<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                              --------------------
   
                                   FORM 10-K/A
                               AMENDMENT NUMBER 1
    

(Mark One)
  /X/         ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                 For the fiscal year ended December 31, 1996
                                       OR
  / /       TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

               For the transition period from ________ to ________

                         COMMISSION FILE NUMBER 1-13256

                             ----------------------

                       EVANS WITHYCOMBE RESIDENTIAL, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

            MARYLAND                                       86-0766008
 (State or other jurisdiction of                        (I.R.S. Employer
 incorporation or organization)                        Identification No.)

    6991 EAST CAMELBACK ROAD
       SCOTTSDALE, ARIZONA                                    85251
 (Address of Principal Executive                           (Zip Code)
            Offices)

       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:  (602) 840-1040

                            ------------------------

   
The undersigned registrant hereby amends the following items of its Annual
Report for the fiscal year ended December 31, 1996 on Form 10-K set forth in the
pages attached hereto.
    




<PAGE>

                       EVANS WITHYCOMBE RESIDENTIAL, INC.

                                TABLE OF CONTENTS

Item No.                                                              Page No.

          PART I

1.   Business  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     1
2.   Properties  . . . . . . . . . . . . . . . . . . . . . . . . . . . .     5
3.   Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . .     8
4.   Submission of Matters to Vote of Stockholders . . . . . . . . . . .     8

          PART II

5.   Market for the Registrant's Common Stock and Related Stockholder
          Matters  . . . . . . . . . . . . . . . . . . . . . . . . . . .     8
6.   Selected Financial Data . . . . . . . . . . . . . . . . . . . . . .    10
7.   Management's Discussion and Analysis of Financial Condition and
       Results of Operations . . . . . . . . . . . . . . . . . . . . . .    12
8.   Financial Statements and Supplementary Data . . . . . . . . . . . .    23
9.   Changes in and Disagreements with Accountants on Accounting and
       Financial Disclosure  . . . . . . . . . . . . . . . . . . . . . .    23

          PART III

10.  Directors and Executive Officers of the Registrant  . . . . . . . .    23
11.  Executive Compensation  . . . . . . . . . . . . . . . . . . . . . .    27
12.  Security Ownership of Certain Beneficial Owners and Management  . .    35
13.  Certain Relationships and Related Transactions  . . . . . . . . . .    37

          PART IV
   
14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K  .     38
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    41
    



<PAGE>

                                     PART I

ITEM 1. BUSINESS

GENERAL

   
Evans Withycombe Residential, Inc. was formed in August 1994 as a self-managed
and self-administered real estate investment trust to continue and expand the
multifamily apartment operations of Evans Withycombe.  Unless the context
otherwise requires, references to the "Company" shall include the Company's
predecessor, Evans Withycombe, Inc., and its affiliates, predecessors and
partners (collectively, "Evans Withycombe"), Evans Withycombe Residential, L.P.,
Evans Withycombe Finance Partnership, L.P., Evans Withycombe Finance, Inc. and
Evans Withycombe Management, Inc.  The Company is regionally focused in Arizona
and Southern California.
    

The Company's portfolio consists of stabilized communities and communities under
construction and in lease-up:

*    STABILIZED COMMUNITIES.  At December 31, 1996, the Company owned and
     managed 49 stabilized apartment communities (a property is considered
     stabilized when it reaches 93 percent occupancy) located in metro Phoenix,
     Arizona; metro Tucson, Arizona; and Riverside/San Bernardino, California.
     The stabilized portfolio increased 2,852 units or 25.8 percent from 11,053
     units at December 31, 1995 to 13,905 units at December 31, 1996.

*    COMMUNITIES UNDER CONSTRUCTION AND IN LEASE-UP.  At December 31, 1996, the
     Company owned five apartment communities under construction and in lease-up
     with a total of 1,078 apartments.  Three of these communities were new
     developments and two were expansions of existing communities owned by the
     Company.

COMPANY FORMATION

   
The Company was incorporated on May 24, 1994 to develop, acquire, own and manage
upscale multifamily apartment communities.  On August 17, 1994, the Company
completed an initial public offering (the "Initial Public Offering") and engaged
in various formation transactions designed to transfer ownership of the
communities and other assets of the predecessor company to Evans Withycombe
Residential, L. P. (the "Operating Partnership") or Evans Withycombe Finance
Partnership, L.P. (the "Financing Partnership").  The Company is the sole
general partner of and owned a 79.7 percent  interest in the Operating
Partnership at December 31, 1996.  The Operating Partnership owns 99 percent of
the Financing Partnership.  The remaining one percent interest in the Financing
Partnership is owned by Evans Withycombe Finance, Inc., a wholly owned
subsidiary of the Company.  The Company also holds a noncontrolling interest in
Evans Withycombe Management, Inc. (the "Management Company").


EVANS WITHYCOMBE
RESIDENTIAL, INC.
Evans Withycombe
Residential, L.P.
[Operating Partnership]
Evans Withycombe
Finance, Inc.
Evans Withycombe
Management, Inc.
[Management Company]
Evans Withycombe
Finance Partnership, L.P.
[Financing Partnership]
General partner
interest
1%
Limited partner
interest
78.7%
Limited partner
interest
20.3%
100%
common stock
1%
General partner interest
99%
Limited partner
interest
100% Non-voting common stock
1% Voting common stock
(99% of economic interest)
99% Voting common stock
(1% economic interest)
Current and former 
members of senior
management

    

The Company elected to be taxed as a real estate investment trust ("REIT") for
Federal income tax purposes.   A corporate REIT is a legal entity which holds
real estate interests and, through payments of dividends to shareholders, is
permitted to reduce or avoid the payment of federal income taxes at the
corporate level.  The Company was incorporated under the laws of the State of
Maryland in May 1994.  The Company's principal executive offices are located at
6991 East Camelback Road, Suite A-200, Scottsdale, Arizona  85251 and its
telephone number is (602) 840-1040.  To maintain the Company's qualifications as
a REIT while realizing income from its fee management and related service
business, the Company's management operations are conducted through the
Management Company pursuant to the terms of a management agreement.

COMPANY ADVANTAGES

The Company believes that the following factors have accounted for the Company's
success and will contribute to the Company's prospects for future growth:


                                        1
<PAGE>

*    REGIONAL FOCUS.  The Company has focused on becoming a major presence in
     each of its markets, allowing it to capitalize on its superior customer
     service, product design and property locations while establishing and
     maintaining a strong brand identity.  The Company seeks to operate in
     markets where population and employment growth rates are expected to exceed
     the national averages and where it believes it can become one of the
     regionally significant owners and managers of multifamily apartment
     properties.

          ARIZONA.  The Company's size and prominence in its primary Arizona
          markets provide it with a number of competitive advantages, including
          superior market knowledge resulting in choice site selection, superior
          employee training and retention, product differentiation, economies of
          scale in operations and the ability to utilize specialized marketing
          techniques.

          CALIFORNIA.  After conducting an extensive study of a number of
          potential markets within its region, the Company has determined that
          certain markets in Southern  California present significant
          opportunities for growth and attractive investment opportunities.  The
          Company has acquired 1,900 units in this market and believes that
          properties continue to be available for purchase in the  market at
          prices below replacement costs which could result in growth and
          attractive yields for the Company.

   
          On February 27, 1997, the Company acquired Canyon Ridge Apartments, a
          162 unit apartment community located in San Diego California for
          approximately $11 million.  The acquisition brings the total number of
          units owned by the Company in Southern California to 2,062 units.
    

   
          The Company has also entered into an agreement to acquire an
          additional apartment community containing 336 units in Corona Hills,
          California for approximately $23 million, of which $18.35 million will
          be represented by the assumption of debt and the remainder will be
          funded with proceeds from the Revolving Credit Facility.
    

   
*    PROPERTY LOCATIONS.  The Communities are located in growing sub-markets in
     Phoenix and Tucson, Arizona and Southern California.  The Communities are
     in sub-markets close to areas of employment, transportation and shopping,
     and in  master planned communities.
    

*    REPUTATION FOR QUALITY.  As a long-term investor, the Company develops and
     acquires its communities for long-term value.  The properties developed by
     the Company share an innovative design approach characterized by high-
     quality construction, architectural detail, attractive landscaping,
     extensive amenities and interior features.  Similarly, in seeking
     acquisition properties, the Company identifies properties which after
     refurbishment meet the same standards.  The Company's reputation for
     quality in its markets has led to success in obtaining development
     entitlements and brand name identification in its primary markets.

*    EXPERIENCED MANAGEMENT IN FULLY-INTEGRATED ORGANIZATION.  With an average
     of over 18 years in the multifamily apartment business, the Company's
     executive management team has extensive development, construction,
     acquisition, refurbishment, marketing and property management experience,
     and has gained in-depth knowledge of the multifamily apartment industry and
     the Company's markets.  Of the Stabilized Communities, the Company has
     developed 19 new properties and 9 expansions to existing properties
     consisting of 5,682 apartments.  It has acquired and refurbished 30
     properties consisting of 8,223 apartments.

*    WELL-TRAINED WORKFORCE.  The Company believes that employee training has
     been integral to its success.  The Company conducts numerous training
     sessions and prides itself on the quality and experience of its employees.
     The Company's size and concentration in its principal markets provide
     qualified employees with opportunities for advancement within the Company.
     The Company believes employee stability enhances operating efficiency and
     productivity.

*    SERVICE-ORIENTED PHILOSOPHY.  The Company will continue its tradition of
     focusing on extensive resident amenities and customer service designed to
     maintain high occupancy, premium rental rates and low resident turnover.
     By providing efficient service and soliciting customer feedback, the
     Company believes


                                        2
<PAGE>

     it maintains a high level of customer satisfaction which results in lower
     turnover and more frequent rental referrals by existing residents.
     Emphasizing product differentiation and customer service, the Company has
     created and continues to strengthen its brand image in its primary markets.

   
The Company's results of operations are subject to certain uncertainities, 
including, for example, population and employment growth rates and household 
formations, the availability of properties for purchase, the actual timing of 
the Company's planned acquisitions and developments, the strength of the local 
economies in the sub-markets in which the Company operates and the Company's 
ability to successfully manage its planned expansion into Southern 
California.  No assurance can be given that actual results will meet the 
Company's expectations and projections with respect to such 
uncertainties.
    

GROWTH STRATEGY

The Company's primary business objectives are to maximize the current return to
shareholders through increases in cash flow available for distribution per share
and to increase long-term total returns to shareholders through appreciation in
the value of the common shares.  The Company intends to grow by improving cash
flow from existing properties through intensive management, focusing on resident
satisfaction and retention, increasing rents and community occupancy levels and
controlling operating expenses.  The Company's strategy also includes growth
through development and acquisition of multifamily properties which will provide
both favorable initial returns and long-term growth prospects.

*    GROWTH FROM EXISTING PROPERTIES.  The Company believes that cash flow from
     existing properties will improve as supply and demand of apartment units
     stabilize in Tucson and certain Phoenix sub-markets, as the Southern
     California rental market continues to improve, and through the Company's
     property management programs. The property management team for each
     apartment community includes on-site management and maintenance personnel.
     The property management teams perform leasing and rent collection functions
     and coordinate resident services.  All personnel are extensively trained
     and are encouraged to continue their education through both Company-
     sponsored and outside training.  Property management personnel utilize
     state-of-the-art on-site computer management systems to assist in the
     timely leasing of vacant apartments, collection of rents, maintenance
     management and delivery of services to the apartment residents. In
     accordance with the REIT requirements of the Internal Revenue Code of 1986,
     as amended (the "Code"), certain of the services with respect to the
     communities are provided through independent contractors.

     The focus of the Company's on-site management program is on providing
     prompt, courteous and responsive service to its residents.  The Company
     believes that a strong resident retention program that emphasizes customer
     service reduces the Company's resident turnover rate and encourages
     residents to refer new customers.  The Company solicits resident feedback
     and responds to maintenance requests on a same day basis and provides 24
     hour a day emergency maintenance services.

     The Company conducts periodic capital and preventive maintenance programs
     at each Community.  In addition, periodic preventive maintenance checks are
     made in each apartment, pursuant to which appliances, heating and cooling
     systems and apartment interiors are inspected and serviced as necessary.
     The Company believes that these programs lower operating costs over the
     life of the Communities, increase the long-term value and maintain the
     market position of the Communities.

   
*    DEVELOPMENT STRATEGY.  The Company seeks to develop properties in markets
     where it discerns a strong demand, which the Company anticipates will
     enable it to achieve attractive rates of return.  Communities currently
     under construction as listed under development and construction activity on
     page 7 and the number of communities stabilized since the Initial Public
     Offering that are included in Item 2 Properties on page 6 are specific
     examples of the Company's implementation of its growth strategy through
     development.
    

     The Company develops its communities in markets where resident profiles
     justify the development of high quality apartments offering extensive
     resident amenities and services.  In evaluating whether to develop an
     apartment community in a particular location, the Company analyzes relevant
     demographic, economic and financial data.  Specifically, the Company
     considers the following factors, among others, in


                                        3
<PAGE>

     determining the viability of a potential new apartment community:  (i)
     income levels and employment growth trends in the relevant market, (ii)
     uniqueness of location, (iii) household growth and net migration of the
     relevant market's population, (iv) supply/demand ratio, competitive housing
     alternatives, sub-market occupancy and rent levels and (v) barriers to
     entry that would limit competition.  The Company currently intends to
     develop apartment communities in select sub-markets in the Phoenix area and
     intends to develop communities in its California markets when market
     conditions warrant.  Based on current market conditions and until such time
     as market conditions warrant, the Company intends to discontinue
     development in its Tucson market upon completion and stabilization of the
     current two projects.

*    ACQUISITION STRATEGY.  The Company believes that it is well positioned to
     take advantage of market timing opportunities in certain Southern
     California markets, which will permit it to acquire existing apartment
     properties at favorable prices.  The Company focuses on properties with
     below market occupancies and rents, so that it can benefit both from
     property repositioning and market improvements.  The target acquisition
     properties will often be under-managed, but fundamentally sound properties.
     Improvements to landscaping, recreational amenities, and apartment
     interiors, coupled with more effective management and marketing, may result
     in significant revenue increases over revenue levels at the time of
     acquisition.  Such repositioning may require substantial expenditures for
     capital improvements, refurbishments and marketing.

     The Company believes that its status as a publicly traded REIT conducting
     business through the Operating Partnership enhances its ability to acquire
     properties or development sites by providing property sellers a means to
     defer federal income taxes on gains through the use of units of partnership
     interest in the Operating Partnership ("Units") as consideration for the
     acquisition.  Units were utilized in the acquisition of Acacia Creek in the
     first quarter of 1995 and The Ashton in the fourth quarter of 1995.  In
     addition, the Company's access to the capital markets provides for
     additional financing flexibility for acquisitions.

*    DISPOSITION STRATEGY:  The Company may, from time to time, elect to sell
     certain of its properties or exchange such properties for other properties
     in a tax-free exchange when it believes that such assets could be better
     deployed elsewhere.

*    THIRD PARTY FEE MANAGEMENT BUSINESS.  The Company succeeded to the third
     party property management activities of its predecessor. Although it
     contributes a small part of the Company's revenues, the Management Company
     continues to manage multifamily properties owned by third parties.  The fee
     management business is highly competitive and fragmented.  The Company's
     competitors include a variety of local, regional and national firms with no
     one firm controlling a significant market share in the Company's markets.
     The Company will take advantage of its reputation and experience as a
     property manager and accept property management assignments that it expects
     to be profitable and which fit well with the Company's property portfolio.

   
     Effective March 1, 1997, the Company entered into an agreement to manage
     four apartment communities located in Phoenix, Arizona containing
     approximately 570 units increasing the third party fee managed portfolio to
     nine apartment communities containing approximately 1,800 units.
    

The Company's growth strategies stated above include estimates and forward-
looking statements and prospects regarding, among other things, the stability of
occupancy and rent levels in the Company's markets and its ability to acquire
existing apartment communities at favorable prices.  This forward-looking
information involves risks and uncertainties that could significantly impact the
Company's ability to successfully implement these strategies.  Among the factors
that could cause actual results to differ materially from the forward-looking
statements above are: the timing of the Company's acquisitions and planned
development of new, and expansion of existing communities; the actual costs
associated with such acquisitions and developments; the demand for apartments in
its markets; the strength of the local economies; and the Company's ability to
successfully expand its operations into Southern California, a market in which
it did not have any operating experience prior to 1995.


                                        4
<PAGE>

COMPETITION

The Communities are located in areas that include other apartment communities
and that may include new apartment communities that are under construction.  The
number of competitive communities in a particular area could have an effect on
the Company's ability to lease apartments at the Communities or at any newly
developed or acquired properties and on the rents charged by the Company.  In
addition, other forms of housing, such as single family homes, townhomes and
condominiums provide alternatives to potential residents of high quality
apartment complexes like the Communities.

ENVIRONMENTAL MATTERS

Under various federal, state and local environmental laws, ordinances and
regulations, a current or previous owner or operator of real estate may be
required to investigate and clean up hazardous or toxic substances or petroleum
product releases at such property, and may be held liable to a governmental
entity or to third parties for property damage and for investigation and clean-
up costs incurred by such parties in connection with the contamination.

The Company believes that the Communities are in compliance in all material
respects with all federal, state and local laws, ordinances and regulations
regarding hazardous or toxic substances or petroleum products.  The Company has
not been notified by any governmental authority, and is not otherwise aware, of
any material noncompliance, liability or claim relating to hazardous or toxic
substances or petroleum products in connection with any of its present
properties.

EMPLOYEES

As of January 15, 1997, the Company, primarily through the Management Company,
employed 583 persons.  The Management Company and/or the Operating Partnership
employ substantially all of the professional employees that are currently
engaged in the residential property management, development, acquisition and
construction businesses of the Company.  The Company believes that its relations
with its employees are good.

REGULATION

Apartment communities are subject to various laws, ordinances and regulations,
including laws, ordinances and regulations related to fair housing, Americans
with disabilities and building safety.  The Company believes that each Community
has the necessary permits and approvals to operate its business and that each
Community is in material compliance with present laws, ordinances and
regulations.

SEASONALITY

The fall and winter months in the Company's Arizona markets generally experience
somewhat higher seasonal occupancies.

ITEM 2.  PROPERTIES

Stabilized Properties

The following sets forth certain information regarding the current Stabilized
Communities.  All of the Communities are owned 100 percent in fee by the
Company.  For a description of liens on certain of the Communities listed below,
see Schedule III - Real Estate Investments and Accumulated Depreciation on page
F-17.


                                        5
<PAGE>

<TABLE>
<CAPTION>

                                                                                                                           PHYSICAL
                                                                                                  AVERAGE    AVERAGE      OCCUPANCY
                                                                                 YEAR              UNIT      PHYSICAL       AS OF
                                                                               DEVELOPED           SIZE      OCCUPANCY     DECEMBER
                                              NUMBER OF        DEVELOPED/         OR              (SQUARE      DURING           31,
STABILIZED COMMUNITIES           CITY         APARTMENTS        ACQUIRED       ACQUIRED             FEET)     1996 (1)     1996 (1)
----------------------           ----         ---------        ---------       ---------          -------    ---------    ----------
<S>                              <C>          <C>              <C>             <C>                <C>        <C>          <C>
ARIZONA:
    PHOENIX:
Acacia Creek                   Scottsdale         508           Acquired           1995              910         97%         98%
Bayside at the Islands           Gilbert          272           Developed          1988              870         93%         94%
Country Brook (4)               Chandler          396            Acq/Dev      1991/1993/1996         961         93%         92%
Deer Creek Village               Phoenix          308           Acquired           1991              819         97%         92%
Gateway Villas                 Scottsdale         180           Developed          1995              998         96%         97%
Greenwood Village                 Tempe           270           Acquired           1993              884         96%         93%
Heritage Point                    Mesa            148           Acquired           1994              773         95%         91%
La Mariposa                       Mesa            222           Acquired           1990              928         95%         93%
La Valencia                       Mesa            361           Acquired           1990              950         92%         87%
Ladera                           Phoenix          248           Developed          1996            1,012         95%         98%
Little Cottonwoods                Tempe           379          Acq/Acq/Dev      1989/89/90         1,023         91%         85%
Los Arboles (2)                 Chandler          232           Developed          1985              851         95%         92%
Mirador                          Phoenix          316           Developed          1996              987         85%         94%
Miramonte                      Scottsdale         151           Developed          1983              782         98%         99%
Morningside                    Scottsdale         160           Acquired           1992            1,019         95%         99%
Mountain Park Ranch              Phoenix          240           Developed          1995              961         93%         93%
Park Meadow (4)                  Gilbert          224            Acq/Dev         1992/1996           880         96%         93%
Preserve at Squaw Peak           Phoenix          108           Acquired           1991              952         96%         90%
Promontory Pointe (3)            Phoenix          304           Acquired           1988              986         91%         83%
Rancho Murietta                   Tempe           292           Acquired           1995              866         97%         87%
Scottsdale Courtyards          Scottsdale         274           Developed          1993            1,044         97%        100%
Scottsdale Meadows             Scottsdale         168           Developed          1984              888         95%         99%
Shadow Brook                     Phoenix          224           Acquired           1993            1,010         97%         98%
Shores at Andersen Springs      Chandler          299           Developed        1989/1993           889         97%         97%
Silver Creek                     Phoenix          174           Acquired           1991              775         98%         97%
Sonoran                          Phoenix          429           Developed          1995              965         93%         89%
Sun Creek                       Glendale          175           Acquired           1993              762         98%         98%
Superstition Vista                Mesa            316           Acquired           1995              950         97%         96%
The Enclave                       Tempe           204           Developed          1995              952         97%        100%
The Heritage                     Phoenix          204           Developed          1995              973         93%         92%
The Ingleside                    Phoenix          120           Developed          1995              987         96%         94%
The Meadows                       Mesa            306           Acquired           1987              809         94%         92%
The Palms                        Phoenix          132           Developed          1990            1,026         93%         96%
The Pines                         Mesa            194           Acquired           1992              887         96%         94%
Towne Square (4)                Chandler          584            Acq/Dev      1992/1995/1996         960         92%         90%
Villa Encanto                    Phoenix          382           Developed          1983              810         99%         99%
Village at Lakewood              Phoenix          240           Developed          1988              857         94%         98%
                                                ------
                                                9,744
                                                ------
   TUCSON:
Harrison Park (3)                Tucson           172           Acquired         1991/1996           809         87%         85%
La Reserve                     Oro Valley         240           Developed          1988              900         91%         92%
Orange Grove Village (4)         Tucson           400            Acq/Dev         1991/1996           714         93%         87%
Suntree Village                Oro Valley         424           Acquired           1992              831         91%         93%
The Arboretum                    Tucson           496            Acq/Dev         1992/1995           886         93%         89%
The Legends                      Tucson           312           Developed          1995            1,041         94%         94%
Village at Tanque Verde          Tucson           217            Acq/Dev         1990/1995           694         90%         83%
                                              --------
                                                2,261
                                              --------
Total Arizona                                  12,005
CALIFORNIA:
The Ashton                    Corona Hills        492           Acquired           1995              850         94%         92%
Canyon Crest Views (5)          Riverside         178           Acquired           1996            1,193         97%          96%
Portofino (6)                  Chino Hills        176           Acquired           1996              873         99%         98%
Parkview Terrace (6)            Redlands          558           Acquired           1996              801         96%         95%
Redlands Lawn & Tennis (7)      Redlands          496           Acquired           1996              795         89%         89%
                                              --------                                            --------
Total California                                1,900
                                              --------
                                              --------
               Total                           13,905                                              44,343
                                              --------                                            --------
                                              --------                                            --------
               Weighted Average                   283                                                 905
                                              --------                                            --------
                                              --------                                            --------
</TABLE>


                                        6
<PAGE>

_________

(1)  Physical occupancy is defined as apartments occupied or leased (including
     models and employee apartments) divided by the total number of leasable
     apartments within the Community, expressed as a percentage.

