UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D. C. 20549


                                    FORM 10-Q



                Quarterly Report Under Section 13 or 15(d) of the
                         Securities Exchange Act of 1934


For Quarter ended March 31, 1997                  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                (I.R.S. employer identification no.)
of incorporation or organization)


         6991 East Camelback Road, Suite A200, Scottsdale, Arizona 85251
                    (Address of principal executive offices)

       Registrant's telephone number, including area code: (602) 840-1040



         Indicate  by check  mark  whether  the  registrant:  (1) has  filed all
reports  required to be filed by Section 13 or 15(d) of the Securities  Exchange
Act of 1934 during the preceding 12 months (or for such shorter  period that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.

                                YES  X       NO  
                                    ---        ---





  As of April 25, 1997 there were 20,245,064 shares of the registrant's common
                       stock, $0.01 par value outstanding.

                                  Page 1 of 24
<PAGE>
                       EVANS WITHYCOMBE RESIDENTIAL, INC.
                       ----------------------------------


                                      INDEX
                                      -----
<TABLE>
<CAPTION>
Part I           FINANCIAL INFORMATION                                                     Page
------           ---------------------                                                     ----
<S>              <C>                                                                         <C>
                 Item 1   Financial Statements

                 Consolidated Balance Sheets as of March 31, 1997 (Unaudited) and
                 December 31, 1996 ........................................................   3

                 Consolidated Statements of Income for the three months
                 ended March 31, 1997 and 1996 (Unaudited) ................................   4

                 Consolidated Statement of Stockholders' Equity as of March 31, 1997
                 (Unaudited) ..............................................................   5

                 Consolidated Statements of Cash Flows for the three months
                 ended March 31, 1997 and 1996 (Unaudited) ................................   6

                 Notes to Consolidated Financial Statements ...............................   7

                 Item 2   Management's Discussion
                          and Analysis of Financial
                          Condition and Results of
                          Operations ......................................................  13

Part II          OTHER INFORMATION
-------          -----------------

                 Item 6   Exhibits and Reports on Form 8-K.................................  23


Signatures       ..........................................................................  24
</TABLE>
                                  Page 2 of 24
<PAGE>
                       EVANS WITHYCOMBE RESIDENTIAL, INC.
                           CONSOLIDATED BALANCE SHEETS
               (Amounts in thousands, except for number of shares)
<TABLE>
<CAPTION>
                                                                       March 31, 1997  December 31, 1996
                                                                       --------------  -----------------
                                                                         (Unaudited)
<S>                                                                       <C>            <C>      
ASSETS
Real Estate:
  Land ................................................................   $ 133,704      $ 121,915
  Buildings and improvements ..........................................     584,866        543,839
  Furniture and fixtures ..............................................      31,090         29,567
  Construction-in-progress ............................................      57,431         66,229
                                                                          ---------      ---------
                                                                            807,091        761,550

  Less accumulated depreciation .......................................     (44,432)       (38,331)
                                                                          ---------      ---------
                                                                            762,659        723,219
Cash and cash equivalents .............................................       2,942          2,568
Restricted cash .......................................................       1,710          1,622
Accounts and notes receivable .........................................       3,079          3,500
Deferred costs, net of accumulated amortization
  of $1,281 and $1,265 at March 31, 1997 and
 December 31, 1996, respectively ......................................       3,484          3,838
Other assets ..........................................................       1,451          1,587
                                                                          ---------      ---------
Total assets ..........................................................   $ 775,325      $ 736,334
                                                                          =========      =========

LIABILITIES AND STOCKHOLDERS' EQUITY

Mortgage and notes payable ............................................   $ 435,917      $ 436,172
Accounts payable and other liabilities ................................       6,075          7,833
Dividends payable .....................................................       8,199            --
Accrued interest ......................................................       1,249          1,417
Accrued property taxes ................................................       5,003          2,912
Resident security deposits ............................................       2,161          1,818
Prepaid rent ..........................................................         898            585
                                                                          ---------      ---------
Total liabilities .....................................................     459,502        450,737

Minority interest .....................................................      55,768         56,592

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, 20,245,064 and 18,366,902 issued
    and outstanding at March 31, 1997 and
    December 31, 1996, respectively ...................................         203            184
  Additional paid-in capital ..........................................     290,345        253,425
  Unamortized employee restricted stock compensation ..................        (481)          (465)
  Distributions in excess of net income ...............................     (30,012)       (24,139)
                                                                          ---------       ---------

Total stockholders' equity ............................................     260,055        229,005
                                                                          ---------      ---------

Total liabilities and stockholders' equity ............................   $ 775,325      $ 736,334
                                                                          =========      =========
</TABLE>
See Notes to Consolidated Financial Statements

                                  Page 3 of 24
<PAGE>
                       EVANS WITHYCOMBE RESIDENTIAL, INC.
                        CONSOLIDATED STATEMENTS OF INCOME
    (Amounts in thousands, except for number of shares and per share amounts)
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                                               Three months Ended
                                                                                          ------------------------------
                                                                                          March 31, 1997  March 31, 1996
                                                                                          --------------  --------------
<S>                                                                                         <C>             <C>         
Revenues:
  Rental ................................................................................   $     27,152    $     22,136
  Third party management fees ...........................................................            110             287
  Interest and other ....................................................................          1,759           1,756
                                                                                            ------------    ------------
    Total revenues ......................................................................         29,021          24,179

Expenses:
  Repairs and maintenance ...............................................................          2,941           2,556
  Property operating ....................................................................          4,200           2,683
  Advertising ...........................................................................            414             433
  Real estate taxes .....................................................................          2,119           1,649
  Property management ...................................................................            907             884
  General and administrative ............................................................            511             497
  Interest ..............................................................................          7,389           5,424
  Depreciation and amortization .........................................................          6,178           4,770
                                                                                            ------------    ------------
Total expenses ..........................................................................         24,659          18,896
                                                                                            ------------    ------------

