SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549
                              _________________
                                 FORM 10-K/A
                               AMENDMENT NO. 1
                              _________________

   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                                  ACT OF 1934

                           For the fiscal year ended

                               DECEMBER 31, 1997

                       Commission file number: 001-11081
                              ________________

                    MERRY LAND & INVESTMENT COMPANY, INC.
                                 P.O. Box 1417
                            Augusta, Georgia 30903
                                 706-722-6756
State of Incorporation: Georgia        I.R.S. Employer Identification Number:
                                                                   58-0961876

Securities registered  pursuant  to  Section  12(b)  of  the  Act: Name of Each
Exchange
            TITLE OF EACH CLASS                         ON WHICH REGISTERED

Common Stock, no par value                           New York Stock Exchange
       $1.75  Series  A  Cumulative Convertible Preferred Stock New York  Stock
       Exchange
       $2.15 Series C Cumulative  Convertible  Preferred  Stock  New York Stock 
       Exchange
       7.625%  Series  E  Cumulative Redeemable Preferred Stock New York  Stock
       Exchange

Securities registered pursuant to Section 12(g) of the Act: None

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  twelve  months,  and  (2)  has  been subject to such
filing requirements for the past ninety days:  Yes  X   No

Indicate by check mark if disclosure of delinquent filers pursuant  to Item 405
of  Regulation S-K is not contained herein, and will not be contained,  to  the
best  of  registrant's knowledge, in definitive proxy or information statements
incorporated  by  reference  in  Part III of this Form 10-K or any amendment to
this Form 10-K.

The aggregate market value of the  voting  stock  held by non affiliates of the
registrant on January 30, 1998: Common Stock, no par  value--$819,689,731  (all
shares  other  than  those  owned  or controlled by officers, directors, and 5%
shareholders).

The number of shares of common stock  outstanding  as  of  January 31, 1998 was
39,506,587.

Documents incorporated by reference: The 1998 definitive proxy  statement to be
mailed to shareholders for the annual meeting scheduled for April  20, 1998, is
incorporated by reference into Part III of this form 10-K.

<PAGE>

                              TABLE OF CONTENTS

                                                             PAGE
PART I                                                       ----

Item 1 Business                                                 1

Item 2 Properties                                               9

Item 3 Legal Proceedings                                       15

Item 4 Submission of Matters to a Vote of Security Holders     15


PART II

Item  5  Market  for  the Registrant's Common Stock and Related Shareholders'
Matters                                                         16

Item 6 Selected Financial Data                                  20

Item  7 Management's Discussion  and  Analysis  of  Financial  Condition  and
Results of Operations                                           21

Item 8 Financial Statements and Supplementary Data              30

Item  9  Changes  in  and  Disagreements  with  Accountants on Accounting and
Financial Disclosure                                            41


PART III

Item 10 Directors and Executive Officers of the Registrant      41

Item 11 Executive Compensation                                  41

Item 12 Security Ownership of Certain Beneficial Owners 
and Management                                                  41

Item 13 Certain Relationships and Related Transactions          41


PART IV

Item 14 Exhibits, Financial Statement Schedules, and Reports on Form 8-K 42

<PAGE>

PART I

Item 1--Business

                                 THE COMPANY

   Merry  Land  &  Investment Company, Inc. is an apartment operating company
and is one of the largest  owners  of upscale garden apartments in the United
States. At December 31, 1997, the Company  had  a total market capitalization
of  $1.8  billion  and  owned  a  high  quality portfolio  of  104  apartment
communities,  containing 29,526 units geographically  diversified  throughout
the Southern United  States.  The  communities  are  located  in nine states,
extending from the Washington, D.C. area to Texas and to Florida, with 32% of
the  Company's  assets  located  in Florida, 25% in Texas, and 43%  in  other
Southern  states,  based  on  cost. The  Company  also  has  seven  apartment
communities under development and construction. The Company believes that its
strong  capitalization,  cost  efficient  operations  and  established  brand
identity  give  it  significant operating  advantages  over  other  apartment
operators. Merry Land  completed  its  initial  public securities offering in
1981 and elected real estate investment trust ("REIT")  tax  status  in 1987.
The   Company  is  headquartered  in  Augusta,  Georgia  and  maintains  area
management offices in Charlotte, Atlanta, Orlando and Dallas.

   Merry  Land's  apartment  communities  are located in 27 metropolitan areas,
each with a population in excess of 250,000  and,  at  December  31,  1997,  no
metropolitan  area  contained  more  than  14%  of the Company's portfolio. The
Company  believes  that  this diversification reduces  the  volatility  of  its
aggregate rental occupancy  and  rental  income. The Company also believes that
specializing  in  high end Southern apartment  communities  will  allow  it  to
establish a recognized  franchise  in  its  market  area  and  will allow it to
achieve economies in marketing and operating its communities.

   The following table summarizes the Company's apartment holdings  by  major
market as of December 31, 1997 (dollars in millions):
                                              
<TABLE>
<CAPTION>                                                      
                                                             INVESTMENT                                                 
MARKET                                              UNITS      AT COST    % OF COST
<S>                                                 <C>       <C>            <C>          
Dallas/Ft. Worth, Texas                             3,208    $  209.3        14%
Atlanta, Georgia                                    4,235       208.6         14
Orlando, Florida                                    2,404       119.0          8
Charlotte, North Carolina                           2,459       113.6          8
Jacksonville, Florida                               2,550       107.1          7
Houston, Texas                                      1,457        87.4          6
Austin, Texas                                       1,249        80.4          5
Ft. Lauderdale, Florida                             1,144        72.5          5
Tampa, Florida                                      1,449        70.6          5
Ft. Myers, Florida                                  1,268        59.2          4
Savannah, Georgia                                   1,149        55.2          4
Raleigh, North Carolina                             1,256        48.8          3
Nashville, Tennessee                                  587        35.5          2
Charleston, South Carolina                            880        34.2          2
Others                                              4,231       194.7         12
                                                   ------    --------       ----
                                                   29,526    $1,496.1       100%

</TABLE>
<PAGE>

CORPORATE STRATEGY

     The  Company's  objective  is  to  increase  operating  cash  flow  and
 shareholder value by generating superior growth in the net operating income
 of  its  communities,  by acquiring or developing selected communities with
 satisfactory initial yields  and  the  prospects  for  continued  cash flow
 growth,  and  by  financing its activities at the lowest possible cost.  In
 order to accomplish  these  objectives,  the  Company  intends  to  own and
 operate  a  significant number of communities in most major markets of  the
 Southern United States, to build further on its recognized reputation among
 apartment renters  in  this  region  for high quality communities and first
 class service, and to continue to develop superior techniques for operating
 a growing system of communities. The Company  expects  eventually to extend
 its operations to other high growth areas of the country.

  OPERATING.  The execution of this strategy provides significant  marketing
 advantages  and  operating efficiencies to Merry Land. The Company believes
 that operating a system  of  communities  which  are  of  consistently high
 quality  allows  it  to  conduct  a focused marketing effort, provide  high
 levels of customer service, maintain  consistent  policies,  procedures and
 training, and offer programs and amenities tailored to the needs of upscale
 residents.  The  Company  believes  that significant incremental demand  is
 generated by its brand identity and by  the  referral of prospects from one
 Merry  Land  community  to  another. At present, approximately  5%  of  the
 Company's new leases are provided  by  the transfer of residents from other
 Merry Land communities or the referral of  customers  from other Merry Land
 communities.  The  Company  also  believes  that its high income  residents
 provide a large customer base to which it can  market  additional goods and
 services and generate additional income.

     GROWTH.  Merry Land seeks to increase its apartment holdings  both for the
 increase  in  earnings  expected  from  each  transaction  as well as to build
 further on the marketing and operating advantages provided by  its  system  of
 Southern  apartments.  The  Company adds to its holdings by a variety of means
 including  buying existing apartment  communities,  buying  communities  under
 construction  and  in  the  initial  lease-up  stage  (primarily from merchant
 builders) and developing communities from the ground up.

     Merry Land has bought over $1.0 billion of apartment communities in the
 past five years. The Company believes that the long term  growth  prospects
 of  the  South remain the strongest in the country. Furthermore, the  large
 number of  newly  built  communities  currently  available  for sale in its
 market  areas  provide  excellent  prospects  for the Company's acquisition
 program. The Company buys both single assets and  portfolios  after careful
 evaluation  of  each  community's  location,  physical attributes, and  the
 conditions of supply and demand in its submarket.

     While  the Company believes rapid growth through  acquisitions  remains
 the  preferable   way  to  expand  its  holdings,  it  also  believes  that
 development is becoming  an  increasingly important component of its growth
 strategy. The Company currently  uses the services of outside developers to
 build apartment communities in selected  markets.  The  cost of development
 units delivered by the Company was $28.4 million in 1996,  $67.1 million in
 1997  and  is  expected  to  be $101.1 million in 1998. The use of  outside
 developers has allowed the Company to undertake a large development program
 in multiple markets while retaining  the  flexibility to expand or contract
 this  program  as conditions warrant. The Company  expects  to  expand  its
 internal development capability over the next several years.

     The Company  also intends to dispose of assets which do not conform to its
 strategy and to reinvest those proceeds in conforming communities. In the past
 two years the Company  has  sold  two apartment communities in Ohio as well as
 older properties in Augusta. In 1998,  it  intends  to  redevelop  or  sell  a
 limited number of communities whose cash flow growth prospects do not meet the
 Company's  targets. Dispositions in 1998 are expected to total less than 5% of
 assets.

     The following  table  summarizes  the  Company's growth in recent years
 (dollars in thousands):

<TABLE>
<CAPTION>
                                        1997        1996         1995       1994       1993
                                        ----        ----         ----       ----       ----
<S>                                     <C>        <C>          <C>        <C>        <C>
 Units acquired                        4,104       2,475        3,444      4,872      7,452
 Units developed                         936         414           --         --         --
 Total units owned at end 
 of period                            29,526      24,936       22,296     18,852     13,981
 Total cost of apartments         $1,496,109  $1,175,427   $1,009,056   $796,436   $554,589
 Total apartment rental income    $  208,363  $  176,053   $  144,283   $101,667   $ 54,565

</TABLE>
  PROPERTY MANAGEMENT.  The apartment community  is Merry Land's basic business
 unit. Each community is led by a Property Manager whose staff receives ongoing
 training  in  the  disciplines  of  leasing, administration,  maintenance  and
 marketing. The objective of the on site  staff  is  to maximize growth in cash
 flow by providing superior customer service, maximum  revenue growth, and cost
 effective maintenance. In order to tie employee compensation  to the interests
 of  the  Company's  shareholders,  a  significant  part of on site personnel's
 compensation  consists of cash bonuses paid for achievement  of  budgeted  net
 cash flow.

     The Company believes that its large size provides it superior buying power
 which allows it  to  obtain  goods  and  services  for  lower costs than would
 otherwise  be available. The Company has dedicated personnel  who  concentrate
 their efforts on exploiting this advantage. Large size also allows the Company
 to hire and  train  well  qualified  individuals  who  specialize  in  various
 disciplines,  providing  the  Company  greater  competence in these areas than
 would be available in a smaller organization.

