<PAGE>
 
                             ARTICLES OF AMENDMENT
                                       TO
                     ARTICLES OF AMENDMENT AND RESTATEMENT
                                       OF
                           ARTICLES OF INCORPORATION
                                       OF
                   CHARLES E. SMITH RESIDENTIAL REALTY, INC.



     Charles E. Smith Residential Realty, Inc., a Maryland corporation (the
"Corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland pursuant to Section 2-607(2) of the Annotated Code of
Maryland (the "Code")  and Section 9(a)(6) of the Corporation's Articles of
Amendment and Restatement of Articles of Incorporation (the "Articles") that:

     FIRST:    Article VI, Section 6(a) of the Articles provides that the total
number of shares of capital stock of all classes which the Corporation has the
authority to issue is 145,000,000 shares each with a par value of $.01,
classified as (i) 95,000,000 shares of Common Stock, (ii) 45,000 shares of
Excess Common Stock, and (iii) 5,000,000 unclassified shares.

     SECOND:   To date, the Corporation has issued and sold approximately 17.5
million shares of Common Stock and an aggregate of 3,857,491 shares of Preferred
Stock in three separate series designated and classified as follows: (i)
2,640,325 Series A Cumulative Convertible Redeemable Preferred Shares, par value
$.01 per share; (ii) 1,216,666 Series B Cumulative Convertible Redeemable
Preferred Shares, par value $0.1 per share; and (iii) 500 Series C Cumulative
Convertible Preferred Shares, par value $.01 per share.

     THIRD:    Pursuant to Article VI, Section 6(a) of the Articles, the Board
of Directors of the Corporation is empowered to classify and reclassify any
unissued shares of capital stock.

     FOURTH:   On January 27, 1998, the Board of Directors deemed it to be in
the best interests of the Corporation and its shareholders to increase the
flexibility of the Corporation to support future offerings of preferred stock by
increasing the current number of shares of preferred stock of the Corporation.

     FIFTH:    Pursuant to authority granted by Article VI, Section 6(a) and as
previously supplemented, a majority of the entire Board of Directors on January
27, 1998 adopted a resolution reclassifying 15,000,000 authorized but unissued
shares of Common Stock of the Corporation as Preferred Stock, with the
preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends, qualifications or terms and conditions of
redemption, and other characteristics to be determined only at the time of
issuance and sale of such Preferred Stock by the adoption of appropriate
Articles Supplementary by the Board of Directors pursuant to Section 2-208 of
the Code, such Articles Supplementary to be in such form as the officers of the
Corporation may deem necessary or advisable.

                                      E-1
<PAGE>
 
     SIXTH:    The first two sentences of Section 6(a) of the Articles are
hereby amended and restated in their entirety as follows:

               "The total number of shares of capital stock of all three classes
         which the Corporation has authority to issue is 145,000,000 shares (par
         value $.01 per share), of which (i) 80,000,000 shares are classified as
         common stock having a par value of $.01 per share (the "Common Stock"),
         amounting to an aggregate par value of $800,000, (ii) 45,000,000 shares
         are classified as excess stock having a par value of $.01 per share
         (the "Excess Stock"), amounting to an aggregate par value of $450,000
         and (iii) 18,857,491 shares are classified as preferred stock having a
         par value of $.01 per share (the "Preferred Stock", amounting to an
         aggregate par value of $188,575. The remaining 1,142,509 shares are not
         classified."

  SEVENTH:  No stock entitled to be voted on relating to the reclassification of
Common Stock pursuant to these Articles of Amendment was outstanding or
subscribed for at the time of approval of such reclassification by the Board of
Directors of the Corporation.

                      [Page Break Intentionally Inserted]
<PAGE>
 
  IN WITNESS WHEREOF, the Corporation has caused these Articles of Amendment to
the Articles of Amendment and Restatement of Articles of Incorporation of the
Corporation to be duly executed by its President and attested by its Secretary
this 23th day of December, 1998.


                         CHARLES E. SMITH 
                         RESIDENTIAL REALTY, INC. 



                         By:     /s/ Ernest. A. Gerardi, Jr.
                                --------------------------------
                         Name:  Ernest A. Gerardi, Jr. 
                         Title: President


  I, Robert D. Zimet, Secretary, hereby acknowledge on behalf of Charles E.
Smith Residential Realty, Inc. that the foregoing Articles of Amendment to the
Articles of Amendment and Restatement of Articles of Incorporation of the
Corporation are the corporate act of said corporation under the penalties of
perjury.

Attest:


/s/ Robert D. Zimet
-------------------
Robert D. Zimet
Secretary