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                                            March 18, 1999



Commerzbank  AG, New York Branch  Commerzbank AG,
Los Angeles Branch Wells Fargo Bank,
National Association Chase Bank of Texas, N.A.
BankBoston N.A.
c/o Commerzbank AG, New York Branch
2 World Financial Center
New York, New York 10038

Homestead Village Incorporated
2100 RiverEdge Parkway
Atlanta, Georgia  30328

     Re:  Subscription  Letter Agreement (the "Subscription  Agreement"),  dated
     June  16,  1998,  from  Security  Capital  Group  Incorporated   ("Security
     Capital") to Homestead Village  Incorporated  ("Homestead"),  including the
     form of Homestead Village  Convertible  Subordinated  Debenture attached as
     Exhibit A to the Subscription Agreement (the "Debenture")

Ladies and Gentlemen:

         This will confirm our agreement as follows:

1.   If  Homestead,  prior to any purchase by Security  Capital of  Subordinated
     Debentures  under  the  Subscription  Agreement,   offers  (an  "Offering")
     pursuant to a registered public offering or private  placement,  other than
     pursuant  to  an  employee  or  other  stock  option  or  incentive   plan,
     $200,000,000  or more of  common  stock,  preferred  stock or other  equity
     securities  or  combinations  or units of equity  securities  (the AOffered
     Securities@),   Security  Capital's   obligations  under  the  Subscription
     Agreement  shall be reduced to the extent that parties  other than Security
     Capital purchase greater than $20,000,000 of the Offered Securities.

2.   The second sentence of paragraph 3 of the  Subscription  Agreement shall be
     deemed to be amended and restated as follow:

                  "If at the  end  of  such  90 day  period  Homestead  has  not
                  completed an equity offering, then the Subordinated Debentures
                  shall,  subject to the following  sentence,  automatically  be
                  converted  into  Shares  in  accordance  with the terms of the
                  Subordinated Debenture."

3.   The  penultimate  sentence of Section 3.01 of the Debenture shall be deemed
     to be amended and restated as follows:


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                  "The Company may redeem, or exchange,  debentures prior to the
                  90th day after the Issue Date only with  proceeds of, or with,
                  shares of Preferred stock or Common Stock."

4.   Section 5.01(c) of the Form of Convertible  Subordinated Debenture shall be
     deemed to be amended and restated as follows:

                  "(c) The Conversion  Price shall be equal to the lowest of (i)
                  $13.931 per share,  (ii) the Fair  Market  Value of the Common
                  Stock on the Issue  Date,  and  (iii)  the Fair  Market of the
                  Common Stock on the Mandatory Conversion Date."

         Please execute a copy of this letter and return it to Security  Capital
to acknowledge your agreement with this letter.

                                            Sincerely,

                                            SECURITY CAPITAL GROUP INCORPORATED



                                        By:____________________________________
                                        Name:
                                        Title:

ACKNOWLEDGED AND AGREED:


         HOMESTEAD VILLAGE INCORPORATED



         By:_______________________________________
              Name:
              Title:


         COMMERZBANK AG, LOS ANGELES BRANCH


         By:_______________________________________
              Name:
              Title:

         By:_______________________________________
              Name:
              Title:


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         COMMERZBANK AG, NEW YORK BRANCH


         By:______________________________________
              Name:
              Title:


         By:______________________________________
              Name:
              Title:

         WELLS FARGO, NATIONAL ASSOCIATION


         By:_____________________________________
              Name:
              Title:


         CHASE BANK OF TEXAS, N.A.


         By:___________________________________
              Name:
              Title:


         BANKBOSTON N.A.


         By:___________________________________
              Name:
              Title: