<PAGE>

                                 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 SEPTEMBER 30, 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 November 7, 1997 there were 20,477,006 shares of the registrant's 
common stock, $0.01 par value outstanding.


                                 Page 1 of 27

<PAGE>
                                       
                      EVANS WITHYCOMBE RESIDENTIAL, INC.
                                       
                                       
                                     INDEX
                                       
PART I         FINANCIAL INFORMATION                         PAGE

               Item 1 Financial Statements
               
               Consolidated Balance Sheets as of 
               September 30, 1997 (Unaudited) and
               December 31, 1996................................3
               
               Consolidated Statements of Income for 
               the three and nine months ended September 30,
               1997 and 1996 (Unaudited)........................4

               Consolidated Statement of Stockholders' 
               Equity as of September 30, 1997 (Unaudited)......5
               
               Consolidated Statements of Cash Flows for 
               the nine months ended September 30, 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............................14

PART II        OTHER INFORMATION

               Item 6     Exhibits and Reports on Form 8-K.....25


SIGNATURES     ................................................25

                              Page 2 of 27

<PAGE>

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

<TABLE>
<CAPTION>

                                                   SEPTEMBER 30, 1997    DECEMBER 31, 1996
                                                   ------------------    ------------------
<S>                                                <C>                   <C>
ASSETS                                                (Unaudited)
Real Estate:
  Land............................................     $  129,278           $  121,915
  Buildings and improvements......................        606,882              543,839
  Furniture and fixtures..........................         34,780               29,567
  Construction-in-progress........................         35,568               66,229
                                                   ------------------    ------------------
                                                          806,508              761,550
  Less accumulated depreciation...................        (54,409)             (38,331)
                                                   ------------------    ------------------
                                                          752,099              723,219
Cash and cash equivalents.........................          2,488                2,568
Restricted cash...................................         15,305                1,622
Accounts and notes receivable.....................          2,453                3,500
Mortgage notes receivable.........................          7,188                  -
Deferred costs, net of accumulated amortization
  of $1,851 and $1,265 at September 30, 1997 and
  December 31, 1996, respectively.................          4,503                3,838
Other assets......................................          3,135                1,587
                                                   ------------------    ------------------
Total assets......................................     $  787,171           $  736,334
                                                   ------------------    ------------------
                                                   ------------------    ------------------
LIABILITIES AND STOCKHOLDERS' EQUITY

Mortgage and notes payable........................     $  442,156           $  436,172
Accounts payable and other liabilities............          8,962                7,833
Dividends payable.................................          7,765                 -
Accrued interest..................................          5,327                1,417
Accrued property taxes............................          5,306                2,912
Resident security deposits........................          2,617                1,818
Prepaid rent......................................            838                  585
Total liabilities.................................        472,971              450,737
                                                   ------------------    ------------------
Minority interest.................................         53,351               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, 20,433,747 and 18,366,902 issued
    and outstanding at September 30, 1997 and
    December 31, 1996, respectively...............            204                  184
  Additional paid-in capital......................        294,177              253,425
  Unamortized employee restricted stock 
    compensation..................................         (1,691)                (465)
  Distributions in excess of net income...........        (31,841)             (24,139)
                                                   ------------------    ------------------
Total stockholders' equity........................        260,849              229,005
                                                   ------------------    ------------------
Total liabilities and stockholders' equity........     $  787,171           $  736,334
                                                   ------------------    ------------------
                                                   ------------------    ------------------

See Notes to Consolidated Financial Statements
</TABLE>

                                 Page 3 of 27

<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                      NINE MONTHS ENDED
                                                       SEPTEMBER 30,  SEPTEMBER 30,  SEPTEMBER 30,   SEPTEMBER 30,
                                                       -------------  -------------  -------------   -------------
                                                            1997         1996            1997            1996
                                                            ----         ----            ----            ----
<S>                                                <C>                <C>             <C>            <C>
Revenues:
  Rental..........................................      $  28,417      $  24,351      $  83,282      $  68,565
  Third party management fees.....................            381            103            611          1,054
  Interest income - investment in mortgage notes..            194              -            201              -
  Interest and other..............................          2,255          1,502          5,777          4,622
                                                       -------------  -------------  -------------   -------------
Total revenues....................................         31,247         25,956         89,871         74,241

Expenses:
  Property and maintenance........................          7,709          7,367         22,143         18,759
  Real estate taxes and insurance.................          2,552          1,847          7,287          5,574
  Property management.............................            788            721          2,328          2,429
  General and administrative......................            444            406          1,311          1,366
  Depreciation....................................          6,701          5,437         19,338         15,077
  Interest:
    Expense incurred, net of amounts capitalized..          7,587          6,077         22,534         16,693
    Amortization of deferred financing costs......            286            174            741            451
                                                       -------------  -------------  -------------   -------------
Total expenses....................................         26,067         22,029         75,682         60,349
                                                       -------------  -------------  -------------   -------------
Income before minority interest, gain on sale of
  real estate assets and extraordinary item.......          5,180          3,927         14,189         13,892
Gain on sale of real estate assets................          2,278              -          7,531              -
Minority interest.................................         (1,359)          (812)        (4,023)        (3,051)
                                                       -------------  -------------  -------------   -------------
Income before extraordinary item..................          6,099          3,115         17,697         10,841

Extraordinary item-
 loss on early extinguishment of debt
  net of minority interest of $300................             -               -        (1,200)             -

Net income........................................       $  6,099       $  3,115      $  16,497      $  10,841
                                                       -------------  -------------  -------------   -------------
                                                       -------------  -------------  -------------   -------------
Earnings per share before extraordinary item......         $  0.30        $  0.17        $  0.88        $  0.63
                                                       -------------  -------------  -------------   -------------
                                                       -------------  -------------  -------------   -------------
Earnings per share................................         $  0.30        $  0.17        $  0.82        $  0.63
                                                       -------------  -------------  -------------   -------------
                                                       -------------  -------------  -------------   -------------



Weighted average shares outstanding...............      20,367,905     18,271,915     19,997,836      17,118,499
                                                       -------------  -------------  -------------   -------------
                                                       -------------  -------------  -------------   -------------


