SEPARATION AGREEMENT AND GENERAL RELEASE


          THIS  AGREEMENT is made and entered by and between David C.  Dressler,
Jr. ("Employee") and Homestead Village Incorporated (together with is directors,
officers,   shareholders  and  other   affiliates,   collectively   referred  to
hereinafter as "Employer").
         WHEREAS, Employee has been employed by the Employer; and
         WHEREAS,  the  parties  have  engaged in  discussions  resulting  in an
amicable and mutually satisfactory  separation of Employee's employment with the
Employer.
         NOW,  THEREFORE,  in consideration of the mutual covenants and promises
set forth below, the parties hereby agree as follows:
         1.  Employer  and  Employee  hereby  mutually  agree that  because of a
reorganization  of the  management  of Employer,  there shall be a separation of
Employee's employment from Employer. The effective date of Employee's separation
of  employment  with  Employer  shall be the close of business on March 31, 2000
(the  "Separation  Date").  As  part of  Employee's  separation  of  employment,
Employee  shall  resign as an  officer  of  Employer  and all  subsidiaries  and
affiliates of Employer as of the Separation Date.
         2. Employer shall pay Employee all unpaid salary through the Separation
Date and his pro rata  target  bonus for 2000  through  the  Separation  Date or
$87,500,  which amount shall be paid on the Separation Date. Employer shall also
pay Employee the aggregate amount of $875,000 (the "Separation  Amount"),  which
shall be paid in fifteen  equal amounts of $58,333 on the last day of each month
commencing  April 30, 2000 and ending June 30, 2001, less applicable  deductions
for state and federal taxes on such amounts.
         3. Employer also agrees to pay Employee, as of the Separation Date, all
amounts due  Employee  for accrued and unused  vacation  through the  Separation
Date.
         4.  Employer  shall  extend to Employee  the right to  continue  health
insurance  for up to twelve (12)  months,  as may be required by and pursuant to
the terms and conditions of the Consolidated  Omnibus Budget  Reconciliation Act
of 1986  ("COBRA").  Employer  will provide  coverage to Employee at  Employer's
expense to the extent of any COBRA premium for the first twelve months. Employee
shall pay the COBRA premium and other  expense of such health  insurance for any
remaining period of coverage.
         5. Employer shall  maintain  Employee's  telephone  voice mailbox until
June 30,  2000.  Employer  shall  deliver to Employee  the  equipment  listed on
Exhibit A without additional consideration.
         6.  Employee  shall  repay  all  loans  from  Security   Capital  Group
Incorporated ("Security Capital") on or before the Separation Date.
         7.  Employee's  continuous  service  under  Employer's  401(k) plan and
Employer's  Non-Qualified  Savings Plan shall cease as of the  Separation  Date.
Within four (4) to six (6) weeks of Employee's  written  request and pursuant to
the terms of the 401(k) plan,  Employee shall be entitled to a  distribution  of
all the  contributions  to  Employee's  401(k)  account made by  Employee,  plus
earnings thereon, plus Employer matching  contributions to the extent vested, or
a  transfer  of  such  amounts  to  another  plan  at  Employee's  request.  All
distributions  will be net of applicable  withholding taxes, if any. Pursuant to
the  terms  of the  Employer's  Non-Qualified  Savings  Plan  and  any  deferral
elections made by Employee under the Non-Qualified  Savings Plan, Employee shall
be entitled  to a  distribution  of all  deferrals  made by  Employee  under the
Non-Qualified  Savings Plan,  plus  earnings  thereon,  plus  Employer  matching
contributions to the extent vested.  All distributions will be net of applicable
withholding  taxes.  Any options  granted  Employee under any  Employer's  stock
option  plans or under any Security  Capital  stock option plans shall expire on
the ninetieth day after the Separation Date.
         8. At the election of Employee, Employer shall pay for professional tax
and legal  services  provided to Employee for a review of this Agreement and the
consulting  agreements referred to below, provided that the cost of such tax and
legal  services  shall not exceed  $10,000 and Employer shall not be responsible
for any such fees and expenses incurred by Employee after March 31, 2000.
         9.  Employee and Employer  shall  execute a Consulting  Agreement to be
effective as of April 1, 2000 (the "Homestead Consulting Agreement") in the form
attached as Exhibit B.

