets forth certain information with respect to the  
Company's office and retail tenants.                                            

                                                        [Enlarge/Download Table]

                                                                                                                       PERCENTAGE  
                                             NUMBER       REMAINING                      PERCENTAGE OF    AGGREGATE   OF AGGREGATE 
                                               OF        LEASE TERM     TOTAL RENTAL     TOTAL RENTAL      LEASED        LEASED    
TENANT NAME                                  LEASES       IN MONTHS   REVENUE($000)(1)    REVENUE(1)     SQUARE FEET   SQUARE FEET 
----------------------------------------  -------------  -----------  ----------------  ---------------  -----------  -------------
                                                                                                                                   
OFFICE TENANTS                                                                                                                     
Unisys Corporation......................            3           137      $    7,895(2)          39.7%       845,827          45.7% 
Teleport Communications Group...........            2            (3)          3,092             15.5        172,385           9.3  
IBM.....................................            1            50           2,767             13.9        170,000           9.2  
Merck (4)...............................            1           137           1,048(2)           5.3        109,110           5.9  
Penna. Emergency Mgmt. Agency(5)........            1            46             636              3.2         47,328           2.6  
Penn State Geisinger....................            2            (6)            411              2.1         25,428           1.4  
Ernst & Young...........................            1           117             292              1.5         17,499           0.9  
Texas Eastern...........................            1            28             286              1.4         17,363           0.9  
USF&G...................................            1            53             272              1.4         19,903           1.1  
Health Central..........................            1            35             190              1.0         12,699           0.7  
Cowles Magazines........................            1            50             149              0.7         11,309           0.6  
Orion Capital...........................            1            33             117              0.6          8,640           0.5  
Pitney Bowes............................            1            40              87              0.4          6,898           0.4  
Aerotek.................................            1            20              62              0.3          4,338           0.2  
Groundwater Sciences....................            1            39              56              0.3          4,420           0.2  
Orion Consulting........................            1            52              45              0.2          3,566           0.2  
Hershey Foods...........................            1            51              34              0.2          2,387           0.1  
McGraw-Hill.............................            1            52              26              0.1          1,467           0.1  
                                                   --                                                                              
                                                                            -------            -----     -----------        -----  
    Total Office Properties.............           22                        17,464             87.7      1,480,567          80.0  
RETAIL TENANTS                                                                                                                     
Fleming Companies, Inc..................            3            (7)            730              3.7        128,320           6.9  
Nash-Finch Company (8)..................            2           191             640              3.2        106,366           5.7  
SV Ventures (9).........................            1           165             548              2.8         67,541           3.7  
Innsbruck Investments (10)..............            1           157             523              2.6         67,510           3.6  
                                                   --                                                                              
                                                                            -------            -----     -----------        -----  
    Total Retail Properties.............            7                         2,441             12.3        369,737          20.0  
                                                   --                                                                              
                                                                            -------            -----     -----------        -----  
Total...................................           29                    $   19,905            100.0%     1,850,304         100.0% 
                                                   --                                                                              
                                                   --                                                                              
                                                                            -------            -----     -----------        -----  
                                                                            -------            -----     -----------        -----  

------------------------                                                        
(1) Total Rental Revenue is the monthly contractual base rent as of February 1, 
   1998 multiplied by 12, plus the estimated annualized expense reimbursements
    under existing leases, except for the Philadelphia Region properties and the
   retail properties which are triple net leases for which the tenant pays all
operating expenses directly.                                            

(2) Property occupied under a triple net lease agreement, pursuant to which the 
tenant directly pays all building operating expenses.                   

(3) Teleport leases 142,385 square feet which expires in February 2008 and      
 30,000 square feet which expires in December 2006. The 30,000 square feet
   are subleased from IBM through April 2002 and directly leased through 2006.

(4) Lease is with Unisys. Merck subleases 109,110 square feet with an option to 
lease an additional 109,109 square feet on January 1, 1999.             

(5) Aggregate Leased Square Feet has been adjusted from a 43,828 useable square 
feet lease to 47,828 rentable square feet for comparability.            

(6) Penn State Geisinger leases 17,665 square feet through October 2007 and     
7,763 square feet through October 2000. Both leases are in the Commerce 
Court property.                                                         

(7) Fleming Companies, Inc. has three leases consisting of 36,248 square feet,  
 39,272 square feet and 52,800 square feet. The leases expire in September
2010, May 2014 and November 2014, respectively.                         

(8) Nash-Finch has two leases consisting of 60,232 square feet and 46,134 square
feet. Both leases expire in January 2014.                               

(9) SV Ventures is a wholly owned subsidiary of SuperValu, Inc. SuperValu, Inc. 
has guaranteed this lease through 2006.                                 

(10) Franchisee of SuperValu, Inc. The Company pays SuperValu, Inc. a credit    
enhancement fee to guarantee payment under the lease through 2001.      

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LEASE EXPIRATION--PORTFOLIO TOTAL                                               

  The following table sets forth a summary schedule of the lease expirations
for the Trust's properties for leases in place as of February 1, 1998, assuming 
that none of the tenants exercise renewal options.                              

                                                        [Enlarge/Download Table]

                                                                         TOTAL RENTAL     TOTAL RENTAL                         
                                             SQUARE                       REVENUE OF         REVENUE                           
                                           FOOTAGE OF   PERCENTAGE OF      EXPIRING        OF EXPIRING        PERCENTAGE OF    
                             NUMBER OF      EXPIRING   TOTAL OCCUPIED       LEASES         LEASES PER         TOTAL RENTAL     
PERIOD OF EXPIRATION      LEASES EXPIRING    LEASES      SQUARE FEET       ($000)(1)     SQUARE FOOT(1)    REVENUE EXPIRING(1) 
------------------------  ---------------  ----------  ---------------  ---------------  ---------------  ---------------------
                                                                                                                               
1998....................             0              0           0.0%       $       0        $    0.00                 0.0%     
1999....................             1          4,420           0.2               56            12.65                 0.3      
2000....................             4         46,465           2.5              712            15.33                 3.6      
2001....................             3         58,564           3.2              784            13.40                 3.9      
2002....................             6        208,632          11.3            3,293            15.78                16.5      
2003....................             0              0           0.0                0             0.00                 0.0      
2004....................             0              0           0.0                0             0.00                 0.0      
2005....................             0              0           0.0                0             0.00                 0.0      
2006....................             1         30,000           1.6              583            19.43                 2.9      
2007....................             2         35,164           1.9              584            16.60                 2.9      
2008 and beyond.........            12      1,467,059          79.3           13,893             9.47                69.8      
                                    --                                                                                         
                                           ----------         -----          -------                                -----      
Total...................            29      1,850,304         100.0%       $  19,905            10.76               100.0%     
                                    --                                                                                         
                                    --                                                                                         
                                           ----------         -----          -------                                -----      
                                           ----------         -----          -------                                -----      

------------------------                                                        

(1) Total Rental Revenue is the monthly contractual base rent as of February 1, 
   1998 multiplied by 12, plus the estimated annualized expense reimbursements
    under existing leases, except for the Philadelphia Region properties and the
   retail properties which are triple net leases for which the tenant pays all
operating expenses directly.                                            

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LEASE EXPIRATIONS BY PROPERTY                                                   

  The following table sets forth a schedule of lease expirations by property
for leases in place as of February 1, 1998, for each of the 10 full and partial 
calendar years beginning February 1, 1998, assuming that none of the tenants    
exercise renewal options and excluding an aggregate 1,200 square feet of vacant 
space.                                                                          

                                                        [Enlarge/Download Table]

                                                     1998       1999       2000       2001       2002       2003       2004   
                                                   ---------  ---------  ---------  ---------  ---------  ---------  ---------
                                                                                                                              
OFFICE PROPERTIES                                                                                                             
------------------------                                                                                                      
PHILADELPHIA REGION                                                                                                           
  751 Jolly Road          Square Feet (1)                  0          0          0          0          0          0          0
                          % Square Feet (2)             0.0%       0.0%       0.0%       0.0%       0.0%       0.0%       0.0%
                          Total Rental Revenue     $       0  $       0  $       0  $       0  $       0  $       0  $       0
                          (3)                                                                                                 
                          Number of Leases                 0          0          0          0          0          0          0
                          Rent per Square Foot     $    0.00  $    0.00  $    0.00  $    0.00  $    0.00  $    0.00  $    0.00

  753 Jolly Road          Square Feet (1)                  0          0          0          0          0          0          0
                          % Square Feet (2)             0.0%       0.0%       0.0%       0.0%       0.0%       0.0%       0.0%
                          Total Rental Revenue     $       0  $       0  $       0  $       0  $       0  $       0  $       0
                          (3)                                                                                                 
                          Number of Leases                 0          0          0          0          0          0          0
                          Rent per Square Foot     $    0.00  $    0.00  $    0.00  $    0.00  $    0.00  $    0.00  $    0.00

  760 Jolly Road          Square Feet (1)                  0          0          0          0          0          0          0
                          % Square Feet (2)             0.0%       0.0%       0.0%       0.0%       0.0%       0.0%       0.0%
                          Total Rental Revenue     $       0  $       0  $       0  $       0  $       0  $       0  $       0
                          (3)                                                                                                 
                          Number of Leases                 0          0          0          0          0          0          0
                          Rent per Square Foot     $    0.00  $    0.00  $    0.00  $    0.00  $    0.00  $    0.00  $    0.00

  785 Jolly Road          Square Feet (1)                  0          0          0          0          0          0          0
                          % Square Feet (2)             0.0%       0.0%       0.0%       0.0%       0.0%       0.0%       0.0%
                          Total Rental Revenue     $       0  $       0  $       0  $       0  $       0  $       0  $       0
                          (3)                                                                                                 
                          Number of Leases                 0          0          0          0          0          0          0
                          Rent per Square Foot     $    0.00  $    0.00  $    0.00  $    0.00  $    0.00  $    0.00  $    0.00

HARRISBURG REGION                                                                                                             
  6385 Flank Drive        Square Feet (1)                  0          0      8,640      6,898     17,262          0          0
                          % Square Feet (2)             0.0%       0.0%      26.3%      21.0%      52.6%       0.0%       0.0%
                          Total Rental Revenue     $       0  $       0  $ 116,726  $  86,915  $ 227,974  $       0  $       0
                          (3)                                                                                                 
                          Number of Leases                 0          0          1          1          3          0          0
                          Rent per Square Foot     $    0.00  $    0.00  $   13.51  $   12.60  $   13.21  $    0.00  $    0.00

  2601 Market Place       Square Feet (1)                  0      4,420     25,126          0      1,467          0          0
                          % Square Feet (2)             0.0%       6.6%      37.3%       0.0%       2.2%       0.0%       0.0%
                          Total Rental Revenue     $       0  $  55,930  $ 406,040  $       0  $  25,673  $       0  $       0
                          (3)                                                                                                 
                          Number of Leases                 0          1          2          0          1          0          0
                          Rent per Square Foot     $    0.00  $   12.65  $   16.16  $    0.00  $   17.50  $    0.00  $    0.00

  2605 Interstate Drive   Square Feet (1)                  0          0     12,699     51,666     19,903          0          0
                          % Square Feet (2)             0.0%       0.0%      15.1%      61.3%      23.6%       0.0%       0.0%
                          Total Rental Revenue     $       0  $       0  $ 189,723  $ 697,761  $ 271,676  $       0  $       0
                          (3)                                                                                                 
                          Number of Leases                 0          0          1          2          0          0          0
                          Rent per Square Foot     $    0.00  $    0.00  $   14.94  $   13.51  $   13.65  $    0.00  $    0.00


                                                            2008 AND                                                          
                            2005       2006       2007       BEYOND      TOTALS                                               
                          ---------  ---------  ---------  ----------  -----------                                            
                                                                                                                              
OFFICE PROPERTIES                                                                                                             
------------------------                                                                                                      
PHILADELPHIA REGION                                                                                                           
  751 Jolly Road                  0          0          0     112,958      112,958                                            
                               0.0%       0.0%       0.0%      100.0%       100.0%                                            
                          $       0  $       0  $       0  $1,425,955  $ 1,425,955                                            

                                  0          0          0           1            1                                            
                          $    0.00  $    0.00  $    0.00  $    12.62  $     12.62                                            
  753 Jolly Road                  0          0          0     424,380      424,380                                            
                               0.0%       0.0%       0.0%      100.0%       100.0%                                            
                          $       0  $       0  $       0  $2,903,216  $ 2,903,216                                            

                                  0          0          0           1            1                                            
                          $    0.00  $    0.00  $    0.00  $     6.84  $      6.84                                            
  760 Jolly Road                  0          0          0     199,380      199,380                                            
                               0.0%       0.0%       0.0%      100.0%       100.0%                                            
                          $       0  $       0  $       0  $2,516,925  $ 2,516,925                                            

                                  0          0          0           1            1                                            
                          $    0.00  $    0.00  $    0.00  $    12.62  $     12.62                                            
  785 Jolly Road                  0          0          0     218,219      218,219                                            
                               0.0%       0.0%       0.0%      100.0%       100.0%                                            
                          $       0  $       0  $       0  $2,096,951  $ 2,096,951                                            

                                  0          0          0           2            2                                            
                          $    0.00  $    0.00  $    0.00  $     9.61  $      9.61                                            
HARRISBURG REGION                                                                                                             
  6385 Flank Drive                0          0          0           0       32,800                                            
                               0.0%       0.0%       0.0%        0.0%       100.0%                                            
                          $       0  $       0  $       0  $        0  $   431,616                                            

                                  0          0          0           0            5                                            
                          $    0.00  $    0.00  $    0.00  $     0.00  $     13.16                                            
  2601 Market Place               0          0     35,164           0       66,177                                            
                               0.0%       0.0%      52.2%        0.0%        98.3%                                            
                          $       0  $       0  $ 583,706  $        0  $ 1,071,348                                            

                                  0          0          2           0            6                                            
                          $    0.00  $    0.00  $   16.60  $     0.00  $     16.19                                            
  2605 Interstate Drive           0          0          0           0       84,268                                            
                               0.0%       0.0%       0.0%        0.0%       100.0%                                            
                          $       0  $       0  $       0  $        0  $ 1,159,160                                            

                                  0          0          0           0            3                                            
                          $    0.00  $    0.00  $    0.00  $     0.00  $     13.76                                            

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                                                                1998       1999       2000       2001       2002       2003   
                                                              ---------  ---------  ---------  ---------  ---------  ---------
                                                                                                                              
OFFICE PROPERTIES                                                                                                             
-----------------------------------                                                                                           
PRINCETON REGION                                                                                                              
  429 Ridge Road                     Square Feet (1)                  0          0          0          0          0          0
                                     % Square Feet (2)             0.0%       0.0%       0.0%       0.0%       0.0%       0.0%
                                     Total Rental Revenue     $       0  $       0  $       0  $       0  $       0  $       0
                                     (3)                                                                                      
                                     Number of Leases                 0          0          0          0          0          0
                                     Rent per Square Foot     $    0.00  $    0.00  $    0.00  $    0.00  $    0.00  $    0.00

  431 Ridge Road                     Square Feet (1)                  0          0          0          0    170,000          0
                                     % Square Feet (2)             0.0%       0.0%       0.0%       0.0%     100.0%       0.0%
                                     Total Rental Revenue     $       0  $       0  $       0  $       0  $2,767,414 $       0
                                     (3)                                                                                      
                                     Number of Leases                 0          0          0          0          1          0
                                     Rent per Square Foot     $    0.00  $    0.00  $    0.00  $    0.00  $   16.28  $    0.00

  437 Ridge Road                     Square Feet (1)                  0          0          0          0          0          0
                                     % Square Feet (2)             0.0%       0.0%       0.0%       0.0%       0.0%       0.0%
                                     Total Rental Revenue     $       0  $       0  $       0  $       0  $       0  $       0
                                     (3)                                                                                      
                                     Number of Leases                 0          0          0          0          0          0
                                     Rent per Square Foot     $    0.00  $    0.00  $    0.00  $    0.00  $    0.00  $    0.00

TOTAL OFFICE PROPERTIES              Square Feet (1)                  0      4,420     46,465     58,564    208,632          0
                                     % Square Feet (2)             0.0%       0.3%       3.1%       4.0%      14.1%       0.0%
                                     Total Rental Revenue     $       0  $  55,930  $ 712,489  $ 784,676  $3,292,736 $       0
                                     (3)                                                                                      
                                     Number of Leases                 0          1          4          3          5          0
                                     Rent per Square Foot     $    0.00  $   12.65  $   15.33  $   13.40  $   15.78  $    0.00

RETAIL PROPERTIES                                                                                                             
-----------------------------------                                                                                           
  Plymouth                           Square Feet (1)                  0          0          0          0          0          0
                                     % Square Feet (2)             0.0%       0.0%       0.0%       0.0%       0.0%       0.0%
                                     Total Rental Revenue     $       0  $       0  $       0  $       0  $       0  $       0
                                     (3)                                                                                      
                                     Number of Leases                 0          0          0          0          0          0
                                     Rent per Square Foot     $    0.00  $    0.00  $    0.00  $    0.00  $    0.00  $    0.00

  Indianapolis                       Square Feet (1)                  0          0          0          0          0          0
                                     % Square Feet (2)             0.0%       0.0%       0.0%       0.0%       0.0%       0.0%
                                     Total Rental Revenue     $       0  $       0  $       0  $       0  $       0  $       0
                                     (3)                                                                                      
                                     Number of Leases                 0          0          0          0          0          0
                                     Rent per Square Foot     $    0.00  $    0.00  $    0.00  $    0.00  $    0.00  $    0.00

  Glendale                           Square Feet (1)                  0          0          0          0          0          0
                                     % Square Feet (2)             0.0%       0.0%       0.0%       0.0%       0.0%       0.0%
                                     Total Rental Revenue     $       0  $       0  $       0  $       0  $       0  $       0
                                     (3)                                                                                      
                                     Number of Leases                 0          0          0          0          0          0
                                     Rent per Square Foot     $    0.00  $    0.00  $    0.00  $    0.00  $    0.00  $    0.00


                                                                                  2008 AND                                    
                                       2004       2005       2006       2007       BEYOND      TOTALS                         
                                     ---------  ---------  ---------  ---------  ----------  ----------                       
                                                                                                                              
OFFICE PROPERTIES                                                                                                             
-----------------------------------                                                                                           
PRINCETON REGION                                                                                                              
  429 Ridge Road                             0          0          0          0     142,385     142,385                       
                                          0.0%       0.0%       0.0%       0.0%      100.0%      100.0%                       
                                     $       0  $       0  $       0  $       0  $2,508,824  $2,508,824                       

                                             0          0          0          0           1           1                       
                                     $    0.00  $    0.00  $    0.00  $    0.00  $    17.62  $    17.62                       
  431 Ridge Road                             0          0          0          0           0     170,000                       
                                          0.0%       0.0%       0.0%       0.0%        0.0%      100.0%                       
                                     $       0  $       0  $       0  $       0  $        0  $2,767,414                       

                                             0          0          0          0           0           1                       
                                     $    0.00  $    0.00  $    0.00  $    0.00  $     0.00  $    16.28                       
  437 Ridge Road                             0          0     30,000          0           0      30,000                       
                                          0.0%       0.0%     100.0%       0.0%      100.0%      100.0%                       
                                     $       0  $       0  $ 582,867  $       0  $        0  $  582,867                       

                                             0          0          1          0           1           1                       
                                     $    0.00  $    0.00  $   19.43  $    0.00  $     0.00  $    19.43                       
TOTAL OFFICE PROPERTIES                      0          0     30,000     35,164   1,097,322   1,480,567                       
                                          0.0%       0.0%       2.0%       2.4%       74.1%       99.9%                       
                                     $       0  $       0  $ 582,867  $ 583,706  $11,451,871 $17,464,275                      

                                             0          0          1          2           6          22                       
                                     $    0.00  $    0.00  $   19.43  $   16.60  $    10.44  $    11.80                       
RETAIL PROPERTIES                                                                                                             
-----------------------------------                                                                                           
  Plymouth                                   0          0          0          0      67,510      67,510                       
                                          0.0%       0.0%       0.0%       0.0%      100.0%      100.0%                       
                                     $       0  $       0  $       0  $       0  $  522,813  $  522,813                       

                                             0          0          0          0           1           1                       
                                     $    0.00  $    0.00  $    0.00  $    0.00  $     7.74  $     7.74                       
  Indianapolis                               0          0          0          0      67,541      67,541                       
                                          0.0%       0.0%       0.0%       0.0%      100.0%      100.0%                       
                                     $       0  $       0  $       0  $       0  $  548,196  $  548,196                       

                                             0          0          0          0           1           1                       
                                     $    0.00  $    0.00  $    0.00  $    0.00  $     8.12  $     8.12                       
  Glendale                                   0          0          0          0      36,248      36,248                       
                                          0.0%       0.0%       0.0%       0.0%      100.0%      100.0%                       
                                     $       0  $       0  $       0  $       0  $  168,300  $  168,300                       

                                             0          0          0          0           1           1                       
                                     $    0.00  $    0.00  $    0.00  $    0.00  $     4.64  $     4.64                       

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                                                                1998       1999       2000       2001        2002       2003   
                                                              ---------  ---------  ---------  ---------  ----------  ---------
                                                                                                                               
RETAIL PROPERTIES                                                                                                              
-----------------------------------                                                                                            
  Peru                               Square Feet (1)                  0          0          0          0           0          0
                                     % Square Feet (2)             0.0%       0.0%       0.0%       0.0%        0.0%       0.0%
                                     Total Rental Revenue     $       0  $       0  $       0  $       0  $        0  $       0
                                     (3)                                                                                       
                                     Number of Leases                 0          0          0          0           0          0
                                     Rent per Square Foot     $    0.00  $    0.00  $    0.00  $    0.00  $     0.00  $    0.00

  Oconomowac                         Square Feet (1)                  0          0          0          0           0          0
                                     % Square Feet (2)             0.0%       0.0%       0.0%       0.0%        0.0%       0.0%
                                     Total Rental Revenue     $       0  $       0  $       0  $       0  $        0  $       0
                                     (3)                                                                                       
                                     Number of Leases                 0          0          0          0           0          0
                                     Rent per Square Foot     $    0.00  $    0.00  $    0.00  $    0.00  $     0.00  $    0.00

  Minot                              Square Feet (1)                  0          0          0          0           0          0
                                     % Square Feet (2)             0.0%       0.0%       0.0%       0.0%        0.0%       0.0%
                                     Total Rental Revenue     $       0  $       0  $       0  $       0  $        0  $       0
                                     (3)                                                                                       
                                     Number of Leases                 0          0          0          0           0          0
                                     Rent per Square Foot     $    0.00  $    0.00  $    0.00  $    0.00  $     0.00  $    0.00

  Delafield                          Square Feet (1)                  0          0          0          0           0          0
                                     % Square Feet (2)             0.0%       0.0%       0.0%       0.0%        0.0%       0.0%
                                     Total Rental Revenue     $       0  $       0  $       0  $       0  $        0  $       0
                                     (3)                                                                                       
                                     Number of Leases                 0          0          0          0           0          0
                                     Rent per Square Foot     $    0.00  $    0.00  $    0.00  $    0.00  $     0.00  $    0.00

TOTAL RETAIL                         Square Feet (1)          $       0  $       0  $       0  $       0  $        0  $       0
  PROPERTIES                         % Square Feet (2)             0.0%       0.0%       0.0%       0.0%        0.0%       0.0%
                                     Total Rental Revenue     $       0  $       0  $       0  $       0  $        0  $       0
                                     (3)                                                                                       
                                     Number of Leases                 0          0          0          0           0          0
                                     Rent per Square Foot     $    0.00  $    0.00  $    0.00  $    0.00  $     0.00  $    0.00

TOTAL PROPERTIES                     Square Feet (1)                  0      4,420     46,465     58,564     208,632          0
                                     % Square Feet (2)             0.0%       0.2%       2.5%       3.2%       11.3%       0.0%
                                     Total Rental Revenue     $       0  $  55,930  $ 712,489  $ 784,676  $3,292,736  $       0
                                     (3)                                                                                       
                                     Number of Leases                 0          1          4          3           5          0
                                     Rent per Square Foot     $    0.00  $   12.65  $   15.33  $   13.40  $    15.78  $    0.00


                                                                                  2008 AND                                     
                                       2004       2005       2006       2007       BEYOND     TOTALS                           
                                     ---------  ---------  ---------  ---------  ----------  ---------                         
                                                                                                                               
RETAIL PROPERTIES                                                                                                              
-----------------------------------                                                                                            
  Peru                                       0          0          0          0      60,232     60,232                         
                                          0.0%       0.0%       0.0%       0.0%      100.0%     100.0%                         
                                     $       0  $       0  $       0  $       0  $  334,776  $ 334,776                         

                                             0          0          0          0           1          1                         
                                     $    0.00  $    0.00  $    0.00  $    0.00  $     5.56  $    5.56                         
  Oconomowac                                 0          0          0          0      39,272     39,272                         
                                          0.0%       0.0%       0.0%       0.0%      100.0%     100.0%                         
                                     $       0  $       0  $       0  $       0  $  249,125  $ 249,125                         

                                             0          0          0          0           1          1                         
                                     $    0.00  $    0.00  $    0.00  $    0.00  $     6.34  $    6.34                         
  Minot                                      0          0          0          0      46,134     46,134                         
                                          0.0%       0.0%       0.0%       0.0%      100.0%     100.0%                         
                                     $       0  $       0  $       0  $       0  $  305,774  $ 305,774                         

                                             0          0          0          0           1          1                         
                                     $    0.00  $    0.00  $    0.00  $    0.00  $     6.63  $    6.63                         
  Delafield                                  0          0          0          0      52,800     52,800                         
                                          0.0%       0.0%       0.0%       0.0%      100.0%     100.0%                         
                                     $       0  $       0  $       0  $       0  $  312,201  $ 312,201                         

                                             0          0          0          0           1          1                         
                                     $    0.00  $    0.00  $    0.00  $    0.00  $     5.91  $    5.91                         
TOTAL RETAIL                         $       0  $       0  $  30,000  $       0  $  369,737  $ 369,737                         
  PROPERTIES                              0.0%       0.0%       0.0%       0.0%      100.0%     100.0%                         
                                     $       0  $       0  $       0  $       0  $2,441,185  $2,441,185                        

                                             0          0          0          0           7          7                         
                                     $    0.00  $    0.00  $    0.00  $    0.00  $     6.60  $    6.60                         
TOTAL PROPERTIES                             0          0     30,000     35,164   1,467,059  1,850,304                         
                                          0.0%       0.0%       1.6%       1.9%       79.3%      99.9%                         
                                     $       0  $       0  $ 582,867  $ 583,706  $13,893,056 $19,905,460                       

                                             0          0          1          2          13         29                         
                                     $    0.00  $    0.00  $   19.43  $   16.60  $     9.47  $   10.76                         

------------------------                                                        
(1) Total net rentable square feet represented by expiring leases.              

(2) Percentage of total net rentable square feet represented by expiring leases.

(3) Total Rental Revenue is the monthly contractual base rent as of February 1, 
   1998 multiplied by 12, plus the estimated annualized expense reimbursements
    under existing leases, except for the Philadelphia Region properties and the
   retail properties which are triple net leases for which the tenant pays all
operating expenses directly.                                            

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DISTRIBUTION POLICY 

   The Trust, in order to qualify as a REIT, is required to make distributions
(other than capital gains distributions) to its shareholders each year in an    
amount at least equal to (a) the sum of (i) 95% of the Trust's REIT taxable     
income for such year (computed without regard to the dividends paid deduction   
and the Trust's net capital gain) and (ii) 95% of the net income (after tax), if
any, from foreclosure property, minus (b) the sum of certain items of non-cash  
income. Such distributions as are required to maintain the Trust's REIT status  
must be paid in the taxable year to which they relate, or in the following      
taxable year if declared before the Trust timely files its tax return for the   
earlier year and if paid on or before the first regular distribution payment    
after such declaration. To the extent that the Trust does not distribute all of 
its net capital gain or distributes at least 95%, but less than 100%, of its    
REIT taxable income, as adjusted, it will be subject to tax on the undistributed
amounts at regular corporate tax rates; provided, however, that, as discussed   
below, effective for taxable years of the Trust beginning on or after January 1,
1998, the Trust's shareholders may claim a credit for taxes paid by the Trust in
respect of undistributed net capital gains if the Trust so elects. Furthermore, 
if the Trust should fail to distribute during each calendar year at least the   
sum of (A) 85% of its ordinary income for such year, (B) 95% of its capital gain
net income for such year, and (C) any undistributed taxable income from prior   
periods, the Trust would be subject to a 4% excise tax on the excess of the     
required distribution over the amounts actually distributed. Distributions      
declared by the Trust in October, November or December of a calendar year       
payable to shareholders of record on a specified date in any such month will be 
deemed to have been paid by the Trust and received by each shareholder on       
December 31 of such year as long as they are actually paid in January of the    
following year.                                                                 

The Trust intends to make regular quarterly cash distributions to its   
shareholders based upon a quarterly distribution of $0.125 per Common Share     
(equivalent to the cash distributions currently being paid on the Common Stock).
On an annualized basis, this would be $0.50 per Common Share (or an annual      
distribution rate of approximately 5% based on the last trade price of the      
Common Stock on NASDAQ on February 3, 1998).                                    

   Future distributions by the Trust will be at the discretion of the Board of
Trustees and will depend on the actual funds from operations of the Trust, its  
financial condition, capital requirements, the annual distribution requirements 
under the REIT provisions of the Code (see "Federal Income Tax                  
Considerations--Taxation of the Trust--Annual Distribution Requirements") and   
such other factors as the Board of Trustees deems relevant. See "Risk           
Factors--Possible Changes in Policies Without Shareholder Approval; No          
Limitation on Debt."                                                            

POLICIES WITH RESPECT TO CERTAIN ACTIVITIES 

 The following is a description of certain investment, financing and other
policies of the Trust. These policies have been adopted by the Board of Trustees
and may be amended or revised from time to time without the approval of the     
Trust's shareholders, except that changes in certain policies with respect to   
conflicts of interest must be consistent with legal requirements.               

INVESTMENT POLICIES                                                             

    If the Reformation is approved, the Trust will own the net retail properties
directly but intends to conduct all of its other investment activities through  
the Operating Partnership and its subsidiaries and other affiliates and joint   
ventures in which the Operating Partnership or a subsidiary may be a partner.   
The Trust's investment objectives are to provide quarterly cash distributions   
and achieve long-term capital appreciation through increases in the value of the
Trust's portfolio of properties and its operations. For a discussion of the     
Trust's properties, see "Properties." The Trust's policies are to (i) purchase  
income-producing commercial properties primarily for long-term capital          
appreciation and rental growth and (ii) expand and improve its current          
properties or other properties purchased or sell such properties, in whole or in
part, when circumstances warrant. To a lesser extent, the Trust intends to grow 
through the                                                                     

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selective development, redevelopment and construction of commercial properties. 
The Trust does not intend to expand its existing investments in net leased      
retail properties and, to the extent appropriate opportunities arise, it may    
contribute some or all of these properties to the Operating Partnership in      
exchange for additional Units or sell or exchange some or all of these          
properties and reinvest any net cash proceeds in suburban office properties.    

  Equity investments may be subject to existing mortgage financing and other
indebtedness or to such financing or indebtedness as may be incurred in         
connection with acquiring or refinancing such equity investments. Debt service  
with respect to such financing or indebtedness will have a priority over any    
distributions with respect to the Common Shares. Investments are also subject to
the Trust's policy not to be treated as an investment company under the         
Investment Company Act of 1940.                                                 

   The Trust expects to pursue its investment objectives primarily through the
direct ownership by the Operating Partnership of its current properties (other  
than those currently held by the Properties Partnerships) and other properties  
to be acquired in the future. The Trust currently intends to invest primarily in
existing improved properties but may, if market conditions warrant, invest in   
development projects as well. The Trust intends to concentrate on acquiring,    
owning and operating suburban office properties, and future investment or       
development activities will not be limited to any geographic area or product    
type or to a specified percentage of the Trust's assets. While the Trust intends
to seek diversity in its investments in terms of property locations, size and   
market, the Trust does not have any limit on the amount or percentage of its    
assets that may be invested in any one property or any one geographic area. The 
Trust intends to engage in such future investment and development activities in 
a manner which is consistent with the maintenance of its status as a REIT for   
federal income tax purposes.                                                    

 While the Trust's current portfolio consists of, and the Trust's business
objectives emphasize, equity investments in suburban office properties, the     
Trust may, in the discretion of the Board of Trustees, invest in mortgages and  
deeds of trust, consistent with the Trust's continued qualification as a REIT   
for federal income tax purposes, including participating or convertible         
mortgages if the Trust concludes that it may benefit from the cash flow or any  
appreciation in value of the property secured by such mortgages. Investments in 
real estate mortgages run the risk that one or more borrowers may default under 
such mortgages and that the collateral securing such mortgages may not be       
sufficient to enable the Trust to recoup its full investment.                   

  Subject to the limitations on ownership of certain types of assets and the
gross income tests imposed by the Code, the Trust also may invest in the        
securities of other REITs, other entities engaged in real estate activities or  
other issuers, including for the purpose of exercising control over such        
entities. See "Federal Income Tax Considerations--Taxation of the Trust--Asset  
Tests" and "--Taxation of the Trust--Gross Income Tests." The Trust may enter   
into joint ventures or partnerships for the purpose of obtaining an equity      
interest in a particular property in accordance with the Trust's investment     
policies. Such investments may permit the Trust to own interests in larger      
assets without unduly restricting diversification and, therefore, add           
flexibility in structuring its portfolio. The Trust will not enter into a joint 
venture or partnership to make an investment that would not otherwise meet its  
investment policies.                                                            

FINANCING POLICIES                                                              

In conjunction with its strategy to acquire additional suburban office  
properties, management has developed a two-phase capital strategy. The Company  
intends that the first phase would be a rapid growth period, during which the   
Trust plans to emphasize the issuance of Units to facilitate entity and         
portfolio acquisitions, and to utilize higher levels of debt than is typically  
employed by public REITs in order to accelerate growth in FFO per share. During 
the second phase, the Trust's mature growth period, it plans to gradually reduce
its debt as a percentage of total market capitalization. To accomplish this, the
Trust plans to issue a significant amount of its Common Shares, as well as      
Preferred Shares and unsecured debt. The effect of this approach, in the long   
term, should be a level of debt as a percentage of total capitalization         

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more in line with a typical REIT structure while continuing to grow FFO per     
share. The Declaration of Trust and the Maryland Bylaws, however, do not limit  
the amount or percentage of indebtedness that the Trust may incur, and the Trust
may from time to time modify its debt policy in light of current economic       
conditions, relative costs of debt and equity capital, the market values of its 
properties, general conditions in the market for debt and equity securities,    
fluctuations in the market price of its Common Shares, growth and acquisition   
opportunities and other factors. Any increase in the Trust's level of           
indebtedness results in an increased risk of default on its obligations and a   
related increase in debt service requirements that could adversely affect the   
financial condition and results of operations of the Trust and the Trust's      
ability to make distributions to shareholders. The Trust will consider a number 
of factors in making decisions regarding the incurrence of debt such as the     
purchase price of properties to be acquired with debt financing, the estimated  
market value of properties upon refinancing and the ability of particular       
properties and the Trust as a whole to generate sufficient cash flow to cover   
expected debt service. See "Risk Factors--Possible Changes in Policies Without  
Shareholder Approval; No Limitation on Debt."                                   

    The Trust has not established any limit on the number or amount of mortgages
that may be placed on any single property or on its portfolio as a whole.       

To the extent that the Board of Trustees decides to obtain additional   
capital, the Trust may raise such capital through additional equity offerings   
(including offerings of senior securities), debt financings or retention of cash
available for distribution (subject to provisions in the Code concerning        
taxability of undistributed REIT income), or a combination of these methods. As 
long as the Operating Partnership is in existence, the net proceeds of the sale 
of Common Shares by the Trust will be transferred to the Operating Partnership  
in exchange for that number of Partnership Units in the Operating Partnership   
equal to the number of Common Shares sold by the Trust. The Trust presently     
anticipates that any additional borrowings would be made through the Operating  
Partnership, although the Trust may incur indebtedness directly and loan the    
proceeds to the Operating Partnership. Borrowings may be unsecured or may be    
secured by any or all of the assets of the Trust, the Operating Partnership or  
any existing or new property owning partnership and may have full or limited    
recourse to all or any portion of the assets of the Trust, the Operating        
Partnership or any existing or new property owning partnership. Indebtedness    
incurred by the Trust may be in the form of bank borrowings, purchase money     
obligations to sellers of properties, publicly or privately placed debt         
instruments or financing from institutional investors or other lenders. The     
proceeds from any borrowings by the Trust may be used for working capital, to   
refinance existing indebtedness or to finance acquisitions, expansions or the   
development of new properties, and for the payment of distributions. See        
"Federal Income Tax Considerations."                                            

CONFLICT OF INTEREST POLICIES                                                   

The Trust has adopted certain policies that are intended to minimize    
potential conflicts of interest. The Board of Trustees also is subject to       
certain provisions of Maryland law that are designed to eliminate or minimize   
certain potential conflicts of interest. However, there can be no assurance that
these policies will be successful in eliminating the influence of such          
conflicts, and if they are not successful, decisions could be made that might   
fail to reflect fully the interests of all shareholders. See "Risk              
Factors--Conflicts of Interest."                                                

DECLARATION OF TRUST AND MARYLAND BYLAW PROVISIONS.  The Declaration of 
Trust includes a provision generally permitting the Trust to enter into an      
agreement or transaction with any person, including any Trustee, employee or    
agent of the Trust. The Operating Partnership Agreement provides that neither   
the Trust nor any of its affiliates (including its officers and Trustees) may   
sell, transfer or convey any property to, or purchase any property from, the    
Operating Partnership except on terms competitive with those that may be        
obtained in the marketplace from unaffiliated persons.                          

