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                                                                    EXHIBIT 10.2


                             DEMAND PROMISSORY NOTE


$6,532,5254.34                                                     July 30, 1998
                                                                   Dallas, Texas


         FOR VALUE RECEIVED, the undersigned, AMERICAN INDUSTRIAL PROPERTIES
REIT, a Texas real estate investment trust ("Maker"), hereby promises to pay to
the order of DEVELOPERS DIVERSIFIED REALTY CORPORATION, an Ohio corporation
("Payee"), the principal amount of SIX MILLION FIVE HUNDRED THRITY-TWO THOUSAND
FIVE HUNDRED TWENTY-FIVE DOLLARS AND 34/100 ($6,532,525.34), together with
interest upon the outstanding balance of the principal amount hereof at a rate
of interest of ten and one-quarter percent (10.25%) per annum. The principal of
and interest on this Demand Promissory Note are payable as follows: (a) accrued
and unpaid interest only on the outstanding principal balance of this Demand
Promissory Note shall be paid quarterly on the first day of each November,
February, May and August, commencing on November 1, 1998, 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 thirtieth calendar day following a demand by Payee.
Both principal and interest are payable in lawful money of the United States of
America to Payee at 34255 Chagrin Boulevard, Moreland Hills, Ohio 44022 or at
such other address as Payee may designate in writing from time to time to Maker,
in immediately available funds.

         Maker shall have the privilege of prepaying all or any part of the
amounts due under this Demand Promissory Note at any time and from time to time
without notice or any prepayment penalty. Any prepayment shall first be applied
to accrued but unpaid interest and thereafter applied to the unpaid principal
balance hereof.

         The invalidity or unenforceability of any term or provision of this
Demand Promissory Note, or the application of such term or provision to any
person or circumstance, shall not impair or affect the remainder of this Demand
Promissory Note and its application to other persons and circumstances and the
remaining terms and provisions hereof shall not be invalid, but shall remain in
full force and effect.

         This Demand Promissory Note shall be governed by and construed in
accordance with the laws of the State of Texas.

         This Demand Promissory Note has been executed at Dallas, Dallas County,
Texas, as of the date first above written.

                                       AMERICAN INDUSTRIAL PROPERTIES REIT,
                                       a Texas real estate investment trust


                                       By: /s/ Marc A. Simpson
                                           -------------------------------------
                                       Name: Marc A. Simpson
                                             -----------------------------------
                                       Title: Senior Vice President
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