<PAGE>

         10. In  consideration  of the  promises  contained  in this  Agreement,
Employee and Employer hereby mutually agree to do the following:
                  a. Except for a claim  based upon a breach of this  Agreement,
         the Homestead  Consulting Agreement and the loans from Security Capital
         (to the  extent  they  have not been  repaid by the  Separation  Date),
         Employee and Employer  hereby  release and forever  discharge the other
         (including,  in the  case  of  Employer,  its  related  and  affiliated
         entities,  and  each  of  their  officers,   directors,   shareholders,
         representatives, agents, employees and insurers (Employee, Employer and
         said related parties are hereinafter collectively and individually "the
         Releasees")) from any and all rights,  claims,  demands,  debts,  dues,
         sums of  money,  accounts,  attorneys'  fees,  complaints,  judgements,
         executions,  actions  and  causes of action of any  nature  whatsoever,
         cognizable at law or equity, which Employee and Employer have or claim,
         or might  hereafter  have or claim against the Releasees  based upon or
         arising out of any matter or thing  whatsoever,  from the  beginning of
         the world through the date of this Agreement, including but not limited
         to any rights, claims,  complaints or actions or causes of action which
         were or could have been asserted by Employee or Employer arising out of
         or related to  Employee's  employment  by the  Employer  or  Employee's
         resignation  therefrom,  the  purchase  (or  sale to  Employer)  of any
         Employer  securities or Security  Capital  securities  by Employee,  or
         under  any  local,  state,  or  federal  law  dealing  with  employment
         discrimination  including,  without limitation,  Title VII of the Civil
         Rights Act of 1964,  the Age  Discrimination  in  Employment  Act,  the
         Americans with Disabilities Act, and the Workers Adjustment, Retraining
         and Notification Act.  Notwithstanding  the foregoing,  no such release
         shall be applicable to any existing  indemnity rights of Employee as an
         officer or employee of Employer through the Separation Date,  including
         those under Employer's  Amended Articles of  Incorporation,  Employer's
         Bylaws,  any  Indemnification  Agreements entered into between Employer
         and Employee or between  Security  Capital and Employee,  any insurance
         rights  in favor of  Employee  including  the  Directors  and  Officers
         Liability  Policy of Employer  dated  November 1, 1998,  with  Reliance
         National, or any rights to exercise options which have vested as of the
         Separation Date and granted under any stock option plans of Employer or
         Security Capital.
                  b.  Employee  shall  promptly  submit to  Employer  an expense
         account report accounting for all business expenses charged by Employee
         to Employer  and all  advances  received,  and repay  Employer  for all
         advances  and all  non-business  related  items  charged by Employee to
         Employer,  if any.  Employee  hereby  agrees  that  such  advances  and
         non-business  related  expenses  may,  at the  option of  Employer,  be
         deducted by Employer  from any of its  payments to Employee  under this
         Agreement.
          11. In  consideration  of the promises  contained  in this  Agreement,
Employee  agrees to each of the  following:  a. Except as may be required by the
lawful  order of a court or agency of  competent  jurisdiction,  or as expressly
permitted by the Homestead Consulting Agreement,  Employee agrees to keep secret
and confidential  indefinitely all non-public information concerning Employer or
any affiliate  thereof which was acquired by or disclosed to Employee during the
course of Employee's  employment with Employer or any affiliate thereof, and not
to disclose the same, either directly or indirectly,  to any other person,  firm
or business entity or to use it in any way. b. For a period of one (1) year from
the  Separation  Date,  Employee  covenants  and agrees that  Employee will not,
whether  for  Employee  or  for  any  other   person,   business,   partnership,
association,  firm,  company or  corporation,  initiate  contact with,  solicit,
divert or take away any of the  employees of Employer or any  affiliate  thereof
who are  employees  of  Employer  or any  affiliate  thereof at the time of such
initiation,  solicitation or diversion.
          12 Employee  agrees to  immediately  turn over to Employer  all notes,
offering  materials,  slide shows,  investment  summaries,  memoranda,  records,
documents and all other information,  no matter how produced or reproduced, kept
by Employee or in Employee's possession or control, used in or pertaining to the
business of Employer,  it being hereby  acknowledged  that all of said items are
the sole and exclusive  property of the Employer.
          13.  Except as may be required to the contrary by an order issued by a
court of competent jurisdiction and except for any communication with members of
Employee's  immediate family and any attorney or accountant  rendering advice to
Employee in connection  with this  Agreement,  Employee  shall not,  directly or
indirectly,  discuss or communicate the facts of this  Agreement,  or any of its
terms and provisions  with any third party.
          14. Employer agrees not to contest  Employee's  claim for unemployment
benefits.
          15. From and after the date of presentment of this Agreement,  neither
party shall,  directly or  indirectly,  take any action which is in fact,  or is
intended to be,  contrary to the  material  interests  of the other party or any
affiliate of the other party,  nor will either party disparage or make negative,
derogatory  or  defamatory  statements  about the other  party,  its related and
affiliated entities, its directors, officers, employees, shareholders, agents or
representative,  or any of them, to any other person or business entity,  except
as may be  required  by  legal  process  or court  order.
          16.  Nothing  in this  Agreement  shall  be  deemed  an  admission  of
wrongdoing or any kind of liability by either party.

