SECOND AMENDMENT TO CREDIT AGREEMENT


         THIS SECOND  AMENDMENT TO CREDIT  AGREEMENT (this  "Agreement") is made
and  entered  into as of the 21st day of August,  1998,  among  COLONIAL  REALTY
LIMITED PARTNERSHIP,  a Delaware limited partnership (the "Borrower"),  COLONIAL
PROPERTIES TRUST, an Alabama trust ("CPT"), COLONIAL PROPERTIES HOLDING COMPANY,
INC., an Alabama corporation  ("CPHC";  CPHC and CPT are collectively,  known as
the "Guarantors"),  SOUTHTRUST BANK,  NATIONAL  ASSOCIATION,  a national banking
association,  AMSOUTH BANK, a state banking corporation,  WACHOVIA BANK, N.A., a
national banking association,  FIRST NATIONAL BANK OF COMMERCE, N.A., a national
banking association,  WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking
association and PNC BANK, NATIONAL ASSOCIATION,  a national banking association,
successor by merger to PNC Bank, Ohio, National Association  (collectively,  the
"Banks").


                                R E C I T A L S:

         A. Borrower, Guarantors and Banks have entered into that certain Credit
Agreement  dated July 10, 1997,  as amended by that certain  Amendment to Credit
Agreement  dated  July  10,  1998  (as  so  amended,  the  "Credit  Agreement").
Capitalized  terms  used  herein  without  definition  shall  have the  meanings
ascribed to such terms in the Credit Agreement.

         B. Borrower,  Guarantors and Banks desire to amend the Credit Agreement
to add and amend certain definitions contained in the Credit Agreement.


                                    AGREEMENT

         NOW,  THEREFORE,  in consideration of the foregoing  recitals and other
good and valuable consideration, the parties hereto agree as follows:

         1. Article 1 of the Credit  Agreement is hereby amended by deleting the
definitions of "GAV" and "Stabilized Properties"and by inserting in lieu thereof
the following definitions:



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                                                         6
 557390.3
         "GAV"  shall mean the sum of (without  redundancy)  (i) EBITDA from all
Properties which have not been acquired within the applicable  reporting period,
capitalized  at the  appropriate  Capitalization  Rate,  (ii) pro rata  share of
EBITDA from Joint Ventures and  Unconsolidated  Subsidiaries which have not been
acquired within the applicable reporting period,  capitalized at the appropriate
Capitalization Rate, (iii) Corporate Recurring Income less corporate general and
administrative  expenses,  net of the  imputed  management  fee  included in the
definition of EBITDA, all capitalized at eighteen percent (18%), (iv) Gross Book
Value of Properties  acquired during the applicable  reporting  period,  (v) pro
rata share of Gross Book Value of  properties  acquired  by Joint  Ventures  and
Unconsolidated  Subsidiaries  during the  applicable  reporting  period and (vi)
recorded  value  of  land  and  remaining  tangible  assets,  as  determined  in
accordance with GAAP.

         "Stabilized  Properties" shall mean any Property which meets all of the
following  criteria:  (i) a  certificate  of  occupancy  has been issued for the
Property  and remains in full force and effect,  (ii) the  Property  has been at
least  eighty-five  percent (85%)  occupancy level if  multifamily,  retail,  or
office (based on actual  leasable  square  footage at the property) for the most
immediately  preceding three (3) consecutive  months based on leases wherein the
tenants are paying at least the average  monthly lease payments  required by the
terms of such  leases  and such  leases  are free from  default  by  either  the
landlord  or  tenant  thereunder,  and (iii)  there is no Lien on the  Property.
However,  if a  historically  Stabilized  Property  drops below the above listed
occupancy  threshold  level,  such  Property  may again become  classified  as a
Stabilized Property after attaining a ninety percent (90%) occupancy level for a
monthly  reporting  period if such  Property  attains such ninety  percent (90%)
occupancy  level  within  three  months  of  previously  being  classified  as a
Stabilized  Property.  Once a Property is reclassified as a Stabilized Property,
then such  Property  shall  remain  classified  as a  Stabilized  Property if it
satisfies items (i) and (iii) above and maintains at least  eighty-five  percent
(85%) occupancy level for each month thereafter.

         2. Article 1 of the Credit  Agreement  is hereby  amended by adding the
following definition:

         "Colonial  Investments" means any investment in any Person,  whether by
means of purchase or  acquisition  of  obligations or securities of such Person,
capital contribution to such Person, loan or advance to such Person or making of
a time deposit with such Person.