 THE OPERATING PARTNERSHIP.  The Operating Partnership Agreement gives the
Trust, in its capacity as General Partner, full, complete and exclusive         
discretion in managing and controlling the business of the                      

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Operating Partnership and in making all decisions affecting the business and    
assets of the Operating Partnership. Pursuant to the Operating Partnership      
Agreement, the Limited Partners have agreed that the Trust is acting on behalf  
of the Operating Partnership and the Trust's shareholders generally and, in its 
capacity as General Partner, although owing fiduciary duties to all partners, in
the event of a conflict of interest between the Limited Partners and the Trust's
shareholders, the General Partner shall discharge its fiduciary obligations to  
the Limited Partners by acting in the best interests of the Trust's             
shareholders. In addition, the General Partner is not responsible for any       
misconduct or negligence on the part of its agents, provided that such agents   
were appointed in good faith. See "Operating Partnership Agreement."            

PROVISIONS OF MARYLAND LAW.  Under the MGCL, a contract or transaction  
between a corporation and any of its directors or between a corporation and any 
other corporation, firm or other entity in which any of its directors is a      
director or has a material financial interest is not void or voidable solely    
because of (a) the common directorship or interest, (b) the presence of the     
director at the meeting of the board of directors or a committee of the board of
directors that authorizes or approves or ratifies the contract or transaction or
(c) the counting of the vote of the director for the authorization, approval or 
ratification of the contract or transaction if (i) after disclosure of the      
interest, the transaction is authorized, approved or ratified by the affirmative
vote of a majority of the disinterested directors, or by the affirmative vote of
a majority of the votes cast by shareholders entitled to vote other than the    
votes of shares owned of record or beneficially by the interested director or   
such corporation, firm or other entity, or (ii) the transaction is fair and     
reasonable to the corporation. Under the Maryland By-laws, these provisions     
apply to the Trust and the Trustees.                                            

POLICIES WITH RESPECT TO OTHER ACTIVITIES.  The Trust may, but does not 
presently intend to, make investments other than as previously described. The   
Trust has authority to offer its Common Shares, other shares of beneficial      
interest or other securities for cash or in exchange for property and to        
repurchase or otherwise reacquire its shares or any other securities and may    
engage in such activities in the future. The Trust has not issued Common Shares,
interests or any other securities to date, except in connection with the        
formation of the Trust. The Trust has no outstanding loans to other entities or 
persons, including its officers and Trustees. The Trust has not engaged in      
trading, underwriting or agency distribution or sale of securities of other     
issuers, nor has the Trust invested in the securities of other issuers other    
than the Operating Partnership for the purpose of exercising control and        
currently does not intend to do so. The Trust makes and intends to continue to  
make investments in such a way that it will not be treated as an investment     
company under the Investment Company Act of 1940. The Trust's policies with     
respect to such activities may be reviewed and modified or amended from time to 
time by the Board of Trustees without approval of the Trust's shareholders.     

At all times, the Trust intends to make investments in such a manner    
consistent with the requirements of the Code for the Trust to qualify as a REIT 
unless, because of changing circumstances or changes in the Code (or in Treasury
Regulations), the Board of Trustees determines that it is no longer in the best 
interests of the Trust to quality as a REIT.                                    

WORKING CAPITAL RESERVES                                                        

  The Trust intends to maintain working capital reserves in amounts that the
Board of Trustees determines to be adequate to meet normal contingencies in     
connection with the operation of the Trust's business and investments.          

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OPERATING PARTNERSHIP AGREEMENT 

GENERAL                                                                         

Substantially all of the Trust's assets (other than its interest in the 
retail properties) will be held by, and its operations will be conducted        
through, the Operating Partnership. The Trust holds Partnership Units           
representing an 18.86% partnership interest in the Operating Partnership (after 
giving effect to the Retained Interests) and will control the Operating         
Partnership in its capacity as the sole general partner. Subject to the Trust's 
right to receive the Excess Allocations through December 31, 2000, the Trust's  
interest in the Operating Partnership will entitle it to share in quarterly cash
distributions from, and in the profits and losses of, the Operating Partnership 
in proportion to the Trust's percentage ownership of the Operating Partnership; 
provided, however, that the Trust as General Partner will be allocated all      
losses in excess of partner capital accounts. See "Certain Transactions--The    
Transactions." The Limited Partners will own the remaining 81.14% economic      
interest in the Operating Partnership (after giving effect to the Retained      
Interests) through their ownership of Partnership Units and Preferred Units.    
Under the Operating Partnership Agreement no Partnership Units or Preferred     
Units may be transferred by a Limited Partner without the consent of the General
Partner and no such transfer may be made if such transfer would (i) result in   
the Operating Partnership being terminated for federal income tax purposes or   
treated as an association taxable as a corporation, (ii) be effectuated through 
an "established securities market" or a "secondary market (or the substantial   
equivalent thereof)" within the meaning of Section 7704 of the Code, (iii)      
violate the provisions of applicable securities laws or (iv) violate the terms  
of any law, rule, regulation or commitment binding on the Operating Partnership,
among others. The transferee will only be admitted as a Limited Partner by      
furnishing certain requested instruments or documents to the Trust in its       
capacity as General Partner. In addition, with the consent of the General       
Partner, Partnership Units and Preferred Units may be transferred to certain    
family members or entities controlled by or comprised of such family members.   

    The net proceeds of any subsequent issuance of Common Shares are anticipated
to be contributed to the Operating Partnership in exchange for an equivalent    
number of Partnership Units.                                                    

    As the general partner of the Operating Partnership, the Trust will have the
exclusive power under the Operating Partnership Agreement to manage and conduct 
the business of the Operating Partnership. The Board of Trustees will direct the
affairs of the Operating Partnership. The Operating Partnership will be         
responsible for, and pay when due, its share of all administrative and operating
expenses of its properties. The General Partner of the Operating Partnership may
have fiduciary duties to the Limited Partners, the discharge of which may       
conflict with interests of the Trust shareholders. Pursuant to the Operating    
Partnership Agreement, however, the Limited Partners have acknowledged that the 
Trust is acting both on behalf of the Trust's shareholders and, in its capacity 
as General Partner, on behalf of the Limited Partners. The Limited Partners have
agreed that the Trust will discharge its fiduciary duties to the Limited        
Partners by acting in the best interests of the Trust's shareholders.           

   The following summary of the Operating Partnership Agreement, including the
descriptions of certain provisions set forth elsewhere in this Proxy            
Statement/Prospectus, is qualified in its entirety by reference to the Operating
Partnership Agreement, which is filed as an exhibit to the Registration         
Statement of which this Proxy Statement/Prospectus is a part.                   

MANAGEMENT                                                                      

The Operating Partnership has been organized as a Delaware limited      
partnership pursuant to the terms of the Operating Partnership Agreement. The   
Trust, as the sole general partner of the Operating Partnership, will generally 
have full, exclusive and complete discretion in managing and controlling the    
Operating Partnership. The Limited Partners of the Operating Partnership will   
have no authority to transact business for, or to participate in the management 
activities or decisions of, the Operating Partnership, except as provided in the
Operating Partnership Agreement and as provided by applicable                   

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law. However, the General Partner may not perform any act that would subject a  
Limited Partner to liability as a general partner in any jurisdiction or any    
other liability except as provided in the Operating Partnership Agreement or    
under the laws of the State of Delaware. In addition, no amendments may be made 
to the Operating Partnership Agreement that would alter a partner's amount of,  
or right to, distributions, modify the redemption rights discussed below or     
terminate the Operating Partnership without the consent of each partner         
adversely affected thereby.                                                     

CONVERSION AND REDEMPTION                                                       

Preferred Units may be converted on or after October 1, 1999 into       
Partnership Units of the Operating Partnership on the basis of 3.5714           
Partnership Units for each Preferred Unit being converted plus an amount in cash
equal to the accrued Priority Return Amount (as defined in the Operating        
Partnership Agreement) in respect of such Preferred Units.                      

    Subject to compliance with the Operating Partnership Agreement, beginning on
September 1, 1998, each Limited Partner has the right to require the Operating  
Partnership to redeem all or a portion of the Partnership Units held by such    
Limited Partner. The Operating Partnership (or the Trust as its General Partner)
has the right, in its sole discretion, to deliver to such redeeming Limited     
Partner for each Partnership Unit either one Common Share (subject to           
anti-dilution adjustment) or a cash payment equal to the then fair market value 
of such share (so adjusted) (based on the formula for determining such value set
forth in the Operating Partnership Agreement). Such rights of redemption and    
conversion are immediately exercisable upon the happening of a Special Event (as
defined in the Operating Partnership Agreement). The redemption of Partnership  
Units for Common Shares will have the effect of increasing the Trust's          
percentage interest in the Operating Partnership.                               

 The receipt of Common Shares upon exercise of such right of redemption is
subject to compliance with a number of significant conditions precedent,        
including compliance with the Declaration of Trust, all requirements under the  
Code applicable to REITs, the MGCL or any other law then in effect applicable to
the Trust and any applicable rule or policy of any stock exchange or            
self-regulatory organization.                                                   

LIABILITY AND INDEMNIFICATION                                                   

  The Operating Partnership Agreement provides the General Partner shall not
be liable to the Operating Partnership or any of the other partners for any act 
or omission performed or omitted in good faith on behalf of the Operating       
Partnership and in a manner reasonably believed to be (i) within the scope of   
the authority granted by the Operating Partnership Agreement and (ii) in the    
best interests of the Operating Partnership or the shareholders of the General  
Partner. The Operating Partnership Agreement also provides that the Operating   
Partnership shall indemnify the General Partner and each director, officer and  
shareholder of the General Partner and each person (including any affiliate)    
designated as an agent by the General Partner to the fullest extent permitted   
under the Delaware Revised Uniform Limited Partnership Act from and against any 
and all losses (including reasonable attorney's fees), and any other amounts    
arising out of or in connection with any claim, relating to or resulting        
(directly or indirectly) from the operations of the Operating Partnership, in   
which such indemnified party becomes involved, or reasonably believes it may    
become involved, as a result of its acting in the referred to capacity.         

CAPITAL CONTRIBUTIONS                                                           

  When the Trust contributes additional capital to the Operating Partnership
from the proceeds of subsequent issuances of Common Shares (or Preferred        
Shares), the Trust's interest in the Operating Partnership will be increased on 
a proportionate basis based upon the number of Common Shares (or Preferred      
Shares) issued to the extent the net proceeds from, or the property received in 
consideration for, the issuance thereof are used to fund the contribution.      

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TAX MATTERS                                                                     

  Pursuant to the Operating Partnership Agreement, the Trust will be the tax
matters partner of the Operating Partnership and, as such, will have authority  
to make certain tax related decisions and tax elections under the Code on behalf
of the Operating Partnership.                                                   

OPERATIONS                                                                      

The Operating Partnership Agreement allows the Trust to operate the     
Operating Partnership in a manner that will enable the Company to satisfy the   
requirements for being classified as a REIT. The Operating Partnership Agreement
also requires the distribution of the cash available for distribution of the    
Operating Partnership quarterly on a basis in accordance with the Operating     
Partnership Agreement.                                                          

TERM                                                                            

The Operating Partnership will continue in full force and effect until  
October 31, 2096 or until sooner dissolved upon (i) the withdrawal of the Trust 
as a general partner (unless a majority the Limited Partners elect to continue  
the Operating Partnership) or (ii) entry of a decree of judicial dissolution of 
the Operating Partnership or (iii) the sale, exchange or other disposition of   
all or substantially all of the assets of the Operating Partnership or (iv) the 
affirmative vote of two-thirds in interest of Limited Partners.                 

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MANAGEMENT

EXECUTIVE OFFICERS AND TRUSTEES                                                 

   The persons who will serve as executive officers and directors of the Trust
are identified below. Except as noted below, each of the executive officers will
be a full time employee of the Trust or the Operating Partnership.              

                                                        [Enlarge/Download Table]

NAME                                               AGE                          OFFICE                        CLASS
-------------------------------------------------  ---     -------------------------------------------------  -----
                                                                                                                   

Jay H. Shidler...................................      51  Chairman of the Board of Trustees                   III 

Clay W. Hamlin, III..............................      52  President, Chief Executive Officer and Trustee      III 

Vernon R. Beck...................................      56  Vice President and Vice Chairman of the Board of     I  
                                                           Trustees                                                

Kenneth D. Wethe.................................      56  Trustee                                             II  

Allen C. Gehrke..................................      63  Trustee                                              I  

William H. Walton................................      45  Trustee                                             II  

Kenneth S. Sweet, Jr.............................      65  Trustee                                             III 

Antony Bernheim..................................      37  Vice President, Chief Investment Officer                

Thomas D. Cassel.................................      39  Vice President, Finance                                 

David P. Hartsfield..............................      46  Vice President, Operations and Development              

John Parsinen....................................      55  Secretary                                               

James K. Davis, Jr...............................      37  Vice President, Acquisitions                            

Denise J. Liszewski..............................      41  Vice President, Administration                          

Stephen S. Fera..................................      31  Controller                                              

JAY H. SHIDLER is Chairman of the Board of Trustees. Mr. Shidler is the 
Founder and Managing Partner of The Shidler Group. A nationally acknowledged    
expert in the field of real estate investment and finance, Mr. Shidler has over 
25 years of experience in real estate investment and has been directly involved 
in the acquisition and management of over 1,000 properties in 40 states and     
Canada totalling over $4 billion in aggregate value. Mr. Shidler is a founder   
and current Chairman of the Board of Directors of First Industrial Realty Trust,
Inc. (NYSE: FR) and is a founder and former director and Co-Chairman of TriNet  
Corporate Realty Trust, Inc. (NYSE: TRI). Mr. Shidler is also founder and       
Chairman of the Board of Directors of CGA Group, Ltd., a holding company whose  
subsidiary is a AAA-rated financial guarantor based in Bermuda.                 

 Mr. Shidler serves on the boards of directors of several companies and is
active as a trustee of several charitable organizations, including The Shidler  
Family Foundation. Mr. Shidler holds a bachelor's degree in Business            
Administration from the University of Hawaii.                                   

  CLAY W. HAMLIN, III is a Trustee and President and Chief Executive Officer
of the Trust. Mr. Hamlin joined The Shidler Group in May 1989, where he was     
Managing Partner of The Shidler Group's Mid-Atlantic regional office and        
acquired over 4 million square feet of commercial property with a value in      
excess of $300 million. A resident of Philadelphia for over 30 years, Mr. Hamlin
has been active in the real estate business for 25 years. Mr. Hamlin is an      
attorney, a CPA and holds an MBA from The Wharton                               

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School of Business and an undergraduate degree from the University of           
Pennsylvania. Mr. Hamlin served as a Lieutenant J.G. in the U.S. Navy, and is   
active in many professional and charitable organizations. Mr. Hamlin is a       
founding shareholder of both TriNet Corporate Realty Trust, Inc. and First      
Industrial Realty Trust, Inc. His professional affiliations include the Urban   
Land Institute, NAREIT, NAIOP, the American Institute of CPAs and the American  
Bar Association.                                                                

VERNON R. BECK is Vice Chairman of the Board of Trustees and is a Vice  
President of the Trust. From 1988 to 1997, Mr. Beck served as President of the  
Company and as President of Crown Advisors, Inc., the Company's former external 
advisors. Since 1976, Mr. Beck has also been President of Vernon Beck &         
Associates, Inc., a commercial mortgage banking and real estate development     
firm, which has developed and financed numerous commercial real estate projects.
Mr. Beck is a former commercial loan officer with IDS Mortgage Corporation and  
senior analyst with Northwestern National Life Insurance Company. Mr. Beck,     
together with John Parsinen, owns all of the interests in Glacier Realty LLC.   
See "Certain Transactions--Management Agreement."                               

  KENNETH D. WETHE is a Trustee of the Trust. Since 1990, Mr. Wethe has been
the owner and principal officer of Wethe & Associates, a Dallas-based firm      
providing independent risk management, insurance and employee benefit services  
to school districts and governmental agencies. Mr. Wethe's background includes  
over 26 years experience in the group insurance and employee benefits area. He  
is a certified public accountant and holds an MBA from Pepperdine University.   

ALLEN C. GEHRKE is a Trustee of the Trust. Prior to becoming a private  
investor in 1995, Mr. Gehrke served for 35 years in various key positions at    
Fleming Companies, Inc. As Senior Vice President of Corporate Development, Mr.  
Gehrke's responsibilities included management of company physical assets, market
research, lease negotiations and real estate financing. Prior to his employment 
with Fleming Companies, Mr. Gehrke spent seven years with Midwest Contractors   
and L.A. Construction Co. of Milwaukee. Mr. Gehrke is a former director of      
United Cerebral Palsy and several other community organizations.                

WILLIAM H. WALTON is a Trustee of the Trust. Mr. Walton is a Managing   
Principal of Westbrook Partners, L.L.C. ("Westbrook") which he co-founded in    
April of 1994. With offices in Dallas, New York, San Francisco and Florida,     
Westbrook is a fully integrated real estate investment management company.      
Westbrook is the sponsor of Westbrook Real Estate Fund and Westbrook Real Estate
Fund II, which together control approximately $4 billion of real estate assets  
including investments in: real estate companies and securities; offices, retail 
and industrial properties; apartments; hotels; and residential developments.    
Prior to co-founding Westbrook, Mr. Walton was a Managing Director of Morgan    
Stanley Realty. Mr. Walton holds an AB from Princeton University and an MBA from
Harvard Business School.                                                        

  KENNETH S. SWEET, JR. is a Trustee of the Trust. Mr. Sweet is the Managing
Director of Gordon Stuart Associates, Inc., which he founded in 1991. In 1971,  
Mr. Sweet founded K.S. Sweet Associates which specialized in real estate and    
venture capital investments. From 1957 to 1971, he served in increasingly       
responsible positions at The Fidelity Mutual Life Insurance Company. Currently  
the Managing General Partner of fifteen venture capital and real estate         
partnership with assets of over $300 million, Mr. Sweet has over 37 years of    
experience in real estate investment, management, development and venture       
capital transactions.                                                           

   Mr. Sweet is active in community affairs and serves as a director, chairman
of the real estate committee and a member of the finance committee of the Main  
Line Health and the Philadelphia Chapter of the Nature Conservancy and is on the
Advisory Committee of the Arthur Ashe Youth Tennis Center. Mr. Sweet holds a BA 
degree from the Lafayette College and attended The Wharton School of Business.  

ANTONY BERNHEIM became Vice President, Chief Investment Officer, of the 
Company in November 1997. Prior to joining the Company, Mr. Bernheim served as  
Director of Acquisitions for Cali Realty Corp from September 1994 to May 1997.  
As Cali's Director of Acquisitions, Mr. Bernheim oversaw the                    

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acquisition program which transformed Cali from a $300 million company with 12  
buildings to a 130 building, $2.5 billion company. Prior to his employment with 
Cali, Mr. Bernheim had 13 years experience in the real estate industry,         
including three years with Oppenheimer & Company from February 1991 to September
1994. Mr. Bernheim studied international finance at the University of Southern  
California.                                                                     

THOMAS D. CASSEL has been Vice President, Finance of the Company since  
October 1997. Mr. Cassel has over 18 years experience in real estate accounting,
finance, acquisitions and management. From 1995 until he joined the Company, Mr.
Cassel was Vice President and Chief Financial Officer of Delancey Investment    
Group, Inc., a Philadelphia based real estate investment and management company 
of commercial and residential properties. Prior to Delancey, he was a real      
estate consulting manager for Arthur Andersen, LLP for four years and Kenneth   
Leventhal & Co. for two years. As a consultant, he performed strategic planning,
capital markets, valuation and acquisition analyses for a variety of real estate
companies, including REITs. Mr. Cassel is a CPA and received his bachelor's     
degree in Finance with a major in Accounting from the Wharton School at the     
University of Pennsylvania. He is active in several professional and charitable 
organizations.                                                                  

  DAVID P. HARTSFIELD has been Vice President, Operations and Development of
the Company since October 1997. He joined The Shidler Group in November 1994, as
Vice President with responsibility for management, leasing and development for  
The Shidler Group's Mid-Atlantic region. Prior to joining The Shidler Group, he 
served as Vice President, Development for the Kevin F. Donohoe Companies, where 
he was responsible for the development and management of office, hotel and      
retail properties, including the 1.1 million square foot Curtis Center in       
Philadelphia. Mr. Hartsfield has over 20 years of experience with commercial    
real estate management, leasing and development. He has a degree in architecture
and an MBA from The University of Virginia and is a member of BOMA and other    
professional organizations.                                                     

 JOHN PARSINEN. has over 31 years of experience in commercial real estate.
Mr. Parsinen has developed and owns various real estate projects. Mr. Parsinen  
has been a senior attorney at Parsinen Kaplan Levy Rosberg & Gotlieb, P.A.      
(Minneapolis, Minnesota) since it was formed in 1982. Mr. Parsinen owns 50% of  
Guaranty Title, Inc. a Minneapolis-based real estate title insurance company.   
Mr. Parsinen was a general partner of Earle Brown Commons Limited Partnership   
II, which owned and operated an elderly housing facility in Brooklyn Center, MN.
In 1994, the limited partnership initiated a Chapter 11 bankruptcy              
reorganization proceeding to restructure certain tax and debt obligations. The  
bankruptcy was dismissed in 1995 and the project was sold. Mr. Parsinen,        
together with Vernon Beck, owns all of the interests in Glacier Realty LLC. See 
"Certain Transactions--Management Agreement."                                   

JAMES K. DAVIS, JR. has been Vice President, Acquisitions of the Company
since October 1997. He joined The Shidler Group in July 1994, as Vice President 
with responsibility for acquisitions, financing, and leasing for The Shidler    
Group's Mid-Atlantic region. Prior to joining The Shidler Group, Mr. Davis, was 
Vice President, Acquisitions for Sandler Securities, Inc. He has 13 years of    
real estate experience in acquisitions, financing, development and leasing. Mr. 
Davis has an MBA from The Wharton School with a major in finance and an         
undergraduate degree from The University of North Carolina. He is active in     
several professional and charitable organizations.                              

  DENISE J. LISZEWSKI has been Vice President, Administration of the Company
and Assistant Secretary since October l997. She joined The Shidler Group in May 
1989 serving in a number of capacities, where she was in charge of personnel,   
administration and information systems. Ms. Liszewski has over 20 years of      
business experience and has an undergraduate degree from Drexel University.     

STEPHEN S. FERA has been Controller of the Company since December 1997. 
Prior to joining the Company, he spent seven years at Pennsylvania Real Estate  
Investment Trust ("PREIT"), where he was promoted to the position of Controller.
At PREIT, he was responsible for managing the day-to-day accounting operations  
of the REIT including all wholly-owned and joint venture properties. Prior to   
PREIT, Mr. Fera was Assistant Controller at Calvanese Corporation, where he was 
responsible for all corporate and construction accounting.                      

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CERTAIN INFORMATION REGARDING THE BOARD OF TRUSTEES AND COMMITTEES              

THE BOARD OF TRUSTEES.  The business and affairs of the Trust will be   
managed under the direction of the Board of Trustees. Pursuant to the terms of  
the Declaration of Trust, the Trustees are divided into three classes. Class I  
will hold office initially for a term expiring at the annual meeting of         
shareholders to be held in 1999, Class II will hold office initially for a term 
expiring at the annual meeting of shareholders to be held in 2000, and Class III
will hold office initially for a term expiring at the annual meeting of         
shareholders to be held in 2001. At each annual meeting of the shareholders of  
the Trust, the successors to the class of Trustees whose terms expire at the    
meeting will be elected to hold office for a term continuing until the annual   
meeting of shareholders held in the third year following the year of their      
election and the election and qualification of their successors. See "Proposal  
1--Reformation of Company--Comparison of Rights of Shareholders of the Company  
and Shareholders of the Trust."                                                 

COMMITTEES.  The Trust has a standing Audit Committee which currently   
consists of Mr. Wethe (Chairman) and Mr. Gehrke and Mr. Shidler and a           
Compensation Committee which currently consists of Mr. Sweet and Mr. Walton. The
Audit Committee reviews, recommends and reports to the Board of Trustees on (1) 
independent auditors, (2) the quality and effectiveness of internal controls,   
(3) engagement or discharge of the independent auditors, (4) professional       
services provided by the independent auditors and (5) the review and approval of
major changes in the Trust's accounting principles and practices. The           
Compensation Committee determines all executive compensation, recommends        
specific option grants to key personnel and approves employment contracts.      

The Board of Trustees presently acts as its own Nominating Committee.   

COMPENSATION OF TRUSTEES.  Independent Trustees (Messrs. Gehrke, Sweet, 
Walton and Wethe) will receive an annual fee of $15,000 from the date of the    
Special Meeting. Trustees incurring travel expenses in connection with their    
duties as trustees of the Trust are reimbursed in full. If the Plan is approved,
each Trustee is eligible to participate in the Plan. Management intends to      
recommend that the Compensation Committee grant to each Trustee who is not an   
employee of the Trust, upon initial election or appointment, an option to       
purchase Common Shares in an amount to be determined, at the then fair market   
value of the Common Shares, and grant such Trustee options to purchase an       
additional Common Shares annually.                                              

EXECUTIVE COMPENSATION                                                          

Upon completion of the Transactions on October 14, 1997, the Company    
converted from an externally advised to a self-administered REIT. Prior to      
October 14, 1997, no individual officer of the Company was paid any cash or     
other compensation. The following table sets forth the compensation paid from   
October 14, 1997 to December 31, 1997 and current base annual compensation for  
each of the executive officers of the Company.                                  

SUMMARY COMPENSATION TABLE

                                                        [Enlarge/Download Table]

                                                            PRINCIPAL                   1997 ACTUAL  BASE ANNUAL 
NAME                                                         POSITION                     SALARY        SALARY   
------------------------------------------  ------------------------------------------  -----------  ------------
                                                                                                                 

Clay W. Hamlin, III.......................  President, Chief Executive Officer           $  18,000    $   90,000 

Antony Bernheim...........................  Vice President, Chief Investment Officer        --           125,000 

Thomas D. Cassel..........................  Vice President, Finance                         22,038        90,000 

David Hartsfield..........................  Vice President, Operations and Development      16,000        80,000 

James K. Davis Jr.........................  Vice President                                  13,000        65,000 

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   None of these officers received options in connection with their service to
the Company during the year ended December 31, 1997. In addition, none of these 
officers contributed to any 401(k) plan.                                        

In addition to cash compensation in the form of base annual salary, the 
Company anticipates that it will have a cash bonus incentive plan pursuant to   
which cash bonuses may be awarded to executive officers and other key employees 
based on attainment of specified personal and corporate objectives. It is       
anticipated that the amounts of such bonuses will be determined by the Board    
based upon a recommendation of the Compensation Committee.                      

EMPLOYMENT AGREEMENT                                                            

 Mr. Hamlin has entered into an employment agreement with the Company. The
agreement is for a continuous and self-renewing term of two years unless        
terminated by either party. The agreement provides for base annual compensation 
in the amount set forth above and incentive compensation to be determined by the
Board, upon a recommendation of the Compensation Committee. The base annual     
compensation may be increased in subsequent years by action of the Compensation 
Committee. The employment agreement provides for certain severance payments in  
the event of disability or termination by the Company without cause or by Mr.   
Hamlin based upon constructive termination. The agreement also provides for     
certain payments to be made to Mr. Hamlin in the event of a Change in Control   
(as defined in the agreement). Mr. Hamlin is required under the terms of his    
employment agreement to devote his full business time to the affairs of the     
Company. The agreement also prohibits Mr. Hamlin from engaging, directly or     
indirectly, during the term of his employment and for a period thereafter, in   
activities that compete with those of the Company.                              

EXISTING PLAN                                                                   

   Since 1993, the Company has maintained the Existing Plan. A total of 75,000
shares of Common Stock are reserved for issuance under the Existing Plan. Each  
director of the Company is eligible to participate in the Existing Plan. The    
Existing Plan provides that each director will receive, upon initial election or
appointment, an option to purchase 2,500 shares of Common Stock at the then fair
market value of the Common Stock. The Existing Plan also provides for the grant 
of an option to purchase an additional 2,500 shares of the Common Stock upon    
each director's re-election to the Board. The options become exercisable in full
one year after date of grant and expire ten years from the date of grant.       
Following the adoption of the Plan, the Trust will assume the Existing Plan but 
does not intend to issue additional options thereunder. See "Proposal           
2--Adoption of the Plan."                                                       

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SECURITY OWNERSHIP OF MANAGEMENT AND OTHERS 

THE COMPANY                                                                     

The following table contains certain information as of January 14, 1998,
regarding the beneficial ownership of the Common Stock by (i) each person known 
by the Company to own beneficially more than 5% of the Common Stock, (ii) each  
current director and executive officer of the Company and (iii) the current     
directors and executive officers as a group, and as to the percentage of the    
outstanding shares held by them on such date. Any shares which are subject to an
option or a warrant exercisable within 60 days are reflected in the following   
table and are deemed to be outstanding for the purpose of computing the         
percentage of Common Stock owned by the option or warrant holder but are not    
deemed to be outstanding for the purpose of computing the percentage of Common  
Stock owned by any other person. Unless otherwise noted, each person identified 
below possesses sole voting and investment power with respect to such shares.   

                                                        [Enlarge/Download Table]

                                                                                    SHARES                      
                                                                                  BENEFICIALLY                  
                                                                                   OWNED(1)    PERCENT OF CLASS 
                                                                                  -----------  -----------------
                                                                                                                
Clay W. Hamlin, III..............................................................    300,000           13.22%   
Jay H. Shidler...................................................................    300,000           13.22    
Vernon R. Beck...................................................................    149,293(  (3)          6.55
John Parsinen....................................................................    151,965(  (4)          6.67
Allen C. Gehrke..................................................................      5,250(5)         *       
Kenneth S. Sweet, Jr.............................................................     10,000(1)         *       
William H Walton.................................................................     --               *        
Kenneth D. Wethe.................................................................     10,224(3)         *       
Anthony P. Bernheim..............................................................      7,500           *        
Thomas D. Cassel.................................................................        660           *        
All Directors and ExecutiveOfficers as a Group (10 persons)......................    934,892(6)         40.58%  

------------------------                                                        

*   Represents less than one percent.                                           

(1) Shares Beneficially Owned by a person are determined in accordance with the 
   definition of "beneficial ownership" as set forth in the regulations of the
  Commission and, accordingly, may include securities owned by or for, among
  others, the spouse, children or certain other relatives of such person, as
well as other shares as to which the person has or shares voting or     
  investment power or has the option or right to acquire Common Stock within
60 days.                                                                

(2) Shares are held by Enterprise Nautical, Inc., of which Mr. Beck is the sole 
owner.                                                                  

(3) Includes 10,000 shares of Common Stock each issuable upon exercise of       
presently exercisable options.                                          

(4) Includes 3,000 shares owned by Mr. Parsinen's wife.                         

(5) Includes 5,000 shares of Common Stock issuable upon exercise of presently   
exercisable options.                                                    

(6) Includes 35,000 shares of Common Stock issuable upon exercise of presently  
exercisable options.                                                    

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THE OPERATING PARTNERSHIP                                                       

  The following table sets forth certain information as of December 31, 1997
regarding the ownership of Partnership Units and Preferred Units (before giving 
effect to any contribution of Retained Interests):                              

                                                        [Enlarge/Download Table]

                                                                                  PERCENTAGE        PREFERRED   
                                                                COMMON UNITS       INTEREST           UNITS     
                                                               --------------  -----------------  --------------
                                                                                                                
GENERAL PARTNER                                                                                                 
The Company...................................................                        20.6946%                  
LIMITED PARTNERS AND PREFERRED LIMITED PARTNERS                                                                 
Mr. Shidler...................................................         2,600           0.0897           126,079 
Shidler Equities, L.P.(1).....................................       582,103          20.0773           457,826 
Mr. Hamlin....................................................         5,235            .1805           115,334 
LBCW Limited Partnership(2)...................................       875,284          30.1894           663,808 
CHLB Partnership(2)...........................................        63,243           2.1813            41,741 
Robert L. Denton..............................................       129,549           4.4683            85,502 
James K. Davis................................................        15,368            .5300            10,142 
John E. deB. Blockey, Trustee of the John E. deB. Blockey                                                       
  Living Trust dated 9/12/88..................................        89,549           3.0886            59,102 
Henry D. Bullock..............................................        34,718           1.1975            22,914 
Frederick K. Ito..............................................        17,359           0.5987            11,457 
LGR Investment Fund, Ltd......................................        80,030           2.7603            52,820 
Tiger South Brunswick, L.L.C..................................         2,875            .0992             1,898 
Westbrook Real Estate Fund I, L.P.............................       336,121          11.5931           221,840 
Westbrook Real Estate Co. InvestmentPartnership I, L.P........        33,299           1.1485            21,977 
Denise J. Liszewski...........................................        10,227           0.3527             6,750 
Samuel Tang...................................................         6,818           0.2352             4,500 
David P. Hartsfield...........................................         9,091           0.3136             6,000 
Lawrence J. Taff..............................................         4,091           0.1411             2,700 
Kimberly F. Aquino............................................         1,750           0.0604             1,155 
                                                               --------------        --------     --------------
                                                                   2,899,310         100.0000%        1,913,545 
                                                               --------------        --------     --------------
                                                               --------------        --------     --------------

------------------------                                                        

(1) A limited partnership controlled by Jay H. Shidler and his wife, Wallette   
Shidler.                                                                

(2) A family partnership controlled by Mr. Hamlin and his wife, Lynn B. Hamlin, 
as the sole general partners.                                           

REGISTRATION RIGHTS                                                             

The Company has granted to the holders of the Partnership Units and the 
Preferred Units certain registration rights. No later than August 1, 1998, the  
Company is obligated to file a shelf registration statement with respect to the 
shares of Common Stock issuable upon conversion or redemption of the Units (the 
"Registerable Securities"). The Company is also required, at the demand of      
holders of 6% or more of the Registerable Securities, to register such holders' 
Registerable Securities, subject to the right to defer the filing of the        
necessary registration statement for a period not to exceed 90 days under       
certain limited circumstances. This right to demand registration may be         
exercised not more than three times. In addition, the Company has granted to    
holders of Registrable Securities certain "piggy-back" rights. The Company has  
agreed to indemnify the holders of Registrable Securities against certain       
liabilities, including liabilities under the Securities Act. The Company will   
pay all fees associated with these registrations, other than underwriting       
discounts and commissions. In connection with the Reformation, the Trust will   
assume these obligations with respect to registering Common Shares issuable upon
conversion or redemption of the Units.                                          

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CERTAIN TRANSACTIONS

THE TRANSACTIONS                                                                

   On October 14, 1997, the Company completed the Transactions pursuant to the
Formation Agreement. Although the Transactions involved a number of properties  
and partnerships and were effected by a series of intermediate steps, the       
Transactions were negotiated and effected as a unitary transaction and, in      
effect, constituted the acquisition by the Company of an interest in the        
Operating Partnership formed to acquire a portfolio of ten properties           
representing the Mid-Atlantic suburban office operations of The Shidler Group, a
national real estate firm.                                                      

    Pursuant to the Transactions, the Company became the sole General Partner of
the Operating Partnership, and the Operating Partnership acquired all of the    
limited partnership interests in limited partnerships holding the Shidler       
Acquisition Properties (collectively, the "Properties Partnerships") except for 
an 11% limited partnership interest in Blue Bell Investment Company, L.P.       
retained by Shidler Equities, L.P., a limited partnership in effect controlled  
by Mr. Shidler, Chairman of the Board, and his wife, Wallette Shidler, and 11%  
limited partnership interests in each of ComCourt Investors L.P. and 6385 Flank 
Drive, L.P. retained by Mr. Hamlin, the President, Chief Executive Officer and a
director of the Company (collectively, the "Retained Interests"). Immediately   
prior to the Acquisition, Holdings was admitted as the sole general partner of  
each of the Properties Partnerships, holding a .1% interest in each of them. The
Company has a 20.6946% percentage interest (before giving effect to the         
contribution of the Retained Interests) in the Operating Partnership. In        
addition, until December 31, 2000, a portion of the Profits (as defined in the  
Operating Partnership Agreement) for each fiscal year is to be allocated 19.8%  
to the Company as the General Partner and 80.2% to all partners (including the  
Company as the General Partner but not the holders of Preferred Units).         

The Retained Interests are required to be contributed to the Operating  
Partnership in November 2000 in consideration for the issuance to them of an    
aggregate of 282,508 Partnership Units and 186,455 Preferred Units.             

 Immediately prior to the Acquisition, each of the Properties Partnerships
jointly and severally entered into a $100 million principal amount mortgage     
financing with Bankers Trust Company pursuant to a Senior Secured Credit        
Agreement dated as of October 14, 1997 (the "Property Financing"). See          
"Description of Property Financing."                                            

   For the purposes of the Acquisition, the Properties Partnerships (including
the Retained Interests) were treated as having a value of $170 million (which   
includes the $100 million of indebtedness represented by the Property           
Financing). For purposes of determining the consideration to be given in respect
of the acquisition by the Operating Partnership of limited partnership interests
in the Properties Partnerships, Partnership Units were issued (and will be      
issued in November 2000 for Retained Interests) at the rate of one Partnership  
Unit for every $5.50 in exchange value and Preferred Units were issued (and will
be issued in November 2000 for Retained Interests) at a rate of one Preferred   
Unit for every $25.00 in exchange value.                                        

 The aggregate consideration issued in the Transactions by the Company and
the Operating Partnership on October 14, 1997 to the former general and limited 
partners of the Properties Partnerships consisted of (x) 600,000 shares of      
Common Stock (issued at a price of $5.50 per share); (y) an aggregate of        
2,899,310 Partnership Units (including 600,000 issued to the Company in         
consideration for limited partnership interests in the Properties Partnerships  
acquired by it for 600,000 shares of Common Stock and subsequently contributed  
by it to the Operating Partnership); and (z) 1,913,545 Preferred Units. The     
nature and amount of consideration given and received by the Company in the     
Transactions was based on its judgment as to the fair market value of the       
Shidler Acquisition Properties and the shares of Common Stock at the time the   
Formation Agreement was negotiated.                                             

Pursuant to the Transactions, Messrs. Shidler and Hamlin each acquired  
300,000 shares of Common Stock in exchange for partnership interests in various 
of the Properties Partnerships. The Common Stock                                

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issued to Mr. Shidler and Mr. Hamlin represents, in the aggregate, approximately
26% of the outstanding Common Stock immediately following the Transactions.     
Prior to the Transactions, the Properties Partnerships had in effect been       
controlled by Mr. Shidler and Mr. Hamlin.                                       

MANAGEMENT AGREEMENT                                                            

Subject to the supervision of the Board, prior to October 14, 1997 the  
business of the Company was managed by Crown Advisors, Inc. ("Crown"), which    
provided investment advisory and administrative services to the Company pursuant
to an advisory agreement (the "Advisory Agreement"). Crown was owned by John    
Parsinen and Vernon R. Beck, then officers and directors of the Company and     
currently Secretary and Vice President and a director of the Company,           
respectively. Under the Advisory Agreement, the Company paid Crown certain      
attorney fees, expenses and performances fees, as defined in the Advisory       
Agreement, and a 3% fee for each real estate acquisition or disposition.        

