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 June 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 August 1, 1997 there were 20,342,763 shares of the registrant's  common
stock, $0.01 par value outstanding.
                                  Page 1 of 25
<PAGE>
                       EVANS WITHYCOMBE RESIDENTIAL, INC.
                       ----------------------------------


                                      INDEX
                                      -----

Part I       FINANCIAL INFORMATION                                          Page
------       ---------------------                                          ----

             Item 1   Financial Statements

             Consolidated Balance Sheets as of June 30, 1997 (Unaudited) and
             December 31, 1996 .............................................   3

             Consolidated Statements of Income for the three and six months
             ended June 30, 1997 and 1996 (Unaudited) ......................   4

             Consolidated Statement of Stockholders' Equity as of June 30, 1997
             (Unaudited) ...................................................   5

             Consolidated Statements of Cash Flows for the six months
             ended June 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 4   Submission of Matters to Vote by Security Holders ....  25

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


Signatures   ...............................................................  25
                                  Page 2 of 25
<PAGE>
                       EVANS WITHYCOMBE RESIDENTIAL, INC.
                           CONSOLIDATED BALANCE SHEETS
               (Amounts in thousands, except for number of shares)
<TABLE>
<CAPTION>
                                                                         June 30, 1997  December 31, 1996
                                                                         -------------  -----------------
                                                                          (Unaudited)
<S>                                                                        <C>             <C>      
ASSETS
Real Estate:
  Land ....................................................................$ 130,490       $ 121,915
  Buildings and improvements ..............................................  598,421         543,839
  Furniture and fixtures ..................................................   31,728          29,567
  Construction-in-progress ................................................   43,265          66,229
                                                                           ---------       ---------
                                                                             803,904         761,550

  Less accumulated depreciation ...........................................  (48,925)        (38,331)
                                                                           ---------       ---------
                                                                             754,979         723,219
Cash and cash equivalents .................................................    1,051           2,568
Restricted cash ...........................................................    8,518           1,622
Accounts and notes receivable .............................................    2,886           3,500
Mortgage notes receivable .................................................   15,120            --
Deferred costs, net of accumulated amortization
 of $1,555 and $1,265 at June 30, 1997 and
 December 31, 1996, respectively ..........................................    4,489           3,838
Other assets ..............................................................    1,906           1,587
                                                                           ---------       ---------

Total assets ..............................................................$ 788,949       $ 736,334
                                                                           =========       =========

LIABILITIES AND STOCKHOLDERS' EQUITY

Mortgage and notes payable ................................................$ 445,441       $ 436,172
Accounts payable and other liabilities ....................................   10,106           7,833
Dividends payable .........................................................    8,235            --
Accrued interest ..........................................................    2,860           1,417
Accrued property taxes ....................................................    3,241           2,912
Resident security deposits ................................................    2,408           1,818
Prepaid rent ..............................................................      870             585
                                                                           ---------       ---------
Total liabilities .........................................................  473,161         450,737

Minority interest .........................................................   54,610          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, 20,334,743 and 18,366,902 issued
    and outstanding at June 30, 1997 and
    December 31, 1996, respectively .......................................      204             184
  Additional paid-in capital ..............................................  292,253         253,425
  Unamortized employee restricted stock compensation ......................   (1,104)           (465)
  Distributions in excess of net income ...................................  (30,175)        (24,139)
                                                                           ---------       ---------

Total stockholders' equity ................................................  261,178         229,005
                                                                           ---------       ---------

Total liabilities and stockholders' equity ................................$ 788,949       $ 736,334
                                                                           =========       =========
</TABLE>
See Notes to Consolidated Financial Statements
                                  Page 3 of 25
<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                    Six Months Ended
                                                         June 30, 1997      June 30, 1996      June 30, 1997      June 30, 1996
                                                         -------------      -------------      -------------      -------------
<S>                                                      <C>                <C>                <C>                <C>         
Revenues:
  Rental ................................................$     27,713       $     22,078       $     54,865       $     44,214
  Third party management fees ...........................         120                664                230                951
  Interest and other ....................................       1,770              1,364              3,529              3,120
                                                         ------------       ------------       ------------       ------------
    Total revenues ......................................      29,603             24,106             58,624             48,285

Expenses:
  Repairs and maintenance ...............................       2,637              2,719              5,578              5,275
  Property operating ....................................       4,237              2,865              8,437              5,548
  Advertising ...........................................         542                599                956              1,032
  Real estate taxes .....................................       2,079              1,615              4,198              3,264
  Property management ...................................         633                824              1,540              1,708
  General and administrative ............................         356                463                867                960
  Interest ..............................................       8,013              5,469             15,402             10,893
  Depreciation and amortization .........................       6,459              4,870             12,637              9,640
                                                         ------------       ------------       ------------       ------------
Total expenses ..........................................      24,956             19,424             49,615             38,320
                                                         ------------       ------------       ------------       ------------