(2)  The Company owns approximately a 10 percent interest in the joint venture
     that owns Los Arboles II, as well as two promissory notes with an
     outstanding balance of approximately $760,000, secured by subordinated
     liens on such property.  Los Arboles II contains 200 apartments, was
     developed in 1987, has an average unit size of 843 square feet and had
     average physical occupancy during 1996 of 95 percent and physical occupancy
     as of December 31, 1996 of 92 percent.

(3)  Another phase of this community is currently under development.  See
     "Development and Construction Activity" below.

(4)  A new phase of this community was completed and reached stabilized
     occupancy in 1996.

(5)  Property was acquired June 1996.

(6)  Property was acquired July 1996.

(7)  Property was acquired December 1996.

Of the current Stabilized Communities included in the table, 37 are located in
the greater Phoenix area, seven are located in the Tucson area and five are
located in California.  All of the Stabilized Communities are managed and
operated by the Company and have an average size of 283 units.  The Stabilized
Communities are primarily oriented to upscale residents seeking high levels of
amenities, such as clubhouses, exercise rooms, tennis courts, swimming pools,
therapy pools and covered parking.  The average unit size of the Stabilized and
Communities under Construction combined is 905 square feet.  All have fully-
equipped kitchens with upgraded cabinets, individual utility metering,
dishwashers, microwave ovens, separate dining areas, individual storage,
spacious patios and balconies, and ceramic tile entries.  Most have
washers/dryers; and many offer high ceilings, fireplaces, and alarm system
prewiring.

DEVELOPMENT AND CONSTRUCTION ACTIVITY

The apartment Communities under Construction and in Lease-Up are listed below:

<TABLE>
<CAPTION>

                                                                                               ACTUAL      ACTUAL OR
                                                                   AVERAGE     ESTIMATED       DATE OF     ESTIMATED    ESTIMATED
                                                                    UNIT     CONSTRUCTION   CONSTRUCTION   COMMENCE-     DATE OF
                                                      TOTAL         SIZE         COST         COMMENCE-     MENT OF    STABILIZED
         NAME                           CITY          UNITS       (SQ. FT.)   (MILLIONS)        MENT       LEASE-UP     OCCUPANCY
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                            QUARTER
                                                                                          ------------------------------------------
<S>                                     <C>             <C>          <C>         <C>             <C>           <C>          <C>
PHOENIX
The Hawthorne                           Phoenix          276           904       $   17          4:95          3:96         3:97
The Isle at Arrowhead Ranch             Glendale         256           940           17          2:96          4:96         4:97
Promontory Pointe II
   Expansion                            Phoenix          120         1,013            8          4:95          3:96         2:97
                                                      ------                      ------
                                                         652                         42
TUCSON
Bear Canyon                             Tucson           238           973           15          3:95          2:96         2:97
Harrison Park II Expansion              Tucson           188           974           10          3:95          2:96         2:97
                                                      ------                      ------
                                                         426                         25
                                                      ------                      ------
     TOTAL                                             1,078                      $  67
                                                      ------                      ------
                                                      ------                      ------
</TABLE>


                                        7
<PAGE>

   
The Company owns sites in the Phoenix area intended for the development of four
additional multifamily apartment communities, which, if completed, are expected
to contain approximately 1115 apartment units.  In February 1997, the Company
began the construction at one of the sites of the first phase of The Retreat,
which will contain 240 apartment units.  Upon completion of the construction of
phase I and phase II, The Retreat will ultimately contain 480 apartment units.
There can be no assurance, that  the Company will succeed in obtaining any
necessary governmental approvals or any financing required to develop the
remaining sites or the completion of phase II of The Retreat,  or that the
Company will decide to develop any particular project.
    

The information set forth in the table above is based upon a number of estimates
and assumptions that are inherently subject to business, economic and
competitive uncertainties and contingencies, many of which are beyond the
Company's control.  The actual development cost, completion date and
stabilization date of any project will be dependent upon a variety of factors
beyond the control of the Company including, for example, labor and other
personnel costs, material costs, weather conditions, government fees and leasing
rates.

ITEM 3.  LEGAL PROCEEDINGS

Neither the Company, the Operating Partnership, the Management Company, the
Financing Partnership, or any of the Communities is presently subject to
material litigation nor, to the Company's knowledge, is any litigation
threatened against the Company or any of the Communities, other than routine
actions for negligence or other claims and administrative proceedings arising in
the ordinary course of business, some of which are expected to be covered by
liability insurance and all of which collectively are not expected to have a
material adverse effect on the business or financial condition of the Company.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF STOCKHOLDERS

There were no matters submitted to a vote of the Company's stockholders during
the fourth quarter of 1996.

                                     PART II

ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
          STOCKHOLDER MATTERS

   
(a)  MARKET INFORMATION:  The Company's Common Stock, $.01 par value, is traded
on the New York Stock Exchange under the symbol "EWR."  The ranges of high and
low sales prices of the Company's trading reported on the New York Stock
Exchange composite tape of each quarter since the Initial Public Offering
through the fourth quarter of 1996 have been as follows:
    


<TABLE>
<CAPTION>
   

                                              Sale Prices                       Dividends
                                              ------------
                                          High                Low               Declared
                                          ----                ---               --------

<S>                                       <C>                 <C>               <C> 
1994
-----
  Third quarter (from August 10 to
                 September 30, 1994)    $21 1/4             $19 3/8              $.18(1)
  Fourth quarter                         21 1/2              17 7/8               .37

1995
-----
  First quarter                          20 7/8              19 1/2               .37
  Second quarter                         20 7/8              18 3/8               .37
  Third quarter                          20 3/8              18 1/2               .38
  Fourth quarter                         21 5/8              18 7/8               .38

1996
-----
  First quarter                          23 1/4              20 3/4               .39
  Second quarter                         23 1/4              20 1/4               .39
  Third quarter                          21 7/8              19 3/4               .40
  Fourth quarter                         22 1/4              20 1/8               .40
    
</TABLE>

--------------
   
(1) Paid with respect to the period August 17, 1994 to September 30, 1994.
    

                                        8
<PAGE>

On January 30, 1997, the last reported sale price of the Company's common stock
on the New York Stock Exchange was $20 7/8 per share.

   
Approximately 36 percent, 30 percent and 25 percent of the dividends declared
during 1996, 1995 and 1994, respectively, represented return of capital to the
shareholders.
    

(b)  HOLDERS:  As of January 30, 1997, there were approximately 232 stockholders
of record of the Company's Common Stock.  Such number does not include the total
number of beneficial holders of Common Stock.

(c)  DISTRIBUTIONS:  The Company intends to pay regular quarterly dividends to
holders of shares of Common Stock and distributions to holders of Units in the
Operating Partnership.  On December 31, 1996, the Company paid a quarterly
dividend of $.40 per share for the fourth quarter to holders of shares of Common
Stock and Units of record on December 24, 1996.  Future distributions by the
Company will be at the discretion of the board of directors and will depend on
the actual funds from operations of the Company, its financial condition,
capital requirements, the annual distribution requirements under the REIT
provisions of the Code and such other factors as the board of directors deems
relevant.

The Company anticipates that Funds from Operations will exceed earnings and
profits due to non-cash expenses, primarily depreciation and amortization, to be
incurred by the Company.  Distributions by the Company to the extent of its
current and accumulated earnings and profits for Federal income tax purposes
will be taxable to stockholders as ordinary dividend income.  Distributions in
excess of earnings and profits generally will be treated as a non-taxable
reduction of the stockholder's basis in the Common Stock (return of capital) to
the extent thereof, and thereafter as taxable gain.  Such distributions will
have the effect of deferring taxation until the sale of such Common Stock.  In
order to maintain its qualification as a REIT, the Company must make annual
distributions to stockholders of at least 95 percent of its taxable income
(which does not include capital gains).  Under certain circumstances (which the
Company does not expect to occur), the Company could be required to make
distributions in excess of cash available for distribution in order to meet such
distribution requirements.


                                        9
<PAGE>

ITEM 6.  SELECTED FINANCIAL DATA

The following table sets forth certain financial and operating data on a
consolidated basis for the Company and on a combined historical basis for Evans
Withycombe.  The following information should be read in conjunction with all of
the consolidated financial statements and notes thereto included elsewhere in
this Annual Report on Form 10-K/A.

<TABLE>
<CAPTION>

                                                                      YEAR ENDED DECEMBER 31,
                                             ----------------------------------------------------------------------
                                                 1996           1995           1994           1993           1992
                                                 (Amounts in thousands, except per share and property information)

<S>                                             <C>            <C>            <C>            <C>            <C>
OPERATING INFORMATION:
 REVENUES:
   Rental                                       $94,350        $68,864        $51,097        $38,613        $26,876
   Third party management fees                    1,157          1,268          1,668          2,213          2,204
   Interest and other                             6,195          4,478          4,424          3,112          2,373
                                              ---------------------------------------------------------------------
Total revenues                                  101,702         74,610         57,189         43,938         31,453
 EXPENSES:
   Repairs and maintenance                       11,607          8,293          6,288          4,730          3,272
   Other property operating                      12,713          8,699          7,834          6,593          4,684
   Advertising                                    1,864          1,244            966          1,022            783
   Real estate taxes                              6,915          4,723          3,204          2,869          2,307
   Property management                            3,225          2,825          2,505          2,605          2,417
   General and administrative                     1,698          1,588          1,409          1,466          1,360
   Interest                                      24,225         12,650          7,836          6,361          5,909
   Depreciation and amortization                 20,885         13,762         10,333         10,319          7,146
   Write-down of real estate
     assets(1)                                        -              -              -          1,361         10,284
   Other(2)                                           -              -          5,233              -              -
                                              ---------------------------------------------------------------------
 Total expenses                                  83,132         53,784         45,608         37,326         38,162
                                              ---------------------------------------------------------------------

 Income (loss) before minority
  interest and extraordinary item                18,570         20,826         11,581          6,612         (6,709)
 Minority interest (3)                           (4,010)        (4,594)        (1,548)             -              -
 Extraordinary item-gain on
  extinguishment of debt (1)                          -              -              -          6,061         12,569
                                              ---------------------------------------------------------------------

 Net income                                     $14,560        $16,232        $10,033        $12,673         $5,860
                                              ---------------------------------------------------------------------
                                              ---------------------------------------------------------------------
 Earnings per share (4)                           $0.84        $  1.01
                                              ---------      ---------
                                              ---------      ---------
 Earnings per share for the period
 August 17 to December 31, 1994
  (4)                                                                         $  0.38
                                                                             --------
                                                                             --------
</TABLE>


                                       10
<PAGE>

<TABLE>
<CAPTION>

                                                                              YEAR ENDED DECEMBER 31,
                                                           1996            1995          1994           1993           1992
                                                     --------------------------------------------------------------------------
<S>                                                       <C>          <C>            <C>            <C>            <C>
OTHER INFORMATION:                                        (Amounts in thousands, except per share and property information)
Cash flows from:
   Operating activities                                $   38,587      $  36,531      $  21,609      $  20,897      $  13,271
   Investing activities                                  (129,461)      (118,061)      (211,651)       (79,511)       (61,829)
   Financing activities                                    89,808         82,725        190,003         57,417         50,792
Total stabilized communities                                   49             41             32             31             27
      (end of period)
Total number of apartments                                 13,905         11,053          7,924          7,695          6,502
   (end of period)
Physical occupancy (end of                                     93%            96%            97%            97%            97%
   period) (5)
Weighted average number of                                 12,887          9,798          7,740          6,641          4,998
   apartments (6)
Weighted average monthly                                     $715           $641           $586           $532           $498
   revenue per unit (7)



                                                                                       DECEMBER 31,
                                                           1996           1995           1994           1993           1992
                                                       -----------------------------------------------------------------------
                                                                              (Amounts in thousands)
BALANCE SHEET INFORMATION:
Real estate, before accumulated depreciation             $761,550       $587,183       $399,987       $292,513       $215,549
Total assets                                              736,334        580,495        403,540        271,055        204,836
Total debt                                                436,172        297,456        127,787        106,545         64,792
Minority interest                                          56,592         64,487         52,626              -              -
Equity                                                   $229,005       $198,148       $204,667       $142,886       $122,135
</TABLE>

---------

(1)  During 1993, the Company negotiated a discounted payoff of a mortgage loan
     secured by The Meadows and Promontory Pointe (1992).  The excess of the
     amounts owed for principal and interest over the amount paid to pay off the
     loan is recorded as an extraordinary item-gain on extinguishment of debt.
     The Company determined that the carrying values of the Communities were in
     excess of net realizable value.  The excess of $1,361 and $10,284 was
     charged to write down of real estate assets.

(2)  In connection with the repayment of existing indebtedness at the time of
     the Initial Public Offering, prepayment penalties and lender participation
     (additional interest) totaling $2,594 were paid.  Prior to the Initial
     Public Offering, an Executive Incentive Deferred Compensation Plan was
     canceled and the $2,639 that was funded by the Company was expensed during
     1994.

(3)  Net income includes an adjustment for the 20.30 percent, 22.98 percent and
     20.50 percent minority interest in the Operating Partnership for the years
     ended December 31, 1996 and 1995 and the period from August 17 to December
     31, 1994, respectively.

(4)  Net income per share is based on 17,409,897, 16,053,453 and 15,967,432
     weighted average number of shares outstanding for the years ended December
     31, 1996 and 1995 and the period from August 17 to December 31, 1994,
     respectively.

(5)  Physical Occupancy is defined as the number of apartments occupied or
     leased (including models and employee apartments) divided by the total
     number of leaseable apartments within the Community, expressed as a
     percentage.


                                       11
<PAGE>
     Physical occupancy has been calculated using the average of the occupancy
     that existed on the last day of each month over each period.

(6)  Weighted average number of apartments is the average of all apartments
     during the period.  For stabilized properties, all apartments are included
     in the calculation of the weighted average.  For communities in the lease-
     up phase, only apartments that are completed and occupied are included in
     the weighted average calculation.

(7)  Weighted average monthly revenue per apartment is derived by dividing
     rental income by the weighted average number of available apartments.


ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
          CONDITION AND RESULTS OF OPERATIONS
          (Amounts in thousands, except apartment data)

   
The following discussion, which is based primarily on the consolidated financial
statements of Evans Withycombe Residential, Inc. and the combined financial
statements of its predecessor, should be read in conjunction with the "Selected
Financial Data" and all financial statements appearing elsewhere in this Annual
Report on Form 10-K/A.  The consolidated financial statements of the Company
consist of the Communities and the Management Company.
    

OVERVIEW

When used in the following discussion, the words "believes," "anticipates,"
"expects," and similar expressions are intended to identify forward-looking
statements.  Such statements are subject to certain risks and uncertainties
which could cause actual results to differ materially from those projected,
including, but not limited to, the actual timing of the Company's planned
acquisitions and developments, the strength of the local economies in the sub-
markets in which the Company operates, and the Company's ability to successfully
manage its planned expansion into Southern California.  Readers are cautioned
not to place undue reliance on these forward-looking statements, which speak
only as of the date hereof.  The Company undertakes no obligation to publicly
release any revisions to these forward-looking statements which may be made to
reflect events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events.


                                       12
<PAGE>

RESULTS OF OPERATIONS - CONSOLIDATED FINANCIAL STATEMENTS

The results of operations for the years ended December 31, 1996 and 1995,
respectively, were significantly affected by acquisitions, developments and
expansions.

COMPARISON OF RESULTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1996 TO THE
YEAR ENDED DECEMBER 31, 1995

                                                 YEAR ENDED
                                                DECEMBER 31,
                                         ------------------------
                                                                     PERCENTAGE
                                            1996           1995        CHANGE
                                         ---------      ---------    -----------
   Rental income                         $  94,350      $  68,864        37.0%
   Third party management fees               1,157          1,268        (8.7)
   Interest and other                        6,195          4,478        38.3
                                         ---------      ---------    --------
       Total revenues                      101,702         74,610        36.3


   Property operating and maintenance (1)   26,184         18,236        43.5
   Real estate taxes                         6,915          4,723        46.4
   Property management                       3,225          2,825        14.2
   General and administrative                1,698          1,588         6.9
   Interest                                 24,225         12,650        91.5
   Depreciation and amortization            20,885         13,762        51.8
                                         ---------      ---------    --------
   Total expenses                           83,132         53,784        54.6
                                         ---------      ---------    --------
   Income before minority interest       $  18,570      $  20,826       (10.8)%
                                         ---------      ---------    --------
                                         ---------      ---------    --------

   Weighted average monthly rental
     revenue per unit                       $  715         $  641
                                          --------       --------
                                          --------       --------
   Weighted average number of apartments    12,887          9,798
                                          --------       --------
                                          --------       --------
   Economic occupancy (2)                     90.0%          91.6%
                                          --------       --------
                                          --------       --------

   (1) The Company defines property operating and maintenance expense as repairs
       and maintenance, other property operating and advertising expense.
   (2) Stabilized properties only.

Rental revenues increased by $25,486 or 37.0 percent for the year ended December
31, 1996 as compared to the similar period in 1995 as a result of increases in
the weighted average number of apartments and weighted average monthly revenue
per occupied apartment. The Company believes that the increase in rental income
was largely attributable to the acquisitions and stabilization of properties
developed by the Company in its rental markets.

Interest and other income increased $1,717 for the year ended December 31, 1996
compared to the year ended December 31, 1995 primarily as a result of the sale
of telephone servicing rights on certain properties and an increase in ancillary
income such as redecoration and application fees as a result of the increase in
the weighted average number of apartments.

Third party management fees decreased $111 or 8.7 percent due to the sale of
several properties from the management portfolio.  included in third party
management fees is a non recurring $500 fee received in exchange for terminating
the management contract on nine apartment communities containing 1,298 apartment
units in the second quarter of 1996.

Property operating and maintenance expense increased due to the increase in the
weighted average number of apartments for the year ended December 31, 1996 as
compared to the same period in 1995, respectively.  Real


                                       13
<PAGE>

estate taxes increased primarily due to the increase in the number of properties
for the year ended December 31, 1996.

Interest expense increased due to an increase in debt resulting from
acquisitions and the increase in weighted average number of units in the
portfolio.  The Company capitalized $2,714 of interest for the year ended
December 31, 1996 compared to $5,048 for the year ended December 31, 1995 due to
a decrease in construction activity.  Interest costs incurred during
construction of a new property are capitalized until completion of construction
on a building-by-building basis.


"SAME STORE" PORTFOLIO

The Company defines same store portfolio as those communities that reached
stabilized occupancy prior to January 1, 1995.   Same store portfolio consists
of 32 stabilized properties containing 7,924 apartment units that were owned by
the Company for the years ended December 31, 1996 and 1995.

                                                   YEAR ENDED
                                                  DECEMBER 31,      
                                           -----------------------
                                                                    PERCENTAGE
                                               1996          1995      CHANGE
                                           ---------     ---------   ---------
   Rental income                           $  55,074     $  55,202       (.2)%
   Other Income                                3,296         2,581      27.7
                                           ---------     ---------   ---------
                                              58,370        57,783       1.0

   Property operating and maintenance         16,134        14,619      10.4
   Real estate taxes                           3,995         3,906       2.3
                                           ---------     ---------   ---------
                                              20,129        18,525       8.7
                                           ---------     ---------   ---------
   Property net operating income           $  38,241     $  39,258      (2.6)%
                                           ---------     ---------   ---------
                                           ---------     ---------   ---------

   Weighted average monthly rental
      revenue per unit                        $  654        $  638
                                           ---------     ---------
                                           ---------     ---------
   Economic occupancy                           89.7%         91.1%
                                           ---------     ---------
                                           ---------     ---------

Rental income for the year ended December 31, 1996 was comparable with the same
period in 1995 as a result of the increase in the weighted average monthly
rental revenue per unit being offset by a decline in the average economic
occupancy during the year ended December 31, 1996 as compared to the year ended
December 31, 1995.  Other income for the year ended December 31, 1996 increased
as a result of gains from the sale of telephone servicing rights at various
communities.

Property operating and maintenance expense increased $1,515 or 10.4 percent over
1995 due to higher apartment turnover and utility costs associated with an
increased number of vacant apartments and higher advertising costs incurred by
the Company in its "same store" portfolio.


                                       14
<PAGE>

COMMUNITIES STABILIZED LESS THAN TWO YEARS

Communities stabilized less than two years consist of the development of five
new apartment communities and the expansion of two existing apartment
communities by the Company, containing 1,521 apartment units that reached
stabilized occupancy during the year ended December 31, 1995.  Increases in the
year ended December 31, 1996 as compared to the year ended December 31, 1995 are
the result of the increase in the weighted average number of apartments.


                                                       YEAR ENDED
                                                       DECEMBER 31,
                                                 -----------------------
                                                    1996            1995
                                                 ---------      --------
          Rental income                          $ 12,606       $  7,113
          Other income                                680            541
                                                 ---------      --------
                                                   13,286          7,654
          Property operating and
            maintenance                             2,532          1,734
          Real estate taxes                         1,011            407
                                                 ---------      --------
                                                    3,543          2,141
                                                 ---------      --------
          Property net operating income          $  9,743       $  5,513
                                                 ---------      --------
                                                 ---------      --------
          Weighted average number of
            apartments                               1,521           888
                                                 ---------      --------
                                                 ---------      --------

DEVELOPMENT AND LEASE UP COMMUNITIES

Development and lease up communities consist of the development of 13 new
apartment communities or the expansion of existing apartment communities
containing 2,522 apartment units that were in the "construction," "development,"
or "lease up" stage during 1996 and therefore, not considered to have achieved
stabilized occupancy for all of the periods presented.  Increases in the year
ended December 31, 1996 as compared to the year  ended December 31, 1995 are the
result of an increase in the weighted average number of apartments.


                                                        YEAR ENDED
                                                        DECEMBER 31,
                                                 -----------------------
                                                    1996          1995
                                                 ---------      --------
          Rental income                          $  11,276      $ 1,281
          Other income                                 720          128
                                                 ---------      --------
                                                    11,996        1,409
          Property operating and
            maintenance                              3,203          700
          Real estate taxes                            790           30
                                                 ---------      --------
                                                     3,993          730
                                                 ---------      --------
          Property net operating income          $   8,003      $   679
                                                 ---------      --------
                                                 ---------      --------

          Weighted average number of
            apartments in lease-up                   1,398          174
                                                 ---------      --------
                                                 ---------      --------


                                       15
<PAGE>

ACQUISITIONS

Acquisitions consist of eight properties containing 3,016 apartment units, which
have been acquired by the Company since January 1, 1995.  Increase in the year
ended December 31, 1996, as compared to the year ended December 31, 1995, are
the result of the increase in the weighted average number of apartments.