Concurrently with the closing of the Transactions and pursuant to the   
Formation Agreement, the Advisory Agreement was terminated, and the Company     
entered into a new management agreement (the "Management Agreement") with       
Glacier Realty LLC, a Minnesota limited liability company ("Glacier"). All of   
the interests in Glacier are owned by Vernon R. Beck, a Vice President and Vice 
Chairman of the Board of the Trust, and John Parsinen, the Secretary of the     
Trust. Under the Management Agreement, Glacier is responsible for the management
of the retail properties of the Company, subject to the approval and direction  
of the Board. The Management Agreement provides that Glacier will receive an    
annual fee of $250,000 plus a percentage of Average Invested Assets (as defined 
in the Management Agreement) and will pay third party expenses associated with  
owning the retail properties. In addition Glacier will receive a fee of 1% of   
the purchase price or the sale price upon the acquisition or disposition by the 
Company or any of its affiliates of any net-leased real estate assets. Under the
Management Agreement, this percentage is increased to 3% in the event that all  
or substantially all of the net-leased real estate properties are disposed of.  
The Management Agreement has a term of five years and is terminable thereafter  
on 180 days prior written notice. In the event the Management Agreement is      
terminated, including for non-renewal, a fee equal to 3% of the Invested Real   
Estate Assets (defined in the Management Agreement to exclude the Company's     
current net-leased real estate assets) would be due to Glacier. Crown and       
Glacier received combined fees of $250,288 pursuant to the Advisory Agreement   
and the Management Agreement in the year ended December 31, 1997.               

OTHER                                                                           

Options to purchase an aggregate of 17,500 shares of Common Stock were  
granted to the directors in the year ended December 31, 1997 under the Existing 
Plan at a purchase price of $7.59 (options to purchase 2,500 Common Shares were 
granted to each Messrs. Hamlin, Shidler, Sweet and Walton in October 1997) and  
$5.25 (options to purchase 2,500 Common Shares were granted to each of Messrs.  
Beck, Gehrke and Wethe in May 1997) in each case, pursuant to the terms of the  
Existing Plan. These options expire ten years after their issue date.           

 Parsinen Kaplan Levy Rosberg & Gotlieb, P.A. performed legal services for
the Company. The Company incurred legal fees to them of approximately $69,000 in
the year ended December 31, 1997. John Parsinen, Secretary of the Company, is an
officer, director and shareholder of the Parsinen Kaplan Levy Rosberg & Gotlieb,
P.A.                                                                            

DESCRIPTION OF PROPERTY FINANCING 

 Immediately prior to the Acquisition, each of the Properties Partnerships
jointly and severally entered into the $100 million Property Financing with     
Bankers Trust Company. Approximately $96.1 million of the proceeds of the       
Property Financing was used by entities other than the Company and the Operating
Partnership to refinance indebtedness of or secured by the assets of the        
Properties Partnerships and to pay various costs in connection with the         
Transactions. Approximately $3.9 million of the proceeds of the Property        
Financing were contributed to the Operating Partnership in connection with the  
Transactions.                                                                   

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The Operating Partnership used approximately $2.9 million of these funds to pay 
various costs associated with the Transactions and retained approximately $1.0  
million for working capital needs.                                              

  The Operating Partnership is a joint and several obligor in respect of the
Property Financing. The Company and Holdings are not obligors with respect to   
the Property Financing, but have pledged certain assets described in the        
following sentence to secure repayment of the Property Financing. Substantially 
all of the assets of the Properties Partnerships and the Operating Partnership's
and Holdings' interests in the Properties Partnerships and the Company's        
interests in Holdings and the Operating Partnership have been pledged or        
mortgaged to secure the Properties Partnerships' and the Operating Partnership's
joint and several obligations in respect of the Property Financing.             

The initial term of the Property Financing is three years with the right
given to the obligors to extend it, subject to the satisfaction of certain      
conditions precedent thereto, for two successive one year extensions. Borrowings
under the Property Financing bear interest at the rate of 7.5% per annum. In the
event that the Property Financing is extended after the third anniversary or    
following an event of default during the first three years, the borrowings under
the Property Financing will bear interest at a floating rate based on LIBOR plus
2.5%.                                                                           

  The Property Financing contains, among other things, covenants restricting
the ability of the Operating Partnership to make distributions. The Property    
Financing also contains covenants restricting the ability of each Properties    
Partnership to incur indebtedness, create liens, make certain investments, enter
into transactions with affiliates and otherwise restrict activities. The        
Property Financing also contains the following financial covenants binding upon 
the Company and its subsidiaries: maintenance of consolidated net worth, a      
minimum consolidated interest coverage ratio, a maximum consolidated unhedged   
floating rate debt ratio and a maximum consolidated total indebtedness ratio.   
Each Properties Partnership must also maintain a minimum property interest      
coverage ratio and a minimum property hedged interest coverage ratio.           

   Events of default under the Property Financing include, among other things,
default in the payment of principal or interest on borrowings outstanding under 
the Property Financing, any payment default in respect of material amounts of   
indebtedness of the Company or its subsidiaries, any non-payment default on such
indebtedness, any material breach of the covenants or representations and       
warranties included in the Property Financing and related documents, the        
institution of any bankruptcy proceedings and the failure of any security       
agreement related to the Property Financing or lien granted thereunder to be    
valid and enforceable. Upon the occurrence and continuance of an event of       
default under the Property Financing, the lenders may declare the then          
outstanding loans due and payable.                                              

FEDERAL INCOME TAX CONSIDERATIONS 

The Company was organized in 1988 and elected to be taxed as a REIT     
commencing with its taxable year ended on December 31, 1992. The Company        
believes that it was organized and has operated in a manner that permits it to  
satisfy the requirements for taxation as a REIT under the applicable provisions 
of the Code, and the Trust intends to continue to operate in such a manner. No  
assurance can be given, however, that such requirements have been or will       
continue to be met. The following is a summary of the federal income tax        
considerations for the Trust and its shareholders with respect to the treatment 
of the Trust as a REIT.                                                         

  Based upon certain assumptions and representations described below, Cahill
Gordon & Reindel, special tax counsel to the Company and the Trust, is of the   
opinion that, for federal income tax purposes, (i) the Company has properly     
elected and otherwise qualified to be taxed as a REIT for the taxable years     
beginning on and after January 1, 1992 and ending prior to January 1, 1998 and  
(ii) the proposed method of operation as described in this Proxy                
Statement/Prospectus and as represented by the Company will enable the Company  
and the Trust to continue to satisfy the requirements for such qualification for
subsequent taxable years. See the discussion below under "--Taxation of the     
Trust" and "--Share Ownership Tests," however, regarding the possible impact of 
the Company's failure to make certain                                           

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demands of information from its shareholders, as required by Treasury           
Regulations. The determination of REIT qualification is based on certain        
assumptions relating to the organization and operation of the Company, the      
Trust, the Operating Partnership and the Properties Partnerships, and is        
conditioned upon certain representations made by the Company as to certain      
factual matters relating to its and the Trust's organization and intended or    
expected manner of operation. In addition, this determination is based on the   
law existing and in effect on the date hereof (or, where applicable, as in      
effect during earlier periods in question) and the Company's and the Trust's    
qualification and taxation as a REIT will depend on compliance with such law and
as the same may hereafter be amended. The qualification and taxation as a REIT  
will further depend upon the ability to meet, on a continuing basis through     
actual operating results, asset composition, distribution levels and diversity  
of share ownership, the various qualification tests imposed under the Code      
discussed below. No assurance can be given that the Company and the Trust will  
satisfy such tests on a continuing basis.                                       

In brief, a corporation that invests primarily in real estate can, if it
meets the REIT provisions of the Code described below, claim a tax deduction for
the dividends it pays to its shareholders. Such a corporation generally is not  
taxed on its "REIT taxable income" to the extent such income is currently       
distributed to shareholders, thereby substantially eliminating the "double      
taxation" (i.e., at both the corporate and shareholder levels) that generally   
results from an investment in a corporation. However, as discussed in greater   
detail below, such an entity remains subject to tax in certain circumstances    
even if it qualifies as a REIT. Further, if the entity were to fail to qualify  
as a REIT in any year, it would not be able to deduct any portion of the        
dividends it paid to its shareholders and would be subject to full federal      
income taxation on its earnings, thereby significantly reducing or eliminating  
the cash available for distribution to its shareholders. See "--Taxation of the 
Trust-General" and "--Taxation of the Trust-- Failure to Qualify."              

The following summary is based on existing law, is not exhaustive of all
possible tax considerations and does not give a detailed discussion of any      
state, local or foreign tax considerations, nor does it discuss all of the      
aspects of federal income taxation that may be relevant to a prospective        
shareholder in light of his or her particular circumstances or to certain types 
of shareholders (including insurance companies, financial institutions and      
broker-dealers) subject to special treatment under the federal income taxation  
laws. Except as noted, this summary is intended to address the federal income   
tax treatment applicable to the Trust and its shareholders following the        
Mergers.                                                                        

TAXATION OF THE TRUST                                                           

   GENERAL.  In any year in which the Trust qualifies as a REIT, in general it
will not be subject to federal income tax on that portion of its REIT taxable   
income or capital gain which is distributed to shareholders. The Trust may,     
however, be subject to tax at normal corporate rates upon any taxable income or 
capital gains not distributed. Under recently enacted legislation, shareholders 
are required to include their proportionate share of the REIT's undistributed   
long-term capital gain in income but receive a credit for their share of any    
taxes paid on such gain by the REIT.                                            

  Notwithstanding its qualification as a REIT, the Trust also may be subject
to taxation in certain other circumstances. If the Trust should fail to satisfy 
either the 75% or the 95% gross income test (each as discussed below), and      
nonetheless maintains its qualification as a REIT because certain other         
requirements are met, it will be subject to a 100% tax on the greater of the    
amount by which the Trust fails either the 75% or the 95% test, multiplied by a 
fraction intended to reflect the Trust's profitability. The Trust will also be  
subject to a tax of 100% on net income from any "prohibited transaction" (as    
described below), and if the Trust has (i) net income from the sale or other    
disposition of "foreclosure property" which is held primarily for sale to       
customers in the ordinary course of business or (ii) other non-qualifying income
from foreclosure property, it will be subject to tax on such income from        
foreclosure property at the highest corporate rate. In addition, if the Trust   
should fail to distribute during each calendar year at least the sum of (i) 85% 
of its REIT ordinary income for such year, (ii) 95% of its REIT capital gain net
income for such year and (iii) any undistributed taxable income from prior      
years, the Trust would be subject to a 4% excise                                

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tax on the excess of such required distribution over the amounts actually       
distributed. The Trust also may be subject to the corporate alternative minimum 
tax, as well as to tax in certain situations not presently contemplated. The    
Trust will use the calendar year both for federal income tax purposes, as is    
required of a REIT, and for financial reporting purposes.                       

In order to qualify as a REIT, the Trust must meet the following        
requirements, among others:                                                     

SHARE OWNERSHIP TESTS.  The Trust's shares of beneficial interest (which
term, in the case of the Trust, currently means the Common Shares) must be held 
by a minimum of 100 persons for at least 335 days in each taxable year (or a    
proportionate number of days in any short taxable year). In addition, at all    
times during the second half of each taxable year, no more than 50% in value of 
the outstanding shares of beneficial interest of the Trust may be owned,        
directly or indirectly and including the effects of certain constructive        
ownership rules, by five or fewer individuals, which for this purpose includes  
certain tax-exempt entities. However, for purposes of this test, any shares of  
beneficial interest held by a qualified domestic pension or other retirement    
trust will be treated as held directly by its beneficiaries in proportion to    
their actuarial interest in such trust rather than by such trust.               

   In order to attempt to ensure compliance with the foregoing share ownership
tests, the Company has and the Trust will place certain restrictions on the     
transfer of its shares of beneficial interest to prevent additional             
concentration of stock ownership. Moreover, to evidence compliance with these   
requirements, Treasury Regulations require the Trust to maintain records which  
disclose the actual ownership of its outstanding shares of beneficial interest. 
In fulfilling its obligations to maintain records, the Trust must and will      
demand written statements each year from the record holders of designated       
percentages of its shares of beneficial interest disclosing the actual owners of
such shares of beneficial interest (as prescribed by Treasury Regulations). A   
list of those persons failing or refusing to comply with such demand must be    
maintained as part of the Trust's records. A shareholder failing or refusing to 
comply with the Trust's written demand must submit with his tax return a similar
statement disclosing the actual ownership of Trust shares of beneficial interest
and certain other information. In addition, the Trust's Declaration of Trust    
provides restrictions regarding the transfer of its shares of beneficial        
interest that are intended to assist the Trust in continuing to satisfy the     
share ownership requirements. See "Proposal 1--Reformation of the               
Company--Description of Shares of Beneficial Interest--Restrictions on          
Transfer."                                                                      

    The Company unintentionally made required demands for shareholder statements
later then the time permitted by the regulations for its taxable years 1994     
through 1996 (and failed to make such demands for its taxable years 1992 and    
1993, which are generally closed years for purposes of the assessment of federal
income tax). As a consequence, the Service may contend that the Company failed  
to qualify as a REIT for some or all of such years. The Company, however,       
believes that it has substantially complied with the purposes of the shareholder
demand regulation. At its own initiative, the Company requested that the Service
enter into a closing agreement with the Company whereby the Service would agree 
not to treat the Company as failing to qualify as a REIT because of the         
Company's failure strictly to comply with the shareholder demand regulation. The
Service has not yet advised the Company whether it will enter into such closing 
agreement, although the Company has been advised that the Service has in some   
cases agreed to enter into such agreements under similar circumstances. The     
Service has given no indication that it intends to challenge the Company's      
qualification as a REIT for a failure to make the shareholder demands. If such a
challenge were successfully made, the Company believes that any liability for   
income taxes and interest for the taxable years 1994 through 1996 could be      
material. If the Service were successful in challenging the Company's REIT      
status for failure to satisfy the shareholder demand regulation, the Company's  
qualification as a REIT for 1997 would depend on the Company's ability to prove 
that its failure to make the shareholder demands was due to reasonable cause and
not due to willful neglect. Otherwise, the Company and the Trust could not elect
REIT status, potentially until 1999. The Company estimates that if it was unable
to elect REIT status until 1999, the Company's and the Trust's aggregate        
liability for income taxes and interest for the years 1994 through 1996 would be
approximately $165,000                                                          

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plus applicable interest. An additional tax liability could also fall due with  
respect to tax years 1997 and 1998.                                             

   ASSET TESTS.  At the close of each quarter of the Trust's taxable year, the
Trust must satisfy two tests relating to the nature of its assets (determined in
accordance with generally accepted accounting principles). First, at least 75%  
of the value of the Trust's total assets must be represented by interests in    
real property, interests in mortgages on real property, shares in other REITs,  
cash, cash items, government securities and qualified temporary investments.    
Second, although the remaining 25% of the Trust's assets generally may be       
invested without restriction, securities in this class may not exceed (i) in the
case of securities of any one non-government issuer, 5% of the value of the     
Trust's total assets (the "Value Test") or (ii) 10% of the outstanding voting   
securities of any one such issuer (the "Voting Stock Test"). Where the Trust    
invests in a partnership (such as the Operating Partnership), it will be deemed 
to own a proportionate share of the partnership's assets, and the partnership   
interest will not constitute a security for purposes of these tests. See "--Tax 
Aspects of the Trust's Investments in Partnerships--General." Accordingly, the  
Trust's investment in the Properties through its interests in the Operating     
Partnership and the Properties Partnerships (jointly referred to herein as the  
"Partnerships") will constitute an investment in qualified assets for purposes  
of the 75% asset test.                                                          

    GROSS INCOME TESTS.  There are two separate percentage tests relating to the
sources of the Trust's gross income which must be satisfied for each taxable    
year. For purposes of these tests, where the Trust invests in a partnership, the
Trust will be treated as receiving its share of the income and loss of the      
partnership, and the gross income of the partnership will retain the same       
character in the hands of the Trust as it has in the hands of the partnership.  
See "--Tax Aspects of the Trust's Investments in Partnerships--General" below.  
The two tests are as follows:                                                   

    THE 75% TEST.  At least 75% of the Trust's gross income for the taxable year
must be "qualifying income." Qualifying income generally includes: (i) rents    
from real property (except as modified below); (ii) interest on obligations     
secured by mortgages on, or interests in, real property; (iii) gains from the   
sale or other disposition of interests in real property and real estate         
mortgages, other than gain from property held primarily for sale to customers in
the ordinary course of the Trust's trade or business ("dealer property"); (iv)  
dividends or other distributions on shares in other REITs, as well as gain from 
the sale of such shares; (v) abatements and refunds of real property taxes; (vi)
income from the operation, and gain from the sale, of property acquired at or in
lieu of a foreclosure of the mortgage secured by such property ("foreclosure    
property"); and (vii) commitment fees received for agreeing to make loans       
secured by mortgages on real property or to purchase or lease real property.    

  Rents received from a tenant will not, however, qualify as rents from real
property in satisfying the 75% gross income test (or the 95% gross income test  
described below) if the Trust, or an owner of 10% or more of the Trust, directly
or constructively owns 10% or more of such tenant. In addition, if rent         
attributable to personal property leased in connection with a lease of real     
property is greater that 15% of the total rent received under the lease, then   
the portion of rent attributable to such personal property will not qualify as  
rents from real property. Moreover, an amount received or accrued will not      
qualify as rents from real property (or as interest income) for purposes of the 
75% and 95% gross income tests if it is based in whole or in part on the income 
or profits of any person, although an amount received or accrued generally will 
not be excluded from "rents from real property" solely by reason of being based 
on a fixed percentage or percentages of receipts or sales. Finally, for rents   
received to qualify as rents from real property for purposes of the 75% and 95% 
gross income tests, the Trust generally must not operate or manage the property 
or furnish or render services to customers, other than through an "independent  
contractor" from whom the Trust derives no income, except that the "independent 
contractor" requirement does not apply to the extent that the services provided 
by the Trust are "usually or customarily rendered" in connection with the rental
of space for occupancy only, and are not otherwise considered "rendered to the  
occupant for his convenience." In addition, under recently enacted legislation, 
beginning with its taxable year ending December 31, 1998, the Trust may directly
perform a DE MINIMIS amount of non-customary services. See "--Other Tax         
Considerations--The Taxpayer Relief Act" below.                                 

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The Trust intends to monitor its operations in the context of these     
standards so as to satisfy the 75% and 95% gross income tests. The Operating    
Partnership will provide certain services at the properties of the Properties   
Partnerships and possibly at any newly acquired properties of the Partnerships. 
The Trust believes that for purposes of the 75% and 95% gross income tests the  
services provided at such properties and any other services and amenities       
provided by the Operating Partnership or its agents with respect to such        
properties will be of the type usually or customarily rendered in connection    
with the rental of space for occupancy only and not rendered to the occupants of
such properties. The Trust intends that services that cannot be provided        
directly by the Operating Partnership or other agents will be performed by      
independent contractors.                                                        

THE 95% TEST.  In addition to deriving 75% of its gross income from the 
sources listed above, at least 95% of the Trust's gross income for the taxable  
year must be derived from the above-described qualifying income or from         
dividends, interest, or gains from the sale or other disposition of stock or    
other securities that are not dealer property. Dividends and interest on any    
obligations not collateralized by an interest in real property are included for 
purposes of the 95% test, but not for purposes of the 75% test. The Trust       
intends to monitor closely its non-qualifying income and anticipates that       
non-qualifying income from its other activities will not result in the Trust    
failing to satisfy either the 75% or 95% gross income test.                     

   For purposes of determining whether the Trust complies with the 75% and the
95% gross income tests, gross income does not include income from prohibited    
transactions. A "prohibited transaction" is a sale of dealer property (excluding
foreclosure property); however, a sale of property will not be a prohibited     
transaction if such property is held for at least four years and certain other  
requirements (relating to the number of properties sold in a year, their tax    
bases, and the cost of improvements made thereto) are satisfied. See "--Taxation
of the Trust--General" and "--Tax Aspects of the Trust's Investments in         
Partnerships--Sale of the Properties."                                          

The Trust believes that, for purposes of both the 75% and the 95% gross 
income test, its investment in properties through the Partnerships will in major
part give rise to qualifying income in the form of rents, and that gains on     
sales of its properties generally will also constitute qualifying income.       

Even if the Trust fails to satisfy one or both of the 75% and 95% gross 
income tests for any taxable year, it may still qualify as a REIT for such year 
if it is entitled to relief under certain provisions of the Code. These relief  
provisions will generally be available if: (i) the Trust's failure to comply is 
due to reasonable cause and not to willful neglect; (ii) the Trust reports the  
nature and amount of each item of its income included in the tests on a schedule
attached to its tax return; and (iii) any incorrect information on this schedule
is not due to fraud with intent to evade tax. If these relief provisions apply, 
however, the Trust will nonetheless be subject to a 100% tax on the greater of  
the amount by which it fails either the 75% or 95% gross income test, multiplied
by a fraction intended to reflect the Trust's profitability.                    

   ANNUAL DISTRIBUTION REQUIREMENTS.  In order to qualify as a REIT, the Trust
is required to distribute dividends to its shareholders each year in an amount  
at least equal to (A) the sum of (i) 95% of the Trust's REIT taxable income     
(computed without regard to the dividends received deduction and the Trust's net
capital gain) and (ii) 95% of the net income (after tax), if any, for           
foreclosure property, minus (B) the sum of certain items of non-cash income.    
Such distributions must be paid in the taxable year to which they relate, or in 
the following taxable year if declared before the Trust timely files its tax    
return for such year and if paid on or before the first regular dividend payment
after the declaration. To the extent that the Trust does not distribute all of  
its net capital gain or distributes at least 95%, but less than 100%, of its    
REIT taxable income, as adjusted, it will be subject to tax on the undistributed
amount at regular capital gain or ordinary corporate tax rates, as the case may 
be.                                                                             

The Trust intends to make timely distributions sufficient to satisfy the
annual distribution requirements described in the first sentence of the         
preceding paragraph. In this regard, the Partnership Agreement authorizes the   
Trust in its capacity as general partner to take such steps as may be necessary 
to cause the Operating Partnership to distribute to its partners an amount      
sufficient to permit the Trust to meet the                                      

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distribution requirements. It is possible that the Trust may not have sufficient
cash or other liquid assets to meet the 95% distribution requirement, due to    
timing differences between the actual receipt of income and actual payment of   
expenses on the one hand, and the inclusion of such income and deduction of such
expense in computing the Trust's REIT taxable income on the other hand; or for  
other reasons. The Trust will monitor closely the relationship between its REIT 
taxable income and cash flow and, if necessary, intends to borrow funds (or     
cause the Operating Partnership or other affiliates to borrow funds) in order to
satisfy the distribution requirement. However, there can be no assurance that   
such borrowing would be available at such time.                                 

  If the Trust fails to meet the 95% distribution requirement as a result of
an adjustment to the Trust's tax return by the Service, the Trust may           
retroactively cure the failure by paying a "deficiency dividend" (plus          
applicable penalties and interest) within a specified period.                   

    FAILURE TO QUALIFY.  If the Trust fails to qualify for taxation as a REIT in
any taxable year and the relief provisions do not apply, the Trust will be      
subject to tax (including any applicable alternative minimum tax) on its taxable
income at regular corporate rates. Distributions to shareholders in any year in 
which the Trust fails to qualify as a REIT will not be deductible by the Trust, 
nor generally will they be required to be made under the Code. In such event, to
the extent of current and accumulated earnings and profits, all distributions to
shareholders will be taxable as ordinary income, and subject to certain         
limitations in the Code, corporate distributees may be eligible for the         
dividends received deduction. Unless entitled to relief under specific statutory
provisions, the Trust also will be disqualified from re-electing taxation as a  
REIT for the four taxable years following the year during which qualification   
was lost.                                                                       

TAX ASPECTS OF THE TRUST'S INVESTMENTS IN PARTNERSHIPS                          

GENERAL.  The Trust will hold a partnership interest in the Operating   
Partnership. In general, a partnership is a "pass-through" entity which is not  
subject to federal income tax. Rather, partners are allocated their             
proportionate shares of the items of income, gain, loss, deduction and credit of
a partnership, and are potentially subject to tax thereon, without regard to    
whether a partner received a distribution from the partnership. The Trust will  
include its proportionate share of the foregoing partnership items for purposes 
of the various REIT gross income tests and in the computation of its REIT       
taxable income. See "--Taxation of the Trust--General" and "--Gross Income      
Tests."                                                                         

Each partner's share of a partnership's tax attributes is determined in 
accordance with the partnership agreement, although the allocations will be     
adjusted for tax purposes if they do not comply with the technical provisions of
Code Section 704(b) and the regulations thereunder. The Partnerships'           
allocations of tax attributes are intended to comply with these provisions.     
Notwithstanding these allocation provisions, for purposes of complying with the 
gross income and asset tests discussed above, the Trust will be deemed to own   
its proportionate share of each of the assets of the Partnerships and will be   
deemed to have received a share of the income of the Partnerships based on its  
capital interest in the Partnerships.                                           

   Accordingly, any resultant increase in the Trust's REIT taxable income from
its interest in the Partnerships (whether or not a corresponding cash           
distribution is also received from the Partnerships) will increase its          
distribution requirements (see "--Taxation of the Trust--Annual Distribution    
Requirements"), but will not be subject to federal income tax in the hands of   
the Trust provided that an amount equal to such income is distributed by the    
Trust to its shareholders. Moreover, for purposes of the REIT asset tests (see  
"--Taxation of the Trust--Asset Tests"), the Trust will include its             
proportionate share of assets held by the Partnerships.                         

   TAX ALLOCATIONS WITH RESPECT TO THE PROPERTIES.  Pursuant to Section 704(c)
of the Code, income, gain, loss and deductions attributable to appreciated or   
depreciated property that is contributed to a partnership in exchange for an    
interest in the partnership must be allocated in a manner such that the         
contributing partner is charged with, or benefits from, respectively, the       
unrealized gain or unrealized loss associated with the property at the time of  
the contribution. The amount of such unrealized gain or unrealized loss is      

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generally equal to the difference between the fair market value of the          
contributed property at the time of contribution, and the adjusted tax basis of 
such property at the time of contribution (a "Book-Tax Difference"). Such       
allocations are solely for federal income tax purposes and do not affect the    
book capital amounts or other economic arrangements among the partners.         
Consequently, the Partnership Agreement requires certain allocations to be made 
in a manner consistent with Section 704(c) of the Code.                         

    Treasury Regulations under Section 704(c) provide partnerships with a choice
of several methods of accounting for Book-Tax Differences. The Partnerships and 
the Trust have not yet determined which of the alternative methods of accounting
for Book-Tax Differences will be elected, and accordingly, such determination   
could have differing timing and other effects on the Trust.                     

    The Trust's properties acquired in taxable transactions will in general have
a tax basis equal to their fair market value. Section 704(c) of the Code will   
not apply in such cases.                                                        

SALE OF THE PROPERTIES.  The Trust's share of any gain realized by a    
Partnership on the sale of any "dealer property" generally will be treated as   
income from a prohibited transaction that is subject to a 100% penalty tax. See 
"--Taxation of the Trust--General" and "--Gross Income Tests--The 95% Test."    
Under existing law, whether property is dealer property is a question of fact   
that depends on all the facts and circumstances with respect to the particular  
transaction. The Company has held and the Partnerships intend to hold their     
properties for investment with a view to long-term appreciation, to engage in   
the business of acquiring, owning, operating and developing its properties and  
other commercial properties, and to make such occasional sales of properties,   
whether presently held or acquired subsequent to the date hereof, as are        
consistent with the Trust's investment objectives. Based upon the Trust's       
investment objectives, the Trust believes that overall, its current properties  
should not be considered dealer property and that the amount of income from     
prohibited transactions, if any, will not be material.                          

TAXATION OF SHAREHOLDERS                                                        

  TAXATION OF TAXABLE DOMESTIC SHAREHOLDERS.  As long as the Trust qualifies
as a REIT, distributions made to the Trust's taxable domestic shareholders out  
of current or accumulated earnings and profits generally will be taxed to such  
shareholders as ordinary dividend income, except that, subject to the discussion
below regarding the new tax rates contained in the Taxpayer Relief Act of 1997  
(the "Taxpayer Relief Act"), distributions of net capital gain designated by the
Trust as capital gain dividends will be taxed to such shareholders as long-term 
capital gain (to the extent they do not exceed the Trust's actual net capital   
gain for the fiscal year) without regard to the period for which the shareholder
has held its shares of beneficial interest in the Trust. However, corporate     
shareholders may be required to treat up to 20% of capital gain dividends as    
ordinary income. To the extent that the Trust makes distributions in excess of  
current and accumulated earnings and profits, such distributions will be treated
first as a tax-free return of capital to the shareholder, reducing the tax basis
of such shareholder's Common Shares by the amount of such excess distribution   
(but not below zero), with distributions in excess of the shareholder's tax     
basis being taxed as capital gain (if the Common Shares are held by the         
shareholder as a capital asset). See "Distribution Policy." In addition, any    
dividend declared by the Trust in October, November or December of any year that
is payable to a shareholder of record on a specific date in any such month shall
be treated as both paid by the Trust and received by the shareholder on December
31 of such year, provided that the dividend is actually paid by the Trust during
January of the following calendar year. Shareholders may not include in their   
individual income tax returns any net operating losses of the Trust. Federal    
income tax rules may also require that certain minimum tax adjustments and      
preferences be apportioned to the Trust's shareholders.                         

   The Trust is permitted under the Code to elect to retain and pay income tax
on its net capital gain for any taxable year. However, if the Trust so elects, a
shareholder must include in income such shareholder's proportionate share of the
Trust's undistributed capital gain for the taxable year, and will be deemed to  
have paid such shareholder's proportionate share of the income tax paid by the  
Trust with respect to such                                                      

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undistributed capital gain. Such tax would be credited against the shareholder's
tax liability and subject to normal refund procedures. In addition, each        
shareholder's basis in such shareholder's Common Shares would be increased by   
the amount of undistributed capital gain (less the tax paid by the Trust)       
included in the shareholder's income.                                           

The Taxpayer Relief Act alters the taxation of capital gain income for  
individuals (and for certain trusts and estates). Gain from the sale or exchange
of certain investments held for more than 18 months will be taxed at a maximum  
rate of 20%. Gain from the sale or exchange of such investments held for 18     
months or less, but for more than one year, will be taxed at a maximum rate of  
28%. The Taxpayer Relief Act also provides a maximum rate of 25% for            
"unrecaptured section 1250 gain" recognized on the sale or exchange of certain  
real estate assets, introduces special rules for "qualified 5-year gain," and   
makes certain other changes to prior law. On November 10, 1997, the Service     
issued Notice 97-64, which provides generally that the Trust may classify       
portions of its designated capital gain dividend as (i) a 20% rate gain         
distribution (which would be taxed as capital gain in the 20% group), (ii) an   
unrecaptured Section 1250 gain distribution (which would be taxed as capital    
gain in the 25% group) or (iii) a 28% rate gain distribution (which would be    
taxed as capital gain in the 28% group). If no designation is made, the entire  
designated capital gain dividend will be treated as a 28% rate capital gain     
distribution. Notice 97-64 provides that a REIT must determine the maximum      
amounts that it may designate as 20% and 25% rate capital gain dividends by     
performing the computation required by the Code as if the REIT were an          
individual whose ordinary income was subject to a marginal tax rate of at least 
28%.                                                                            

In general, any loss upon a sale or exchange of Common Shares by a      
shareholder who has held such Common Shares for six months or less (after       
applying certain holding period rules) will be treated as a long-term capital   
loss, to the extent of prior distributions required to be treated by such       
shareholders as long-term capital gains.                                        

   BACKUP WITHHOLDING.  The Trust will report to its domestic shareholders and
to the Service the amount of distributions paid for each calendar year, and the 
amount of tax withheld, if any, with respect thereto. Under the backup          
withholding rules, a shareholder may be subject to backup withholding at a rate 
of 31% with respect to distributions paid unless such shareholder (i) is a      
corporation or comes with certain other exempt categories and, when required,   
demonstrates this fact or (ii) provides a taxpayer identification number,       
certifies as to no loss of exemption from backup withholding, and otherwise     
complies with applicable requirements of the backup withholding rules. A        
shareholder that does not provide the Trust with its correct taxpayer           
identification number may also be subject to penalties imposed by the Service.  
Any amount paid as backup withholding is available as a credit against the      
shareholder's income tax liability. In addition, the Trust may be required to   
withhold a portion of capital gain distributions made to any shareholders who   
fail to certify their non-foreign status to the Trust. See "--Taxation of the   
Shareholders--Taxation of Foreign Shareholders" below.                          

TAXATION OF TAX-EXEMPT SHAREHOLDERS.  The Service has issued a revenue  
ruling in which it held that amounts distributed by a REIT to a tax-exempt      
employees' pension trust do not constitute unrelated business taxable income    
("UBTI"). Subject to the discussion below regarding a "pension-held REIT," based
upon such ruling, distributions by the Trust to a shareholder that is a         
tax-exempt entity should not constitute UBTI, provided that the tax-exempt      
entity has not financed the acquisition of its shares with "acquisition         
indebtedness" within the meaning of the Code, that the shares are not otherwise 
used in an unrelated trade or business of the tax-exempt entity, and that the   
Trust, consistent with its present intent, does not hold a residual interest in 
a real estate mortgage investment conduit ("REMIC") that is an entity or        
arrangement that satisfies the standards set forth in Section 860D of the Code. 

    If any pension or other retirement trust that qualifies under Section 401(a)
of the Code (a "qualified pension trust") holds more than 10% by value of the   
interests in a "pension-held REIT" at any time during a taxable year, a portion 
of the dividends paid to the qualified pension trust by such REIT may constitute
UBTI. For these purposes, a "pension-held REIT" is defined as a REIT (i) which  
would not have qualified                                                        

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as a REIT but for the provisions of the Code which look through such a qualified
pension trust in determining ownership of shares of the REIT and (ii) as to     
which at least one qualified pension trust holds more than 25% by value of the  
interests of such REIT or one or more qualified pension trusts (each owning more
than a 10% interest by value in the REIT) hold in the aggregate more than 50% by
value of the interests in such REIT.                                            

    TAXATION OF FOREIGN SHAREHOLDERS.  The rules governing United States federal
income taxation of nonresident alien individuals, foreign corporations, foreign 
partnerships and other foreign shareholders (collectively, "Non-U.S.            
Shareholders") are highly complex and the following is only a brief summary of  
such rules. Prospective Non-U.S. Shareholders should consult with their own tax 
advisors to determine the impact of federal, state and local income tax laws    
with regard to an investment in Common Shares, including any reporting          
requirements. The Trust will qualify as a "domestically-controlled REIT" so long
as less than 50% in value of its shares of beneficial interest are held by      
foreign persons (i.e., non-resident aliens, and foreign corporations,           
partnerships, trusts and estates). The Trust currently anticipates that it will 
qualify as a domestically-controlled REIT. Under these circumstances, gain from 
the sale of Common Shares by a foreign person should not be subject to United   
States taxation, unless such gain is effectively connected with such person's   
United States trade or business or, in the case of an individual foreign person,
such person is present within the United States for more than 182 days during   
the taxable year. However, notwithstanding the Trust's current expectation that 
the Trust will qualify as a domestically-controlled REIT, because the Common    
Shares will be publicly traded no assurance can be given that the Trust will    
continue to so qualify.                                                         

  Distributions of cash generated by the Trust's real estate operations (but
not by the sale or exchange of properties) that are paid to foreign persons     
generally will be subject to United States withholding tax at a rate of 30%,    
unless (i) an applicable tax treaty reduces that tax and the foreign shareholder
files with the Trust the required form evidencing such lower rate, or (ii) the  
foreign shareholder files an IRS Form 4224 with the Trust claiming that the     
distribution is "effectively connected" income.                                 

Distributions of proceeds attributable to the sale or exchange of United
States real property interests by the Trust are subject to income and           
withholding taxes pursuant to the Foreign Investment in Real Property Tax Act of
1980 ("FIRPTA"), and may also be subject to branch profits tax in the hands of a
shareholder that is a foreign corporation if it is not entitled to treaty relief
or exemption. The Trust is required by applicable Treasury Regulations to       
withhold 35% of any distribution to a foreign person that could be designated by
the Trust as a capital gain dividend. This amount is creditable against the     
foreign shareholder's FIRPTA tax liability.                                     

 The federal income taxation of foreign persons is a highly complex matter
that may be affected by other considerations. Accordingly, foreign investors in 
the Trust should consult their own tax advisor regarding the income and         
withholding tax considerations with respect to their investment in the Trust.   

OTHER TAX CONSIDERATIONS                                                        

THE TAXPAYER RELIEF ACT.  The Taxpayer Relief Act modifies many of the  
provisions relating to the requirements for qualification as, and the taxation  
of, a REIT. Among other things, the Taxpayer Relief Act (i) replaces the rule   
that disqualifies a REIT for any year in which the REIT fails to comply with    
Treasury Regulations that are intended to enable the REIT to ascertain its      
ownership with a prescribed penalty for failing to do so; (ii) permits a REIT to
render a DE MINIMIS amount of impermissible services to tenants, or in          
connection with the management of property, and still treat amounts received    
with respect to that property as rents from real property; (iii) permits a REIT 
to elect to retain and pay income tax on net long-term capital gains; (iv)      
repeals a rule that required that less than 30% of a REIT's gross income be     
derived from gain from the sale or other disposition of stock or securities held
for less than one year, certain real property held for less than four years, and
property that is sold or disposed of in a prohibited transaction; (v) lengthens 
the original grace period for foreclosure property from two years after the REIT

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acquired the property to a period ending on the last day of the third full      
taxable year following the taxable year in which the property was acquired; (vi)
treats income from all hedges that reduce the interest rate risk of REIT        
liabilities, not just interest rate swaps and caps, as qualifying income under  
the 95% gross income test; and (vii) permits any corporation wholly owned by a  
REIT to be treated as a qualified subsidiary, regardless of whether the         
corporation has always been owned by a REIT. The changes are effective for      
taxable years beginning after the date of enactment, and thus will apply to the 
Trust's taxable year ending December 31, 1998.                                  