     The  Company  believes  that  the  control  of  operating  expenses  is
 essential to the production of superior operating returns. Its focus on the
 acquisition  of  newly  built  communities  and controlling  expenses  have
 allowed it to reduce its same store operating  ratio  (operating costs as a
 percent of revenue) from 39.0% in 1994, 38.9% in 1995,  38.0%  in  1996  to
 37.5% in 1997.

   FINANCING.   The Company maintains a capital structure which affords both
 financial flexibility and access to low cost capital. At December 31, 1997,
 equity market capitalization  was  $1.2  billion,  total capitalization was
 $1.8  billion  and  debt equaled 34% of total capitalization.  The  Company
 prefers to finance its  acquisitions  using  unsecured debt but on occasion
 assumes  mortgage  debt  in  order  to  acquire  apartment  communities  or
 portfolios.  At  December  31, 1997, seven of the Company's  104  apartment
 communities were encumbered  with  mortgages.  The average interest rate on
 outstanding  debt  at  that  date  was  7.0%.  The  Company  has  scheduled
 maturities of its debt in order to allow orderly repayment  or refinancing.
 Its securities carry investment grade ratings.

 1997 ACTIVITIES

   ORGANIZATIONAL  CHANGES.  In December, 1996, Peter S. Knox III,  Chairman
 and Chief Executive Officer of Merry Land since its inception in 1981, died
 after an illness of  several  months.  W. Tennent Houston, President of the
 Company  and  Chief  Operating  Officer since  1985,  was  appointed  Chief
 Executive Officer; Michael N. Thompson,  Vice President of Acquisitions and
 Development since 1992, was appointed Chief Operating Officer; and Boone A.
 Knox, Mr. Knox's brother, was elected Chairman  of  the Board of Directors.
 Boone  Knox  was Chief Executive Officer of Allied Bankshares,  a  publicly
 owned bank holding  company,  and  is  a  director  of  Cousins  Properties
 Incorporated,  a  diversified  REIT.  Mr.  Knox's  family  is  the  largest
 shareholder  of  the  Company.  During 1997, the Company's organization was
 restructured along functional lines,  area  management offices were opened,
 additional personnel were added in various areas,  and the Company invested
 in equipment and systems to enable it to compete more  effectively  in  the
 rapidly maturing apartment industry.

   OPERATING  RESULTS.   In  1997, the Company more aggressively managed its
 rent rates and rental concessions  in order to operate at a higher level of
 occupancy  and  to  increase  rental  income.  Positions  in  its  property
 management  organization  were  added  to provide  better  support  of  its
 communities. As a result of those measures and improving conditions in some
 southern markets, same store net operating  income  rose 4.2% for the year.
 Same store occupancy (consisting of apartment communities  owned for all of
 1996  and  1997)  rose  1.1%  for  the year to 94.8% and same store  rental
 revenues rose 3.3%. The Company focused  on  expense  control  and began to
 pass a significant portion of water costs on to its residents which  helped
 hold the increase in same store operating expense to 1.8%.

   SALE  OF MARKETABLE SECURITIES.  In order to fund the future expenditures
 required  by  its development program, the Company had raised funds through
 sales of securities  in  1995  and  1996  and had invested a portion of the
 proceeds in the securities of other REITs.  Marketable  securities  totaled
 $23.8 million at December 31, 1996. Income produced by these holdings added
 $5.0 million of funds from operations ("FFO") in 1997 ($.10 per share), and
 $6.0 million in 1996 ($.13 per share). During the first half of 1997, these
 holdings  were  liquidated  and  the  proceeds  were  invested in apartment
 acquisitions and development.

   ACQUISITIONS.   In  1997,  the Company acquired 14 apartment  communities
 containing 4,104 units at a cost  of  $257.9  million.  These  high quality
 communities had an average age of two years and average rents of  $820  per
 month.  They averaged 93% occupancy at closing. During the year the Company
 made its  first  investments in Houston and eventually added 1,457 units in
 that  city at a cost  of  $86  million.  The  following  is  a  listing  of
 communities acquired in 1997 (dollars in thousands):

<TABLE>
<CAPTION>

COMMUNITY                    LOCATION          UNITS         BUILT            COST
                             --------          -----         -----            ----
<S>                           <C>               <C>            <C>            <C>
Trails at Briar Forest    Houston, Texas        476           1990           $22,150
La Tour Fontaine          Houston, Texas        162           1994            15,250
Parc Royale               Houston, Texas        171           1994            12,750
Richmond Townhomes        Houston, Texas        188           1995            12,700
Palms at South Shore      Houston, Texas        240           1990            12,210
Ranchstone                Houston, Texas        220           1996            11,250
Wimberly              Dallas/Ft. Worth, Texas   372           1996            26,500
Coventry at City View Dallas/Ft. Worth, Texas   360           1996            22,140
Riverhill             Dallas/Ft. Worth, Texas   334           1996            22,000
Hidden Lakes          Dallas/Ft. Worth, Texas   312           1997            20,000
The Point           Charlotte, North Carolina   340           1996            21,300
The Oaks            Charlotte, North Carolina   318           1996            20,250
Chatelaine Park          Atlanta, Georgia       303           1996            23,413
Polos East               Orlando, Florida       308           1991            16,000
                                               ----                          -------                                      
                                              4,104                         $257,913

</TABLE>
  DEVELOPMENT.   In  1997, the Company completed the construction of Adams Farm
 II,  a  200  unit expansion  in  Greensboro,  continued  construction  on  its
 development communities  in  Atlanta and Savannah, and started construction on
 four other communities in Atlanta,  Richmond  and  Greensboro.  For  the year,
 construction  expenditures  for these seven communities totaled $57.1 million,
 and 936 units at a total cost  of  $67.1  million were completed and placed in
 service. This included all 200 units at Madison  at  Adams Farm in Greensboro,
 452 units at Madison at River Sound in Atlanta, and 284  units  at Hammocks at
 Long Point in Savannah. The Company expects to deliver the following  units in
 1998 (dollars in thousands):
<TABLE>
<CAPTION>
                                                                    Expected         Cost of
                                                       Units        Delivery        Delivered
 Community                    Location                Planned       in 1998           Units
 ---------                    --------                -------       -------          -------
 <S>                           <C>                      <C>          <C>                <C>
 Hammocks at Long Point     Savannah, Georgia           308           24            $ 1,914
 Carriage Homes at Wyndham  Richmond, Virginia          264          264             26,071
 Madison at Bridford Lake  Greensboro, North Carolina   320          320             24,791
 Madison at Satellite Place  Atlanta, Georgia           424          308             25,715
 Cherry Creek III           Nashville, Tennessee        220          160             12,186
 Spring Oak                 Richmond, Virginia          506          132             10,467
                                                        ---          ---            -------
                                                      2,042        1,208           $101,144

</TABLE>
   SALE  OF  NON-CONFORMING  ASSETS.  In April, 1997, the Company sold Saw Mill
 Village in Columbus, Ohio for  $19.6  million,  recognizing  a  gain  of  $0.5
 million.  Saw  Mill  Village was acquired in 1994 as part of a twelve property
 portfolio transaction but did not conform to Merry Land's strategy of building
 a Southern apartment franchise.  The  Company  also  disposed of several small
 commercial and residential properties located in Augusta  which  were acquired
 early in the 1980s. The cost of these assets was $3.4 million, and  a net loss
 of $0.4 million was recognized on the sales.

   FINANCING  ACTIVITY.   On  July  28, 1997, the Company completed a public
 offering of $50.0 million of senior  unsecured  notes  to  yield  6.941% to
 maturity.  The  notes bear an interest rate of 6.90%, with interest payable
 semi-annually in  February  and  August,  and  with principal due August 1,
 2007.

     On October 30, 1997, the Company completed a  public  offering of $50.0
 million  of  senior unsecured notes to yield 6.69% to maturity.  The  notes
 bear an interest  rate  of  6.69%,  with  interest payable semi-annually in
 May and November, and with principal due October 30, 2006.

     The  notes  issued  in  1997  are  rated  BBB+  by  Standard  &  Poor's
 Corporation  and  Duff  &  Phelps Credit Rating Co.  and  Baa2  by  Moody's
 Investors  Services,  Inc.  and  rank  equally  with  the  Company's  other
 unsecured and unsubordinated indebtedness.

     On September 16, 1997, the  Company  obtained  a $200.0 million syndicated
 revolving  credit facility from a group of banks. Borrowings  under  the  line
 bear interest  at  0.60%  above the thirty day London Interbank Offered Rates.
 The credit facility also includes  a  $100.0  million  competitive  bid option
 which  allows  the  Company to solicit bids from participating banks at  rates
 below the contractual  rate. The facility is for a three year term followed by
 a two year amortization  for a total term of five years with an annual renewal
 option.

 RECENT DEVELOPMENTS

  ACQUISITION OF COMMUNITIES  FROM  TRAMMELL  CROW RESIDENTIAL.  On February
 23,  1998  Merry  Land  entered  into  a definitive  agreement  to  acquire
 13 Florida apartment communities containing 3,994 units (the "Trammell Crow
 Residential  Portfolio")  from  Trammell  Crow   Residential,   a  national
 apartment  development  and  management  company,  and its affiliates.  The
 acquisition  is expected to close late in the first quarter  of  1998.  The
 sellers  will  receive   consideration  of  approximately  $248.0  million,
 including  partnership units  in  Merry  Land's  newly  created  subsidiary
 DownREIT partnership, cash and the assumption of debt.

     The communities  to  be acquired include eleven stabilized properties, one
 in  lease up and one under  construction.  Four  communities  are  located  in
 Orlando,  four  in  Tampa,  three in Jacksonville and one each in Sarasota and
 Daytona. This high quality portfolio  averages  seven years of age, 941 square
 feet per unit and $717 monthly rent, and was 94%  occupied  as of December 31,
 1997. These characteristics are very similar to those of Merry Land's existing
 Florida holdings. These communities have approximately 100 on-site  employees.
 Merry Land expects to employ substantially all of the staff at the communities
 and   a   number   of  additional  management  personnel  from  Trammell  Crow
 Residential.