Income before minority interest, gain on sale of
  real estate assets and extraordinary item .............       4,647              4,682              9,009              9,965
Gain on sale of real estate assets ......................       5,253               --                5,253               --
Minority interest .......................................      (1,828)            (1,027)            (2,664)            (2,239)
                                                         ------------       ------------       ------------       ------------

Income before extraordinary item ........................       8,072              3,655             11,598              7,726

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

Net income ..............................................$      8,072       $      3,655       $     10,398       $      7,726
                                                         ============       ============       ============       ============


Earnings per share before extraordinary item ............$       0.40       $       0.22       $       0.59       $       0.47
                                                         ============       ============       ============       ============

Earnings per share ......................................$       0.40       $       0.22       $       0.52       $       0.47
                                                         ============       ============       ============       ============






Weighted average shares outstanding .....................  20,257,173         16,933,771         19,809,734         16,535,454
                                                         ============       ============       ============       ============
</TABLE>
See Notes to Consolidated Financial Statements
                                  Page 4 of 25
<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
                                         -----------    -----------   -----------  ------------    -----------    -----------
<C>                                       <C>           <C>           <C>           <C>            <C>            <C>        
Stockholders' equity, December 31,
1996 ..............................       18,366,902    $       184   $   253,425   $      (465)   $   (24,139)   $   229,005

    Net income ....................             --             --            --            --           10,398         10,398
    Dividends on common stock
        ($0.81 per share) .........             --             --            --            --          (16,434)       (16,434)
    Proceeds of third offering, net
      of underwriting discount and
      offering costs of $406 ......        1,800,000             18        35,397          --             --           35,415
    Conversion of units to common
      stock .......................          126,387              2         2,480          --             --            2,482
    Exercise of stock options .....            7,500           --             207          --             --              207
    Issuance of restricted stock ..           36,130           --             744          (744)          --             --
    Forfeiture of restricted stock            (2,176)          --            --            --             --             --
    Amortization of deferred
      compensation ................             --             --            --             105           --              105
                                         -----------    -----------   -----------   -----------    -----------    -----------

Stockholders' equity, June 30 1997        20,334,743    $       204   $   292,253   $    (1,104)   $   (30,175)   $   261,178
                                         ===========    ===========   ===========   ===========    ===========    ===========
</TABLE>
See Notes to Consolidated Financial Statements
                                  Page 5 of 25
<PAGE>
                       EVANS WITHYCOMBE RESIDENTIAL, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (Amounts in thousands)
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                              Six Months ended June 30,
                                                              -------------------------
                                                                  1997         1996
                                                               ---------    ---------
<S>                                                            <C>          <C>      
Cash flows from operating activities
Net income .................................................   $  10,398    $   7,726
Adjustments to reconcile net income to net cash
  provided by operating  activities:
    Depreciation and amortization ..........................      13,183        9,960
    Amortization of deferred comp ..........................          81          350
    Minority interest ......................................       2,364        2,239
    Net gain on sale of real estate assets .................      (5,253)        --
    Write-off of development and acquisition costs .........         402           39
    Write-off of deferred loan costs .......................         294         --
Decrease (increase) in assets:
    Restricted cash ........................................      (6,896)        (437)
    Accounts and notes receivable ..........................         614         (441)
    Other assets ...........................................        (319)         206
(Decrease) increase in liabilities:
    Accounts payable and other liabilities .................       2,273         (883)
    Accrued interest .......................................       1,443          (64)
    Accrued property taxes .................................         329          901
    Resident security deposits .............................         590            2
    Prepaid rent ...........................................         285          (12)
                                                               ---------    ---------
Net cash provided by operating activities ..................      19,788       19,586

Cash flows from investing activities
Purchase of real estate assets .............................     (42,354)     (60,643)
Sale of real estate assets .................................       6,012         --
                                                               ---------    ---------
Net cash used in investing activities ......................     (36,342)     (60,643)

Cash flows from financing activities
Proceeds from Third Public Offering, net of expenses .......      35,415         --
Proceeds from Second Public Offering, net of expenses ......        --         41,107
Proceeds from exercise of options ..........................         207          160
Proceeds from mortgage notes and revolving
  credit facility ..........................................     184,306      176,221
Principal payments on mortgage notes .......................    (193,355)    (161,887)
Payment for loan costs .....................................      (1,473)        (315)
Dividends paid .............................................      (8,199)     (12,424)
Minority interest distributions ............................      (1,864)      (3,651)
                                                               ---------    ---------
Net cash provided by financing activities ..................      15,037       39,211
                                                               ---------    ---------


Net decrease in cash and cash equivalents ..................      (1,517)      (1,846)
Cash and cash equivalents, beginning of period .............       2,568        3,634
                                                               ---------    ---------
Cash and cash equivalents, end of period ...................   $   1,051    $   1,788
                                                               =========    =========


Supplemental information
Cash paid during the period for interest ...................   $  13,457    $  10,645
                                                               =========    =========

Supplemental disclosure of non-cash activity
Assumption of debt related to the acquisition of
  apartment communities ....................................   $  18,318    $    --
                                                               =========    =========