Income before minority interest and extraordinary item ..................................          4,362           5,283
Minority interest .......................................................................           (836)         (1,212)
                                                                                            ------------    ------------

Income before extraordinary item ........................................................          3,526           4,071
Extraordinary item - loss from early extinguishment of debt,
    net of minority interest of $300 ....................................................         (1,200)           --
                                                                                            ------------    ------------

Net income ..............................................................................   $      2,326    $      4,071
                                                                                            ============    ============


Earnings per share before extraordinary item ............................................   $       0.18    $       0.25
                                                                                            ============    ============

Earnings per share ......................................................................   $       0.12    $       0.25
                                                                                            ============    ============




Weighted average shares outstanding .....................................................     19,357,324      16,137,137
                                                                                            ============    ============
</TABLE>
See Notes to Consolidated Financial Statements

                                  Page 4 of 24
<PAGE>
                       EVANS WITHYCOMBE RESIDENTIAL, INC.
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
    (Amounts in thousands, except for number of shares and per share amounts)
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                                              Unamortized
                                                                                               Employee
                                                                                Additional    Restricted  Distributions
                                                       Number of     Common      Paid-in        Stock      in Excess of
                                                         Shares       Stock      Capital     Compensation  Net Income       Total
                                                       ----------    -------   -----------   ------------  ----------    ----------
<S>                                                    <C>           <C>       <C>             <C>         <C>           <C>       
Stockholders' equity, December 31, 1996 ...........    18,366,902    $   184   $   253,425     $  (465)    $  (24,139)   $  229,005

    Net income ....................................          --         --            --          --            2,326         2,326
    Dividends on common stock
        ($0.405 per share) ........................          --         --            --          --           (8,199)       (8,199)
    Proceeds of third offering, net of underwriting
       discount and offering costs of $406  .......     1,800,000         18        35,397        --             --          35,415
    Conversion of units to common stock ...........        70,332          1         1,359        --             --           1,360
    Exercise of stock options .....................         5,000       --             100        --             --             100
    Issuance of restricted stock ..................         2,930       --              64         (64)          --            --
    Forfeiture of restricted stock ................          (100)      --            --          --             --            --
    Amortization of deferred compensation .........          --         --            --            48           --              48
                                                      -----------    -------   -----------     -------     ----------   -----------


Stockholders' equity, March 31, 1997 ..............    20,245,064    $   203   $   290,345     $  (481)    $  (30,012)   $  260,055
                                                      ===========    =======   ===========     =======     ==========    ==========
</TABLE>
See Notes to Consolidated Financial Statements

                                  Page 5 of 24
<PAGE>
                       EVANS WITHYCOMBE RESIDENTIAL, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (Amounts in thousands)
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                  Three Months ended March 31,
                                                                  ----------------------------
                                                                       1997          1996
                                                                       ----          ----
<S>                                                                 <C>               <C>      
Cash flows from operating activities
Net income ....................................................     $   2,326      $   4,071 
Adjustments to reconcile net income to net cash                                              
  provided by operating  activities:                                                         
    Depreciation and amortization .............................         6,355          4,889 
    Amortization of executive deferred comp ...................            48            170 
    Minority interest .........................................           536          1,212 
    Write-off of development and acquisition costs ............            68             36 
    Write-off of deferred loan costs ..........................           294           --   
Decrease (increase) in assets:                                                       
    Restricted cash ...........................................          (88)          (149)
    Accounts and notes receivable .............................           421           (269)
    Other assets ..............................................           136              2 
(Decrease) increase in liabilities:                                                  
    Accounts payable and other liabilities ....................        (1,758)         2,364 
    Accrued interest ..........................................          (168)           207 
    Accrued property taxes ....................................         2,091          1,472 
    Resident security deposits ................................           343              3 
    Prepaid rent ..............................................           313             (2)
                                                                    ---------      --------- 
Net cash provided by operating activities .....................        10,917         14,006 
                                                                                             
Cash flows from investing activities                                                         
Purchase of real estate assets ................................       (27,290)       (30,756)
                                                                    ---------      --------- 
Net cash used in investing activities .........................       (27,290)       (30,756)
                                                                                             
Cash flows from financing activities                                                         
Proceeds from Third Public Offering, net of expenses ..........        35,415           --   
Proceeds from exercise of options .............................           100            145 
Proceeds from mortgage notes and                                                             
  credit facility .............................................        49,021        133,217 
Principal payments on mortgage notes ..........................       (67,595)      (111,087)
Payment for loan costs ........................................          (194)          (312)
Dividends paid ................................................           --          (6,127)
Minority interest distributions ...............................           --          (1,775)
Net cash provided by financing activities .....................        16,747         14,061 
                                                                    ---------      --------- 
                                                                                             
Net increase (decrease) in cash and cash                                                     
  equivalents .................................................           374         (2,689)
Cash and cash equivalents, beginning of period ................         2,568          3,634 
                                                                    ---------      --------- 
Cash and cash equivalents, end of period ......................     $   2,942      $     945 
                                                                    =========      ========= 
                                                                                             
Supplemental information                                                                     
Cash paid during the period for interest ......................     $   7,318      $   5,054 
                                                                    =========      ========= 
                                                                                             
Supplemental disclosure of non-cash activity                                                 
Assumption of debt related to the acquisition of                                             
  apartment communities .......................................     $  18,318      $    --   
                                                                    =========      ========= 
                                                                                             
Issuance of stock under restricted stock incentive plan........     $    --        $       9 
                                                                    =========      ========= 
Conversion of units to common stock ...........................     $   1,360      $     204 
                                                                    =========      ========= 
</TABLE>
See Notes to Consolidated Financial Statements                      

                                  Page 6 of 24
<PAGE>
                       EVANS WITHYCOMBE RESIDENTIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 1997
               (Amounts in thousands, except for number of shares
                        or units and per share amounts)
                                   (Unaudited)

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  52  stabilized  multifamily  apartment  communities
containing   14,799  units,  of  which  45  stabilized   multifamily   apartment
communities  are located in Phoenix and Tucson,  Arizona,  containing a total of
12,401 units and seven stabilized  multifamily apartment communities are located
in the Southern California market containing a total of 2,398 units. The Company
is also in the process of developing  or expanding  five  multifamily  apartment
communities  comprising 1,146 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 600 employees
at March 31, 1997.