                                                       YEAR ENDED
                                                       DECEMBER 31,
                                                 -----------------------
                                                     1996          1995
                                                 ---------      --------
          Rental income                          $  15,394      $  5,268
          Other income                                 727           193
                                                 ---------      --------
                                                    16,121         5,461

          Property operating and
            maintenance                              4,315         1,183
          Real estate taxes                          1,119           380
                                                 ---------      --------
                                                     5,434         1,563
                                                 ---------      --------
          Property net operating income          $  10,687      $  3,898
                                                 ---------      --------
                                                 ---------      --------
          Weighted average number of
            apartments                               2,044           769
                                                 ---------      --------
                                                 ---------      --------

COMPARISON OF RESULTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1995 TO THE
YEAR ENDED DECEMBER 31, 1994

        TOTAL PORTFOLIO                         DECEMBER 31,        PERCENTAGE
                                              1995         1994       CHANGE
                                            -------      -------    ----------
        Rental income                       $68,864      $51,097      34.8%
        Third party management fees           1,268        1,668     (24.0)%
        Interest and other                    4,478        4,424       1.2%
                                            -------      -------     ------
                                             74,610       57,189      30.5%

        Property operating and maintenance   18,236       15,088      20.9%
        Real estate taxes                     4,723        3,204      47.4%
        Property management                   2,825        2,505      12.8%
        General and administrative            1,588        1,409      12.7%
        Interest                             12,650        7,836      61.4%
        Depreciation and amortization        13,762       10,333      33.2%
        Other                                     -        5,233         -
                                            -------      -------     ------
                                             53,784       45,608      17.9%
                                            -------      -------     ------
        Income before minority interest     $20,826      $11,581      79.8%
                                            -------      -------     ------
                                            -------      -------     ------
        Weighted average number of
           apartments                         9,798        7,740
                                            -------      -------
                                            -------      -------
        Economic occupancy                     91.6%        92.3%
                                            -------      -------
                                            -------      -------

Rental revenues increased by $17,767 or 34.8 percent as a result of increases in
the weighted average number of apartments and weighted average monthly revenue
per occupied apartment. The Company believes that the increase in rental income,
other than that attributable to the acquisitions and developments, was achieved
as a result of the Company's ability to capitalize on continuing improvement in
the Company's rental markets.


                                       16
<PAGE>

The decrease in third party management fees of $400, a 24.0 percent decrease
from the 1994 period, is due to the sale of several properties from the
management portfolio, including 508 units which the Company purchased.

Property operating and maintenance expense increased $3,148 or 20.9 percent
(versus a 26.6 percent increase in the weighted average number of units) due to
the increase in the number of properties.  Real estate taxes increased $1,519 or
47.4 percent (versus a 26.6 percent increase in the weighted average number of
units) primarily due to the increase in the number of properties and higher
values placed on properties due to improved market conditions.

Property management expense increased $320 or 12.8 percent due to the increase
in the number of properties under management.

Interest expense increased $4,814 or 61.4 percent due to an increase in debt
resulting from acquisitions and from more units under construction.  The Company
capitalized $5,048 of interest in 1995 compared to $2,724 in 1994 due to an
increase in construction activity.  Interest costs incurred during construction
of a new property are capitalized until completion of construction on a
building-by-building basis.

"SAME STORE" PORTFOLIO

In 1995, the Company defined the same store portfolio as those communities that
reached stabilization prior to January 1, 1994.

Same store portfolio consists of 30 stabilized operating properties containing
7,559 apartment units that were owned by the Company for the years ended
December 31, 1995 and 1994.


                                                   DECEMBER 31,      PERCENTAGE
                                                 1995        1994      CHANGE
                                               -------      -------  ----------
         Rental income                         $52,940      $49,712      6.5%
         Other income                            2,568        3,180    (19.2)%
                                               -------      -------    ------
                                                55,508       52,892      4.9%
         Property operating and maintenance     14,213       14,589     (2.6)%
         Real estate taxes                       3,671        3,180     15.4%
                                               -------      -------     ------
                                                17,884       17,769       .6%
                                               -------      -------     ------
         Property net operating income         $37,624      $35,123      7.1%
                                               -------      -------     ------
                                               -------      -------     ------
         Weighted average monthly rental
            revenue per unit                   $   638      $   586
                                               -------      -------
                                               -------      -------
         Economic occupancy                      91.5%        92.5%
                                               -------      -------
                                               -------      -------

Rental income for the year ended December 31, 1995 increased $3,228 or 6.5
percent as a result of an increase in the weighted average monthly revenue per
occupied unit which increased $52 or 8.9 percent which was partially offset by a
decline in the average economic occupancy from 92.5 percent during the year
ended December 31, 1994 and 91.5 percent during the year ended December 31,
1995.

Property operating and maintenance expense decreased $376 or 2.6 percent due to
the Company beginning to realize economies of scale from consolidated operations
of the integrated property portfolio.

Real estate taxes increased $491  or 15.4 percent due to higher values placed on
properties due to improved  market conditions and property values.


                                       17
<PAGE>

DEVELOPMENT AND LEASE UP COMMUNITIES

Development communities consist of 15 developments or expansion of existing
properties containing 2,878 apartment units that have been developed by the
Company since the Initial Public Offering in August 1994.  Increases in 1995 as
compared to 1994 is the result of development units stabilized or in lease-up
increasing to 15 properties and 2,878 apartment units in 1995 as compared to 3
properties and 661 apartment units in 1994.

                                                         DECEMBER 31,
                                                      1995          1994
                                                     ------        ------
          Rental income                              $9,766        $1,248
          Other income                                  636            84
                                                     ------        ------
                                                     10,402         1,332
          Property operating and maintenance          2,604           459
          Real estate taxes                             560            18
                                                     ------        ------
                                                      3,164           477
                                                     ------        ------
          Property net operating income              $7,238        $  855
                                                     ------        ------
                                                     ------        ------
ACQUISITIONS

Acquisitions consist of five properties containing 1,756 apartment units which
have been acquired by the Company since the Initial Public Offering in August
1994.  Increases in 1995 as compared to 1994 are the result of the acquisition
of four properties in 1995 consisting of 1,608 apartment units compared to one
property consisting of 148 apartment units in 1994.

                                                         DECEMBER 31,
                                                      1995          1994
                                                     ------        ------
          Rental income                              $6,158        $  137
          Other income                                  239             5
                                                     ------        ------
                                                      6,397           142
          Property operating and maintenance          1,419            40
          Real estate taxes                             492             6
                                                     ------        ------
                                                      1,911            46
                                                     ------        ------
          Property net operating income              $4,486        $   96
                                                     ------        ------
                                                     ------        ------
LIQUIDITY AND CAPITAL RESOURCES

LIQUIDITY

The Company's net cash provided by operating activities increased from $36.5
million for the year ended December 31, 1995 to $38.6 million for the year ended
December 31, 1996 principally due to increased rental operations from additional
properties acquired and developed subsequent to December 31, 1995. Net cash used
in investing activities increased from $118.1 million for the year ended
December 31, 1995 to $129.5 million for the year ended December 31, 1996.  Cash
used in investing activities largely relates to the Company's development and
construction of new apartment communities in Phoenix and Tucson, Arizona and
acquisitions of apartment communities in its markets.  Net cash provided by
financing activities increased from $82.7 million for the year ended December
31, 1995 to $89.8 million for the year ended December 31, 1996 due to the
proceeds from the sale of 2,088,889 shares of common stock and borrowings under
the Revolving Credit Facility which were used to fund the development and
acquisition of apartment communities.

The Company elected to be taxed as a REIT under Sections 856 through 860 of the
Internal Revenue Code of 1986, as amended, commencing with its taxable year
ended December 31, 1994.  REITs are subject to a number of


                                       18
<PAGE>

organizational and operational requirements, including a requirement that they
currently distribute 95 percent of their ordinary taxable income.

The Company expects to meet its short-term liquidity requirements, including
capital expenditures relating to maintaining Stabilized Communities, generally
through its net cash provided by operations and borrowings under its credit
arrangements and anticipates meeting long-term liquidity requirements, such as
scheduled debt maturities, financing of construction and development activities
and possible acquisitions through long-term unsecured borrowings, issuance of
additional equity securities of the Company or debt securities of the Operating
Partnership, or, possibly in connection with acquisitions of land or existing
properties, Units of the Operating Partnership.  The Company believes that its
net cash provided by operations will be adequate and anticipates that it will
continue to be adequate to meet both operating requirements and payment of
dividends by the Company in accordance with REIT requirements in both the short
and the long-term.

The information in the immediately preceding paragraph is forward looking and
involves risks and uncertainties that could significantly impact the Company's
expected liquidity requirements in the short and long term.  While it is
impossible to itemize the many factors and specific events that could affect the
Company's outlook for its liquidity requirements, such factors would include the
actual timing of the Company's planned development of new, and expansion of
existing, communities; acquisitions of existing apartment communities; the
actual costs associated with such developments and acquisitions; and the
strength of the local economies in the sub-markets in which the Company
operates.  The Company is further subject to risks relating to the limited
geographic area in which it operates and its ability to successfully manage its
planned expansion into Southern California, a market in which it does not have
any operating history prior to 1995.  Higher than expected costs, delays in
development of communities, a downturn in the local economies and/or the lack of
growth of such economies could reduce the Company's revenues and increase its
expenses, resulting in a greater burden on the Company's liquidity than that
which the Company has described above.

CAPITAL RESOURCES

At December 31, 1996, the Company's total debt was approximately $436.2 million
and the Company's debt to total market capitalization (Market Equity plus Debt)
was approximately 47.4 percent.  The Company received an investment grade rating
of "BBB-" from Standards and Poors, and "Baa3" from Moody's  in December 1996.

   
A security rating is not a recommendation to buy, sell or hold securities and
may be subject to revision or withdrawal at any time by the assigning rating
organization, and each rating should be evaluated independently of any other
rating.  A rating of (a) BBB- from Standard & Poors Corporation indicates that
the obligations of the Company exhibit adequate protection parameters and
(b) Baa3 from Moody's Investor Service Inc. indicates that the obligations of
the Company are considered to be medium-grade obligations that are neither
highly protected nor poorly secured.
    

CONVENTIONAL MORTGAGE LOANS

Conventional mortgage loans were comprised of six fixed rate loans at December
31, 1996, each of which is collateralized by a first mortgage lien on an
apartment community included in real estate assets.  The mortgages are payable
in monthly installments of principal and interest and mature at various dates
through 1997.  The conventional mortgage loans aggregated $40.1 million at
December 31, 1996 with interest rates ranging from 8.0 percent to 9.95 percent.
On January 9, 1997, the Company extinguished the debt on three mortgages with
unpaid principal balances of approximately $18.7 million with proceeds from the
Revolving Credit Facility.  As a result, the Company incurred a loss from the
early extinguishment of debt of approximately $1.2 million.  The Company prepaid
a $6.2 million mortgage note on January 31, 1997 which resulted in an additional
loss from the early extinguishment of debt of approximately $300.  The loss from
the early extinguishment of debt was recorded by the Company in the first
quarter 1997.

In December 1995, the Company entered into a ten year $50 million fixed rate
loan from an insurance company that bears interest at 7.17 percent, with
principal and interest due monthly based on a 25-year amortization



                                       19
<PAGE>

schedule beginning January 1, 1996 through January 1, 2006, and the remaining
unpaid principal balance due January 1, 2006.  The loan is secured by a first
deed of trust on five apartment communities.  Proceeds from the loan were used
to pay down outstanding balances on the Revolving Credit Facility. The
outstanding debt was $49.5 million at December 31, 1996.  The loan is
convertible to unsecured upon the Company achieving an investment grade rating
of BBB or better.

MORTGAGE LOAN CERTIFICATES

The Company, through the Financing Partnership, borrowed $102.0 million under a
securitized loan in August 1994.  During January 1995, the Company borrowed the
balance of $29.0 million (increasing the total to $131.0 million).  The loan is
secured by the first mortgage liens on 22 Communities.  The $102.0 million was
issued at 99.97 percent of its face amount and the $29.0 million was issued at
97.9375 percent of its face amount and will mature on August 1, 2001.  Although
both amounts bear interest at 7.98 percent, the $29.0 million has an effective
interest rate of 8.40 percent due to the discount.  The weighted average
effective interest rate of the total $131 million loan is 8.05 percent.  The
bonds have been rated "AA" by Standard and Poors.

TAX EXEMPT BONDS

Tax exempt bonds were comprised of three floating rate bonds based on the tax
exempt note rate set by the respective remarketing agents (or, at the option of
the Company at a fixed rate determined by the remarketing agents).  The bonds
are secured by letters of credit which are secured by first mortgage liens on
four apartment communities.  The tax exempt bonds have monthly interest only
payments and mature at various dates through 2016.  The tax exempt bonds
aggregated $64 million at December 31, 1996 with interest rates ranging from
5.16 percent to 6.14 percent.

REVOLVING CREDIT FACILITY

   
On September 25, 1996, the Company expanded its existing $125 million unsecured
Revolving Credit Facility to $225 million with a Bank Group.  The Revolving
Credit Facility bears interest at a floating rate of London Interbank Offered
Rate (LIBOR) plus 150 basis points (100 basis points is the equivalent of 1.0
percent)  (or, at the option of the Company, at the prime rate announced by the
Banks).  The interest rate was reduced 25 basis points upon the Company
achieving an investment grade rating of "Baa3" or "BBB-". The Revolving Credit
Facility  has a term of three years, with an option to extend for one year and
provides for monthly payments of interest only.  It will be used to finance
acquisitions, to fund construction and development and renovation costs, and for
working capital purposes.  At December 31, 1996, there was $152 million
outstanding on the Revolving Credit Facility, with an effective interest rate of
7.20 percent.  The Revolving Credit Facility contains customary representations,
covenants and events of default, including a limitation which restricts
dividends to 95 percent of Funds From Operations, as defined on page 22.  The
Company does not expect that the covenants will affect its ability to pay
dividends in accordance with its current dividend policy or its ability to
maintain a REIT status.
    

                                      20

<PAGE>

The table below outlines the Company's debt structure as of December 31, 1996
(amounts in thousands).

                                               OUTSTANDING     WEIGHTED AVERAGE
                                                  BALANCE        INTEREST RATE
                                               ------------    ----------------
FIXED RATE DEBT:
  Mortgage Debt
    Conventional . . . . . . . . . . . . . .     $  89,652        7.87%
    Mortgage Loan Certificates . . . . . . .       130,520        8.05
                                                 ----------      --------
      Total Fixed Rate Debt. . . . . . . . .       220,172        7.98

VARIABLE RATE DEBT:
  Tax Exempt Bonds . . . . . . . . . . . . .        64,000        5.70
  Revolving Credit Facility. . . . . . . . .       152,000        7.20
                                                 ----------      --------
      Total Variable Rate Debt . . . . . . .       216,000        6.76
                                                 ----------      --------
      Total Debt . . . . . . . . . . . . . .    $  436,172        7.37%
                                                 ----------      --------
                                                 ----------      --------

The Company had 4,806 unencumbered apartment units related to the Stabilized
Communities (including properties with debt that was repaid in January 1997) and
1,198 unencumbered apartment units related to the Communities Under Construction
and in Lease-Up at December 31, 1996.

SUBSEQUENT OFFERINGS AND REGISTRATION STATEMENTS

In September 1995, the Company filed a shelf registration statement with the
Securities and Exchange Commission (SEC) for up to $200 million of debt
securities, common stock, preferred stock and warrants.

In January 1997, the Company filed a shelf registration statement with the SEC
for up to $125 million of common stock, preferred stock and warrants issuable by
the Company and $200 million of debt securities issuable by the Operating
Partnership.  The registration statement, which has not yet been declared
effective by the SEC includes $125 million of available securities under the
September 1995 registration statement.  These registration statements provide
the Company with the ability to issue and sell a portion of such securities from
time to time.

On May 28, 1996, the Company completed a public offering of 4,500,000 shares of
its Common Stock of which 2,000,000 shares were sold by the Company and an
aggregate of 2,500,000 were sold by two institutional stockholders. On June 25,
1996, the underwriters exercised their over-allotment option for 200,000 shares
and the Company issued an additional 88,889 shares of its Common Stock and the
institutional stockholders sold an additional 111,111 shares pursuant to a
partial exercise of the over-allotment option granted to the underwriters.  Net
proceeds to the Company from the May 1996 Offering was approximately
$40,891,000.  The Company used the proceeds from the sale of Common Stock to pay
down its Revolving Credit Facility.

On February 14, 1997, the Company completed a public offering of 1,800,000
shares of its common stock.  Net proceeds to the Company were approximately
$35,820,000.  The Company used the proceeds to pay down the Revolving Credit
Facility.


INFLATION

Most of the leases at the communities are for a term of one year or less, which
may enable the Company to seek increased rents upon renewal of existing leases
or commencement of new leases.  The short-term nature of the leases generally
serves to reduce the risk to the Company of the adverse effects of inflation.


                                       21
<PAGE>

FUNDS FROM OPERATIONS

The Company and industry analysts consider Funds from Operations ("FFO") to be
an appropriate measure of the performance of an equity REIT because it is
predicated on cash flow analyses.  The Company computes FFO in accordance with
standards established by the National Association of Real Estate Investment
Trusts ("NAREIT").  FFO is defined as net income (loss) determined in accordance
with GAAP, excluding gains (or losses) from debt restructuring and sales of
property plus depreciation and amortization, excluding depreciation on non-real
estate assets and amortization of deferred financing costs.  Funds from
operations should not be considered as an alternative to net income (determined
in accordance with GAAP) as an indicator of the Company's financial performance
or to cash flow from operating activities (determined in accordance with GAAP)
as a measure of the Company's needs.  The Company believes that in order to
facilitate a clear understanding of the consolidated historical operating
results of the Company, FFO  should be examined in conjunction with net income,
as presented in the consolidated financial statements and elsewhere in this
document.

<TABLE>
<CAPTION>

                                                                      YEAR ENDED DECEMBER 31,
                                                  1996           1995           1994 (a)       1993           1992
                                                  ----           ----           --------       ----           ----
                                                                     (Amounts in thousands)

<S>                                             <C>            <C>            <C>             <C>          <C>
Income (loss) before extraordinary              $18,570        $20,826        $16,814         $6,612       $(6,709)
   items and minority interest
Depreciation and amortization                    20,712         13,624         10,333         10,319          7,146
Amortization of executive deferred
    compensation expense                            390            693            267              -              -
                                                -------------------------------------------------------------------
Funds from operations                           $39,672        $35,143        $27,414        $16,931           $437
                                                -------------------------------------------------------------------
                                                -------------------------------------------------------------------
</TABLE>

(a)  1994 FFO has been adjusted to include other expenses ($5,233) that were
     incurred relating to the repayment of existing indebtedness at the time of
     the Initial Public Offering, prepayment penalties and lender participation
     (additional interest) totaling $2,594.  Prior to the Initial Public
     Offering, an Executive Incentive Deferred Compensation Plan was canceled
     and the $2,639 that was funded by the Company was expensed in 1994.  The
     Company believes it is appropriate to add back other expenses to net income
     for the FFO calculation in 1994 as these expenses represent nonrecurring
     costs directly related to the Initial Public Offering rather than recurring
     expenses from operations.

NUMBER OF COMMON SHARES AND UNITS

The Company had 22,184,395 and 20,590,873 weighted average number of shares and
units for the year ended December 31, 1996 and 1995, respectively.

CAPITALIZATION OF FIXED ASSETS AND COMMUNITY IMPROVEMENTS.

The Company has established a policy of capitalizing those expenditures relating
to acquiring new assets, materially enhancing the value of an existing asset, or
substantially extending the useful life of an existing asset.  All expenditures
necessary to maintain a community in ordinary operating condition are expensed
as incurred.


                                       22
<PAGE>

Acquisition of assets and community expenditures for the years ended December 31
are as follows:

                                                       1996            1995
                                                    --------        --------
          New community development                $  82,177      $  107,223
          Acquisitions                                88,648          77,895
          Nonrecurring capital expenditures
            Vehicle access control gates                 551               -
            Computer upgrade                             413             202
          Recurring capital expenditures:
            Community additions and
              improvements                             2,374           1,547
          Corporate additions and improvements           348             549
                                                    --------        --------
                                                    $174,511        $187,416
                                                    --------        --------
                                                    --------        --------

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The Report of Independent Auditors, Consolidated Financial Statements and
Selected Quarterly Financial Information are set forth on pages F-1 to F-22 of
this Annual Report on Form 10-K/A.

ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
          ACCOUNTING AND FINANCIAL DISCLOSURE

There were no changes in accountants or disagreements with the Company's
accountants on accounting and financial disclosure matters in 1996.

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The Board of Directors of the Company is currently comprised of seven members
divided into three classes serving staggered terms of three years each.
Pursuant to the Company's Charter and Bylaws, the term of office of one class of
directors expires each year and at each annual meeting the successors of the
class whose term is expiring in that year are elected to hold office for a term
of three years and until their successors are elected and have qualified.  The
current terms of two directors expire in this year, three expire in 1998 and two
expire in 1999.

<TABLE>
<CAPTION>

                                            NOMINEES FOR ELECTION AS DIRECTOR AT THE 1997
                                                   ANNUAL MEETING OF STOCKHOLDERS

NAME                       AGE     PRESENT POSITION WITH THE COMPANY                          DIRECTOR SINCE
----                       ---     ---------------------------------                          --------------
<S>                        <C>     <C>                                                        <C>
Richard G. Berry           52      President, Chief Operating Officer and Director                 1994
Joseph W. O'Connor         51      Director                                                        1994
</TABLE>
   
Richard G. Berry was appointed President and Chief Operating Officer of the
Company on January 21, 1997.  Prior to that time, Mr. Berry served as the
Executive Vice President and a director of the Company since its formation in
May 1994 and has served as the Executive Vice President of Evans Withycombe,
Inc. since 1992.
    

                                       23
<PAGE>

From 1983 to 1992, Mr. Berry served as Chairman of the Board of Berry and Boyle,
a real estate investment and development management company.  Prior to 1983, Mr.
Berry served as Executive Vice President of Hutton Real Estate Services and was
responsible for that firm's real estate investment and management activities.
Mr. Berry earned a Bachelor of Architecture degree and a Masters of Business
Administration degree from the University of Michigan.  He also served as an
officer of a United States Navy mobile construction battalion for three years.

Joseph W. O'Connor became a director of the Company concurrently with the
closing of the Initial Public Offering in August 1994.  Mr. O'Connor has been
active in real estate since 1970 and has served for 14 years as the President
and Chief Executive Officer of Copley Real Estate Advisors, Inc.  In 1996,
Copley Real Estate Advisors merged with Aldrich, Eastman and Waltch to form AEW
Capital Management L.P. where Mr. O'Connor is currently Co-Chairman.
Mr. O'Connor is a graduate of Holy Cross College and earned his Masters of
Business Administration Degree at Harvard Business School.  He has lectured
extensively and is affiliated with numerous real estate professional
organizations and community affairs.  At the present time, Mr. O'Connor is
either a Director or Trustee of the following entities:  The Urban Land
Institute, Copley Properties, Inc., The New England Aquarium, Harvard Management
Company, Children's Hospital and the MIT Center for Real Estate Development.