Origination of carryback mortgage notes arising from sale of
    apartment communities ..................................   $  15,120    $    --
                                                               =========    =========

Issuance of stock under restricted stock incentive plan ....   $      24    $    --
                                                               =========    =========
Conversion of units to common stock ........................   $   2,482    $     888
                                                               =========    =========
</TABLE>
See Notes to Consolidated Financial Statements
                                  Page 6 of 25
<PAGE>
                       EVANS WITHYCOMBE RESIDENTIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 1997
               (Amounts in thousands, except for number of shares
                         or units and per share amounts)
                                   (Unaudited)

1.   Organization and Formation of the Company

Evans  Withycombe  Residential,  Inc.  (the  "Company")  is one  of the  largest
developers  and  managers  of upscale  apartment  communities  in Arizona and is
expanding its operations into selected sub-markets in Southern  California.  The
Company  owns  and  manages  52  stabilized  multifamily  apartment  communities
containing   14,723  units,  of  which  45  stabilized   multifamily   apartment
communities  are located in Phoenix and Tucson,  Arizona,  containing a total of
12,325 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  three  multifamily  apartment
communities  comprising  720 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 June 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
81.46 percent and 77.08 percent  interest in the Operating  Partnership  at June
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 six month  period  ended June 30,  1997 are not  necessarily
indicative  of the results that may be expected for the year ended  December 31,
1997.
                                  Page 7 of 25
<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.

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 June 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 $493 and $970 and $744 and $1,464,  for the three and
the six months ended June 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 $10,802 and
$12,060 at June 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.

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.
                                  Page 8 of 25
<PAGE>
3.   Summary of Significant Accounting Policies (continued)

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 six  months  ended June 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 consist of the following:
<TABLE>
     <S>                                                                                <C>    
     $7.9 million  mortgage note  receivable at a fixed interest rate of 9.5 percent,   $ 7,932
     secured by a first  mortgage  lien on Deer  Creek  Village  Apartments,  matures
     November 1, 1997.  (Paid off on July 23, 1997.)

     $7.2 million  mortgage  note  receivable  at a fixed  interest  rate of 8.0          7,188
     percent secured by a first  mortgage  lien on The Pines  Apartments, matures
     November 1, 1997 
                                                                                        -------
                                                                                        $15,120
                                                                                        =======
</TABLE>
                                  Page 9 of 25
<PAGE>
5.   Mortgage and Notes Payable

The Company's mortgage notes and notes payable consists of the following:
<TABLE>
<CAPTION>
                                                                                     June 30,     December 31,
                                                                                       1997          1996
                                                                                       ----          ----
<S>                                                                                <C>          <C>        
Mortgage note payable at a fixed interest rate of 8.0 percent, monthly principal   $        -   $     5,380
and interest payments.  The unpaid principal balance was repaid on January 9,
1997.

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

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

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

Mortgage note payable at a fixed interest rate of 9.95 percent, monthly principal      12,000        12,065
and interest payments through September 15, 1997, remaining balance due September
15, 1997.  The unpaid principal balance was repaid on July 15, 1997.

Mortgage note payable at a fixed interest rate of 9.3 percent, monthly principal        3,166         3,182
and interest payments through September 15, 1997, remaining balance due September
15, 1997.  The unpaid principal balance was repaid on July 15, 1997.

Mortgage note payable at fixed interest rates ranging from 6.25 percent to 9.0         18,252
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.

$50 million securitized debt at a fixed interest rate of 7.17 percent, monthly         49,250        49,509
principal and interest payments through January 1, 2006, remaining balance due
January 1, 2006.  Secured by first mortgage liens on 5 communities.

Securitized debt at a fixed stated interest rate of 7.98 percent, with an             130,563       130,520
effective interest rate of 8.05 percent, monthly interest payments only through
August 1, 2001. Secured by first mortgage liens on 21 communities.  The face
amount of $131 million is  due August 1, 2001.  The balance is net of unamortized
discount of $437 and $480 at June 30, 1997 and December 31, 1996, respectively.

$17.3 million tax exempt bonds with a floating interest rate based on the tax          17,300        17,300
exempt note rate set by the remarketing agent, or at the option of the Company
can convert to a fixed rate as determined by the remarketing agent.  Secured by a
$17.5 million direct pay letter of credit, interest payments only, matures
December 1, 2007 (Effective interest rate of 5.20 percent at June 30, 1997).

$22.6 million tax exempt bonds with a floating interest rate based on the tax          22,650        22,650
exempt note rate set by the remarketing agent, interest payments only.  Secured
by a $22.8  million  direct  pay  letter of credit,  matures  February  1, 2016.
(Effective interest rate of 5.56 percent at June 30, 1997).
</TABLE>
                                  Page 10 of 25
<PAGE>
5.   Mortgage and Notes Payable (continued)
<TABLE>
<CAPTION>
                                                                                     June 30,     December 31,
                                                                                       1997          1996
                                                                                       ----          ----
<C>                                                                                <C>           <C>     
$24.05 million tax exempt bonds with a floating interest rate based on the tax       $ 24,050      $ 24,050
exempt note rate set by the remarketing agent, interest payments only.  Secured
by a $24.4  million  direct  pay  letter of  credit,  matures  August  1,  2005.
(Effective interest rate of 5.34 percent at June 30, 1997).