See Notes to Consolidated Financial Statements
</TABLE>

                                  Page 4 of 27

<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................................           -           -                 -             -           16,497         16,497
 Dividends on common stock
    ($1.19 per share).....................           -           -                 -             -          (24,199)       (24,199)
Proceeds of third offering, net of 
 underwriting discount and offering.......   1,800,000          18            35,397             -                -         35,415
 costs of $406
Conversion of units to common stock.......     164,076           2             3,233             -                -          3,235
Exercise of stock options.................      36,500           -               731             -                -            731
Issuance of restricted stock..............      69,775           -             1,435        (1,435)               -              -
Forfeiture of restricted stock............      (3,506)          -               (44)            -                -            (44)
Amortization of deferred compensation.....           -           -                 -           209                -            209
                                           ------------      ---------    ----------    ------------   --------------    ----------
Stockholders' equity, September 30 1997...  20,433,747      $  204        $  294,177     $  (1,691)      $  (31,841)     $ 260,849
                                           ------------      ---------    ----------    ------------   --------------    ----------
                                           ------------      ---------    ----------    ------------   --------------    ----------
                                       
                                       
See Notes to Consolidated Financial Statements
</TABLE>

                                   Page 5 of 27

<PAGE>

<TABLE>
<CAPTION>
                      EVANS WITHYCOMBE RESIDENTIAL, INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (Amounts in thousands)
                                  (Unaudited)

                                                     NINE MONTHS ENDED SEPTEMBER 30,
                                                     -------------------------------
                                                           1997            1996
                                                           ----            ----
<S>                                                  <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income..........................................    $  16,497      $  10,841
Adjustments to reconcile net income to net cash
  provided by operating  activities:
    Depreciation and amortization...................       19,338         15,077
    Amortization of deferred financing costs 
      and bond discount.............................          807            495
    Amortization of deferred comp...................          255            360
    Minority interest...............................        3,723          3,051
    Net gain on sale of real estate assets..........       (7,531)             -
    Write-off of development and acquisition costs..          402            107
    Write-off of deferred loan costs................          294              -
Decrease (increase) in assets:
    Restricted cash.................................      (13,683)          (371)
    Accounts and notes receivable...................        1,047         (1,203)
    Other assets....................................       (1,548)          (160)
(Decrease) increase in liabilities:
    Accounts payable and other liabilities..........        1,129           (425)
    Accrued interest................................        3,910            141
    Accrued property taxes..........................        2,394          2,201
    Resident security deposits......................          799            158
    Prepaid rent....................................          253            341
                                                      ------------    ------------
Net cash provided by operating activities...........       28,086         30,613

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of real estate assets......................      (54,431)      (103,443)
Sale of real estate assets..........................       24,383              -
                                                      ------------    ------------
Net cash used in investing activities...............      (30,048)      (103,443)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Third Public Offering, net 
 of expenses........................................       35,415              -
Proceeds from Second Public Offering, 
 net of expenses....................................            -         40,891
Proceeds from exercise of options...................          731            234
Proceeds from mortgage notes and revolving
  credit facility...................................      209,306        235,028
Principal payments on mortgage notes................     (221,706)      (178,748)
Payment for loan costs..............................       (1,700)        (1,758)
Dividends paid......................................      (16,434)       (19,550)
Minority interest distributions.....................       (3,730)        (5,509)
                                                      ------------    ------------
Net cash provided by financing activities...........        1,882         70,588
                                                      ------------    ------------
Net decrease in cash and cash equivalents...........          (80)        (2,242)
Cash and cash equivalents, beginning of period......        2,568          3,634
                                                      ------------    ------------
Cash and cash equivalents, end of period............    $   2,488      $   1,392
                                                      ------------    ------------
                                                      ------------    ------------
SUPPLEMENTAL INFORMATION
Cash paid during the period for interest............    $  18,624      $  16,500
                                                      ------------    ------------
                                                      ------------    ------------
SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITY
Assumption of debt related to the acquisition of
  apartment communities.............................    $  18,318      $  22,650
                                                      ------------    ------------
                                                      ------------    ------------
Origination of carryback mortgage notes arising
  from sale of apartment communities................    $   7,188      $       -
                                                      ------------    ------------
                                                      ------------    ------------
Issuance of stock under restricted stock 
  incentive plan....................................    $      89      $      66
                                                      ------------    ------------
                                                      ------------    ------------
Conversion of units to common stock.................    $   3,234      $     888
                                                      ------------    ------------
                                                      ------------    ------------
</TABLE>

See Notes to Consolidated Financial Statements

                                  Page 6 of 27

<PAGE>
                                       
                       EVANS WITHYCOMBE RESIDENTIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             SEPTEMBER 30, 1997
(AMOUNTS IN THOUSANDS, EXCEPT FOR APARTMENT DATA, 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 operations into selected sub-markets in Southern California.  
The Company owns and manages 51 stabilized multifamily apartment communities 
containing 14,747 units, of which 44 stabilized multifamily apartment 
communities are located in Phoenix and Tucson, Arizona, containing a total of 
12,349 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 four 
multifamily apartment communities comprising 953 units in its Phoenix market. 
 The Company is fully integrated with expertise in development, acquisitions, 
construction and management of apartment communities.  The Company had 
approximately 600 employees at September 30, 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 81.9 percent and 79.3 percent interest in the Operating Partnership 
at September 30, 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 of $40,891 from the sale of 2,088,889 shares of 
common stock from the Second Public Offering were used to repay a portion of 
the $150 million unsecured Revolving Credit Facility (Revolving Credit 
Facility).

In the first quarter of 1997, the Company completed the Third Public 
Offering. The net proceeds of $35,415 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 nine month period 
ended September 30, 1997 are not necessarily indicative of the results that 
may be expected for the year ended December 31, 1997.

                                Page 7 of 27

<PAGE>

2.BASIS OF PRESENTATION (CONTINUED)

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. Annual Report on 
Form 10-K/A.

RECLASSIFICATION

Certain amounts in the consolidated statements of income for 1996 have been 
reclassified to conform to the 1997 presentation.