     The following is a detailed listing of the communities to be acquired:

                                            
<TABLE>
<CAPTION>
                                                YEAR                    SQ. FT.                      12/31/97  
 COMMUNITY                 LOCATION            BUILT       UNITS       PER UNIT     AVG. RENT         OCCUP.
 ---------                 --------            -----       -----       --------     ---------        --------
 <S>                         <C>               <C>         <C>            <C>         <C>              <C>
 Wood Forest             Daytona Beach         1985        144            822       $  568             93%
 Oaks at Baymeadows      Jacksonville          1985        248            995          637             88
 Oaks at Regency         Jacksonville          1985        159            844          562             86
 Oaks at Orange Park     Jacksonville          1986        280            845          603             92
 Vinings at Lake            
 Buena Vista               Orlando             1988        400            927          696             97
 Chicasaw Crossing         Orlando             1986        292            850          613             95
 Vinings Club at Metrowest Orlando             1997        411          1,182        1,005            (1)
 Vinings at Lenox Place    Orlando             1998        456          1,011          851            (2)
 Beneva Place             Sarasota             1986        192            882          683             96
 Vinings Club at Boot 
 Ranch                      Tampa              1996        432            956          773             94
 Vinings at Carrollwood 
 Place                      Tampa              1995        432            970          738             93
 Forest Place               Tampa              1985        244            813          577             97
 Horizon Place              Tampa              1985        304            841          605             97
                                               ----        ---            ---        -----            ---   
 Weighted Average or Total                     1990      3,994            941       $  717            94%

 ----------
 (1) Under lease-up at December 31, 1997.
 (2) Under construction at December 31, 1997.

</TABLE>

     The Company believes  that  this transaction will be a significant step in
 its strategy to become recognized  by  renters  throughout  the  South  as the
 region's   leading   provider  of  high-quality  apartment  homes.  With  this
 transaction, Merry Land  will  assume  a  major position in the Florida luxury
 apartment  market  with  14,256 high quality units  in  that  state  and  with
 particularly strong concentrations  in  Orlando,  Tampa  and Jacksonville. The
 Company  expects  this transaction will help it to further capitalize  on  its
 significant marketing  advantages  and  operating  efficiencies  in the state.
 Merry Land has substantial infrastructure in place in Florida and  expects  to
 quickly   integrate  the  new  communities  into  its  Orlando  based  Florida
 Management Area.

     The  acquisition   will   bring  Merry  Land's  investment  in  Florida
 apartments to $746 million, an  increase  of  50%, and will represent a 17%
 increase  in the Company's total investment in apartments  based  on  total
 cost. Following  the  transaction,  Merry  Land's  Florida communities will
 represent  about  43%  of  the  Company's  total apartments  at  cost.  The
 following table includes Merry Land's apartment  holdings  at  December 31,
 1997 and the Trammell Crow Residential Portfolio:

                                                                           
<TABLE>
<CAPTION>
                                                                                   % of
                              TCR       Merry Land    Total    Investment      Investment
 City                        Units        Units       Units      at Cost          at Cost
 ----                        -----      ----------    -----    ----------      ----------                            
                                                               (millions)
 <S>                          <C>          <C>         <C>        <C>              <C>              
 Orlando                     1,559        2,404       3,963    $  235.0            13.5%
 Tampa                       1,412        1,449       2,861       164.2             9.4
 Jacksonville                  687        2,550       3,237       140.0             8.0
 Ft. Lauderdale                 --        1,144       1,144        72.5             4.2
 Ft. Myers                      --        1,268       1,268        59.2             3.4
 Other Florida                 336        1,447       1,783        75.3             4.3
                             -----       ------      ------       -----            ----
      Total Florida          3,994       10,262      14,256       746.2            42.8

 Dallas/Ft. Worth               --        3,208       3,208       209.3            12.0
 Atlanta                        --        4,235       4,235       208.6            12.0
 Charlotte                      --        2,459       2,459       113.6             6.5
 Houston                        --        1,457       1,457        87.4             5.0
 Austin                         --        1,249       1,249        80.4             4.6
 Other Markets                  --        6,656       6,656       298.6            17.1
                             -----       ------      ------       -----            ----    
      Total Portfolio        3,994       29,526      33,520    $1,744.1           100.0%


</TABLE>
     To fund the acquisition Merry Land will assume $113.5 million  of debt,
 including  $96.7  million of tax exempt debt bearing interest at an average
 rate of approximately  5.0%.  Merry  Land  also  has  formed  a  subsidiary
 DownREIT partnership which will issue operating partnership units  with  an
 aggregate  value  of  approximately $20.0 million to the sellers. The units
 will be redeemable for  cash  or,  at  the Company's option shares of Merry
 Land common stock on a one for one basis, beginning one year after closing.
 The Company will file a registration statement allowing the units exchanged
 for common stock to be publicly traded.  The  balance of the purchase price
 of  approximately  $115.0  million  will be paid in  cash.  The  definitive
 agreement with Trammell Crow Residential  contains  customary conditions of
 sale and there can be no assurance the transaction will close.

  SALE OF PREFERRED STOCK.  In an offering completed on  February  13, 1998,
 the  Company  issued  4.0  million shares of Series E Cumulative Redeemable
 Preferred Stock at $25.00 per share for net proceeds of $96.7 million. This
 issue bears a dividend rate of 7.625%. The Company used the net proceeds to
 pay down its line of credit  and  to  provide  funds to acquire and develop
 additional apartment communities. The Series E Preferred Stock is rated BBB
 by Standard & Poor's Corporation and Duff & Phelps  Credit  Rating  Co. and
 Baa3  by  Moody's  Investors  Services,  Inc.  and  ranks  equally with the
 Company's other series of preferred stock.

 ORGANIZATION

      Merry  Land  is  an  operating company which maintains a centralized  and
 functionally organized management  structure,  conducting  all  its  corporate
 level  activities  (including accounting, finance, general property management
 and acquisitions and  development)  from  its  offices in Augusta. The Company
 does not provide any services to third parties.

     The Company manages its properties under the  trade  name  "Merry  Land
 Apartment  Communities"  and  in  1998  has  begun  to identify each of its
 communities  with  the  trade  name "Merritt" followed by  the  community's
 specific name in order to further establish brand identity.

     Each  apartment community functions  as  an  individual  business  unit
 according to  well  developed  policies  and  procedures. Each community is
 operated  by  an  onsite  Property Manager and staff  who  are  extensively
 trained by the Company in sales,  management,  accounting,  maintenance and
 other  disciplines.  Property  Managers  report  to  14  Regional  Property
 Managers  who  report  to  four  Area  Property Managers. Regional Property
 Managers are located in Raleigh, Charlotte  (2),  Atlanta  (2), Charleston,
 Jacksonville,  Orlando,  Tampa,  Ft.  Lauderdale,  Dallas (2), Houston  and
 Austin. Area Property Managers are located in Charlotte,  Atlanta, Orlando,
 and  Dallas  and  are  supported  by  training,  marketing  and maintenance
 specialists.

      At December 31, 1997, the Company had a total of 905 employees.  Of  this
 number  820  work at its apartment communities, 48 are employed in accounting,
 administrative   and  general  management,  25  in  corporate  level  property
 management and 12  in  acquisitions  and development. A significant portion of
 the compensation of on site personnel is tied to achievement of community cash
 flow  targets.  All  employees  have the opportunity to  become  shareholders
 through  the  Company's  Employee  Stock   Ownership  Plan.  Management  level
 personnel participate in the Company's stock  option and stock purchase plans,
 further aligning their interests with those of the Company's shareholders.

 MARKETS

     The Company believes that a generally favorable  long term relationship
 between  aggregate supply and demand exists for apartment  rentals  in  its
 Southern markets.  The  Company's  nine  state  market area has experienced
 growth in households, a key determinant of apartment  demand,  in excess of
 national  averages  during  the  1980s and 1990s. Demographic data for  the
 Company's markets indicate that from 1990 to 1997 total households in these
 markets increased 13.0% versus an  increase  of  7.4% nationally. Data also
 indicates that in the next five years, total households  in  these  markets
 will increase 8.4% versus an increase of 4.5% nationally.

      Apartment starts in the nine states which the Company considers to be its
 current market area have risen in recent years from 50,000 in 1992 to  124,000
 in  1996.  In  1997, this increased supply led to softness in certain markets,
 but the Company  believes  supply  and demand, in the South as a whole, are in
 equilibrium. The Company's overall occupancy at communities it held for all of
 1996 and 1997 averaged 94.8% for 1997 versus 93.7% for 1996.

 HISTORY

     Merry Land conducted its initial  public  stock  offering in 1981 after
 having been spun off earlier that year from Merry Companies,  Inc.,  one of
 the  Nation's  largest brick manufacturers, in connection with the latter's
 acquisition by an  Australian  company. Merry Land had been incorporated in
 1966  and  had  remained  a  passive  asset  holding  subsidiary  of  Merry
 Companies, Inc. until the 1981  spin-off,  when active operations began. At
 that time, the Company's major asset was 4,700  acres of clay land, most of
 which it still owns and from which it continues to  receive  clay  and sand
 royalties.  The  Company  bought  its first apartments in 1982 and has been
 actively involved in the acquisition  and  management  of  apartments since
 that  date.  The  Company  is  a Georgia corporation. It has its  principal
 office at 624 Ellis Street, Augusta, Georgia 30901 and its telephone number
 is (706) 722-6756.

 FORWARD LOOKING STATEMENTS

     This filing includes statements  that  are "forward looking statements"
 regarding  expectations  with  respect  to market  conditions,  development
 projects, acquisitions, occupancy rates,  capital  requirements, sources of
 funds,  expense  levels,  operating  performance and other  matters.  These
 assumptions and statements are subject  to  various  factors, unknown risks
 and  uncertainties,  including  general economic conditions,  local  market
 factors, delays and cost overruns  in  construction, completion and rent up
 of  development communities, performance  of  consultants  or  other  third
 parties, environmental concerns, and interest rates, any of which may cause
 actual results to differ from the Company's current expectations.

<PAGE>

 PART I

 Item 2--Properties

 APARTMENTS

   COMMUNITIES.   The  Company  owns  high  quality  apartment  communities,
 substantially all of which command rental rates in the upper range of their
 markets.  They  are generally newer "garden apartments", in wood frame two-
 and three-story buildings  without  elevators,  with  individually  metered
 electric  and  gas  service and individual heating and cooling systems.  In
 1997, the Company acquired  two "mid-rise" communities containing 333 units
 located in urban areas of Houston,  Texas. The Company's apartments are 48%
 one bedroom units, 46% two bedroom units  and  6%  three bedroom units. The
 units average 909 square feet in area, seven years of  age,  and  are  well
 equipped with modern appliances and other conveniences. The communities are
 generally  heavily  landscaped  and offer extensive amenities. Most include
 swimming pools, tennis courts, club  rooms,  exercise  facilities  and  hot
 tubs.  Some  of  the  Company's  communities also offer racquetball courts,
 saunas, alarm systems and other features, including enclosed garages.

  RESIDENTS.  Residents at the Company's  apartments  typically earn middle and
 upper middle levels of incomes. They include young professionals, white collar
 workers, medical personnel, teachers, members of the military, single parents,
 single adults and young families. These residents are  generally  "renters  by
 choice"--who  have  the  means  to  own  homes but choose to live in apartment
 communities  because of their current employment,  family  or  other  personal
 circumstances.  The  Company  believes  that  demand  for  its  apartments  is
 primarily  dependent on the general economic strength of each market's economy
 and its level  of job creation and household formation, and to a lesser extent
 to prevailing interest  rate levels for home mortgage loans. There is a steady
 turnover of leases at the Company's communities, allowing rents to be adjusted
 upward as demand allows.  Leases are generally for terms of from six to twelve
 months. About two-thirds of  the  Company's  units turn over each year, a rate
 the Company believes is typical for higher end apartment communities.

