Unsecured Promissory Note

PROMISSORY NOTE


$1,671,000 May 23, 1997
Cleveland, Ohio


FOR VALUE RECEIVED, the undersigned, JEFFREY I.
FRIEDMAN (the "Maker"), hereby promises to pay to the order of
ASSOCIATED ESTATES REALTY CORPORATION, an Ohio corporation
("Payee"), the principal amount of ONE MILLION SIX HUNDRED
SEVENTY ONE THOUSAND DOLLARS ($1,671,000), together with interest
on and from the date hereof until due, whether at stated
maturity, by acceleration or otherwise, upon the outstanding
balance of the principal amount hereof at a fluctuating rate of
interest equal at all times to the Libor Rate for a one month
Interest Period in effect from time to time, as such capitalized
terms are defined in the Second Amended and Restated Credit
Agreement, among Payee and National City Bank, as agent, and the
Banks, dated as of September 26, 1995, as amended from time to
time (the "Credit Agreement"). Both principal and interest are
payable in lawful money of the United States of America to Payee
at 5025 Swetland Court, Richmond Heights, Ohio 44143-1467, or at
such other address as Payee may designate in writing from time to
time to Maker, in immediately available funds.


Section 1. Terms of Payment. Except under those
circumstances hereinafter set forth providing for acceleration or
for the payment of interest after the same becomes due, the
principal of and interest on this Promissory Note are payable as
follows: (a) accrued and unpaid interest only on the outstanding
principal balance of this Promissory Note shall be paid quarterly
on the first day of each February, May, August and November,
commencing on August 1, 1997, until the principal balance hereof
is paid in full; and (b) the entire outstanding balance of the
principal hereof, together with all accrued and unpaid interest
thereon, shall be due and payable on the 1st day of May, 2002.
Any amount of principal or interest which is not paid when due,
whether at stated maturity, by acceleration or otherwise, or
within ten days thereafter, shall bear interest, payable on
demand, on and from the day when due at a fluctuating rate equal
at all times to the Default Rate, as such term is defined in the
Credit Agreement, until such amount is paid in full.


Section 2. O ...