$150 million unsecured Revolving Credit Facility with floating interest rate           44,000        152,000
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
7.23 percent at June 30, 1997).

$75 million senior unsecured notes with a fixed coupon rate of 7.50 percent.           74,595             -
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 $405 at June 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 7.625 percent.          49,615              -
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 $385 at June 30, 1997.  The effective interest rate
inclusive of the benefit of a treasury lock transaction is 7.36 percent.



                                                                                   ------------- ------------
                                                                                     $445,441       $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       Certificate        Notes          Bonds           Facility           Total
                 --------------- --------------- -------------- --------------- ----------------- ----------------
<C>              <C>             <C>             <C>            <C>             <C>               <C>        
1997             $    15,487     $         -     $         -    $         -     $         -       $    15,487
1998                     784               -               -              -               -               784
1999                     831               -               -              -          44,000            44,831
2000                     882               -               -              -               -               882
2001                     500         130,563               -              -               -           131,063
Thereafter            64,184               -         124,210         64,000               -           252,394
                 --------------- --------------- -------------- --------------- ----------------- ----------------
   Total         $    82,668     $   130,563     $   124,210    $    64,000     $    44,000       $   445,441
                 --------------- --------------- -------------- --------------- ----------------- ----------------
</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 $150 million Revolving Credit Facility provides funding for working capital,
construction activities and acquisitions.

The  Company  has three  direct pay  letters of credit of  $17,500,  $22,800 and
$24,400  which  serve as a credit  enhancement  for the tax  exempt  bonds.  The
letters of credit are secured by a first mortgage on four apartment communities.
                                  Page 11 of 25
<PAGE>
In January 1997, the Company extinguished the debt on four mortgages with unpaid
principal  balances of  approximately  $25,000 with  proceeds from the Revolving
Credit  Facility.  As a  result,  the  Company  incurred  a loss  from the early
extinguishment  of debt of  approximately  $1,200,  net of minority  interest of
$300.

6.   Distributions

On July 15, 1997, the Company paid a  distribution  of $0.405 per share ($8,235)
to shareholders and $0.405 per unit ($1,864) to unitholders of record as of June
30, 1997.

7.   Management Fees

The Company performs management services for certain  unaffiliated  communities.
Management  fees  received from managed  communities  were $119 and $664 for the
three  months  ended June 30, 1997 and 1996 and $230 and $951 for the six months
ended June 30, 1997 and 1996,  respectively.  The Second  Quarter  1996  balance
includes a one time non-recurring $500 termination fee received from the sale of
management contracts.

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 six months ended June 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                                           (7,500)          20.00
         Granted                                            241,500           20.49
         Forfeited                                          (32,225)          20.84
Options outstanding at June 30, 1997                  ---------------  ----------------
                                                          1,110,625          $20.66
                                                      ===============  ================

Options exercisable:
         December 31, 1996                                  357,700          $19.98
         June 30, 1997                                      521,125          $20.46
</TABLE>

Options to purchase  719,375 and 901,650  shares of common stock were  available
for grant under the plan at June 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  
                                  Page 12 of 25
<PAGE>
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  periods in which the shares vest and an expense of
$30 and $180 and $60 and $350 for the three and six months  ended June 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 June 30, 1997                            73,172
                                                                  ======

     Number of shares vested at June 30, 1997                     27,600

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 $27 and $11
and $45 and $20,  for the three and six  months  ended  June 30,  1997 and 1996,
respectively, is included in general and administrative expense.

9.   Minority Interest

Minority interest at June 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             (126,387)         (2,482)
     Allocation of net income                               -           2,664
     Allocation of extraordinary item -
          loss from early extinguishment of debt            -            (300)
     Distributions paid                                     -          (1,864)
                                                    ---------         -------
     Balance at June 30, 1997                       4,551,423         $54,610
                                                    =========         =======


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.
                                  Page 13 of 25
<PAGE>
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
          CONDITION AND RESULTS OF OPERATIONS
          (Amounts in thousands,  except apartment data and number of shares and
          units)


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

Overview

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

Results of Operations - Consolidated Financial Statements

The results of  operations  for the three and the six months ended June 30, 1997
and  1996,   respectively,   were   significantly   affected  by   acquisitions,
developments and expansions.