   MARKETS.   Merry  Land's  apartment  communities   are   located   in  27
 metropolitan areas, each with a population in excess of 250,000 and, as  of
 December  31,  1997,  none  containing  more  than  14%  of  the  Company's
 portfolio.  The  Company  believes  that  this  diversification reduces the
 volatility of its aggregate rental occupancy and rental income. The Company
 also believes that specializing in high-end Southern  apartment communities
 will allow it to establish a recognized franchise in its  market  area  and
 will  allow  it  to  achieve  economies  in  marketing  and  operating  its
 communities.

      The  following  table  describes  the  Company's apartment communities at
 December 31, 1997.

<TABLE>
<CAPTION>
                                                    Average                       Average December Rent(2)  Occupancy
                    Date     Date    Cost(1)    Cost Per Unit Size             Per Month      Per Sq. Ft.      (3)
 Name  Location     Built  Acquired   Units    (In Thousands)Unit(1)(Sq.Ft.)  1996    1997   1996     1997   1996  1997
 ----  --------     -----  --------   ------   -----------------------------  ----    ----   ----     ----   ----  ----
 <S>    <C>          <C>     <C>        <C>        <C>       <C>      <C>     <C>      <C>   <C>      <C>    <C>   <C>
 ALABAMA
 1.   Birmingham     1986     1996      276    $   11,528   $41,766   903     $582    $571   $0.64    $0.63    85%   92%
 FLORIDA
 2.   Daytona        1989     1994      304        11,615    38,208   882      573     586    0.65     0.66    88    95
 3.   Delray Beach   1989     1994      236        13,708    58,083   910      756     809    0.83     0.89    92    98
 4.   Ft. Lauderdale 1987     1996      152         9,120    59,998 1,100      838     849    0.76     0.77    94    95
 5.   Ft. Lauderdale 1989     1995      384        26,479    68,957 1,192      864     883    0.72     0.74    88    93
 6.   Ft. Lauderdale 1988     1996      304        18,483    60,798   931      875     836    0.94     0.90    92    93
 7.   Ft. Lauderdale 1991     1993      304        18,433    60,634 1,061      798     790    0.75     0.74    91    94
                                      -----        ------    ------ -----      ---     ---    ----     ----    ---   ---
                                      1,144        72,515    63,387 1,076      846     841    0.79     0.78    91    94 
 8.   Ft. Myers      1990     1995      320        12,421    38,817   872      600     617    0.69     0.71    92    96
 9.   Ft. Myers      1991     1993      300        18,469    61,565 1,136      753     748    0.66     0.66    95    97
 10.  Ft. Myers      1991     1993      328        15,413    46,990   955      650     673    0.68     0.70    94    96
 11.  Ft. Myers      1991     1992      320        12,889    40,277   863      647     663    0.75     0.77    92    96
                                      -----        ------    ------  ----      ---     ---    ----     ----    ---   ---    
                                      1,268        59,192    46,681   953      661     674    0.70     0.71    93    96

 12.  Jacksonville   1989     1994      350        15,976    45,644   912      668     683    0.73     0.75    96    96
 13.  Jacksonville   1986     1993      256        13,839    54,059 1,010      693     850    0.69     0.84    97    95
 14.  Jacksonville   1983     1993      144         7,142    49,595 1,293      739     750    0.57     0.58    94    94
 15.  Jacksonville   1984     1992      288         8,561    29,724   738      520     542    0.70     0.73    95    94
 16.  Jacksonville   1991     1993      284        12,406    43,682   816      613     617    0.75     0.76    96    94
 17.  Jacksonville   1986     1992      512        16,946    33,097   759      527     547    0.69     0.72    95    94
 18.  Jacksonville   1987     1993      284        12,836    45,196   851      592     624    0.70     0.73    98    97
 19.  Jacksonville   1988     1993      432        19,380    44,861 1,066      671     682    0.63     0.64    95    95
                                      -----        ------    ------ -----      ---     ---    ----     ----    ---   ---
                                      2,550       107,086    41,995   902      615     646    0.69     0.72    96    95
              
 20.  Melbourne      1990     1993      326        16,246    49,833 1,027      678     683    0.66     0.67    91    97
 21.  Miami          1991     1993      175        12,109    69,194   970      844     850    0.87     0.88    95    97
 22.  Orlando        1991     1993      480        22,890    47,688 1,021      675     713    0.66     0.70    97    97
 23.  Orlando        1991     1993      324        17,126    52,859   903      637     659    0.71     0.73    94    96
 24.  Orlando        1987     1993      242        11,417    47,176   787      594     622    0.75     0.79    97    98
 25.  Orlando        1989     1992      300        12,182    40,608   902      665     687    0.74     0.76    94    96
 26.  Orlando        1988     1993      252        11,380    45,159   799      601     613    0.75     0.77    89    94
 27.  Orlando        1991     1993      304        17,343    57,050 1,087      763     776    0.70     0.71    91    96
 28.  Orlando        1991     1997      308        16,491    53,543   877      (4)     694     (4)     0.79   (4)    94
 29.  Orlando        1990     1996      194        10,197    52,564   899      684     711    0.76     0.79    96    97
                                      -----        ------    ------  ----      ---     ---    ----     ----    ---   ---
                                      2,404       119,026    49,512   930      663     688    0.72     0.75    94    96
 30.  Tallahassee    1988     1993      222         8,468    38,144   900      633     626    0.70     0.70    86    93
 31.  Tallahassee    1990     1996      184         7,685    41,767   849      628     623    0.74     0.73    94    93
                                      -----        ------    ------  ----      ---     ---    ----     ----    ---   ---
                                        406        16,153    39,786   877      631     625    0.72     0.71    90    93
 32.  Tampa          1990     1993      447        20,374    45,580   849      632     655    0.74     0.77    95    98
 33.  Tampa          1989     1996      148         5,358    36,204   834      626     658    0.75     0.79    97    99
 34.  Tampa          1985     1993      240         8,590    35,794   655      519     521    0.79     0.80    94    96
 35.  Tampa          1988     1993      280        15,180    54,215   953      668     689    0.70     0.72    94    98
 36.  Tampa          1994     1994      334        21,081    63,117   978      764     786    0.78     0.80    95    99
                                        ---        ------    ------   ---      ---     ---    ----     ----    ---   ---
                                      1,449        70,583    48,712   865      650     670    0.75     0.77    95    98
 GEORGIA
 37.  Atlanta        1988     1993      316        13,535    42,834 1,023      643     668    0.63     0.65    96    95
 38.  Atlanta        1988     1993      424        16,734    39,468   911      611     646    0.67     0.71    97    94
 39.  Atlanta        1987     1994      252        11,861    47,069   806      644     682    0.80     0.85    97    96
 40.  Atlanta        1995     1997      303        23,709    78,247 1,105      (4)     866     (4)     0.78   (4)    92
 41.  Atlanta     1990/89  1992/95      574        20,905    36,420   874      623     639    0.71     0.73    96    94
 42.  Atlanta        1986     1992      376        11,580    30,799   927      593     605    0.64     0.65    95    94
 43.  Atlanta        1990     1993      480        31,810    66,271 1,095      853     866    0.78     0.79    93    94
 44.  Atlanta        1996     1996      586        41,984    71,645   834      793     855    0.95     1.03    63    63
 45.  Atlanta        1989     1994      228         9,987    43,803 1,018      652     658    0.64     0.65    96    94
 46.  Atlanta        1986     1992      200         6,440    32,202   802      579     616    0.72     0.77    97    96
 47.  Atlanta        1985     1993      224         7,915    35,335   860      587     603    0.68     0.70    97    95
 48.  Atlanta        1982     1994      272        12,185    44,798   845      629     644    0.74     0.76    95    91
                                      -----        ------    ------ -----      ---     ---    ----     ----    ---   ---
                                      4,235       208,645    49,267   927      657     712    0.71     0.77    96    91
 
 49.  Augusta         (5)      (5)       75         3,454    46,055   974      478     487    0.49     0.50    86    91
 50.  Augusta        1982     1982      248         8,699    35,077   875      519     525    0.59     0.60    75    78
 51.  Augusta        1975     1982       52         1,554    35,077   900      477     492    0.53     0.55    95    96
 52.  Augusta        1984     1984        1            72    72,131 1,300      675     675    0.52     0.52   100   100
                                      -----        ------    ------ -----      ---     ---    ----     ----   ---   ---
                                        376        13,779    36,593   856      447     513    0.52     0.57    76    83
 53.  Savannah       1983     1986      194         7,392    38,102   852      569     594    0.67     0.70    95    92
 54.  Savannah       1997     1997      284        21,385    75,300 1,049      (4)     776     (4)     0.74   (4)    77
 55.  Savannah       1986     1992      147         5,335    36,291   812      606     616    0.75     0.76    97    77
 56.  Savannah       1986     1986      144         5,709    39,648 1,119      603     621    0.54     0.55    96    94
 57.  Savannah       1983     1986      188         8,104    43,105 1,053      644     658    0.61     0.62    96    90
 58.  Savannah       1985     1993      192         7,262    37,822 1,124      660     684    0.59     0.61    99    96
                                      -----        ------    ------ -----      ---     ---    ----     ----   ---   ---
                                      1,149        55,187    48,030   994      617     671    0.63     0.67    96    98
 MARYLAND
 59.  Baltimore      1984     1994      198        12,138    61,031   938      805     842    0.86     0.90    95    95
 NORTH CAROLINA
 60.  Charlotte      1982     1990      240         9,024    37,599   882      615     630    0.70     0.71    95    96
 61.  Charlotte      1984     1994      280        10,541    37,648   688      559     556    0.81     0.81    93    95
 62.  Charlotte      1990     1992      300        10,901    36,335   891      665     672    0.75     0.75    95    95
 63.  Charlotte      1986     1995      260         9,638    37,070   750      549     567    0.73     0.76    94    95
 64.  Charlotte      1984     1989      296        10,739    36,280   918      597     607    0.65     0.66    94    91
 65.  Charlotte      1996     1997      318        20,413    64,192   883      (4)     756     (4)     0.86   (4)    93
 66.  Charlotte      1996     1997      340        21,529    63,319   884      (4)     743     (4)     0.84   (4)    95
 67.  Charlotte      1986     1996      178        11,461    64,388   925      771     751    0.92     0.81    94    91
 68.  Charlotte      1986     1994      247         9,304    37,668   724      558     565    0.77     0.78    96    95
                                      -----        ------    ------   ---      ---     ---    ----     ----   ---   ---
                                      2,459       113,550    46,177   823      610     651    0.75     0.78    94    95
 69.  Greensboro     1987     1994      500        28,546    57,092 1,005      690     727    0.69     0.72    93    80
 70.  High Point     1986     1990      208         7,426    35,702   811      531     557    0.65     0.69    97    95
 71.  Raleigh        1987     1994      362        18,553    51,251   784      644     658    0.82     0.84    93    92
 72.  Raleigh        1984     1991      360        11,615    32,264   766      587     611    0.77     0.80    97    95
 73.  Raleigh        1986     1993      192         6,391    33,286   641      547     568    0.85     0.89    95    95
 74.  Raleigh        1983     1990      144         5,601    38,894   780      626     640    0.80     0.82    96    97
 75.  Chapel Hill    1986     1991      198         6,649    33,582   735      653     676    0.89     0.92    96    98
                                      -----        ------    ------ -----      ---     ---    ----     ----   ---   ---
                                      1,256        48,809    38,861   751      605     632    0.81     0.84    95    95
 SOUTH CAROLINA
 76.  Charleston     1986     1989      230         9,681    42,093   810      589     616    0.73     0.76   100    99
 77.  Charleston     1985     1985      226         8,346    36,929   892      460     480    0.52     0.54    87    93
 78.  Charleston     1985     1988      200         7,939    39,693   911      547     570    0.60     0.63    93    97
 79.  Charleston     1984     1989      224         8,192    36,570   953      540     551    0.57     0.58    88    98
                                      -----        ------    ------ -----      ---     ---    ----     ----   ---   ---       
                                        880        34,158    38,816   890      534     554    0.60     0.62    92    97
 80.  Columbia       1987     1991      212         6,540    30,847   762      516     528    0.68     0.69    95    94
 81.  Greenville     1985     1991      216         7,070    32,732   848      560     565    0.66     0.67    98    94