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
81.46 percent and 77.08 percent  interest in the Operating  Partnership at March
31,  1997 and  1996,  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 Public Offering.
The net  proceeds  from the sale of  2,088,889  shares of common  stock from the
Second  Public  Offering  were used to repay a portion of the  Revolving  Credit
Facility.

In the first quarter of 1997, the Company  completed the Third Public  Offering.
The net  proceeds  from the sale of  1,800,000  shares of common  stock from the
Third  Public  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

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.

The accompanying unaudited consolidated financial statements have been presented
by the Company's  management in accordance  with generally  accepted  accounting
principles for interim  financial  information  and the rules and regulations of
the Securities and Exchange Commission (SEC).  Accordingly,  they do not include
all of the information and footnotes required by generally  accepted  accounting
principles  for complete  financial  statements.  All  significant  intercompany
accounts and transactions have been eliminated in consolidation.  In the opinion
of  management,  all  adjustments  (consisting of normally  recurring  accruals)
considered necessary for a fair presentation have been included.  The results of
operations  for the three month period ended March 31, 1997 are not  necessarily
indicative  of the results that may be expected for the year ended  December 31,
1997.

                                  Page 7 of 24
<PAGE>
These consolidated  financial  statements should be read in conjunction with the
Company's  December  31, 1996  audited  consolidated  financial  statements  and
accompanying notes in the Evans Withycombe Residential, Inc.
Form 10-K/A.

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". 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 March 31,  1997 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 $478 and $720,  for the three  months ended March 31,
1997 and 1996, 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 $15,142 and
$16,542 at March 31, 1997 and December 31, 1996, 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.

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.

                                  Page 8 of 24
<PAGE>
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 three months
ended March 31, 1997 and 1996,  respectively,  by the weighted average number of
shares outstanding.

In February 1997, the Financial  Accounting Standards Board issued SFAS No. 128,
"Earnings  per Share" which is required to be adopted on December  31, 1997.  At
that time,  the Company will be required to change the method  currently used to
compute earnings per share and to restate all prior periods presented. Under the
new requirements  for calculating  basic earnings per share, the dilutive effect
of stock options will be excluded. The impact of SFAS No. 128 is not expected to
be material.

4.   Mortgage and Notes Payable

The Company's mortgage notes and notes payable consists of the following:
<TABLE>
<CAPTION>
                                                                                   March 31,  December 31,
                                                                                       1997      1996
                                                                                       ----      ----
<S>                                                                                  <C>       <C>    
Mortgage note payable at fixed interest rate of 8.0 percent, monthly principal       $  --     $ 5,380
and interest payments. The unpaid principal balance was repaid on January 9, 1997

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

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

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

Mortgage note payable at fixed interest rate of 9.95 percent, monthly principal       12,033    12,065
and interest payments through September 15, 1997, remaining balance due September
15, 1997 

Mortgage note payable at fixed interest rate of 9.3 percent, monthly principal         3,174     3,182
and interest payments through September 15, 1997, remaining balance due September
15, 1997 

Mortgage note payable at fixed interest rates ranging from 6.25 percent to 9.0        18,318      --
percent, monthly principal and interest payments through August 17, 2004,
remaining balance due August 17, 2004. Interest rate increases 0.25 percent
annually each September. The mortgage note can be repaid at any time at the
Company's option without prepayment penalty
</TABLE>
                                  Page 9 of 24
<PAGE>
4.   Mortgage and Notes Payable (continued)
<TABLE>
<CAPTION>
                                                                                   March 31,   December 31,
                                                                                     1997         1996
                                                                                     ----         ----
<S>                                                                                 <C>        <C>     
$50 million securitized debt at a fixed interest rate of 7.17 percent, monthly      $ 49,381   $ 49,509
principal and interest payments through January 1, 2006, remaining balance due
January 1, 2006. Secured by first mortgage liens on 5 communities

Securitized debt at a fixed stated interest rate of 7.98 percent, with an            130,542    130,520
effective interest rate of 8.05 percent, monthly interest payments only through
August 1, 2001. Secured by first mortgage liens on 21 communities. The face
amount of $131 million is due August 1, 2001. The balance is net of unamortized
discount of $458 and $480 at March 31, 1997 and December 31, 1996, respectively

$17.3 million tax exempt bonds with a floating interest rate based on the tax         17,300     17,300
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, interest payments only, matures
December 1, 2007 (Effective interest rate of 4.95 percent at March 31, 1997)

$22.6 million tax exempt bonds with a floating interest rate based on the tax         22,650     22,650
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 5.05 percent at March 31, 1997)

$24.05 million tax exempt bonds with a floating interest rate based on the tax        24,050     24,050
exempt note rate set by the remarketing agent, interest payments only. Secured
by a $24.4 million direct pay letter of credit, matures August 1, 2005.
(Effective interest rate of 6.06 percent at March 31, 1997)

$225 million unsecured Revolving Credit Facility with floating interest rate         158,469    152,000
based on LIBOR plus 1.50 percent or at the option of the Company at prime rate,
interest payments only. Matures September 24, 1999 (Effective interest rate of
7.25 percent at March 31, 1997)

                                                                                    --------   --------
                                                                                    $435,917   $436,172
                                                                                    ========   ========
</TABLE>

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

Principal maturities as of March 31, 1997 are as follows:

               1997                                $    15,724
               1998                                        784
               1999                                    159,300
               2000                                        882
               2001                                    131,479
               Thereafter                              127,748
                                                   -------------

                                                   $   435,917
                                                   =============


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.