<TABLE>
<CAPTION>

                                                   DIRECTORS CONTINUING IN OFFICE

                                                                                                    DIRECTOR        TERM
NAME                              AGE                  PRESENT POSITION WITH THE COMPANY              SINCE        EXPIRES
----                              ---                 ---------------------------------            --------       -------
<S>                              <C>                  <C>                                          <C>            <C>
Stephen O. Evans                  51                      Chairman of the Board and
                                                            Chief Executive Officer                   1994          1998
F. Keith Withycombe               52                               Director                           1994          1999
Joseph F. Azrack                  49                               Director                           1994          1998
G. Peter Bidstrup                 66                               Director                           1994          1999
John O. Theobald II               52                               Director                           1994          1998
</TABLE>
   
Stephen O. Evans has served as the Chairman of the Board and Chief Executive
Officer of the Company since its formation in May 1994.  Mr. Evans founded the
predecessor of the Company in 1977 and served as Chairman of the Board and Chief
Executive Officer.  From 1973 to 1977, Mr. Evans was Investment Vice President
of W.R. Schulz & Associates, at that time Arizona's largest apartment
development company.  He earned his Bachelor of Science in Business
Administration and Masters of Business Administration degrees from Arizona State
University.  He also served as an officer in the United States Air Force for
four years.  Mr. Evans affiliations include National Multi-Housing Council;
National Association of Real Estate Investment Trusts (NAREIT); Lambda Alpha, a
National Land Economic Fraternity; and Urban Land Institute.
    
   
F. Keith Withycombe has served as a director of the Company since its formation
in May 1994 and served as the President and Chief Operating Officer of the
Company since its formation until January 21, 1997.  Prior to that time,
Mr. Withycombe served as the President of Evans Withycombe, Inc.  From 1973 to
1981, Mr. Withycombe was Vice President and a Managing Partner for W.R. Schulz &
Associates where he was responsible for the development and management of a
large number of apartment projects, in addition to corporate responsibilities.
Mr. Withycombe is a Certified Property Manager.  He is a graduate of the
United States Air Force Academy with an Engineering Sciences degree, and earned
a Master of Industrial Engineering degree from Arizona State University.  He
also served as an officer in the United States Air Force for six years.
    

Joseph F. Azrack became a director of the Company concurrently with the closing
of the Company's Initial Public Offering in August 1994.  Mr. Azrack is
President and Chief Executive Officer of AEW Capital Management, L.P., a Boston
based real estate investment advisory firm. Mr. Azrack has over 23 years
experience in the real estate investment industry.  He is past Chairman of the
Pension Real Estate Association.  Mr. Azrack is also a


                                       24
<PAGE>

Trustee of the Urban Land Institute, Past Chairman of the ULI's Task Force on
Real Estate Capital Markets and is a member of the National Realty Committee.
He is also a member of the Board of Directors of La Quinta Inns, and a member of
the Taubman Realty Group, L.P. partnership committee.  Mr. Azrack is also a past
adjunct professor of Real Estate Finance at Columbia University's Graduate
School of Business Administration.  He is a graduate of Villanova University
(B.S.) and Columbia University (M.B.A.).

   
Peter Bidstrup became a director of the Company concurrently with the closing of
the Company's Initial Public Offering in August 1994.  Mr. Bidstrup formed
Doubletree, Inc. in 1969 and was Chairman and Chief Executive Officer of the
company and its successor, Met Hotels, Inc. until 1991.  Since 1991,
Mr. Bidstrup has been a principal officer and director of Bid-Group, Inc., CDT
Investments, Inc. and GA Investments, Inc.  Manager, COPA Capital, L.L.C.
Mr. Bidstrup also is the founder of Homeward Bound, a non-profit housing
organization.  His memberships include Association for Corporate Growth; Dean's
Council of 100, ASU College of Business; Entrepreneurial Fellow, University of
Arizona; Lambda International; the Board of Directors of the World President's
Organization; the Board of Directors of the Arizona Community Foundation.
Mr. Bidstrup holds a Bachelor of Science Degree from the United States Military
Academy and a Master of Business Administration Degree from the Harvard Graduate
School of Business Administration.
    

John O. Theobald II became a director of the Company concurrently with the
closing of the Company's Initial Public Offering in August 1994.  Since 1988,
Mr. Theobald has served as Senior Vice President and General Counsel for The
Pointe Group, Ltd., a privately owned  real estate company operating in Arizona
and Southern California with activities including residential, office,
industrial, land development and resort development and management.  From 1973
to 1988, Mr. Theobald was a partner in the law firm of McLoone, Theobald &
Galbut, specializing in real estate and corporate law.  His memberships includes
the Boards of Directors of St. Luke's Charitable Health Trust, Herrington
Arthritis Research Center; and The Arizona Historical Foundation.  Mr. Theobald
holds an AB Degree from Princeton University and a law degree from the
University of Arizona.

On two occasions (April 1992 and October 1992) when unable to reach a negotiated
settlement with its secured lenders, two partnerships in which Mr. Evans and/or
Mr. Withycombe had an interest elected to file a petition for relief under
Chapter 11 of the United States Bankruptcy Code.  In both cases, the
partnerships were single-purpose entities, each owning one apartment project.
In one case, the partnership was a general partnership in which a corporation
wholly owned by Mr. Evans had a 16.7% non-controlling interest.  In the other
case, the partnership was a limited partnership whose corporate general partner
was wholly owned by secured creditors being paid off in accordance with the
applicable settlement agreement and the bankruptcy petition being voluntarily
dismissed by the parties.

   
DIRECTOR DESIGNATION AGREEMENT.  The Company has entered into a Director
Designation Agreement with each of AEW Partners, L.P. ("AEW"), CIIF
Associates II Limited Partnership, a Delaware limited partnership ("Copley"),
Mr. Evans and Mr. Withycombe.  Pursuant to the terms of such agreement, (a) AEW
has the right to designate for nomination one director for a period of five
years following the Company's Initial Public Offering, so long as they continue
to hold at least a 7.5% interest in the Company (giving effect to the exchange
of all Units (as defined below under "Security Ownership of Certain Beneficial
Owners and Management")) for shares of Common Stock and (b) Mr. Evans and
Mr. Withycombe shall each have the right to designate themselves to serve as
directors of the Company so long as each of them continues to hold a 7.5%
interest in the Company (giving effect to the exchange of all Units for shares
of Common Stock) or they jointly hold a 12.5% interest in the Company (giving
effect to the exchange of all Units for shares of Common Stock) and each of them
continues to serve as an executive officer of the Company.  Pursuant to the
Director Designation Agreement, (y) each of AEW, Copley, Mr. Evans and
Mr. Withycombe have agreed to vote their Common Shares for the persons nominated
for director under the Director Designation Agreement and (z) Mr. Azrack is
AEW's initial designee to the Board of Directors and Mr. O'Connor is Copley's
initial designee to the Board of Directors. In connection with selling stock in
the Company's May 1996 Offering,  Copley owned less than a 7.5 % interest in the
Company.  As a result,  Copley has lost its right to designate for nomination
one director in the Company.
    


                                       25
<PAGE>
EXECUTIVE OFFICERS OF THE REGISTRANT

The following table sets forth, as of January 27, 1997, the names, ages and
positions of each of the Company's executive officers.

<TABLE>
<CAPTION>

          NAME             AGE                         POSITION
     --------------------  ---       -------------------------------------------------
     <S>                   <C>       <C>
     Stephen O. Evans      51        Chairman of the Board and Chief Executive Officer
     Richard G. Berry (1)  52        President, Chief Operating Officer and Director
     Jay E. Northrop       51        Senior Vice President--Property Management
     G. Edward O'Clair     53        Senior Vice President--Construction
     Paul R. Fannin        40        Senior Vice President , Chief Financial Officer,
                                         Treasurer and Secretary
</TABLE>

     (1)  Richard G. Berry was appointed President and Chief Operating Officer
          on January 21, 1997.
   
Stephen O. Evans has served as the Chairman of the Board and Chief Executive
Officer of the Company since its formation in May 1994.  Mr. Evans founded the
predecessor of the Company in 1977 and served as Chairman of the Board and Chief
Executive Officer.  From 1973 to 1977, Mr. Evans was Investment Vice President
of W.R. Schulz & Associates, at that time Arizona's largest apartment
development company.  He earned his Bachelor of Science in Business
Administration and Masters of Business Administration degrees from Arizona State
University.  He also served as an officer in the United States Air Force for
four years.  Mr. Evans affiliations include National Multi-Housing Council;
National Association of Real Estate Investment Trusts (NAREIT); Lambda Alpha, a
National Land Economic Fraternity; and Urban Land Institute.
    
   
Richard G. Berry was appointed President and Chief Operating Officer of the
Company on January 21, 1997.  Prior to that time, Mr. Berry served as the
Executive Vice President and a director of the Company since its formation in
May 1994  and has served as the Executive Vice President of Evans Withycombe,
Inc. since 1992.  From 1983 to 1992, Mr. Berry served as Chairman of the Board
of Berry and Boyle, a real estate investment and development management company.
Prior to 1983, Mr. Berry served as Executive Vice President of Hutton Real
Estate Services and was responsible for that firm's real estate investment and
management activities.  Mr. Berry earned a Bachelor of Architecture degree and a
Masters of Business Administration degree from the University of Michigan.  He
also served as an officer of a United States Navy mobile construction battalion
for three years.
    
   
Jay E. Northrop has served as a Senior Vice President -- Property Management of
the Company since its formation in May 1994.  From 1981 to 1994, Mr. Northrop
served as Senior Vice President -- Property Management of Evans Withycombe, Inc.
Prior to that time, Mr. Northrop served as a District Manager for W.R. Schultz &
Associates, where he was responsible for the property operations of a large
number of apartment communities.  Mr. Northrop holds a Bachelor of Science
degree in Business Administration from Arizona State University.
    
   
G. Edward O'Clair has served as the Senior Vice President -- Construction of the
Company since its formation in May 1994.  From 1978 to 1994, Mr. O'Clair served
as the Senior Vice President -- Construction of Evans Withycombe, Inc.  Mr.
O'Clair has been involved in the construction management field since 1967.
Prior to joining Evans Withycombe's predecessor in 1978, Mr. O'Clair supervised
the construction of numerous residential and commercial projects for Stanley
Development Company and C.J. Hassett Corporation, both located in Arizona.
Mr. O'Clair is a licensed general contractor in the state of Arizona and holds a
Bachelor of Science degree in Business Administration from Arizona State
University.
    
   
Paul R. Fannin has served as the Senior Vice President. Chief Financial Officer,
Treasurer and Secretary of the Company since its formation in May 1994 and was
appointed Secretary in 1996.  Prior to that time, Mr. Fannin

                                       26
<PAGE>

served as the Vice President -- Asset Management of Evans Withycombe, Inc. since
1986.  From 1983 to 1986, Mr. Fannin served as the Director of Finance of an
Arizona real estate development firm for three years, and was a member of the
tax staff of a public accounting firm for a period of three years.  Mr. Fannin
is a Certified Public Accountant licensed in the State of Arizona and holds a
Bachelor of Science degree in Accounting from the University of Arizona and a
Masters of Business Administration degree from Arizona State University.
    

ITEM 11.  EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The Company was organized as a Maryland corporation in May 1994 and commenced
operations in connection with the consummation of its Initial Public Offering on
August 17, 1994.  Prior to the its Initial Public Offering, the Company did not
pay any compensation to its executive officers. The following table sets forth
information concerning the compensation awarded to, earned by or paid during the
last three fiscal years to the Company's Chief Executive Officer and to each of
the four most highly compensated executive officers of the Company whose cash
compensation exceeded $100,000 for the fiscal year ended December 31, 1996 (the
"Named Executive Officers").


                                       27
<PAGE>
                                       
                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>

                                                                                                        LONG TERM
                                                         ANNUAL COMPENSATION                        COMPENSATION AWARDS
                                                ---------------------------------------   ---------------------------------------
                                                                                          RESTRICTED     SECURITIES 
                                                                           OTHER ANNUAL     STOCK        UNDERLYING      ALL OTHER
                                       YEAR     SALARY (2)     BONUS       COMPENSATION    AWARDS (3)   OPTIONS/SARS   COMPENSATION
NAME AND PRINCIPAL POSITION             (1)        $             $            $                 $            #             (4) $
---------------------------            -----    ----------     -------     ------------    ----------   ------------   ------------
<S>                                    <C>      <C>            <C>         <C>             <C>          <C>             <C>   
Stephen O. Evans....................    1996     $204,000      $     --     $ 14,400          --          45,000        $  2,918
 Chairman of the Board and Chief        1995      204,000            --           --          --              --           2,079
 Executive Officer                      1994       71,538        37,500           --          --         150,000           3,179

0. Keith Withycombe (5).............    1996      199,313            --       12,000          --          45,000           2,871
 President and Chief Operating          1995      204,000            --           --          --              --           1,853
 Officer                                1994       45,000        37,500           --          --         150,000           2,738

 Richard G. Berry (5)                   1996      181,188            --       12,000      40,006          54,000           1,812
   Executive Vice President             1995      165,000            --           --          --              --           2,310
                                        1994       53,654        28,125           --          --          65,000           2,767

 G. Edward O'Clair..................    1996      104,500            --        6,000          --          22,500           2,610
   Senior Vice President--              1995       99,493            --           --     423,240              --           1,014
   Construction                         1994       34,219         4,875           --          --           35,000          1,913

Paul R. Fannin......................    1996      116,000        15,000        3,000          --           30,000          1,784
   Senior Vice President-- Chief        1995      103,600            --        3,058     193,160               --          1,857
   Financial Officer, Treasurer and     1994       32,192         3,750        1,071          --           35,000            322
   Secretary
</TABLE>

---------

   
(1)  Compensation information contained in the above table for 1994 represents 
     the period from August 17, 1994 (the date of the Initial Public Offering)
     through December 31, 1994.

(2)  On an annualized basis in 1994, the salaries for the Named Executive
     Officers would be:  $200,000 for each of Messrs. Evans and Withycombe,
     $150,000 for Mr. Berry, $95,667 for Mr. O'Clair, and $90,000  for Mr.
     Fannin.
(3)  An aggregate of 82,802 shares of "restricted stock" were issued to certain
     officers of the Company in August 1995 in connection with the continuation
     of an executive incentive deferred compensation plan of a predecessor to
     the Company, including 21,162 shares to Mr. O'Clair and 9,658 shares to Mr.
     Fannin.  Such shares vest over a three-year period after issuance and upon
     issuance such shares had voting and dividend rights with one-third of the
     shares vesting in August 1996.  The value of the restricted stock at the
     end of the last fiscal year was $454,983 for Mr. O'Clair, and $193,160 for
     Mr. Fannin.
(4)  Amounts shown in this column represent Company contributions to the
     Company's 401(k) Plan.
    

                                       28
<PAGE>

(5)  Mr. Withycombe resigned as President and Chief Operating Officer of the
     Company effective January 21, 1997.  Mr. Withycombe remains a director of
     the Company.  On January 21, 1997, Richard G. Berry was appointed President
     and Chief Operating Officer of the Company.

INFORMATION CONCERNING STOCK OPTIONS

The following table contains information concerning the grant of stock options
under the Company's Plan for the 1996 fiscal year to the Named Executive
Officers.  The table also lists potential realizable values of such options on
the basis of assumed annual compounded stock appreciation rates of 5% and 10%
over the life of the options which are set at a maximum of ten years.

                      OPTION GRANTS IN THE LAST FISCAL YEAR
                                INDIVIDUAL GRANTS

<TABLE>
<CAPTION>
                                                                                                    POTENTIAL REALIZABLE VALUE
                                                                                                         AT ASSUMED ANNUAL
                           NUMBER OF      PERCENT OF TOTAL                                                RATES OF SHARE
                          SECURITIES           OPTIONS            EXERCISE                              PRICE APPRECIATION
                          UNDERLYING           GRANTED             OR BASE                              FOR OPTION TERM (4)
                        OPTIONS GRANTED    TO EMPLOYEES IN          PRICE          EXPIRATION      ----------------------------
       NAME                 (#)(1)           FISCAL YEAR          ($/SH)(2)          DATE(3)          5%($)(2)       10%($)(2)
----------------------  ---------------    ---------------      ------------     --------------     ------------   ------------
<S>                          <C>                <C>               <C>             <C>                 <C>          <C>
Stephen O. Evans             45,000             13.0%              $22.25         February 2006       $566,000     $1,434,000
F. Keith Withycombe          45,000             13.0%              $22.25         February 2006        566,000      1,434,000
Richard G. Berry             54,000             15.6%              $22.25         February 2006        705,000      1,785,000
G. Edward O'Clair            22,500              6.3%              $22.25         February 2006        283,000        717,000
Paul R. Fannin               35,000              8.7%              $22.25         February 2006        377,000        957,000
</TABLE>


(1)  These options generally will vest in three equal installments on the first,
     second and third anniversaries of the date of grant in the case of Messrs.
     Evans and Withycombe and in four equal installments for the other officers.
(2)  Based on the price per Common Share at the award date.
(3)  The expiration date of the options is ten years from the date of the award.
(4)  The potential realizable value is reported net of the option price, but
     before income taxes associated with exercise.  These amounts represent
     assumed annual compounded rates of appreciation at 5% and 10% only from the
     date of grant to the expiration date of the option.

The following table provides information related to the exercise of stock
options during the year ended December 31, 1996 by each of the Named Executive
Officers and the 1996 fiscal year-end value of unexercised options.  There were
no stock options exercised in 1996.


                                       29

<PAGE>

                AGGREGATED OPTION  EXERCISES IN LAST FISCAL YEAR
                        AND FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>


                                                                                 NUMBER OF
                                                                                 SECURITIES
                                                                                 UNDERLYING                 VALUE OF
                                                                                UNEXERCISED               UNEXERCISED
                                                                                  OPTIONS                 IN-THE-MONEY
                                                                               AT FY-END (#)           OPTIONS AT FY-END
                                  SHARES ACQUIRED     VALUE REALIZED ($)        EXERCISABLE/              EXERCISABLE/
          NAME                    ON EXERCISE (#)                              UNEXERCISABLE          UNEXERCISABLE ($)(1)
-------------------------      --------------------   ------------------     -----------------        --------------------

<S>                                      <C>                  <C>              <C>                      <C>
Stephen O. Evans                         -                    -                111,250/83,750           $100,000/$50,000
F. Keith Withycombe (2)                  -                    -                100,000/83,750            100,000/50,000
Richard G. Berry                         -                    -                 46,000/73,000             32,500/32,500
G. Edward O'Clair                        -                    -                 23,125/34,375             17,500/17,500
Paul R. Fannin                           -                    -                 25,000/35,000             17,500/17,500
</TABLE>


(1)  Market value of underlying Common Stock on date of fiscal year-end minus
     the exercise price.  The closing price on December 31, 1996 was $21.00.
(2)  Keith Withycombe resigned as President and Chief Operating Officer
     effective January 21, 1997 and remains a director of the Company.  Richard
     G. Berry was appointed President and Chief Operating Officer on such date.

The Company does not have any stock appreciation rights.

EMPLOYMENT AGREEMENTS

On August 17, 1994, each of Stephen O. Evans and Richard G. Berry entered into
employment agreements with the Company for a term of three years.  The
agreements provide for annual compensation in the amounts set forth in the
"Summary Compensation Table" above and incentive compensation on the terms set
forth in "Incentive Compensation Plan" below.  Each of the employment agreements
provides for certain severance payments equal to base compensation for the
longer of the balance of the employment term or 18 months in the event of
disability or termination by the Company without cause or by the employee with
"good reason."

The Company generally will have "cause" to terminate Messrs. Evans or Berry if
such person (i) engages in acts or omissions with respect to the Company which
constitute intentional misconduct or a knowing violation of law, (ii) personally
receives a benefit of money, property or services from the Company or from
another person dealing with the Company in violation of law, (iii) breaches his
non-competition agreement with the Company, (iv) breaches his duty of loyalty to
the Company, (v) engages in gross negligence in the performance of his duties or
(vi) fails to perform services that have been reasonably requested of him by the
Board of Directors following applicable notice and cure periods and which are
consistent with the terms of his employment agreement. Messrs. Evans or Berry
will each have "good reason" to terminate his employment with the Company in the
event of any reduction in his compensation without his consent, any material
breach or default by the Company under his employment agreement or any
substantial diminution in his duties.

As part of their employment agreements, each of Messrs. Evans and Berry agreed
to a noncompetition covenant with the Company which generally prohibits them
(with certain specified exceptions) from engaging in or carrying on, directly or
indirectly, whether as an advisor, principal, agent, partner, officer, director,
employee, shareholder, associate or consultant to any person, partnership,
corporation or any other business entity which is engaged in the


                                       30

<PAGE>

development, construction, acquisition or management of multifamily apartment
properties in the North America except by or through the Company for the longer
of (a) 12 months following the termination of employment with the Company or
(b) three years after the closing of the Company's Initial Public Offering,
without the prior written consent of the Board of Directors; provided, however,
if such person's employment is terminated by the Company without "cause" or by
the employee for "good reason," the agreement not to compete will terminate upon
the termination of employment.

On January 21, 1997, Mr. Withycombe resigned as an officer of the Company and
his duties were assumed by Mr. Berry.  Mr. Withycombe will continue to serve in
his capacity as a Director of the Company.  Pursuant to an employment agreement
between the Company and Mr. Withycombe, Mr. Withycombe is prohibited (with
certain specified exceptions) from engaging in or carrying on, directly or
indirectly, whether as an advisor, principal, agent, partner, officer, director,
employee, shareholder, associate or consultant to any person, partnership,
corporation or any other business entity which is engaged in the development,
construction, acquisition or management of multifamily apartment properties in
North America except by or through the Company for one year following the
termination of his employment with the Company.


                                       31

<PAGE>

1994 STOCK INCENTIVE PLAN

GENERAL.  In August 1994 the Company's Board of Directors adopted, and the
stockholders of the Company approved, the 1994 Stock Incentive Plan (sometimes
referred to herein as the "1994 Plan").  The maximum number of shares of Common
Stock that may be issued pursuant to Awards (as defined below) under the 1994
Plan is 1,830,000, subject to adjustment as set forth in the 1994 Plan.  No
person shall be eligible to be granted options and other Awards with respect to
an excess of 250,000 shares of Common Stock during any one calendar year.  The
purpose of the 1994 Plan is to enable the Company, the Operating Partnership,
the Management Company (as defined below) and their subsidiaries to attract,
retain and motivate their employees and consultants by providing for or
increasing the proprietary interests of such employees and consultants in the
Company and to enable the Company to attract, retain and motivate its
nonemployee directors and further align their interests with those of the
Company's stockholders by providing for or increasing the proprietary interest
of such directors in the Company.  Any person, including any director of the
Company, who is an employee of or consultant to the Company, the Operating
Partnership, the Management Company or any of their subsidiaries (an
"Employee"), is eligible to be considered for the grant of Awards under the 1994
Plan.  The 1994 Plan also provides for the automatic grant of options to
directors of the Company who are not employees ("Nonemployee Directors").