3.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

REAL ESTATE ASSETS AND DEPRECIATION

The Company records its real estate assets in accordance with Statement of 
Financial Accounting Standards ("SFAS") No. 121, "Accounting for the 
Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed of".  
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 September 
30, 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 $509 and $1,479 and $608 and $2,072, for the 
three and the nine months ended September 30, 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 $8,272 
and $12,060 at September 30, 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.

                                Page 8 of 27

<PAGE>

3.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

RESTRICTED CASH

Restricted cash includes restricted deposits held by third party 
intermediaries for the purpose of completing an IRS Section 1031 tax free 
exchange, sinking fund accounts related to tax exempt bonds, property taxes 
and escrow accounts.

DEFERRED COSTS

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

INCOME TAXES

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

USE OF ESTIMATES

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

EARNINGS PER SHARE

Earnings per share has been computed by dividing net income for the three and 
the nine months ended September 30, 1997 and 1996, respectively, by the 
weighted average number of shares outstanding during the period.

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 NOTES RECEIVABLE

The Company's mortgage notes receivable consists of a $7.2 million mortgage 
note receivable at a fixed rate of 8.0 percent secured by a first mortgage 
lien on The Pines Apartments, matures November 1, 1997.  The mortgage note 
receivable maturity date can be extended 30 days to December 1, 1997 at the 
option of the borrower.

                                  Page 9 of 27

<PAGE>

5.   MORTGAGE AND NOTES PAYABLE

The Company's mortgage notes and notes payable consists of the following:


<TABLE>
<CAPTION>

                                                                              SEPTEMBER 30,   DECEMBER 31,
                                                                                  1997            1996
                                                                                  ----            ----
<S>                                                                           <C>             <C>
Conventional Mortgage Loans:
Mortgage note payable at a fixed interest rate of 8.0 percent, monthly
principal and interest payments.  The unpaid principal balance was repaid on
January 9, 1997.                                                                  $     -         $  5,380

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

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

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

Mortgage note payable at a fixed interest rate of 9.95 percent, monthly
principal and interest payments through September 15, 1997.  The unpaid
principal balance was repaid on July 15, 1997.                                          -           12,065

Mortgage note payable at a fixed interest rate of 9.3 percent, monthly
principal and interest payments through September 15, 1997.  The unpaid
principal balance was repaid on July 15, 1997.                                          -            3,182

Mortgage note payable at fixed interest rates ranging from 6.5 percent to 9.0
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.  Secured by a first mortgage lien on one apartment
community.  The mortgage note can be repaid at any time at the Company's option
without prepayment penalty.                                                        18,219                -

$50 million securitized debt at a fixed interest rate of 7.17 percent,              49,117           49,509
monthly principal and interest payments through January 1, 2006,
remaining balance due January 1, 2006.  Secured by first mortgage liens on 5
communities.                                                                       67,336           89,652

MORTGAGE LOAN CERTIFICATES:
Securitized debt at a fixed stated interest rate of 7.98 percent,                 130,586          130,520
 with an 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 $414 and $480 at September 30, 1997 and December 31,
1996, respectively.

SENIOR UNSECURED NOTES:
$75 million senior unsecured notes with a fixed coupon rate of                     74,610                -
7.50 percent.  Semiannual interest only payments due April 15 and October 15
commencing October 15, 1997.  Face amount of $75 million is due April 15, 2004.
The balance is net of an unamortized discount of $390 at September 30, 1997.
The effective interest rate inclusive of the benefit of a treasury lock
transaction is 7.18 percent.

$50 million senior unsecured notes with a fixed coupon rate of                     49,624                -
7.625 percent.  Semiannual interest only payments due April 15 and October 15
commencing October 15, 1997.  Face amount of $50 million is due April 15, 2007.
The balance is net of an unamortized discount of $375 at September 30, 1997.
The effective interest rate inclusive of the benefit of a treasury lock
transaction is 7.36 percent.
                                                                                 ----------    -----------
                                                                                  124,234                -
</TABLE>


                                    Page 10 of 27

<PAGE>


5.   MORTGAGE AND NOTES PAYABLE (CONTINUED)


<TABLE>
<CAPTION>

                                                                              SEPTEMBER 30,   DECEMBER 31,
                                                                                  1997            1996
                                                                                  ----            ----
<S>                                                                           <C>             <C>
TAX EXEMPT BONDS:
$17.3 million tax exempt bonds with a floating interest rate                   $  17,300       $  17,300
based on the tax exempt note rate set by the remarketing agent, or at the
option of the Company can convert to a fixed rate as determined by the
remarketing agent.  Secured by a $17.5 million direct pay letter of credit,
interest payments only, matures December 1, 2007 (Effective interest rate of
5.61 percent at September 30, 1997).

$22.6 million tax exempt bonds with a floating interest rate                      22,650          22,650
based on the tax exempt note rate set by the remarketing agent, interest
payments only.  Secured by a $22.8 million direct pay letter of credit, matures
February 1, 2016.  (Effective interest rate of 5.58 percent at September 30,
1997).

$24.05 million tax exempt bonds with a floating interest rate                     24,050          24,050
based on the tax exempt note rate set by the remarketing agent, interest
payments only.  Secured by a $24.4 million direct pay letter of credit, matures
August 1, 2005.  (Effective interest rate of 5.29 percent at September 30,
1997). 
                                                                                 ----------     ----------
                                                                                  64,000          64,000

REVOLVING CREDIT FACILITY:
$150 million unsecured Revolving Credit Facility with floating                    56,000         152,000
interest rate based on LIBOR plus 1.15 percent or at the option of the Company
at prime rate, interest payments only.  Matures September 24, 1999 (Effective
interest rate of 6.92 percent atSeptember 30, 1997).
                                                                                 ----------     ----------
                                                                                $442,156        $436,172
                                                                                 ----------     ----------
                                                                                 ----------     ----------
</TABLE>

Scheduled principal payments on debt, assuming that the Company exercises its 
options to extend the maturity date on the Revolving Credit Facility, are as 
follows:

<TABLE>
<CAPTION>

                    MORTGAGE      MORTGAGE        SENIOR       REVOLVING
                     NOTES          LOAN         UNSECURED     TAX-EXEMPT     CREDIT
                    PAYABLE     CERTIFICATES       NOTES          BONDS       FACILITY        TOTAL
                   ---------    ------------     ---------     ----------     ---------     ---------
<S>             <C>          <C>            <C>             <C>            <C>           <C>
1997             $     154     $        -     $        -      $       -      $       -         $  154
1998                   784              -              -              -              -            784
1999                   831              -              -              -         56,000         56,831
2000                   882              -              -              -              -            882
2001                   937        130,586              -              -              -        131,523
Thereafter          63,748              -        124,234         64,000              -        251,982
                   ---------    ------------     ---------     ----------     ---------     ---------
 Total           $  67,336     $  130,586     $  124,234      $  64,000      $  56,000     $  442,156
                   ---------    ------------     ---------     ----------     ---------     ---------
                   ---------    ------------     ---------     ----------     ---------     ---------
</TABLE>

On June 13, 1997, the Company amended its existing $225 million Revolving 
Credit Facility with a bank group to decrease the commitment amount from $225 
million to $150 million and decrease the interest rate from LIBOR plus 1.50 
percent to LIBOR plus 1.15 percent.  The 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 lien on four apartment 
communities.

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.

                                 Page 11 of 27

<PAGE>

6.    DISTRIBUTIONS

On October 15, 1997, the Company paid a distribution of $0.38 per share 
($7,765) to shareholders and $0.38 per unit ($1,715) to unitholders of record 
as of September 30, 1997.

7.         MANAGEMENT FEES

The Company performs management services for certain unaffiliated 
communities. Management fees received from managed communities were $380 and 
$102 for the three months ended September 30, 1997 and 1996 and $610 and 
$1,053 for the nine months ended September 30, 1997 and 1996, respectively.  
The nine months ended September 30, 1997 and 1996 balance includes a one time 
non-recurring $250 and $500 termination fee received from the sale of 
management contracts, respectively.

8.        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 nine months ended September 30, 1997 is as follows:

<TABLE>
<CAPTION>
                                                                  Weighted
                                                                   Average
                                                                Exercise Price
                                                    Shares        Per Share
                                                   ---------      ----------
<S>                                              <C>            <C>
Options outstanding at December 31, 1996            908,850         $20.63
  Exercised                                        (36,500)          20.02
  Granted                                           266,500          20.58
  Forfeited                                        (33,588)          20.81
                                                   ---------      ----------
Options outstanding at September 30, 1997         1,105,262         $20.70
                                                   ---------      ----------
                                                   ---------      ----------
Options exercisable:
  December 31, 1996                                 357,700         $19.98
  September 30, 1997                                601,664         $20.40
</TABLE>


Options to purchase 724,738 and 901,650 shares of common stock were available 
for grant under the plan at September 30, 1997 and December 31, 1996, 
respectively.

EXECUTIVE STOCK INCENTIVE PLAN

Prior to the Initial Public 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 remained 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 

                             Page 12 of 27

<PAGE>

periods in which the shares vest and an expense of $35 and $48 and $95 and 
$360 for the three and nine months ended September 30, 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 December 31, 1996    74,346
      Forfeited                                                     (1,174)
                                                                   ---------
      Restricted stock at September 30, 1997                        73,172
                                                                   ---------
                                                                   ---------
      Number of shares vested at September 30, 1997                 53,325

RESTRICTED STOCK PROGRAM

The Company has awarded 45,220 shares, net of forfeitures, 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 
seven 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 $92 and $34 and $168 and $66, for the three and nine months 
ended September 30, 1997 and 1996, respectively, is included in general and 
administrative expense.

9.   MINORITY INTEREST

Minority interest at September 30, 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                (164,076)        (3,234)
    Allocation of net income                                   -          4,023
Allocation of extraordinary item -
    loss from early extinguishment of debt                     -          (300)
    Distributions paid                                         -        (3,730)
                                                       -----------   ----------
    Balance at September 30, 1997                      4,513,734        $53,351
                                                       -----------   ----------
                                                       -----------   ----------

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.

10.  MERGER AND RECENT DEVELOPMENTS

The Company has entered into an Agreement and Plan of Merger, dated as of 
August 27, 1997 (the "Agreement"), with Equity Residential Properties Trust 
("EQR").  The Agreement provides for the exchange of all of the outstanding 
common shares of the Company for common shares of EQR, at an exchange ratio 
of 0.50 common shares of EQR for each common share of the Company (the 
"Merger").

The Merger is subject to the approval of the common shareholders of both EQR 
and the Company.

                             Page 13 of 27

<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, the Company's ability to 
successfully manage its planned expansion into Southern California and the 
culmination of its pending merger with EQR.  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 and the nine months ended September 
30, 1997 and 1996, respectively, were significantly affected by acquisitions, 
developments and expansions.

COMPARISON OF RESULTS OF OPERATIONS FOR THE THREE MONTHS AND NINE MONTHS 
ENDED SEPTEMBER 30, 1997 TO THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1996

<TABLE>
<CAPTION>


                                                            THREE MONTHS ENDED               NINE MONTHS ENDED
                                                              SEPTEMBER 30,                    SEPTEMBER 30,      
                                                        -------------------    PERCENTAGE  -------------------  PERCENTAGE
                                                             1997      1996      CHANGE      1997        1996     CHANGE
                                                        ---------  ---------   ---------  ----------   -------- ---------- 
<S>                                                     <C>        <C>        <C>           <C>         <C>       <C>
Rental income........................................   $  28,417  $  24,351       16.7%   $  83,282    $  68,565     21.5%
Third party management fees..........................         381        103      269.9          611        1,054    (42.0)
Interest income - investment in mortgage notes.......         194          -        N/A          201            -      N/A
Interest and other...................................       2,255      1,502       50.1        5,777        4,622     25.0
                                                        ---------  ---------   ---------  ----------   -------- ---------- 
     Total revenues..................................      31,247     25,956       20.4       89,871       74,241     21.1