POSSIBLE LEGISLATIVE OR OTHER ACTIONS AFFECTING TAX                     
CONSEQUENCES.  Shareholders should recognize that the present federal income tax
treatment of an investment in the Trust may be modified by legislative, judicial
or administrative action at any time and that any such action may affect        
investments and commitments previously made. The rules dealing with federal     
income taxation are constantly in review by persons involved in the legislative 
process and by the Service and the Treasury Department, resulting in revisions  
of regulations and revised interpretations of established concepts as well as   
statutory changes. No assurance can be given as to the form or content          
(including with respect to effective dates) of any tax legislation which may be 
enacted. Revisions in federal tax laws and interpretations thereof can adversely
affect the tax consequences of an investment in the Trust.                      

STATE AND LOCAL TAXES.  The Trust and the Partnerships may be subject to
state or local taxation, and the Trust's shareholders may be subject to state or
local taxes in various jurisdictions, including those in which they transact    
business or reside. The state and local tax treatment of the Trust and its      
shareholders may not conform to the federal income tax consequences discussed   
above. Consequently, prospective shareholders should consult their own tax      
advisors regarding the effect of state and local tax laws on an investment in   
Common Shares. See "Risk Factors--Tax Risks--Other Tax Liabilities."            

  EACH SHAREHOLDER IS ADVISED TO CONSULT WITH SUCH SHAREHOLDER'S TAX ADVISOR
REGARDING THE SPECIFIC TAX CONSEQUENCES TO SUCH SHAREHOLDER OF THE OWNERSHIP AND
SALE OF COMMON SHARES IN AN ENTITY ELECTING TO BE TAXED AS A REAL ESTATE        
INVESTMENT TRUST, INCLUDING THE FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX    
CONSEQUENCES OF SUCH, OWNERSHIP, SALE AND ELECTION AND OF POTENTIAL CHANGES IN  
APPLICABLE TAX LAWS.                                                            

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PROPOSAL 2 -- 
ADOPTION OF THE PLAN

DESCRIPTION OF THE PLAN                                                         

Prior to the Reformation, the Board of Trustees will adopt, and the sole
shareholder of the Trust will approve, the Plan for the purpose of attracting,  
retaining and motivating employees and directors of the Trust. The Plan         
authorizes the issuance of up to ten percent of the Common Shares outstanding   
from time to time, subject to adjustment on the event of certain                
recapitalization or reorganization transactions. The Plan will be administered  
by the Compensation Committee of the Board of Trustees or, with respect to      
certain matters, its delegate. As used in this summary, the term "Administrator"
means the Compensation Committee or its delegate, as appropriate. Trustees, and 
employees of the Trust, the Operating Partnership and other subsidiaries of the 
Trust, and designated affiliates of the Trust will be eligible for selection by 
the Administrator to participate in the Plan. The maximum number of Common      
Shares with respect to which options may be granted during a calendar year to   
any participant under the Plan will be 200,000 Common Shares, subject to        
adjustment for certain recapitalization or reorganization transactions. No      
awards may be granted under the Plan after the tenth anniversary of the Plan's  
approval by the Shareholders.                                                   

   The Plan provides for the grant of (i) share options intended to qualify as
incentive stock options under Section 422 of the Code, (ii) share options not   
intended to qualify as incentive stock options under Section 422 of the Code    
("nonqualified stock options") and (iii) Dividend Equivalents (as defined in the
Plan) which may be granted alone or in conjunction with share options (each an  
"Award"). The Administrator will determine the type and number of Awards        
granted, the terms and conditions of any Award and adopt, amend, waive and      
rescind the rules and regulations necessary to administer the Plan, among other 
things. In connection with the grant of options under the Plan, the             
Administrator will determine the option exercise price, the term of the option  
and the time and method of exercising.                                          

 An option granted under the Plan may be exercised for any number of whole
Common Shares less than the full number of Common Shares for which the option   
could be exercised. Unless otherwise agreed by the Administrator, Awards will   
not be transferable except by will or the laws of descent and distribution. A   
holder of an option will have no rights as a shareholder with respect to Common 
Shares subject to his or her option until the option is exercised. Any Common   
Shares subject to options which are forfeited (or expire without exercise)      
pursuant to the vesting requirement or other terms established at the time of   
grant will again be available for grant under the Plan. Payment of the exercise 
price of an option granted under the Plan may be made in cash, or, if permitted 
by the Administrator, by exchanging Common Shares having a fair market value    
equal to the option exercise price. Unless otherwise provided by the            
Administrator, all outstanding Awards will become fully exercisable upon a      
Change of Control.                                                              

BOARD RECOMMENDATION                                                            

  The Board has determined that it is in the best interests of the Trust and
the Shareholders to seek approval of the Plan. The Company believes that a      
long-term incentive plan is important to the retention of its senior management 
team, and also aligns the economic interests of its senior management team with 
the economic interests of its shareholders.                                     

VOTE REQUIRED                                                                   

   Under Minnesota law, the adoption of the Plan requires the affirmative vote
of a majority of the shares of Common Stock, represented and entitled to vote,  
at the Special Meeting. Abstentions and broker non-votes will not be counted as 
either "for" or "against" the approval of the Plan.                             

    THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL OF THE
PLAN.                                                                           

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FEDERAL INCOME TAX CONSEQUENCES                                                 

The following discussion summarizes the principal federal income tax    
consequences of the Plan. This discussion is based on current provisions of the 
Code, the Treasury Regulations promulgated thereunder, and administrative and   
judicial interpretations thereof as in effect on the date hereof. The summary   
does not address any foreign, state or local tax consequences of participation  
in the Plan.                                                                    

STOCK OPTIONS.  In general, the grant of an option will not be a taxable
event to the recipient (the "Participant") and it will not result in a deduction
to the Company. The tax consequences associated with the exercise of an option  
and the subsequent disposition of Common Shares acquired on the exercise of such
option depend on whether the option is an incentive stock option or a           
nonqualified stock option.                                                      

Upon the exercise of a nonqualified stock option, the Participant will  
recognize ordinary taxable income equal to the excess of the fair market value  
of the Common Shares received upon exercise over the exercise price. The Company
will generally be able to claim a deduction in an equivalent amount. Any gain or
loss upon a subsequent sale or exchange of the Common Shares will be capital    
gain or loss. If the holding period for the shares is not more than one year,   
the gain or loss will be short-term capital gain or loss. Short-term capital    
gain is taxable at the same rates as ordinary income. If the holding period is  
more than one year, the gain or loss will be long-term capital gain or loss. In 
general, long-term capital gain is subject to lower maximum federal income tax  
rates than ordinary income. Currently, the maximum rate for long-term capital   
gain on assets held for more than eighteen months is generally 20%, and the     
maximum rate on capital gain on assets held for more than one year but less than
eighteen months ("mid-term gain") is 28%.                                       

  Generally, a Participant will not recognize ordinary taxable income at the
time of exercise of an incentive stock option and no deduction will be available
to the Company, provided the option is exercised while the Participant is an    
employee or within three months following termination of employment (longer, in 
the case of termination of employment by reason of disability or death). If an  
incentive stock option granted under the Plan is exercised after these periods, 
the exercise will be treated for federal income tax purposes as the exercise of 
a nonqualified stock option. Also, an incentive stock option granted under the  
Plan will be treated as a nonqualified stock option to the extent it (together  
with any other incentive stock options granted under plans of the Company and   
its subsidiaries) first becomes exercisable in any calendar year for Common     
Shares having a fair market value, determined as of the date of grant, in excess
of $100,000.                                                                    

If Common Shares acquired upon exercise of an incentive stock option are
sold or exchanged more than one year after the date of exercise and more than   
two years after the date of grant of the option, any gain or loss will be       
long-term capital gain or loss, taxable as discussed above at either a maximum  
rate of 20% or 28% depending on the holding period. If Common Shares acquired   
upon exercise of an incentive stock option are disposed of prior to the         
expiration of these one-year or two-year holding periods (a "Disqualifying      
Disposition"), the Participant will recognize ordinary income at the time of    
disposition, and the Company will generally be able to claim a deduction, in an 
amount equal to the excess of the fair market value of the Common Shares at the 
date of exercise over the exercise price. Any additional gain will be treated as
capital gain, long-term, mid-term or short-term, depending on how long the      
shares of Common Stock have been held. Where Common Shares are sold or exchanged
in a Disqualifying Disposition (other than certain related party transactions)  
for an amount less than their fair market value at the date of exercise, any    
ordinary income recognized in connection with the Disqualifying Disposition will
be limited to the amount of gain, if any, recognized in the sale or exchange,   
and any loss will be a long-term or short-term capital loss, depending on how   
long the Common Shares have been held.                                          

   Although the exercise of an incentive stock option as described above would
not produce ordinary taxable income to the Participant, it would result in an   
increase in the Participant's alternative minimum taxable income and may result 
in an alternative minimum tax liability.                                        

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DIVIDEND EQUIVALENT RIGHTS.  With respect to dividend equivalent rights 
under the Plan, generally, when a Participant receives payment with respect to  
the dividend equivalent right, the amount of cash and the fair market value of  
any other property received will be ordinary income to such Participant and will
be allowed as a deduction for federal income tax purposes to the Company.       

PAYMENT OF WITHHOLDING TAXES.  The Company may withhold, or require a   
Participant to remit to the Company, an amount sufficient to satisfy any        
federal, state or local withholding tax requirements associated with awards     
under the Plan.                                                                 

  SPECIAL RULES.  Special rules may apply to a Participant who is subject to
Section 16(b) of the Exchange Act as in effect from time to time (generally     
directors, officers and 10% stockholders). Certain additional special rules     
apply if the exercise price for an option is paid in shares previously owned by 
the Participant rather than in cash.                                            

 LIMITATION ON DEDUCTIBILITY.  Section 162(m) of the Code generally limits
the deductible amount of annual compensation paid (including, unless an         
exception applies, compensation otherwise deductible in connection with awards  
granted under the Plan) by a public company to a "covered employee" (the chief  
executive officer and four other most highly compensated executive officers of  
the Company) to no more than $1 million. The Company currently intends to       
structure stock options granted under the Plan to comply with an exception to   
nondeductibility under Section 162(m) of the Code.                              

INDEPENDENT ACCOUNTANTS 

The Board of Trustees has selected Coopers & Lybrand L.L.P. ("Coopers & 
Lybrand") to serve as independent accountants for the Trust for the year ending 
December 31, 1998. Coopers & Lybrand was appointed by the Board on October 31,  
1997 to be independent certified public accountants for the Company, replacing  
Lurie, Besikof, Lapidus & Co., LLP ("Lurie"). A representative of Coopers &     
Lybrand is expected to be present at the Special Meeting, have the opportunity  
to make a statement if he so desires, and will be available to respond to       
appropriate questions.                                                          

SHAREHOLDER PROPOSALS FOR THE 
1999 ANNUAL MEETING OF SHAREHOLDERS 

Any shareholder who wishes to present a proposal for action at the next 
annual meeting of shareholders and who wishes to have it set forth in the proxy 
statement and identified in the form of proxy prepared by the Company must      
notify the Company in such manner so that such notice is received by the Company
by December 31, 1998. Any such proposal must be in the form required under the  
rules and regulations promulgated by the Commission.                            

OTHER MATTERS 

  The Board knows of no other matters that are intended to be brought before
the Special Meeting. If other matters, of which the Board is not aware, are     
presented for action, it is the intention of the proxies named in the enclosed  
form of proxy to vote on such matters in their sole discretion.                 

LEGAL MATTERS 

Certain legal matters in connection with the Common Shares being offered
hereby will be passed upon for the Trust by Cahill Gordon & Reindel (a          
partnership including a professional corporation), New York, New York. Cahill   
Gordon & Reindel will rely, without independent investigation, on Ballard Spahr 
Andrews & Ingersoll, Baltimore, Maryland as to certain matters of Maryland law  
and on Maun & Simon, PLC, Minneapolis, Minnesota as to certain matters of       
Minnesota law.                                                                  

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EXPERTS 

  As previously announced, on October 31, 1997, Coopers & Lybrand L.L.P. was
appointed by the Board of Directors of the Company as the Company's independent 
accountants for the year ending December 31, 1997. The Company is not aware of  
any disagreements with Lurie during the Company's two most recent fiscal years  
and through October 31, 1997 on any matters of accounting principles or         
practices, financial statement disclosures, or auditing scope and procedures    
which, if not resolved to the satisfaction of Lurie, would have caused Lurie to 
make reference to the matters in their reports. Lurie has furnished to the      
Commission a letter agreeing with this statement.                               

    The consolidated financial statements of the Company as of December 31, 1996
and 1995 and for each of the years in the three year period ended December 31,  
1996 incorporated by reference in this Registration Statement have been         
incorporated by reference herein in reliance on the report of Coopers & Lybrand 
L.L.P., independent accountants, given on the authority of that firm as experts 
in accounting and auditing.                                                     

   The consolidated financial statements of the Shidler Acquisition Properties
as of December 31, 1996 and 1995 and for each of the years in the three year    
period ended December 31, 1996 incorporated by reference in this Registration   
Statement have been incorporated by reference herein in reliance on the report  
of Coopers & Lybrand L.L.P., independent accountants, given on the authority of 
that firm as experts in accounting and auditing.                                

The balance sheet of Corporate Office Properties Trust as of February 3,
1998 included in this Registration Statement has been included herein in        
reliance on the report of Coopers & Lybrand L.L.P., independent accountants,    
given on the authority of that firm as experts in accounting and auditing.      

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INDEX TO FINANCIAL STATEMENTS 

                                                        [Enlarge/Download Table]

                                                                                          
CORPORATE OFFICE PROPERTIES TRUST                                                         
Report of Independent Accountants..................................................... F-2
Audited Financial Statements                                                              
  Balance Sheet at February 3, 1998................................................... F-3
  Notes to Balance Sheet.............................................................. F-4

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REPORT OF INDEPENDENT ACCOUNTANTS 

The Board of Trustees and Shareholder                                           
Corporate Office Properties Trust:                                          

We have audited the accompanying balance sheet of Corporate Office Properties   
Trust (Company) as of February 3, 1998. This balance sheet is the responsibility
of the Company's management. Our responsi-                                      
bility is to express an opinion on this balance sheet based upon our audit.     

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable 
assurance about whether the balance sheet is free of material misstatement. An  
audit includes examining, on a test basis, evidence supporting the amounts and  
disclosures in the balance sheet. An audit also includes assessing the          
accounting principles used and significant estimates made by management, as well
as evaluating the overall balance sheet presentation. We believe that our audit 
of the balance sheet provides a reasonable basis for our opinion.               

In our opinion, the balance sheet referred to above presents fairly, in all     
material respects, the financial position of Corporate Office Properties Trust  
as of February 3, 1998, in conformity with generally accepted accounting        
principles.                                                                     

COOPERS & LYBRAND L.L.P.                                                        
2400 Eleven Penn Center                                                         
Philadelphia, Pennsylvania                                                      
February 4, 1998                                                                

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CORPORATE OFFICE PROPERTIES TRUST 

BALANCE SHEET 

FEBRUARY 3, 1998

ASSETS

                                                        [Enlarge/Download Table]
                                                                                               
Cash................................................................................. $     100
                                                                                      ---------
                                                                                      ---------

SHAREHOLDER'S EQUITY

                                                        [Enlarge/Download Table]
                                                                                                
Preferred shares of beneficial interest, $.01 per share; 5,000,000 shares authorized;           
  none issued or outstanding.........................................................           

Common shares of beneficial interest, $.01 par value; 45,000,000 shares authorized; 1           
  issued and outstanding.............................................................          0

Additional paid-in capital...........................................................        100
                                                                                       ---------

      Total shareholder's equity.....................................................       $100
                                                                                       ---------
                                                                                       ---------

(See accompanying notes to balance sheet) 

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CORPORATE OFFICE PROPERTIES TRUST 

NOTES TO BALANCE SHEET

1. ORGANIZATION:                                                                

  Corporate Office Properties Trust (the Company) was formed in the State of
Maryland as a real estate investment trust on January 22, 1998 and issued one   
share to COPT, Inc. for a total consideration of $100. The Company has executed 
an Agreement and Plan of Merger under which it will indirectly merge with       
Corporate Office Properties Trust, Inc. (the Merger). The Company intends to    
file a Form S-4 registration statement with Securities and Exchange Commission  
in connection with the Merger.                                                  

 The Company has had no operations. The purposes for which the Company was
formed are to invest in and to acquire, hold, manage, administer, control and   
dispose of property, as a real estate investment trust. Upon consummation of the
Merger, the Company intends to begin operations. The Company will have an       
indirect interest in certain suburban office buildings and hold a number of     
retail properties with related indebtedness.                                    

2. FEDERAL INCOME TAXES:                                                        

At the earliest possible date, the Company intends to qualify as a real 
estate investment trust under the Internal Revenue Code of 1986, as amended.    
Accordingly, upon such qualification it will not be subject to federal income   
taxes on amounts distributed to shareholders provided it distributes at least 95
percent of its taxable income and meets certain other conditions. The Company   
may, however, be subject to state or local taxation in various jurisdictions.   

3. PLANNED TRANSACTIONS:                                                        

The Company intends to consummate the Merger as soon as practicable     
following approval of the Merger by the shareholders of Corporate Office        
Properties Trust, Inc. There can be no assurance that the Merger will be        
consummated.                                                                    

4. EMPLOYEE BENEFIT PLANS AND RELATED MATTERS:                                  

   The Company's Board of Trustees intends to adopt a long-term incentive plan
under which the Board of Trustees is authorized to grant common share awards,   
and determine the form, payment, exercise provisions, and other terms thereof.  
The Company intends to reserve 10% of common shares outstanding from time to    
time for issuance under the incentive plan.                                     

    The Company intends to enter into an employment agreement with its president
and chief executive officer. The agreement will have an initial term of three   
years, subject to automatic renewal for subsequent two year terms, and will     
cover matters including compensation, disability and termination. The agreement 
will also contain provisions which are intended to limit the president from     
competing with the Company throughout the term of the agreement and for a period
of two years thereafter.                                                        

The Company will also enter into a noncompetition agreement with the    
chairman of the board of trustees. The agreement will be in effect during the   
period that he serves as chairman.                                              

   There can be no assurance that the aforementioned actions will be completed
as intended.                                                                    

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                                                                      APPENDIX A

AGREEMENT AND PLAN OF MERGER

    THIS AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated as of January 31,
1998, is by and among Corporate Office Properties Trust, Inc., a Minnesota      
corporation (the "Company"), COPT, Inc., a Maryland corporation (the "Maryland  
Company") and Corporate Office Properties Trust, a Maryland real estate         
investment trust (the "Trust").                                                 

RECITALS

    WHEREAS, the Boards of Directors of the Company and the Maryland Company and
the Board of Trustees of the Trust each have determined that it is in the best  
interests of their respective shareholders to effect the Mergers (as hereinafter
defined) upon the terms and subject to the conditions set forth herein; and     

NOW, THEREFORE, in consideration of the premises, and of the            
representations, warranties, covenants and agreements contained herein the      
parties hereto adopt the plan of merger encompassed by this Agreement and agree 
as follows:                                                                     

ARTICLE I 
THE MERGERS; CLOSING; EFFECTIVE TIME

1.1. THE COMPANY MERGER. Subject to the terms and conditions of this    
Agreement, at the Effective Time (as defined in Section 1.4), the Company shall 
be merged with and into the Maryland Company and the separate corporate         
existence of the Company shall thereupon cease (the "Company Merger"). The      
Maryland Company shall be the surviving entity in the Company Merger (sometimes 
hereinafter referred to as the "Surviving Corporation") and shall continue to be
governed by the laws of the State of Maryland and the separate existence of the 
Maryland Company with all its rights, privileges, immunities, powers and        
franchises shall continue unaffected by the Company Merger.                     

The Company Merger shall have the effects specified in the Minnesota    
Business Corporation Act (the "MBCA") and the Maryland General Corporation Law  
(the "MGCL").                                                                   

1.2. THE TRUST MERGER. Subject to the terms and conditions of this      
Agreement, at the Effective Time (as defined in Section 1.4), the Surviving     
Corporation shall be merged with and into the Trust and the separate corporate  
existence of the Surviving Corporation shall thereupon cease (the "Trust Merger"
and, together with the Company Merger, the "Mergers"). The parties intend that  
the Mergers qualify as a reorganization under Section 368(a)(1) of the Internal 
Revenue Code of 1986, as amended. The Trust shall be the surviving entity in the
Trust Merger (sometimes hereinafter referred to as the "Surviving Entity") and  
shall continue to be governed by the laws of the State of Maryland and the      
separate existence of the Trust with all its rights, privileges, immunities,    
powers and franchises shall continue unaffected by the Merger.                  

The Trust Merger shall have the effects specified in the MGCL.          

 1.3. CLOSING. The Closing of the Mergers (the "Closing") shall take place
(i) at the offices of the Trust, One Logen Square, Suite 1105, Philadelphia,    
Pennsylvania 19103 at 10:00 a.m. local time on the first business day on which  
the last to be fulfilled or waived of the conditions set forth in Section 6.1   
hereof shall be fulfilled or (ii) at such other place and time and/or on such   
other date as the Company, the Maryland Company and the Trust may agree.        

  1.4. EFFECTIVE TIME. Following the fulfillment or waiver of the conditions
set forth in Section 6.1 hereof, and provided that this Agreement has not been  
terminated or abandoned pursuant to Article VII hereof, the Company and the     
Maryland Company will, at such time as they deem advisable, cause Articles      

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of Merger (the "Minnesota Articles of Merger") to be signed and filed with the  
Secretary of State of the State of Minnesota as provided in Section 302A.641 of 
the MBCA and Articles of Merger (the "Maryland Articles of Merger") to be filed 
with the State Department of Assessments and Taxation of Maryland (the "SDAT")  
as provided in Section 3-105 of the MGCL. Following the fulfillment or waiver of
the conditions set forth in Section 6.1 hereof, provided that this Agreement    
shall not have been terminated or abandoned pursuant to Article VII hereof, the 
Maryland Company and the Trust will, at such time as they deem advisable, cause 
Articles of Merger (the "Trust Articles of Merger") to be filed with the SDAT as
provided in Section 3-105 of the MGCL. The Mergers shall become effective upon  
the latter of (i) the filing the Articles of Merger with the Secretary of State 
of the State of Minnesota and (ii) the acceptance for record of the Maryland    
Articles of Merger and the Trust Articles of Merger by the SDAT (the "Effective 
Time"). The parties hereto intend the Mergers to become effective               
simultaneously.                                                                 

ARTICLE II
DECLARATION OF TRUST AND BYLAWS 
OF THE SURVIVING CORPORATION
AND THE SURVIVING ENTITY

  2.1. SURVIVING CORPORATION. The Certificate of Incorporation and Bylaws of
the Maryland Company in effect at the Effective Time shall be the Certificate of
Incorporation and Bylaws of the Surviving Corporation, until duly amended in    
accordance with the terms thereof and the MGCL.                                 

  2.2. SURVIVING ENTITY. The Declaration of Trust and Bylaws of the Trust in
effect at the Effective Time shall be the Declaration of Trust and Bylaws of the
Surviving Entity, until duly amended in accordance with the terms thereof and   
the MGCL.                                                                       

ARTICLE III 
TRUSTEES AND OFFICERS 
OF THE SURVIVING CORPORATION AND
THE SURVIVING ENTITY

   3.1. DIRECTORS. The directors of the Maryland Company at the Effective Time
shall, from and after the Effective Time, be the directors of the Surviving     
Corporation until their successors have been duly elected or until their earlier
death, resignation or removal in accordance with the Surviving Corporation's    
Certificate of Incorporation and Bylaws.                                        

  3.2. TRUSTEES. The trustees of the Trust at the Effective Time shall, from
and after the Effective Time, be the trustees of the Surviving Entity until     
their successors have been duly elected or until their earlier death,           
resignation or removal in accordance with the Surviving Entity's Declaration of 
Trust and Bylaws.                                                               

 3.3. OFFICERS. The officers of the Maryland Company at the Effective Time
shall, from and after the Effective Time, be the officers of the Surviving      
Corporation until their successors have been duly appointed and qualified or    
until their earlier death, resignation or removal in accordance with the        
Surviving Corporation's Certificate of Incorporation and Bylaws. The officers of
the Trust at the Effective Time shall, from and after the Effective Time, be the
officers of the Surviving Entity until their successors have been duly appointed
and qualified or until their earlier death, resignation or removal in accordance
with the Surviving Entity's Declaration of Trust and Bylaws.                    

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ARTICLE IV
EFFECT OF THE MERGER ON CAPITAL STOCK;
EXCHANGE OF CERTIFICATES

4.1. EFFECT ON CAPITAL STOCK. At the Effective Time, by virtue of the   
Mergers and without any action on the part of the holder of any capital stock of
the Company:                                                                    

   (a) Each share of the common stock, par value $0.01 per share (the "Company
Stock"), of the Company issued and outstanding immediately prior to the         
Effective Time shall be converted into one validly issued, fully paid and       
nonassessable common share of beneficial interest, par value $0.01 per share    
(the "Common Shares") of the Trust. Each certificate (each, a "Certificate")    
representing any such shares of Common Stock shall thereafter represent the     
right to receive Common Shares. At the Effective Time, all shares of Common     
Stock shall no longer be outstanding and shall be cancelled and retired and     
shall cease to exist.                                                           

   (b) Each share of Common Stock issued and held in the Company's treasury at
the Effective Time, shall by virtue of the Mergers and without any action on the
part of the holder thereof, cease to be outstanding, shall be cancelled and     
retired without payment of any consideration therefor and shall cease to exist. 

  (c) At the Effective Time, each share of common stock, par value $0.01 per
share, of the Maryland Company issued and outstanding immediately prior to the  
Effective Time shall, by virtue of the Mergers and without any action on the    
part of the Maryland Company or the holder of such shares, be cancelled and     
retired without payment of any consideration therefor.                          

(d) At the Effective Time, each Common Share issued and outstanding     
immediately prior to the Effective Time shall, by virtue of the Mergers and     
without any action on the part of the Trust or the holder of such shares, be    
cancelled and retired without payment of any consideration therefor.            

(e) Each option to purchase or otherwise acquire shares of Common Stock 
pursuant to the stock option plan of the Company granted and outstanding        
immediately prior to the Effective Time shall, by virtue of the Mergers and     
without any action on the part of the holder of such option, be converted into  
and become a right to purchase or otherwise acquire the same number of Common   
Shares at the same price per share and upon the same terms and subject to the   
same conditions as applicable to such options immediately prior to the Effective
Time.                                                                           

4.2. CONVERSION OF OUTSTANDING STOCK OF THE COMPANY. From and after the 
Effective Time, each issued and outstanding share of Common Stock and all rights
in respect thereof shall be converted into one fully paid and nonassessable     
Common Share, and each Certificate nominally representing shares of Common Stock
shall for all purposes be deemed to evidence the ownership of an equal number of
Common Shares. The holders of Certificates shall not be required immediately to 
surrender the same in exchange for certificates for Common Shares, but, as      
Certificates nominally representing shares of Common Stock are surrendered for  
transfer, the Trust will cause to be issued certificates representing Common    
Shares, and, at any time upon surrender by any holder of Certificates nominally 
representing shares of Common Stock, the Trust will cause to be issued therefor 
certificates for an equal number of Common Shares.                              

ARTICLE V 
COVENANTS 

5.1. NASDAQ LISTING. The Trust shall use its reasonable best efforts to 
cause the Common Shares to be issued in the Mergers to be approved for trading  
on the Nasdaq SmallCap Market tier of The Nasdaq Stock Market ("NASDAQ"),       
subject to official notice of issuance, prior to the Closing Date.              

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    5.2. INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE. From and after the
Effective Time, the Surviving Entity agrees that it will indemnify, and pay or  
reimburse reasonable expenses in advance of final disposition of a proceeding   
to, (i) any individual who is a present or former director or officer of the    
Company or the Maryland Company or (ii) any individual who, while a director of 
the Company and at the request of the Company, serves or has served another     
corporation, partnership, joint venture, trust, employee benefit plan or any    
other enterprise as a director, officer, partner or trustee of such corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise,   
arising out of or pertaining to matters existing or occurring at or prior to the
Effective Time, whether asserted or claimed prior to, at or after the Effective 
Time, to the fullest extent permitted by law.                                   

ARTICLE VI
CONDITIONS

6.1. CONDITION TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The     
respective obligations of the Company, the Maryland Company and the Trust to    
consummate the Mergers are subject to the fulfillment of each of the following  
conditions:                                                                     

  (a) The registration statement on Form S-4 to be filed by the Trust, which
will include the proxy statement of the Company soliciting proxies to approve   
the Mergers, shall have been declared effective in accordance with the          
Securities Act of 1933, as amended, by the Securities and Exchange Commission   
and no stop order shall have been issued or threatened.                         

  (b) This Agreement shall have been duly approved by (i) the requisite vote
of holders of the shares of Common Stock, in accordance with applicable law and 
the Amended and Restated Articles of Incorporation and Bylaws of the Company,   
(ii) the Company, as sole shareholder of the Maryland Company, and (iii) the    
Maryland Company, as sole shareholder of the Trust.                             

    (c) Holders of not more than 5.0% of the Common Stock issued and outstanding
on the record date set for the special meeting of the Company's shareholders    
called to approve the Mergers shall have exercised their rights under Section   
302A.471 of the MBCA.                                                           

(d) The Common Shares issuable to the Company's shareholders pursuant to
this Agreement shall have been authorized for trading on the NASDAQ or the      
National Market tier of the Nasdaq Stock Market, subject to official notice of  
issuance.                                                                       

 (e) No order to restrain, enjoin or otherwise prevent the consummation of
this Agreement or either of the Mergers shall have been entered by any court or 
administrative body and shall remain in full force and effect.                  

   (f) The obligations to consummate the Mergers contemplated hereby shall not
have been terminated pursuant to Article VII hereof.                            

(g) All consents and approvals, if any, necessary for the transactions  
contemplated hereby shall have been obtained and be in full force and effect.   

ARTICLE VII 
TERMINATION 

    7.1. TERMINATION BY MUTUAL CONSENT. This Agreement may be terminated and the
Mergers may be abandoned at any time prior to the Effective Time, before or     
after the approval by holders of the Common Stock, by the mutual consent of the 
Boards of Directors of the Company and the Maryland Company and the Board of    
Trustees of the Trust.                                                          

  7.2. EFFECT OF TERMINATION AND ABANDONMENT. In the event of termination of
this Agreement and abandonment of the Merger pursuant to this Article VII, no   
party hereto (or any of its                                                     

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directors, trustees or officers) shall have any liability or further obligation 
to any other party to this Agreement.                                           

ARTICLE VIII
MISCELLANEOUS AND GENERAL 

   8.1. MODIFICATION OR AMENDMENT. Subject to the applicable provisions of the
MBCA and the MGCL, at any time prior to the Effective Time, the parties hereto  
may amend or modify this Agreement by written agreement, executed and delivered 
by duly authorized officers of the respective parties; provided, however, that  
after the Mergers have been approved by the Company's shareholders, no amendment
or modification may change the amount or form of the consideration to be        
received by such shareholders in the Mergers.                                   

8.2. WAIVER OF CONDITIONS. The conditions to each of the parties'       
obligations to consummate the relevant Merger are for the sole benefit of such  
party and may be waived by such party in whole or in part to the extent         
permitted by applicable law.                                                    

    8.3. COUNTERPARTS. For the convenience of the parties hereto, this Agreement
may be executed in any number of counterparts, each of which shall be deemed an 
original, and all of which shall constitute one and the same agreement.         

8.4. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the States of Minnesota and Maryland, in the case of
the Company Merger, and in accordance with the laws of the State of Maryland, in
the case of the Trust Merger.                                                   

8.5. NO THIRD PARTY BENEFICIARIES. Except as provided in Section 5.2, no
provision of this Agreement is intended, nor shall it be interpreted, to provide
or create any third party beneficiary rights or any other rights of any kind in 
any client, customer, affiliate, stockholder, partner or employee or any other  
person or entity.                                                               

 8.6. HEADINGS. The Article, Section and paragraph headings herein are for
convenience of reference only and shall have no effect on the construction or   
meaning of this Agreement.                                                      

8.7. SERVICE OF PROCESS. (a) The Trust may be served with process in the
State of Minnesota in a proceeding for the enforcement of an obligation of the  
Company, the Maryland Company or the Trust, and in a proceeding for the         
enforcement of the rights of a dissenting shareholder of the Company against the
Maryland Company or the Trust. The Trust hereby irrevocably appoints the        
Secretary of State of the State of Minnesota as its agent to accept service of  
process in any such proceeding. The address to which a copy of such process     
shall be mailed by the Secretary of State to the Trust is One Logan Square,     
Suite 1105, Philadelphia, Pennsylvania 19103, Attn: Clay W. Hamlin, III.        

(b) The Trust may be served with process in the State of Maryland in any
proceeding for the enforcement of any obligation of the Company or the Maryland 
Company, as well as for enforcement of any obligations of the Trust arising from
the Mergers, and it does hereby irrevocably appoint the Secretary of State of   
the State of Maryland as its agent to accept service of process in any such suit
or other proceedings. The address to which a copy of such process shall be      
mailed by the Secretary of State to the Trust is One Logan Square, Suite 1105,  
Philadelphia, Pennsylvania 19103, Attn: Clay W. Hamlin, III.                    

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  IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the duly authorized officers of the parties hereto on the date first hereinabove
written.                                                                        

                               CORPORATE OFFICE PROPERTIES
               TRUST, INC.

                               By: /s/ CLAY W. HAMLIN, III
--------------------------------------------------------------------------------

                                   Name: Clay W. Hamlin, III
                                    Title: President and Chief
                     Executive Officer

              COPT, INC.

                               By: /s/ CLAY W. HAMLIN, III
--------------------------------------------------------------------------------

                                   Name: Clay W. Hamlin, III
                          Title: President

                               CORPORATE OFFICE PROPERTIES
         TRUST

                               By: /s/ CLAY W. HAMLIN, III
--------------------------------------------------------------------------------

                                   Name: Clay W. Hamlin, III
                                    Title: President and Chief
                     Executive Officer

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                                                                      APPENDIX B

CORPORATE OFFICE PROPERTIES TRUST 
AMENDED AND RESTATED DECLARATION OF TRUST 
Dated February   , 1998 

This DECLARATION OF TRUST is made as of the date set forth above by the 
undersigned Trustee (as defined herein):                                        

ARTICLE I 
FORMATION 

  The Trust is a real estate investment trust within the meaning of Title 8.
The Trust shall not be deemed to be a general partnership, limited partnership, 
joint venture, joint stock company or a corporation (but nothing herein shall   
preclude the Trust from being treated for tax purposes as an association under  
the Code).                                                                      

ARTICLE II
NAME

The name of the Trust is:                                               

Corporate Office Properties Trust 

   Under circumstances in which the Board of Trustees of the Trust (the "Board
of Trustees" or "Board") determines that the use of the name of the Trust is not
practicable, the Trust may use any other designation or name for the Trust.     

ARTICLE III 
PURPOSES AND POWERS 

 Section 3.1  PURPOSES.  The purposes for which the Trust is formed are to
invest in and to acquire, hold, manage, administer, control and dispose of      
property and interests (direct or indirect and of whatsoever nature) in and in  
respect of property, including, without limitation or obligation, engaging in   
business as a real estate investment trust under the Internal Revenue Code of   
1986, as amended (the "Code").                                                  

    Section 3.2  POWERS.  The Trust shall have all of the powers granted to real
estate investment trusts by Title 8 and all other powers set forth in the       
Declaration of Trust which are not inconsistent with law and are appropriate to 
promote and attain the purposes set forth in the Declaration of Trust.          

ARTICLE IV
RESIDENT AGENT

The name of the resident agent of the Trust in the State of Maryland is 
James J. Hanks, Jr., whose post office address is c/o Ballard Spahr Andrews &   
Ingersoll, 300 East Lombard Street, Baltimore, Maryland 21202. The resident     
agent is a citizen of and resides in the State of Maryland. The Trust may have  
such offices or places of business within or outside the State of Maryland as   
the Board of Trustees may from time to time determine.                          

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ARTICLE V 
BOARD OF TRUSTEES 

 Section 5.1  POWERS.  Subject to any express limitations contained in the
Declaration of Trust or in the Bylaws, (a) the business and affairs of the Trust
shall be managed under the direction of the Board of Trustees and (b) the Board 
shall have full, exclusive and absolute power, control and authority over any   
and all property of the Trust. The Board may take any action as in its sole     
judgment and discretion is necessary or appropriate to conduct the business and 
affairs of the Trust. The Declaration of Trust shall be construed with the      
presumption in favor of the grant of power and authority to the Board. Any      
construction of the Declaration of Trust or determination made in good faith by 
the Board concerning its powers and authority hereunder shall be conclusive. The
enumeration and definition of particular powers of the Trustees included in the 
Declaration of Trust or in the Bylaws shall in no way be limited or restricted  
by reference to or inference from the terms of this or any other provision of   
the Declaration of Trust or the Bylaws or construed or deemed by inference or   
otherwise in any manner to exclude or limit the powers conferred upon the Board 
or the Trustees under the general laws of the State of Maryland or any other    
applicable laws.                                                                

  The Board, without any action by the shareholders of the Trust, shall have
and may exercise, on behalf of the Trust, without limitation, the power to      
terminate the status of the Trust as a real estate investment trust under the   
Code; to determine that compliance with any restriction or limitations on       
ownership and transfers of shares of the Trust's beneficial interest set forth  
in Article VII of the Declaration of Trust is no longer required in order for   
the Trust to qualify as a REIT; to adopt, amend and repeal Bylaws; to elect     
officers in the manner prescribed in the Bylaws; to solicit proxies from holders
of shares of beneficial interest of the Trust; and to do any other acts and     
deliver any other documents necessary or appropriate to the foregoing powers.   