The 1994 Plan is required to be administered by a committee of the Board of
Directors consisting of two or more directors, each of whom is a "Disinterested
Person," as such term is defined in Rule 16b-3, as amended from time to time,
promulgated under the Securities Exchange Act of 1934.  Subject to the
provisions of the 1994 Plan, the committee is authorized and empowered to
administer the 1994 Plan, including, without limitation, adopting, amending and
rescinding rules and regulations relating to the 1994 Plan; determining which
persons are Employees under the 1994 Plan and to which of such Employees, if
any, Awards shall be granted under the 1994 Plan; granting Awards to Employees
and determining the terms and conditions of Awards granted under the 1994 Plan,
and the agreements relating to such Awards; and construing the 1994 Plan and the
terms, conditions and restrictions of any Awards and Nonemployee Director
Options granted under the 1994 Plan.

AWARDS TO EMPLOYEES.  The committee is authorized under the 1994 Plan to enter
into any type of arrangement with an Employee, consistent with the provisions of
the 1994 Plan, that involves or might involve the issuance of (a) Common Stock,
(b) an option, warrant, convertible security, stock appreciation right or
similar right, with an exercise or conversion privilege at a price related to
the Common Stock, or (c) any other security or benefit with a value derived from
the value of the Common Stock (any such arrangement is defined herein as the
"grant" of an "Award").

Awards are not restricted to any specified form or structure and may include,
without limitation, sales or bonuses of stock, restricted stock, stock options,
reload stock options, stock purchase warrants, other rights to acquire stock,
securities convertible into or redeemable for stock, stock appreciation rights,
limited stock appreciation rights, phantom stock, dividend equivalents,
performance units or performance shares.  An Award may consist of any one of
such security or benefit, or of two or more of them in tandem or in the
alternative.  A stock option granted to an employee of the Company may be an
Incentive Option or a Nonqualified Option (as defined below), while a stock
option granted to any other Employee will be a Nonqualified Option.  The maximum
number of Common Stock that may be issued pursuant to Incentive Options granted
under the 1994 Plan is 1,000,000.  Common Stock may be issued pursuant to an
Award for any lawful consideration as determined by the committee, including,
without limitation, services rendered by the recipient of such Award.

NONEMPLOYEE DIRECTOR OPTIONS.  The 1994 Plan provides that each Nonemployee
Director will, on the day of the annual meeting of stockholders of the Company,
or any adjournment thereof, at which directors of the Company are elected,
automatically be granted a Nonemployee Director Option to purchase 2,500 shares
of Common Stock.  In addition, each Nonemployee Director shall automatically be
granted a Nonemployee Director Option to purchase 2,500 shares of Common Stock
upon appointment to the Board of Directors.  Each Nonemployee Director Option
will have an exercise price equal to the greater of:  (i) the fair market value
of the underlying shares subject to such option on the date of its grant or
(ii) the aggregate par value of such Common Stock on such date.  Each


                                       32

<PAGE>

Nonemployee Director Option granted pursuant to the 1994 Plan shall become
exercisable for the first time to purchase 100% of the Common Stock subject
thereto one year after the date of grant of such Nonemployee Director Option.

AMENDMENT AND TERMINATION OF 1994 PLAN.  The 1994 Plan  may be amended or
terminated by the Board of Directors at any time, except that the provisions
relating to Nonemployee Director Options may not be amended more than once every
six months, other than to comport with changes in the Internal Revenue Code (the
"Code"), ERISA, or the rules thereunder.  Additionally, no amendment or
termination of the 1994 Plan shall deprive the recipient of any Award or
Nonemployee Director Option that was previously granted to the recipient under
the 1994 Plan of his or her rights thereto without the recipient's consent.

Unless sooner terminated by the Board of Directors, the 1994 Plan will terminate
on August 4, 2004.  After termination of the 1994 Plan, no additional Awards or
Nonemployee Director Options may be granted thereunder.  Although Common Stock
may be issued after August 4, 2004 pursuant to the exercise of Awards and
Nonemployee Director Options granted prior to such date, no Common Stock shall
be issued under the 1994 Plan after August 4, 2014.

INCENTIVE COMPENSATION PLAN

   
The Company has established an incentive compensation plan for officers and key
employees of the Company.  This plan provides for payment of a cash bonus to
participating officers and key employees if certain performance objectives
established for each individual are achieved.  Pursuant to such plan, each of
Messrs. Evans and Berry shall be entitled to receive a cash bonus of up to 100%
of their respective base compensation, respectively, upon the achievement by the
Company of specified targets of growth in funds available for distribution per
share as determined by the Compensation Committee.  The amount of the bonus to
other participating officers and key employees is based on a formula determined
for each employee by the Compensation Committee or the Chief Executive Officer
and President of the Company, which is based on growth in funds available for
distribution and specific business unit goals.
    

401(K) PLAN

The Company maintains through Evans Withycombe Management, Inc. (the "Management
Company"), a qualified retirement plan, with a salary deferral feature designed
to qualify under Section 401 of the Internal Revenue Code (the "401(k) Plan").
The 401(k) Plan permits employees of the Management Company to defer a portion
of their compensation in accordance with the provisions of Section 401(k) of the
Code.  The 401(k) Plan currently allows participants to defer up to 20% of their
eligible compensation on a pre-tax basis subject to certain maximum amounts.
Matching contributions may be made in amounts and at times determined by the
Company.  Amounts contributed by the Company for a participant will vest over
five years and will be held in trust until distributed pursuant to the terms of
the 401(k) Plan.  Employees are eligible to participate in the 401(k) Plan if
they meet certain requirements concerning minimum age and period of credited
service.  Distributions from participant accounts will not be permitted before
age 59 1/2, except in the event of death, disability, certain financial
hardships or termination of employment.

For the fiscal year ended December 31, 1996, the Company contributed an
aggregate of approximately $13,000 pursuant to the 401(k) Plan on behalf of the
Named Executive Officers and $113,000 on behalf of all employees as a group.  At
December 31, 1996, a total of 272 of the Company's employees were participants
in the 401(k) Plan.

EXECUTIVE INCENTIVE DEFERRED COMPENSATION PLAN

   
Prior to the Company's Initial Public Offering, Evans Withycombe, Inc. had in
place an Executive Incentive Deferred Compensation Plan (the "Executive Plan").
Pursuant to the Executive Plan, certain executives of Evans Withycombe, Inc.
(the "Participants") were granted unfunded, unsecured rights to receive cash
payments based on the distributions from certain partnerships in which Evans
Withycombe, Inc. owned an interest.  The awards would


                                       33

<PAGE>

have vested over a six-year period from the date of grant.  In connection with
the consummation of the Company's Initial Public Offering, all rights of
Participants under the Executive Plan were canceled, and the Participants
received (a) an aggregate of approximately $2.6 million in cash funded by the
Management Company prior to the offering and (b) the right to receive an
aggregate of 98,500 shares of restricted stock from the Company one year
following the offering if they remained as employees of the Company during such
period, of which 82,802 shares were issued on or about August 17, 1995.  One
third of the shares will vest on each of the second, third and fourth
anniversaries of the offering based  upon the continued employment by the
Company of the Participants.
    

DIRECTOR COMPENSATION

The Company currently pays each non-employee director a fee of $12,000 per year
for services as a director plus $500 for attendance in person at each meeting of
the Board of Directors (including telephonic board meetings), but not for
committee meetings.  The Company also reimburses the directors for travel
expenses incurred in connection with their duties as directors of the Company.
The Board of Directors has approved a plan to allow the non-employee directors
to elect to receive payment of their retainer fees in the form of Common Stock
or options to purchase Common Stock rather than in cash.   See "Non-Employee
Directors Stock Plan" below.  In addition, pursuant to the terms of the
Company's 1994 Stock Incentive Plan, each non-employee director will
automatically receive on the date of each annual meeting an option to purchase
2,500 shares of Common Stock, at an exercise price equal to the fair market
value of such shares on the date of grant.  See "Item 11. Executive
Compensation--1994 Stock Incentive Plan."  The Company has been advised that any
compensation received by Mr. O'Connor is as a nominee for CIIF Associates II
Limited Partnership, a Delaware limited partnership.

                        NON-EMPLOYEE DIRECTORS STOCK PLAN

The Board of Directors adopted and the Company's stockholders approved the Evans
Withycombe Residential, Inc. Non-Employee Directors Stock Plan (the "Directors
Plan").  As discussed above, non-employee directors of the Company currently
receive cash compensation as an annual retainer and for meeting fees.  The
Directors Plan is intended to more closely align the directors' compensation to
the Company's stock price, to further the perspective of directors as
stockholders, and to promote the long-term growth and financial success of the
Company by enabling the Company to attract, retain and motivate such persons by
providing for or increasing their proprietary interest in the Company.  Under
the Directors Plan, non-employee directors will have the ability to elect to
receive their quarterly directors' retainer (including meeting fees) in the form
of Common Stock or options to purchase Common Stock in lieu of the cash they
would otherwise be entitled to receive.

ELIGIBILITY.  Each director on the Board of Directors who on any date when the
Company pays directors' retainer fees (each, a "Payment Date") is not an
employee of the Company or a subsidiary of the Company is automatically a
participant in the Directors Plan.

ADMINISTRATION.  The timing, amount and persons eligible to receive stock or
options under the Directors Plan are prescribed by the terms of the Directors
Plan and requires no discretionary action by any administrative body.  Each
director may elect, six months before a Payment Date, to receive retainer fees
payable on such date in the form of stock or options.  Subject to the foregoing,
the Directors Plan is administered by the Compensation Committee of the Board of
Directors and by such persons to whom it may delegate any ministerial duties.
The Directors Plan is intended to operate in a manner that exempts grants of
stock and options under the Directors Plan from Section 16(b) of the Exchange
Act and that does not affect the status of participants in the Directors Plan as
"disinterested administrators" under Exchange Act Rule 16b-3, for purposes of
their administering other stock-based plans of the Company.

STOCK SUBJECT TO THE DIRECTORS PLAN.  The aggregate number of shares of the
Company's Common Stock that can be issued under the Directors Plan may not
exceed 100,000.  Such number of shares shall be appropriately adjusted by the
Compensation Committee if the Company's Common Stock is affected through a
reorganization, merger, consolidation, recapitalization, restructuring,
reclassification, dividend (other than quarterly cash dividends) or


                                       34

<PAGE>

other distribution, stock split, spin-off or sale of substantially all of the
Company's assets.  Stock may not be issued under the Directors Plan more than
ten years after the date of stockholder approval of the Directors Plan, except
that Common Stock may be issued pursuant to the exercise of options granted
prior to such date for a period of five years following such date.

STOCK AND OPTIONS AWARDS. Each participant in the Directors Plan may choose,
through delivery of an irrevocable election six months in advance to the
Company, to receive his or her directors retainer payment in the form of shares
(a "Stock Election") or as options to purchase shares (an "Option Election").
If a participant makes a Stock Election with respect to the retainer fee payable
on a quarterly Payment Date, then on such Payment Date, such participant in the
Directors Plan will receive of his or her retainer in the form of shares of
Common Stock.  The number of  shares to be received by a participant is equal to
the retainer fee amount which the director is entitled to receive divided by the
average closing price per share of the Common Stock reported for each of the
five business days preceding the Payment Date (the "Market Price").

If a participant makes an Option Election with respect to a Payment Date, then
on such Payment Date such participant shall be granted a nonqualified option to
purchase shares of Common Stock with the following terms: (i) the option shall
be immediately exerciseable, (ii) the option shall have a term of ten years, and
(iii) the exercise price of the shares subject to such option shall equal to 75%
of the Market Price.  The number of shares of Common Stock to be subject to such
option is equal to the retainer fee amount which the director is entitled to
receive divided by a number equal to 25% of the Market Price.  That is, each
such option will be granted with an exercise price that is 25% below the Market
Price such that the spread between the exercise price and the Market Price
multiplied by the number of shares subject to the option are, on the date of
grant, equal to the amount of cash otherwise payable to, but forgone by such
participant.

The number of shares to be received by any one director is not determinable in
advance because such number is dependent both on the amount of directors' fees
payable to such director and the trading price of the Company's Common Stock.
Participants shall have full beneficial ownership of shares awarded under the
Directors Plan, and shares received pursuant to exercise of options granted
under the Directors Plan, including the right to vote and to receive any
dividends payable with respect to such shares, subject to any restrictions on
transferability required under Exchange Act Rule 16b-3.

AMENDMENTS AND TERMINATION.  The Compensation Committee may alter, amend,
suspend or terminate the Directors Plan, with or without stockholder approval,
except that if required under Exchange Act Rule 16b-3 the provisions of the
Directors Plan designating persons eligible to participate in the Directors Plan
and specifying the amount of directors fees and the amount and timing of grants
under the Directors Plan may not be amended more than once every six months
other than to comport with changes in the Internal Revenue Code, the Employees
Retirement Income Security Act, or the rules thereunder.  The Directors Plan
also provides that, to the extent any amendment is required by Exchange Act Rule
16b-3 to be approved by stockholders in order for the Directors Plan to continue
to satisfy Rule 16b-3, such amendment to the Directors Plan shall not be made
without approval of stockholders.


ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information as of January 15, 1997  regarding
beneficial ownership of the Common Stock and Units of the Company by (i) each
person known by the Company to be a beneficial owner of more than 5% of the
Company's Common Stock, (ii) each director of the Company, (iii) the Chief
Executive Officer and each of the four highly compensated executive officers of
the Company whose cash compensation exceeded $100,000 for the fiscal year ended
December 31, 1996 and (iv) the Company's executive officers and directors as a
group.  "Units" are partnership interests in the Operating Partnership.  Units
are exchangeable by the holder for cash or, at the Company's option, shares of
Common Stock on a one-for-one basis (subject to adjustments) commencing in
August 1995.  For purposes of this Annual Report on Form 10-K/A, beneficial
ownership of securities is defined in accordance with the rules of the
Securities and Exchange Commission and generally means the power to vote or


                                       35

<PAGE>

exercise investment discretion with respect to securities, regardless of
economic interests therein.  Except as otherwise indicated, the Company believes
that the beneficial owners of Common Stock listed below have sole investment and
voting power with respect to such  shares, subject to community property laws
where applicable.

<TABLE>
<CAPTION>
                                    NUMBER OF
                                  COMMON SHARES      PERCENT OF ALL                            PERCENT OF
   NAME AND ADDRESS OF            BENEFICIALLY        COMMON SHARES         NUMBER OF           ALL UNITS          PERCENT OF
   BENEFICIAL OWNER(1)                OWNED            OUTSTANDING            UNITS            OUTSTANDING       EQUITY INTEREST
------------------------------   --------------     ----------------       ----------        --------------     ----------------

<S>                                  <C>                   <C>              <C>                    <C>                 <C>
Stephen O. Evans(2). . . . . .       248,252               1.3%             1,808,136              38.7%               8.9%
F. Keith Withycombe(3) . . . .       215,402               1.2%             1,674,886              35.8%               8.2%
Richard G. Berry(4). . . . . .        48,120                 *                110,000               2.3%                 *
G. Edward O'Clair(5) . . . . .        49,828                 *                  4,724                *                   *
Paul R. Fannin (6) . . . . . .        41,334                 *                   -                   -                   *
Joseph F. Azrack(7). . . . . .     2,452,900              13.4%                 __                  __                10.6%
Joseph W. O'Connor(8). . . . .       979,297               5.3%                 __                  __                 4.2%
G. Peter Bidstrup(10). . . . .        25,000                 *                  __                  __                   *
John O. Theobald II(10). . . .         6,000                 *                  __                  __                   *
AEW Partners, L.P. . . . . . .     2,447,900              13.3%                 __                  __                10.6%
CIIF Associates II Limited                                                                             
  Partnership, a Delaware                                                                              
  limited partnership. . . . .       974,297               5.3%                 __                  __                 4.2%
ABKB/LaSalle Group(11)........     1,906,750              10.4%                 --                  --                 8.3%

All Executive Officers and
  Directors as a Group (12
  persons)((7)(8)(9) . . . . .     4,112,522              22.0%             3,600,331              77.0%              33.0%
</TABLE>


*    Less than 1%.
(1)  Unless otherwise noted, the address for each of the persons or entities
     listed above is 6991 East Camelback Road, Suite A-200, Scottsdale, Arizona,
     85251.  The address for AEW and Mr. Azrack is 225 Franklin Street, Boston,
     Massachusetts 02110; the address for CIIF Associates II Limited Partnership
     and Mr. O'Connor is 399 Boylston Street, Boston, Massachusetts 02116; and
     the address for ABKB/LaSalle Securities Limited Partnership is 11 South
     LaSalle Street, Chicago, Illinois 60603.
(2)  Includes 111,250 Common Shares subject to options that are exercisable
     within 60 days.  Does not include 83,750 Common Shares subject to options
     that are not exercisable within 60 days.  Does not include shares of Common
     Stock issuable upon exchange of 1,808,136 Units.  All exchanges of Units
     for shares of Common Stock and exercise of stock options are subject to the
     Ownership Limit (as defined in the Company's Charter).  Without regard to
     the Ownership Limit, 1,808,136 Units owned by Mr. Evans would be presently
     exchangeable into a like number of shares of Common Stock and the amount
     and percentage of shares in the table above for Mr. Evans would be
     2,056,388 and 8.9%, respectively.
(3)  Includes 111,250 Common Shares subject to options that are exercisable
     within 60 days.  Does not include 83,750 Common Shares subject to options
     that are not exercisable within 60 days.  Does not include shares of Common
     Stock issuable upon exchange of 1,674,886 Units.  All exchanges of Units
     for shares of Common Stock and exercise of stock options are subject to the
     Ownership Limit (as defined in the Company's Charter).  Without regard to
     the Ownership Limit, 1,674,886 Units owned by Mr. Withycombe would be
     presently exchangeable into a like number of shares of Common Stock and the
     amount and percentage of shares in the table above for Mr. Withycombe would
     be 1,890,288 and 8.2%, respectively.
(4)  Includes 46,000 Common Shares subject to options that are exercisable
     within 60 days.  Does not include 73,000 Common Shares subject to options
     that are not exercisable within 60 days. Does not include shares of Common
     Stock issuable upon exchange of 110,000 Units.  The 110,000 Units owned by
     Mr. Berry are presently exchangeable into a like number of shares of Common
     Stock and, giving effect to


                                       36

<PAGE>

     such exchange, the amount and percentage of shares in the table above for
     Mr. Berry would be 158,120 and .7%, respectively.
(5)  Includes 23,125 Common Shares subject to options that are exercisable
     within 60 days.   Does not include 34,375 Common Shares subject to options
     that are not exercisable within 60 days. Does not include shares of Common
     Stock issuable upon exchange of 4,724 Units.  The 4,724 Units owned by Mr.
     O'Clair are presently exchangeable into a like number of shares of Common
     Stock and, giving effect to such change, the amount and percentage of
     shares in the table above for Mr. O'Clair would be 49,828 and .2%,
     respectively.
(6)  Includes 25,000 Common Shares subject to options that are exercisable
     within 60 days.  Does not include 35,000 Common Shares subject to options
     that are not exercisable within 60 days.  The percentage of shares in the
     table above for Mr. Fannin is 41,344 and .2%.
(7)  Includes 2,447,900 Common Shares held by AEW Partners, L.P. Mr. Azrack
     disclaims beneficial ownership of all of such Common Shares except 3,309
     Common Shares relating to his proportionate interest in AEW Partners, L.P.
     Mr. Azrack is the President and Co-Chairman of AEW Capital Markets, L.P..,
     the sole general partner of the sole general partner of AEW Partners, L.P
     and 2,500 common shares subject to options that are exerciseable within 60
     days.  Does not include 2,500 Common Shares subject to options that are not
     exercisable within 60 days.
(8)  Includes 974,297 Common Shares held by CIIF Associates II Limited
     Partnership, a Delaware limited partnership, as to which Mr. O'Connor
     disclaims beneficial ownership.  Mr. O'Connor is Co-Chairman of AEW capital
     Management, L.P. formerly Copley Advisors, Inc., the managing general
     partner of CIIF Associates II Limited Partnership and 2,500 common shares
     subject to options that are exerciseable within 60 days.  Does not include
     2,500 Common Shares subject to options that are not exercisable within 60
     days, which Mr. O'Connor holds as nominee of CIIF Associates II Limited
     Partnership.
(9)  Does not include 482,250 Common Shares subject to options that are not
     exercisable within 60 days.  Does not include shares of Common Stock
     issuable upon exchange of 3,600,331 Units held by Executive Officers and
     directors as a group. All exchanges of Units for shares of Common Stock and
     exercise of stock options are subject to the Ownership Limit (as defined in
     the Company's Charter).  Without regard for the Ownership Limit, 3,600,331
     Units owned by such persons would be presently exchangeable into a like
     number of shares of Common Stock, and the amount and percentage of shares
     in the table above for such persons would be 7,712,853 and 33.0%,
     respectively.
(10) Does not include 2,500 Common Shares subject to options that are not
     exercisable within 60 days.
(11) The information set forth is based on a Schedule 13G filed by LaSalle
     Advisors Limited Partnership ("LaSalle Advisors") and ABKB/LaSalle
     Securities Limited Partnership ("ABKB/LaSalle") with the SEC on October 10,
     1996 that identifies such entities as a "group" as defined in Section
     13(d)(3) of the Exchange Act.  Such Schedule 13G indicates that LaSalle
     Advisors Limited Partnership beneficially owns an aggregate of 1,006,900
     shares of Common Stock, of which it has sole and dispositive power over
     502,300 shares, shared voting power over 185,700 shares and shared
     dispositive power over 504,600 shares.  The Schedule 13G further indicates
     that ABKB/LaSalle beneficially owns 899,850 shares of Common Stock, of
     which it has sole voting and dispositive power over 201,600 shares, shared
     voting power over 566,450 shares and shared dispositive power over 698,250
     shares.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Certain entities affiliated with Messrs. Evans and Withycombe (the "Evans
Withycombe Entities") own a minority interest in joint ventures that own nine
multi-family apartment communities (the "Berry and Boyle Communities"), which
were not transferred to the Company in connection with the Formation
Transactions.  The Evans Withycombe Entities had a right of first refusal to
acquire the Berry and Boyle Communities upon a sale by a venture.  The Evans
Withycombe Entities had agreed to transfer any Berry Boyle Community subject to
the right of first refusal to the Company, if the Company so elects, at the
right of first refusal price  In the second quarter of 1996, the Company elected
not to acquire the Berry & Boyle communities and terminated its management
contracts on the nine multi-family apartment communities in exchange for
receiving a termination fee of $500,000.  In addition, five multifamily
apartment communities in which Evans Withycombe owns an interest were not
transferred to the Company.  The Management Company continues to manage these
five multi-family apartment communities for a fee pursuant to existing
management agreements.