                                  Page 10 of 24
<PAGE>
In January 1997, the Company extinguished the debt on four mortgages with unpaid
principal  balances of  approximately  $25,000 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,  net of minority  interest of
$300.

5.   Distributions

On April 15, 1997, the Company paid a distribution  of $0.405 per share ($8,199)
to  shareholders  and $0.405 per unit  ($1,866) to  unitholders  of record as of
March 31, 1997.

6.    Management Fees

The Company performs management services for certain  unaffiliated  communities.
Management  fees  received from managed  communities  were $110 and $287 for the
three months ended March 31, 1997 and 1996, respectively.

7.   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 the alternative  fair value
accounting  provided  for  under  SFAS  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.
Proforma information  regarding net income and earnings per share is required by
SFAS No. 123 and is provided by the Company in its annual report.

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 the three months ended March 31, 1997 is as follows:

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

Options outstanding at December 31, 1996         908,850          $20.63
         Exercised                                (5,000)          20.00
         Granted                                  12,000           20.77
         Forfeited                               (23,775)          21.26
Options outstanding at March 31, 1997         ----------      ----------     
                                                 892,075          $20.68
                                              ==========      ==========

Options exercisable:
         December 31, 1996                       357,700          $19.98
         March 31, 1997                          502,775          $20.45


Options to purchase  913,425 and 901,650  shares of common stock were  available
for grant under the plan at March 31, 1997 and December 31, 1996, 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 an aggregate of 98,500  shares of restricted
stock from the Company one year  following the Initial  Public  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  Initial  Public
Offering  based on an  offering  price per share of $20.  The  expense  is being
amortized  ratably  over the  periods in 

                                  Page 11 of 24
<PAGE>
which the shares vest and an expense of $30 and $170 for the three  months ended
March 31, 1997 and 1996, respectively, is included in general and administrative
expense.  Information  with respect to the executive  restricted stock incentive
plan is as follows:

                                                                     Shares
                                                                     ------

     Restricted stock, net of forfeitures, at March 31, 1997         74,348
     Number of shares vested at March 31, 1997                       27,600

Restricted Stock Program

The Company has awarded 12,850 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
$19.13 to $22.25. The related expense will be amortized ratably over the periods
in which the shares vest and an expense of $18 and $9 for the three months ended
March 31, 1997 and 1996, respectively, is included in general and administrative
expense.

8.   Minority Interest

Minority interest at March 31, 1997 is comprised of the following:

                                                   Number
                                                  of Units       Dollars
                                                 ----------    -----------

     Balance at December 31, 1996                 4,677,810    $    56,592
     Conversion of units to common stock            (70,332)        (1,360)
     Allocation of net income                          --              836
     Allocation of extraordinary item -
       loss from early extinguishment of debt          --             (300)
     Balance at March 31, 1997                    ---------    -----------
                                                  4,607,478    $    55,768
                                                  =========    ===========


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.

9.   Subsequent Event

On April 2, 1997,  the Operating  Partnership  completed the sale of $75 million
senior unsecured notes priced at 99.44 percent of par with a coupon rate of 7.50
percent due April 15,  2004 and $50 million  senior  unsecured  notes  priced at
99.21  percent of par with a coupon rate of 7.625  percent  due April 15,  2007.
Proceeds  to the  Operating  Partnership  from  the  sale of the  notes,  net of
underwriter's   discount  and  out-of-pocket  costs,  was  approximately  $122.8
million. In anticipation of the Offering, the Operating Partnership entered into
two forward  treasury lock  agreements  on February 25, 1997.  The treasury lock
agreements  were settled  concurrently  with the  completion  of the sale of the
senior unsecured notes on April 2, 1997, and the Operating  Partnership received
proceeds from the settlement of the treasury lock agreements of approximately $3
million.  The Operating  Partnership is amortizing the gain on the settlement of
the treasury lock  transaction  as a reduction in interest  expense on the notes
using the effective  interest rate method.  The effective  interest rates on the
senior  unsecured  notes  inclusive  of the benefit from the  settlement  of the
treasury lock  transaction is 7.18 percent and 7.36 percent,  respectively.  The
Operating  Partnership  used  the  proceeds  from  the  sale  of the  notes  and
settlement of the treasury  lock  transaction  to pay down its Revolving  Credit
Facility.

                                  Page 12 of 24
<PAGE>
ITEM 2.   MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF  FINANCIAL  CONDITION  AND
          RESULTS OF OPERATIONS
          (Amounts in thousands,  except apartment data and number of shares and
          units)


The following discussion, which is based primarily on the consolidated financial
statements of Evans Withycombe  Residential,  Inc. should be read in conjunction
with the consolidated  financial  statements appearing elsewhere in this report.
The consolidated financial statements of the Company consist of the Company, the
Operating Partnership, the Financing Partnership, 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.

Results of Operations - Consolidated Financial Statements

The results of  operations  for the three  months ended March 31, 1997 and 1996,
respectively,  were  significantly  affected by  acquisitions,  developments and
expansions.