TENNESSEE
 82.  Memphis        1986     1994      292        11,831    40,517   786      570     595    0.73     0.76    94    93
 83.  Nashville   1996/86     1994      407        24,247    59,575   902      716     757    0.79     0.84    91    97
 84.  Nashville      1994     1996      180        11,254    62,524 1,027      758     789    0.74     0.77    96    95
                                      -----        ------    ------ -----      ---     ---    ----     ----   ---   ---        
                                        587        35,501    60,479   940      729     767    0.78     0.82    93    95
 TEXAS
 85.  Austin         1995     1996      302       18,286     60,509   894      852     877    0.95     0.98    85    96
 86.  Austin         1995     1996      161       10,467     65,015   937      840     833    0.90     0.89    95    97
 87.  Austin         1995     1995      390       23,905     61,294   862      789     773    0.92     0.90    89    95
 88.  Austin         1995     1996      396       27,714     69,985   950      888     918    0.93     0.97    88    95
                                      -----       ------     ------   ---      ---     ---    ----     ----   ---   ---       
                                      1,249       80,372     64,439   907      842     852    0.93     0.94    88    95
 89.  Dallas         1995     1995      380       24,423     64,271   898      870     911    0.97     1.01    97    98
 90.  Dallas         1995     1995      470       29,608     62,995   895      816     814    0.91     0.91    91    93
 91.  Dallas         1995     1995      200       14,086     70,430   947      908     915    0.96     0.97    88    93
 92.  Dallas         1995     1995      376       24,981     66,439   904      851     866    0.94     0.96    85    91
 93.  Dallas         1995     1995      404       25,213     62,407   933      790     819    0.85     0.88    91    92
 94.  Dallas         1996     1997      334       21,877     65,501   890      (4)     831     (4)     0.93   (4)    84
 95.  Ft. Worth      1996     1997      360       22,278     61,882   978      (4)     856     (4)     0.88   (4)    92
 96.  Ft. Worth      1996     1997      312       20,141     64,553   928      (4)     831     (4)     0.90   (4)    85
 97.  Ft. Worth      1996     1997      372       26,689     71,746   921      (4)     888     (4)     0.96   (4)    91
                                      -----       ------     ------   ---      ---     ---    ----     ----   ---   ---         
                                      3,208      209,296     65,242   919      839     855    0.92     0.93    91    92
 98.  Houston        1994     1997      162       15,415     95,156 1,029      (4)   1,171     (4)     1.14   (4)    93
 99.  Houston        1990     1997      240       12,310     51,293   795      (4)     752     (4)     0.95   (4)    97
 100. Houston        1994     1997      171       12,891     75,383   976      (4)   1,019     (4)     1.04   (4)    94
 101. Houston        1996     1997      220       11,353     51,604   878      (4)     771     (4)     0.88   (4)    95
 102. Houston        1995     1997      188       12,963     68,952   978      (4)     889     (4)     0.91   (4)    96
 103. Houston        1990     1997      476       22,485     47,238   897      (4)     712     (4)     0.79   (4)    95
                                      -----       ------     ------   ---      ---   -----    ----     ----   ---   ---
                                      1,457       87,417     59,998   912      (4)     837     (4)     0.92   (4)    96
 VIRGINIA
 104. Richmond       1988     1994      212       10,486     49,463   776      656     685    0.85     0.88    93    96
 105. Richmond       1984     1994      294       15,597     53,055   851      664     701    0.78     0.82    95    97
                                       ----       ------     ------   ---      ---   -----    ----     ----   ---   --- 
                                        506       26,083     51,549   820      661     694    0.81     0.85    94    96
 
 TOTALS                              29,526   $1,496,109    $50,671   909     $670  $  709   $0.74    $0.78    93%   94%
<FN>
1.  Shoal Run
2.  Indigo Plantation
3.  Waterford Village
4.  Country Club Place
5.  Madison at Coral Square
6.  Mariner Club
7.  Welleby Lake Club
8.  Beach Club
9.  Colony Place
10. Polos
11. Viridian Lake
12. Bermuda Cove
13. Claire Point
14. Deerbrook
15. Princeton Square
16. Royal Oaks
17. Spicewood Springs
18. Timberwalk
19. Waterford
20. Cypress Cove
21. Lakeridge at Moors
22. Auvers Village
23. Bishop Park
24. Conway Station
25. Copper Terrace
26. Lexington Park
27. Mission Bay
28. Polos East
29. Valencia Plantation
30. Augustine Club
31. Plantations at Killearn
32. Audubon Village
33. Essex Place
34. Falls
35. Lofton Place
36. Promenade
37. Belmont Crossing
38. Belmont Landing
39. Champion's Park
40. Chatelaine Park
41. Gwinnett Crossing
42. Harvest Grove
43. Lexington Glen
44. Madison at River Sound
45. Shadowlake
46. Sweetwater Glen
47. Willow Trail
48. Windridge
49. Downtown
50. Woodcrest
51. Woodknoll
52. Other
53. Greentree
54. Hammocks at Long Point
55. Huntington
56. Magnolia Villa
57. Marsh Cove
58. West Wind Landing
59. Clarys Crossing
60. Brookshire Place
61. English Hills
62. Hunt Club
63. Kimmerly Glen
64. Lake Point
65. The Oaks
66. The Point
67. Regency
68. Steeplechase
69. Adams Farm
70. Chatham Wood
71. Duraleigh Woods
72. Misty Woods
73. Sailboat Bay
74. Sommerset Place
75. Timber Hollow
76. Quarterdeck
77. Summit Place
78. Waters Edge
79. Windsor Place
80. Hollows
81. Haywood Pointe
82. The Landings
83. Cherry Creek
84. Waterford Place
85. Estate at Quarry Lake
86. Madison at the Arboretum
87. Madison at Stone Creek
88. Sedona Springs
89. Madison at Cedar Springs
90. Madison at Chase Oaks
91. Madison on Melrose
92. Madison on the Parkway
93. Madison at Round Grove
94. Riverhill
95. Coventry at Cityview
96. Hidden Lakes
97. Wimberly
98. La Tour Fontaine
99. Palms at South Shore
100. Parc Royale
101. Ranchstone
102. Richmond Townhomes
103. Trials at Briar Forest
104. Champions Club
105. Hickory Creek
</TABLE>
 _________________

 (1)  Represents  the  total  acquisition  cost  of   the   property  plus  the
      capitalized cost of the improvements made subsequent to acquisition.
 (2)  Represents  the weighted average of rent charged for occupied  units  and
      rent asked for unoccupied units at month end.
 (3)  Represents average  physical  occupancy  at each month end for the period
      held.
 (4)  Properties not owned during period indicated.
 (5)  These units consist of three locations, built  and  acquired  at  various
      times.
 (6)  1996 amounts represent the 134 units delivered by December 31,1996.
 (7)  1996 amounts represent the initial 300 units owned.


 DEVELOPMENT COMMUNITIES

    At December 31, 1997, the Company had six communities under construction
 which will contain 2,408 units (of which 870 units have been delivered) and
 one  community  with 220 units under development. These communities will be
 completed at an expected  total  cost  of  $203.3 million. In addition, the
 Company owns land for 1,240 additional units  to  be  built  in  subsequent
 phases  of  development  communities in Greensboro, Nashville and Savannah.
 The communities under development  offer  features typical of very high end
 properties, including nine foot ceilings, high  levels  of trim and finish,
 garages and extensive amenities.

    The  Company  has  engaged experienced apartment developers  to  provide
 development and construction  management  services  to  the  Company  on  a
 project  by project basis. These developers are not partners of the Company
 and have no  interest in the real estate or improvements which are owned in
 fee simple by  Merry  Land. The developers' fees are computed as a share of
 the value of the completed  projects,  based  on agreed upon formulas, less
 actual costs. Merry Land's employees supervise  development activities with
 the assistance of architects and engineers as required.  The  Company  owns
 all  land  and  improvements, directly contracts for construction and bears
 essentially all risks  of  project development. While the Company has added
 several individuals to its acquisition  and  development  department  as  a
 result  of  this  program,  it  does  not  intend  to  establish  a  large,
 specialized development organization. The Company believes that this system
 of constructing new communities allows it the flexibility to simultaneously
 develop  communities in multiple markets and to expand, reduce or terminate
 such activities  as  conditions  warrant.  Merry Land will manage these new
 communities during and after construction.

    The following table summarizes the Company's  current  developments  and
 recently  completed  communities  as  of December 31, 1997. Estimated costs
 consists of land, direct construction costs  and  indirect costs, including
 projected fees to third party development managers  and  allocated overhead
 (dollars in thousands, except cost per unit):

<TABLE>
<CAPTION>
                                                                             Cost of
                                                                              Units
                                             Total      Total     Units      Placed
                                           Estimated     Cost       in         in        Units      Estimated
 Location         Community       Units      Cost      to date   Service     Service     Leased     Completion
 --------         ---------       -----    ---------   -------   -------    --------     ------     ----------   
<S>                 <C>           <C>        <C>         <C>       <C>        <C>         <C>  
 Completed
 Greensboro      Adams Farm(1)     200     $ 13,100   $ 13,062     200      $13,062       167         3Q1997

 Under Construction
 Atlanta          River Sound      586     $ 42,000   $ 41,976     586      $41,976       366         1Q1998
 Savannah         Long Point       308       22,900     22,289     284       21,383       221         1Q1998
 Richmond          Wyndham         264       24,500     15,764      --           --         0         4Q1998
 Greensboro      Bridford Lake     320       24,500      7,832      --           --         0         1998
 Atlanta        Satellite Place    424       34,000      7,721      --           --         0         1999
 Richmond         Spring Oak       506       38,800      6,073      --           --         0         1999
                                 -----     --------   --------     ---      -------       ---     
                                 2,408     $186,700   $101,655     870      $63,359       587

 UNDER DEVELOPMENT
 Nashville       Cherry Creek
                  III(1)           220     $ 16,600   $  3,682                                         1999

 FUTURE DEVELOPMENT
 Savannah        Long Point II(1)  352     $  1,128
 Nashville      Bell Road I and II 688        3,908
 Greensboro    Bridford Lake II(1) 200        1,328
                                 -----     --------
                                 1,240     $  6,364
  ----------
 (1) Adjoins an existing community owned by the Company.

