ADVISORY AGREEMENT





         THIS ADVISORY AGREEMENT (this "Agreement") is made as of ________, 2004

(the "Effective Date"), by and between (i) Bull Street Real Estate Investment

Trust, Inc., a Maryland corporation (the "Company"), and (ii) Burton Management

Company, Ltd., a Nevada corporation (the "Advisor").



         THE PARTIES ENTER THIS AGREEMENT on the basis of the following facts,

understandings and intentions:



         A. The Company intends to use the net proceeds of borrowings and

security offerings and the net returns on its investments which are not

otherwise distributed to stockholders in Mortgage Assets (defined herein) in a

manner which allows the Company to qualify as a "real estate investment trust"

under the Internal Revenue Code of 1986, as amended (the "Code") and to qualify

for an exemption from being an "investment company" under the Investment Company

Act of 1940, as amended (the "Investment Company Act").



         B. The Company desires that the Advisor undertake, on the Company's

behalf, the duties and responsibilities set forth in this Agreement, subject to

the direction and oversight of the Board of Directors of the Company (the "Board

of Directors"), on the terms and conditions set forth in this Agreement.



         C. The Advisor desires to undertake, on the Company's behalf, the

duties and responsibilities set forth in this Agreement, subject to the

direction and oversight of the Board of Directors, on the terms and conditions

set forth in this Agreement.



         NOW, THEREFORE, in consideration of the premises and the mutual

covenants of the parties hereto, and for other good and valuable consideration,

the receipt and sufficiency of which are hereby acknowledged, the parties hereto

hereby agree as follows:



1. Definitions. Capitalized terms used in this Agreement shall have the

respective meanings assigned to them below:



         1.1 "Advisor" has the meaning set forth in the Introductory Paragraph

of this Agreement, and shall include any successor thereto.



         1.2 "Advisor Obligations" has the meaning set forth in Section 2.4.2 of

this Agreement.



         1.3 "Advisor Refund" has the meaning set forth in Section 6.2.1(2) of

this Agreement.



         1.4 "Affiliate" means, when used with reference to a specified person,

any person that directly, or indirectly through one or more intermediaries,

controls or is controlled by, or is under common control with, the specified

person. For purposes of this definition, the term "person" means and includes

individuals, corporations, general and limited partnerships, stock companies,

land trusts, business trusts and other entities and governments and agencies and

political







subdivisions thereof. For purposes of this definition, "control" (including the

correlative meanings of the terms "controlled by" and "under common control

with"), as used with respect to any person, shall mean the possession, directly,

or indirectly through one or more intermediaries, of the power to direct or

cause the direction of the management and policies of such person, whether by

contract, through the ownership of voting securities, partnership interests or

other equity interests or otherwise.



         1.5 "Annual Incentive Amount" shall have the meaning set forth in

Section 6.2.1(2) of this Agreement.



         1.6 "Agreement" means this Advisory Agreement dated as of the Effective

Date, by and between the Company and the Advisor, as it is amended from time to

time in accordance with the terms of this Agreement.





         1.7 "Average Invested Assets" means for any period the average of the

aggregate book value of our assets invested, directly or indirectly, in equity

interests in and loans secured by real estate, before reserves for depreciation

or bad debts or other similar non-cash reserves, computed by taking the average

of such values at the end of each month during any given period.





         1.8 "Average Net Worth" means for any period the average of the net

worth of the Company at the end of each week during the period. For purposes of

determining the Average Net Worth, the "net worth" means the difference between

(i) the aggregate book value of the consolidated assets of the Company and its

subsidiaries, before reserves for depreciation, bad debts or other similar

non-cash items, and (ii) the aggregate book value of debt of the Company and its

subsidiaries.



         1.9 "Base Management Compensation" has the meaning set forth in Section

6.1 of this Agreement.



         1.10 "Board of Directors" has the meaning set forth in Recital B of

this Agreement.



         1.11 "Cause" means a reasonable good faith determination of the Board

of Directors based on findings of fact which are disclosed to the Advisor that

the Advisor was grossly negligent, acted with reckless disregard or engaged in

willful misconduct or active fraud while discharging its material duties under

this Agreement.



         1.12 "Change of Control" means in any transaction or series of

transactions (i) any sale, lease, assignment, transfer or other conveyance of

all or substantially all of the Company's assets, or (ii) any consolidation or

merger involving the Company in which all of the stockholders of the Company

immediately prior to the consummation of such transaction, considered

collectively, do not immediately following the transaction own shares of the

surviving entity constituting at least a majority of the voting power of the

surviving entity, (iii) any reclassification or other exchange of capital stock,

or any other recapitalization of the Company in which any person or group, as

those terms are used in Rule 13d-1 promulgated under the Securities Exchange Act

of 1934, as amended, that owned 30% of the voting power of





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the Company immediately prior to the consummation of such transaction do not

immediately following the transaction own at least 30% of the voting power of

the Company or in which any person or group that owned less than 30% of the

voting power of the Company immediately prior to the consummation of the

transaction do not immediately following the transaction own more than 30% of

the voting power of the Company, (iv) any liquidation, dissolution or winding up

of the Company, or (v) any time fewer than two members of the Board of Directors

are individuals which were selected by the Advisor. In instances where a natural

person selected by the Advisor and immediately thereafter appointed to the Board

of Directors either resigns or dies, then a Change of Control under clause (v)

of the preceding sentence shall not be triggered if (i) the Board of Directors

does not elect to terminate the Advisor within 30 days after the first director

resigns or dies, or (ii) the qualified individual next selected by the Advisor

is appointed as soon as possible after such selection and the Board of Directors

does not take any action from the time the Advisor selects the next individual

until the time the next Advisor-selected director is appointed.