Comparison of Results of Operations for the Three Months Ended March 31, 1997 to
the Three Months Ended March 31, 1996

                                                     March 31,             
                                                ------------------  Percentage
                                                  1997       1996     Change
                                                -------    -------  ----------
   Rental income                                $27,152    $22,136     22.7%
   Third party management fees                      110        287    (61.6)
   Interest and other                             1,759      1,756      0.2
                                                -------    -------    ----- 
        Total revenues                           29,021     24,179     20.0

   Property operating and maintenance(1)          7,555      5,672     33.2
   Real estate taxes                              2,119      1,649     28.5
   Property management                              907        884      2.6
   General and administrative                       511        497      2.8
   Interest                                       7,389      5,424     36.2
   Depreciation and amortization                  6,178      4,770     29.5
                                                -------    -------    ----- 
   Total expenses                                24,659     18,896     30.5
                                                -------    -------    ----- 
   Income before minority interest and
       extraordinary item                       $ 4,362    $ 5,283    (17.4)%
                                                =======    =======    =====  

   Weighted average monthly rental
       revenue per unit, net of concessions     $   688    $   672
                                                =======    =======
   Weighted average number of apartments         14,766     11,929
                                                =======    =======
   Economic occupancy (2)                          89.2%      92.3%
                                                =======    =======

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

   (2)   Stabilized properties only.

                                  Page 13 of 24
<PAGE>
Rental  revenues  increased by $5,016 or 22.7 percent for the three months ended
March  31,  1997 as  compared  to the  similar  period  in 1996 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  for the three  months  ended  March  31,  1997 was
comparable  to the similar  period in 1996.  Interest  and other income for 1996
included  a $235  gain on the sale of  telephone  servicing  rights  on  certain
properties.

Third party  management  fees  decreased $177 or 61.6 percent due to the sale of
several properties in the management portfolio.

Property  operating and maintenance  expense and real estate taxes increased due
to the  increase in the  weighted  average  number of  apartments  for the three
months   ended  March  31,  1997  as  compared  to  the  same  period  in  1996,
respectively.

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 $478 of interest for the three months ended
March 31, 1997 compared to $720 for the same period in 1996 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, 1996. Same store portfolio consists of
41 stabilized  properties  containing  11,053 apartment units that were owned by
the Company for the three months ended March 31, 1997 and 1996.

                                                     March 31,             
                                               --------------------   Percentage
                                                 1997        1996       Change
                                               --------    --------   ----------
  Rental income                                $ 19,802    $ 20,240     (2.2)%
  Other income                                    1,113       1,173     (5.1)
                                               --------    --------    -----
                                                 20,915      21,413     (2.3)
  Property operating and maintenance              5,448       5,174      5.3
  Real estate taxes                               1,498       1,478      1.4
                                               --------    --------    -----
                                                  6,946       6,652      4.4
                                               --------    --------    -----
  Property net operating income                $ 13,969    $ 14,761     (5.4)%
                                               ========    ========    =====
  Weighted average monthly rental
      revenue per unit, net of concessions     $    671    $    661
                                               ========    ========
  Economic occupancy                               89.2%       92.3%
                                               ========    ========

Rental  income for the three  months  ended  March 31,  1997  decreased  $438 as
compared to the same period in 1996 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.  Other  income for the three  months  ended  March 31, 1997
decreased  as a result of the 1996 amount  including  $235 gain from the sale of
telephone servicing rights at various communities.

Property  operating and maintenance  expense  increased $274 or 5.3 percent over
1996 due to inflation,  higher  apartment  turnover and utility costs associated
with an increased number of vacant apartments in its "same store" portfolio.

                                  Page 14 of 24
<PAGE>
Communities Stabilized Less Than Two Years

Communities  stabilized  less than two years consist of the  development of four
new  apartment   communities  and  the  expansion  of  four  existing  apartment
communities by the Company, containing an aggregate of 1,444 new apartment units
that  reached  stabilized  occupancy  during the year ended  December  31, 1996.
Increases  in the three  month  period  ended  March 31, 1997 as compared to the
three month  period  ended March 31, 1996 are the result of the  increase in the
weighted average number of apartments.

                                                    March 31,
                                                ---------------
                                                 1997     1996
                                                ------   ------
                Rental income                   $3,062   $1,894
                Other income                       159      135
                                                ------   ------
                                                 3,221    2,029
                Property operating and
                   maintenance                     717      482
                Real estate taxes                  245      171
                                                ------   ------
                                                   962      653
                                                ------   ------
                Property net operating income   $2,259   $1,376
                                                ======   ======
                Weighted average number of
                    apartments                   1,444      874
                                                ======   ======

Development and Lease Up Communities

Development  and lease up  communities  consist of the  development of seven new
apartment  communities  or  the  expansion  of  existing  apartment  communities
containing   an   aggregate   of  1,542   apartment   units  that  were  in  the
"construction,"  "development,"  or "lease up" stage during 1997 and  therefore,
not  considered  to have  achieved  stabilized  occupancy for all of the periods
presented.  Increases in the three month period ended March 31, 1997 as compared
to the three month  period ended March 31, 1996 are the result of an increase in
the weighted average number of apartments.

                                                       March 31,
                                                    ---------------
                                                     1997     1996
                                                    ------   ------
            Rental income                           $1,349   $    2
            Other income                               121        1
                                                    ------   ------
                                                     1,470        3

            Property operating and maintenance         484       16
            Real estate taxes                          128     --
                                                    ------   ------
                                                       612       16
                                                    ------   ------
            Property net operating income (loss)    $  858   $  (13)
                                                    ======   ======
            Weighted average number of apartments
                in lease up                            695        2
                                                    ======   ======

                                  Page 15 of 24
<PAGE>
Acquisitions

Acquisitions  consist of 6 properties  containing 1,906 apartment  units,  which
have  been  acquired  by the  Company  since  January  1,  1996.  There  were no
acquisitions of apartment communities in the First Quarter of 1996.