   ACQUISITION OF COMMUNITIES UNDER DEVELOPMENT.  The Company has also agreed to
 acquire  the  following  communities  to be built by unrelated  third  parties
 (dollars in thousands):


</TABLE>
<TABLE>
<CAPTION>
                                                                 Estimated              Estimated
 Community                       Location            Units         Cost                Completion
 --------                        --------            -----       ---------             ----------
<S>                               <C>                <C>          <C>                    <C>
 Creekside Homes at Legacy      Dallas, Texas         380         $31,200               2Q1998
 Villages of Prairie Creek I    Dallas, Texas         236          19,800               2Q1998
 Villages of Prairie Creek II   Dallas, Texas         200          19,500               1Q1999
                                                      ---         -------                                           
                                                      816         $70,500

</TABLE>
     The Company will acquire title to these  communities upon completion of
 construction for an amount equal to the lesser  of the budgeted cost or the
 seller's  actual cost. The Company will pay the seller  additional  amounts
 upon the attainment  of  specified  occupancy  and  net operating cash flow
 levels based on agreed upon formulas.

     The   Company  believes  that  there  is  more  risk  associated   with
 development  activities  than with buying operating communities. Such risks
 include  those  associated  with   obtaining   regulatory   approvals   and
 entitlements, timely completion of construction, cost control and marketing
 and  lease up. Any one or more of these factors could cause adverse changes
 in the  construction budgets referred to in the table. The Company believes
 that the  potentially  higher  returns  on  development  projects merit the
 assumption  of  this additional risk. The Company's present  intent  is  to
 limit the total cost  of  development underway at any given time to no more
 than 10% of its total assets.

 OTHER ASSETS

  UNIMPROVED LAND.  The Company  owns 5,315 acres of undeveloped land with a
 book value of $4.1 million. Most of this land was acquired by the Company's
 predecessor for clay reserves and is located in Georgia and South Carolina.
 Since 1981, brick manufacturer Boral  Bricks, Inc. has had a long term clay
 mining lease on 2,622 acres of the Company's  land. The Company also leases
 100 acres to another company for the mining of  sand  and gravel and leases
 other  tracts for agriculture, and grows timber on much  of  the  remaining
 land. The Company expects that some of its land eventually may be developed
 or sold for development by others.

  COMMERCIAL  PROPERTIES.   The  Company  also owns several small commercial
 properties in the Augusta area, primarily  office  buildings, including the
 Company's  headquarters building, which were acquired  before  the  Company
 began to focus  on apartments. These properties, aggregating 182,000 square
 feet, have a book  value of $4.0 million. The Company intends to sell these
 properties.

<PAGE>

 PART I

 Item 3--Legal Proceedings

     None

 Item 4--Submission of Matters to a Vote of Security Holders

     None

<PAGE>
 PART II

 Item 5--Market for the  Registrant's Common Stock and Related Shareholders'
 Matters

 COMMON STOCK

     Merry Land's Common Stock is traded on the NYSE under the symbol "MRY".
 The following table sets  forth  the  reported high and low sales prices of
 the Common Stock on the NYSE, and the cash  dividends declared per share of
 Common Stock.
                                                                         
<TABLE>
<CAPTION>
                                                                              Cash
                                                        Common              Dividends
                                                      Stock Price           Declared
                                                    High      Low           per share
                                                    ----      ---           ---------
<S>                                              <C>        <C>              <C>
 1997
 Fourth Quarter                                  $24 1/8   $211/16            $.39
 Third Quarter                                    23        211/16             .39
 Second Quarter                                   22 1/8    20 1/2             .39
 First Quarter                                    22 5/8    20 3/8             .39
 
 1996
 Fourth Quarter                                  $21 3/4   $18 1/4            $.37
 Third Quarter                                    22 1/8    20 1/8             .37
 Second Quarter                                   22 1/4    20                 .37
 First Quarter                                    23 3/4    21 5/8             .37

</TABLE>

     On December 31, 1997, the Company had 4,523  shareholders  of  record. The
 Company estimates that an additional 24,000 shareholders hold their  shares in
 "street name."

     On January 19, 1998, the Board of Directors declared a dividend of $.41
 per share of Common Stock to be paid on March 31, 1998 to holders of record
 on March 16, 1998. The projected current annual dividend rate is $1.64  per
 share.  The  $.41  quarterly  dividend  represents  a  payout of 79% of FFO
 available  for  common shares for the quarter ended December  31,  1997,  a
 payout ratio which  the  Company  believes  is conservative relative to its
 REIT peers. Future dividends will be declared  at  the  discretion  of  the
 Board  of  Directors  after  considering the Company's distributable funds,
 financial requirements, tax considerations and other factors.

     Under the REIT rules of the Internal Revenue Code, the Company must pay
 at  least  95% of its REIT taxable  income  (excluding  capital  gains)  as
 dividends in  order  to  avoid taxation as a regular corporation. The Board
 makes decisions with respect  to  the  distribution  of  capital gains on a
 case-by-case basis. A portion, or all, of the Company's dividends  paid  to
 its shareholders may be deemed capital gain, ordinary income or a return of
 capital.

     The  federal  income  tax status of dividends paid to holders of Common
 Stock was as follows:

                                                    1997     1996    1995
                                                    ----     ----    ----
 Ordinary income                                   $0.88    $1.18   $1.34
 Capital gains                                       .16      .11     .06
 Return of capital                                   .52      .19      --
                                                   -----    -----   -----
      Total dividends paid                         $1.56    $1.48   $1.40

     The  loan  agreements for  the  Company's  6.625%  Senior  Notes  and  its
 $200.0 million line  of  credit prohibit the payment of any dividends or other
 distributions upon the occurrence  of  an  event  of default. The terms of the
 Company's credit agreements and preferred stock include  other restrictions on
 its ability to pay dividends, including a requirement in its  line  of  credit
 agreement that it not pay dividends in any year in an amount in excess of  90%
 of  its  FFO,  except  as necessary to maintain the Company's REIT status. The
 Company does not expect that these covenants will adversely affect its ability
 to make dividend payments.

 SERIES A PREFERRED STOCK

     Merry Land's $1.75 Series  A  Cumulative Convertible Preferred Stock is
 traded  on  the  New  York Stock Exchange  under  the  symbol  "MRYpr".  At
 December  31,  1997,  $4.7   million   of  Series  A  Preferred  Stock  was
 outstanding. The following table sets forth the reported high and low sales
 prices of the Series A Preferred Stock on  the NYSE, and the cash dividends
 declared per share of Series A Preferred Stock.

<TABLE>
<CAPTION>
                                                 Preferred
                                                Stock Price             Dividends
                                             High       Low              Declared
                                             ----       ---             ---------
<S>                                          <C>        <C>                <C>
 1997
 Fourth quarter                            $31.94    $29.63             $.4375
 Third quarter                              30.63     28.69              .4375
 Second quarter                             29.38     27.38              .4375
 First quarter                              30.00     28.38              .4375
 
 1996
 Fourth quarter                            $28.88    $25.13             $.4375
 Third quarter                              29.38     27.63              .4375
 Second quarter                             29.75     27.25              .4375
 First quarter                              31.75     30.00              .4375

</TABLE>

     The  federal  income tax status of dividends  paid  to  holders  Series  A
 Preferred Stock was as follows:
                                               1997      1996      1995
                                               ----      ----      ----
 Ordinary income                              $1.49     $1.61     $1.68
 Capital gains                                 0.26       .14       .07
 Return of capital                               --        --        --
 Total dividends paid                         $1.75     $1.75     $1.75

     The Series A Preferred  Stock  has  an  annual  dividend rate of $1.75 per
 share,  payable  quarterly,  and  is  convertible  into  common  shares  at  a
 conversion price of $18.65 per share of common stock. The  Series  A Preferred
 Stock  may  not be redeemed for cash at any time, but may be redeemed  by  the
 Company for common  shares  after  June  30, 1998, at a rate of 1.34 shares of
 common for each share of preferred, provided  the  common  shares  are trading
 above $18.65, subject to adjustments for certain circumstances.

 SERIES B PREFERRED STOCK

     Merry Land's $2.205 Series B Cumulative Convertible Preferred Stock  is
 not  publicly  traded  though the Company has granted to the holders of the
 Series B Preferred Stock certain registration rights. At December 31, 1997,
 $100.0 million of Series  B  Preferred  Stock  was outstanding. The federal
 income tax status of dividends paid to holders of  Series B Preferred Stock
 was as follows:

                                              1997      1996      1995
                                              ----      ----      ----
 Ordinary income                            $1.875    $2.025    $2.115
 Capital gains                                .330      .180      .090
 Return of capital                              --        --        --
 Total dividends paid                       $2.205    $2.205    $2.205

     The Series B Preferred Stock has an annual dividend  rate  of  $2.205  per
 year, payable quarterly, and is convertible into common shares at a conversion
 price  of  $21.04  per  common  share. The Series B Preferred Stock may not be
 redeemed for cash at any time, but  may  be redeemed by the Company for common
 shares after October 31, 1999, at a rate of  1.188  shares of common stock for
 each  share  of preferred, provided the Company's common  shares  are  trading
 above the conversion  price  of  $21.04  per share, subject to adjustments for
 certain circumstances.

 SERIES C PREFERRED STOCK

     Merry Land's $2.15 Series C Cumulative  Convertible  Preferred Stock is
 traded  on  the  New  York  Stock  Exchange  under the symbol "MRYPrC".  At
 December  31,  1997,  $115.0  million  of  Series  C  Preferred  Stock  was
 outstanding. The following table sets forth the high  and  low sales prices
 of  the  Series  C  Preferred  Stock  on  the  NYSE, and the cash dividends
 declared per share of Series C Preferred Stock:
<TABLE>
<CAPTION>
                                                     Preferred
                                                    Stock Price        Dividends
                                                  High      Low        Declared
                                                  ----      ---        ---------
<S>                                               <C>       <C>          <C>
 1997
 Fourth quarter                                 $28.31   $26.50         $.5375
 Third quarter                                   28.81    26.38          .5375
 Second quarter                                  28.00    26.00          .5375
 First quarter                                   28.75    26.00          .5375

 1996
 Fourth quarter                                 $28.88   $24.50         $.5375
 Third quarter                                   28.63    26.25          .5375
 Second quarter                                  28.38    25.75          .5375
 First quarter                                   30.25    27.00          .5375

</TABLE>
     The federal income tax status of dividends paid  to  holders  of  Series C
 Preferred Stock was as follows:

                                            1997       1996       1995
                                            ----       ----       ----
 Ordinary income                           $1.82      $1.97        $--
 Capital gains                              0.33        .18         --
 Return of capital                            --         --         --
 Total dividends paid                      $2.15      $2.15        $--

     The  Series  C  Preferred  Stock  is  convertible  into common shares at a
 conversion  price  of  $22.00  per  share of common stock and  has  an  annual
 dividend rate of $2.15 per share payable  quarterly. The dividend rate will be
 increased to an amount equal to at least the  dividends  paid on the number of
 shares of common stock into which the Series C Preferred Stock is convertible.
 The Series C Preferred Stock may not be redeemed for cash at any time, but may
 be redeemed by the Company for common shares after March 31,  2000,  at a rate
 of  1.136 shares of common for each share of Series C Preferred Stock provided
 the common shares are trading above $22.00, subject to adjustments for certain
 circumstances.