    Section 5.2  NUMBER AND CLASSIFICATION.  The number of Trustees (hereinafter
the "Trustees") initially shall be 1, which number may be increased or decreased
pursuant to the Bylaws of the Trust. The Trustees shall be elected at every     
third annual meeting of shareholders in the manner provided in the Bylaws or, in
order to fill any vacancy on the Board of Trustees, in the manner provided in   
the Bylaws. The name and address of the Trustee who shall serve until the first 
annual meeting of shareholders and until his successor is duly elected and      
qualify is:                                                                     

                                                                [Download Table]
                                                             
Name                                   Address               
Clay W. Hamlin, III                    1 Logan Square        
                                       Philadelphia, PA 19103

This Trustee may increase the number of Trustees and fill any vacancy,  
whether resulting from an increase in the number of Trustees or otherwise, on   
the Board of Trustees prior to the first annual meeting of shareholders in the  
manner provided in the Bylaws. It shall not be necessary to list in the         
Declaration of Trust the names and addresses of any Trustees hereinafter        
elected.                                                                        

    At any meeting of shareholders, the Trustees (other than any Trustee elected
solely by holders of one or more classes or series of Preferred Shares) may be  
classified, with respect to the terms for which they severally hold office, into
three classes, one class to hold office initially for a term expiring at the    
next succeeding annual meeting of shareholders, another class to hold office    
initially for a term expiring at the second succeeding annual meeting of        
shareholders and another class to hold office initially for a term expiring at  
the third succeeding annual meeting of shareholders, with the Trustees of each  
class to hold office until their successors are duly elected and qualify. At    
each annual meeting of shareholders, the successors to the class of Trustees    
whose term expires at such meeting shall be elected to hold office for a term   
expiring at the annual meeting of shareholders held in the third year following 
the year of their election.                                                     

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Section 5.3  RESIGNATION, REMOVAL OR DEATH.  Any Trustee may resign by  
written notice to the Board, effective upon execution and delivery to the Trust 
of such written notice or upon any future date specified in the notice. Subject 
to the rights of holders of one or more classes or series of Preferred Shares to
elect one or more Trustees, a Trustee may be removed at any time, only for cause
and only at a meeting of the shareholders, by the affirmative vote of the       
holders of not less than two-thirds of the Shares then outstanding and entitled 
to vote generally in the election of Trustees.                                  

ARTICLE VI
SHARES OF BENEFICIAL INTEREST 

   Section 6.1  AUTHORIZED SHARES.  The beneficial interest of the Trust shall
be divided into shares of beneficial interest (the "Shares"). The Trust has     
authority to issue 50,000,000 shares of beneficial interest, consisting of      
45,000,000 common shares of beneficial interest, $0.01 par value per share      
("Common Shares") and 5,000,000 preferred shares of beneficial interest, $0.01  
par value per share ("Preferred Shares"). The Board of Trustees, without any    
action by the shareholders of the Trust, may amend the Declaration of Trust from
time to time to increase or decrease the aggregate number of Shares or the      
number of Shares of any class that the Trust has authority to issue. If shares  
of one class of stock are classified or reclassified into shares of another     
class of stock pursuant to Sections 6.2, 6.3 or 6.4 of this Article VI, the     
number of authorized shares of the former class shall be automatically decreased
and the number of shares of the latter class shall be automatically increased,  
in each case by the number of shares so classified or reclassified.             

   Section 6.2  COMMON SHARES.  Subject to the provisions of Article VII, each
Common Share shall entitle the holder thereof to one vote on each matter upon   
which holders of Common Shares are entitled to vote. The Board of Trustees may  
reclassify any unissued Common Shares from time to time in one or more classes  
or series of Shares.                                                            

Section 6.3  PREFERRED SHARES.  The Board of Trustees may classify any  
unissued Preferred Shares and reclassify any previously classified but unissued 
Preferred Shares of any series from time to time, in one or more series of      
Shares.                                                                         

Section 6.4  CLASSIFIED OR RECLASSIFIED SHARES.  Prior to issuance of   
classified or reclassified Shares of any class or series, the Board of Trustees 
by resolution shall (a) designate that class or series to distinguish it from   
all other classes and series of Shares; (b) specify the number of Shares to be  
included in the class or series; (c) set, subject to the provisions of Article  
VII and subject to the express terms of any class or series of Shares           
outstanding at the time, the preferences, conversion or other rights, voting    
powers, restrictions, limitations as to dividends or other distributions,       
qualifications and terms and conditions of redemption for each class or series; 
and (d) cause the Trust to file articles supplementary with the State Department
of Assessments and Taxation of Maryland (the "SDAT"). Any of the terms of any   
class or series of Shares set pursuant to clause (c) of this Section 6.4 may be 
made dependent upon facts ascertainable outside the Declaration of Trust        
(including the occurrence of any event, including a determination or action by  
the Trust or any other person or body) and may vary among holders thereof,      
provided that the manner in which such facts or variations shall operate upon   
the terms of such class or series of Shares is clearly and expressly set forth  
in the articles supplementary filed with the SDAT.                              

Section 6.5  AUTHORIZATION BY BOARD OF SHARE ISSUANCE.  The Board of    
Trustees may authorize the issuance from time to time of Shares of any class or 
series, whether now or hereafter authorized, or securities or rights convertible
into Shares of any class or series, whether now or hereafter authorized, for    
such consideration (whether in cash, property, past or future services,         
obligation for future payment or otherwise) as the Board of Trustees may deem   
advisable (or without consideration in the case of a Share split or Share       
dividend), subject to such restrictions or limitations, if any, as may be set   
forth in the Declaration of Trust or the Bylaws of the Trust.                   

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 Section 6.6  DIVIDENDS AND DISTRIBUTIONS.  The Board of Trustees may from
time to time authorize and declare to shareholders such dividends or            
distributions, in cash or other assets of the Trust or in securities of the     
Trust or from any other source as the Board of Trustees in its discretion shall 
determine. The Board of Trustees shall endeavor to declare and pay such         
dividends and distributions as shall be necessary for the Trust to qualify as a 
real estate investment trust under the Code; however, shareholders shall have no
right to any dividend or distribution unless and until authorized and declared  
by the Board. The exercise of the powers and rights of the Board of Trustees    
pursuant to this Section 6.6 shall be subject to the provisions of any class or 
series of Shares at the time outstanding. Notwithstanding any other provision in
the Declaration of Trust, no determination shall be made by the Board of        
Trustees nor shall any transaction be entered into by the Trust which would     
cause any Shares or other beneficial interest in the Trust not to constitute    
"transferable shares" or "transferable certificates of beneficial interest"     
under Section 856(a)(2) of the Code or which would cause any distribution to    
constitute a preferential dividend as described in Section 562(c) of the Code.  

Section 6.7  GENERAL NATURE OF SHARES.  All Shares shall be personal    
property entitling the shareholders only to those rights provided in the        
Declaration of Trust. The shareholders shall have no interest in the property of
the Trust and shall have no right to compel any partition, division, dividend or
distribution of the Trust or of the property of the Trust. The death of a       
shareholder shall not terminate the Trust. The Trust is entitled to treat as    
shareholders only those persons in whose names Shares are registered as holders 
of Shares on the beneficial interest ledger of the Trust.                       

Section 6.8  FRACTIONAL SHARES.  The Trust may, without the consent or  
approval of any shareholder, issue fractional Shares, eliminate a fraction of a 
Share by rounding up or down to a full Share, arrange for the disposition of a  
fraction of a Share by the person entitled to it, or pay cash for the fair value
of a fraction of a Share.                                                       

 Section 6.9  DECLARATION AND BYLAWS.  All shareholders are subject to the
provisions of the Declaration of Trust and the Bylaws of the Trust. Except as   
otherwise specifically required by law, the Trustees shall have the sole power  
to adopt, amend and modify the Bylaws of the Trust.                             

  Section 6.10  DIVISIONS AND COMBINATIONS OF SHARES.  Subject to an express
provision to the contrary in the terms of any class or series of beneficial     
interest hereafter authorized, the Board of Trustees shall have the power to    
divide or combine the outstanding shares of any class or series of beneficial   
interest, without a vote of shareholders.                                       

ARTICLE VII 
RESTRICTION ON TRANSFER AND OWNERSHIP OF SHARES 

Section 7.1  DEFINITIONS.  For the purpose of this Article VII, the     
following terms shall have the following meanings:                              

    AGGREGATE SHARE OWNERSHIP LIMIT.  The term "Aggregate Share Ownership Limit"
shall mean not more than 9.8 percent in value of the aggregate of the           
outstanding Equity Shares. The value of the outstanding Equity Shares shall be  
determined by the Board of Trustees in good faith, which determination shall be 
conclusive for all purposes hereof.                                             

   BENEFICIAL OWNERSHIP.  The term "Beneficial Ownership" shall mean ownership
of Equity Shares by a Person, whether the interest in Equity Shares is held     
directly or indirectly (including by a nominee), and shall include interests    
that would be treated as owned through the application of Section 544 of the    
Code, as modified by Section 856(h)(1)(B) of the Code. The terms "Beneficial    
Owner," "Beneficially Owns" and "Beneficially Owned" shall have the correlative 
meanings.                                                                       

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BUSINESS DAY.  The term "Business Day" shall mean any day, other than a 
Saturday or Sunday, that is neither a legal holiday nor a day on which banking  
institutions in New York City are authorized or required by law, regulation or  
executive order to close.                                                       

    CHARITABLE BENEFICIARY.  The term "Charitable Beneficiary" shall mean one or
more beneficiaries of the Charitable Trust as determined pursuant to Section    
7.3.6, provided that each such organization must be described in Section        
501(c)(3) of the Code and contributions to each such organization must be       
eligible for deduction under each of Sections 170(b)(1)(A), 2055 and 2522 of the
Code.                                                                           

    CHARITABLE TRUST.  The term "Charitable Trust" shall mean any trust provided
for in Section 7.3.1.                                                           

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

    COMMON SHARE OWNERSHIP LIMIT.  The term "Common Share Ownership Limit" shall
mean not more than 9.8 percent (in value or in number of shares, whichever is   
more restrictive) of the aggregate of the outstanding Common Shares. The number 
and value of outstanding Common Shares shall be determined by the Board of      
Trustees in good faith, which determination shall be conclusive for all purposes
hereof.                                                                         

CONSTRUCTIVE OWNERSHIP.  The term "Constructive Ownership" shall mean   
ownership of Equity Shares by a Person, whether the interest in Equity Shares is
held directly or indirectly (including by a nominee), and shall include         
interests that would be treated as owned through the application of Section     
318(a) of the Code, as modified by Section 856(d)(5) of the Code. The terms     
"Constructive Owner," "Constructively Owns" and "Constructively Owned" shall    
have the correlative meanings.                                                  

DECLARATION OF TRUST.  The term "Declaration of Trust" shall mean this  
Declaration of Trust as filed for record with the SDAT, and any amendments      
thereto.                                                                        

    EQUITY SHARES.  The term "Equity Shares" shall mean all classes or series of
Shares, including, without limitation, Common Shares and Preferred Shares.      

  EXCEPTED HOLDER.  The term "Excepted Holder" shall mean a Permitted Holder
or a shareholder of the Trust for whom an Excepted Holder Limit is created by   
this Article VII or by the Board of Trustees pursuant to Section 7.2.7.         

   EXCEPTED HOLDER LIMIT.  The term "Excepted Holder Limit" shall mean, (i) in
the case of Permitted Holders, the percentage limit established by the Board of 
Trustees prior to their becoming shareholders of the Trust, subject to          
adjustment pursuant to Sections 7.2.7 and 7.2.8 and (ii) in the case of any     
other Excepted Holder, provided that the affected Excepted Holder agrees to     
comply with the requirements established by the Board of Trustees pursuant to   
Section 7.2.7, and subject to adjustment pursuant to Section 7.2.8, the         
percentage limit established by the Board of Trustees pursuant to Section 7.2.7.

  INITIAL DATE.  The term "Initial Date" shall mean the date upon which this
Declaration of Trust containing this Article VII is filed for record with the   
SDAT.                                                                           

   MARKET PRICE.  The term "Market Price" on any date shall mean, with respect
to any class or series of outstanding Equity Shares, the Closing Price for such 
Equity Shares on such date. The "Closing Price" on any date shall mean the last 
sale price for such Equity Shares, regular way, or, in case no such sale takes  
place on such day, the average of the closing bid and asked prices, regular way,
for such Equity Shares, in either case as reported in the principal consolidated
transaction reporting system with respect to the securities listed or admitted  
to trading on National Market or Small Cap tier of the Nasdaq Stock Market      
("Nasdaq-NM") or, if such Equity Shares are not listed or admitted to trading on
the Nasdaq-NM, as reported on the principal consolidated transaction reporting  
system with respect to the principal national securities exchange on which such 
Equity Shares are listed or admitted to trading or, if such Equity Shares are   
not listed or admitted to trading on the Nasdaq-NM or any national securities   
exchange, the last                                                              

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quoted price, or, if not so quoted, the average of the high bid and low asked   
prices in the over-the-counter market, as reported by the principal automated   
quotation system that may then be in use or, if such Equity Shares are not      
quoted by any such organization, the average of the closing bid and asked prices
as furnished by a professional market maker making a market in such Equity      
Shares selected by the Board of Trustees or, in the event that no trading price 
is available for such Equity Shares, the fair market value of Equity Shares, as 
determined in good faith by the Board of Trustees.                              

    PERMITTED HOLDER.  The term Permitted Holder shall mean Jay H. Shidler, Clay
W. Hamlin, III, Westbrook Real Estate Fund I, L.P. and Westbrook Real Estate Co.
Investment Partnership I, L.P. and any corporation, partnership, trust, estate  
or other legal entity controlled by any of the foregoing persons (or jointly    
controlled by Messrs. Shidler and Hamlin).                                      

PERSON.  The term "Person" shall mean an individual, corporation,       
partnership, estate, trust (including a trust qualified under Sections 401(a) or
501(c)(17) of the Code), a portion of a trust permanently set aside for or to be
used exclusively for the purposes described in Section 642(c) of the Code,      
association, private foundation within the meaning of Section 509(a) of the     
Code, joint stock company or other entity and also includes a group as that term
is used for purposes of Section 13(d)(3) of the Securities Exchange Act of 1934,
as amended, and a group to which an Excepted Holder Limit applies.              

  PROHIBITED OWNER.  The term "Prohibited Owner" shall mean, with respect to
any purported Transfer, any Person who, but for the provisions of Section 7.2.1,
would Beneficially Own or Constructively Own Equity Shares, and if appropriate  
in the context, shall also mean any Person who would have been the record owner 
of Equity Shares that the Prohibited Owner would have so owned.                 

   REIT.  The term "REIT" shall mean a real estate investment trust within the
meaning of Section 856 of the Code.                                             

    RESTRICTION TERMINATION DATE.  The term "Restriction Termination Date" shall
mean the first day after the Initial Date on which the Board of Trustees        
determines that it is no longer in the best interests of the Trust to attempt   
to, or continue to, qualify as a REIT or that compliance with the restrictions  
and limitations on Beneficial Ownership, Constructive Ownership and Transfers of
Equity Shares set forth herein is no longer required in order for the Trust to  
qualify as a REIT.                                                              

 SDAT.  The term "SDAT" shall mean the State Department of Assessments and
Taxation of Maryland.                                                           

TRANSFER.  The term "Transfer" shall mean any issuance, sale, transfer, 
gift, assignment, devise or other disposition, as well as any other event that  
causes any Person to acquire Beneficial Ownership or Constructive Ownership, or 
any agreement to take any such actions or cause any such events, of Equity      
Shares or the right to vote or receive dividends on Equity Shares, including (a)
the granting or exercise of any option (or any disposition of any option), (b)  
any disposition of any securities or rights convertible into or exchangeable for
Equity Shares or any interest in Equity Shares or any exercise of any such      
conversion or exchange right and (c) Transfers of interests in other entities   
that result in changes in Beneficial or Constructive Ownership of Equity Shares;
in each case, whether voluntary or involuntary, whether owned of record,        
Constructively Owned or Beneficially Owned and whether by operation of law or   
otherwise; provided, however, that the term Transfer shall not include the      
initial issuance of Equity Shares in connection with the indirect merger of     
Corporate Office Properties Trust, Inc., a Minnesota corporation, with and into 
the Trust. The terms "Transferring" and "Transferred" shall have the correlative
meanings.                                                                       

TRUSTEE.  The term "Trustee" shall mean the Person unaffiliated with the
Trust and a Prohibited Owner, that is appointed by the Trust to serve as trustee
of the Charitable Trust.                                                        

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Section 7.2  EQUITY SHARES.                                             

  Section 7.2.1  OWNERSHIP LIMITATIONS.  During the period commencing on the
Initial Date and prior to the Restriction Termination Date:                     

(a)  BASIC RESTRICTIONS.                                                

   (i) (1) No Person, other than an Excepted Holder, shall Beneficially Own or
Constructively Own Equity Shares in excess of the Aggregate Share Ownership     
Limit, (2) no Person, other than an Excepted Holder, shall Beneficially Own or  
Constructively Own Common Shares in excess of the Common Share Ownership Limit  
and (3) no Excepted Holder shall Beneficially Own or Constructively Own Equity  
Shares in excess of the Excepted Holder Limit for such Excepted Holder.         

    (ii) No Person shall Beneficially or Constructively Own Equity Shares to the
extent that such Beneficial or Constructive Ownership of Equity Shares would    
result in the Trust being "closely held" within the meaning of Section 856(h) of
the Code (without regard to whether the ownership interest is held during the   
last half of a taxable year), or otherwise failing to qualify as a REIT         
(including, but not limited to, Beneficial or Constructive Ownership that would 
result in the Trust owning (actually or Constructively) an interest in a tenant 
that is described in Section 856(d)(2)(B) of the Code if the income derived by  
the Trust from such tenant would cause the Trust to fail to satisfy any of the  
gross income requirements of Section 856(c) of the Code).                       

    (iii) Notwithstanding any other provisions contained herein, any Transfer of
Equity Shares (whether or not such Transfer is the result of a transaction      
entered into through the facilities of the Nasdaq-NM or any other national      
securities exchange or automated inter-dealer quotation system) that, if        
effective, would result in Equity Shares being beneficially owned by less than  
100 Persons (determined under the principles of Section 856(a)(5) of the Code)  
shall be void AB INITIO, and the intended transferee shall acquire no rights in 
such Equity Shares.                                                             

    (b) TRANSFER IN TRUST. If any Transfer of Equity Shares (whether or not such
Transfer is the result of a transaction entered into through the facilities of  
the NYSE or any other national securities exchange or automated inter-dealer    
quotation system) occurs which, if effective, would result in any Person        
Beneficially Owning or Constructively Owning Equity Shares in violation of      
Section 7.2.1(a)(i) or (ii),                                                    

(i) then that number of Equity Shares the Beneficial or Constructive    
Ownership of which otherwise would cause such Person to violate Section         
7.2.1(a)(i) or (ii)(rounded to the nearest whole share) shall be automatically  
transferred to a Charitable Trust for the benefit of a Charitable Beneficiary,  
as described in Section 7.3, effective as of the close of business on the       
Business Day prior to the date of such Transfer, and such Person shall acquire  
no rights in such Equity Shares; or                                             

    (ii) if the transfer to the Charitable Trust described in clause (i) of this
sentence would not be effective for any reason to prevent the violation of      
Section 7.2.1(a)(i) or (ii), then the Transfer of that number of Equity Shares  
that otherwise would cause any Person to violate Section 7.2.1(a)(i) or (ii)    
shall be void AB INITIO, and the intended transferee shall acquire no rights in 
such Equity Shares.                                                             

 Section 7.2.2  REMEDIES FOR BREACH.  If the Board of Trustees or any duly
authorized committee thereof shall at any time determine in good faith that a   
Transfer or other event has taken place that results in a violation of Section  
7.2.1 or that a Person intends to acquire or has attempted to acquire Beneficial
or Constructive Ownership of any Equity Shares in violation of Section 7.2.1    
(whether or not such violation is intended), the Board of Trustees or a         
committee thereof shall take such action as it deems advisable to refuse to give
effect to or to prevent such Transfer or other event, including, without        
limitation, causing the Trust to redeem Equity Shares, refusing to give effect  
to such Transfer on the books of the Trust or instituting proceedings to enjoin 
such Transfer or other event; PROVIDED, HOWEVER, that any Transfers or attempted
Transfers or other events in violation of Section 7.2.1 shall automatically     
result in the transfer to the Charitable Trust described above, and, where      
applicable, such Transfer (or other event) shall be void AB INITIO as provided  
above irrespective of any action (or non-action) by the Board of Trustees or a  
committee thereof.                                                              

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    Section 7.2.3  NOTICE OF RESTRICTED TRANSFER.  Any Person who, as the result
of a Transfer, attempted Transfer or intended Transfer acquires or attempts or  
intends to acquire Beneficial Ownership or Constructive Ownership of Equity     
Shares that will or may violate Section 7.2.1(a), or any Person who would have  
owned Equity Shares that resulted in a transfer to the Charitable Trust pursuant
to the provisions of Section 7.2.1(b), shall immediately give written notice to 
the Trust of such event, or in the case of such a proposed or attempted         
transaction, give at least 15 days prior written notice, and shall provide to   
the Trust such other information as the Trust may request in order to determine 
the effect, if any, of such Transfer on the Trust's status as a REIT.           

Section 7.2.4  OWNERS REQUIRED TO PROVIDE INFORMATION.  From the Initial
Date and prior to the Restriction Termination Date:                             

(a) every owner of more than five percent (or such other percentage as  
required by the Code or the Treasury Regulations promulgated thereunder) of the 
outstanding Equity Shares, within 30 days after the end of each taxable year,   
shall give written notice to the Trust stating the name and address of such     
owner, the number of Equity Shares and other Equity Shares Beneficially Owned   
and a description of the manner in which such shares are held. Each such owner  
shall provide to the Trust such additional information as the Trust may request 
in order to determine the effect, if any, of such Beneficial Ownership on the   
Trust's status as a REIT and to ensure compliance with the Aggregate Share      
Ownership Limit.                                                                

  (b) each Person who is a Beneficial or Constructive Owner of Equity Shares
and each Person (including the shareholder of record) who is holding Equity     
Shares for a Beneficial or Constructive Owner shall provide to the Trust such   
information as the Trust may request, in good faith, in order to determine the  
Trust's status as a REIT and to comply with requirements of any taxing authority
or governmental authority or to determine such compliance.                      

Section 7.2.5  REMEDIES NOT LIMITED.  Subject to Section 5.1 of the     
Declaration of Trust, nothing contained in this Section 7.2 shall limit the     
authority of the Board of Trustees to take such other action as it deems        
necessary or advisable to protect the Trust and the interests of its            
shareholders in preserving the Trust's status as a REIT.                        

    Section 7.2.6  AMBIGUITY.  In the case of an ambiguity in the application of
any of the provisions of this Section 7.2, Section 7.3 or any definition        
contained in Section 7.1, the Board of Trustees shall have the power to         
determine the application of the provisions of this Section 7.2 or Section 7.3  
or any such definition with respect to any situation based on the facts known to
it. In the event Section 7.2 or 7.3 requires an action by the Board of Trustees 
and the Declaration of Trust fails to provide specific guidance with respect to 
such action, the Board of Trustees shall have the power to determine the action 
to be taken so long as such action is not contrary to the provisions of Sections
7.1, 7.2 or 7.3.                                                                

Section 7.2.7  EXCEPTIONS.                                              

(a) Subject to Section 7.2.1(a)(ii), the Board of Trustees, in its sole 
discretion, may exempt a Person from the Aggregate Share Ownership Limit and the
Common Share Ownership Limit, as the case may be, and may establish or increase 
an Excepted Holder Limit for a Person (including a Permitted Holder) if:        

    (i) the Board of Trustees obtains such representations and undertakings from
such Person as are reasonably necessary to ascertain that no individual's       
Beneficial or Constructive Ownership of such Equity Shares will violate Section 
7.2.1(a)(ii);                                                                   

  (ii) such Person does not and represents that it will not own, actually or
Constructively, an interest in a tenant of the Trust (or a tenant of any entity 
owned or controlled by the Trust) that would cause the Trust to own, actually or
Constructively, more than a 9.9% interest (as set forth in Section 856(d)(2)(B) 
of the Code) in such tenant and the Board of Trustees obtains such              
representations and undertakings from such Person as are reasonably necessary to
ascertain this fact (for this purpose, a tenant from whom the Trust (or an      
entity owned or controlled by the Trust) derives (and is expected to continue to
derive) a sufficiently small amount of revenue such that, in the opinion of the 
Board of Trustees, rent from such tenant would not adversely affect the Trust's 
ability to qualify as a REIT, shall not be treated as a tenant of the Trust);   
and                                                                             

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  (iii) such Person agrees that any violation or attempted violation of such
representations or undertakings (or other action which is contrary to the       
restrictions contained in Sections 7.2.1 through 7.2.6) will result in such     
Equity Shares being automatically transferred to a Charitable Trust in          
accordance with Sections 7.2.1(b) and 7.3.                                      

   (b) Prior to granting any exception pursuant to Section 7.2.7(a), the Board
of Trustees may require a ruling from the Internal Revenue Service, or an       
opinion of counsel, in either case in form and substance satisfactory to the    
Board of Trustees in its sole discretion, as it may deem necessary or advisable 
in order to determine or ensure the Trust's status as a REIT. Notwithstanding   
the receipt of any ruling or opinion, the Board of Trustees may impose such     
conditions or restrictions as it deems appropriate in connection with granting  
such exception.                                                                 

   (c) Subject to Section 7.2.1(a)(ii), an underwriter which participates in a
public offering or a private placement of Equity Shares (or securities          
convertible into or exchangeable for Equity Shares) may Beneficially Own or     
Constructively Own Equity Shares (or securities convertible into or exchangeable
for Equity Shares) in excess of the Aggregate Share Ownership Limit, the Common 
Share Ownership Limit or both such limits, but only to the extent necessary to  
facilitate such public offering or private placement.                           

  (d) The Board of Trustees may only reduce the Excepted Holder Limit for an
Excepted Holder: (1) with the written consent of such Excepted Holder at any    
time, or (2) pursuant to the terms and conditions of the agreements and         
undertakings entered into with such Excepted Holder in connection with the      
establishment of the Excepted Holder Limit for that Excepted Holder. No Excepted
Holder Limit shall be reduced to a percentage that is less than the Common Share
Ownership Limit.                                                                

Section 7.2.8  INCREASE IN AGGREGATE SHARE OWNER-SHIP AND COMMON SHARE  
OWNERSHIP LIMITS.  The Board of Trustees may from time to time increase the     
Common Share Ownership Limit and the Aggregate Share Ownership Limit.           

Section 7.2.9  LEGEND.  Each certificate for Equity Shares shall
bear substantially the following legend:                                

The shares represented by this Certificate are subject to restrictions  
on Beneficial Ownership, Constructive Ownership and Transfer for the    
purpose of the Trust's maintenance of its status as a real estate       
investment trust (a "REIT") under the Internal Revenue Code of 1986, as 
amended (the "Code"). Subject to certain further restrictions and except
as expressly provided in the Declaration of Trust of the Trust, (i) no  
Person may Beneficially Own or Constructively Own Common Shares of the  
Trust in excess of 9.8 percent (in value or number of shares) of the    
outstanding Common Shares of the Trust unless such Person is an Excepted
Holder or a Permitted Holder (in which case the Excepted Holder Limit   
shall be applicable); (ii) no Person may Beneficially Own or            
Constructively Own Equity Shares of the Trust in excess of 9.8 percent  
of the value of the total outstanding Equity Shares of the Trust, unless
such Person is an Excepted Holder or a Permitted Holder (in which case  
the Excepted Holder Limit shall be applicable); (iii) no Person may     
Beneficially Own or Constructively Own Equity Shares that would result  
in the Trust being "closely held" under Section 856(h) of the Code or   
otherwise cause the Trust to fail to qualify as a REIT; and (iv) no     
Person may Transfer Equity Shares if such Transfer would result in      
Equity Shares of the Trust being owned by fewer than 100 Persons. Any   
Person who Beneficially Owns or Constructively Owns or attempts to      
Beneficially Own or Constructively Own Equity Shares which cause or will
cause a Person to Beneficially Own or Constructively Own Equity Shares  
in excess or in violation of the above limitations must immediately     
notify the Trust. If any of the restrictions on transfer or ownership   
are violated, the Equity Shares represented hereby will be automatically
transferred to a Trustee of a Charitable Trust for the benefit of one or
more Charitable Beneficiaries. In addition, upon the occurrence of      
certain events, attempted Transfers in violation of the restrictions    
described above may be void AB INITIO. All capitalized terms in this    
legend have the meanings defined in the Declaration of Trust of the     
Trust, as the                                                           

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same may be amended from time to time, a copy of which, including the   
restrictions on transfer and ownership, will be furnished to each holder
of Equity Shares of the Trust on request and without charge.            

 Instead of the foregoing legend, the certificate may state that the Trust
will furnish a full statement about certain restrictions on transferability to a
shareholder on request and without charge.                                      

Section 7.3  TRANSFER OF EQUITY SHARES IN TRUST.                        

Section 7.3.1  OWNERSHIP IN TRUST.  Upon any purported Transfer or other
event described in Section 7.2.1(b) that would result in a transfer of Equity   
Shares to a Charitable Trust, such Equity Shares shall be deemed to have been   
transferred to the Trustee as trustee of a Charitable Trust for the exclusive   
benefit of one or more Charitable Beneficiaries. Such transfer to the Trustee   
shall be deemed to be effective as of the close of business on the Business Day 
prior to the purported Transfer or other event that results in the transfer to  
the Charitable Trust pursuant to Section 7.2.1(b). The Trustee shall be         
appointed by the Trust and shall be a Person unaffiliated with the Trust and any
Prohibited Owner. Each Charitable Beneficiary shall be designated by the Trust  
as provided in Section 7.3.6.                                                   

   Section 7.3.2  STATUS OF SHARES HELD BY THE TRUSTEE.  Equity Shares held by
the Trustee shall be issued and outstanding Equity Shares of the Company. The   
Prohibited Owner shall have no rights in the shares held by the Trustee. The    
Prohibited Owner shall not benefit economically from ownership of any shares    
held in trust by the Trustee, shall have no rights to dividends or other        
distributions and shall not possess any rights to vote or other rights          
attributable to the shares held in the Charitable Trust.                        

Section 7.3.3  DIVIDEND AND VOTING RIGHTS.  The Trustee shall have all  
voting rights and rights to dividends or other distributions with respect to    
Equity Shares held in the Charitable Trust, which rights shall be exercised for 
the exclusive benefit of the Charitable Beneficiary. Any dividend or other      
distribution paid prior to the discovery by the Trust that Equity Shares have   
been transferred to the Trustee shall be paid with respect to such Equity Shares
to the Trustee upon demand and any dividend or other distribution authorized but
unpaid shall be paid when due to the Trustee. Any dividends or distributions so 
paid over to the Trustee shall be held in trust for the Charitable Beneficiary. 
The Prohibited Owner shall have no voting rights with respect to shares held in 
the Charitable Trust and, subject to Maryland law, effective as of the date that
Equity Shares have been transferred to the Trustee, the Trustee shall have the  
authority (at the Trustee's sole discretion) (i) to rescind as void any vote    
cast by a Prohibited Owner prior to the discovery by the Trust that Equity      
Shares have been transferred to the Trustee and (ii) to recast such vote in     
accordance with the desires of the Trustee acting for the benefit of the        
Charitable Beneficiary; provided, however, that if the Company has already taken
irreversible trust action, then the Trustee shall not have the authority to     
rescind and recast such vote. Notwithstanding the provisions of this Article    
VII, until the Trust has received notification that Equity Shares have been     
transferred into a Charitable Trust, the Trust shall be entitled to rely on its 
share transfer and other shareholder records for purposes of preparing lists of 
shareholders entitled to vote at meetings, determining the validity and         
authority of proxies and otherwise conducting votes of shareholders.            

Section 7.3.4  SALE OF SHARES BY TRUSTEE.  Within 20 days of receiving  
notice from the Trust that Equity Shares have been transferred to the Charitable
Trust, the Trustee of the Charitable Trust shall sell the shares held in the    
Charitable Trust to a person, designated by the Trustee, whose ownership of the 
shares will not violate the ownership limitations set forth in Section 7.2.1(a).
Upon such sale, the interest of the Charitable Beneficiary in the shares sold   
shall terminate and the Trustee shall distribute the net proceeds of the sale to
the Prohibited Owner and to the Charitable Beneficiary as provided in this      
Section 7.3.4. The Prohibited Owner shall receive the lesser of (1) the price   
paid by the Prohibited Owner for the shares or, if the Prohibited Owner did not 
give value for the shares in connection with the event causing the shares to be 
held in the Charitable Trust (e.g., in the case of a gift, devise or other such 
transaction), the Market Price of the shares on the day of the event causing the
shares to be held in the Charitable Trust and (2) the price per share received  
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Charitable Trust. Any net sales proceeds in excess of the amount payable to the 
Prohibited Owner shall be immediately paid to the Charitable Beneficiary. If,   
prior to the discovery by the Trust that Equity Shares have been transferred to 
the Trustee, such shares are sold by a Prohibited Owner, then (i) such shares   
shall be deemed to have been sold on behalf of the Charitable Trust and (ii) to 
the extent that the Prohibited Owner received an amount for such shares that    
exceeds the amount that such Prohibited Owner was entitled to receive pursuant  
to this Section 7.3.4, such excess shall be paid to the Trustee upon demand.    

   Section 7.3.5  PURCHASE RIGHT IN SHARES TRANSFERRED TO THE TRUSTEE.  Equity
Shares transferred to the Trustee shall be deemed to have been offered for sale 
to the Trust, or its designee, at a price per share equal to the lesser of (i)  
the price per share in the transaction that resulted in such transfer to the    
Charitable Trust (or, in the case of a devise or gift, the Market Price at the  
time of such devise or gift) and (ii) the Market Price on the date the Trust, or
its designee, accepts such offer. The Trust shall have the right to accept such 
offer until the Trustee has sold the shares held in the Charitable Trust        
pursuant to Section 7.3.4. Upon such a sale to the Trust, the interest of the   
Charitable Beneficiary in the shares sold shall terminate and the Trustee shall 
distribute the net proceeds of the sale to the Prohibited Owner.                

  Section 7.3.6  DESIGNATION OF CHARITABLE BENEFICIARIES.  By written notice
to the Trustee, the Trust shall designate one or more nonprofit organizations to
be the Charitable Beneficiary of the interest in the Charitable Trust such that 
(i) Equity Shares held in the Charitable Trust would not violate the            
restrictions set forth in Section 7.2.1(a) in the hands of such Charitable      
Beneficiary and (ii) each such organization must be described in Section        
501(c)(3) of the Code and contributions to each such organization must be       
eligible for deduction under each of Sections 170(b)(1)(A), 2055 and 2522 of the
Code.                                                                           

Section 7.4  NASDAQ-NM TRANSACTIONS.  Nothing in this Article VII shall 
preclude the settlement of any transaction entered into through the facilities  
of the Nasdaq-NM or any other national securities exchange or automated         
inter-dealer quotation system. The fact that the settlement of any transaction  
is so permitted shall not negate the effect of any other provision of this      
Article VII and any transferee in such a transaction shall be subject to all of 
the provisions and limitations set forth in this Article VII.                   

Section 7.5  ENFORCEMENT.  The Trust is authorized specifically to seek 
equitable relief, including injunctive relief, to enforce the provisions of this
Article VII.                                                                    

 Section 7.6  NON-WAIVER.  No delay or failure on the part of the Trust or
the Board of Trustees in exercising any right hereunder shall operate as a      
waiver of any right of the Trust or the Board of Trustees, as the case may be,  
except to the extent specifically waived in writing.                            

ARTICLE VIII
SHAREHOLDERS

Section 8.1  MEETINGS.  There shall be an annual meeting of the         
shareholders, commencing with the calendar year 1999, to be held on proper      
notice at such time (after the delivery of the annual report) and convenient    
location as shall be determined by or in the manner prescribed in the Bylaws,   
for the election of the Trustees, if required, and for the transaction of any   
other business within the powers of the Trust. Except as otherwise provided in  
the Declaration of Trust or as specifically required by law, special meetings of
shareholders may only be called in the manner provided in the Bylaws. If there  
are no Trustees, the officers of the Trust shall promptly call a special meeting
of the shareholders entitled to vote for the election of successor Trustees. Any
meeting may be adjourned and reconvened as the Trustees determine or as provided
in the Bylaws.                                                                  

Section 8.2  VOTING RIGHTS.  Subject to the provisions of any class or  
series of Shares then outstanding, the shareholders shall be entitled to vote   
only on the following matters: (a) election of Trustees as provided in Section  
5.2 and the removal of Trustees as provided in Section 5.3; (b) amendment of the
Declaration of Trust as provided in Article X; (c) termination of the Trust as  
provided in Section 10.3;                                                       

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(d) merger or consolidation of the Trust, or the sale or disposition of         
substantially all of the Trust Property, as provided in Article XI; and (e) such
other matters with respect to which the Board of Trustees has adopted a         
resolution declaring that a proposed action is advisable and directing that the 
matter be submitted to the shareholders for approval or ratification. Except    
with respect to the foregoing matters, no action taken by the shareholders at   
any meeting or by consent shall in any way bind the Board of Trustees.          

   Section 8.3  PREEMPTIVE AND APPRAISAL RIGHTS.  Except as may be provided by
the Board of Trustees in setting the terms of classified or reclassified Shares 
pursuant to Section 6.4, no holder of Shares shall, as such holder, (a) have any
preemptive right to purchase or subscribe for any additional Shares of the Trust
or any other security of the Trust which it may issue or sell or (b), except as 
expressly required by Title 8, have any right to require the Trust to pay him   
the fair value of his Shares in an appraisal or similar proceeding.             