Comparison  of Results of  Operations  for the Three Months and Six Months Ended
June 30, 1997 to the Three and Six Months Ended June 30, 1996
<TABLE>
<CAPTION>
                               Three Months Ended              Six Months Ended
                               ------------------              ----------------
                                   June 30,                        June 30,     
                               -----------------  Percentage   ---------------  Percentage 
                                 1997       1996    Change     1997       1996    Change
                                 ----       ----    ------     ----       ----    ------
<S>                            <C>        <C>         <C>    <C>        <C>         <C>  
Rental income                  $27,713    $22,078     25.5%  $54,865    $44,214     24.1%
Third party management
    fees                           120        664    (81.9)      230        951    (75.8)

Interest and other               1,770      1,364     29.8     3,529      3,120     13.1
                               -------    -------     ----   -------    -------     ----
     Total revenues             29,603     24,106     22.8    58,624     48,285     21.4

Property operating and
  maintenance (1)                9,495      7,798     21.8    19,169     15,119     26.8

Property management                633        824    (23.2)    1,540      1,708     (9.8)
General and administrative         356        463    (23.1)      867        960     (9.6)
Interest                         8,013      5,469     46.6    15,402     10,893     41.4
Depreciation and
    amortization                 6,459      4,870     32.6    12,637      9,640     31.1
                               -------    -------     ----   -------    -------     ----
Total expenses                  24,956     19,424     28.5    49,615     38,320     29.5
                               -------    -------     ----   -------    -------     ----
Income before minority
    interest, gain on sale
    of real estate assets
    and extraordinary item     $ 4,647    $ 4,682     (0.7)% $ 9,009    $ 9,965     (9.6)%
                               =======    =======     ====   =======    =======     ====
Weighted average monthly
    rental revenue per
    unit, net of concessions   $   682    $   671            $   684    $   653
                               =======    =======            =======    =======
Weighted average number
    of apartments               15,272     12,302             15,019     12,116
                               =======    =======            =======    =======
Economic occupancy (2)            86.5%      88.3%              87.7%      90.3%
                               =======    =======            =======    ======= 
</TABLE>
                                  Page 14 of 25
<PAGE>
     (1) The Company  defines  property  operating  and  maintenance  expense as
     repairs and maintenance, other property operating,  advertising expense and
     real estate taxes.
     (2) Stabilized properties only.

Rental revenues increased by $5,635 and $10,651 or 25.5 percent and 24.1 percent
for the three and six months  ended June 30,  1997 as  compared  to the  similar
period  in 1996 as a result  of  increases  in the  weighted  average  number of
apartments and weighted  average  monthly  revenue per occupied  apartment.  The
Company believes that the increase in rental income was largely  attributable to
the acquisitions and stabilization of properties developed by the Company in its
rental markets.

Third party  management  fees  decreased  $544 and $721 or 81.9 percent and 75.8
percent 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 six months  ended  June 30,  1997
increased  $406 and $409 or 29.8  percent  and 13.1  percent as  compared to the
similar period in 1996 as a result of an increase in the weighted average number
of units.

Property operating and maintenance  expense increased due to the increase in the
weighted  average  number of  apartments  for the three and the six months ended
June 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 $493 and $971 of interest for the three and
six months ended June 30, 1997  compared to $744 and $1,464 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
39 stabilized  properties  containing  10,551 apartment units that were owned by
the  Company for the three  months and six months  ended June 30, 1997 and 1996.
Same store portfolio was adjusted in the second quarter 1997 to reflect the sale
of Deer Creek Village and The Pines apartment communities.
<TABLE>
<CAPTION>
                          Three Months Ended                Six Months Ended
                         --------------------              ------------------
                               June 30,                         June 30,     
                         -------------------- Percentage   ------------------   Percentage
                           1997        1996     Change       1997        1996     Change
                           ----        ----     ------       ----        ----     ------
<S>                      <C>         <C>          <C>      <C>         <C>          <C>   
Rental income            $ 18,504    $ 18,868     (1.9)%   $ 37,518    $ 38,329     (2.1)%
Other income                1,052         819     28.4        2,124       1,910     11.2
                         --------    --------     ----     --------    --------     ----
                           19,556      19,687     (0.7)      39,642      40,239     (1.5)
Property operating and
    maintenance             6,783       6,610      2.6       13,430      12,975      3.5
                         --------    --------     ----     --------    --------     ----
Property net operating
    income               $ 12,773    $ 13,077     (2.3)%   $ 26,212    $ 27,264     (3.9)%
                         ========    ========     ====     ========    ========     ====
Weighted average
    monthly rental
    revenue per unit,
    net of concessions   $    676    $    675              $    676    $    670       
                         ========    ========              ========    ========
Economic occupancy           86.5%       88.4%                 87.7%       90.3%
                         ========    ========              ========    ======== 
</TABLE>

Rental  income for the three and six months ended June 30, 1997  decreased  $364
and $811 as  compared to the same period in 1996 as a result of a decline in the
average economic occupancy. Other income for the three and six
                                  Page 15 of 25
<PAGE>
months ended June 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 six month  periods ended June 30, 1997 as compared to
the  three and six  month  periods  ended  June 30,  1996 are the  result of the
increase in the weighted average number of apartments.