 SERIES D PREFERRED STOCK

     Merry  Land's  $4.145 Series D Cumulative Redeemable Preferred Stock is
 not publicly traded.  At  December  31,  1997,  $50.0  million  of Series D
 Preferred Stock was outstanding. The federal income tax status of dividends
 paid to holders of Series D Preferred Stock was as follows:

                                              1997        1996       1995
                                              ----        ----       ----
 Ordinary income                            $3.526       $0.222        --
 Capital gains                               0.619         .020        --
 Return of capital                              --           --        --
 Total dividends paid                       $4.145       $0.242        --

     The  Series  D  Preferred Stock has an annual dividend rate of $4.145  per
 year, payable quarterly.  The  Series  D  Preferred  Stock may not be redeemed
 until December 10, 2026.

 SERIES E PREFERRED STOCK

     On  February 13, 1998, the Company issued 4,000,000  shares  of  7.625%
 Series E  Cumulative  Redeemable  Preferred  Stock,  which  has  an  annual
 dividend  rate  of  $1.906, payable quarterly beginning March 31, 1998. The
 Series E Preferred Stock  may  not be redeemed until February 13, 2003. The
 Series E Preferred Stock is traded on the New York Stock Exchange under the
 symbol "MRYPrE".

 DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN

     The Company has adopted a Dividend Reinvestment and Stock Purchase Plan
 under which any holder of Common Stock or Preferred Stock may reinvest cash
 dividends  or  optional cash payments  of  up  to  $5,000  per  quarter  in
 additional shares  of Common Stock purchased directly from the Company at a
 5% discount. Stock purchases made with optional cash payments cannot exceed
 the number of shares  of  Common  Stock  and  Preferred  Stock owned by the
 shareholder. All common and preferred shareholders are eligible to join the
 plan including shareholders whose shares are held in the name of va nominee
 or broker. During 1997 the Company issued 783,907 shares under  the plan at
 an average price of $20.81 per share providing $16.3 million in new  equity
 capital. The Dividend Reinvestment and Stock Purchase Plan has provided new
 equity capital as follows (dollars in thousands):

                                         1997        1996        1995
                                         ----        ----        ----
 Dividend Reinvestment                $11,459     $ 9,128     $ 8,547
 Stock Purchase Plan                    4,858       4,704       2,622
                                      -------     -------     ------- 
                                      $16,317     $13,832     $11,169

<PAGE>
PART II
Item 6--Selected Financial Data
                          SELECTED FINANCIAL DATA

     The  following table sets forth selected financial data for the Company
and should  be  read  in conjunction with the financial statements and notes
thereto incorporated by  reference  herein.  The  following  amounts  are in
thousands,  except  for  information  with  respect to per share amounts and
apartment units.
<TABLE>
<CAPTION>
                                                     Years Ended December 31,
                                                     ------------------------
                                          1997        1996       1995      1994     1993
                                          ----        ----       ----      ----     ----
<S>                                       <C>         <C>       <C>        <C>      <C>
Operating Data
Income from property operations:
  Rental and mineral royalty revenue $  210,272  $ 176,989 $  145,214  $103,169  $56,181
 Rental expenses, property taxes
     and insurance                       79,735     68,087     58,527    38,409   22,611
  Depreciation of real estate owned      42,464     34,490     26,265    17,877    9,066
                                        -------    -------    -------   -------   ------
                                         88,073     74,412     60,422    46,883   24,504
Other income:
  Other interest and dividend income      2,603      5,454      6,908     2,440    2,463
  Other                                   5,086      6,178      4,476     (655)       10
                                        -------    -------    -------   -------   ------
                                          7,689     11,632     11,384     1,785    2,473
Expenses:
  Interest                               25,900     22,527     15,646    10,394    5,640
  General and administrative              4,666      2,858      2,396     1,773    1,433
  Depreciation-other and amortization     1,149        860        670       470      180
  Other non-recurring costs                  --         --      1,370       200    1,308
                                        -------    -------    -------   -------   ------     
                                         31,715     26,245     20,082    12,837    8,561
Gains on sales of assets:
  Gains on sales of investments             996      2,679      1,673       881    6,960
  Gains on sales of land                     --         --         68       196    1,023
  Gains on sales of depreciable
     real estate                            460      1,528         72        77        9
                                        -------    -------    -------   -------   ------
                                          1,456      4,207      1,813     1,154    7,992
Net income                               65,503     64,006     53,537    36,985   26,408
Preferred dividends paid                 23,257     19,843     18,129     7,934    4,025
                                        -------    -------    -------   -------   ------
Net income available for common shares $ 42,246 $   44,163  $  35,408   $29,051  $22,383
                                       ======== ==========  =========   =======  =======
Weighted average common shares           38,461     35,919     33,368    26,430   17,268
Weighted average diluted common shares   38,928     36,676     33,418    26,450   17,288
Diluted earnings  per  common  share  $    1.10 $     1.23 $     1.06 $   1.10  $   1.30
Common dividends paid                 $  60,040 $   53,886 $   46,734 $ 33,467  $ 16,934
Common  dividends  paid  per share    $    1.56 $     1.48 $     1.40 $   1.25  $    .90
BALANCE SHEET DATA (at end of period)
Apartments,  net of depreciation     $1,356,226 $1,075,933 $  943,070 $756,588  $532,465
Senior notes                            460,000    360,000    360,000  120,000   120,000
Mortgage debt                            70,282     27,546         --   17,835    37,173
Other debt                               67,800         --         --   74,975        --
Total stockholders' equity              797,332    798,772    695,859  584,851   397,715
Total assets                         $1,427,881 $1,208,246 $1,072,840 $806,655  $562,172
OTHER DATA
Funds from operations(1)             $  102,367 $   94,047 $   79,360 $ 53,907  $ 28,790
Funds from operations
  available to common shares         $   83,254 $   74,446 $   61,231 $ 45,973  $ 24,764
Apartment units acquired or
  developed during the period             5,040      2,889      3,444    4,872     7,452
Total apartment units at end of
  the period                             29,526     24,936     22,296   18,852    13,981
</TABLE>
______________

(1)  The  Company  uses  the  National  Association  of Real Estate  Investment
      Trusts' task force's published definition of funds from operations. Funds
      from  operations  is defined as net income computed  in  accordance  with
      generally accepted  accounting  principles, excluding non-recurring costs
      and net realized gains (other than gains included in other income as cash
      management  income)  plus  depreciation  of  real  property.  Funds  from
      operations should be considered  along  with,  and  not as a substitution
      for,  net  income and cash flows as a measure of the Company's  operating
      performance  and  liquidity. See "Management's Discussion and Analysis of
      Financial Condition and Results of Operations."

<PAGE>

PART II

Item 7--Management's Discussion and Analysis of Financial Condition and Results
of Operations

RESULTS OF OPERATIONS FOR  THE  TWELVE MONTHS ENDED DECEMBER 31, 1997, 1996 AND
1995.

    RENTAL MARKETS.  In the aggregate,  the  Company's  Southern rental markets
were  stronger  in  1997 than in 1996 as strong demand for apartments  exceeded
additions to supply.  The Company's apartments experienced occupancy in 1997 of
93.8% which was 0.5% above  1996  as the result of stronger markets, aggressive
leasing efforts by staff, and selectively  offering concessions to residents in
order to induce them to rent. While levels of  new  construction throughout the
South remain high, the Company believes that physical  occupancy  should remain
satisfactory  if general economic activity, job growth and household  formation
in the South remain strong.

    RENTAL OPERATIONS--TOTAL  PORTFOLIO.   The  operating  performance  of  the
Company's  apartment portfolio is summarized in the following table (dollars in
thousands, except average monthly rent):
<TABLE>
<CAPTION>
                                  %      Change from
                               Change   1996 TO 1997   1997       1996     1995
                               ------   ------------   ----       ----     ----
<S>                             <C>        <C>        <C>         <C>       <C>
Rental income                    18%      $32,310   $208,363  $176,053  $144,283
Operating expenses(1)             15        7,212     55,347    48,135    40,726
Taxes and insurance
  expense                         23        4,283     23,265    18,982    15,520
Subtotal                          17       11,495     78,612    67,117    56,246
Earnings before interest,
  depreciation and amortization   19      $20,815   $129,751  $108,936  $ 88,037
Average Units(2)                  14        3,303     26,850    23,547    20,291
Average occupancy(3)             0.5(4)                93.8%     93.3%     95.2%
Occupancy at end of period       0.6(4)                92.8%     92.2%     94.0%
Average monthly rent(5)          5.8      $    39   $    709  $    670  $    639
Expense ratio (6)               (0.5)(4)               37.7%     38.1%     39.0%

</TABLE>
______________

(1)  Excludes depreciation and amortization.
(2)  Represents the average number of units owned at each month end.
(3)  Represents the average physical occupancy at each month end for the period
     held.
(4)  Represents increase between periods.
(5)  Represents  weighted  average  monthly rent charged for occupied units and
      rents asked for unoccupied units at December 31.
(6)  Represents total of operating expenses,  taxes  and  insurance  divided by
     rental revenues.


     Acquisitions  and  the  delivery  of  units from the Company's development
program increased the weighted average number  of apartments owned to 26,850 in
1997 from 23,547 in 1996. Rental revenues, operating  expenses  and  taxes  and
insurance  rose  accordingly. A 5.8% increase in portfolio average rental rates
in 1997 resulted from  both higher rents at the Company's continuing properties
and also from higher rents  charged at the communities the Company acquired and
put  in  service  in  1997 and 1996,  whose  monthly  rents  averaged  $800  at
December 31, 1997, versus the total portfolio average of $709.

