LOAN AND SECURITY AGREEMENT



      This LOAN AND SECURITY AGREEMENT (the "Agreement" or "Loan Agreement") is

made the 1st day of October, 2002 by and between RAIT PARTNERSHIP, L.P., a

limited partnership organized and existing under the laws of the State of

Delaware (the "Borrower") and COMMERCE BANK, N.A., a national banking

association (the "Bank" or the "Lender").



                                   Background



      Bank has agreed to make available to Borrower, subject to the terms and

provisions hereof, a certain Line of Credit, as more fully hereinafter

described.



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

forth herein, and for other good and valuable consideration, the receipt and

sufficiency of which are hereby mutually acknowledged, the parties hereto,

intending to be legally bound hereby, agree as follows:



      SECTION 1. DEFINITIONS, CERTAIN RULES OF CONSTRUCTION



            1.1. Defined Terms. Each initially capitalized term used herein

shall have the meaning set forth in the recitals hereto, in this Section or as

otherwise set forth herein, for the purposes hereof and for each of the Loan

Documents. All initially-capitalized terms not otherwise defined herein shall

have the meanings ascribed to them in the Uniform Commercial Code as enacted in

the Commonwealth of Pennsylvania from time to time (the "UCC").



            "Accounts" means all of the "accounts" (as that term is defined in

the UCC) of Borrower, whether now existing or hereafter arising.



            "Advance" means monies advanced or credit extended to Borrower by

Bank under the Line of Credit and shall include each A Advance and each B

Advance.



            "A Advance" means with respect to each Real Property, the amount of

the Advance which is not in excess of the amount necessary in order for the

Borrower to meet the Debt Service Coverage Ratio for such Real Property as

provided in Section 2.1.2 (d) hereof.



            "B Advance" means with respect to each Real Property, the amount of

the Advance in excess of the A Advance.



            "Affiliate" means and refers to, as applied to any Person, any other

Person directly or indirectly controlling, or through one or more Persons

controlled by, controlling or in common control with that Person.



            "Agreement" or "Loan Agreement" means this Loan and Security

Agreement, and all amendments, modifications and restatements hereof.

{PAGE}

            "Bankruptcy Code" means Title 11 of the United States Code as now or

hereafter in effect, or any successor statute.



            "Bank's Costs" means all reasonable costs and expenses of any kind

paid or incurred by Bank in connection with the preparation, execution,

delivery, amendment, modification, restatement, administration or termination of

this Loan Agreement or any other Loan Document, any amendments thereto, any

transaction contemplated herein or in any existing or future related agreements

and the preservation, enforcement, defense and protection of Bank's rights,

remedies, obligations and liabilities in any manner concerning this Loan

Agreement or any other Loan Document, any transaction contemplated herein or any

existing or future related agreements, including but not limited to: (a)

reasonable expenditures of every nature and kind of Borrower, paid or incurred

by Bank pursuant to the provisions of this Loan Agreement; (b) filing,

recording, publication, appraisal, monitoring, and search costs related to the

Collateral, including, but not limited to, costs paid to perfect, maintain

perfected and preserve the existence and priority of Liens on the Collateral;

(c) after the occurrence of an Event of Default, all Bank's reasonable internal

and external administrative costs and costs incurred in collecting and gaining

possession of, maintaining, handling, preserving, storing, shipping, selling,

preparing for sale and advertising to sell the Collateral, including but not

limited to taxes, levies and insurance; (d) all reasonable attorneys' fees and

other fees and expenses paid or incurred by Bank in enforcing, obtaining legal

advice in preparing, reviewing, consummating, amending, restructuring,

extending, terminating, defending, or preserving or protecting Bank's rights,

remedies, obligations or liabilities in any manner concerning, this Loan

Agreement or any of the other Loan Documents, any transaction contemplated

herein or any existing or future related agreements; (e) any reasonable

attorneys' fees and other reasonable fees and expenses incurred by Bank in

connection with any bankruptcy or insolvency proceeding filed by or against

Borrower whether such attorneys' fees, other fees or expenses, incurred in the

sole discretion of Bank, are related to the review, determination, protection,

monitoring (including attendance at meetings or hearings) or enforcement by Bank

of the Obligations, including, but not limited to, the preparation and filing of

any proof of claim and without regard to whether Bank files, responds, or is a

party to any application, motion, or other proceeding; and (f) wire transfer

charges in such amounts as Bank may from time to time establish for such

service.



            "Business Day" means any day other than a Saturday, Sunday or day on

which banking institutions in Pennsylvania are authorized by law or regulation

to close.



            "Capital Lease" means any lease of property (real, personal or

mixed) which, in conformity with GAAP, is or should be accounted for as a

capital lease on the balance sheet of a Person.



            "Capital Lease Obligations" means the aggregate amount of a Person's

obligations under all of such Person's Capital Leases.



            "Capital Stock" means any and all shares, interests, participations

or other equivalents (however designated) of capital stock of a corporation, any

and all other ownership interests in a Person (other than a corporation) and any

and all warrants or options to purchase any of the foregoing.

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