                                        Three Months Ended  Six Months Ended
                                              June 30,          June 30,
                                          ---------------------------------
                                           1997     1996     1997     1996
                                          ------   ------   ------   ------
     Rental income                        $2,935   $2,286   $5,997   $4,180
     Other income                            137      127      296      262
                                          ------   ------   ------   ------
                                           3,072    2,413    6,293    4,442

     Property operating and maintenance      955      769    1,917    1,422
                                          ------   ------   ------   ------


     Property net operating income        $2,117   $1,644   $4,376   $3,020
                                          ======   ======   ======   ======
     Weighted average number of
         apartments                        1,444    1,180    1,444    1,027
                                          ======   ======   ======   ======

Development and Lease Up Communities

Development  and lease up  communities  consist of the  development  of five new
apartment  communities and the expansion of two existing  apartment  communities
containing   an   aggregate   of  1,542   apartment   units  that  were  in  the
"construction,"  "development,"  or "lease up" stage during 1997 and  therefore,
not  considered  to have  achieved  stabilized  occupancy for all of the periods
presented.  Increases in the three and the six month periods ended June 30, 1997
as compared to the three and the six month  periods  ended June 30, 1996 are the
result of an increase in the weighted average number of apartments.

                                        Three Months Ended  Six Months Ended
                                              June 30,          June 30,
                                          ---------------------------------
                                           1997     1996     1997     1996
                                          ------   ------   ------   ------
     Rental income                        $1,700   $  101   $3,049   $  103
     Other income                            133       24      254       25
                                          ------   ------   ------   ------
                                           1,833      125    3,303      128

     Property operating and maintenance      435      109    1,047      125
                                          ------   ------   ------   ------

     Property net operating income        $1,398   $   16   $2,256   $    3
                                          ======   ======   ======   ======
     Weighted average number of
         apartments in lease up              869       69      782       36
                                          ======   ======   ======   ======
                                  Page 16 of 25
<PAGE>
Acquisitions

Acquisitions  consist of 6 properties  containing 1,906 apartment  units,  which
have  been  acquired  by the  Company  since  January  1,  1996.  There  was one
acquisition  of an  apartment  community  during  the first six  months of 1996,
Canyon Crest Views a 178 unit apartment  community that was acquired on June 27,
1996.

                                        Three Months Ended  Six Months Ended
                                              June 30,          June 30,
                                          ---------------------------------
                                           1997     1996     1997     1996
                                          ------   ------   ------   ------
     Rental income                        $3,800   $   18   $6,739   $   18
     Other income                            138     --        211     --
                                          ------   ------   ------   ------
                                           3,938       18    6,950       18

     Property operating and maintenance    1,110        2    2,264        2
                                          ------   ------   ------   ------

     Property net operating income        $2,828   $   16   $4,686   $   16
                                          ======   ======   ======   ======
     Weighted average number of
         apartments                        1,906        2    1,740     --
                                          ======   ======   ======   ======

Dispositions

Dispositions  consist of two properties  containing 502 apartment  units,  which
were sold by the Company in June 1997.  There were no  dispositions of apartment
communities during 1996.

                                        Three Months Ended  Six Months Ended
                                              June 30,          June 30,
                                          ---------------------------------
                                            1997     1996     1997     1996
                                          ------   ------   ------   ------
     Rental income                        $  774   $  805   $1,562   $1,584
     Other income                             41       35       82       70
                                          ------   ------   ------   ------
                                             815      840    1,644    1,654

     Property operating and maintenance      212      308      511      595
                                          ------   ------   ------   ------


     Property net operating income        $  603   $  532   $1,133   $1,059
                                          ======   ======   ======   ======
     Weighted average number of
         apartments                          502      502      502      502
                                          ======   ======   ======   ======


Liquidity and Capital Resources

Liquidity

The Company's net cash provided by operating activities of $19.6 million for the
six months ended June 30, 1996 was  comparable  to the $19.8 million for the six
months ended June 30, 1997. Net cash used in investing activities decreased from
$60.6  million for the six months  ended June 30, 1996 to $36.4  million for the
six months  ended June 30,  1997.  The  decrease is the result of a reduction in
construction  activity  for the first six  months  of 1997 of $22.3  million  as
compared to $46.2 million for the first six months of 1996 being offset by $16.5
million related to the acquisitions of two apartment communities, net of assumed
debt. Net cash provided by financing activities decreased from $39.2 million for
the six months  ended June 30, 1996 to $15.0  million  for the six months  ended
June 30,  1997 due to less  borrowings  taking  place  on the  Revolving  Credit
Facility as a result of the reduction in construction activity.
                                  Page 17 of 25
<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;  and the
strength  of the  local  economies  in the  sub-markets  in  which  the  Company
operates.  The  Company is  further  subject to risks  relating  to the  limited
geographic area in which it operates and its ability to successfully  manage its
planned  expansion into Southern  California,  a market in which it did not have
any operating  history  prior to 1995.  Higher than  expected  costs,  delays in
development of communities, a downturn in the local economies and/or the lack of
growth of such  economies  could reduce the Company's  revenues and increase its
expenses,  resulting in a greater  burden on the Company's  liquidity  than that
which the Company has described above.