         "Joint  Venture(s)"  means any  investment  by any Credit  Parties in a
corporation,  limited liability company, limited liability partnership,  tenancy
in common, and other similar entities.

         3. Credit Agreement is hereby amended to add the following Article 6A:

         Article 6A.  Colonial Investments Covenant

         Colonial  Investments  shall not exceed  fifteen  percent  (15%) of GAV
("Investments  Covenant").  However,  if the Borrower receives a BBB/Baa3 rating
from a Qualified Rating Agency, then the Investments Covenant shall be increased
to twenty percent (20%).

         4. Article 7. Negative Covenants is hereby amended to add the following
sections to the Agreement:

         7.11.  Loans or Advances.  No Credit Party shall make loans or advances
         to any Person  without the prior written  consent of the Lenders except
         as permitted herein and except:



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(1)      loans or advance to employees and directors not exceeding  $16,000,000 
         in the aggregate  principal  amount outstanding at any time;

(2)      deposits required by government agencies or public utilities;

(3)      loans  or  advances  from the  Borrower  to any  Guarantor  or from any
         Guarantor to the Borrower or another Guarantor; and/or

(4)  other loans and  advances by any Credit  Party to any Person  which (x) are
     evidenced by notes (and, if requested by the Agent, acting at the direction
     of the  Required  Lenders,  with  such  notes,  together  with any  related
     mortgage, have been assigned to and pledged with the Agent, payment for the
     benefit of itself  and the  Lenders,  as  security  for the  payment of all
     obligations of any Credit Party to the Agent and the Lenders hereunder) and
     (y) are in any amount which,  together with Investments permitted by clause
     (vi) of Section  7.12, do not exceed  fifteen  percent (15%) of Gross Asset
     Value as of the end of the most  recent  Fiscal  Quarter.  However,  if the
     Borrower  receives a BBB/Baa 3 rating from a Qualified Rating Agency,  then
     the foregoing  percentage  shall be increased from fifteen percent (15%) to
     twenty percent (20%).

         7.12.  Investments.  No Credit  Party shall make  Colonial  Investments
         after the Closing  Date in any Person  except as  permitted  by Section
         7.11 and except Investments in:

(1)      direct obligations of the United States Government maturing within one 
         (1) year;

(2)      certificates  of deposit  issued by a  commercial  bank whose credit is
         satisfactory to the Agent;

(3)                        commercial  paper rated A1 or the equivalent  thereof
                           by S&P or P1 or the equivalent thereof by Moody's and
                           in either case maturing  withing six (6) months after
                           the date of acquisition;

(4)                        tender  bonds the  payment  of the  principal  of and
                           interest on which is fully  supported  by a letter of
                           credit issued by a United States bank whose long-term
                           certificates  of deposit are rated at least AA or the
                           equivalent  thereof  by S&P and Aa or the  equivalent
                           thereof by Moody's;

(5)                        Colonial Investments consisting of the acquisition of
                           all or  substantially  all of the  assets or stock or
                           another Person permitted by Section 7.2; and/or



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(6)                        other  Colonial  Investments  by Credit Parties in an
                           amount  which   together   with  loans  and  advances
                           permitted  by clause  (iv) of  Section  7.11,  do not
                           exceed fifteen  percent (15%) of Gross Asset Value as
                           of  the  end  of  the  most  recent  Fiscal  Quarter.
                           However,  if the Borrower receives a BBB/Baa 3 rating
                           from a Qualified  Rating  Agency,  then the foregoing
                           percentage  shall be increased  from fifteen  percent
                           (15%) to twenty percent (20%).

         5.  Borrowers  represent  and  warrant  that  all  representations  and
warranties set forth in Article 5 of the Credit  Agreement,  as amended  hereby,
are  true  and  correct  on the  date  hereof,  and  that,  to the best of their
knowledge, no Default or Event of Default has occurred or exists.

         6. No right of any Bank with  respect to the Loan  Documents is or will
be in  any  manner  released,  destroyed,  diminished,  or  otherwise  adversely
affected by this Agreement.

         7. All references in the Loan Documents to the Credit  Agreement  shall
be deemed to refer,  from and after the date hereof,  to the Credit Agreement as
amended hereby, and as the same may hereafter be modified or amended.