<PAGE>

          17. In the event Employee  engages in a material  breach of any of the
terms or provisions of this  Agreement,  then Employer shall provide to Employee
written  notice of such  claimed  breach by Employee,  and  Employee  shall have
thirty (30) days from receipt of such written  notice from Employer to cease any
such conduct which Employer claims to be a material breach. If Employee fails to
cure such breach  within such  thirty  (30) day period,  then all of  Employee's
obligations  shall remain and shall be enforceable,  but Employer's  obligations
under this Agreement shall immediately terminate, including, without limitation,
all remaining monetary obligations of Employer to Employee which are outstanding
at the time of said breach. Similarly, Employee shall be relieved of any further
obligation under this Agreement if Employer  materially  breaches its convenants
in this  Agreement.
          18. This  Agreement  shall be binding upon and inure to the benefit of
both parties, their successor and assigns, and any affiliated or related entity,
as well as  Employee's  heirs,  assigns,  administrators,  executors  and  legal
representatives.
          19.  This  instrument  constitutes  the entire  Agreement  between the
parties with respect to the matters  covered by this  Agreement,  and may not be
modified or amended in any way except by a subsequent, written agreement between
the parties.
          20. If any  provision of this  Agreement  shall be  determined  by any
court of competent jurisdiction to be invalid, illegal or unenforceable in whole
or in part, and such  determination  shall become final, such provision shall be
deemed to be severed or limited,  but only to the extent  required to render the
remaining  provisions  of this  Agreement  enforceable.  This  Agreement as thus
amended  shall be enforced so as to give effect to the  intention of the parties
insofar as this is possible. In addition, the parties hereby expressly empower a
court of competent jurisdiction to modify any provision of this Agreement to the
extent  necessary to comply with  existing law and to enforce this  Agreement as
modified, provided, however, that no payments shall be due from Employer and all
payments  made by  Employer  shall be  refunded  by  Employee  if any portion of
paragraph 10 a. is invalidated, severed or limited.
          21. This Agreement  shall be construed in accordance  with the laws of
the State of Georgia.
          22.  The  language  used in this  Agreement  shall be deemed to be the
language  chosen by the parties to express their mutual  intent,  and no rule of
strict construction shall be applied against any person.
          23. This  Agreement  may be signed in multiple  counterparts,  each of
which shall be deemed to be an original for all purposes.
          24.  Employee  may revoke this  Agreement  within  twenty-one  days of
Employee's signing it. If Employee revokes this Agreement, Employee shall return
any benefits  Employee has received and all other  provisions of this  Agreement
shall not be effective or enforceable.  Revocation, along with a cashier's check
for any benefits  Employee may have received  hereunder,  should be delivered to
Employer's  offices at 2100 RiverEdge  Parkway,  Atlanta,  Georgia 30328,  Attn:
James Potts.  For such revocation to be effective,  the notice and the cashier's
check must be received no later than 5:00 p.m. on the twenty-first  calendar day
after Employee signs this Agreement.

          25. EMPLOYEE AFFIRMS THAT EMPLOYEE HAS BEEN GIVEN A PERIOD OF AT LEAST
TWENTY-EIGHT DAYS WITHIN WHICH TO CONSIDER THIS AGREEMENT, AND THAT EMPLOYEE HAS
CAREFULLY  READ AND  REVIEWED  ALL THE TERMS AND  CONDITIONS  CONTAINED  IN THIS
AGREEMENT AND FULLY  UNDERSTANDS  THIS  AGREEMENT TO BE A RELEASE OF ALL CLAIMS,
KNOWN OR  UNKNOWN,  PRESENT OR FUTURE,  THAT  EMPLOYEE  HAS OR MAY HAVE  AGAINST
EMPLOYER  ARISING OUT OF EMPLOYEE'S  EMPLOYMENT BY EMPLOYER OR ITS  TERMINATION.
EMPLOYEE ALSO AFFIRMS THAT EMPLOYEE HAS BEEN ADVISED TO CONSULT WITH AN ATTORNEY
PRIOR TO EXECUTING  THIS  AGREEMENT AND THAT  EMPLOYEE HAS, IN FACT,  BEEN GIVEN
FULL OPPORTUNITY TO REVIEW THIS AGREEMENT WITH COUNSEL,  AND THAT EMPLOYEE SIGNS
IT  VOLUNTARILY  OF HIS OWN  VOLITION,  WITHOUT  DURESS  OR  COERCION.  EMPLOYEE
REPRESENTS THAT EMPLOYEE IS SIGNING THIS AGREEMENT  BECAUSE OF THE  COMPENSATION
TO  BE  PAID  BY  EMPLOYER  UNDER  THIS  AGREEMENT   WHICH  EXCEEDS   SEPARATION
COMPENSATION GENERALLY AVAILABLE UNDER EMPLOYER'S POLICIES.


<PAGE>


         IN WITNESS  THEREOF,  the parties have executed  this  Agreement on the
date(s) set forth below.

                                              HOMESTEAD VILLAGE INCORPORATED


                                              By  C. Ronald Blankenship

                                      Title    Interim Chairman and CEO

                                      Date     2/28/00




                                               DAVID C. DRESSLER, JR.




                                      Date     3/3/00