Capital Resources

At June 30, 1997, the Company's total debt was approximately  $445.4 million and
the Company's debt to total market capitalization  (Market Equity plus Debt) was
approximately  46.2 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 three fixed rate loans at June 30,
1997, each of which is  collateralized  by a first mortgage lien on an apartment
community  included in real estate assets.  The mortgages are payable in monthly
installments  of  principal  and interest  and mature at various  dates  through
August 17, 2004. The  conventional  mortgage loans  aggregated  $33.4 million at
June 30, 1997 with interest rates ranging from 6.25 percent to 9.95 percent.  In
January 1997,  the Company  extinguished  the debt on four mortgages with unpaid
principal  balances  of  approximately  $25.0  million  with  proceeds  from the
Revolving  Credit  Facility.  As a result,  the Company incurred a loss from the
early  extinguishment  of debt of  approximately  $1.2 million,  net of minority
                                  Page 18 of 25
<PAGE>
interest of $300. On July 15, 1997, the 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 outstanding balances on the Revolving Credit Facility. The outstanding debt
was $49.3 million at June 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
million at June 30, 1997 with  interest  rates ranging from 5.20 percent to 5.56
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 19 of 25
<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 June 30, 1997, there was $44.0 million outstanding
on the  Revolving  Credit  Facility,  with an  effective  interest  rate of 7.23
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 June 30, 1997.

                                                    Outstanding Weighted Average
                                                      Balance    Interest Rate
                                                      -------    -------------
Fixed Rate Debt:
   Mortgage Debt
     Conventional ....................................$ 82,668       7.60%
     Mortgage Loan Certificates ...................... 130,563       8.05
   Unsecured 
     $75 million senior notes ........................  74,595       7.18
     $50 million senior notes ........................  49,615       7.36
                                                      --------       ----
         Total Fixed Rate Debt ....................... 337,441       7.63

Variable Rate Debt:
   Tax Exempt Bonds ..................................  64,000       5.40
   Revolving Credit Facility .........................  44,000       7.23
                                                      --------       ----
         Total Variable Rate Debt .................... 108,000       6.10
                                                      --------       ----
         Total Debt ..................................$445,441       7.28%
                                                      ========       ====

The Company had 6,140  unencumbered  apartment  units related to the  Stabilized
Communities  and 720  unencumbered  apartment  units related to the  Communities
Under Construction and in Lease-Up at June 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 20 of 25
<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.

                                         Three Months Ended  Six Months Ended
                                              June 30,          June 30,
                                         -------------------------------------
                                           1997      1996      1997      1996
                                         -------   -------   -------   -------
  Income before minority interest,
    gain on sale of real estate assets
    and extraordinary item               $ 4,647   $ 4,682   $ 9,009   $ 9,965
  Depreciation and amortization, net
      of corporate depreciation            6,386     4,831    12,498     9,562
  Amortization of executive deferred
      compensation expense                    30       180        60       350
                                         -------   -------   -------   -------
  Funds from Operations                  $11,063   $ 9,693   $21,567   $19,877
                                         =======   =======   =======   =======

Number of Common Shares and Units

The Company had 24,415,225 and 21,320,722  weighted average number of shares and
units at June 30, 1997 and 1996, respectively.

Capitalization of Fixed Assets and Community Improvements.

The Company has established a policy of capitalizing those expenditures relating
to acquiring new assets, materially enhancing the value of an existing asset, or
substantially  extending the useful life of an existing asset.  All expenditures
necessary to maintain a community in ordinary  operating  condition are expensed
as incurred.
                                  Page 21 of 25
<PAGE>
Acquisition of assets and community expenditures are as follows:
<TABLE>
<CAPTION>
                                        Three Months Ended June 30, Six Months Ended June 30,
                                             1997         1996         1997         1996
                                            -------      -------      -------      -------
<S>                                         <C>          <C>          <C>          <C>    
New community development                   $12,532      $15,895      $22,325      $46,171
Acquisitions                                   --         13,018       34,800       13,018
Nonrecurring capital expenditures:
  Vehicle access control gates                  412         --            725         --
  Computer upgrade                               81           23          152           51
Recurring capital expenditures:
  Community additions and
      improvements                            1,490          913        2,042        1,329
  Corporate additions and improvements           34         --             46         --
                                            -------      -------      -------      -------
                                            $14,549      $29,849      $60,090      $60,569
                                            =======      =======      =======      =======
</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                                                                                                            
-------                                                                                                            
The Isle at Arrowhead Ranch     Glendale      256       940     $   17           2:96         4:96           4:97    
The Retreat Phase I             Phoenix       240       973         14           1:97         3:97           2:98    
Vista Grove                     Mesa          224       911         14           1:97         3:97           2:98    
                                              ---               ------                                             
     Total                                    720               $   45                                               
                                              ===               ======                                               
</TABLE>                                                        

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

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


Acquisition Activity

The Company is actively pursuing and in preliminary  negotiations  regarding the
acquisition of additional properties in Riverside/San  Bernardino and San Diego,
California,  but no  assurance  can be given that it will  continue to pursue or
consummate any acquisitions as a result of these negotiations.
                                  Page 22 of 25
<PAGE>
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
mortgage  notes are secured by a first deed of trust on the two  properties  and
mature in November  1997.  The buyer may repay the two mortgage notes at anytime
without prepayment penalties.