Section 8.4  EXTRAORDINARY ACTIONS.  Except as specifically provided in 
Section 5.3 (relating to removal of Trustees), in Article X (relating to        
amendments to this Declaration of Trust), in Article XI (relating to mergers,   
consolidations or sales of trust property), and in Section 12.2 (relating to    
termination of the Trust) and except for any deletion or modification of the    
foregoing references in this Section 8.4, notwithstanding any provision of law  
permitting or requiring any action to be taken or authorized by the affirmative 
vote of the holders of a greater number of votes, any such action shall be      
effective and valid if taken or authorized by the affirmative vote of holders of
Shares entitled to cast a majority of all the votes entitled to be cast on the  
matter.                                                                         

Section 8.5  BOARD APPROVAL.  The submission of any action to the       
shareholders for their consideration shall first be approved by the Board of    
Trustees.                                                                       

 Section 8.6  ACTION BY SHAREHOLDERS WITHOUT A MEETING.  The Bylaws of the
Trust may provide that any action required or permitted to be taken by the      
shareholders may be taken without a meeting by the written consent of all       
shareholders entitled to cast votes on the matter.                              

ARTICLE IX
LIABILITY LIMITATION, INDEMNIFICATION 
AND TRANSACTIONS WITH THE TRUST 

  Section 9.1  LIMITATION OF SHAREHOLDER LIABILITY.  No shareholder shall be
liable for any debt, claim, demand, judgment or obligation of any kind of,      
against or with respect to the Trust by reason of his being a shareholder, nor  
shall any shareholder be subject to any personal liability whatsoever, in tort, 
contract or otherwise, to any person in connection with the property or the     
affairs of the Trust by reason of his being a shareholder.                      

 Section 9.2  LIMITATION OF TRUSTEE AND OFFICER LIABILITY.  To the maximum
extent that Maryland law in effect from time to time permits limitation of the  
liability of trustees and officers of a real estate investment trust, no Trustee
or officer of the Trust shall be liable to the Trust or to any shareholder for  
money damages. Neither the amendment nor repeal of this Section 9.2, nor the    
adoption or amendment of any other provision of the Declaration of Trust        
inconsistent with this Section 9.2, shall apply to or affect in any respect the 
applicability of the preceding sentence with respect to any act or failure to   
act which occurred prior to such amendment, repeal or adoption. In the absence  
of any Maryland statute limiting the liability of trustees and officers of a    
Maryland real estate investment trust for money damages in a suit by or on      
behalf of the Trust or by any shareholder, no Trustee or officer of the Trust   
shall be liable to the Trust or to any shareholder for money damages except to  
the extent that (a) the Trustee or officer actually received an improper benefit
or profit in money, property, or services, for the amount of the benefit or     
profit in money, property, or services actually received; or (b) a judgment or  
other final adjudication adverse to the Trustee or officer is entered in a      
proceeding based on a finding in the proceeding that the                        

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Trustee's or officer's action or failure to act was the result of active and    
deliberate dishonesty and was material to the cause of action adjudicated in the
proceeding.                                                                     

Section 9.3  INDEMNIFICATION.  The Trust shall have the power, to the   
maximum extent permitted by Maryland law in effect from time to time, to        
obligate itself to indemnify, and to pay or reimburse reasonable expenses in    
advance of final disposition of a proceeding to, (a) any individual who is a    
present or former shareholder, Trustee or officer of the Trust or (b) any       
individual who, while a Trustee of the Trust and at the request of the Trust,   
serves or has served as a director, officer, partner, trustee, employee or agent
of another real estate investment trust, corporation, partnership, joint        
venture, trust, employee benefit plan or any other enterprise from and against  
any claim or liability to which such person may become subject or which such    
person may incur by reason of his status as a present or former shareholder,    
Trustee or officer of the Trust. The Trust shall have the power, with the       
approval of its Board of Trustees, to provide such indemnification and          
advancement of expenses to a person who served a predecessor of the Trust in any
of the capacities described in (a) or (b) above and to any employee or agent of 
the Trust or a predecessor of the Trust.                                        

Section 9.4  TRANSACTIONS BETWEEN THE TRUST AND ITS TRUSTEES, OFFICERS, 
EMPLOYEES AND AGENTS.  Subject to any express restrictions in the Declaration of
Trust or adopted by the Trustees in the Bylaws or by resolution, the Trust may  
enter into any contract or transaction of any kind with any person, including   
any Trustee, officer, employee or agent of the Trust or any person affiliated   
with a Trustee, officer, employee or agent of the Trust, whether or not any of  
them has a financial interest in such transaction.                              

ARTICLE X 
AMENDMENTS

 Section 10.1  GENERAL.  The Trust reserves the right from time to time to
make any amendment to the Declaration of Trust, now or hereafter authorized by  
law, including any amendment altering the terms or contract rights, as expressly
set forth in the Declaration of Trust, of any Shares. All rights and powers     
conferred by the Declaration of Trust on shareholders, Trustees and officers are
granted subject to this reservation. An amendment to the Declaration of Trust   
(a) shall be signed and acknowledged by at least a majority of the Trustees, or 
an officer duly authorized by at least a majority of the Trustees, (b) shall be 
filed for record as provided in Section 13.5 and (c) shall become effective as  
of the later of the time the SDAT accepts the amendment for record or the time  
established in the amendment, not to exceed 30 days after the amendment is      
accepted for record. All references to the Declaration of Trust shall include   
all amendments thereto.                                                         

   Section 10.2  BY TRUSTEES.  The Trustees may amend the Declaration of Trust
from time to time, in the manner provided by Title 8, without any action by the 
shareholders, to qualify as a real estate investment trust under the Code or    
under Title 8 and as otherwise provided in the Declaration of Trust.            

Section 10.3  BY SHAREHOLDERS.  Except as otherwise provided in the     
Declaration of Trust, any amendment to the Declaration of Trust shall be valid  
only if approved by the affirmative vote of at least two-thirds of all the votes
entitled to be cast on the matter.                                              

ARTICLE XI
MERGER, CONSOLIDATION OR SALE OF TRUST PROPERTY 

Subject to the provisions of any class or series of Shares at the time  
outstanding, the Trust may (a) merge the Trust into another entity, (b)         
consolidate the Trust with one or more other entities into a new entity or (c)  
sell, lease, exchange or otherwise transfer all or substantially all of the     
Trust Property. Any such action must be approved by the Board of Trustees and,  
after notice to all shareholders entitled to vote on the matter, by the         
affirmative vote of two-thirds of all the votes entitled to be cast on the      
matter.                                                                         

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ARTICLE XII 
DURATION AND TERMINATION OF TRUST 

Section 12.1  DURATION.  The Trust shall continue perpetually unless    
terminated pursuant to Section 12.2 or pursuant to any applicable provision of  
Title 8.                                                                        

Section 12.2  TERMINATION.                                              

  (a) Subject to the provisions of any class or series of Shares at the time
outstanding, the Trust may be terminated at any meeting of shareholders, by the 
affirmative vote of two-thirds of all the votes entitled to be cast on the      
matter. Upon the termination of the Trust:                                      

  (i) The Trust shall carry on no business except for the purpose of winding
up its affairs.                                                                 

   (ii) The Trustees shall proceed to wind up the affairs of the Trust and all
of the powers of the Trustees under the Declaration of Trust shall continue,    
including the powers to fulfill or discharge the Trust's contracts, collect its 
assets, sell, convey, assign, exchange, transfer or otherwise dispose of all or 
any part of the remaining property of the Trust to one or more persons at public
or private sale for consideration which may consist in whole or in part of cash,
securities or other property of any kind, discharge or pay its liabilities and  
do all other acts appropriate to liquidate its business.                        

(iii) After paying or adequately providing for the payment of all       
liabilities, and upon receipt of such releases, indemnities and agreements as   
they deem necessary for their protection, the Trust may distribute the remaining
property of the Trust among the shareholders so that after payment in full or   
the setting apart for payment of such preferential amounts, if any, to which the
holders of any Shares at the time outstanding shall be entitled, the remaining  
property of the Trust shall, subject to any participating or similar rights of  
Shares at the time outstanding, be distributed ratably among the holders of     
Common Shares at the time outstanding.                                          

   (b) After termination of the Trust, the liquidation of its business and the
distribution to the shareholders as herein provided, a majority of the Trustees 
shall execute and file with the Trust's records a document certifying that the  
Trust has been duly terminated, and the Trustees shall be discharged from all   
liabilities and duties hereunder, and the rights and interests of all           
shareholders shall cease.                                                       

ARTICLE XIII
MISCELLANEOUS 

 Section 13.1  GOVERNING LAW.  The Declaration of Trust is executed by the
undersigned Trustees and delivered in the State of Maryland with reference to   
the laws thereof, and the rights of all parties and the validity, construction  
and effect of every provision hereof shall be subject to and construed according
to the laws of the State of Maryland without regard to conflicts of laws        
provisions thereof.                                                             

    Section 13.2  RELIANCE BY THIRD PARTIES.  Any certificate shall be final and
conclusive as to any person dealing with the Trust if executed by the Secretary 
or an Assistant Secretary of the Trust or a Trustee, and if certifying to: (a)  
the number or identity of Trustees, officers of the Trust or shareholders; (b)  
the due authorization of the execution of any document; (c) the action or vote  
taken, and the existence of a quorum, at a meeting of the Board of Trustees or  
shareholders; (d) a copy of the Declaration of Trust or of the Bylaws as a true 
and complete copy as then in force; (e) an amendment to the Declaration of      
Trust; (f) the termination of the Trust; or (g) the existence of any fact       
relating to the affairs of the Trust. No purchaser, lender, transfer agent or   
other person shall be bound to make any inquiry concerning the                  

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validity of any transaction purporting to be made by the Trust on its behalf or 
by any officer, employee or agent of the Trust.                                 

Section 13.3  SEVERABILITY.                                             

(a) The provisions of the Declaration of Trust are severable, and if the
Board of Trustees shall determine, with the advice of counsel, that any one or  
more of such provisions (the "Conflicting Provisions") are in conflict with the 
Code, Title 8 or other applicable federal or state laws, the Conflicting        
Provisions, to the extent of the conflict, shall be deemed never to have        
constituted a part of the Declaration of Trust, even without any amendment of   
the Declaration of Trust pursuant to Article X and without affecting or         
impairing any of the remaining provisions of the Declaration of Trust or        
rendering invalid or improper any action taken or omitted prior to such         
determination. No Trustee shall be liable for making or failing to make such a  
determination. In the event of any such determination by the Board of Trustees, 
the Board shall amend the Declaration of Trust in the manner provided in Section
10.2.                                                                           

 (b) If any provision of the Declaration of Trust shall be held invalid or
unenforceable in any jurisdiction, such holding shall apply only to the extent  
of any such invalidity or unenforceability and shall not in any manner affect,  
impair or render invalid or unenforceable such provision in any other           
jurisdiction or any other provision of the Declaration of Trust in any          
jurisdiction.                                                                   

    Section 13.4  CONSTRUCTION.  In the Declaration of Trust, unless the context
otherwise requires, words used in the singular or in the plural include both the
plural and singular and words denoting any gender include all genders. The title
and headings of different parts are inserted for convenience and shall not      
affect the meaning, construction or effect of the Declaration of Trust. In      
defining or interpreting the powers and duties of the Trust and its Trustees and
officers, reference may be made by the Trustees or officers, to the extent      
appropriate and not inconsistent with the Code or Title 8, to Titles 1 through 3
of the Corporations and Associations Article of the Annotated Code of Maryland. 
In furtherance and not in limitation of the foregoing, in accordance with the   
provisions of Title 3, Subtitles 6 and 7, of the Corporations and Associations  
Article of the Annotated Code of Maryland, the Trust shall be included within   
the definition of "corporation" for purposes of such provisions.                

Section 13.5  RECORDATION.  The Declaration of Trust and any amendment  
hereto shall be filed for record with the SDAT and may also be filed or recorded
in such other places as the Trustees deem appropriate, but failure to file for  
record the Declaration of Trust or any amendment hereto in any office other than
in the State of Maryland shall not affect or impair the validity or             
effectiveness of the Declaration of Trust or any amendment hereto. A restated   
Declaration of Trust shall, upon filing, be conclusive evidence of all          
amendments contained therein and may thereafter be referred to in lieu of the   
original Declaration of Trust and the various amendments thereto.               

  IN WITNESS WHEREOF, this Declaration of Trust has been signed on this 22nd
day of January, 1998 by the undersigned Trustee of the Trust, who acknowledges, 
that this document is his act, and that to the best of his knowledge,           
information, and belief, the matters and facts set forth herein are true in all 
material respects and that the statement is made under the penalties for        
perjury.                                                                        

                                                                [Download Table]
                                         
-----------------------------------------
Clay W. Hamlin, III                      
Trustee                                  

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                                                                      APPENDIX C

BYLAWS OF 
CORPORATE OFFICE PROPERTIES TRUST 
(THE "TRUST") 

ARTICLE I 

OFFICES 

 Section 1.  PRINCIPAL OFFICE.  The principal office of the Trust shall be
located at such place or places as the Trustees may designate.                  

 Section 2.  ADDITIONAL OFFICES.  The Trust may have additional offices at
such places as the Board of Trustees may from time to time determine or the     
business of the Trust may require.                                              

ARTICLE II

MEETINGS OF SHAREHOLDERS

Section 1.  PLACE.  All meetings of shareholders shall be held at the   
principal office of the Trust or at such other place within the United States as
shall be stated in the notice of the meeting.                                   

  Section 2.  ANNUAL MEETING.  An annual meeting of the shareholders for the
election of Trustees and the transaction of any business within the powers of   
the Trust shall be held within a reasonable period, but not less than 30 days,  
following delivery of the annual report, referred to in Section 12 of this      
Article II, but in any event within six months after the end of each full fiscal
year at a convenient location and on proper notice, on a date and at the time   
set by the Trustees, beginning with the year 1999. Failure to hold an annual    
meeting does not invalidate the Trust's existence or affect any otherwise valid 
acts of the Trust.                                                              

    Section 3.  SPECIAL MEETINGS.  The chairman of the board or the president or
a majority of the Trustees may call special meetings of the shareholders.       
Special meetings of shareholders shall also be called by the secretary upon the 
written request of the holders of shares entitled to cast not less than a       
majority of all the votes entitled to be cast at such meeting. Such request     
shall state the purpose of such meeting and the matters proposed to be acted on 
at such meeting. The secretary shall inform such shareholders of the reasonably 
estimated cost of preparing and mailing notice of the meeting and, upon payment 
by such shareholders to the Trust of such costs, the secretary shall give notice
to each shareholder entitled to notice of the meeting. Unless requested by      
shareholders entitled to cast a majority of all the votes entitled to be cast at
such meeting, a special meeting need not be called to consider any matter which 
is substantially the same as a matter voted on at any meeting of the            
shareholders held during the preceding twelve months.                           

Section 4.  NOTICE.  Not less than ten nor more than 90 days before each
meeting of shareholders, the secretary shall give to each shareholder entitled  
to vote at such meeting and to each shareholder not entitled to vote who is     
entitled to notice of the meeting written or printed notice stating the time and
place of the meeting and, in the case of a special meeting or as otherwise may  
be required by any statute, the purpose for which the meeting is called, either 
by mail or by presenting it to such shareholder personally or by leaving it at  
his residence or usual place of business. If mailed, such notice shall be deemed
to be given when deposited in the United States mail addressed to the           
shareholder at his post office address as it appears on the records of the      
Trust, with postage thereon prepaid.                                            

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    Section 5.  SCOPE OF NOTICE.  Any business of the Trust may be transacted at
an annual meeting of shareholders without being specifically designated in the  
notice, except such business as is required by any statute to be stated in such 
notice. No business shall be transacted at a special meeting of shareholders    
except as specifically designated in the notice.                                

Section 6.  ORGANIZATION.  At every meeting of the shareholders, the    
Chairman of the Board, if there be one, shall conduct the meeting or, in the    
case of vacancy in office or absence of the Chairman of the Board, one of the   
following officers present shall conduct the meeting in the order stated: the   
Vice Chairman of the Board, if there be one, the President, the Vice Presidents 
in their order of rank and seniority, or a Chairman chosen by the shareholders  
entitled to cast a majority of the votes which all shareholders present in      
person or by proxy are entitled to cast, shall act as Chairman, and the         
Secretary, or, in his absence, an assistant secretary, or in the absence of both
the Secretary and assistant secretaries, a person appointed by the Chairman     
shall act as Secretary.                                                         

   Section 7.  QUORUM.  At any meeting of shareholders, the presence in person
or by proxy of shareholders entitled to cast a majority of all the votes        
entitled to be cast at such meeting shall constitute a quorum; but this section 
shall not affect any requirement under any statute or the Declaration of Trust  
for the vote necessary for the adoption of any measure. If, however, such quorum
shall not be present at any meeting of the shareholders, the shareholders       
entitled to vote at such meeting, present in person or by proxy, shall have the 
power to adjourn the meeting from time to time to a date not more than 120 days 
after the original record date without notice other than announcement at the    
meeting. At such adjourned meeting at which a quorum shall be present, any      
business may be transacted which might have been transacted at the meeting as   
originally notified.                                                            

Section 8.  VOTING.  A plurality of all the votes cast at a meeting of  
shareholders duly called and at which a quorum is present shall be sufficient to
elect a Trustee. Each share may be voted for as many individuals as there are   
Trustees to be elected and for whose election the share is entitled to be voted.
A majority of the votes cast at a meeting of shareholders duly called and at    
which a quorum is present shall be sufficient to approve any other matter which 
may properly come before the meeting, unless more than a majority of the votes  
cast is required herein or by statute or by the Declaration of Trust. Unless    
otherwise provided in the Declaration of Trust, each outstanding share,         
regardless of class, shall be entitled to one vote on each matter submitted to a
vote at a meeting of shareholders.                                              

  Section 9.  PROXIES.  A shareholder may cast the votes entitled to be cast
by the shares owned of record by him either in person or by proxy executed in   
writing by the shareholder or by his duly authorized agent. Such proxy shall be 
filed with the secretary of the Trust before or at the time of the meeting. No  
proxy shall be valid after eleven months from the date of its execution, unless 
otherwise provided in the proxy.                                                

Section 10.  VOTING OF SHARES BY CERTAIN HOLDERS.  Shares of the Trust  
registered in the name of a corporation, partnership, trust or other entity, if 
entitled to be voted, may be voted by the president or a vice president, a      
general partner or trustee thereof, as the case may be, or a proxy appointed by 
any of the foregoing individuals, unless some other person who has been         
appointed to vote such shares pursuant to a bylaw or a resolution of the        
governing board of such corporation or other entity or agreement of the partners
of the partnership presents a certified copy of such bylaw, resolution or       
agreement, in which case such person may vote such shares. Any trustee or other 
fiduciary may vote shares registered in his name as such fiduciary, either in   
person or by proxy.                                                             

    Shares of the Trust directly or indirectly owned by it shall not be voted at
any meeting and shall not be counted in determining the total number of         
outstanding shares entitled to be voted at any given time, unless they are held 
by it in a fiduciary capacity, in which case they may be voted and shall be     
counted in determining the total number of outstanding shares at any given time.

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   The Trustees may adopt by resolution a procedure by which a shareholder may
certify in writing to the Trust that any shares registered in the name of the   
shareholder are held for the account of a specified person other than the       
shareholder. The resolution shall set forth the class of shareholders who may   
make the certification, the purpose for which the certification may be made, the
form of certification and the information to be contained in it; if the         
certification is with respect to a record date or closing of the share transfer 
books, the time after the record date or closing of the share transfer books    
within which the certification must be received by the Trust; and any other     
provisions with respect to the procedure which the Trustees consider necessary  
or desirable. On receipt of such certification, the person specified in the     
certification shall be regarded as, for the purposes set forth in the           
certification, the shareholder of record of the specified shares in place of the
shareholder who makes the certification.                                        

  Notwithstanding any other provision contained herein or in the Declaration
of Trust or these Bylaws, Title 3, Subtitle 7 of the Corporations and           
Associations Article of the Annotated Code of Maryland (or any successor        
statute) shall not apply to any acquisition by any person of shares of          
beneficial interest of the Trust. This section may be repealed, in whole or in  
part, at any time, whether before or after an acquisition of control shares and,
upon such repeal, may, to the extent provided by any successor bylaw, apply to  
any prior or subsequent control share acquisition.                              

 Section 11.  INSPECTORS.  At any meeting of shareholders, the chairman of
the meeting may appoint one or more persons as inspectors for such meeting. Such
inspectors shall ascertain and report the number of shares represented at the   
meeting based upon their determination of the validity and effect of proxies,   
count all votes, report the results and perform such other acts as are proper to
conduct the election and voting with impartiality and fairness to all the       
shareholders.                                                                   

 Each report of an inspector shall be in writing and signed by him or by a
majority of them if there is more than one inspector acting at such meeting. If 
there is more than one inspector, the report of a majority shall be the report  
of the inspectors. The report of the inspector or inspectors on the number of   
shares represented at the meeting and the results of the voting shall be PRIMA  
FACIE evidence thereof.                                                         

Section 12.  REPORTS TO SHAREHOLDERS.                                   

The Trustees shall submit to the shareholders at or before the annual   
meeting of shareholders a report of the business and operations of the Trust    
during such fiscal year, containing a balance sheet and a statement of income   
and surplus of the Trust, accompanied by the certification of an independent    
certified public accountant, and such further information as the Trustees may   
determine is required pursuant to any law or regulation to which the Trust is   
subject. Within the earlier of 20 days after the annual meeting of shareholders 
or 120 days after the end of the fiscal year of the Trust, the Trustees shall   
place the annual report on file at the principal office of the Trust and with   
any governmental agencies as may be required by law and as the Trustees may deem
appropriate.                                                                    

Section 13.  NOMINATIONS AND PROPOSALS BY SHAREHOLDERS.                 

(a)  ANNUAL MEETINGS OF SHAREHOLDERS.  (1) Nominations of persons for   
election to the Board of Trustees and the proposal of business to be considered 
by the shareholders may be made at an annual meeting of shareholders (i)        
pursuant to the Trust's notice of meeting, (ii) by or at the direction of the   
Trustees or (iii) by any shareholder of the Trust who was a shareholder of      
record both at the time of giving of notice provided for in this Section 13(a)  
and at the time of the annual meeting, who is entitled to vote at the meeting   
and who complied with the notice procedures set forth in this Section 13(a).    

      (2) For nominations or other business to be properly brought before an
annual meeting by a shareholder pursuant to clause (iii) of paragraph (a) (1) of
this Section 13, the shareholder must have given timely notice thereof in       
writing to the secretary of the Trust and such other business must otherwise be 
a proper matter for action by shareholders. To be timely, a shareholder's notice
shall be delivered to the secretary at the principal executive offices of the   
Trust not later than the close of business on the 60th day nor earlier than the 
close of business on the 90th day prior to the first anniversary of the         
preceding year's                                                                

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annual meeting; provided, however, that in the event that the date of the annual
meeting is advanced by more than 30 days or delayed by more than 60 days from   
such anniversary date or if the Trust has not previously held an annual meeting,
notice by the shareholder to be timely must be so delivered not earlier than the
close of business on the 90th day prior to such annual meeting and not later    
than the close of business on the later of the 60th day prior to such annual    
meeting or the tenth day following the day on which public announcement of the  
date of such meeting is first made by the Trust. In no event shall the public   
announcement of a postponement or adjournment of an annual meeting to a later   
date or time commence a new time period for the giving of a shareholder's notice
as described above. Such shareholder's notice shall set forth (i) as to each    
person whom the shareholder proposes to nominate for election or reelection as a
Trustee all information relating to such person that is required to be disclosed
in solicitations of proxies for election of Trustees in an election contest, or 
is otherwise required, in each case pursuant to Regulation 14A under the        
Securities Exchange Act of 1934, as amended (the "Exchange Act") (including such
person's written consent to being named in the proxy statement as a nominee and 
to serving as a Trustee if elected); (ii) as to any other business that the     
shareholder proposes to bring before the meeting, a brief description of the    
business desired to be brought before the meeting, the reasons for conducting   
such business at the meeting and any material interest in such business of such 
shareholder and of the beneficial owner, if any, on whose behalf the proposal is
made; and (iii) as to the shareholder giving the notice and the beneficial      
owner, if any, on whose behalf the nomination or proposal is made, (x) the name 
and address of such shareholder, as they appear on the Trust's books, and of    
such beneficial owner and (y) the number of each class of shares of the Trust   
which are owned beneficially and of record by such shareholder and such         
beneficial owner.                                                               

        (3) Notwithstanding anything in the second sentence of paragraph (a) (2)
of this Section 13 to the contrary, in the event that the number of Trustees to 
be elected to the Board of Trustees is increased and there is no public         
announcement by the Trust naming all of the nominees for Trustee or specifying  
the size of the increased Board of Trustees at least 70 days prior to the first 
anniversary of the preceding year's annual meeting, a shareholder's notice      
required by this Section 13(a) shall also be considered timely, but only with   
respect to nominees for any new positions created by such increase, if it shall 
be delivered to the secretary at the principal executive offices of the Trust   
not later than the close of business on the tenth day following the day on which
such public announcement is first made by the Trust.                            

(b)  SPECIAL MEETINGS OF SHAREHOLDERS.  Only such business shall be     
conducted at a special meeting of shareholders as shall have been brought before
the meeting pursuant to the Trust's notice of meeting. Nominations of persons   
for election to the Board of Trustees may be made at a special meeting of       
shareholders at which Trustees are to be elected (i) pursuant to the Trust's    
notice of meeting, (ii) by or at the direction of the Board of Trustees or (iii)
provided that the Board of Trustees has determined that Trustees shall be       
elected at such special meeting, by any shareholder of the Trust who was a      
shareholder of record both at the time of giving of notice provided for in this 
Section 13(b) and at the time of the special meeting, who is entitled to vote at
the meeting and who complied with the notice procedures set forth in this       
Section 13(b). In the event the Trust calls a special meeting of shareholders   
for the purpose of electing one or more Trustees to the Board of Trustees, any  
such shareholder may nominate a person or persons (as the case may be) for      
election to such position as specified in the Trust's notice of meeting, if the 
shareholder's notice containing the information required by paragraph (a) (2) of
this Section 13 shall be delivered to the secretary at the principal executive  
offices of the Trust not earlier than the close of business on the 90th day     
prior to such special meeting and not later than the close of business on the   
later of the 60th day prior to such special meeting or the tenth day following  
the day on which public announcement is first made of the date of the special   
meeting and of the nominees proposed by the Trustees to be elected at such      
meeting. In no event shall the public announcement of a postponement or         
adjournment of a special meeting to a later date or time commence a new time    
period for the giving of a shareholder's notice as described above.             

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 (c)  GENERAL.  (1) Only such persons who are nominated in accordance with
the procedures set forth in this Section 13 shall be eligible to serve as       
Trustees and only such business shall be conducted at a meeting of shareholders 
as shall have been brought before the meeting in accordance with the procedures 
set forth in this Section 13. The chairman of the meeting shall have the power  
and duty to determine whether a nomination or any business proposed to be       
brought before the meeting was made or proposed, as the case may be, in         
accordance with the procedures set forth in this Section 13 and, if any proposed
nomination or business is not in compliance with this Section 13, to declare    
that such nomination or proposal shall be disregarded.                          

     (2) For purposes of this Section 13, "public announcement" shall mean
disclosure in a press release reported by the Dow Jones News Service, Associated
Press or comparable news service or in a document publicly filed by the Trust   
with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) 
of the Exchange Act.                                                            

  (3) Notwithstanding the foregoing provisions of this Section 13, a
shareholder shall also comply with all applicable requirements of state law and 
of the Exchange Act and the rules and regulations thereunder with respect to the
matters set forth in this Section 13. Nothing in this Section 13 shall be deemed
to affect any rights of shareholders to request inclusion of proposals in the   
Trust's proxy statement pursuant to Rule 14a-8 under the Exchange Act.          

Section 14.  INFORMAL ACTION BY SHAREHOLDERS.  Any action required or   
permitted to be taken at a meeting of shareholders may be taken without a       
meeting if a consent in writing, setting forth such action, is signed by each   
shareholder entitled to vote on the matter and any other shareholder entitled to
notice of a meeting of shareholders (but not to vote thereat) has waived in     
writing any right to dissent from such action, and such consent and waiver are  
filed with the minutes of proceedings of the shareholders.                      

 Section 15.  VOTING BY BALLOT.  Voting on any question or in any election
may be VIVA VOCE unless the presiding officer shall order or any shareholder    
shall demand that voting be by ballot.                                          

ARTICLE III 

TRUSTEES

Section 1.  GENERAL POWERS; QUALIFICATIONS; TRUSTEES HOLDING OVER.  The 
business and affairs of the Trust shall be managed under the direction of its   
Board of Trustees. A Trustee shall be an individual at least 21 years of age who
is not under legal disability. In case of failure to elect Trustees at an annual
meeting of the shareholders, the Trustees holding over shall continue to direct 
the management of the business and affairs of the Trust until their successors  
are elected and qualify.                                                        

    Section 2.  NUMBER.  At any regular meeting or at any special meeting called
for that purpose, a majority of the entire Board of Trustees may establish,     
increase or decrease the number of Trustees and may be classified into any class
as provided for by the Declaration of Trust.                                    

   Section 3.  ANNUAL AND REGULAR MEETINGS.  An annual meeting of the Trustees
shall be held immediately after and at the same place as the annual meeting of  
shareholders, no notice other than this Bylaw being necessary. The Trustees may 
provide, by resolution, the time and place, either within or without the State  
of Maryland, for the holding of regular meetings of the Trustees without other  
notice than such resolution.                                                    

Section 4.  SPECIAL MEETINGS.  Special meetings of the Trustees may be  
called by or at the request of the chairman of the board or the president or by 
a majority of the Trustees then in office. The person or persons authorized to  
call special meetings of the Trustees may fix any place, either within or       
without the State of Maryland, as the place for holding any special meeting of  
the Trustees called by them.                                                    

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    Section 5.  NOTICE.  Notice of any special meeting shall be given by written
notice delivered personally, telegraphed, facsimile-transmitted or mailed to    
each Trustee at his business or residence address. Personally delivered or      
telegraphed notices shall be given at least two days prior to the meeting.      
Notice by mail shall be given at least five days prior to the meeting. Telephone
or facsimile-transmission notice shall be given at least 24 hours prior to the  
meeting. If mailed, such notice shall be deemed to be given when deposited in   
the United States mail properly addressed, with postage thereon prepaid. If     
given by telegram, such notice shall be deemed to be given when the telegram is 
delivered to the telegraph company. Telephone notice shall be deemed given when 
the Trustee is personally given such notice in a telephone call to which he is a
party. Facsimile-transmission notice shall be deemed given upon completion of   
the transmission of the message to the number given to the Trust by the Trustee 
and receipt of a completed answer-back indicating receipt. Neither the business 
to be transacted at, nor the purpose of, any annual, regular or special meeting 
of the Trustees need be stated in the notice, unless specifically required by   
statute or these Bylaws.                                                        

 Section 6.  QUORUM.  A majority of the Trustees shall constitute a quorum
for transaction of business at any meeting of the Trustees, provided that, if   
less than a majority of such Trustees are present at said meeting, a majority of
the Trustees present may adjourn the meeting from time to time without further  
notice, and provided further that if, pursuant to the Declaration of Trust or   
these Bylaws, the vote of a majority of a particular group of Trustees is       
required for action, a quorum must also include a majority of such group.       

 The Trustees present at a meeting which has been duly called and convened
may continue to transact business until adjournment, notwithstanding the        
withdrawal of enough Trustees to leave less than a quorum.                      

    Section 7.  VOTING.  The action of the majority of the Trustees present at a
meeting at which a quorum is present shall be the action of the Trustees, unless
the concurrence of a greater proportion is required for such action by          
applicable statute.                                                             

 Section 8.  TELEPHONE MEETINGS.  Trustees may participate in a meeting by
means of a conference telephone or similar communications equipment if all      
persons participating in the meeting can hear each other at the same time.      
Participation in a meeting by these means shall constitute presence in person at
the meeting.                                                                    

  Section 9.  INFORMAL ACTION BY TRUSTEES.  Any action required or permitted
to be taken at any meeting of the Trustees may be taken without a meeting, if a 
consent in writing to such action is signed by each Trustee and such written    
consent is filed with the minutes of proceedings of the Trustees.               

   Section 10.  VACANCIES.  If for any reason any or all the Trustees cease to
be Trustees, such event shall not terminate the Trust or affect these Bylaws or 
the powers of the remaining Trustees hereunder (even if fewer than two Trustees 
remain). Any vacancy (including a vacancy created by an increase in the number  
of Trustees) shall be filled, at any regular meeting or at any special meeting  
called for that purpose, by a majority of the Trustees. Any individual so       
elected as Trustee shall hold office for the unexpired term of the Trustee he is
replacing.                                                                      

Section 11.  COMPENSATION; FINANCIAL ASSISTANCE.                        

  (a)  COMPENSATION.  Trustees shall not receive any stated salary for their
services as Trustees but, by resolution of the Trustees, may receive            
compensation per year and/or per meeting and/or per visit to real property owned
or to be acquired by the Trust and for any service or activity they performed or
engaged in as Trustees. Trustees may be reimbursed for expenses of attendance,  
if any, at each annual, regular or special meeting of the Trustees or of any    
committee thereof; and for their expenses, if any, in connection with each      
property visit and any other service or activity performed or engaged in as     
Trustees; but nothing herein contained shall be construed to preclude any       
Trustees from serving the Trust in any other capacity and receiving compensation
therefor.                                                                       

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(b)  FINANCIAL ASSISTANCE TO TRUSTEES.  The Trust may lend money to,    
guarantee an obligation of or otherwise assist a Trustee or a trustee of its    
direct or indirect subsidiary. The loan, guarantee or other assistance may be   
with or without interest, unsecured, or secured in any manner that the Board of 
Trustees approves, including a pledge of Shares.                                

    Section 12.  REMOVAL OF TRUSTEES.  The shareholders may, at any time, remove
any Trustee only in the manner provided in the Declaration of Trust.            

Section 13.  LOSS OF DEPOSITS.  No Trustee shall be liable for any loss 
which may occur by reason of the failure of the bank, trust company, savings and
loan association, or other institution with whom moneys or shares have been     
deposited.                                                                      

Section 14.  SURETY BONDS.  Unless required by law, no Trustee shall be 
obligated to give any bond or surety or other security for the performance of   
any of his duties.                                                              

Section 15.  RELIANCE.  Each Trustee, officer, employee and agent of the
Trust shall, in the performance of his or her duties with respect to the Trust, 
be fully justified and protected with regard to any act or failure to act in    
reliance in good faith upon the books of account or other records of the Trust, 
upon an opinion of counsel or upon reports made to the Trust by any of its      
officers or employees or by the adviser, accountants, appraisers or other       
experts or consultants selected by the Trustees or officers of the Trust,       
regardless of whether such counsel or expert may also be a Trustee.             

    Section 16.  INTERESTED TRUSTEE TRANSACTIONS.  Section 2-419 of the Maryland
General Corporation Law (the "MGCL") shall be available for and apply to any    
contract or other transaction between the Trust and any of its Trustees or      
between the Trust and any other trust, corporation, firm or other entity in     
which any of its Trustees is a trustee or director or has a material financial  
interest.                                                                       

Section 17.  CERTAIN RIGHTS OF TRUSTEES, OFFICERS, EMPLOYEES AND        
AGENTS.  The Trustees shall have no responsibility to devote their full time to 
the affairs of the Trust. Any Trustee or officer, employee or agent of the Trust
(other than a full-time officer, employee or agent of the Trust), in his        
personal capacity or in a capacity as an affiliate, employee, or agent of any   
other person, or otherwise, may have business interests and engage in business  
activities similar or in addition to those of or relating to the Trust.         

ARTICLE IV

COMMITTEES

Section 1.  NUMBER, TENURE AND QUALIFICATIONS.  The Trustees may appoint
from among its members an Executive Committee, an Audit Committee, a            
Compensation Committee and other committees, composed of one or more Trustees,  
to serve at the pleasure of the Trustees.                                       

    Section 2.  POWERS.  The Trustees may delegate to committees appointed under
Section 1 of this Article any of the powers of the Trustees, except as          
prohibited by law.                                                              

  Section 3.  MEETINGS.  In the absence of any member of any such committee,
the members thereof present at any meeting, whether or not they constitute a    
quorum, may appoint another Trustee to act in the place of such absent member.  
Notice of committee meetings shall be given in the same manner as notice for    
special meetings of the Board of Trustees.                                      

 One-third, but not less than two (if there are two or more members of the
committee), of the members of any committee shall be present in person at any   
meeting of such committee in order to constitute a quorum for the transaction of
business at such meeting, and the act of a majority present shall be the act of 
such committee. The Board of Trustees may designate a chairman of any committee,
and such chairman or any two (if there are two or more members of the committee)
members of any committee may                                                    

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fix the time and place of its meetings unless the Board shall otherwise provide.
In the absence or disqualification of any member of any such committee, the     
members thereof present at any meeting and not disqualified from voting, whether
or not they constitute a quorum, may unanimously appoint another Trustee to act 
at the meeting in the place of such absent or disqualified members.             

 Each committee shall keep minutes of its proceedings and shall report the
same to the Board of Trustees at the next succeeding meeting, and any action by 
the committee shall be subject to revision and alteration by the Board of       
Trustees, provided that no rights of third persons shall be affected by any such
revision or alteration.                                                         

   Section 4.  TELEPHONE MEETINGS.  Members of a committee of the Trustees may
participate in a meeting by means of a conference telephone or similar          
communications equipment if all persons participating in the meeting can hear   
each other at the same time. Participation in a meeting by these means shall    
constitute presence in person at the meeting.                                   

    Section 5.  INFORMAL ACTION BY COMMITTEES.  Any action required or permitted
to be taken at any meeting of a committee of the Trustees may be taken without a
meeting, if a consent in writing to such action is signed by each member of the 
committee and such written consent is filed with the minutes of proceedings of  
such committee.                                                                 

Section 6.  VACANCIES.  Subject to the provisions hereof, the Board of  
Trustees shall have the power at any time to change the membership of any       
committee, to fill all vacancies, to designate alternate members to replace any 
absent or disqualified member or to dissolve any such committee.                