                                                 March 31,
                                              ---------------

                                               1997     1996
                                              ------   ------
              Rental income                   $2,939   $  --
              Other income                        73      --
                                              ------   ------
                                               3,012      --
              Property operating and
                 maintenance                     906      --
              Real estate taxes                  248      --
                                              ------   ------
                                               1,154      --
                                              ------   ------
              Property net operating income   $1,858   $  --
                                              ======   ======
              Weighted average number of
                  apartments                   1,574      --
                                              ======   ======

Liquidity and Capital Resources

Liquidity

The  Company's net cash provided by operating  activities  decreased  from $14.0
million for the three months ended March 31, 1996 to $10.9 million for the three
months ended March 31, 1997  principally due to a reduction in accounts  payable
and other liabilities  related to the decrease in construction  activity and the
decrease  in net  income  related to the loss from the early  extinguishment  of
debt. Net cash used in investing activities decreased from $30.8 million for the
three  months  ended March 31, 1996 to $27.3  million for the three months ended
March 31,  1997.  The  decrease  is the result of a  reduction  in  construction
activity for the first quarter 1997 of $9.8 million as compared to $30.2 million
in the  first  quarter  1996  being  offset  by  $16.5  million  related  to the
acquisitions  of two  apartment  communities,  net of  assumed  debt.  Net  cash
provided by  financing  activities  increased  from $14.1  million for the three
months  ended March 31, 1996 to $16.7  million for the three  months ended March
31, 1997 due to the proceeds  from the sale of 1,800,000  shares of common stock
from the  Third  Public  Offering  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  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, issuance of 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

                                  Page 16 of 24
<PAGE>
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 did
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 March 31, 1997, the Company's total debt was approximately $435.9 million and
the Company's debt to total market capitalization  (Market Equity plus Debt) was
approximately  46.0 percent.  The Company  received an investment grade security
rating of "BBB-" from  Standards  and Poors  Corporation,  "Baa3"  from  Moody's
Investor  Services,  Inc.,  and " BBB-" from Fitch  Investor  Services  Inc.  in
December 1996 with respect to prospective issuances of senior unsecured debt.

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 are in the lower range of those  obligations that
exhibit adequate protection  parameters,  (b) Baa3 from Moody's Investor Service
Inc.  indicates that the  obligations of the Company are considered to be in the
lower range of medium-grade  obligations,  which are not considered to be highly
protected  or poorly  secured and (c) BBB- from Fitch  Investors  Service,  Inc.
indicates that the  obligations of the Company are considered to be in the lower
range of obligations  considered to be of investment  grade and of  satisfactory
credit  quality and that its ability to pay interest  and to repay  principal is
considered to be adequate.

Conventional Mortgage Loans

Conventional mortgage loans are comprised of three fixed rate loans at March 31,
1997, 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
August 17, 2004. The  conventional  mortgage loans  aggregated  $33.5 million at
March 31, 1997 with interest rates ranging from 6.25 percent to 9.95 percent. In
January 1997,  the Company  extinguished  the debt on four mortgages with unpaid
principal  balances  of  approximately  $25.0  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,  net of minority
interest of $300.

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  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 $49.4 million at March 31, 1997.  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 21  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.

                                  Page 17 of 24
<PAGE>
In March 1997, the Company  substituted two apartment  communities,  Sonoran and
The Heritage,  as collateral for the securitized  loan in exchange for releasing
the liens on three apartment communities,  The Pines, La Valencia and Deer Creek
Village, which are held for sale.

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 March 31, 1997 with interest  rates ranging from 4.95 percent to 6.06
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 Inter Bank Offered
Rate (LIBOR ) plus 150 basis points (100 basis points  equals one percent)  (or,
at the option of the Company,  at the prime rate  announced  by the banks).  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 March 31, 1997,  there was $158.5
million outstanding on the Revolving Credit Facility, with an effective interest
rate  of  7.25  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.  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.

The table below outlines the Company's debt structure as of March 31, 1997
<TABLE>
<CAPTION>
                                                                              Outstanding        Weighted Average
                                                                                Balance            Interest Rate
                                                                          ----------------       ----------------
<S>                                                                       <C>                           <C>  
Fixed Rate Debt:
   Mortgage Debt
     Conventional....................................................     $         82,906              7.40%
     Mortgage Loan Certificates......................................              130,542              8.05
                                                                          ----------------       ----------------
         Total Fixed Rate Debt.......................................              213,448              7.80

Variable Rate Debt:
   Tax Exempt Bonds..................................................               64,000              5.40
   Revolving Credit Facility.........................................              158,469              7.25
                                                                          ----------------       ----------------
         Total Variable Rate Debt....................................              222,469              6.72
                                                                          ----------------       ----------------
         Total Debt..................................................     $        435,917              7.25%
                                                                          ================       ================
</TABLE>

The Company had 5,714  unencumbered  apartment  units related to the  Stabilized
Communities  and 1,146  unencumbered  apartment units related to the Communities
Under Construction and in Lease-Up at March 31, 1997.

Subsequent Offerings

On May 28, 1996, the Company  completed the Second 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 Second  Public  Offering was
approximately $40,891,000. The Company used the proceeds from the sale of Common
Stock to pay down its Revolving Credit Facility.

                                  Page 18 of 24
<PAGE>
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 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  February  14,  1997,  the Company  completed  the Third  Public  Offering of
1,800,000  shares of its Common  Stock.  Net  proceeds to the  Company  from the
February  1997  Offering  was  approximately  $35,415,000.  The Company used the
proceeds  from  the sale of  Common  Stock  to pay  down  its  Revolving  Credit
Facility.