         1.13 "Code" has the meaning set forth in Recital A of this Agreement.



         1.14 "Company" has the meaning set forth in the Introductory Paragraph

of this Agreement, and shall include any successor thereto.



         1.15 "Effective Date" has the meaning set forth in the Introductory

Paragraph of this Agreement.



         1.16 "Federal Reserve Board" means the Board of Governors of the

Federal Reserve System.



         1.17 "GAAP" means generally accepted accounting principles, as applied

in the United States.



         1.18 "Governing Instruments" means the articles of incorporation or

charter, as the case may be, and the bylaws of the Company and its subsidiaries,

as those documents may be amended from time to time.



         1.19 "Incentive Management Compensation" has the meaning set forth in

Section 6.2 of this Agreement.



         1.20 "Independent Directors" are those who are not associated and have

not been associated within the last two years, directly or indirectly, with the

Company or the Advisor.



         1.21 "Investment Company Act" has the meaning set forth in Recital A of

this Agreement.



         1.22 "Last Auditor" has the meaning set forth in Section 6.3 of this

Agreement.



         1.23 "Mortgage Assets" means the following:



         (i)      mortgage securities (or interests therein), including (a)

                  pass-through certificates (including GNMA certificates, FNMA

                  certificates and FHLMC certificates),





                                      -3-







                  (b) collateralized mortgage obligations, (c) securities

                  representing interests in, or secured by, mortgages on real

                  property other than pass-through certificates and CMOs, (d)

                  certificates and other securities collateralized by loans,

                  mortgage derivative securities, subordinated interests and

                  other mortgage-backed and mortgage-collateralized obligations,

                  (e) mortgage derivative securities and (f) subordinated

                  interests;



         (ii)     mortgage loans, including (a) conforming mortgage loans (i.e.,

                  mortgage loans which comply with requirements for inclusion in

                  credit support programs sponsored by FHLMC, FNMA or GNMA or

                  are FHA or VA Loans, all of which are secured by first

                  mortgages or deeds of trust on single-family (one to four

                  units) residences, multifamily residences or commercial

                  properties) and (b) non-conforming mortgage loans; and



         (iii)    short-term investments, including short-term bank certificates

                  of deposit, short-term U.S. Treasury securities, short-term

                  U.S. government agency securities, commercial paper,

                  repurchase agreements, short-term CMOs, short-term

                  asset-backed securities and other similar types of short-term

                  investment instruments, all of which will have maturities or

                  average lives of less than one year.



         1.24 "Net Income" means for any period the taxable income of the

Company and its subsidiaries (including net capital gains, if any, but excluding

net capital losses, if any) before deducting (i) the Incentive Management

Compensation, (ii) any net operating loss deductions arising from losses in

prior periods and (iii) any items which the Code permits to be deducted when

calculating taxable income for a REIT.



         1.25 "Quarterly Incentive Amount" has the meaning set forth in Section

6.2.1(1) of this Agreement.



         1.26 "Reconciliation Notice" has the meaning set forth in Section 6.3

of this Agreement.



         1.27 "REIT" means a "real estate investment trust" as defined under the

Code.



         1.28 "REIT Provisions of the Code" means Sections 856 through 860 of

the Code.



         1.29 "Remaining Amount" has the meaning set forth in Section 6.2.1(2)

of this Agreement.









         1.30 "Short-Term Investments" means short-term bank certificates of

deposit, short-term U.S. Treasury securities, short-term U.S. government agency

securities, commercial paper, repurchase agreements, short-term CMOs, short-term

asset-backed securities and other similar types of short-term investment

instruments, all of which will have maturities or average lives of less than one

year.





                                      -4-





         1.31 "Sub-Advisor" means any third party (other than the Advisor) which

has been selected by the Advisor and approved by the Board of Directors to

manage all or a portion of the day-to-day operations of the Company and perform

the services and other activities described in Section 2.1 of this Agreement.

Any approval of a Sub-Advisor by the Board of Directors may be conditioned or

limited in any manner determined by the Board of Directors, including, without

limitation, the terms and conditions of any such agreement with a Sub-Advisor.







         1.32 "Ten-Year U.S. Treasury Rate" means for any period the average of

the weekly average yields to maturity for actively traded current coupon U.S.

Treasury fixed interest rate securities (adjusted to a constant maturity of ten

years) published by the Federal Reserve Board for each week during such period,

or, if such rate is not published by the Federal Reserve Board, any Federal

Reserve Bank or agency or department of the federal government selected by the

Company. If the Company determines in good faith that the Ten-Year U.S. Treasury

Rate cannot be calculated as provided above, then the rate shall be the

arithmetic average of the per annum average yields to maturities, based upon

closing asked prices on each business day during such period, for each actively

traded marketable U.S. Treasury fixed interest rate security with a final

maturity date not less than eight nor more than 12 years from the date of the

closing asked prices as chosen and quoted for each business day in each such

period in New York City by at least three recognized dealers in U.S. government

securities selected by the Company.







         1.33 "Threshold Return" has the meaning set forth in Section 6.2.3 of

this Agreement.







         1.34 "Tiered Percentage" has the meaning set forth in Section 6.2.2 of

this Agreement.







         1.35 "Total Operating Expenses" means the aggregate expenses of every

character paid or incurred by the Company as determined under GAAP, including

the Advisor's fees, but excluding (i) the expenses or raising capital such as

organization and offering expenses, legal audit, accounting underwriting,

brokerage, listing registration and other fees, printing and other such

expenses, and tax incurred in connection with the issuance, distribution,

transfer, registration, and stock exchange listing of the Company's shares; (ii)

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