February 10, 1998

Mr. William M. Hammond
1225 Bent Creek Dr.
Southlake, TX  76092

Dear Bill:

     In light of various changes in the operations of Gables  Residential  Trust
(the "Company"),  the Company accepts your resignation effective March 27, 1998.
Based on our  review  of the facts  surrounding  your  resignation,  it has been
determined  that the  Company  will  provide  you with  the  separation  package
described below. In return for your agreements contained herein,  including your
release of certain claims as described below, and subject to your performance of
your  obligations  under this agreement,  the Company agrees,  upon execution of
this letter to the following:

(1)  The Company will pay you Two Hundred  Thirty  Thousand  and No/100  Dollars
     ($230,000.00),  in one lump sum, which amount represents your 1997 bonus as
     well as  severance.  Such  payment  will be made to you  prior to March 27,
     1998. The Company will withhold applicable deductions for state and federal
     taxes from this payment.

(2)  The Company will  continue  your car  allowance at the current rate through
     March 27, 1998.

(3)  The Company will continue to make  contributions to your 401(k) plan at the
     current rate through March 27, 1998.

(4)  The Company will  continue to provide you all benefits at the current level
     through March 27, 1998.  Subsequent to March 27, 1998, you will be eligible
     to continue to participate  in the Company's  group health plan pursuant to
     COBRA. Such COBRA premiums,  to the extent you choose to participate,  will
     be your financial responsibility.

(5)  All stock options  issued to you that have not already  vested by March 27,
     1998 will become  vested on March 27,  1998,  with the  exception  of 1,700
     unvested  stock  grants  received in 1997 that will  expire.  You will have
     until January 1, 2000 to exercise the following stock options:
<PAGE>
                                     Page-2

    -     13,332 incentive share options dated January 26, 1994 at the  exercise
          price of $22.50.

     -    20,334  non-qualified  stock  options  dated  January  26, 1994 at the
          exercise price of $22.50. (You were originally granted 33,668 options,
          and exercised 13,334 in 1997).

     -    3,334 non-qualified stock options dated May 16, 1995 at the exercise
          price of $20.375. (You were originally granted 10,000 options, and
          exercised 6,666 in 1997).

(6)  The Company  agrees to sell you the office  furniture in your office for an
     amount to be agreed  upon  between  you and the  Company.  In the event you
     elect to purchase such furniture,  you agree that the Company is authorized
     to set off such amount against payments due you pursuant to this agreement.

(7)  The  Company  agrees to release  you from the terms of the  non-competition
     provision  set forth in Section 9 of the  Employment  Agreement you entered
     into with the Company on January 1, 1997, with the following exceptions:

          For a period of one year,  beginning  March 27, 1998 through March 27,
          1999, you agree not to solicitant the  following:

               Gables' personnel,
               Gables' current third party fee clients,  and
               Gables' Corporate Housing client base.

     However,  the partial  release of the  non-competition  provision in no way
     releases you from your confidentiality obligations as set forth below.

(8)  The  Company  agrees to  reimburse  you for your  reasonable  out-of-pocket
     expenses  associated  with your  continued  work on  behalf of the  Company
     through March 27, 1998.
<PAGE>
                                     Page-3


(9)  The Company  agrees  that  should you be sued in your  capacity as a former
     senior  vice  president  for the  Company,  that  you will be  entitled  to
     coverage under the Director's and Officer's errors and omissions  insurance
     to the extent  applicable  and the Company  agrees to indemnify you for all
     reasonable expenses incurred and any judgments against you in your capacity
     as a  former  director/officer  to the  extent  that  the  Company,  in its
     discretion,  determines  that your actions as a senior vice  president were
     proper.

     In  consideration  for the  Company's  agreement  to  provide  you with the
benefits set forth in provisions (1) through (9) above, which you acknowledge to
be good and valid consideration, you voluntarily and knowingly agree as follows:

          (a)  You agree to cooperate with the Company in the  transitioning  of
               your duties and  responsibilities.  Beginning  February 27, 1998,
               you agree that your  property  management  responsibilities  will
               transition  to John Rippel who will  assume the direct  reporting
               responsibility  for Vice Presidents  Cathy Cabell and Marty Page.
               Your Corporate Accommodations responsibilities will transition to
               Dennis   Rainosek   who  will   assume   the   direct   reporting
               responsibility for Pam Wade, Sandra Barfield,  Carol Cadriel, and
               Lisa  Waters.  You  further  agree that you will  continue  to be
               available  for work and  consultation  through March 27, 1998 and
               agree to continue to assist in the complete transitioning of your
               duties and responsibilities within the Company.