ARTICLE V 

OFFICERS

  Section 1.  GENERAL PROVISIONS.  The officers of the Trust shall include a
president, a secretary and a treasurer and may include a chairman of the board, 
a vice chairman of the board, a chief executive officer, a chief operating      
officer, a chief financial officer, one or more vice presidents, one or more    
assistant secretaries and one or more assistant treasurers. In addition, the    
Trustees may from time to time appoint such other officers with such powers and 
duties as they shall deem necessary or desirable. The officers of the Trust     
shall be elected by the Trustees. Each officer shall hold office until his      
successor is elected and qualifies or until his death, resignation or removal in
the manner hereinafter provided. Any two or more offices except president and   
vice president may be held by the same person. In their discretion, the Trustees
may leave unfilled any office except that of president and secretary. Election  
of an officer or agent shall not of itself create contract rights between the   
Trust and such officer or agent.                                                

   Section 2.  REMOVAL AND RESIGNATION.  Any officer or agent of the Trust may
be removed by the Trustees if in their judgment the best interests of the Trust 
would be served thereby, but such removal shall be without prejudice to the     
contract rights, if any, of the person so removed. Any officer of the Trust may 
resign at any time by giving written notice of his resignation to the Trustees, 
the chairman of the board, the president or the secretary. Any resignation shall
take effect at any time subsequent to the time specified therein or, if the time
when it shall become effective is not specified therein, immediately upon its   
receipt. The acceptance of a resignation shall not be necessary to make it      
effective unless otherwise stated in the resignation. Such resignation shall be 
without prejudice to the contract rights, if any, of the Trust.                 

Section 3.  VACANCIES.  A vacancy in any office may be filled by the    
Trustees for the balance of the term.                                           

Section 4.  CHIEF EXECUTIVE OFFICER.  The Trustees may designate a chief
executive officer from among the elected officers. The chief executive officer  
shall have responsibility for implementation of the policies of the Trust, as   
determined by the Trustees, and for the administration of the business affairs  
of                                                                              

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the Trust. In the absence of both the chairman and vice chairman of the board,  
the chief executive officer shall preside over the meetings of the Trustees and 
of the shareholders at which he shall be present.                               

Section 5.  CHIEF OPERATING OFFICER.  The Trustees may designate a chief
operating officer from among the elected officers. Said officer will have the   
responsibilities and duties as set forth by the Trustees or the chief executive 
officer.                                                                        

Section 6.  CHIEF FINANCIAL OFFICER.  The Trustees may designate a chief
financial officer from among the elected officers. Said officer will have the   
responsibilities and duties as set forth by the Trustees or the chief executive 
officer.                                                                        

 Section 7.  CHAIRMAN AND VICE CHAIRMAN OF THE BOARD.  The chairman of the
board shall preside over the meetings of the Trustees and of the shareholders at
which he shall be present and shall in general oversee all of the business and  
affairs of the Trust. In the absence of the chairman of the board, the vice     
chairman of the board shall preside at such meetings at which he shall be       
present. The chairman and the vice chairman of the board may execute any deed,  
mortgage, bond, contract or other instrument, except in cases where the         
execution thereof shall be expressly delegated by the Trustees or by these      
Bylaws to some other officer or agent of the Trust or shall be required by law  
to be otherwise executed. The chairman of the board and the vice chairman of the
board shall perform such other duties as may be assigned to him or them by the  
Trustees.                                                                       

    Section 8.  PRESIDENT.  In the absence of the chairman, the vice chairman of
the board and the chief executive officer, the president shall preside over the 
meetings of the Trustees and of the shareholders at which he shall be present.  
In the absence of a designation of a chief executive officer by the Trustees,   
the president shall be the chief executive officer and shall be ex officio a    
member of all committees that may, from time to time, be constituted by the     
Trustees. The president may execute any deed, mortgage, bond, contract or other 
instrument, except in cases where the execution thereof shall be expressly      
delegated by the Trustees or by these Bylaws to some other officer or agent of  
the Trust or shall be required by law to be otherwise executed; and in general  
shall perform all duties incident to the office of president and such other     
duties as may be prescribed by the Trustees from time to time.                  

Section 9.  VICE PRESIDENTS.  In the absence of the president or in the 
event of a vacancy in such office, the vice president (or in the event there be 
more than one vice president, the vice presidents in the order designated at the
time of their election or, in the absence of any designation, then in the order 
of their election) shall perform the duties of the president and when so acting 
shall have all the powers of and be subject to all the restrictions upon the    
president; and shall perform such other duties as from time to time may be      
assigned to him by the president or by the Trustees. The Trustees may designate 
one or more vice presidents as executive vice president or as vice president for
particular areas of responsibility.                                             

Section 10.  SECRETARY.  The secretary shall (a) keep the minutes of the
proceedings of the shareholders, the Trustees and committees of the Trustees in 
one or more books provided for that purpose; (b) see that all notices are duly  
given in accordance with the provisions of these Bylaws or as required by law;  
(c) be custodian of the trust records and of the seal of the Trust; (d) keep a  
register of the post office address of each shareholder which shall be furnished
to the secretary by such shareholder; (e) have general charge of the share      
transfer books of the Trust; and (f) in general perform such other duties as    
from time to time may be assigned to him by the chief executive officer, the    
president or by the Trustees.                                                   

  Section 11.  TREASURER.  The treasurer shall have the custody of the funds
and securities of the Trust and shall keep full and accurate accounts of        
receipts and disbursements in books belonging to the Trust and shall deposit all
moneys and other valuable effects in the name and to the credit of the Trust in 
such depositories as may be designated by the Trustees.                         

    The treasurer shall disburse the funds of the Trust as may be ordered by the
Trustees, taking proper vouchers for such disbursements, and shall render to the
president and Trustees, at the regular meetings of                              

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the Trustees or whenever they may require it, an account of all his transactions
as treasurer and of the financial condition of the Trust.                       

 If required by the Trustees, the treasurer shall give the Trust a bond in
such sum and with such surety or sureties as shall be satisfactory to the       
Trustees for the faithful performance of the duties of his office and for the   
restoration to the Trust, in case of his death, resignation, retirement or      
removal from office, of all books, papers, vouchers, moneys and other property  
of whatever kind in his possession or under his control belonging to the Trust. 

   Section 12.  ASSISTANT SECRETARIES AND ASSISTANT TREASURERS.  The assistant
secretaries and assistant treasurers, in general, shall perform such duties as  
shall be assigned to them by the secretary or treasurer, respectively, or by the
president or the Trustees. The assistant treasurers shall, if required by the   
Trustees, give bonds for the faithful performance of their duties in such sums  
and with such surety or sureties as shall be satisfactory to the Trustees.      

   Section 13.  SALARIES.  The salaries and other compensation of the officers
shall be fixed from time to time by the Trustees and no officer shall be        
prevented from receiving such salary or other compensation by reason of the fact
that he is also a Trustee.                                                      

ARTICLE VI

CONTRACTS, LOANS, CHECKS AND DEPOSITS 

  Section 1.  CONTRACTS.  The Trustees may authorize any officer or agent to
enter into any contract or to execute and deliver any instrument in the name of 
and on behalf of the Trust and such authority may be general or confined to     
specific instances. Any agreement, deed, mortgage, lease or other document      
executed by one or more of the Trustees or by an authorized person shall be     
valid and binding upon the Trustees and upon the Trust when authorized or       
ratified by action of the Trustees.                                             

  Section 2.  CHECKS AND DRAFTS.  All checks, drafts or other orders for the
payment of money, notes or other evidences of indebtedness issued in the name of
the Trust shall be signed by such officer or agent of the Trust in such manner  
as shall from time to time be determined by the Trustees.                       

  Section 3.  DEPOSITS.  All funds of the Trust not otherwise employed shall
be deposited from time to time to the credit of the Trust in such banks, trust  
companies or other depositories as the Trustees may designate.                  

ARTICLE VII 

SHARES

Section 1.  CERTIFICATES.  Each shareholder shall be entitled to a      
certificate or certificates which shall represent and certify the number of     
shares of each class of beneficial interests held by him in the Trust. Each     
certificate shall be signed by the chief executive officer, the president or a  
vice president and countersigned by the secretary or an assistant secretary or  
the treasurer or an assistant treasurer and may be sealed with the seal, if any,
of the Trust. The signatures may be either manual or facsimile. Certificates    
shall be consecutively numbered; and if the Trust shall, from time to time,     
issue several classes of shares, each class may have its own number series. A   
certificate is valid and may be issued whether or not an officer who signed it  
is still an officer when it is issued. Each certificate representing shares     
which are restricted as to their transferability or voting powers, which are    
preferred or limited as to their dividends or as to their allocable portion of  
the assets upon liquidation or which are redeemable at the option of the Trust, 
shall have a statement of such restriction, limitation, preference or redemption
provision, or a                                                                 

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summary thereof, plainly stated on the certificate. In lieu of such statement or
summary, the Trust may set forth upon the face or back of the certificate a     
statement that the Trust will furnish to any shareholder, upon request and      
without charge, a full statement of such information.                           

Section 2.  TRANSFERS.  Certificates shall be treated as negotiable and 
title thereto and to the shares they represent shall be transferred by delivery 
thereof to the same extent as those of a Maryland stock corporation. Upon       
surrender to the Trust or the transfer agent of the Trust of a share certificate
duly endorsed or accompanied by proper evidence of succession, assignment or    
authority to transfer, the Trust shall issue a new certificate to the person    
entitled thereto, cancel the old certificate and record the transaction upon its
books.                                                                          

 The Trust shall be entitled to treat the holder of record of any share or
shares as the holder in fact thereof and, accordingly, shall not be bound to    
recognize any equitable or other claim to or interest in such share or shares on
the part of any other person, whether or not it shall have express or other     
notice thereof, except as otherwise provided by the laws of the State of        
Maryland.                                                                       

    Notwithstanding the foregoing, transfers of shares of beneficial interest of
the Trust will be subject in all respects to the Declaration of Trust and all of
the terms and conditions contained therein.                                     

    Section 3.  REPLACEMENT CERTIFICATE.  Any officer designated by the Trustees
may direct a new certificate to be issued in place of any certificate previously
issued by the Trust alleged to have been lost, stolen or destroyed upon the     
making of an affidavit of that fact by the person claiming the certificate to be
lost, stolen or destroyed. When authorizing the issuance of a new certificate,  
an officer designated by the Trustees may, in his discretion and as a condition 
precedent to the issuance thereof, require the owner of such lost, stolen or    
destroyed certificate or the owner's legal representative to advertise the same 
in such manner as he shall require and/or to give bond, with sufficient surety, 
to the Trust to indemnify it against any loss or claim which may arise as a     
result of the issuance of a new certificate.                                    

Section 4.  CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE.  The    
Trustees may set, in advance, a record date for the purpose of determining      
shareholders entitled to notice of or to vote at any meeting of shareholders or 
determining shareholders entitled to receive payment of any dividend or the     
allotment of any other rights, or in order to make a determination of           
shareholders for any other proper purpose. Such date, in any case, shall not be 
prior to the close of business on the day the record date is fixed and shall be 
not more than 90 days and, in the case of a meeting of shareholders not less    
than ten days, before the date on which the meeting or particular action        
requiring such determination of shareholders of record is to be held or taken.  

In lieu of fixing a record date, the Trustees may provide that the share
transfer books shall be closed for a stated period but not longer than 20 days. 
If the share transfer books are closed for the purpose of determining           
shareholders entitled to notice of or to vote at a meeting of shareholders, such
books shall be closed for at least ten days before the date of such meeting.    

  If no record date is fixed and the share transfer books are not closed for
the determination of shareholders, (a) the record date for the determination of 
shareholders entitled to notice of or to vote at a meeting of shareholders shall
be at the close of business on the day on which the notice of meeting is mailed 
or the 30th day before the meeting, whichever is the closer date to the meeting;
and (b) the record date for the determination of shareholders entitled to       
receive payment of a dividend or an allotment of any other rights shall be the  
close of business on the day on which the resolution of the Trustees, declaring 
the dividend or allotment of rights, is adopted.                                

When a determination of shareholders entitled to vote at any meeting of 
shareholders has been made as provided in this section, such determination shall
apply to any adjournment thereof, except when (i) the determination has been    
made through the closing of the transfer books and the stated period of closing 
has expired or (ii) the meeting is adjourned to a date more than 120 days after 
the record date fixed for the original meeting, in either of which case a new   
record date shall be determined as set forth herein.                            

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   Section 5.  STOCK LEDGER.  The Trust shall maintain at its principal office
or at the office of its counsel, accountants or transfer agent, an original or  
duplicate share ledger containing the name and address of each shareholder and  
the number of shares of each class held by such shareholder.                    

 Section 6.  FRACTIONAL SHARES; ISSUANCE OF UNITS.  The Trustees may issue
fractional shares or provide for the issuance of scrip, all on such terms and   
under such conditions as they may determine. Notwithstanding any other provision
of the Declaration of Trust or these Bylaws, the Trustees may issue units       
consisting of different securities of the Trust. Any security issued in a unit  
shall have the same characteristics as any identical securities issued by the   
Trust, except that the Trustees may provide that for a specified period         
securities of the Trust issued in such unit may be transferred on the books of  
the Trust only in such unit.                                                    

ARTICLE VIII

ACCOUNTING YEAR 

    The Trustees shall have the power, from time to time, to fix the fiscal year
of the Trust by a duly adopted resolution.                                      

ARTICLE IX

DISTRIBUTIONS 

Section 1.  AUTHORIZATION.  Dividends and other distributions upon the  
shares of beneficial interest of the Trust may be authorized and declared by the
Trustees, subject to the provisions of law and the Declaration of Trust.        
Dividends and other distributions may be paid in cash, property or shares of the
Trust, subject to the provisions of law and the Declaration of Trust.           

Section 2.  CONTINGENCIES.  Before payment of any dividends or other    
distributions, there may be set aside out of any funds of the Trust available   
for dividends or other distributions such sum or sums as the Trustees may from  
time to time, in their absolute discretion, think proper as a reserve fund for  
contingencies, for equalizing dividends or other distributions, for repairing or
maintaining any property of the Trust or for such other purpose as the Trustees 
shall determine to be in the best interest of the Trust, and the Trustees may   
modify or abolish any such reserve in the manner in which it was created.       

ARTICLE X 

INVESTMENT POLICY 

    Subject to the provisions of the Declaration of Trust, the Board of Trustees
may from time to time adopt, amend, revise or terminate any policy or policies  
with respect to investments by the Trust as it shall deem appropriate in its    
sole discretion.                                                                

ARTICLE XI

SEAL

   Section 1.  SEAL.  The Trustees may authorize the adoption of a seal by the
Trust. The seal shall have inscribed thereon the name of the Trust and the year 
of its formation. The Trustees may authorize one or more duplicate seals and    
provide for the custody thereof.                                                

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  Section 2.  AFFIXING SEAL.  Whenever the Trust is permitted or required to
affix its seal to a document, it shall be sufficient to meet the requirements of
any law, rule or regulation relating to a seal to place the word "(SEAL)"       
adjacent to the signature of the person authorized to execute the document on   
behalf of the Trust.                                                            

ARTICLE XII 

INDEMNIFICATION AND ADVANCE OF EXPENSES 

    To the maximum extent permitted by Maryland law in effect from time to time,
the Trust shall indemnify (a) any Trustee, officer or shareholder or any former 
Trustee, officer or shareholder (including among the foregoing, for all purposes
of this Article XII and without limitation, any individual who, while a Trustee,
officer or shareholder and at the request of the Trust, serves or has served    
another real estate investment trust, corporation, partnership, joint venture,  
trust, employee benefit plan or any other enterprise as a trustee, director,    
officer, partner, employee or agent of such real estate investment trust,       
corporation, partnership, joint venture, trust, employee benefit plan or other  
enterprise) who has been successful, on the merits or otherwise, in the defense 
of a proceeding to which he was made a party by reason of service in such       
capacity, against reasonable expenses incurred by him in connection with the    
proceeding, (b) any Trustee or officer or any former Trustee or officer against 
any claim or liability to which he may become subject by reason of such status  
unless it is established that (i) his act or omission was material to the matter
giving rise to the proceeding and was committed in bad faith or was the result  
of active and deliberate dishonesty, (ii) he actually received an improper      
personal benefit in money, property or services or (iii) in the case of a       
criminal proceeding, he had reasonable cause to believe that his act or omission
was unlawful and (c) each shareholder or former shareholder against any claim or
liability to which he may become subject by reason of such status. In addition, 
the Trust shall, without requiring a preliminary determination of the ultimate  
entitlement to indemnification, pay or reimburse, in advance of final           
disposition of a proceeding, reasonable expenses incurred by a Trustee, officer 
or shareholder or former Trustee, officer or shareholder made a party to a      
proceeding by reason such status, provided that, in the case of a Trustee or    
officer, the Trust shall have received (i) a written affirmation by the Trustee 
or officer of his good faith belief that he has met the applicable standard of  
conduct necessary for indemnification by the Trust as authorized by these Bylaws
and (ii) a written undertaking by or on his behalf to repay the amount paid or  
reimbursed by the Trust if it shall ultimately be determined that the applicable
standard of conduct was not met. The Trust may, with the approval of its        
Trustees, provide such indemnification or payment or reimbursement of expenses  
to any Trustee, officer or shareholder or any former Trustee, officer or        
shareholder who served a predecessor of the Trust and to any employee or agent  
of the Trust or a predecessor of the Trust. Neither the amendment nor repeal of 
this Article, nor the adoption or amendment of any other provision of the       
Declaration of Trust or these Bylaws inconsistent with this Article, shall apply
to or affect in any respect the applicability of this Article with respect to   
any act or failure to act which occurred prior to such amendment, repeal or     
adoption.                                                                       

    Any indemnification or payment or reimbursement of the expenses permitted by
these Bylaws shall be furnished in accordance with the procedures provided for  
indemnification or payment or reimbursement of expenses, as the case may be,    
under Section 2-418 of the MGCL for directors of Maryland corporations. The     
Trust may provide to Trustees, officers and shareholders such other and further 
indemnification or payment or reimbursement of expenses, as the case may be, to 
the fullest extent permitted by the MGCL, as in effect from time to time, for   
directors of Maryland corporations.                                             

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ARTICLE XIII

WAIVER OF NOTICE

  Whenever any notice is required to be given pursuant to the Declaration of
Trust or Bylaws or pursuant to applicable law, a waiver thereof in writing,     
signed by the person or persons entitled to such notice, whether before or after
the time stated therein, shall be deemed equivalent to the giving of such       
notice. Neither the business to be transacted at nor the purpose of any meeting 
need be set forth in the waiver of notice, unless specifically required by      
statute. The attendance of any person at any meeting shall constitute a waiver  
of notice of such meeting, except where such person attends a meeting for the   
express purpose of objecting to the transaction of any business on the ground   
that the meeting is not lawfully called or convened.                            

ARTICLE XIV 

AMENDMENT OF BYLAWS 

 The Trustees shall have the exclusive power to adopt, alter or repeal any
provision of these Bylaws and to make new Bylaws.                               

ARTICLE XV

MISCELLANEOUS 

All references to the Declaration of Trust shall include any amendments 
thereto.                                                                        

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                                                                      APPENDIX D

CORPORATE OFFICE PROPERTIES TRUST 
1998 LONG TERM INCENTIVE PLAN 

1. PURPOSES.                                                            

The purposes of the 1998 Long Term Incentive Plan are to advance the    
interests of Corporate Office Properties Trust and its shareholders by providing
a means to attract, retain, and motivate employees and directors of the Company 
upon whose judgment, initiative and efforts the continued success, growth and   
development of the Company is dependent.                                        

2. DEFINITIONS.                                                         

   For purposes of the Plan, the following terms shall be defined as set forth
below:                                                                          

(a) "Affiliate" means any entity other than the Company and its 
    Subsidiaries that is designated by the Committee as a participating employer
under the Plan, provided that the Company directly or indirectly owns at
least 20% of the combined voting power of all classes of stock of such  
entity or at least 20% of the ownership interests in such entity.       

 (b) "Award" means any Option or Dividend Equivalent granted to an
Eligible Person under the Plan.                                         

     (c) "Award Agreement" means any written agreement, contract, or other
instrument or document evidencing an Award.                             

       (d) "Beneficiary" means the person, persons, trust or trusts which have
 been designated by such Eligible Person in his or her most recent written
beneficiary designation filed with the Company to receive the benefits  
specified under this Plan upon the death of the Eligible Person, or, if 
    there is no designated Beneficiary or surviving designated Beneficiary, then
    the person, persons, trust or trusts entitled by will or the laws of descent
and distribution to receive such benefits.                              

(e) "Board" means the Board of Directors of the Company.        

        (f) "Code" means the Internal Revenue Code of 1986, as amended from time
   to time. References to any provision of the Code shall be deemed to include
successor provisions thereto and regulations thereunder.                

      (g) "Committee" means the Compensation Committee of the Board, or such
other Board committee (which may include the entire Board), as may be   
designated by the Board to administer the Plan.                         

 (h) "Company" means Corporate Office Properties Trust, a Maryland
business trust, or any successor.                                       

        (i) "Director" means a member of the Board who is not an employee of the
Company, a Subsidiary or an Affiliate.                                  

       (j) "Dividend Equivalent" means a right, granted under Section 5(c), to
receive cash, Shares, or other property equal in value to dividends paid
 with respect to a specified number of Shares. Dividend Equivalents may be
 awarded on a free-standing basis or in connection with another Award, and
may be paid currently or on a deferred basis.                           

        (k) "Eligible Person" means (i) an employee of the Company, a Subsidiary
or an Affiliate, including any director who is an employee, or (ii) a   
Director.                                                               

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        (l) "Exchange Act" means the Securities Exchange Act of 1934, as amended
   from time to time. References to any provision of the Exchange Act shall be
  deemed to include successor provisions thereto and regulations thereunder.

        (m) "Fair Market Value" means, with respect to Shares or other property,
 the fair market value of such Shares or other property determined by such
methods or procedures as shall be established from time to time by the  
  Committee. If the Shares are listed on any established stock exchange or a
    national market system, unless otherwise determined by the Committee in good
   faith, the Fair Market Value of Shares shall mean the mean between the high
  and low selling prices per Share on the immediately preceding date (or, if
the Shares were not traded on that day, the next preceding day that the 
   Shares were traded) on the principal exchange or market system on which the
   Shares are traded, as such prices are officially quoted on such exchange or
market system.                                                          

        (n) "ISO" means any Option intended to be and designated as an incentive
stock option within the meaning of Section 422 of the Code.             

(o) "NQSO" means any Option that is not an ISO.                 

   (p) "Option" means a right, granted under Section 5(b), to purchase
Shares.                                                                 

        (q) "Participant" means an Eligible Person who has been granted an Award
under the Plan.                                                         

(r) "Plan" means this 1998 Long Term Incentive Plan.            

     (s) "Rule 16b-3" means Rule 16b-3, as from time to time in effect and
  applicable to the Plan and Participants, promulgated by the Securities and
Exchange Commission under Section 16 of the Exchange Act.               

       (t) "Shares" means common shares of beneficial interest, $.01 par value
per share, of the Company.                                              

     (u) "Subsidiary" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if each of the
 corporations (other than the last corporation in the unbroken chain) owns
shares possessing 50% or more of the total combined voting power of all 
classes of stock in one of the other corporations in the chain.         

3. ADMINISTRATION.                                                      

(a) AUTHORITY OF THE COMMITTEE. The Plan shall be administered by the   
Committee, and the Committee shall have full and final authority to take the    
following actions, in each case subject to and consistent with the provisions of
the Plan:                                                                       

(i) to select Eligible Persons to whom Awards may be granted;   

(ii) to designate Affiliates;                                   

  (iii) to determine the type or types of Awards to be granted to each
Eligible Person;                                                        

  (iv) to determine the type and number of Awards to be granted, the
  number of Shares to which an Award may relate, the terms and conditions of
any Award granted under the Plan (including, but not limited to, any    
   exercise price, grant price, or purchase price, and any bases for adjusting
 such exercise, grant or purchase price, any restriction or condition, any
    schedule for lapse of restrictions or conditions relating to transferability
or forfeiture, exercisability, or settlement of an Award, and waiver or 
   accelerations thereof, and waivers of performance conditions relating to an
Award, based in each case on such considerations as the Committee shall 
determine), and all other matters to be determined in connection with an
Award;                                                                  

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      (v) to determine whether, to what extent, and under what circumstances
  an Award may be settled, or the exercise price of an Award may be paid, in
   cash, Shares, other Awards, or other property, or an Award may be canceled,
forfeited, exchanged, or surrendered;                                   

       (vi) to determine whether, to what extent, and under what circumstances
cash, Shares, other Awards, or other property payable with respect to an
Award will be deferred either automatically, at the election of the     
Committee, or at the election of the Eligible Person;                   

    (vii) to prescribe the form of each Award Agreement, which need not be
identical for each Eligible Person;                                     

(viii) to adopt, amend, suspend, waive, and rescind such rules and  
  regulations and appoint such agents as the Committee may deem necessary or
advisable to administer the Plan;                                       

  (ix) to correct any defect or supply any omission or reconcile any
inconsistency in the Plan and to construe and interpret the Plan and any
Award, rules and regulations, Award Agreement, or other instrument      
hereunder;                                                              

        (x) to accelerate the exercisability or vesting of all or any portion of
   any Award or to extend the period during which an Award is exercisable; and

      (xi) to make all other decisions and determinations as may be required
under the terms of the Plan or as the Committee may deem necessary or   
advisable for the administration of the Plan.                           

    (b) MANNER OF EXERCISE OF COMMITTEE AUTHORITY. The Committee shall have sole
discretion in exercising its authority under the Plan. Any action of the        
Committee with respect to the Plan shall be final, conclusive, and binding on   
all persons, including the Company, Subsidiaries, Affiliates, Eligible Persons, 
any person claiming any rights under the Plan from or through any Eligible      
Person, and shareholders. The express grant of any specific power to the        
Committee, and the taking of any action by the Committee, shall not be construed
as limiting any power or authority of the Committee. The Committee may delegate 
to officers or employees of the Company or any Subsidiary or Affiliate the      
authority, subject to such terms as the Committee shall determine, to perform   
administrative functions and, with respect to Awards granted to persons not     
subject to Section 16 of the Exchange Act, to perform such other functions as   
the Committee may determine, to the extent permitted under Rule 16b-3 (if       
applicable) and applicable law.                                                 

   (c) LIMITATION OF LIABILITY. Each member of the Committee shall be entitled
to, in good faith, rely or act upon any report or other information furnished to
him or her by any officer or other employee of the Company or any Subsidiary or 
Affiliate, the Company's independent certified public accountants, or other     
professional retained by the Company to assist in the administration of the     
Plan. No member of the Committee, nor any officer or employee of the Company    
acting on behalf of the Committee, shall be personally liable for any action,   
determination, or interpretation taken or made in good faith with respect to the
Plan, and all members of the Committee and any officer or employee of the       
Company acting on their behalf shall, to the extent permitted by law, be fully  
indemnified and protected by the Company with respect to any such action,       
determination, or interpretation.                                               

4. SHARES SUBJECT TO THE PLAN.                                          

(a) Subject to adjustment as provided in Section 4(c) hereof, the total 
number of Shares reserved for issuance in connection with Awards under the Plan 
shall be 10 percent of the number of issued and outstanding Shares at the time  
the Award is granted; provided however, that no more than 200,000 Shares shall  
be cumulatively available for Awards of ISOs hereunder. No Award may be granted 
if the number of Shares to which such Award relates, when added to the number of
Shares previously issued under the Plan, exceeds the number of Shares reserved  
under the preceding sentence. If any Awards are forfeited, canceled, terminated,
exchanged or surrendered or such Award is settled in cash or otherwise          
terminates without a distribution of Shares to the Participant, any Shares      
counted against the number of Shares reserved and available under the Plan with 
respect to such Award shall, to the extent of any such forfeiture,              

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settlement, termination, cancellation, exchange or surrender, again be available
for Awards under the Plan. Upon the exercise of any Award granted in tandem with
any other Awards, such related Awards shall be canceled to the extent of the    
number of Shares as to which the Award is exercised.                            

 (b) Subject to adjustment as provided in Section 4(c) hereof, the maximum
number of Shares with respect to which Options may be granted during a calendar 
year to any Eligible Person under this Plan shall be 200,000 Shares.            

(c) In the event that the Committee shall determine that any dividend in
Shares, recapitalization, Share split, reverse split, reorganization, merger,   
consolidation, spin-off, combination, repurchase, or share exchange, or other   
similar corporate transaction or event, affects the Shares such that an         
adjustment is appropriate in order to prevent dilution or enlargement of the    
rights of Eligible Persons under the Plan, then the Committee shall make such   
equitable changes or adjustments as it deems appropriate and, in such manner as 
it may deem equitable, adjust any or all of (i) the number and kind of shares   
which may thereafter be issued under the Plan, (ii) the number and kind of      
shares, other securities or other consideration issued or issuable in respect of
outstanding Awards, and (iii) the exercise price, grant price, or purchase price
relating to any Award; provided, however, in each case that, with respect to    
ISOs, such adjustment shall be made in accordance with Section 424(a) of the    
Code, unless the Committee determines otherwise.                                

   (d) Any Shares distributed pursuant to an Award may consist, in whole or in
part, of authorized and unissued Shares or treasury Shares including Shares     
acquired by purchase in the open market or in private transactions.             

5. SPECIFIC TERMS OF AWARDS.                                            

   (a) GENERAL. Awards may be granted on the terms and conditions set forth in
this Section 5. In addition, the Committee may impose on any Award or the       
exercise thereof, at the date of grant or thereafter (subject to Section 8(d)), 
such additional terms and conditions, not inconsistent with the provisions of   
the Plan, as the Committee shall determine, including terms regarding forfeiture
of Awards or continued exercisability of Awards in the event of termination of  
employment by the Eligible Person.                                              

(b) OPTIONS. The Committee is authorized to grant Options, which may be 
NQSOs or ISOs, to Eligible Persons on the following terms and conditions:       

     (i) EXERCISE PRICE. The exercise price per Share purchasable under an
   Option shall be determined by the Committee, and the Committee may, without
limitation, set an exercise price that is based upon achievement of     
performance criteria if deemed appropriate by the Committee.            

    (ii) OPTION TERM. The term of each Option shall be determined by the
Committee.                                                              

     (iii) TIME AND METHOD OF EXERCISE. The Committee shall determine at the
date of grant or thereafter the time or times at which an Option may be 
exercised in whole or in part (including, without limitation, upon      
    achievement of performance criteria if deemed appropriate by the Committee),
 the methods by which such exercise price may be paid or deemed to be paid
   (including, without limitation, broker-assisted exercise arrangements), the
   form of such payment (including, without limitation, cash, Shares, notes or
    other property), and the methods by which Shares will be delivered or deemed
to be delivered to Eligible Persons.                                    

      (iv) ISOS. The terms of any ISO granted under the Plan shall comply in
  all respects with the provisions of Section 422 of the Code, including but
not limited to the requirement that the ISO shall be granted within ten 
 years from the earlier of the date of adoption or shareholder approval of
the Plan. ISOs may only be granted to employees of the Company or a     
Subsidiary.                                                             

(c) DIVIDEND EQUIVALENTS. The Committee is authorized to grant Dividend 
Equivalents to Eligible Persons. The Committee may provide, at the date of grant
or thereafter, that Dividend Equivalents shall be                               

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paid or distributed when accrued or shall be deemed to have been reinvested in  
additional Shares, or other investment vehicles as the Committee may specify,   
provided that Dividend Equivalents (other than freestanding Dividend            
Equivalents) shall be subject to all conditions and restrictions of the         
underlying Awards to which they relate.                                         

6. CERTAIN PROVISIONS APPLICABLE TO AWARDS.                             

 (a) STAND-ALONE, ADDITIONAL, TANDEM AND SUBSTITUTE AWARDS. Awards granted
under the Plan may, in the discretion of the Committee, be granted to Eligible  
Persons either alone or in addition to, in tandem with, or in exchange or       
substitution for, any other Award granted under the Plan or any award granted   
under any other plan or agreement of the Company, a predecessor of the Company  
or any Subsidiary or Affiliate, or any business entity to be acquired by the    
Company or a Subsidiary or Affiliate, or any other right of an Eligible Person  
to receive payment from the Company, a predecessor of the Company or any        
Subsidiary or Affiliate. Awards may be granted in addition to or in tandem with 
such other Awards or awards, and may be granted either as of the same time as or
a different time from the grant of such other Awards or awards. The per Share   
exercise price of any Option, or purchase price of any other Award conferring a 
right to purchase Shares, which is granted in connection with the substitution  
of awards granted under any other plan or agreement of the Company, a           
predecessor of the Company or any Subsidiary or Affiliate or any business entity
to be acquired by the Company or any Subsidiary or Affiliate shall be determined
by the Committee, in its discretion.                                            

 (b) TERMS OF AWARDS. The term of each Award granted to an Eligible Person
shall be for such period as may be determined by the Committee; provided,       
however, that in no event shall the term of any ISO exceed a period of ten years
from the date of its grant (or such shorter period as may be applicable under   
Section 422 of the Code).                                                       

  (c) FORM OF PAYMENT UNDER AWARDS. Subject to the terms of the Plan and any
applicable Award Agreement, payments to be made by the Company or a Subsidiary  
or Affiliate upon the grant, maturation, or exercise of an Award may be made in 
such forms as the Committee shall determine at the date of grant or thereafter, 
including, without limitation, cash, Shares, notes or other property, and may be
made in a single payment or transfer, in installments, or on a deferred basis.  
The Committee may make rules relating to installment or deferred payments with  
respect to Awards, including the rate of interest to be credited with respect to
such payments.                                                                  

 (d) NONTRANSFERABILITY. Unless otherwise set forth by the Committee in an
Award Agreement, Awards shall not be transferable by an Eligible Person except  
by will or the laws of descent and distribution (except pursuant to a           
Beneficiary designation) and shall be exercisable during the lifetime of an     
Eligible Person only by such Eligible Person or his guardian or legal           
representative. An Eligible Person's rights under the Plan may not be pledged,  
mortgaged, hypothecated, or otherwise encumbered, and shall not be subject to   
claims of the Eligible Person's creditors.                                      

7. CHANGE OF CONTROL PROVISIONS.                                        

 (a) ACCELERATION OF EXERCISABILITY AND LAPSE OF RESTRICTIONS; CASH-OUT OF
AWARDS. Unless otherwise provided by the Committee at the time of the Award     
grant, all outstanding Awards pursuant to which the Participant may have rights 
the exercise of which is restricted or limited shall become fully exercisable at
the time of a Change of Control.                                                

(b) DEFINITIONS OF CERTAIN TERMS. For purposes of this Section 7, the   
following definitions, in addition to those set forth in Section 2, shall apply:

      (i) "Change of Control" means and shall be deemed to have occurred if:

         (a) any Person (within the meaning of the Exchange Act), other than
     the Company or a Permitted Person, is or becomes the "beneficial owner"
(as defined in Rule 13d-3 under the                               

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      Exchange Act), directly or indirectly, of Voting Securities representing
more than 20 percent or more of the total voting power of all the 
then-outstanding Voting Securities; or                            

        (b) during any period of two consecutive years, individuals who at
       the beginning of such period constituted the Board (together with any new
     directors whose election by such Board or whose nomination for election
     by the shareholders of the Company was approved by a vote of 66 2/3% of
the directors of the Company then still in office who were either 
       directors at the beginning of such period or whose election or nomination
for election was previously so approved) cease for any reason to  
constitute a majority of the Board then in office;                

          (c) the stockholders of the Company approve a merger, consolidation,
recapitalization or reorganization of the Company or a Subsidiary,
   reverse split of any class of Voting Securities, or an acquisition of
     securities or assets by the Company or a Subsidiary, or consummation of
      any such transaction if stockholder approval is not obtained, other than
 (I) any such transaction in which the holders of outstanding Voting
      Securities immediately prior to the transaction receive (or, in the case
   of a transaction involving a Subsidiary and not the Company, retain),
with respect to such Voting Securities, voting securities of the  
     surviving or transferee entity representing more than 60 percent of the
     total voting power outstanding immediately after such transaction, with
    the voting power of each such continuing holder relative to other such
      continuing holders not substantially altered in the transaction, or (II)
       any such transaction which would result in Permitted Persons beneficially
   owning more than 50 percent of the voting securities of the surviving
 entity outstanding immediately after such transaction, or (III) the
   merger of Corporate Office Properties Trust, Inc. indirectly with and
into the Company; or                                              

    (d) the stockholders of the Company approve a plan of complete
       liquidation of the Company or an agreement for the sale or disposition by
   the Company of all or substantially all of the Company's assets other
      than any such transaction which would result in Permitted Persons owning
  or acquiring more than 50 percent of the assets owned by the Company
immediately prior to the transaction.                             

    (ii) "Permitted Person" means (a) a majority-owned subsidiary of the
Company; (b) an employee or group of employees of the Company or any    
  majority-owned subsidiary of the Company; (c) a trustee or other fiduciary
holding securities under an employee benefit plan of the Company or any 
  majority-owned subsidiary of the Company; (d) a corporation owned directly
  or indirectly by the stockholders of the Company in substantially the same
proportion as their ownership of Voting Securities; (e) the Operating   
Partnership; or (f) Jay H. Shidler, Clay W. Hamlin III, Westbrook Real  
  Estate Fund I, L.P. or Westbrook Real Estate Co. Investment Partnership I,
 L.P. or any corporation, partnership, trust, estate or other legal entity
    controlled by any of the foregoing Persons (or jointly controlled by Messrs.
Shidler and Hamlin).                                                    

       (iii) "Voting Securities or Security" means any securities of the Company
   or a Subsidiary or Affiliate which carry the right to vote generally in the
election of directors.                                                  

8. GENERAL PROVISIONS.                                                  

  (a) COMPLIANCE WITH LEGAL AND TRADING REQUIREMENTS. The Plan, the granting
and exercising of Awards thereunder, and the other obligations of the Company or
a Subsidiary or Affiliate under the Plan and any Award Agreement, shall be      
subject to all applicable federal and state laws, rules and regulations, and to 
such approvals by any regulatory or governmental agency as may be required. The 
Company, in its discretion, may postpone the issuance or delivery of Shares     
under any Award until completion of such stock exchange or market system listing
or registration or qualification of such Shares or other required action under  
any state or federal law, rule or regulation as the Company may consider        
appropriate, and may require any Participant to make such representations and   
furnish such information as it may consider appropriate in connection with the  
issuance or delivery of Shares in compliance with applicable laws,              

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rules and regulations. No provisions of the Plan shall be interpreted or        
construed to obligate the Company to register any Shares under federal or state 
law.                                                                            

 (b) NO RIGHT TO CONTINUED EMPLOYMENT OR SERVICE. Neither the Plan nor any
action taken thereunder shall be construed as giving any employee or director   
the right to be retained in the employ or service of the Company or any         
Subsidiary or Affiliate, nor shall it interfere in any way with the right of the
Company or any Subsidiary or Affiliate to terminate any employee's or director's
employment or service at any time.                                              

(c) TAXES. The Company or any Subsidiary or Affiliate is authorized to  
withhold from any Award granted, any payment relating to an Award under the     
Plan, including from a distribution of Shares, or any payroll or other payment  
to an Eligible Person, amounts of withholding and other taxes due in connection 
with any transaction involving an Award, and to take such other action as the   
Committee may deem advisable to enable the Company or any Subsidiary or         
Affiliate and any Eligible Person to satisfy obligations for the payment of     
withholding taxes and other tax obligations relating to any Award. This         
authority shall include authority to withhold or receive Shares or other        
property and to make cash payments in respect thereof in satisfaction of an     
Eligible Person's tax obligations.                                              

(d) CHANGES TO THE PLAN AND AWARDS. The Board may amend, alter, suspend,
discontinue, or terminate the Plan without the consent of shareholders of the   
Company or Participants, except that any such amendment, alteration, suspension,
discontinuation, or termination shall be subject to the approval of the         
Company's shareholders to the extent such shareholder approval is required under
Section 422 of the Code; provided, however, that, without the consent of an     
affected Participant, no amendment, alteration, suspension, discontinuation, or 
termination of the Plan may materially and adversely affect the rights of such  
Participant under any Award theretofore granted to him or her. The Committee may
waive any conditions or rights under, amend any terms of, or amend, alter,      
suspend, discontinue or terminate, any Award theretofore granted, prospectively 
or retrospectively; provided, however, that, without the consent of a           
Participant, no amendment, alteration, suspension, discontinuation or           
termination of any Award may materially and adversely affect the rights of such 
Participant under any Award theretofore granted to him or her.                  