         8.  Except  as  hereby  expressly  modified  and  amended,  the  Credit
Agreement shall remain in full force and effect,  and the Credit  Agreement,  as
amended,  is hereby  ratified and affirmed in all  respects.  Borrowers  confirm
that,  to the best of their  knowledge,  they have no defenses  or setoffs  with
respect  to their  obligations  pursuant  to the  Credit  Agreement,  as amended
hereby.

         9. This Agreement shall inure to the benefit of and be binding upon the
parties hereto, and their respective successors and assigns.

         10. This Agreement may be executed in any number of counterparts,  each
of which shall be deemed an  original,  but all of which,  when taken  together,
shall constitute one and the same instrument.



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         11. TO THE EXTENT PERMITTED BY APPLICABLE LAW,  BORROWER AND GUARANTORS
HEREBY  WAIVE  ANY  RIGHT  ANY OF THEM MAY  HAVE TO TRIAL BY JURY ON ANY  CLAIM,
COUNTERCLAIM, SETOFF, DEMAND, ACTION OR CAUSE OF ACTION (I) ARISING OUT OF OR IN
ANY WAY PERTAINING OR RELATING TO THIS AGREEMENT OR THE LOAN DOCUMENTS,  OR (II)
IN ANY WAY  CONNECTED  WITH OR  PERTAINING  OR RELATED TO OR  INCIDENTAL  TO ANY
DEALINGS  OF THE  PARTIES  HERETO  WITH  RESPECT TO THIS  AGREEMENT  OR THE LOAN
DOCUMENTS OR IN CONNECTION WITH THE TRANSACTIONS RELATED THERETO OR CONTEMPLATED
THEREBY OR THE EXERCISE OF EITHER PARTY'S RIGHTS AND REMEDIES THEREUNDER, IN ALL
OF THE FOREGOING  CASES WHETHER NOW EXISTING OR HEREAFTER  ARISING,  AND WHETHER
SOUNDING IN CONTRACT,  TORT OR  OTHERWISE.  BORROWER AND  GUARANTORS  AGREE THAT
LENDERS MAY FILE A COPY OF THIS WAIVER WITH ANY COURT AS WRITTEN EVIDENCE OF THE
KNOWING,   VOLUNTARY  AND  BARGAINED   AGREEMENT  OF  BORROWER  AND   GUARANTORS
IRREVOCABLY  TO WAIVE  THEIR  RIGHT TO TRIAL BY JURY,  AND THAT,  TO THE  EXTENT
PERMITTED BY  APPLICABLE  LAW,  ANY DISPUTE OR  CONTROVERSY  WHATSOEVER  BETWEEN
BORROWER, GUARANTORS, AND LENDERS SHALL INSTEAD BE TRIED IN A COURT OF COMPETENT
JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
properly  executed  and  delivered  to be effective as of the day and year first
above written.

BORROWER:

COLONIAL REALTY LIMITED PARTNERSHIP, a Delaware limited partnership

BY: COLONIAL PROPERTIES HOLDING COMPANY, INC., an Alabama
corporation,
Its General partner

By: /s/ Howard B. Nelson Jr.
Its: Chief Financial Officer


GUARANTORS:

COLONIAL PROPERTIES TRUST,
an Alabama trust

By: /s/ Howard B. Nelson Jr.
Its: Chief Financial Officer


COLONIAL PROPERTIES HOLDING COMPANY, INC., an Alabama corporation

By: /s/ Howard B. Nelson Jr.
Its: Chief Financial Officer


(Signatures Continue)


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Signature Page to Colonial Realty
Limited Partnership Credit Agreement

LENDERS:

SOUTHTRUST BANK, NATIONAL ASSOCIATION,
a national banking association

By: /s/ Curtis J. Perry
Curtis J. Perry
Its Group Vice President


AMSOUTH BANK,
a state banking corporation

By:
Its


WELLS FARGO BANK, NATIONAL ASSOCIATION,
a national banking association

By:
Its


WACHOVIA BANK, N.A., a national banking association

By:
Its



(Signatures Continue)


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Signature Page to Colonial Realty
Limited Partnership Credit Agreement

PNC BANK, NATIONAL ASSOCIATION,
a national banking association,
successor by merger to PNC Bank, Ohio, National Association

By:
Its


FIRST NATIONAL BANK OF COMMERCE, N.A.,
a national banking association


By:
Its


AGENT:

SOUTHTRUST BANK, NATIONAL ASSOCIATION,
a national banking association


By: /s/ Curtis J. Perry
Curtis J. Perry
Its Group Vice President