          (b)  You further  agree to cooperate  with the Company  subsequent  to
               March 27, 1998 with respect to any ongoing  projects  that remain
               uncompleted at the time of your  departure.  You further agree to
               cooperate with,  assist,  and provide testimony at the request of
               the Company or its attorneys in any  currently  pending or future
               litigation involving the Company.
<PAGE>
                                     Page-4


          (c)  For all times  hereafter,  you agree to protect and  preserve the
               confidentiality of and safeguard the Company's proprietary and/or
               confidential  information and to not use, directly or indirectly,
               for your  benefit or for the benefit of  another,  or disclose to
               another,  any of the Company's  proprietary  and/or  confidential
               information  unless  disclosures that are deemed  confidential to
               the Company  are  required by or pursuant to a court order or the
               demands  of  a  public  agency.   Confidential  information  will
               include, without limitation, information concerning the Company's
               financial  affairs,  strategic  plans  and  objectives,  business
               plans,  proprietary  statistics,  reports,  pricing  information,
               customer  data  and  contracts  except  to the  extent  that  the
               information is available to the public.

          (d)  Prior to March 27, 1998,  you agree to deliver to the Company all
               documents  embodying  any of  the  Company's  proprietary  and/or
               confidential information.

          (e)  Prior to March 27, 1998,  you agree to deliver to the Company all
               property owned by the Company and in your possession.

     As further  consideration  for the Company's  obligations set forth herein,
you  voluntarily  and knowingly,  fully and  completely and forever  release the
Company and its current or former directors, officers, stockholders,  employees,
agents,  attorneys and affiliates from any and all claims, actions,  demands and
causes of action of whatever  kind or  character,  whether now known or unknown,
that you may  have or that you may  claim to have  against  the  Company  or its
current  or  former  directors,  officers,   stockholders,   employees,  agents,
attorneys or affiliates  that are in any way connected with your employment with
the Company, your resignation from your position with the Company, or otherwise,
including without limitation any contractual claims of employment or tort claims
you may have or that you may claim to have, wrongful discharge or discrimination
in employment on the basis of race, color, sex, national origin,  religion,  age
under the Age  Discrimination in Employment Act and related laws prohibiting age
discrimination,  or  disability,  if any, you may have,  and attorneys  fees and
costs,  if any, and any and all acts or failure to act in  contravention  of the
<PAGE>
                                     Page-5


Constitution,  statutes or regulations of the United States or the  constitution
or regulations of any state or local  government  including,  but not limited to
state or federal securities laws, claims of fraud, breach of fiduciary duty, the
Texas Deceptive Trade Practices Act (or any similar act in any other state),  or
the Racketeer  Influenced and Corrupt  Organizations  Act occurring on or before
the effective date of this agreement and release.

     In  addition,  you  covenant  and agree to keep the terms,  conditions  and
circumstances  of your  resignation  from the  Company,  including  this letter,
confidential  and to not aid, abet,  assist or render  assistance in any form to
any  person or entity  pursuing,  or that may in the  future  pursue,  any claim
against the Company or its directors, officers, stockholders, employees, agents,
attorneys or affiliates of any nature unless required to do by law.

     This letter is  intended  by you and the Company to be a legally  valid and
binding  agreement,  to be construed in accordance with the laws of the State of
Texas.  You and we agree that this letter is not to be construed as an admission
of liability by the Company in any respect, and the Company expressly denies any
liability  to you  whatsoever.  You and we  agree  that  any  legal  proceedings
instituted  hereunder shall be conducted and litigated in the State of Texas and
the parties hereto consent to the jurisdiction and venue in the courts of Dallas
County,  Texas.  Nothing  herein shall in any way limit or abridge the Company's
right to seek injunctive or similar  equitable relief for the enforcement of its
rights  hereunder.  This letter sets forth the entire agreement  between you and
the  Company and its  directors,  officers,  employees,  agents,  attorneys  and
representatives  relating to the separation of your  employment from the Company
and fully supersedes any and all prior agreements or understandings  between the
parties hereto,  including the January 1, 1997 Employment  Agreement executed by
you and the Company, pertaining to the subject matter hereof.

                                                Very truly yours,
                                                Gables Residential Trust


                                        By:  /s/ John Rippel
                                             ------------------------------
                                                John Rippel
                                                President and COO


     The law requires that you be advised and you are hereby  advised to consult
with an attorney prior to executing  this  agreement and release.  If you accept
the terms of this  agreement and release,  it must be signed by you and returned
to Mary  Cheddie  on or before  twenty-one  (21) days from your  receipt of this
agreement and release.  After the execution of this  agreement and release,  you
have a period of seven  (7) days in which  you may  revoke  this  agreement  and
release.  Notification  of revocation  should be in writing and returned to Mary
Cheddie.  The  effective  date of this  agreement  and release is eight (8) days
after you execute this agreement and release.

     I have read and  understood the forgoing  agreement and release,  have been
advised to and have had the  opportunity  to  discuss  it with  anyone I desire,
including an attorney of my own choice, agree to its terms,  acknowledge receipt
of a copy of same, and the sufficiency of the payments recited therein, and sign
this agreement and release voluntarily.


                                        By:  /s/  William M. Hammond
                                             ---------------------------
                                        Dated: 2/16/98
                                             ---------------------------