Apartment Communities

The following  sets forth certain  information  regarding the current  apartment
communities  at June 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
Los Arboles                                        Chandler            232       Developed        1985
Miramonte                                         Scottsdale           151       Developed        1983
Morningside                                       Scottsdale           160        Acquired        1992
Mountain Park Ranch                                Phoenix             240       Developed        1995
Park Meadow                                        Gilbert             156        Acquired        1992
Preserve at Squaw Peak                             Phoenix             108        Acquired        1991
Promontory Pointe                                  Phoenix             304        Acquired        1988
Rancho Murietta                                     Tempe              292        Acquired        1995
Scottsdale Courtyards                             Scottsdale           274       Developed        1993
Scottsdale Meadows                                Scottsdale           168       Developed        1984
Shadow Brook                                       Phoenix             224        Acquired        1993
Shores at Andersen Springs                         Chandler            299       Developed      1989/1993
Silver Creek                                       Phoenix             174        Acquired        1991
Sonoran                                            Phoenix             429       Developed        1995
Sun Creek                                          Glendale            175        Acquired        1993
Superstition Vista                                   Mesa              316        Acquired        1995
The Enclave                                         Tempe              204       Developed        1995
The Heritage                                       Phoenix             204       Developed        1995
The Meadows                                          Mesa              306        Acquired        1987
The Palms                                          Phoenix             132       Developed        1990
Towne Square                                       Chandler            468        Acq/Dev       1992/1995
Villa Encanto                                      Phoenix             382       Developed        1983
Village at Lakewood                                Phoenix             240       Developed        1988
                                                                   --------
                                                                     8,254
   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                                               10,551
                                                                   ========
</TABLE>
                                  Page 23 of 25
<PAGE>
<TABLE>
<CAPTION>
                                                                                                  Year
                                                                                                Developed
                                                                  Number of      Developed/        or
             Apartment Communities                   City        Apartments       Acquired      Acquired
             ---------------------                   ----        ----------       --------      --------
<S>                                               <C>              <C>          <C>              <C> 
Communities Stabilized Less than Two Years
Arizona
-------
    Phoenix:
Country Brook Expansion Phase III                  Chandler            120       Developed       1995/96
Ingleside                                          Phoenix             120       Developed       1995/96
Ladera                                             Phoenix             248       Developed       1995/96
Mirador                                            Phoenix             316       Developed       1995/96
Park Meadow Expansion Phase II                     Gilbert              68       Developed       1995/96
Towne Square Expansion Phase III                   Chandler            116       Developed       1995/96
                                                                   --------
                                                                       988
Tucson:
The Legends                                         Tucson             312       Developed       1995/96
Orange Grove Expansion Phase II                     Tucson             144       Developed       1995/96
                                                                   --------
                                                                       456
                                                                   --------
     Total Communities Stabilized Less than Two Years                1,444
                                                                   ========

Developments and Lease-Up Properties
Arizona
-------
   Phoenix:
The Hawthorne (1)                                  Phoenix             276       Developed       1995/96
The Retreat Phase I                                Glendale            240       Developed       1996/97
Vista Grove                                          Mesa              224       Developed       1996/97
The Isle at Arrowhead Ranch (2)                    Glendale            256       Developed        1996
Promontory Pointe Expansion Phase II (1)           Phoenix             120       Developed       1995/96
                                                                   --------
                                                                     1,116
  Tucson:
Bear Canyon (3)                                     Tucson             238       Developed       1995/96
Harrison Park Expansion Phase II (3)                Tucson             188       Developed       1995/96
                                                                   --------
                                                                       426
                                                                   --------
    Total Developments and Lease-Up Properties                       1,542
                                                                   ========

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

Total                                                               15,443
                                                                   ========

Dispositions
Arizona
-------
Deer Creek Village                                 Phoenix           308          Acquired        1991
The Pines                                            Mesa            194          Acquired        1992
                                                                   --------
                                                                     502
                                                                   ========
</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
                                  Page 24 of 25
<PAGE>
PART II     OTHER INFORMATION

Item 4 - Submission of Matters to Vote by Security Holders.

On June 10,  1997 at the Annual  Meeting of  Stockholders,  two  directors  were
re-elected to the Board of Directors for a three year term to expire at the 2000
Annual Meeting of Stockholders. The stockholders voted to elect both nominees as
follows:

                                Total Votes for  Total Votes Against
                                 Each Director     Each Director       Abstained
                                 -------------     -------------       ---------
Richard G. Berry                  15,124,417           45,225          5,075,322
Gadi Kaufmann                     15,124,417           45,225          5,075,322

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

(b) No current  reports on Form 8-K were filed during the quarter ended June 30,
1997.


                                   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.



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




August 11, 1997                         /s/ Paul R. Fannin
-----------------------                 -----------------------------------
 (Date)                                 Paul R. Fannin,
                                        Senior Vice President and
                                        Chief Financial Officer
                                  Page 25 of 25