                                       37

<PAGE>

                                     PART IV


ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
          FORM 8-K

(a)  The following documents are filed as part of this Report:

          1.   Report of Independent Auditors                              F-1

               Consolidated Balance Sheets as of
               December 31, 1996 and 1995.                                 F-2

               Consolidated Statements of Income for the years ended
               December 31, 1996,1995 and 1994.                            F-3

               Consolidated Statements of Stockholders'
               Equity for the years ended December 31, 1996,1995
               and 1994.                                                   F-4

               Consolidated Statements of Cash Flows for the years
               ended December 31, 1996,1995 and 1994                       F-5

               Notes to Consolidated Financial Statements                  F-6

          2.   Financial Statement Schedule required to be filed by
               ITEM 8 and Paragraph (d) of this ITEM 14.

               Schedule III - Real Estate Investments and Accumulated
               Depreciation as of December 31, 1996.                       F-17

               All other schedules for which provision is made in
               the applicable accounting regulation of the
               Securities and Exchange Commission are not
               required under the related instructions or are
               inapplicable and therefore have been omitted.

          3.   The Exhibits are listed in the index of Exhibits
               required by Item 601 of Regulation S-K at Item (c)
               below and are herein incorporated by reference.

   
(b)  A Current Report on Form 8-K dated December 24, 1996 was filed on December
     26, 1996 reporting under Item 2 the acquisition of  six  multifamily
     residential properties and Item 7 on the financial statements of 
     Parkview Terrace Club Apartments and Redlands Lawn and Tennis 
     Club Apartments for the year ended December 31, 1995 and the period 
     from January 1, 1996 through the date of acquisition and the pro forma 
     consolidated financial information of the properties acquired for the 
     year ended December 31, 1995 and the nine months ended September 30, 1996
    


                                       38

<PAGE>

     EXHIBIT 
     NUMBER  
     -------            DESCRIPTION OF DOCUMENT

     ** 3.1    Articles of Amendment and Restatement of the Company.

     ** 3.2    Amended and Restated Bylaws of the Company.

    ** 10.1    Amended and Restated Agreement of Limited Partnership of the
               Operating
               Partnership, dated as of August 17, 1994.

    *10.2.1    Articles of Incorporation of Evans Withycombe Management, Inc.

  ** 10.2.2    First Amendment to Articles of Incorporation of Evans Withycombe
               Management, Inc.

    ** 10.3    Amended and Restated Bylaws of Evans Withycombe Management Inc.

    ** 10.4    Certificate of Incorporation of Evans Withycombe Finance, Inc.

    ** 10.5    Bylaws of Evans Withycombe Finance, Inc.

    ** 10.6    Agreement of Limited Partnership for Evans Withycombe Finance
               Partnership, L.P.

    ** 10.7    Director Designation Agreement dated as of August 17, 1994.

    ** 10.8    Registration Rights Agreement among the Company and the persons
               named
               therein, dated as of August 17, 1994.

   ** #10.9    1994 Stock Incentive Plan.

     *10.10    Form of Indemnity Agreement between the Registrant and its
               directors and
               officers.

  ** #10.11    Employment Agreement among the Company, Evans Withycombe
               Management, Inc. and Stephen O. Evans.

  ** #10.12    Employment Agreement among the Company, Evans Withycombe
               Management, Inc. and F. Keith Withycombe.

  ** #10.13    Employment Agreement among the Company, Evans Withycombe
               Management, Inc. and Richard G. Berry.

     *10.14    Lease between the Company and 6991 Camelback Limited Partnership,
               dated
               October 5, 1993.

     *10.15    Asset Contribution Agreement by and among the Company and Evans
               Withycombe Residential, L.P., as purchasers, and the Sellers
               listed therein, dated as of June 9, 1994.

     *10.16    Property Contribution Agreement by and between the Company and
               AEW Partners, L.P., dated as of June 9, 1994.


                                       39

<PAGE>

     *10.17    Property Interests Contribution Agreement by and between the
               Registrant and CIIF Associates II Limited Partnership; Copley
               Pension Properties VI, A Real Estate Limited Partnership; New
               England Pension Properties V, A Real Estate Limited Partnership;
               and Copley Pension Properties VII, A Real Estate Limited
               Partnership, dated as of June 9, 1994.

   ** 10.18    Revolving Loan Agreement by and between Bank One, Arizona, NA and
               Evans Withycombe Residential, L.P., dated December 1, 1995.

   ** 10.19    Property Management Agreement by and between Evans Withycombe
               Residential, L.P. and Evans Withycombe Management, Inc. dated
               August 17,
               1994.

   ** 10.20    Property Management Agreement by and between Evans Withycombe
               Finance Partnership, L.P. and Evans Withycombe Management, Inc.
               dated as of August 17, 1994.

   ** 10.21    Deed of Trust with Assignment of Rents, Security Agreement and
               Fixture Filing made by Evans Withycombe Finance Partnership, L.P.
               to Lawyers Title of Arizona, Inc. dated as of August 17, 1994.

   ** 10.22    Property Contribution Agreement by and between Evans Withycombe
               Residential, L.P., Evans Withycombe Residential, Inc. and Acacia
               Creek Limited Partnership dated as of February 1, 1995.

   ** 10.23    Loan Agreement by and between Northwestern Mutual Life Insurance
               and Evans Withycombe Residential, dated December 15, 1995.

   ***10.24    Revolving Loan Agreement by and between the Banks named herein,
               Bank One Arizona, N.A., as administrative agent, and Bank of
               America National Trust and Savings Association and Wells Fargo
               Bank, National Association as co-agents, and Evans Withycombe
               Residential L.P. dated September 24, 1996.

        *21    List of Subsidiaries of the Company.

       23.1    Consent of Ernst & Young LLP.

*    Previously filed as an exhibit of like number to the Company's Registration
     Statement on Form S-11 and amendments thereto (File No. 33-80150) and
     incorporated herein by reference.

#    Management contract or compensatory plan or arrangement.

**   Previously filed as an exhibit to the Company's annual report on form 10-K
     for the fiscal year ended December 31, 1995 and 1994 and incorporated
     herein by reference.

***  Previously filed as an exhibit to the Company's Registration Statement on
     Form S-3 and amendments thereto (File No. 333-17805) and is incorporated
     herein by reference.


                                       40

<PAGE>

                                   SIGNATURES

   
     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Amendment No. 1 on
Form 10-K/A to its Form 10-K for the year ended December 31, 1996 to be signed
on its behalf by the undersigned, thereunto duly authorized.
    

                                   EVANS WITHYCOMBE RESIDENTIAL, INC.


   
Date:     March 11, 1997                     By: /s/ PAUL R. FANNIN
                                                --------------------
                                                  Paul R. Fannin,
                                              SENIOR VICE PRESIDENT AND
                                               CHIEF FINANCIAL OFFICER
    


                                       41

<PAGE>

                         REPORT OF INDEPENDENT AUDITORS

Board of Directors and Stockholders
Evans Withycombe Residential, Inc.

We have audited the accompanying consolidated balance sheets of Evans Withycombe
Residential, Inc. and subsidiaries (the Company) as of December 31, 1996 and
1995 and the related consolidated statements of income, stockholders' equity and
cash flows for each of the three years in the period ended December 31, 1996.
Our audits also included the financial statement schedule listed in the Index at
Item 14(a).  These financial statements and the schedule are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements and schedule based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of the
Company at December 31, 1996 and 1995, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1996, in conformity with generally accepted accounting principles.
Also, in our opinion the related financial statement schedule, when considered
in relation to the basic financial statements taken as a whole, presents fairly,
in all material respects the information set forth therein.



                                             Ernst & Young LLP



   
Phoenix, Arizona
January 31, 1997
    


                                       F-1

<PAGE>

                       EVANS WITHYCOMBE RESIDENTIAL, INC.
                           CONSOLIDATED BALANCE SHEETS
               (Amounts in thousands, except for number of shares)


                                                 DECEMBER 31,   DECEMBER 31,
                                                 ------------   ------------
                                                     1996           1995
                                                     ----           ----
ASSETS
Real Estate:
  Land . . . . . . . . . . . . . . . . . . . .   $  121,915     $   95,908
  Buildings and improvements . . . . . . . . .      543,839        389,846
  Furniture and fixtures . . . . . . . . . . .       29,567         23,736
  Construction-in-progress . . . . . . . . . .       66,229         77,693
                                                -------------  -------------
                                                    761,550        587,183


  Less accumulated depreciation. . . . . . . .      (38,331)       (17,511)
                                                -------------  -------------
                                                    723,219        569,672
Cash and cash equivalents. . . . . . . . . . .        2,568          3,634
Restricted cash. . . . . . . . . . . . . . . .        1,622            522
Accounts and notes receivable. . . . . . . . .        3,500          2,065
Deferred costs, net of accumulated
  amortization of $1,265 and $507 at
  December 31, 1996 and 1995,
  respectively . . . . . . . . . . . . . . . .        3,838          2,946
Other assets . . . . . . . . . . . . . . . . .        1,587          1,656
                                                -------------  -------------

Total assets . . . . . . . . . . . . . . . . .   $  736,334     $  580,495
                                                -------------  -------------
                                                -------------  -------------

LIABILITIES AND STOCKHOLDERS' EQUITY

Mortgage and notes payable . . . . . . . . . .   $  436,172     $  297,456
Accounts payable and other liabilities . . . .        7,833          9,379
Dividends payable. . . . . . . . . . . . . . .            -          6,127
Accrued interest . . . . . . . . . . . . . . .        1,417            605
Accrued property taxes . . . . . . . . . . . .        2,912          2,358
Resident security deposits . . . . . . . . . .        1,818          1,497
Prepaid rent . . . . . . . . . . . . . . . . .          585            438
                                                -------------  -------------
Total liabilities. . . . . . . . . . . . . . .      450,737        317,860

Minority interest. . . . . . . . . . . . . . .       56,592         64,487

Stockholders' Equity:
  Preferred stock, $.01 par value, 10,000,000
shares
  authorized, issued and outstanding - none. .            -              -
 Common stock, $.01 par value, 100,000,000
shares
  authorized, 18,366,902 and 16,123,279 issued


                                       F-2

<PAGE>

    and outstanding at December 31, 1996 and
    1995, respectively . . . . . . . . . . . .          184            161
  Additional paid-in capital . . . . . . . . .      253,425        209,344
  Unamortized employee restricted stock
compensation . . . . . . . . . . . . . . . . .         (465)          (698)
 Distributions in excess of net income . . . .      (24,139)       (10,659)
                                                -------------  -------------

Total stockholders' equity . . . . . . . . . .      229,005        198,148
                                                -------------  -------------

Total liabilities and stockholders' equity . .   $  736,334     $  580,495
                                                -------------  -------------
                                                -------------  -------------

See Notes to Consolidated Financial Statements


                                       F-3

<PAGE>

                       EVANS WITHYCOMBE RESIDENTIAL, INC.
                        CONSOLIDATED STATEMENTS OF INCOME
    (Amounts in thousands, except for number of shares and per share amounts)

<TABLE>
<CAPTION>

                                                          EVANS WITHYCOMBE         EVANS WITHYCOMBE         EVANS WITHYCOMBE
                                                          RESIDENTIAL, INC.        RESIDENTIAL, INC.        RESIDENTIAL, INC.
                                                          -----------------        -----------------            AND GROUP
                                                                                                                ---------
                                                                                YEAR ENDED DECEMBER 31,
                                                        ----------------------------------------------------------------------
                                                                1996                     1995                     1994
                                                             ---------                ---------                ---------
<S>                                                          <C>                      <C>                      <C>
Revenues:
  Rental   . . . . . . . . . . . . . . . . . . . .           $  94,350                $  68,864                $  51,097
  Third party management fees. . . . . . . . . . .               1,157                    1,268                    1,668
  Interest and other . . . . . . . . . . . . . . .               6,195                    4,478                    4,424
                                                        -----------------          ---------------          ---------------
    Total revenues . . . . . . . . . . . . . . . .             101,702                   74,610                   57,189

Expenses:
  Repairs and maintenance. . . . . . . . . . . . .              11,607                    8,293                    6,288
  Property operating . . . . . . . . . . . . . . .              12,713                    8,699                    7,834
  Advertising. . . . . . . . . . . . . . . . . . .               1,864                    1,244                      966
  Real estate taxes. . . . . . . . . . . . . . . .               6,915                    4,723                    3,204
  Property management. . . . . . . . . . . . . . .               3,225                    2,825                    2,505
  General and administrative . . . . . . . . . . .               1,698                    1,588                    1,409
  Interest . . . . . . . . . . . . . . . . . . . .              24,225                   12,650                    7,836
  Depreciation and amortization. . . . . . . . . .              20,885                   13,762                   10,333
  Other. . . . . . . . . . . . . . . . . . . . . .                   -                        -                    5,233
                                                        -----------------          ---------------          ---------------
    Total expenses . . . . . . . . . . . . . . . .              83,132                   53,784                   45,608
                                                        -----------------          ---------------          ---------------

Income before minority interest. . . . . . . . . .              18,570                   20,826                   11,581

Minority interest. . . . . . . . . . . . . . . . .              (4,010)                  (4,594)                  (1,548)
                                                        -----------------          ---------------          ---------------

Net income . . . . . . . . . . . . . . . . . . . .           $  14,560                $  16,232                $  10,033
                                                        -----------------          ---------------          ---------------
                                                        -----------------          ---------------          ---------------



Earnings per share . . . . . . . . . . . . . . . .             $  0.84                  $  1.01
                                                        -----------------          ---------------
                                                        -----------------          ---------------



Earnings per share, period from August 17 to
December 31, 1994. . . . . . . . . . . . . . . . .                                                               $  0.38
                                                                                                            ---------------
                                                                                                            ---------------


Weighted average shares outstanding. . . . . . . .          17,409,897               16,053,453               15,967,432

                                                        -----------------          ---------------          ---------------
                                                        -----------------          ---------------          ---------------
</TABLE>


See Notes to Consolidated Financial Statements


                                       F-4

<PAGE>

                       EVANS WITHYCOMBE RESIDENTIAL, INC.
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
    (Amounts in thousands, except for number of shares and per share amounts)
<TABLE>
<CAPTION>

                                                                           ADDITIONAL     UNAMORTIZED
                                                                             PAID-IN       EMPLOYEE
                                                                             CAPITAL      RESTRICTED     DISTRIBUTIONS
                                                NUMBER OF      COMMON       (OWNERS'         STOCK       IN EXCESS OF
                                                 SHARES         STOCK        EQUITY)     COMPENSATION     NET INCOME        TOTAL
                                              ------------   ----------   ------------   ------------    ------------   ------------

<S>                                            <C>              <C>        <C>            <C>          <C>               <C>
Owners' equity, December 31, 1993. . . . .              -        $  -      $  142,886     $     -      $       -         $  142,886

  Capital contributions. . . . . . . . . .              -           -           9,660           -              -              9,660
  Distributions. . . . . . . . . . . . . .              -           -         (15,204)          -              -            (15,204)
  Net income, January 1 to August 16, 1994              -           -           4,012           -              -              4,012
                                              ------------    --------    ------------   ----------  -------------      ------------
                                                        -           -         141,354           -              -            141,354
  The Offering and formation of
    the Company. . . . . . . . . . . . . .     16,021,078         160         119,287           -              -            119,447
  Minority interest of unitholders in
    Operating Partnership at date of Offering           -           -         (53,343)          -              -            (53,343)
  Net Income, August 17 to December 31, 1994            -           -               -           -          6,021              6,021
  Dividends on common stock ($.55 per share)            -           -               -           -         (8,812)            (8,812)
                                              ------------    --------    ------------   ----------  -------------      ------------

Stockholders' equity, December 31, 1994. .     16,021,078         160         207,298           -         (2,791)           204,667
  Net income . . . . . . . . . . . . . . .              -           -               -           -         16,232             16,232
  Dividends on common stock ($1.50 per share)           -           -               -           -        (24,100)           (24,100)
  Conversion of units to common stock. . .         19,399           -             390           -              -                390
  Issuance of restricted common stock for
    executive deferred compensation. . . .         82,802           1           1,656      (1,657)             -                  -
   Amortization of deferred compensation .              -           -               -         959              -                959
                                              ------------    --------    ------------   ----------  -------------      ------------

Stockholders' equity, December 31, 1995. .     16,123,279         161         209,344        (698)       (10,659)           198,148

  Net income . . . . . . . . . . . . . . .              -           -               -           -         14,560             14,560
  Dividends on common stock ($1.58 per
  share) . . . . . . . . . . . . . . . . .              -           -               -           -        (28,040)           (28,040)
  Proceeds of second offering, net of
    underwriting discount and offering
    costs of $3,237. . . . . . . . . . . .      2,088,889          21               -           -         40,870             40,891
  Conversion of units to common stock. . .        132,793           2           2,581           -              -              2,583
  Exercise of stock options. . . . . . . .         19,500           -             390           -              -                390
  Issuance of restricted stock . . . . . .         10,895           -             240        (240)             -                  -
  Forfeiture of restricted stock . . . . .         (8,454)          -               -           -              -                  -
  Amortization of deferred compensation. .              -           -               -         473              -                473
                                              ------------    --------    ------------   ----------  -------------      ------------

Stockholders' equity, December 31, 1996. .     18,366,902      $  184      $  253,425     $  (465)    $  (24,139)        $  229,005
                                              ------------    --------    ------------   ----------  -------------      ------------
                                              ------------    --------    ------------   ----------  -------------      ------------
</TABLE>



See Notes to Consolidated Financial Statements


                                       F-5

<PAGE>

                       EVANS WITHYCOMBE RESIDENTIAL, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (Amounts in thousands)

<TABLE>
<CAPTION>

                                                          EVANS WITHYCOMBE         EVANS WITHYCOMBE         EVANS WITHYCOMBE
                                                          RESIDENTIAL, INC.        RESIDENTIAL, INC.        RESIDENTIAL, INC.
                                                          -----------------        -----------------            AND GROUP
                                                                                                                ---------

                                                                                YEAR ENDED DECEMBER 31,
                                                        ----------------------------------------------------------------------
                                                                1996                     1995                     1994
                                                                ----                     ----                     ----
<S>                                                          <C>                      <C>                      <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income . . . . . . . . . . . . . . . . . . . .           $  14,560                $  16,232                $  10,033
Adjustments to reconcile net income to net cash
  provided by operating  activities:
    Depreciation and amortization. . . . . . . . .              21,578                   14,420                   10,703
    Amortization of executive deferred comp. . . .                 390                      693                      267
    Minority interest. . . . . . . . . . . . . . .               4,010                    4,594                    1,548
    Write-off of development and acquisition costs                 227                        -                        -
    Write-off of deferred loan costs . . . . . . .                   -                      172                        -
Decrease (increase) in assets
    Restricted cash. . . . . . . . . . . . . . . .              (1,100)                     561                     (129)
    Accounts and notes receivable. . . . . . . . .              (1,435)                    (758)                  (1,111)
    Other assets . . . . . . . . . . . . . . . . .                  69                   (1,104)                   3,136
(Decrease) increase in liabilities
    Accounts payable and other liabilities . . . .              (1,546)                     153                    4,444
    Due to related parties and owners. . . . . . .                   -                        -                   (6,482)
    Accrued interest . . . . . . . . . . . . . . .                 812                      505                     (818)
    Accrued property taxes . . . . . . . . . . . .                 554                      825                       62
    Resident security deposits . . . . . . . . . .                 321                      500                       54
    Prepaid rent . . . . . . . . . . . . . . . . .                 147                     (262)                     (98)
                                                            ------------             ------------             ------------
Net cash provided by operating activities. . . . .              38,587                   36,531                   21,609

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of real estate assets . . . . . . . . . .            (127,811)                (116,716)                (207,978)
Payment for organization and loan costs. . . . . .              (1,650)                  (1,345)                  (3,673)
                                                            ------------             ------------             ------------

Net cash (used) in investing activities. . . . . .            (129,461)                (118,061)                (211,651)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Public Offering, net of expenses . .              40,891                        -                  181,262
Proceeds from exercise of options. . . . . . . . .                 390                        -                        -
Proceeds from mortgage notes and
  credit facility. . . . . . . . . . . . . . . . .             269,778                  315,653                  122,522
Principal payments on mortgage notes . . . . . . .            (177,762)                (202,477)                (101,280)
Dividends paid . . . . . . . . . . . . . . . . . .             (34,167)                 (23,901)                  (2,884)
Minority interest distributions. . . . . . . . . .              (9,322)                  (6,550)                  (2,265)
Distributions to owners. . . . . . . . . . . . . .                   -                        -                  (17,012)
Capital contributions. . . . . . . . . . . . . . .                   -                        -                    9,660
                                                            ------------             ------------             ------------
Net cash provided by financing activities. . . . .              89,808                   82,725                  190,003
                                                            ------------             ------------             ------------

Net increase (decrease) in cash and cash
  equivalents. . . . . . . . . . . . . . . . . . .              (1,066)                   1,195                      (39)
Cash and cash equivalents, beginning of year . . .               3,634                    2,439                    2,478
                                                            ------------             ------------             ------------
Cash and cash equivalents, end of year . . . . . .            $  2,568                 $  3,634                 $  2,439
                                                            ------------             ------------             ------------
                                                            ------------             ------------             ------------

SUPPLEMENTAL INFORMATION
Cash paid during the year for interest . . . . . .           $  22,648                $  11,487                $   8,284
                                                            ------------             ------------             ------------
                                                            ------------             ------------             ------------

SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITY
Assumption of debt related to the acquisition of
  apartment communities. . . . . . . . . . . . . .           $  46,700                $  56,493                $       -
                                                            ------------             ------------             ------------
                                                            ------------             ------------             ------------

Acquisition of apartment communities through
  issuance of units in the Operating Partnership .            $      -                $  14,207                     $  -
                                                            ------------             ------------             ------------
                                                            ------------             ------------             ------------
Issuance of stock under restricted stock incentive plan       $     83                   $  959                     $  -
                                                            ------------             ------------             ------------
                                                            ------------             ------------             ------------
Conversion of units to common stock. . . . . . . .            $  2,583                   $  390                     $  -
                                                            ------------             ------------             ------------
                                                            ------------             ------------             ------------
</TABLE>

See Notes to Consolidated Financial Statements


                                       F-6

<PAGE>

                       EVANS WITHYCOMBE RESIDENTIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1996
    (AMOUNTS IN THOUSANDS, EXCEPT FOR NUMBER OF SHARES OR UNITS AND PER SHARE
AMOUNTS)


     1.   ORGANIZATION AND FORMATION OF THE COMPANY

Evans Withycombe Residential, Inc. (the "Company") is one of the largest
developers and managers of upscale apartment communities in Arizona and is
expanding its operation into selected sub-markets in Southern California.  The
Company owns and manages 49 stabilized multifamily apartment communities
containing 13,905 units, of which 44 stabilized multifamily apartment
communities are located in Phoenix and Tucson, Arizona, containing a total of
12,005 units and five stabilized multifamily apartment communities are located
in the Riverside/San Bernardino, California market containing a total of 1,900
units.  The Company considers an apartment community stabilized when it reaches
93 percent physical occupancy.  The Company is also in the process of developing
or expanding five multifamily apartment communities comprising 1,078 units in
its Arizona markets.  The Company is fully integrated with expertise in
development, acquisitions, construction and management of apartment communities.
The Company had approximately 580 employees at December 31, 1996.