On April 2, 1997,  the Operating  Partnership  completed the sale of $75 million
senior unsecured notes priced at 99.44 percent of par with a coupon rate of 7.50
percent due April 15,  2004 and $50 million  senior  unsecured  notes  priced at
99.21  percent of par with a coupon rate of 7.625  percent  due April 15,  2007.
Proceeds  to the  Operating  Partnership  from  the  sale of the  notes,  net of
underwriter's   discount  and  out-of-pocket  costs,  was  approximately  $122.8
million. In anticipation of the Offering, the Operating Partnership entered into
two forward  treasury lock  agreements  on February 25, 1997.  The treasury lock
agreements  were settled  concurrently  with the  completion  of the sale of the
senior unsecured notes on April 2, 1997, and the Operating  Partnership received
proceeds from the settlement of the treasury lock agreements of approximately $3
million.  The Operating  Partnership is amortizing the gain on the settlement of
the treasury lock  transaction  as a reduction in interest  expense on the notes
using the effective  interest rate method.  The effective  interest rates on the
senior  unsecured  notes  inclusive  of the benefit from the  settlement  of the
treasury lock  transaction is 7.18 percent and 7.36 percent,  respectively.  The
Operating  Partnership  used  the  proceeds  from  the  sale  of the  notes  and
settlement of the treasury  lock  transaction  to pay down its 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.

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.

                                                   Three Months Ended
                                                        March 31,
                                                 ----------------------
                                                    1997       1996
                                                 ----------------------
     Income before extraordinary
        items and minority interest               $  4,362  $   5,283
     Depreciation and amortization, net of
         corporate depreciation of $66 and $39,
         respectively                                6,112      4,731
     Amortization of executive deferred
         compensation expense                           30        170
                                                 ----------------------
     Funds from Operations                       $  10,504  $  10,184
                                                 ======================

                                  Page 19 of 24
<PAGE>
Number of Common Shares and Units

The Company had 23,968,328 and 20,941,426  weighted average number of shares and
units at March 31, 1997 and 1996, 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.

Acquisition  of assets and  community  expenditures  for the three  months ended
March 31, are as follows:

                                                       1997      1996
                                                    -------   -------

           New community development                $ 9,793   $30,276
           Acquisitions                              34,800      --
           Nonrecurring capital expenditures:
             Vehicle access control gates               313      --
             Computer upgrade                            71        28
           Recurring capital expenditures:
             Community additions and
                 improvements                           552       416
             Corporate additions and improvements        12      --
                                                    -------   -------
                                                    $45,541   $30,720
                                                    =======   =======


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 Isle at Arrowhead Ranch     Glendale      256       940      $  17        2:96           4:96           4:97
The Retreat Phase I             Phoenix       240       973         14        1:97           3:97           2:98
Vista Grove                     Mesa          224       911         14        1:97           3:97           2:98
                                           -------           ---------
                                              720                   45
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                                  1,146                $  70
                                           =======           ==========
</TABLE>

The  Company  owns  sites  intended  for  the   development  of  two  additional
multifamily  apartment  communities  and  Phase  II of the  Retreat,  which,  if
completed,  are expected to contain approximately 651 apartment units. There can
be no  assurance  that the  Company  will  succeed in  obtaining  any  necessary
governmental  approvals or any financing required to develop these projects,  or
that the Company will decide to develop any particular project.

                                  Page 20 of 24
<PAGE>
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.


Acquisition Activity

On February 27, 1997,  the Company  acquired  Canyon Ridge, a 162 unit apartment
community  located  in San  Diego,  California  for a total  purchase  price  of
approximately  $11.1  million  cash.  On March 14,  1997,  the Company  acquired
Marquessa  Apartments,  a 336 unit apartment  community located in Corona Hills,
California for $5.1 million cash and the assumption of a note for $18.3 million.

The Company is  actively  pursuing  and in  preliminary  negotiations  regarding
additional properties in Riverside/San Bernardino and San Diego, California, but
no  assurance  can be given that it will  continue to pursue or  consummate  any
acquisitions as a result of these negotiations.

Disposition Activity

During the first quarter of 1997,  the Company  entered into  agreements to sell
three properties,  Deer Creek Village, The Pines, and La Valencia containing 863
apartment units. The aggregate sales price is approximately  $42.2 million.  The
sales are subject to due diligence procedures and no assurance can be given that
the sales will be consummated.
                                  Page 21 of 24
<PAGE>
Apartment Communities