Property operating and maintenance (1)...............      10,261      9,214       11.4       29,430       24,333     20.9
Property management..................................         788        721        9.3        2,328        2,429     (4.2)
General and administrative...........................         444        406        9.4        1,311        1,366     (4.0)
Interest.............................................       7,873      6,251       25.9       23,275       17,144     35.8
Depreciation and amortization........................       6,701      5,437       23.2       19,338       15,077     28.3
                                                        ---------  ---------   ---------  ----------   -------- ---------- 
Total expenses.......................................      26,067     22,029       18.3       75,682       60,349     25.4
                                                        ---------  ---------   ---------  ----------   -------- ---------- 
Income before minority interest, gain on sale
 of real estate assets and
 extraordinary item..................................    $  5,180   $  3,927       31.9%   $  14,189    $ 13,892      2.1%
                                                        ---------  ---------   ---------  ----------   -------- ---------- 
                                                        ---------  ---------   ---------  ----------   -------- ---------- 
Weighted average monthly rental revenue per 
  unit, net of concessions...........................      $  697     $  664               $  682       $     678
                                                        ---------  ---------               --------    ---------- 
                                                        ---------  ---------               --------    ---------- 
Weighted average number of apartments................      14,927     13,325                 14,989        12,519
                                                        ---------  ---------               --------    ---------- 
                                                        ---------  ---------               --------    ---------- 
Economic occupancy (2)...............................        92.2%      89.3%                 89.1%         90.0%
                                                        ---------  ---------               --------    ---------- 
                                                        ---------  ---------               --------    ---------- 
</TABLE>

                                    Page 14 of 27

<PAGE>

      (1) The Company defines property operating and maintenance expense as
          property and maintenance, real estate taxes and insurance.
      (2) Stabilized properties only.

Rental revenues increased by $4,066 and $14,717 or 16.7 percent and 21.5 
percent for the three and nine months ended September 30, 1997 as compared to 
the similar period in 1996 as a result of increases in the weighted average 
number of apartments, weighted average monthly revenue per occupied apartment 
and a change in economic occupancy.  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.

Third party management fees increased $278 or 269.9 percent for the three 
months ended September 30, 1997 as a result of a $250 gain on the sale of a 
management contract and decreased $442 or 42.0 percent for the nine months 
ended September 30, 1997 due to the sale of several properties in the 
management portfolio in 1996 including a $500 one time termination fee for 
the sale of management contracts received in the second quarter of 1996.

Interest and other income for the three and nine months ended September 30, 
1997 increased $753 and $1,155 or 50.1 percent and 25.0 percent as compared 
to the similar period in 1996 as a result of an increase in ancillary income 
related to the weighted average number of units, additional interest income 
from funds held by third party intermediaries, and cable revenue sharing.

Property operating and maintenance expense increased due to the increase in 
the weighted average number of apartments for the three and the nine months 
ended September 30, 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 $509 and $1,479 of interest for the three 
and nine months ended September 30, 1997 compared to $608 and $2,072 for the 
same periods 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 38 stabilized properties containing 10,319 apartment units that 
were owned by the Company for the three months and nine months ended 
September 30, 1997 and 1996.  Same store portfolio was adjusted to reflect 
the sale of Deer Creek Village, The Pines and Los Arboles apartment 
communities.

<TABLE>
<CAPTION>

                             THREE MONTHS ENDED                NINE MONTHS ENDED
                                SEPTEMBER 30,                    SEPTEMBER 30,      
                            -------------------   PERCENTAGE  -------------------  PERCENTAGE
                                1997      1996      CHANGE      1997        1996     CHANGE
                            ---------  ---------   ---------  ----------   -------- ---------- 
<S>                       <C>        <C>         <C>        <C>          <C>      <C>
Rental income             $  19,038  $  18,561      2.6%    $  55,763    $ 56,082    (0.6)%
Other income                  1,110      1,044      6.3         3,203       2,973     7.7
                          ---------  ---------   ---------  ----------   -------- ---------- 
                             20,148     19,605      2.8       58,966       59,055    (0.2)
Property operating and 
  maintenance                 7,080      7,053      0.4       20,208       19,725     2.4
                          ---------  ---------   ---------  ----------   -------- ---------- 
Property net operating 
  income                   $ 13,068  $  12,552      4.1%   $  38,758     $ 39,330    (1.5)%
                          ---------  ---------   ---------  ----------   -------- ---------- 
                          ---------  ---------   ---------  ----------   -------- ---------- 
Weighted average 
  monthly rental 
  revenue per unit, net 
  of concessions             $  668     $  667                $  674      $   670
                          ---------  ---------               --------    ---------- 
                          ---------  ---------               --------    ---------- 
Economic occupancy             92.2%      89.3%                 89.1%        90.0%
                          ---------  ---------               --------    ---------- 
                          ---------  ---------               --------    ---------- 
</TABLE>

                                   Page 15 of 27

<PAGE>

Rental income for the three months ended September 30, 1997 increased $477 
and decreased $319 for the nine months ended September 30, 1997 as compared 
to the same period in 1996 as a result of a change in the average economic 
occupancy. Other income for the three and nine months ended September 30, 
1997 increased as a result of higher ancillary income such as redecoration 
and application fees, and lease termination fees.

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 and nine month periods ended September 30, 1997 
as compared to the three and nine month periods ended September 30, 1996 are 
the result of the increase in the weighted average number of apartments.

<TABLE>
<CAPTION>

                                THREE MONTHS ENDED   NINE MONTHS ENDED
                                  SEPTEMBER 30,         SEPTEMBER 30,      
                              -------------------     -------------------
                                  1997      1996        1997       1996 
                               ---------  ---------   ---------- ---------
     <S>                       <C>        <C>         <C>        <C>
     Rental income             $  3,020   $  2,768    $  9,017   $  6,948
     Other income                   183        180         479        442
                               ---------  ---------   ----------   -------
                                  3,203      2,948       9,496      7,390
     
     Property operating and 
       maintenance                1,052        873       2,969      2,295
                               ---------  ---------   ----------   -------
     Property net operating
       income                  $  2,151   $  2,075    $  6,527   $  5,095
                               ---------  ---------   ----------   -------
                               ---------  ---------   ----------   -------
     Weighted average number
       of apartments              1,444      1,354       1,444      1,136
                               ---------  ---------   ----------   -------
                               ---------  ---------   ----------   -------
</TABLE>

DEVELOPMENT AND LEASE UP COMMUNITIES

Development and lease up communities consist of the development of six new 
apartment communities and the expansion of two existing apartment communities 
containing an aggregate of 2,031 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 and the nine month periods ended September 
30, 1997 as compared to the three and the nine month periods ended September 
30, 1996 are the result of an increase in the weighted average number of 
apartments.