(e) NO RIGHTS TO AWARDS; NO SHAREHOLDER RIGHTS. No Eligible Person or   
employee shall have any claim to be granted any Award under the Plan, and there 
is no obligation for uniformity of treatment of Eligible Persons and employees. 
No Award shall confer on any Eligible Person any of the rights of a shareholder 
of the Company unless and until Shares are duly issued or transferred to the    
Eligible Person in accordance with the terms of the Award.                      

(f) UNFUNDED STATUS OF AWARDS. The Plan is intended to constitute an    
"unfunded" plan for incentive compensation. With respect to any payments not yet
made to a Participant pursuant to an Award, nothing contained in the Plan or any
Award shall give any such Participant any rights that are greater than those of 
a general creditor of the Company; provided, however, that the Committee may    
authorize the creation of trusts or make other arrangements to meet the         
Company's obligations under the Plan to deliver cash, Shares, other Awards, or  
other property pursuant to any Award, which trusts or other arrangements shall  
be consistent with the "unfunded" status of the Plan unless the Committee       
otherwise determines with the consent of each affected Participant.             

(g) NONEXCLUSIVITY OF THE PLAN. Neither the adoption of the Plan by the 
Board nor its submission to the shareholders of the Company for approval shall  
be construed as creating any limitations on the power of the Board to adopt such
other incentive arrangements as it may deem desirable, including, without       
limitation, the granting of options and other awards otherwise than under the   
Plan, and such arrangements may be either applicable generally or only in       
specific cases.                                                                 

(h) NOT COMPENSATION FOR BENEFIT PLANS. No Award payable under this Plan
shall be deemed salary or compensation for the purpose of computing benefits    
under any benefit plan or other arrangement of the Company for the benefit of   
its employees or directors unless the Company shall determine otherwise.        

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   (i) NO FRACTIONAL SHARES. No fractional Shares shall be issued or delivered
pursuant to the Plan or any Award. The Committee shall determine whether cash,  
other Awards, or other property shall be issued or paid in lieu of such         
fractional Shares or whether such fractional Shares or any rights thereto shall 
be forfeited or otherwise eliminated.                                           

  (j) GOVERNING LAW. The validity, construction, and effect of the Plan, any
rules and regulations relating to the Plan, and any Award Agreement shall be    
determined in accordance with the laws of the State of New York without giving  
effect to principles of conflict of laws.                                       

  (k) EFFECTIVE DATE; PLAN TERMINATION. The Plan shall become effective upon
its approval by shareholders of the Company (the "Effective Date"). The Plan    
shall terminate as to future awards on the date which is ten (10) years after   
the Effective Date.                                                             

    (l) TITLES AND HEADINGS. The titles and headings of the sections in the Plan
are for convenience of reference only. In the event of any conflict, the text of
the Plan, rather than such titles or headings, shall control.                   

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                                                                      APPENDIX E

302A.471.  RIGHTS OF DISSENTING SHAREHOLDERS                                    

    SUBDIVISION 1.  ACTIONS CREATING RIGHTS.  A shareholder of a corporation may
dissent from, and obtain payment for the fair value of the shareholder's shares 
in the event of, any of the following corporate actions:                        

      (a) An amendment of the articles that materially and adversely affects
the rights or preferences of the shares of the dissenting shareholder in
that it:                                                                

 (1) alters or abolishes a preferential right of the shares;

 (2) creates, alters, or abolishes a right in respect of the
       redemption of the shares, including a provision respecting a sinking fund
for the redemption or repurchase of the shares;                   

     (3) alters or abolishes a preemptive right of the holder of the
  shares to acquire shares, securities other than shares, or rights to
purchase shares or securities other than shares;                  

    (4) excludes or limits the right of a shareholder to vote on a
  matter, or to cumulate votes, except as the right may be excluded or
limited through the authorization or issuance of securities of an 
      existing or new class or series with similar or different voting rights;
       except that an amendment to the articles of an issuing public corporation
   that provides that section 302A.671 does not apply to a control share
      acquisition does not give rise to the right to obtain payment under this
section;                                                          

(b) A sale, lease, transfer, or other disposition of all or     
substantially all of the property and assets of the corporation, but not
 including a transaction permitted without shareholder approval in section
302A.661, subdivision 1, or a disposition in dissolution described in   
   section 302A.725, subdivision 2, or a disposition pursuant to an order of a
court, or a disposition for cash on terms requiring that all or         
  substantially all of the net proceeds of disposition be distributed to the
  shareholders in accordance with their respective interests within one year
after the date of disposition;                                          

       (c) A plan of merger, whether under this chapter or under chapter 322B,
 to which the corporation is a party, except as provided in subdivision 3;

   (d) A plan of exchange, whether under this chapter or under chapter
 322B, to which the corporation is a party as the corporation whose shares
will be acquired by the acquiring corporation, if the shares of the     
shareholder are entitled to be voted on the plan; or                    

        (e) Any other corporate action taken pursuant to a shareholder vote with
  respect to which the articles, the bylaws, or a resolution approved by the
board directs that dissenting shareholders may obtain payment for their 
shares.                                                                 

    SUBD. 2.  BENEFICIAL OWNERS.  (a) A shareholder shall not assert dissenters'
rights as to less than all of the shares registered in the name of the          
shareholder, unless the shareholder dissents with respect to all the shares that
are beneficially owned by another person but registered in the name of the      
shareholder and discloses the name and address of each beneficial owner on whose
behalf the shareholder dissents. In that event, the rights of the dissenter     
shall be determined as if the shares as to which the shareholder has dissented  
and the other shares were registered in the names of different shareholders.    

(b) The beneficial owner of shares who is not the shareholder may assert
dissenters' rights with respect to shares held on behalf of the beneficial      
owner, and shall be treated as a dissenting shareholder under the terms of this 
section and section 302A.473, if the beneficial owner submits to the corporation
at the time of or before the assertion of the rights a written consent of the   
shareholder.                                                                    

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 SUBD. 3.  RIGHTS NOT TO APPLY.  (a) Unless the articles, the bylaws, or a
resolution approved by the board otherwise provide, the right to obtain payment 
under this section does not apply to a shareholder of the surviving corporation 
in a merger, if the shares of the shareholder are not entitled to be voted on   
the merger.                                                                     

    (b) If a date is fixed according to section 302A.445, subdivision 1, for the
determination of shareholders entitled to receive notice of and to vote on an   
action described in subdivision 1, only shareholders as of the date fixed, and  
beneficial owners as of the date fixed who hold through shareholders, as        
provided in subdivision 2, may exercise dissenters' rights.                     

   SUBD. 4.  OTHER RIGHTS.  The shareholders of a corporation who have a right
under this section to obtain payment for their shares do not have a right at law
or in equity to have a corporate action described in subdivision 1 set aside or 
rescinded, except when the corporate action is fraudulent with regard to the    
complaining shareholder or the corporation.                                     

302A.473.  PROCEDURES FOR ASSERTING DISSENTERS' RIGHTS                          

 SUBDIVISION 1.  DEFINITIONS.  (a) For purposes of this section, the terms
defined in this subdivision have the meanings given them.                       

   (b) "Corporation" means the issuer of the shares held by a dissenter before
the corporate action referred to in section 302A.471, subdivision 1 or the      
successor by merger of that issuer.                                             

(c) "Fair value of the shares" means the value of the shares of a       
corporation immediately before the effective date of the corporate action       
referred to in section 302A.471, subdivision 1.                                 

   (d) "Interest" means interest commencing five days after the effective date
of the corporate action referred to in section 302A.471, subdivision 1, up to   
and including the date of payment, calculated at the rate provided in section   
549.09 for interest on verdicts and judgments.                                  

    SUBD. 2.  NOTICE OF ACTION.  If a corporation calls a shareholder meeting at
which any action described in section 302A.471, subdivision 1 is to be voted    
upon, the notice of the meeting shall inform each shareholder of the right to   
dissent and shall include a copy of section 302A.471 and this section and a     
brief description of the procedure to be followed under these sections.         

    SUBD. 3.  NOTICE OF DISSENT.  If the proposed action must be approved by the
shareholders, a shareholder who is entitled to dissent under section 302A.471   
and who wishes to exercise dissenters' rights must file with the corporation    
before the vote on the proposed action a written notice of intent to demand the 
fair value of the shares owned by the shareholder and must not vote the shares  
in favor of the proposed action.                                                

 SUBD. 4.  NOTICE OF PROCEDURE; DEPOSIT OF SHARES.  (a) After the proposed
action has been approved by the board and, if necessary, the shareholders, the  
corporation shall send to all shareholders who have complied with subdivision 3 
and to all shareholders entitled to dissent if no shareholder vote was required,
a notice that contains:                                                         

 (1) The address to which a demand for payment and certificates of
   certificated shares must be sent in order to obtain payment and the date by
which they must be received;                                            

   (2) Any restrictions on transfer of uncertificated shares that will
apply after the demand for payment is received;                         

      (3) A form to be used to certify the date on which the shareholder, or
   the beneficial owner on whose behalf the shareholder dissents, acquired the
shares or an interest in them and to demand payment; and                

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       (4) A copy of section 302A.471 and this section and a brief description
of the procedures to be followed under these sections.                  

(b) In order to receive the fair value of the shares, a dissenting      
shareholder must demand payment and deposit certificated shares or comply with  
any restrictions on transfer of uncertificated shares within 30 days after the  
notice required by paragraph (a) was given, but the dissenter retains all other 
rights of a shareholder until the proposed action takes effect.                 

  SUBD. 5.  PAYMENT; RETURN OF SHARES.  (a) After the corporate action takes
effect, or after the corporation receives a valid demand for payment, whichever 
is later, the corporation shall remit to each dissenting shareholder who has    
complied with subdivisions 3 and 4 the amount the corporation estimates to be   
the fair value of the shares, plus interest, accompanied by:                    

       (1) The corporation's closing balance sheet and statement of income for
 a fiscal year ending not more than 16 months before the effective date of
  the corporate action, together with the latest available interim financial
statements;                                                             

        (2) An estimate by the corporation of the fair value of the shares and a
brief description of the method used to reach the estimate; and         

        (3) A copy of section 302A.471 and this section, and a brief description
of the procedure to be followed in demanding supplemental payment.      

  (b) The corporation may withhold the remittance described in paragraph (a)
from a person who was not a shareholder on the date the action dissented from   
was first announced to the public or who is dissenting on behalf of a person who
was not a beneficial owner on that date. If the dissenter has complied with     
subdivisions 3 and 4, the corporation shall forward to the dissenter the        
materials described in paragraph (a), a statement of the reason for withholding 
the remittance, and an offer to pay to the dissenter the amount listed in the   
materials if the dissenter agrees to accept that amount in full satisfaction.   
The dissenter may decline the offer and demand payment under subdivision 6.     
Failure to do so entitles the dissenter only to the amount offered. If the      
dissenter makes demand, subdivisions 7 and 8 apply.                             

   (c) If the corporation fails to remit payment within 60 days of the deposit
of certificates or the imposition of transfer restrictions on uncertificated    
shares, it shall return all deposited certificates and cancel all transfer      
restrictions. However, the corporation may again give notice under subdivision 4
and require deposit or restrict transfer at a later time.                       

 SUBD. 6.  SUPPLEMENTAL PAYMENT; DEMAND.  If a dissenter believes that the
amount remitted under subdivision 5 is less than the fair value of the shares   
plus interest, the dissenter may give written notice to the corporation of the  
dissenter's own estimate of the fair value of the shares, plus interest, within 
30 days after the corporation mails the remittance under subdivision 5, and     
demand payment of the difference. Otherwise, a dissenter is entitled only to the
amount remitted by the corporation.                                             

SUBD. 7.  PETITION; DETERMINATION.  If the corporation receives a demand
under subdivision 6, it shall, within 60 days after receiving the demand, either
pay to the dissenter the amount demanded or agreed to by the dissenter after    
discussion with the corporation or file in court a petition requesting that the 
court determine the fair value of the shares, plus interest. The petition shall 
be filed in the county in which the registered office of the corporation is     
located, except that a surviving foreign corporation that receives a demand     
relating to the shares of a constituent domestic corporation shall file the     
petition in the county in this state in which the last registered office of the 
constituent corporation was located. The petition shall name as parties all     
dissenters who have demanded payment under subdivision 6 and who have not       
reached agreement with the corporation. The corporation shall, after filing the 
petition, serve all parties with a summons and copy of the petition under the   
rules of civil procedure. Nonresidents of this state may be served by registered
or certified mail or by publication as provided by law. Except as otherwise     
provided, the rules of civil procedure apply to this proceeding. The            
jurisdiction of the court is plenary and exclusive.                             

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The court may appoint appraisers, with powers and authorities the court deems   
proper, to receive evidence on and recommend the amount of the fair value of the
shares. The court shall determine whether the shareholder or shareholders in    
question have fully complied with the requirements of this section, and shall   
determine the fair value of the shares, taking into account any and all factors 
the court finds relevant, computed by any method or combination of methods that 
the court, in its discretion, sees fit to use, whether or not used by the       
corporation or by a dissenter. The fair value of the shares as determined by the
court is binding on all shareholders, wherever located. A dissenter is entitled 
to judgment in cash for the amount by which the fair value of the shares as     
determined by the court, plus interest, exceeds the amount, if any, remitted    
under subdivision 5, but shall not be liable to the corporation for the amount, 
if any, by which the amount, if any, remitted to the dissenter under subdivision
5 exceeds the fair value of the shares as determined by the court, plus         
interest.                                                                       

 SUBD. 8.  COSTS; FEES; EXPENSES.  (a) The court shall determine the costs
and expenses of a proceeding under subdivision 7, including the reasonable      
expenses and compensation of any appraisers appointed by the court, and shall   
assess those costs and expenses against the corporation, except that the court  
may assess part or all of those costs and expenses against a dissenter whose    
action in demanding payment under subdivision 6 is found to be arbitrary,       
vexatious, or not in good faith.                                                

(b) If the court finds that the corporation has failed to comply        
substantially with this section, the court may assess all fees and expenses of  
any experts or attorneys as the court deems equitable. These fees and expenses  
may also be assessed against a person who has acted arbitrarily, vexatiously, or
not in good faith in bringing the proceeding, and may be awarded to a party     
injured by those actions.                                                       

    (c) The court may award, in its discretion, fees and expenses to an attorney
for the dissenters out of the amount awarded to the dissenters, if any.         

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PART II 
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 20. INDEMNIFICATION OF TRUSTEES AND OFFICERS                               

The Maryland REIT Law permits a Maryland real estate investment trust to
include in its Declaration of Trust a provision limiting the liability of its   
trustees and officers to the trust and its shareholders for money damages except
for liability resulting from (a) actual receipt of an improper benefit or profit
in money, property or services or (b) active and deliberate dishonesty          
established by a final judgment as being material to the cause of action. The   
Declaration of Trust of the Trust contains such a provision which eliminates    
such liability to the maximum extent permitted by the Maryland REIT Law.        

  The Declaration of Trust of the Trust authorizes it, to the maximum extent
permitted by Maryland law, to obligate itself to indemnify and to pay or        
reimburse reasonable expenses in advance of final disposition of a proceeding to
(a) any present or former trustee or officer or (b) any individual who, while a 
trustee of the Trust and at the request of the Trust, serves or has served      
another real estate investment trust, corporation, partnership, joint venture,  
trust, employee benefit plan or any other enterprise as a trustee, director,    
officer or partner of such real estate investment trust, corporation,           
partnership, joint venture, trust, employee benefit plan or other enterprise    
from and against any claim or liability to which such person may become subject 
or which such person may incur by reason of his or her status as a present or   
former Trustee or officer of the Trust. The Bylaws of the Trust obligate it, to 
the maximum extent permitted by Maryland law, to indemnify and to pay or        
reimburse reasonable expenses in advance of final disposition of a proceeding to
(a) any present of former trustee or officer who is made a party to the         
proceeding by reason of his service in that capacity or (b) any individual who, 
while a Trustee or officer of the Trust and at the request of the Trust, serves 
or has served another real estate investment trust, corporation, partnership,   
joint venture, trust, employee benefit plan or any other enterprise as a        
trustee, director, officer or partner of such real estate investment trust,     
corporation, partnership, joint venture, trust, employee benefit plan or other  
enterprise and who is made a party to the proceeding by reason of his service in
that capacity, against any claim or liability to which he may become subject by 
reason of such status. The Declaration of Trust and Bylaws also permit the Trust
to indemnify and advance expenses to any person who served a predecessor of the 
Trust in any of the capacities described above and to any employee or agent of  
the Trust to indemnify a trustee or officer who has been successful, on the     
merits or otherwise, in the defense of any proceeding to which he is made a     
party by reason of his service in that capacity.                                

The Maryland REIT Law permits a Maryland real estate investment trust to
indemnify and advance expenses to its trustees, officers, employees and agents  
to the same extent as permitted by the Maryland General Corporation Law (the    
"MGCL") for directors and officers of Maryland corporations. The MGCL permits a 
corporation to indemnify its present and former directors and officers, among   
others, against judgments, penalties, fines, settlements and reasonable expenses
actually incurred by them in connection with any proceeding to which they may be
made party by reason of their service in those or other capacities unless it is 
established that (a) the act or omission of the director or officer was material
to the matter giving rise to the proceeding and (i) was committed in bad faith  
or (ii) was the result of active and deliberate dishonesty, (b) the director or 
officer actually received an improper personal benefit in money, property or    
services or (c) in the case of any criminal proceeding, the director or officer 
had reasonable cause to believe that the act or omission was unlawful. However, 
under the MGCL, a Maryland corporation may not indemnify for an adverse judgment
in a suit by or in the right of the corporation or for a judgment of liability  
on the basis that personal benefit was improperly received, unless in either    
case a court orders indemnification and then only for expenses. In addition, the
MGCL permits a corporation to advance reasonable expenses to a director or      
officer upon the corporation's receipt of (a) a written affirmation by the      
director or officer of his good faith belief that he has met the standard of    
conduct                                                                         

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necessary for indemnification by the corporation and (b) a written undertaking  
by or on his behalf to repay the amount paid or reimbursed by the corporation if
it shall ultimately be determined that the standard of conduct was not met.     

   The Operating Partnership Agreement provides that the Operating Partnership
shall indemnify the Trust, as general partner, and each director, officer and   
shareholder of the Trust and each person (including any affiliate) designated as
an agent by the Trust to the fullest extent permitted under the Delaware Revised
Uniform Limited Partnership Act from and against any and all losses (including  
reasonable attorney's fees), and any other amounts arising out of or in         
connection with any claim, relating to or resulting (directly or indirectly)    
from the operations of the Operating Partnership, in which such indemnified     
party becomes involved, or reasonably believes it may become involved, as a     
result of its acting in the referred to capacity.                               

ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES                             

(a) Exhibits                                                            

                                                        [Enlarge/Download Table]

EXHIBIT                                                                                                              
   NO.     DESCRIPTION                                                                                               
---------  ----------------------------------------------------------------------------------------------------------
                                                                                                                     

     2.1   Agreement and Plan of Merger, dated as of January 31, 1998, between the Registrant, the Maryland Company  
           and the Company (included as Appendix A to the Proxy Statement/Prospectus forming a part of this          
           Registration Statement).                                                                                  

     2.2   Formation/Contribution Agreement dated September 7, 1997, as amended, by and among the Company and certain
           subsidiary corporations and partnerships regarding the Transactions (filed with the Company's Current     
           Report on Form 8-K on October 29, 1997 and incorporated herein by reference).                             

     2.3   Agreement and Plan of Reorganization between the Company and Crown Advisors, Inc. (filed with the         
           Company's Current Report on Form 8-K on October 29, 1997 and incorporated herein by reference).           

     2.4   Limited Partnership Agreement of the Operating Partnership dated October 14, 1997 (filed with the         
           Company's Current Report on Form 8-K on October 29, 1997 and incorporated herein by reference).           

     2.5   Amended and Restated Partnership Agreement of Blue Bell Investment Company (filed with the Company's      
           Current Report on Form 8-K on October 29, 1997 and incorporated herein by reference).                     

     2.6   Amended and Restated Partnership Agreement of South Brunswick Investors, L.P. (filed with the Company's   
           Current Report on Form 8-K on October 29, 1997 and incorporated herein by reference).                     

     2.7   Amended and Restated Partnership Agreement of ComCourt Investors, L.P. (filed with the Company's Current  
           Report on Form 8-K on October 29, 1997 and incorporated herein by reference).                             

     2.8   Amended and Restated Partnership Agreement of 6385 Flank, L.P. (filed with the Company's Current Report on
           Form 8-K on October 29, 1997 and incorporated herein by reference).                                       

     3.1   Amended and Restated Declaration of Trust of Registrant (included as Appendix B to the Proxy              
           Statement/Prospectus forming a part of this Registration Statement)                                       

     3.2   Bylaws of Registrant (included as Appendix C to the Proxy Statement/Prospectus forming a part of this     
           Registration Statement).                                                                                  

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EXHIBIT                                                                                                              
   NO.     DESCRIPTION                                                                                               
---------  ----------------------------------------------------------------------------------------------------------
                                                                                                                     
     4.1   Form of certificate for the Registrant's Common Shares of Beneficial Interest, $0.01 par value per share. 

     5.1   Opinion of Cahill Gordon & Reindel regarding the legality of the securities being registered hereby.      

     8.1   Opinion of Cahill Gordon & Reindel as to certain tax matters.                                             

    10.1   Clay W. Hamlin III Employment Agreement dated October 14, 1997 with the Operating Partnership (filed with 
           the Company's Current Report on Form 8-K on October 29, 1997 and incorporated herein by reference).       

    10.2   Registration Rights Agreement dated October 14, 1997 for the benefit of certain shareholders of the       
           Registrant (filed with the Company's Current Report on Form 8-K on October 29, 1997 and incorporated      
           herein by reference).                                                                                     

    10.3   Management Agreement between Registrant and Glacier Realty, LLC (filed with the Company's Current Report  
           on Form 8-K on October 29, 1997 and incorporated herein by reference).                                    

    10.4   Senior Secured Credit Agreement dated October 13, 1997 (filed with the Company's Current Report on Form   
           8-K on October 29, 1997 and incorporated herein by reference).                                            

    10.5   Corporate Office Properties Trust 1998 Long Term Incentive Plan (included as Appendix D to the Proxy      
           Statement/Prospectus forming a part of this Registration Statement).                                      

    10.6   Lease Agreement between Blue Bell Investment Company, L.P. and Unysis Corporation dated March 12, 1997    
           with respect to lot A.                                                                                    

    10.7   Lease Agreement between Blue Bell Investment Company, L.P. and Unysis Corporation dated March 12, 1997    
           with respect to lot B.                                                                                    

    10.8   Lease Agreement between Blue Bell Investment Company, L.P. and Unysis Corporation dated March 12, 1997    
           with respect to lot C.                                                                                    

    10.9   Amended and Restated Lease between South Brunswick Investors, L.P. and International Business Machines    
           Corporation dated August 11, 1995, as amended.                                                            

    10.10  Agreement of Lease between South Brunswick Investors, L.P. and Teleport Communications Group Inc. dated   
           February 20, 1996, as amended.                                                                            

    10.11  Agreement of Lease between South Brunswick Investors, L.P. and Teleport Communications Group Inc. dated   
           August 19, 1996.                                                                                          

    13.1   The Company's Annual Report on Form 10-KSB40 for the year ended December 31, 1996, as amended (other than 
           the audited financial information of the Company set forth therein).                                      

    13.2   The Company's Quarterly Report on Form 10-QSB for the quarter ended September 30, 1997.                   

    16.1   Letter to the Commission from Lurie, Besikof, Lapidus & Co., LLP dated November 4, 1997 (filed with       
           Company's Current Report on Form 8-K on November 6, 1997 and incorporated herein by reference).           

    21     Subsidiaries of Registrant.                                                                               

    23.1   Consent of Cahill Gordon & Reindel (included in Exhibits 5.1 and 8.1).                                    

    23.2   Consent of Coopers & Lybrand L.L.P.                                                                       

    24.1   Powers of attorney (included on signature page to the Registration Statement).                            

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EXHIBIT                                                                                                              
   NO.     DESCRIPTION                                                                                               
---------  ----------------------------------------------------------------------------------------------------------
                                                                                                                     
    99.1   Form of proxy to be mailed to stockholders of the Company in connection with the Mergers.                 

(b) Financial Statement Schedules                                       

N/A                                                                     

ITEM 22. UNDERTAKINGS                                                           

  (a) The undersigned Registrant hereby undertakes as follows: that prior to
any public reoffering of the securities registered hereunder through use of a   
prospectus which is a part of this Registration Statement, by any person or     
party who is deemed to be an underwriter within the meaning of rule 145(c), the 
issuer undertakes that such reoffering prospectus will contain the information  
called for by the applicable registration form with respect to reofferings by   
persons who may be deemed underwriters, in addition to the information called   
for by the other items of the applicable form.                                  

(b) The Registrant undertakes that every prospectus: (i) that is filed  
pursuant to paragraph (a) immediately preceding, or (ii) that purports to meet  
the requirements of Section 10(a)(3) of the Securities Act and is used in       
connection with the offering of securities subject to Rule 415, will be filed as
a part of an amendment to the registration statement and will not be used until 
such amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be   
deemed to be a new registration statement relating to the securities offered    
therein, and the offering of such securities at that time shall be deemed to be 
the initial BONA FIDE offering thereof.                                         

   (c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of  
the Registrant pursuant to the foregoing provisions, or otherwise, the          
Registrant has been advised that in the opinion of the Securities and Exchange  
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification 
against such liabilities (other than the payment by the Registrant of expenses  
incurred or paid by a director, officer or controlling person of the Registrant 
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being 
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate     
jurisdiction the question whether such indemnification by it is against public  
policy as expressed in the Act and will be governed by the final adjudication of
such issue.                                                                     

   (d) The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the Proxy                    
Statement/Prospectus pursuant to Items 4, 10(b), 11, or 13 of this Form, within 
one business day of receipt of such request, and to send the incorporated       
documents by first class mail or other equally prompt means. This includes      
information contained in documents filed subsequent to the effective date of the
Registration Statement through the date of responding to the request.           

(e) The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the      
company being acquired involved therein, that was not the subject of and        
included in the Registration Statement when it became effective.                

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SIGNATURES

   Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Registration Statement to be signed on its behalf by the undersigned
thereunto duly authorized, in the City of Philadelphia, State of Pennsylvania,  
on the 5th day of February, 1998.                                               

                                                                [Download Table]
                                                                     
CORPORATE OFFICE PROPERTIES TRUST                                    

                  By:                                                


                                     /s/ CLAY W. HAMLIN, III         

                           ------------------------------------------

                                       CLAY W. HAMLIN, III           

                              PRESIDENT AND CHIEF EXECUTIVE OFFICER  


POWERS OF ATTORNEY

Pursuant to the requirements of the Securities Act of 1933, this        
Registration Statement has been signed by the following persons in the          
capacities and on the dates indicated. Each person whose signature appears below
hereby constitutes Clay W. Hamlin and Thomas D. Cassel, and each of them singly,
such person's true and lawful attorneys, each with full power of substitution to
sign for such person and in such person's name and capacity indicated below, any
and all amendments to this Registration Statement, including post-effective     
amendments thereto, and to file the same with the Securities and Exchange       
Commission, hereby ratifying and confirming such person's signature as it may be
signed by said attorneys to any and all amendments.                             

                                                        [Enlarge/Download Table]

                      SIGNATURES                                       TITLE                         DATE        
------------------------------------------------------  -----------------------------------  --------------------
                                                                                                                 

                  /s/ JAY H. SHIDLER                                                                             
     -------------------------------------------        Chairman of the Board and Trustee      February 5, 1998  
                   (Jay H. Shidler)                                                                              

               /s/ CLAY W. HAMLIN, III                  President And Chief Executive                            
     -------------------------------------------          Officer, Trustee (Principal          February 5, 1998  
                (Clay W. Hamlin, III)                     Executive Officer)                                     

                 /s/ THOMAS D. CASSEL                                                                            
     -------------------------------------------        Vice President, Finance (Principal     February 5, 1998  
                  (Thomas D. Cassel)                      Accounting and Financial Officer)                      

     -------------------------------------------        Vice Chairman of the Board and         February 5, 1998  
                   (Vernon R. Beck)                       Trustee                                                

                 /s/ ALLEN C. GEHRKE                                                                             
     -------------------------------------------        Trustee                                February 5, 1998  
                  (Allen C. Gehrke)                                                                              

                 /s/ KENNETH D. WETHE                                                                            
     -------------------------------------------        Trustee                                February 5, 1998  
                  (Kenneth D. Wethe)                                                                             

     -------------------------------------------        Trustee                                February 5, 1998  
                 (William H. Walton)                                                                             

     -------------------------------------------        Trustee                                February 5, 1998  
               (Kenneth S. Sweet, Jr.)                                                                           

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EXHIBIT INDEX 

                                                        [Enlarge/Download Table]

                                                                                                                  PAGE 
 EXHIBIT NO.   DESCRIPTION                                                                                      NUMBER 
-------------  -------------------------------------------------------------------------------------------  -----------
                                                                                                                       

       2.1     Agreement and Plan of Merger, dated as of January 31, 1998, between the Registrant, the                 
               Maryland Company and the Company (included as Appendix A to the Proxy Statement/Prospectus              
               forming a part of this Registration Statement).                                                         

       2.2     Formation/Contribution Agreement dated September 7, 1997, as amended, by and among the                  
               Company and certain subsidiary corporations and partnerships regarding the Transactions                 
               (filed with the Company's Current Report on Form 8-K on October 29, 1997 and incorporated               
               herein by reference).                                                                                   

       2.3     Agreement and Plan of Reorganization between the Company and Crown Advisors, Inc. (filed                
               with the Company's Current Report on Form 8-K on October 29, 1997 and incorporated herein               
               by reference).                                                                                          

       2.4     Limited Partnership Agreement of the Operating Partnership dated October 14, 1997 (filed                
               with the Company's Current Report on Form 8-K on October 29, 1997 and incorporated herein               
               by reference).                                                                                          

       2.5     Amended and Restated Partnership Agreement of Blue Bell Investment Company (filed with the              
               Company's Current Report on Form 8-K on October 29, 1997 and incorporated herein by                     
               reference).                                                                                             

       2.6     Amended and Restated Partnership Agreement of South Brunswick Investors, L.P. (filed with               
               the Company's Current Report on Form 8-K on October 29, 1997 and incorporated herein by                 
               reference).                                                                                             

       2.7     Amended and Restated Partnership Agreement of ComCourt Investors, L.P. (filed with the                  
               Company's Current Report on Form 8-K on October 29, 1997 and incorporated herein by                     
               reference).                                                                                             

       2.8     Amended and Restated Partnership Agreement of 6385 Flank, L.P. (filed with the Company's                
               Current Report on Form 8-K on October 29, 1997 and incorporated herein by reference).                   

       3.1     Amended and Restated Declaration of Trust of Registrant (included as Appendix B to the                  
               Proxy Statement/Prospectus forming a part of this Registration Statement)                               

       3.2     Bylaws of Registrant (included as Appendix C to the Proxy Statement/Prospectus forming a                
               part of this Registration Statement).                                                                   

       4.1     Form of certificate for the Registrant's Common Shares of Beneficial Interest, $0.01 par                
               value per share.                                                                                        

       5.1     Opinion of Cahill Gordon & Reindel regarding the legality of the securities being                       
               registered hereby.                                                                                      

       8.1     Opinion of Cahill Gordon & Reindel as to certain tax matters.                                           

      10.1     Clay W. Hamlin III Employment Agreement dated October 14, 1997 with the Operating                       
               Partnership (filed with the Company's Current Report on Form 8-K on October 29, 1997 and                
               incorporated herein by reference).                                                                      

      10.2     Registration Rights Agreement dated October 14, 1997 for the benefit of certain                         
               shareholders of the Registrant (filed with the Company's Current Report on Form 8-K on                  
               October 29, 1997 and incorporated herein by reference).                                                 

      10.3     Management Agreement between Registrant and Glacier Realty, LLC (filed with the Company's               
               Current Report on Form 8-K on October 29, 1997 and incorporated herein by reference).                   

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 EXHIBIT NO.   DESCRIPTION                                                                                      NUMBER 
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      10.4     Senior Secured Credit Agreement dated October 13, 1997 (filed with the Company's Current                
               Report on Form 8-K on October 29, 1997 and incorporated herein by reference).                           

      10.5     Corporate Office Properties Trust 1998 Long Term Incentive Plan (included as Appendix D to              
               the Proxy Statement/Prospectus forming a part of this Registration Statement).                          

      10.6     Lease Agreement between Blue Bell Investment Company, L.P. and Unisys Corporation dated                 
               March 12, 1997 with respect to Lot A.                                                                   

      10.7     Lease Agreement between Blue Bell Investment Company, L.P. and Unisys Corporation dated                 
               March 12, 1997 with respect to Lot B.                                                                   

      10.8     Lease Agreement between Blue Bell Investment Company, L.P. and Unisys Corporation dated                 
               March 12, 1997 with respect to Lot C.                                                                   

      10.9     Amended and Restated Lease between South Brunswick Investors, L.P. and International                    
               Business Machines Corporation dated August 11, 1995, as amended.                                        

      10.10    Agreement of Lease between South Brunswick Investors, L.P. and Teleport Communications                  
               Group Inc. dated February 20, 1996, as amended.                                                         

      10.11    Agreement of Lease between South Brunswick Investors, L.P. and Teleport Communications                  
               Group Inc. dated August 19, 1996.                                                                       

      13.1     The Company's Annual Report on Form 10-KSB40 for the year ended December 31, 1996, as                   
               amended (other than the audited financial information of the Company set forth therein).                

      13.2     The Company's Quarterly Report on Form 10-QSB for the quarter ended September 30, 1997.                 

      16.1     Letter to the Commission from Lurie, Besikof, Lapidus & Co., LLP dated November 4, 1997                 
               (filed with the Company's Current Report on Form 8-K on November 6, 1997, and incorporated              
               herein by reference).                                                                                   

      21       Subsidiaries of Registrant.                                                                             

      23.1     Consent of Cahill Gordon & Reindel (included in Exhibits 5.1 and 8.1).                                  

      23.2     Consent of Coopers & Lybrand L.L.P.                                                                     

      24.1     Powers of attorney (included on signature page to the Registration Statement).                          

      99.1     Form of proxy to be mailed to stockholders of the Company in connection with the Mergers.               

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘S-4’ Filing		Date		First		Last			Other Filings
		6/30/09		51					10-Q
		3/31/02		54					10-Q
		12/31/00		20		75			10-K
		10/14/00		19
		10/1/99		25		66
		1/1/99		51		56
		12/31/98		27		89			10-K,  4,  5,  8-K/A
		9/1/98		25		66
		8/1/98		74
		3/12/98		2		9			DEF 14A
		2/28/98		8
		2/11/98		2		41			DEF 14A
Filed on:		2/5/98		1		146
		2/4/98		92
		2/3/98		1		93
		2/1/98		16		60
		1/31/98		95		147
		1/22/98		1		94			8-K
		1/21/98		28
		1/20/98		4		8			8-K
		1/14/98		73
		1/1/98		9		77			8-K
		12/31/97		9		90			10-K405
		12/24/97		8		13			8-K/A
		11/10/97		84
		11/6/97		8		148			10QSB,  8-K
		11/4/97		144		148
		10/31/97		89		90			8-K
		10/29/97		8		148			8-K
		10/14/97		9		147			8-K,  8-K/A
		10/13/97		15		148
		9/30/97		4		148			10QSB
		9/8/97		15
		9/7/97		9		147
		9/5/97		15
		6/30/97		8					10-Q
		3/31/97		8					10QSB
		3/12/97		144		148
		12/31/96		4		148			10KSB40,  10KSB40/A
		11/1/96		54
		9/30/96		13					10QSB
		8/19/96		144		148
		2/20/96		144		148
		12/31/95		13		90
		8/11/95		144		148
		12/31/94		13
		12/31/93		13
		12/31/92		13		77
		1/1/92		77
									List all Filings

4 Subsequent Filings that Reference this Filing

  As Of               Filer                 Filing    For·On·As Docs:Size             Issuer                      Filing Agent

 2/22/24  COPT Defense Properties           10-K       12/31/23  124:21M
 2/24/23  Corporate Office Properties Trust 10-K       12/31/22  129:25M
 2/22/22  Corporate Office Properties Trust 10-K       12/31/21  129:25M
 2/12/21  Corporate Office Properties Trust 10-K       12/31/20  128:27M