The following  sets forth certain  information  regarding the current  apartment
communities at March 31, 1997. All of the  communities  are owned 100 percent in
fee by the Company.
<TABLE>
<CAPTION>
                                                                                                  Year
                                                                                                Developed
                                                                  Number of      Developed/        or
             Apartment Communities                   City        Apartments       Acquired      Acquired
             ---------------------                   ----        ----------       --------      --------
<S>                                              <C>                   <C>      <C>             <C> 
Same Store
Arizona
-------
    Phoenix:
Acacia Creek                                      Scottsdale           508        Acquired        1995
Bayside at the Islands                             Gilbert             272       Developed        1988
Country Brook                                      Chandler            276        Acq/Dev       1991/1993
Deer Creek Village                                 Phoenix             308        Acquired        1991
Gateway Villas                                     Phoenix             180       Developed        1995
Greenwood Village                                   Tempe              270        Acquired        1993
Heritage Point                                       Mesa              148        Acquired        1994
La Mariposa                                          Mesa              222        Acquired        1990
La Valencia                                          Mesa              361        Acquired        1990
Little Cottonwoods                                  Tempe              379      Acq/Acq/Dev    1989/89/90
Los Arboles                                        Chandler            232       Developed        1985
Miramonte                                         Scottsdale           151       Developed        1983
Morningside                                       Scottsdale           160        Acquired        1992
Mountain Park Ranch                                Phoenix             240       Developed        1995
Park Meadow                                        Gilbert             156        Acquired        1992
Preserve at Squaw Peak                             Phoenix             108        Acquired        1991
Promontory Pointe                                  Phoenix             304        Acquired        1988
Rancho Murietta                                     Tempe              292        Acquired        1995
Scottsdale Courtyards                             Scottsdale           274       Developed        1993
Scottsdale Meadows                                Scottsdale           168       Developed        1984
Shadow Brook                                       Phoenix             224        Acquired        1993
Shores at Andersen Springs                         Chandler            299       Developed      1989/1993
Silver Creek                                       Phoenix             174        Acquired        1991
Sonoran                                            Phoenix             429       Developed        1995
Sun Creek                                          Glendale            175        Acquired        1993
Superstition Vista                                   Mesa              316        Acquired        1995
The Enclave                                         Tempe              204       Developed        1995
The Heritage                                       Phoenix             204       Developed        1995
The Meadows                                          Mesa              306        Acquired        1987
The Palms                                          Phoenix             132       Developed        1990
The Pines                                            Mesa              194        Acquired        1992
Towne Square                                       Chandler            468        Acq/Dev       1992/1995
Villa Encanto                                      Phoenix             382       Developed        1983
Village at Lakewood                                Phoenix             240       Developed        1988
                                                                 -------------
                                                                     8,756
   Tucson:
Harrison Park                                       Tucson             172        Acquired        1991
La Reserve                                        Oro Valley           240       Developed        1988
Orange Grove Village                                Tucson             256        Acquired        1991
Suntree Village                                   Oro Valley           424        Acquired        1992
The Arboretum                                       Tucson             496        Acq/Dev       1992/1995
Village at Tanque Verde                             Tucson             217        Acq/Dev       1990/1994
                                                                 -------------
                                                                     1,805
   California:
The Ashton                                       Corona Hills          492        Acquired        1995
                                                                 -------------
                                                                       492
                                                                 -------------
     Total Same Store                                               11,053
                                                                 =============
</TABLE>

                                  Page 22 of 24
<PAGE>
<TABLE>
<CAPTION>
                                                                                                  Year
                                                                                                Developed
                                                                  Number of      Developed/        or
             Apartment Communities                   City        Apartments       Acquired      Acquired
             ---------------------                   ----        ----------       --------      --------
<S>                                              <C>                   <C>      <C>             <C> 
Communities Stabilized Less than Two Years
Arizona
-------
    Phoenix:
Country Brook Expansion Phase III                  Chandler            120       Developed       1995/96
Ingleside                                          Phoenix             120       Developed       1995/96
Ladera                                             Phoenix             248       Developed       1995/96
Mirador                                            Phoenix             316       Developed       1995/96
Park Meadow Expansion Phase II                     Gilbert              68       Developed       1995/96
Towne Square Expansion Phase III                   Chandler            116       Developed       1995/96
                                                                 -------------
                                                                       988
Tucson:
The Legends                                         Tucson             312       Developed       1995/96
Orange Grove Expansion Phase II                     Tucson             144       Developed       1995/96
                                                                 -------------
                                                                       456
                                                                 -------------
     Total Communities Stabilized Less than Two Years                1,444
                                                                 =============


Developments and Lease-Up Properties
Arizona
-------
   Phoenix:
The Hawthorne (1)                                  Phoenix             276       Developed       1995/96
The Retreat Phase I                                Glendale            240       Developed       1996/97
Vista Grove                                          Mesa              224       Developed       1996/97
The Isle at Arrowhead Ranch (2)                    Glendale            256       Developed        1996
Promontory Pointe Expansion Phase II (1)           Phoenix             120       Developed       1995/96
                                                                 -------------
                                                                     1,116
  Tucson:
Bear Canyon (2)                                     Tucson             238       Developed       1995/96
Harrison Park Expansion Phase II (2)                Tucson             188       Developed       1995/96
                                                                 -------------
                                                                       426
                                                                 -------------
    Total Developments and Lease-Up Properties                       1,542
                                                                 =============

Acquisitions
  California
  ----------
Canyon Crest Views                                Riverside            178        Acquired        1996
Canyon Ridge                                      San Diego            162        Acquired        1997
Marquessa                                        Corona Hills          336        Acquired        1997
Portofino                                        Chino Hills           176        Acquired        1996
Parkview Terrace Club                              Redlands            558        Acquired        1996
Redlands Lawn & Tennis Club                        Redlands            496        Acquired        1996
                                                                 -------------
                                                                     1,906
                                                                 -------------

Total                                                               15,945
                                                                 =============

(1) Community reached stabilized occupancy in the first quarter 1997
(2) Community is in lease-up
</TABLE>

PART II     OTHER INFORMATION

Item 6 - Exhibits and Reports on Form 8-K.

(b) A Form 8-K was filed on February 13, 1997 reporting  under Item 5 the filing
of a Prospectus  Supplement relating to the issuance and sale of up to 2,070,000
shares of common stock and Item 7 exhibits relating to the purchase agreement by
and among the Company  and  Merrill  Lynch & Co.  dated  February  10, 1997 with
respect to the sale and  issuance  of up to  2,070,000  shares of the  Company's
common stock.

                                  Page 23 of 24
<PAGE>
                                   SIGNATURES

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.




                                        EVANS WITHYCOMBE RESIDENTIAL, INC.



May 9, 1997                             /s/ Stephen O. Evans
----------------                        ---------------------------------
 (Date)                                 Stephen O. Evans,
                                        Chairman of the Board and
                                        Chief Executive Officer




May 9, 1997                             /s/ Paul R. Fannin
----------------                        ---------------------------------
 (Date)                                 Paul R. Fannin,
                                        Senior Vice President and
                                        Chief Financial Officer

                                  Page 24 of 24