The Company was incorporated on May 24, 1994 to develop, acquire, own and manage
upscale multifamily apartment communities.  On August 17, 1994, the Company
completed an initial public offering and engaged in various formation
transactions designed to transfer ownership of the communities and other assets
of the predecessor company to Evans Withycombe Residential, L. P. (the
"Operating Partnership") or Evans Withycombe Finance Partnership, L.P. (the
"Financing Partnership").  The Company is the sole general partner of and owned
a 79.7 percent, 77.02 percent and 79.50 percent interest in the Operating
Partnership at December 31, 1996, 1995 and 1994, respectively.  The Company also
holds a noncontrolling interest in Evans Withycombe Management, Inc. (the
"Management Company").

In the second quarter of 1996, the Company completed the Second Offering.  The
net proceeds from the Second Offering were used to repay a portion of the
Revolving Credit Facility.

The Company elected to be taxed as a real estate investment trust ("REIT") for
Federal income tax purposes.   A corporate REIT is a legal entity which holds
real estate interests and, through payments of dividends to stockholders, is
permitted to reduce or avoid the payment of federal income taxes at the
corporate level.

2.   BASIS OF PRESENTATION


                                       F-7

<PAGE>

The accompanying consolidated financial statements of Evans Withycombe
Residential, Inc. include the consolidated accounts of the Company, the
Operating Partnership, the Financing Partnership and the Management Company from
the date of the Offering, August 17, 1994.  The accompanying financial
statements of Evans Withycombe Residential Group (the "Predecessor") prior to
August 17, 1994, include the accounts of various partnerships sponsored by Evans
Withycombe. The Predecessor was a combination of affiliated entities that had
ownership in multifamily communities in the Phoenix and Tucson, Arizona area; it
was not a separate legal entity.  The Predecessor accounts are presented on a
combined basis because all of the communities were managed by Evans Withycombe
which had a significant ownership interest in each of the communities and
because these communities were the subject of business combination in connection
with the formation of the Company.

All significant intercompany accounts and transactions have been eliminated in
consolidation.

RECLASSIFICATION

Certain amounts in the 1995 balance sheet and statement of stockholders' equity
have been reclassified to conform to the 1996 presentation.

3.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

REAL ESTATE ASSETS AND DEPRECIATION

The Company records its real estate assets in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment
of Long-Lived Assets and Long-Lived Assets to be Disposed of", which was issued
by the Financial Accounting Standards Board in March 1995 and the Company
adopted in 1996.  SFAS No. 121 requires that long-lived assets such as real
estate assets, be reviewed whenever events or changes in circumstances indicate
that the book value of the asset may not be recoverable.  If the sum of the
estimated future net cash flows (undiscounted and without interest charges) from
an asset to be held and used is less than the book value of the asset, an
impairment loss must be recognized in the amount of the difference between book
value and fair value as opposed to the difference between book value and net
realizable value under the previous accounting standard.  For long-term assets
like apartment communities, the determination of whether there is an impairment
loss is dependent primarily on the Company's estimates on occupancy, rent and
expense increases, which involves numerous assumptions and judgments as to
future events over a period of many years. At December 31, 1996 the Company does
not hold any assets that meet the impairment criteria of SFAS No. 121.

Costs related directly to the acquisition and improvement of real estate are
capitalized. Interest costs incurred during construction of a new property are
capitalized until completion of construction on a building-by-building basis.
Interest capitalized was


                                       F-8

<PAGE>

$2,714, $5,048 and $2,724, for the years ended December 31, 1996, 1995 and 1994,
respectively.

Ordinary repairs, maintenance and costs incurred in connection with resident
turnover such as unit cleaning, painting, and carpet cleaning are expensed as
incurred; major replacements and betterments are capitalized and depreciated
over their estimated useful lives. Depreciation is computed on a straight-line
basis over the expected useful lives of depreciable property, which ranges from
10 to 40 years for buildings and improvements and five to eight years for
furnishings and equipment.

The Company reports developments and lease-up properties as construction-in-
progress until construction on the apartment community has been completed and
the apartment community has reached stabilized occupancy.

The Company also reports land relating to construction-in-progress as land on
its balance sheet.  Land associated with construction-in-progress was $16,542
and $16,414 at December 31, 1996 and 1995, respectively.

REVENUE RECOGNITION

Rental income attributable to residential leases is recorded when due from
residents. Leases are for periods of up to one year, with rental payments due
monthly.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents include all cash and cash equivalent investments with
original maturities of three months or less, primarily consisting of demand
deposits in banks.


                                       F-9

<PAGE>

RESTRICTED CASH

Restricted cash includes restricted deposits for sinking fund accounts related
to tax exempt bonds, property taxes and escrow accounts.

DEFERRED COSTS

Costs incurred in obtaining long-term financing are deferred. These costs are
amortized on the effective interest method over the terms of the related debt
agreements.

INCOME TAXES

The Company has made an election to be taxed as a REIT and accordingly, no
federal or state income taxes have been provided in the accompanying
consolidated financial statements.

USE OF ESTIMATES

The preparation of the consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the consolidated financial
statements and accompanying notes. Actual results could differ from those
estimates.

EARNINGS PER SHARE

Earnings per share has been computed by dividing net income for the years ended
December 31, 1996 and 1995 and the period ended December 31, 1994, respectively,
by the weighted average number of shares outstanding.  Historical earnings per
share data for the periods ended prior to the Offering on August 17, 1994 are
not relevant since the financial information prior to such date is comprised of
combined operations of partnerships and corporations.

4.   OTHER

Prior to the Initial Public Offering, Evans Withycombe, Inc. had in place an
Executive Incentive Deferred Compensation Plan (the "Executive Plan").  Pursuant
to the Executive Plan, certain executives of Evans Withycombe, Inc. (the
"Participants") were granted unfunded, unsecured rights to receive cash payments
based on the distributions from certain partnerships in which Evans Withycombe
owned an interest.  The awards would have vested over a six-year period from the
date of grant.  In connection with the Initial Public Offering, all rights of
Participants under the Executive Plan were canceled, and the participants
received (a) an aggregate of approximately $2,600 in cash which was funded by
Evans Withycombe, Inc. prior to the Initial Public Offering and (b) the right to
receive an aggregate of 98,500 shares of restricted stock from the Company one
year following the Offering if they remain as employees of the Company during
such period.  One third of


                                      F-10

<PAGE>

the shares will vest on each of the second,  third and fourth anniversaries of
the Offering based on an offering price per share of $20 (SEE STOCK INCENTIVE
PLAN FOOTNOTE). The $2,600 cash payment, which represents an estimate of the
executives' vested share of the gain, was expensed by Evans Withycombe, Inc.
during the third quarter of 1994 prior to the Initial Public Offering.

In connection with the repayment of existing indebtedness at the time of the
offering, prepayment penalties and lender participation (additional interest)
totaling $2,600 were paid.


                                      F-11

<PAGE>

5.    MORTGAGE AND NOTES PAYABLE

The Company's mortgage notes and notes payable consists of the following at
December 31:
<TABLE>
<CAPTION>

                                                                     1996            1995
                                                                     ----            ----
<S>                                                                 <C>           <C>
Mortgage note payable at fixed interest rate of 7.2 percent,
monthly principal and interest payments through August 18, 1996.
The unpaid principal balance was repaid on August 18, 1996.         $     -       $  5,457

Mortgage note payable at fixed interest rate of 8.0 percent,
monthly principal and interest payments.  The unpaid principal
balance was repaid on January 9, 1997.                                5,380          5,463

Mortgage note payable at fixed interest rate of 8.0 percent,
monthly principal and interest payments. The unpaid principal
balance was repaid on January 9, 1997.                                4,340          4,406

Mortgage note payable at fixed interest rate of 8.0 percent,
monthly principal and interest payments. The unpaid principal
balance was repaid on January 9, 1997.                                8,951          9,063

Mortgage note payable at fixed interest rate of 8.28 percent,
monthly principal and interest payments.  The unpaid principal
balance was repaid on January 31, 1997.                               6,225          6,339

Mortgage note payable at fixed interest rate of 9.95 percent,
monthly principal and interest payments through September 15, 1997,
remaining balance due September 15, 1997.                            12,065         12,184

Mortgage note payable at fixed interest rate of 9.3 percent,
monthly principal and interest payments through September 15, 1997,
remaining balance due September 15, 1997                              3,182          3,212

$50 million securitized debt at a fixed interest rate of 7.17
percent, monthly principal and interest payments through
January 1, 2006, remaining balance due January 1, 2006.  Secured
by first mortgage liens on 5 communities.                            49,509         50,000

Securitized debt at a fixed stated interest rate of 7.98 percent,
with an effective interest rate of 8.05 percent, monthly interest
only payments through August 1, 2001. Secured by first mortgage
liens on 22 communities.  The face amount of $131 million is
due August 1, 2001.  The balance is net of unamortized discount
of $480 and $561 at December 31, 1996 and 1995, respectively.       130,520        130,439

$13 million short term note payable at a fixed interest rate of
6.0 percent.  Interest only payments with the unpaid principal
balance due January 5, 1996.  The unpaid principal balance was
repaid on January 5, 1996.                                                -         13,000

$17.3 million tax exempt bonds with a floating interest rate based
on the tax exempt note rate set by the remarketing agent, or at
the option of the Company can convert to a fixed rate as determined
by the remarketing agent.  Secured by a $17.5 million direct pay
letter of credit agreement, interest payments only matures
December 1, 2007 (Effective interest rate of 5.16 percent at
December 31, 1996).                                                  17,300         17,300

$22.6 million tax exempt bonds with a floating interest rate based
on the tax exempt note rate set by the remarketing agent, interest
payments only.  Secured by a $22.8 million direct pay letter of
credit, matures February 1, 2016.  (Effective interest rate of
5.65 percent at December 31, 1996).                                  22,650              -


                                       F-12

<PAGE>

                                                                    1996              1995
                                                                    ----              ----

$24.05 million tax exempt bonds with a floating interest rate     $  24,050           $  -
based on the tax exempt note rate set by the remarketing agent.
Interest payments only.  Secured by a $24.4 million direct pay
letter of credit agreement, matures August 1, 2005.  (Effective
interest rate of 6.14 percent at December 31, 1996).

$225 million unsecured Revolving Credit Facility with floating      152,000         40,593
interest rate based on LIBOR plus 1.50 percent or at the option
of the Company at prime, interest payments only.  Matures
September 24, 1999 (Effective interest rate of 7.2 percent at
December 31, 1996).


                                                                  ----------     ----------
                                                                   $436,172       $297,456
                                                                  ----------     ----------
                                                                  ----------     ----------
</TABLE>


Each of the mortgage loans is secured by a first mortgage on separate
communities.

Principal maturities as of December 31, 1996 are as follows:

                    1997                          $  40,625
                    1998                                563
                    1999                            152,605
                    2000                                650
                    2001                            131,218
                    Thereafter                      110,511
                                                  ----------
                                                  $ 436,172
                                                  ----------
                                                  ----------

The $225 million Revolving Credit Facility provides funding for working capital,
construction activities and acquisitions.

The Company has three direct pay letters of credit of $17,500, $22,800 and
$24,400 which serve as a credit enhancement for the tax exempt bonds.  The
letters of credit are secured by a first mortgage on four apartment communities.

On January 9, 1997, the Company extinguished the debt on three mortgages with
unpaid principal balances of approximately $18,700 with proceeds from the
Revolving Credit Facility.  As a result, the Company incurred a loss from the
early extinguishment of debt of approximately $1,200.  The Company prepaid the
$6,225 mortgage note on January 31, 1997 with proceeds from the Revolving Credit
Facility which resulted in an additional loss from the early extinguishment of
debt of approximately $300.  The loss from early extinguishment of debt was
recorded by the Company in the first quarter 1997.

6.   DISTRIBUTIONS

On December 31, 1996, the Company paid a distribution of $.40 per share ($7,311)
to shareholders and $.40 per unit ($1,906) to unitholders of record as of
December 24, 1996.


                                      F-13

<PAGE>

Approximately 36 percent and 30 percent of the dividends and distributions paid
during 1996 and 1995 represented return of capital to the shareholders and
unitholders.

7.    MANAGEMENT AND DEVELOPMENT FEES

The Company performs management services for certain unaffiliated communities.
Management fees received from managed communities were $1,157, $1,268, and
$1,668 for the years ended December 31, 1996, 1995 and 1994, respectively.
Included in 1996 third party management fees is a non recurring $500 fee
received in exchange for terminating the management contract on nine apartment
communities containing 1,298 apartment units in the second quarter of 1996.

Prior to the Offering, in conjunction with development of projects, the
communities paid development fees to affiliates of $4,554 for the period ended
August 16, 1994.

8.    RETIREMENT PLAN

The Company has a defined contribution wealth accumulation plan and trust (the
"Plan") covering all employees who have elected to participate in the Plan. Each
participant may make pretax contributions to the Plan up to the maximum allowed
by the IRS. The Company makes a matching contribution of 25 percent of the
participant's contribution up to 1 percent of a participant's salary, which
totaled $113, $53, and $91 for 1996, 1995, and 1994, respectively.


9.    COMMITMENTS AND CONTINGENCIES

The Company leases office space in buildings and certain equipment under
noncancelable operating leases. Future minimum payments under these leases with
initial terms of one year or more consist of the following at December 31, 1996:

                    1997                                   $  358
                    1998                                      364
                    1999                                      224
                    2000                                        4
                                                          --------
                                                           $  950
                                                          --------
                                                          --------

Rent expense for the years ended December 31, 1996, 1995 and 1994 was $360,
$300, and $288, respectively.


                                      F-14

<PAGE>

10.  STOCK INCENTIVE PLAN

STOCK OPTION PLAN

The Company has elected to follow Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" (APB 25) and related interpretations
in accounting for its employee stock options because, as discussed below, the
alternative fair value accounting provided for under FASB Statement No. 123,
"Accounting for Stock-Based Compensation," requires use of option valuation
models that were not developed for use in valuing employee stock options.  Under
APB 25, because the exercise price of the Company's employee stock options
equals the market price of the underlying stock on the date of grant, no
compensation expense is recognized.

Pro forma information regarding net income and earnings per share is required by
Statement 123, and has been determined as if the Company had accounted for its
employee stock options under the fair value method of that Statement. The fair
value for these options was estimated at the date of grant using a Black-Scholes
option pricing model with the following weighted-average assumptions for 1995
and 1996, respectively: risk-free interest rates of 6.5% and 6.5%; dividend
yields of 7.5% and 7.4%; volatility factors of the expected market price of the
Company's common stock of 0.18 and 0.18; and a weighted-average expected life of
the option of 5 years. Because Statement 123 is applicable only to options
granted subsequent to December 31, 1994, its pro forma effect will not be fully
reflected until 1997.

The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded options which have no vesting restrictions and are fully
transferable.  In addition, option valuation models require the input of highly
subjective assumptions including the expected stock price volatility.  Because
the Company's employee stock options have characteristics significantly
different from those of traded options, and because changes in the subjective
input assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its employee stock options.

For purposes of pro forma disclosures, the estimated fair value of the options
is amortized to expense over the options' vesting period.  The Company's pro
forma information follows (amounts in thousands except for earnings per share
information):

                                                           1996        1995
                                                         ---------   ---------
          Pro forma net income                            $14,557     $16,232
          Pro forma primary earnings per share              $0.84       $1.01

Exercise prices for options outstanding as of December 31, 1996 ranged from
$18.25 to $22.25.  The weighted-average remaining contractual life of those
options is 7.6 years.


                                      F-15

<PAGE>

Initially 1,830,000  shares of the Company's common stock were reserved for
issuance under the plan.  Information with respect to stock options granted
during 1996, 1995 and 1994 is as follows:

                                                               Weighted
                                                                Average
                                                               Exercise
                                                                 Price
                                                Shares         Per Share
                                                ------         ---------

Options granted on August 17, 1994              685,200         $20.00
          Exercised                                   -              -
          Granted                                16,000          19.65
          Forfeited                              (4,840)         20.00
                                              -----------    -----------
Options outstanding at December 31, 1994        696,360          19.99
          Exercised                                   -              -
          Granted                                21,000          19.74
          Forfeited                             (18,185)         20.00
                                              -----------    -----------
Options outstanding at December 31, 1995        699,175          19.98
          Exercised                             (19,500)         20.00
          Granted                               345,000          21.96
          Forfeited                            (115,825)         20.00
                                              -----------    -----------

Options outstanding at December 31, 1996        908,850         $20.63
                                              -----------    -----------
                                              -----------    -----------
Options exercisable:
          December 31, 1994                           -              -
          December 31, 1995                     175,300         $20.00
          December 31, 1996                     357,700         $19.98

Options to purchase 901,650, 1,130,825 and 1,133,640 shares of common stock were
available for grant under the plan at December 31, 1996, 1995 and 1994,
respectively.


EXECUTIVE STOCK INCENTIVE PLAN

Prior to the Offering, the Company's predecessor Evans Withycombe, Inc. had in
place an Executive Incentive Deferred Compensation Plan (the "Executive Plan").
Pursuant to the Executive Plan, certain executives of Evans Withycombe, Inc.
(the "Participants") were granted the right to receive an aggregate of 98,500
shares of restricted stock from the Company one year following the Offering if
they remain employees of the Company during such period.  One-third of the
shares vest on each of the second, third and fourth anniversaries of the
Offering based on an offering price per share of $20.  The expense is


                                      F-16

<PAGE>

being amortized ratably over the periods in which the shares vest and an expense
of $390 and $698 and $267 for the years ended December 31, 1996, 1995 and 1994,
respectively, is included in general and administrative expense.  Information
with respect to the executive restricted stock incentive plan is as follows:


                                                      Shares
                                                    ----------
     Restricted stock at December 31, 1994            98,500
     Forfeited                                       (15,698)
                                                    ----------
     Restricted stock at December 31, 1995            82,802
     Forfeited                                        (8,454)
                                                    ----------
     Restricted stock at December 31, 1996            74,348
                                                    ----------
                                                    ----------

     Number of shares vested                          27,600

RESTRICTED STOCK PROGRAM

In 1996, the Company awarded 10,895 shares of restricted stock to certain
employees of the Company under its 1994 Stock Incentive Plan.  The restricted
stock vests ratably over periods ranging from one to four years from the date of
the award and are based on the price of the stock at the award date which ranges
from $20.75 to $22.25.  The related expense will be amortized ratably over the
periods in which the shares vest and an expense of $83 is included in general
and administrative expense for the year ended December 31, 1996.

11. MINORITY INTEREST

Minority interest at December 31, 1996, 1995 and 1994, respectively, is
comprised of the following:

                                                      Number
                                                    of UnitsDollars
     Minority interest of unit holders in
       operating partnership at date of offering      4,119,452     $  53,343
     Allocation of net income                                 -         1,548
     Distributions ($.55 per unit)                            -        (2,265)
                                                     -----------    -----------
     Balance at December 31, 1994                     4,119,452        52,626

     Issuance of units to acquire apartment
     communities                                        710,550        14,207
     Conversion of units to common stock                (19,399)         (390)
     Allocation of net income                                 -         4,594

     Distributions ($1.50 per unit)                           -        (6,550)
                                                     -----------    -----------
     Balance at December 31, 1995                     4,810,603        64,487

     Conversion of units to common stock               (132,793)       (2,583)


                                      F-17

<PAGE>

     Allocation of net income                                 -         4,010
     Distributions ($1.58 per unit)                           -        (9,322)
                                                     -----------    -----------
     Balance at December 31, 1996                     4,677,810     $  56,592
                                                     -----------    -----------
                                                     -----------    -----------

The Units can be redeemed for cash or shares of common stock of the Company on a
one-for-one basis at the Company's option.  Minority interest of unitholders in
the Operating Partnership is calculated based on the weighted average of shares
of common stock and Units outstanding during the period.


12. FAIR VALUE OF FINANCIAL INSTRUMENTS

The following disclosures of estimated fair value were determined by management
using available market information and appropriate valuation methodologies.
Judgment is necessary to interpret market data and develop estimated fair value.
Accordingly, the estimates presented herein are not necessarily indicative of
the amounts the Company could realize on disposition of the financial
instruments. The use of different market assumptions and/or estimation
methodologies may have a material effect on the estimated fair value amounts.

Cash equivalents, accounts receivable, accounts payable and other accruals are
carried at amounts that reasonably approximate their fair values as of December
31, 1996 and 1995.  The Company's debt has an estimated aggregate fair value of
approximately $437,800 at December 31, 1996 compared to the carrying value of
$436,172.  At December 31, 1995, the Company's debt had an estimated fair value
of approximately $298,800 compared to the carrying value of $297,456.  Fair
values were estimated using discounted cash flow analyses, based on interest
rates currently available to the Company for issuance of debt with similar terms
and remaining maturities.

13. 1994 RESULTS OF OPERATIONS

     The 1994 results of operations of the Company and its Predecessor are as
follows:

                                         EVANS WITHYCOMBE      EVANS WITHYCOMBE
                                         RESIDENTIAL, INC.     RESIDENTIAL GROUP
                                         -----------------     -----------------

                                           AUGUST 17 TO          JANUARY 1 TO
                                         DECEMBER 31, 1994      AUGUST 16, 1994
                                         -----------------      ---------------

  Revenues:
      Rental . . . . . . . . . . . . . .      $  20,185           $  30,912
      Third party management fees. . . .            560               1,108
      Interest and other . . . . . . . .          1,258               3,166
                                             -----------         -----------
    Total revenues . . . . . . . . . . .         22,003              35,186
    Expenses:
      Repairs and maintenance. . . . . .          2,642               3,646


                                      F-18

<PAGE>

      Property operating . . . . . . . .          2,392               5,442
      Advertising. . . . . . . . . . . .            345                 621
      Real estate taxes. . . . . . . . .          1,251               1,953
      Property management. . . . . . . .          1,104               1,401
      General and administrative . . . .            644                 765
      Interest . . . . . . . . . . . . .          2,302               5,534
      Depreciation and amortization. . .          3,754               6,579
      Other. . . . . . . . . . . . . . .              -               5,233
                                             -----------         -----------
    Total expenses . . . . . . . . . . .         14,434              31,174
                                             -----------         -----------
    Income before
      minority interest  . . . . . . . .          7,569               4,012
     Minority interest . . . . . . . . .         (1,548)                  -
                                             -----------         -----------
     Net income. . . . . . . . . . . . .       $  6,021            $  4,012
                                             -----------         -----------
                                             -----------         -----------


                                      F-19

<PAGE>

14. SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED, IN THOUSANDS, EXCEPT
PER SHARE AMOUNTS)

<TABLE>
<CAPTION>

                                                                 QUARTER
                                            FIRST         SECOND          THIRD         FOURTH
                                            -----         ------          -----         ------
1996
<S>                                        <C>            <C>            <C>            <C>
Revenue. . . . . . . . . . . . . .         $24,179        $24,106        $25,956        $27,461
Net operating income . . . . . . .          16,858         16,308         16,742         18,695
Income before
  minority interest. . . . . . . .           5,283          4,682          3,927          4,678
Minority interest. . . . . . . . .          (1,212)        (1,027)          (812)          (959)

Net income . . . . . . . . . . . .           4,071          3,655          3,115          3,719
Earnings per share . . . . . . . .            $.25           $.22           $.17           $.20

1995

Revenue. . . . . . . . . . . . . .         $16,300        $17,530        $19,088        $21,692
Net operating income . . . . . . .          11,444         12,015         12,312         15,880
Income before
  minority interest. . . . . . . .           5,606          4,868          4,586          5,766
Minority interest. . . . . . . . .          (1,173)        (1,095)        (1,030)        (1,296)

Net income . . . . . . . . . . . .           4,433          3,773          3,556          4,470
Earnings per share . . . . . . . .            $.28           $.23           $.22           $.28
</TABLE>


The Company defines net operating income as earnings before property management,
general and administrative expense, interest and depreciation.