<TABLE>
<CAPTION>

                                THREE MONTHS ENDED   NINE MONTHS ENDED
                                  SEPTEMBER 30,         SEPTEMBER 30,      
                              -------------------     -------------------
                                  1997      1996        1997        1996 
                               ---------  ---------   ----------   -------
     <S>                       <C>        <C>         <C>        <C>
     Rental income             $  2,041     $  410     $  5,090     $  513
     Other income                   150         79          404        104
                               ---------  ---------   ----------   -------
                                  2,191        489        5,494        617
     
     Property operating 
       and maintenance              649        295        1,696        420
                               ---------  ---------   ----------   -------
     Property net operating 
       income                  $  1,542     $  194     $  3,798     $  197
                               ---------  ---------   ----------   -------
                               ---------  ---------   ----------   -------
     Weighted average number
        of apartments in 
        lease up                  1,026        251          806        107
                               ---------  ---------   ----------   -------
                               ---------  ---------   ----------   -------
</TABLE>

                                 Page 16 of 27

<PAGE>

ACQUISITIONS

Acquisitions consist of six properties containing 1,906 apartment units, 
which have been acquired by the Company since January 1, 1996.  The Company 
acquired three apartment communities containing 912 apartment units during 
the third quarter of 1996.  There were no acquisitions of apartment 
communities during the third quarter of 1997.

<TABLE>
<CAPTION>

                                THREE MONTHS ENDED    NINE MONTHS ENDED
                                  SEPTEMBER 30,          SEPTEMBER 30,
                              -------------------     -------------------
                                  1997      1996        1997        1996 
                               ---------  ---------   ----------   -------
     <S>                       <C>        <C>         <C>         <C>
     Rental income             $  3,908    $  1,400    $  10,647  $  1,418
     Other income                   193          35          404        35
                               ---------  ---------   ----------   -------
                                  4,101       1,435       11,051     1,453
     Property operating and 
       maintenance                1,321         513        3,585       515
                               ---------  ---------   ----------   -------
     Property net operating 
       income                  $  2,780    $    922    $   7,466  $    938
                               ---------  ---------   ----------   -------
                               ---------  ---------   ----------   -------
     Weighted average number 
       of apartments              1,906         667        1,795       222
                               ---------  ---------   ----------   -------
                               ---------  ---------   ----------   -------
</TABLE>

DISPOSITIONS

Dispositions consist of three properties containing 734 apartment units, 
which were sold by the Company in 1997.  The Company sold one apartment 
community, containing 232 units, in the third quarter of 1997 and two 
apartment communities, containing 502 units, in the second quarter of 1997.  
There were no dispositions of apartment communities during 1996.
<TABLE>
<CAPTION>

                                THREE MONTHS ENDED     NINE MONTHS ENDED
                                  SEPTEMBER 30,           SEPTEMBER 30,
                              -------------------     -------------------
                                  1997      1996        1997        1996 
                               ---------  ---------   ----------   -------
     <S>                       <C>        <C>         <C>         <C>
     Rental income                $  410   $  1,212     $  2,766  $  3,604
     Other income                     14         57          127       155
                               ---------  ---------   ----------   -------
                                     424      1,269        2,893     3,759
     
     Property operating and 
       maintenance                   159        480          973     1,378
                               ---------  ---------   ----------   -------
     Property net operating 
       income                     $  265     $  789     $  1,920  $  2,381
                               ---------  ---------   ----------   -------
                               ---------  ---------   ----------   -------
     Weighted average number
        of apartments                232        734          567       734
                               ---------  ---------   ----------   -------
                               ---------  ---------   ----------   -------
</TABLE>

LIQUIDITY AND CAPITAL RESOURCES

LIQUIDITY

The Company's net cash provided by operating activities of $30.6 million for 
the nine months ended September 30, 1996 decreased to $28.1 million for the 
nine months ended September 30, 1997 as a result of cash related to the sale 
of apartment communities being held by a third party intermediary in order to 
complete a tax free exchange.  Net cash used in investing activities 
decreased from $103.4 million for the nine months ended September 30, 1996 to 
$30.0 million for the nine months ended September 30, 1997.  The decrease is 
the result of a reduction in construction activity for the first nine months 
of 1997 of $32.5 million as compared to $66 million for the first nine months 
of 1996 and a decrease in cash used to fund the Company's acquisition 
activity from $34.9 million to $17.5 million in the first nine months of 1996 
as compared to the first nine months of 1997 and the proceeds received from 
the sale of three apartment communities.  Net cash provided by financing 
activities decreased from $70.6 million for the nine months ended September 
30, 1996 to $1.9 million for the nine months 

                                    Page 17 of 27

<PAGE>

ended September 30, 1997 due to less borrowings under the Revolving Credit 
Facility as a result of the reduction in construction and acquisition 
activity.