                                      F-20

<PAGE>

                       EVANS WITHYCOMBE RESIDENTIAL, INC.
       SCHEDULE III - REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
                                December 31, 1996
                             (Amounts in thousands)

<TABLE>
<CAPTION>

                                                               Costs Capitalized Subsequent     Gross Amounts at Which
                                            Initial Cost       to Acquisition /Construction   Carried at Close of Period
                                    ----------------------------------------------------------------------------------------------
                                                   Buildings and             Buildings and                 Buildings and
Description            Encumbrances      Land      Improvements      Land    Improvements         Land     Improvements      Total
----------------------------------------------------------------------------------------------------------------------------------
<S>                         <C>           <C>           <C>          <C>          <C>            <C>          <C>           <C>
SAME STORE
  Phoenix
Bayside at the Islands
  Gilbert,AZ                 $6,589        $1,877       $6,623       $1,429       $3,491         $3,306       $10,114       $13,420
Country Brook
  Chandler, AZ                7,792           937        3,886           25        6,578            962        10,464        11,426
Deer Creek Village
  Phoenix, AZ                 5,116           919        5,454          506        3,465          1,425         8,919        10,344
Greenwood Village
  Tempe, AZ                   6,553         1,770        7,119          349        2,322          2,119         9,441        11,560
Heritage Point
  Mesa, AZ                        -           666        5,125            -          397            666         5,522         6,188
La Mariposa
  Mesa, AZ                    4,750         1,440        3,962          608        2,620          2,048         6,582         8,630
La Valencia
  Mesa, AZ                    7,792         2,485        6,569        1,068        4,283          3,553        10,852        14,405
Little Cottonwoods
  Tempe, AZ                   9,424         2,834        6,655          216        7,161          3,050        13,816        16,866
Los Arboles
  Chandler, AZ                    -         1,160        7,836            -          237          1,160         8,073         9,233
Miramonte
  Scottsdale, AZ              4,340         1,133        3,711            -          123          1,133         3,834         4,967
Morningside
  Scottsdale, AZ              4,542           533        6,316          137        2,115            670         8,431         9,101
Park Meadow
  Gilbert, AZ                 2,936           607        2,828          225        1,275            832         4,103         4,935
Preserve at Squaw Peak
  Phoenix, AZ                 3,172           377        4,252          141        1,939            518         6,191         6,709
Promontory Pointe
  Phoenix, AZ                 7,610         2,038        6,987         (379)       7,861          1,659         4,943         6,602
                                                        (9,905) *

Scottsdale Courtyards
  Scottsdale, AZ             10,442         2,946        8,385           33        3,087          2,979        11,472        14,451
Scottsdale Meadows
  Scottsdale, AZ              5,381         1,512        4,203            -          113          1,512         4,316         5,828
Shadow Brook
  Phoenix, AZ                 7,922         2,440        9,320          625        3,388          3,065        12,708        15,773
Shores at Andersen Springs
  Chandler, AZ                8,196         2,095        9,682          649        3,949          2,744        13,631        16,375
</TABLE>

<TABLE>
<CAPTION>
                                            Accumulated        Year             Year        Depreciable
Description                                Depreciation      Developed        Acquired    Lives in Years
--------------------------------------------------------------------------------------------------------
<S>                                           <C>            <C>              <C>           <C>
SAME STORE
  Phoenix
Bayside at the Islands
  Gilbert, AZ                                 $815           1988-1989                      5 to 40 years
Country Brook
  Chandler, AZ                                 954                               1991       5 to 40 years
Deer Creek Village
  Phoenix, AZ                                  912                               1991       5 to 40 years
Greenwood Village
  Tempe, AZ                                    961                               1993       5 to 40 years
Heritage Point
  Mesa, AZ                                     424                               1994       5 to 40 years
La Mariposa
  Mesa, AZ                                     528                               1990       5 to 40 years
La Valencia
  Mesa, AZ                                     829                               1990       5 to 40 years
Little Cottonwoods
  Tempe, AZ                                    939                               1989       5 to 40 years
Los Arboles
  Chandler, AZ                                 895                               1993       5 to 40 years
Miramonte
  Scottsdale, AZ                               481                               1993       5 to 40 years
Morningside
  Scottsdale, AZ                               731                               1992       5 to 40 years
Park Meadow
  Gilbert, AZ                                  450                               1992       5 to 40 years
Preserve at Squaw Peak
  Phoenix, AZ                                  500                               1991       5 to 40 years
Promontory Pointe
  Phoenix, AZ                                  392                               1988       5 to 40 years

Scottsdale Courtyards
  Scottsdale, AZ                             1,035                1993                      5 to 40 years
Scottsdale Meadows
  Scottsdale, AZ                               539                               1993       5 to 40 years
Shadow Brook
  Phoenix, AZ                                1,157                               1993       5 to 40 years
Shores at Andersen Springs
  Chandler, AZ                               1,078                1993                      5 to 40 years
</TABLE>


                                      F-21

<PAGE>

* Write-down of real estate assets




                                      F-22

<PAGE>

                       EVANS WITHYCOMBE RESIDENTIAL, INC.
       SCHEDULE III - REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
                                December 31, 1996
                             (Amounts in thousands)

<TABLE>
<CAPTION>

                                                               Costs Capitalized Subsequent     Gross Amounts at Which
                                            Initial Cost       to Acquisition /Construction   Carried at Close of Period
                                    ----------------------------------------------------------------------------------------------
                                                   Buildings and             Buildings and                 Buildings and
Description            Encumbrances      Land      Improvements      Land    Improvements         Land     Improvements      Total
----------------------------------------------------------------------------------------------------------------------------------
<S>                        <C>            <C>           <C>          <C>          <C>         <C>             <C>           <C>
SAME STORE (continued)
Silver Creek
  Phoenix, AZ              $  3,211          $484       $3,157         $228       $2,429      $     712        $5,586        $6,298
Sun Creek
  Glendale, AZ                3,811           715        3,950          182        1,648            897         5,598         6,495
The Meadows
  Mesa, AZ                        -           650        4,797            -        2,795            650         6,231         6,881
                                                                                  (1,361) *

The Palms
  Phoenix, AZ                 4,895         2,152        4,455        1,133        2,764          3,285         7,219        10,504
The Pines
  Mesa, AZ                    3,707           577        3,725          351        2,559            928         6,284         7,212
Towne Square
  Chandler, AZ                    -         1,042        8,413          277        3,614          1,319        12,027        13,346
Villa Encanto
  Phoenix, AZ                 8,951         2,884        8,558            -          844          2,884         9,402        12,286
Village at Lakewood
  Phoenix, AZ                 8,317         1,652        5,776        1,514        5,897          3,166        11,673        14,839

  TUCSON
Harrison Park
  Tucson, AZ                  3,315           516        3,511            -          743            516         4,254         4,770
La Reserve
  Oro, Valley                 6,409         2,309        6,356          956        3,656          3,265        10,012        13,277
Orange Grove Village
  Tucson, AZ                  3,786           814        3,233          906        2,575          1,720         5,808         7,528
Suntree Village
  Oro, Valley                 8,550         1,246        8,862          326        3,713          1,572        12,575        14,147
The Arboretum
  Tucson, AZ                 16,684         1,014        8,323        1,526        3,349          2,540        11,672        14,212
Village at Tanque Verde
  Tucson, AZ                  6,436           690        1,280          745        4,895          1,435         6,175         7,610
                         -----------------------------------------------------------------------------------------------------------
SUBTOTAL SAME STORE         180,629        44,514      183,309       13,776       84,619         58,290       267,928       326,218
COMMUNITIES STABILIZED
LESS THAN TWO YEARS
  PHOENIX
Gateway Villas
  Phoenix, AZ                     -         1,431       11,238            -          (50)         1,431        11,188        12,619
</TABLE>

<TABLE>
<CAPTION>
                                            Accumulated        Year             Year        Depreciable
Description                                Depreciation      Developed        Acquired    Lives in Years
--------------------------------------------------------------------------------------------------------
<S>                                           <C>            <C>              <C>           <C>
SAME STORE (continued)
Silver Creek
  Phoenix, AZ                                 $546                               1991       5 to 40 years
Sun Creek
  Glendale, AZ                                 624                               1993       5 to 40 years
The Meadows
  Mesa, AZ                                     532                               1987       5 to 40 years

The Palms
  Phoenix, AZ                                  512                1990                      5 to 40 years
The Pines
  Mesa, AZ                                     679                               1992       5 to 40 years
Towne Square
  Chandler, AZ                               1,607                               1992       5 to 40 years
Villa Encanto
  Phoenix, AZ                                  983                               1991       5 to 40 years
Village at Lakewood
  Phoenix, AZ                                  915                               1991       5 to 40 years

  TUCSON
Harrison Park
  Tucson, AZ                                   393                               1991       5 to 40 years
La Reserve
  Oro, Valley                                  732                1988                      5 to 40 years
Orange Grove Village
  Tucson, AZ                                   605                               1991       5 to 40 years
Suntree Village
  Oro, Valley                                1,348                               1992       5 to 40 years
The Arboretum
  Tucson, AZ                                 1,584                               1992       5 to 40 years
Village at Tanque Verde
  Tucson, AZ                                   589                               1990       5 to 40 years
                                           --------
SUBTOTAL SAME STORE                         25,269

COMMUNITIES STABILIZED
LESS THAN TWO YEARS
  PHOENIX
Gateway Villas
  Phoenix, AZ                                  561           1994-1995                      5 to 40 years
</TABLE>


                                      F-23

<PAGE>

* Write-down of real estate assets


                                      F-24

<PAGE>

                       EVANS WITHYCOMBE RESIDENTIAL, INC.
       SCHEDULE III - REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
                                December 31, 1996
                             (Amounts in thousands)
<TABLE>
<CAPTION>

                                                               Costs Capitalized Subsequent     Gross Amounts at Which
                                            Initial Cost       to Acquisition /Construction   Carried at Close of Period
                                    ----------------------------------------------------------------------------------------------
                                                   Buildings and             Buildings and                 Buildings and
Description            Encumbrances      Land      Improvements      Land    Improvements         Land     Improvements      Total
----------------------------------------------------------------------------------------------------------------------------------
<S>                         <C>           <C>           <C>          <C>          <C>            <C>          <C>           <C>

Communities Stabilized Less
Than Two Years (continued)
Mountain Park Ranch
  Phoenix, AZ                $9,704        $1,662      $12,540         $  -          $28         $1,662       $12,568       $14,230
Sonoran
  Phoenix, AZ                     -         2,362       20,802            -           17          2,362        20,819        23,181
The Enclave
  Tempe, AZ                   8,367         1,500       10,527            -           26          1,500        10,553        12,053
The Heritage
  Phoenix, AZ                     -         1,211       12,370            -          (13)         1,211        12,357        13,568
Towne Square Expansion
Phase II
  Chandler, AZ                    -             -        6,061            -            -              -         6,061         6,061

  Tucson
Arboretum Expansion
Phase II
  Tucson, AZ                      -           914        8,383            -            -            914         8,383         9,297
                       ------------------------------------------------------------------------------------------------------------
Subtotal Communities
Stabilized
  Less than Two Years        18,071         9,080       81,921            -            8          9,080        81,929        91,009

Developments and Lease-Up
Properties
  Phoenix
Country Brook Expansion
Phase III
  Chandler, AZ                    -           543        6,779            -            -            543         6,779         7,322
The Hawthorne
  Phoenix, AZ                     -         2,695       14,087            -            -          2,695        14,087        16,782
Ingleside
  Phoenix, AZ                     -         1,204        6,242            -            -          1,204         6,242         7,446
The Isle at Arrowhead Ranch
  Glendale, AZ                    -         1,652        9,806            -            -          1,652         9,806        11,458
Ladera
  Phoenix, AZ                     -         2,979       14,884            -            -          2,979        14,884        17,863
Mirador
  Phoenix, AZ                     -         2,597       20,885            -            -          2,597        20,885        23,482
Park Meadow Expansion
Phase II
  Gilbert, AZ                     -             4        3,998            -            -              4         3,998         4,002
Promontory Pointe Expansion
Phase II
  Phoenix, AZ                     -           665        8,141            -            -            665         8,141         8,806
Towne Square Expansion
Phase III
  Chandler, AZ                    -           605        6,092            -            -            605         6,092         6,697
</TABLE>

<TABLE>
<CAPTION>
                                            Accumulated        Year             Year        Depreciable
Description                                Depreciation      Developed        Acquired    Lives in Years
--------------------------------------------------------------------------------------------------------
<S>                                           <C>            <C>              <C>           <C>
Communities Stabilized Less
Than Two Years (continued)
Mountain Park Ranch
  Phoenix, AZ                               $1,032           1994-1995                      5 to 40 years
Sonoran
  Phoenix, AZ                                1,142           1994-1995                      5 to 40 years
The Enclave
  Tempe, AZ                                    860           1994-1995                      5 to 40 years
The Heritage
  Phoenix, AZ                                  769           1994-1995                      5 to 40 years
Towne Square Expansion
Phase II
  Chandler, AZ                                   -           1994-1995                      5 to 40 years

Tucson
Arboretum Expansion
Phase II
  Tucson, AZ                                     -           1994-1995                      5 to 40 years
                                           ---------
Subtotal Communities
Stabilized Less than
Two Years                                    4,364

Developments and Lease-Up
Properties
  Phoenix
Country Brook Expansion
Phase III
  Chandler, AZ                                 136                1995                      5 to 40 years
The Hawthorne
  Phoenix, AZ                                  122                1995                      5 to 40 years
Ingleside
  Phoenix, AZ                                  386                1995                      5 to 40 years
The Isle at Arrowhead Ranch
  Glendale, AZ                                   3                1996                      5 to 40 years
Ladera
  Phoenix, AZ                                  727           1994-1995                      5 to 40 years
Mirador
  Phoenix, AZ                                  921           1994-1995                      5 to 40 years
Park Meadow Expansion
Phase II
  Gilbert, AZ                                  100                1995                      5 to 40 years
Promontory Pointe Expansion
Phase II
  Phoenix, AZ                                   68                1995                      5 to 40 years
Towne Square Expansion
Phase III
  Chandler, AZ                                 177                1995                      5 to 40 years
</TABLE>


                                      F-25

<PAGE>

                       EVANS WITHYCOMBE RESIDENTIAL, INC.
       SCHEDULE III - REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
                                December 31, 1996
                             (Amounts in thousands)

<TABLE>
<CAPTION>

                                                               Costs Capitalized Subsequent     Gross Amounts at Which
                                            Initial Cost       to Acquisition /Construction   Carried at Close of Period
                                    ----------------------------------------------------------------------------------------------
                                                   Buildings and             Buildings and                 Buildings and
Description            Encumbrances      Land      Improvements      Land    Improvements         Land     Improvements      Total
----------------------------------------------------------------------------------------------------------------------------------
<S>                         <C>           <C>           <C>          <C>          <C>            <C>          <C>           <C>


The Retreat (1)
  Phoenix, AZ                  $  -        $3,477       $2,578         $  -         $  -         $3,477        $2,578        $6,055
Scottsdale & Mountain
View (1)
  Scottsdale, AZ                  -         3,456          508            -            -          3,456           508         3,964
Vista Grove (1)
  Mesa, AZ                        -         1,343        1,897            -            -          1,343         1,897         3,240
The Gates Project (2)
Various Locations                 -             -          551            -            -              -           551           551
Laguna at Arrowhead (1)
  Glendale, AZ                    -           879          592            -            -            879           592         1,471

  Tucson
Bear Canyon
  Tucson, AZ                      -         1,645       12,926            -            -          1,645        12,926        14,571
Harrison Park Expansion
Phase II
  Tucson, AZ                      -           749        8,912            -            -            749         8,912         9,661
The Legends
  Tucson, AZ                      -         2,728       17,893            -            -          2,728        17,893        20,621
Orange Grove Expansion
Phase II
  Tucson, AZ                      -            93        7,213            -            -             93         7,213         7,306
                           ---------------------------------------------------------------------------------------------------------
Subtotal Developments and
Lease-Up Properties               -        27,314      143,984            -            -         27,314       143,984       171,298

Acquisitions
  Phoenix
Acacia Creek
  Scottsdale, AZ             15,247         6,122       24,382            -          599          6,122        24,981        31,103
Rancho Murietta
  Tempe, AZ                   6,225         1,766       10,208            -          993          1,766        11,201        12,967
Superstition Vista
  Mesa, AZ                        -         1,641       12,272            -        1,512          1,641        13,784        15,425
</TABLE>

<TABLE>
<CAPTION>

                                            Accumulated        Year             Year        Depreciable
Description                                Depreciation      Developed        Acquired    Lives in Years
----------------------------------------------------------------------------------------------------------
<S>                                           <C>            <C>              <C>           <C>
Developments and Lease-Up
Properties (continued)
The Retreat (1)
  Phoenix, AZ                                 $  -                1997                      5 to 40 years
Scottsdale & Mountain View (1)
  Scottsdale, AZ                                 -                1997                      5 to 40 years
Vista Grove (1)
  Mesa, AZ                                       -                1997                      5 to 40 years
The Gates Project (2)
Various Locations                                -             Various                      5 to 40 years
Laguna at Arrowhead (1)
  Glendale, AZ                                   -                1997                      5 to 40 years

Tucson
Bear Canyon
  Tucson, AZ                                   237                1995                      5 to 40 years
Harrison Park Expansion
Phase II
  Tucson, AZ                                   235                1995                      5 to 40 years
The Legends
  Tucson, AZ                                 1,235           1994-1995                      5 to 40 years
Orange Grove Expansion
Phase II
  Tucson, AZ                                   297                1995                      5 to 40 years
                                          ---------
Subtotal Developments and
Lease-Up Properties                          4,644
Acquisitions
  Phoenix
Acacia Creek
  Scottsdale, AZ                             1,486                1995                      5 to 40 years
Rancho Murietta
  Tempe, AZ                                    698                1995                      5 to 40 years
Superstition Vista
  Mesa, AZ                                     480                1995                      5 to 40 years
</TABLE>



                                      F-26

<PAGE>

                       EVANS WITHYCOMBE RESIDENTIAL, INC.
       SCHEDULE III - REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
                                December 31, 1996
                             (Amounts in thousands)
<TABLE>
<CAPTION>

                                                               Costs Capitalized Subsequent     Gross Amounts at Which
                                            Initial Cost       to Acquisition /Construction   Carried at Close of Period
                                    ----------------------------------------------------------------------------------------------
                                                   Buildings and             Buildings and                 Buildings and
Description            Encumbrances      Land      Improvements      Land    Improvements         Land     Improvements      Total
----------------------------------------------------------------------------------------------------------------------------------
<S>                         <C>           <C>           <C>          <C>          <C>            <C>          <C>           <C>

Acquisitions (continued)
  California
Canyon Crest Views
  Riverside, CA                $  -        $1,745 $12,163 $  -         $  -       $1,745        $12,163       $13,908
The Ashton
  Corona Hills, CA           17,300         2,594       18,679            -        2,185          2,594        20,864        23,458
Portofino
  Chino Hills, CA                 -         3,572        9,031            -            -          3,572         9,031        12,603
Parkview Terrace Club
  Redlands, CA               22,650         4,969       28,301            -            -          4,969        28,301        33,270
Redlands Lawn and
Tennis Club
  Redlands, CA               24,050         4,822       24,045            -            -          4,822        24,045        28,867
                          ----------------------------------------------------------------------------------------------------------
Subtotal Acquisitions        85,472        27,231      139,081            -        5,289         27,231       144,370       171,601

Corporate Office
  Scottsdale, AZ -                -           325            -        1,099            -          1,424         1,424

                          ----------------------------------------------------------------------------------------------------------
Total                      $284,172      $108,139     $548,620      $13,776      $91,015       $121,915      $639,635      $761,550
                          ----------------------------------------------------------------------------------------------------------
                          ----------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
                                            Accumulated        Year             Year        Depreciable
Description                                Depreciation      Developed        Acquired    Lives in Years
----------------------------------------------------------------------------------------------------------
<S>                                           <C>            <C>              <C>           <C>

Acquisitions (continued)
  California
Canyon Crest Views
  Riverside, CA                               $141                               1996       5 to 40 years
The Ashton
  Corona Hills, CA                             510                               1995       5 to 40 years
Portofino
  Chino Hills, CA                               91                               1996       5 to 40 years
Parkview Terrace Club
  Redlands, CA                                 286                               1996       5 to 40 years
Redlands Lawn and
Tennis Club
  Redlands, CA                                  50                               1996       5 to 40 years
                                          ---------
Subtotal Acquisitions                        3,742

Corporate Office
  Scottsdale, AZ                               312                               1994        5 to 8 years

                                          ---------
Total                                      $38,331
                                          ---------
                                          ---------
</TABLE>


(1)  Projects are currently in the early planning stage and preliminary site
     work.


(2)  The Gates Project represents the costs associated with the Company's
     investment in constructing security gate systems at all its apartment
     communities.


                                      F-27


<PAGE>

EVANS WITHYCOMBE RESIDENTIAL, INC.
  SCHEDULE III - REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION



A summary of activity for real estate investments and accumulated depreciation
is as follows:

<TABLE>
<CAPTION>

                                                      Years Ended December 31,
                                                 1996           1995           1994
                                              ----------     ----------     ----------
                                                        (Amounts in thousands)
<S>                                          <C>            <C>            <C>
Balance at beginning of period               $  587,183     $  399,987     $  292,513
  Acquisitions                                   88,648         77,895          5,849
  Improvements, including construction costs     85,719        109,301         66,604
  Elimination of accumulated depreciation
    at date of acquisition                            -              -        (38,360) (1)
  Fair value adjustment                               -              -         73,381
                                              ----------     ----------     ----------
  Balance at close of period                 $  761,550     $  587,183     $  399,987
                                              ----------     ----------     ----------
                                              ----------     ----------     ----------


Accumulated depreciation
  Balance at beginning of period              $  17,511       $  3,749      $  32,065
    Depreciation                                 20,885         13,762         10,333
    Accumulated depreciation on disposals           (65)             -           (289)
    Elimination of accumulated depreciation
      at date of acquisition                          -              -        (38,360)

                                              ----------     ----------     ----------
  Balance at close of period                  $  38,331      $  17,511      $   3,749
                                              ----------     ----------     ----------
                                              ----------     ----------     ----------
</TABLE>


(1)  Amount represents decrease in basis due to acquiring real estate at net
     book value at the time of the Offering.


                                      F-28