                                    Page 18 of 27

<PAGE>

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 expansion of existing, communities; acquisitions of existing apartment 
communities; the actual costs associated with such developments and 
acquisitions; the strength of the local economies in the sub-markets in which 
the Company operates and the culmination of its pending merger with EQR.  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 September 30, 1997, the Company's total debt was approximately $442.2 
million and the Company's debt to total market capitalization (Market Equity 
plus Debt) was approximately 40.2 percent.  The Company received an 
investment grade security rating of "BBB-" from Standard & Poor's 
Corporation,  "Baa3" from Moody's Investors Service, Inc., and " BBB-" from 
Fitch Investors Service, L.P. 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 & Poor's 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 Investors 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, L.P. 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 one fixed rate loan at September 
30, 1997 which is collateralized by a first mortgage lien on an apartment 
community included in real estate assets.  The mortgage is payable in monthly 
installments of principal and interest and matures on August 17, 2004.  The 
conventional mortgage loan aggregated $18.2 million at September 30, 1997 
with an interest rate of 6.5 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.  On 
July 15, 1997, the 

                               Page 19 of 27

<PAGE>

Company repaid two additional mortgages with unpaid principal balances of 
approximately $15.2 million with proceeds from the Revolving Credit Facility. 
There were no prepayment penalties associated with the repayment of these 
two mortgages.

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 the outstanding balances on the Revolving Credit Facility. The 
outstanding debt was $49.1 million at September 30, 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 & Poor's.

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 and Deer Creek 
Village, which were sold in June 1997, and La Valencia.

SENIOR UNSECURED NOTES

On April 2, 1997,  the Company through 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.

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 $64.0 million at September 30, 1997 with interest 
rates ranging from 5.29 percent to 5.61  percent.

REVOLVING CREDIT FACILITY

On June 13, 1997, the Company amended its existing $225 million unsecured 
Revolving Credit Facility with a bank group to decrease the commitment amount 
from $225 million to $150 million and decrease the interest rate from a 
floating rate of London Inter Bank Offered Rate (LIBOR) plus 150 basis points 
(100 basis points equals one 

                                Page 20 of 27

<PAGE>

percent) to 115 basis points (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 which expires in September 1999, 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 September 30, 1997, there was 
$56.0 million outstanding on the Revolving Credit Facility, with an effective 
interest rate of 6.92 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 September 30, 
1997.

<TABLE>
<CAPTION>

                                                         OUTSTANDING    WEIGHTED AVERAGE
                                                           BALANCE        INTEREST RATE
                                                        ------------    ----------------
<S>                                                     <C>              <C>
FIXED RATE DEBT:
 Mortgage Debt:
  Conventional......................................    $  67,336              6.98%
  Mortgage Loan Certificates........................      130,586              8.05
Unsecured:
  $75 million senior notes..........................       74,610              7.18
  $50 million senior notes..........................       49,624              7.36
                                                        ------------       ------------
     Total Fixed Rate Debt..........................      322,156              7.51

VARIABLE RATE DEBT:
 Tax Exempt Bonds...................................       64,000              5.38
 Revolving Credit Facility..........................       56,000              6.92
                                                        ------------       ------------
     Total Variable Rate Debt.......................      120,000              6.10
                                                        ------------       ------------
     Total Debt.....................................    $ 442,156              7.12%
                                                        ------------       ------------
                                                        ------------       ------------
</TABLE>

The Company had 6,164 unencumbered apartment units related to the Stabilized 
Communities and 953 unencumbered apartment units related to the Communities 
Under Construction and in Lease-Up at September 30, 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 were approximately $40,891,000.  The 
Company used the proceeds from the sale of Common Stock to pay down its 
Revolving Credit Facility.

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 were approximately $35,415,000.  The Company used the 
proceeds from the sale of Common Stock to pay down its Revolving Credit 
Facility.

                                 Page 21 of 27

<PAGE>

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.

<TABLE>
<CAPTION>
                                                    THREE MONTHS ENDED            NINE MONTHS ENDED
                                                       SEPTEMBER 30,                 SEPTEMBER 30,
                                                   -------------------           -------------------
                                                   1997           1996           1997           1996
                                                ---------      ---------     ---------     ---------
     <S>                                        <C>           <C>           <C>           <C>
     Income before minority interest,
       gain on sale of real estate assets
       and extraordinary item                   $   5,180      $  3,927      $  14,189     $  13,892
     Depreciation and amortization, net of
         corporate depreciation                     6,603         5,390         19,101        14,951
     Amortization of executive deferred
         compensation expense                          35            48             95           360
                                                ---------      ---------     ---------     ---------
     Funds from Operations                      $  11,818      $  9,365      $  33,385     $  29,203
                                                ---------      ---------     ---------     ---------
                                                ---------      ---------     ---------     ---------
</TABLE>

NUMBER OF COMMON SHARES AND UNITS

The Company had 24,915,866 and 24,583,939 weighted average number of shares 
and units for the three and the nine months ended September 30, 1997 and 
23,038,163 and 21,897,381 for the three and the nine months ended September 
30, 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.

                          Page 22 of 27

<PAGE>

Acquisition of assets and community expenditures are as follows:

<TABLE>
<CAPTION>
                                                    THREE MONTHS ENDED            NINE MONTHS ENDED
                                                       SEPTEMBER 30,                 SEPTEMBER 30,
                                                   -------------------           -------------------
                                                   1997           1996           1997           1996
                                                ---------      ---------     ---------     ---------
<S>                                           <C>             <C>           <C>            <C>

New community development                       $  10,556      $  20,143     $  32,881      $  66,314
Acquisitions                                            -         44,193        34,800         57,211
Nonrecurring capital expenditures:
Vehicle access control gates                          712            154         1,437            154
Computer upgrade                                      195            148           347            199
Recurring capital expenditures:
 Community additions and
    improvements                                      930            746         2,972          2,075
Corporate additions and improvements                   13             21            59             21
                                                ---------      ---------     ---------     ---------
                                                $  12,406      $  65,405     $  72,496     $  125,974
                                                ---------      ---------     ---------     ---------
                                                ---------      ---------     ---------     ---------
</TABLE>

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
--------
Montierra                Scottsdale            249          1,052          $  21           3:97           2:98           1:99
The Retreat Phase I         Phoenix            240            973             14           1:97           3:97           2:98
The Retreat Phase II        Phoenix            240            973             17           3:97           2:98           1:99
Vista Grove                    Mesa            224            911             14           1:97           3:97           2:98
                                            --------                      --------
     TOTAL                                     953                         $  66
                                            --------                      --------
                                            --------                      --------
</TABLE>

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.

DISPOSITION ACTIVITY

During the second quarter of 1997, the Company sold two properties, Deer 
Creek Village and The Pines, containing 502 apartment units.  The aggregate 
sales price was approximately $22.4 million resulting in a gain from the sale 
of approximately $5.2 million.  The Company received cash of approximately 
$7.3 million and two carryback mortgage notes of approximately $15.1 million. 
The $7.9 million mortgage note on Deer Creek Village was paid off on July 
23, 1997. The mortgage note is secured by a first deed of trust on The Pines 
property and matures in November 1997.  The buyer may repay the remaining 
mortgage note at anytime without prepayment penalties.  The mortgage note 
receivable maturity date can be extended 30 days to December 1, 1997 at the 
option of the borrower.

                               Page 23 of 27

<PAGE>

On September 30, 1997, the Company sold Los Arboles Apartments, a 232 unit 
apartment community located in Chandler, Arizona.  The aggregate proceeds 
were approximately $12.5 million resulting in a gain from the sale of 
approximately $2.3 million.  In connection with the sale, the Company sold 
the management contract on an adjoining apartment community, Los Arboles II 
and received payment of the unpaid principal balance and accrued interest on 
the mortgage note on that property.

APARTMENT COMMUNITIES

The following sets forth certain information regarding the current apartment 
communities at September 30, 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
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
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
Towne Square                          Chandler            468        Acq/Dev      1992/1995
Villa Encanto                          Phoenix            382      Developed           1983
Village at Lakewood                    Phoenix            240      Developed           1988
                                                      ----------
                                                        8,022
   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                                  10,319
                                                      ----------
                                                      ----------
</TABLE>


                                         Page 24 of 27

<PAGE>

<TABLE>
<CAPTION>

                                                                                        YEAR
                                                                                      DEVELOPED
                                                       NUMBER OF        DEVELOPED/       OR
                    APARTMENT COMMUNITIES                 CITY          APARTMENTS    ACQUIRED  
                    ---------------------                 ----          ----------   ---------- 
<S>                                                   <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 (2)                                   Phoenix            240      Developed        1996/97
The Retreat Phase II                                      Phoenix            240      Developed           1997
Vista Grove (2)                                              Mesa            224      Developed        1996/97
The Isle at Arrowhead Ranch (4)                          Glendale            256      Developed           1996
Promontory Pointe Expansion Phase II (1)                  Phoenix            120      Developed        1995/96
Montierra                                              Scottsdale            249      Developed           1997
                                                                         ----------
                                                                           1,605
  TUCSON:
Bear Canyon (3)                                            Tucson            238      Developed        1995/96
Harrison Park Expansion Phase II (3)                       Tucson            188      Developed        1995/96
                                                                         ----------
                                                                             426
                                                                         ----------
    Total Developments and Lease-Up Properties                             2,031
                                                                         ----------
                                                                         ----------

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                                                                     15,700
                                                                         ----------
                                                                         ----------

DISPOSITIONS
ARIZONA
Deer Creek Village                                        Phoenix            308       Acquired           1991
The Pines                                                    Mesa            194       Acquired           1992
Los Arboles                                              Chandler            232      Developed           1985
                                                                         ----------
                                                                             734
                                                                         ----------
                                                                         ----------
</TABLE>

(1) Community reached stabilized occupancy in the first quarter 1997
(2) Community is in lease-up
(3) Community reached stabilized occupancy in the second quarter 1997
(4) Community reached stabilized occupancy in the third quarter 1997

                         Page 25 of 27

<PAGE>

PART II     OTHER INFORMATION

ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K.

(a)  Exhibits

      10.26  Amendment No. 1 to Employment Agreement, dated as of July 1, 
             1997, by and among Stephen O. Evans, Evans Withycombe Residential,
              Inc. and Evans Withycombe Management Inc.
  
      10.27  Amendment No. 1 to Employment Agreement, dated as of July 1, 1997,
             by and among Richard G. Berry, Evans Withycombe Residential, Inc.
             and Evans Withycombe Management Inc.
  
      10.28  Change in Control Agreement, dated as of June 18, 1997, by and
             between Evans Withycombe Residential, Inc. and Stephen O. Evans
  
      10.29  Change in Control Agreement, dated as of June 18, 1997, by and
             between Evans Withycombe Residential, Inc. and Richard G. Berry
  
      10.30  Change in Control Agreement, dated as of June 18, 1997, by and
             between Evans Withycombe Residential, Inc. and Paul R. Fannin
  
      10.31  Amendment No. 1 to Change in Control Agreement, dated August 27,
             1997, by and between Evans Withycombe Residential, Inc. and 
             Paul R. Fannin
  
      10.32  Change in Control Agreement, dated as of June 18, 1997, by and
             between Evans Withycombe Residential, Inc. and G. E. O'Clair
  
      10.33  Amendment No. 1 to Change in Control Agreement, dated August 27,
             1997, by and between Evans Withycombe Residential, Inc. and Edward
             O'Clair

      27     Financial Data Schedule

(b)  Two Form 8-K's were filed during the third quarter 1997.

     -  A Form 8-K was filed on August 25, 1997 reporting under Item 5 the
        modification of the Company's existing Revolving Loan Agreement by and 
        between the banks named herein, Bank One Arizona, N.A., as 
        administrative agent, and Bank of America National Trust and Savings 
        Association and Wells Fargo Bank, National Association as co-agents 
        and Item 7 exhibits containing the modification agreement.

     -  A Form 8-K was filed on August 27, 1997 reporting under Item 5 the 
        pending merger between the Company and Equity Residential Property 
        Trust and Item 7 exhibits relating to the agreement and plan of merger.


                                  SIGNATURES

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

                              EVANS WITHYCOMBE RESIDENTIAL, INC.



November 11, 1997                      /s/ Stephen O. Evans
--------------------------            ------------------------------
 (Date)                                Stephen O. Evans,
                                       Chairman of the Board and
                                       Chief Executive Officer


                                Page 26 of 27

<PAGE>

November 11, 1997                     /s/ Paul R. Fannin
--------------------------            ------------------------------
 (Date)                               Paul R. Fannin,
                                      Senior Vice President and
                                      Chief Financial Officer

                               Page 27 of 27