     RENTAL OPERATIONS--SAME  STORE.  The performance of the 21,156 units which
the Company held for all of both  1997  and  1996  ("same  store"  results)  is
summarized in the following table (dollars in thousands, except average monthly
rent; see footnotes above):
<TABLE>
<CAPTION>
                                                   Change from
                                         CHANGE   1996 TO 1997   1997    1996
                                         ------   ------------   ----    ----
<S>                                       <C>         <C>        <C>     <C>
Rental income                              3.3%       $5,183 $162,995 $157,811
Personnel expense                         14.5         2,260   17,887   15,627
Utilities expense                        (23.2)      (2,056)    6,816    8,872
Operating expense                         12.7           996    8,830    7,834
Maintenance and grounds expense           (4.7)        (509)   10,214   10,723
Taxes and insurance expense                2.4           543   17,238   16,837
Subtotal(1)                                1.8         1,234   60,985   59,893
Earnings  before  interest,                
depreciation and amortization              4.2        $3,949 $102,010 $ 97,918
Average occupancy(3)                       1.1(4)                94.8%   93.7%
Occupancy at end of period                 1.9(4)                94.6%   92.7%
Average monthly rent(5)                    2.6        $   17 $    674 $    657
Expense ratio(6)                          (0.4)(4)               37.5%   38.0%

</TABLE>

Same store community  results do not include Cherry Creek, a 127 unit community
which was owned for both 1997 and 1996. This community was acquired in December
1994 and was recently renovated.  It  has  been  combined  with  a  development
community  which  contains  280  additional units. Same store community results
also do not include Adams Farm, a  300  unit community which was owned for both
1997 and 1996. This community was acquired in 1994 and has been combined with a
development community which contains 200 additional units.

     Rental income rose by $5.2 million, or 3.3%, for those properties held for
all  of both periods, as a result of 1.1%  higher  occupancy  and  2.6%  higher
average  rental rates. At December 31, 1997, same store occupancy was 94.6%, up
from 92.7% at December 31, 1996.

    Rental  expenses were $61.0 million, or 1.8% more in 1997 than 1996. Higher
on-site bonuses  accounted  for  $1.8  million  of  a  $2.3 million increase in
personnel  costs. Utilities expense decreased by $2.1 million  as  the  Company
passed a portion  of  its  water  expense  to the residents. Operating expenses
increased $1.0 million primarily as a result  of  higher  marketing  costs. Off
site  property management expense, which is allocated to the communities,  rose
$0.3 million  as  the  Company  added  corporate  positions in 1996 and 1997 in
operations,  training,  marketing,  and  maintenance. Maintenance  and  grounds
expenses decreased by $0.5 million or 4.7%  due  primarily  to  lower levels of
contracted services. Property taxes and insurance increased by $0.5  million to
reflect higher assessed values.

     For  those 18,410 apartments owned by the Company for both 1996 and  1995,
rental revenues increased $2.8 million or 2.1% in 1996 over 1995 as a result of
1.5% lower  occupancy  and 3.2% higher average rental rates. Operating expenses
decreased $0.5 million or  1.0% in 1996 as compared to the same period in 1995.
Increases in operating and maintenance  and  grounds  expenses  were  more than
offset  by  lower  personnel,  utilities,  and  taxes  and  insurance  expense.
Personnel  costs  were  down  primarily because year end cash incentive bonuses
decreased by $0.4 million in 1996  as  a  result  of  weaker operating results.
Utilities expense decreased by $0.5 million as the Company  began  charging its
residents  a  portion  of  its  water  expense.  Property  taxes  and insurance
decreased by $0.5 million to reflect lower than expected millage rates, and the
successful  appeal  of  the  assessed  values for several properties. Off  site
property  management  expense,  which is allocated  to  the  communities,  rose
$0.5  million  as the Company established  additional  corporate  positions  in
training, marketing  and maintenance. Maintenance and grounds expense increased
by $0.2 million as turnover increased to 70% from 68% in 1996.

    RENTAL OPERATIONS--DEVELOPMENT COMMUNITIES.  In 1997, the Company placed in
service 936 units as summarized in the following table:
                                                                             
<TABLE>
<CAPTION>
                                                                          Occupancy
                                                                             of
                                                  Units put               delivered
                                         Units   in service  Total units  units at
Community                  Location     Planned    In 1997    In Service   12/31/97
---------                  --------     -------  ----------   ----------- --------- 
<S>                         <C>          <C>        <C>         <C>         <C>
Madison at Adams Farm II Greensboro      200        200          500        84%
Hammocks at Long Point    Savannah       308        284          284         78
Madison at River Sound     Atlanta       586        452          586         63
                                       -----        ---        -----        ---
                                       1,094        936        1,370        75%

</TABLE>
     As discussed above,  the  200 unit Madison at Adams Farm II is adjacent to
the existing 300 unit Adams Farm  community  and  these two communities are now
operated as one. The operating results for 1997 and  1996  for  the  Madison at
River  Sound,  Madison  at  Adams  Farm,  and  the  Hammocks  at Long Point are
summarized in the following table (dollars in thousands; see footnotes above):

<TABLE>
<CAPTION>
                                                                 1997        1996
                                                                 ----        ----
<S>                                                             <C>         <C>
Rental income                                                  $9,697      $4,344
Operating expenses(1)                                           2,663       1,313
Taxes and insurance expense                                       491         230
                                                               ------      ------
Subtotal                                                        3,154       1,543
                                                               ------      ------
Earnings before interest, depreciation and amortization        $6,543      $2,801
Units in service at year end                                    1,777         841

</TABLE>
     RENTAL OPERATIONS--OTHER COMMUNITIES.  "Other communities"  are  those not
considered "same store communities" or "development communities". These include
communities bought or sold in part or in whole in 1996 or 1997. At December 31,
1997,  these  communities  included  6,593  units. The performance of the other
communities for 1997 and 1996 is summarized in  the following table (dollars in
thousands; see footnotes above):
<TABLE>
<CAPTION>
                                                                 1997        1996
                                                                 ----        ----
<S>                                                             <C>          <C>
Rental income                                                 $35,671     $13,898
Operating expenses(1)                                           8,937       3,766
Taxes and insurance expense                                     5,536       1,915
                                                              -------     -------
Subtotal                                                       14,473       5,681
                                                              -------     -------
Earnings before interest, depreciation and amortization       $21,198     $ 8,217
Units                                                           6,593       2,939

</TABLE>
     INTEREST, DIVIDEND AND OTHER INCOME.  Interest,  dividend and other income
decreased to $7.7 million in 1997 from $11.6 million in  1996 and $11.4 million
in  1995  as  the  Company  liquidated  its  holdings  of  cash and  marketable
securities and invested the proceeds in apartments. At December  31, 1997, cash
and marketable securities totaled $2.5 million as compared to $56.6  million at
December  31,  1996  and $92.3 million at December 31, 1995. Interest, dividend
and other income are summarized in the following table (dollars in thousands):

<TABLE>
<CAPTION>
                                                     1997        1996        1995
                                                     ----        ----        ----
<S>                                                  <C>         <C>         <C>
Interest income                                    $1,878     $ 2,276     $ 5,514
Dividend income                                       725       3,178       1,394
Other income                                        5,086       6,177       4,476
Total                                              $7,689     $11,631     $11,384


</TABLE>
       INTEREST EXPENSE.   Interest expense net of capitalized interest totaled
$25.9 million in 1997, up from $22.5 million in 1996 and $15.6 million in 1995.
Average debt outstanding rose  to $457.1 million in 1997 from $373.0 million in
1996 and $264.6 million in 1995. During 1997, the Company issued $100.0 million
of  senior  unsecured notes in July  and  October,  assumed  $43.0  million  of
mortgage debt  in connection with the acquisition of four apartment communities
and borrowed a net  of   $67.8  million under the Company's line of credit. The
weighted average interest rate charged  on  all  the Company's debt was 7.0% in
1997,  7.1% in 1996 and 6.9% in 1995. During 1997,  $5.3  million  of  interest
related  to  the  Company's  development  projects  was  capitalized,  up  from
$3.2  million  in  1996  and  $1.1  million in 1995, due to the higher level of
development.

     GENERAL AND ADMINISTRATIVE EXPENSES.   General and administrative expenses
for 1997 totaled $4.7 million, representing 2.2%  of rental revenues. For 1996,
general and administrative expenses averaged 1.6% of  rental  revenues  and for
1995  averaged  1.7%  of  rental  revenues. General and administrative expenses
increased  in  1997  primarily  as  a result  of  higher  headcount  and  their
associated costs. In 1997, the Company added positions in the areas of property
management, acquisitions, development,  accounting, and administration in order
to provide better service to its residents and to compete more effectively in a
rapidly  evolving  industry.  The Company expects  that  its  overhead  expense
measured as a percentage of revenues  will  remain in the range of 2.0% to 2.5%
of rents.

     GAINS ON SALES OF ASSETS.  Net gains recognized  on  the  sale  of  assets
totaled  $1.5 million in 1997, $4.2 million in 1996, and $1.8 million for 1995.
Gains in 1997  consisted  of  $1.0  million  from  the  sale  of securities and
$0.5 million in gains from the sale of real estate. In 1997, the  Company  sold
Saw  Mill  Village,  a  340-unit  apartment community located in Columbus, Ohio
recognizing a $0.5 million gain. In  1996,  the  Company  sold Hunters Chase, a
244-unit  apartment  community  located  in  Cleveland,  Ohio,  recognizing   a
$1.5  million gain. Saw Mill Village and Hunters Chase were acquired in 1994 as
part of  a  twelve  property  portfolio  transaction, but the Ohio locations of
these two communities did not fit the Company's strategy of building a Southern
franchise.

    NET INCOME.  Net income totaled $65.5  million  in  1997,  $64.0 million in
1996  and  $53.5 million in 1995. Net income available for common  shareholders
totaled $42.2 million in 1997, $44.2 million in 1996 and $35.4 million in 1995.
The increases  in  net  income  for  1997  when compared to 1996 and 1995 arose
principally from substantially increased operating  income  from apartments due
to  the  growth  of  the  Company's apartment holdings, higher same  store  net
operating  income  and  higher   leverage.  Net  income  available  for  common
shareholders and net income per common share decreased in 1997 primarily due to
a reduction in net realized gains.  Net  income  per  common share was $1.10 in
1997, $1.23 in 1996, and $1.06 in 1995.

     DIVIDENDS TO PREFERRED SHAREHOLDERS.  Preferred dividends  are  summarized
in the following table (dollars in thousands):
<TABLE>
<CAPTION>
                                                Issue
                                                 Date      1997     1996     1995
                                                -----      ----     ----     ----
<S>                                              <C>       <C>      <C>       <C>
Series A Preferred share dividends             6/23/93  $   404  $   891  $ 1,425
Series B Preferred share dividends            10/31/94    8,820    8,820    8,820
Series C Preferred share dividends              3/8/95    9,889    9,890    7,884
Series D Preferred share dividends             12/5/96    4,144      242       --
                                                        -------  -------  -------
 Total preferred dividends                              $23,257  $19,843  $18,129

</TABLE>
     The increase in preferred dividends arose from the issue in December  1996
of  1.0  million  shares  of  Series  D  Preferred  Stock.  Shareholders of the
Company's  Series  A  Preferred  Stock have converted 4.4 million  of  the  4.6
million Series A shares originally  issued in June 1993 into 5.9 million shares
of the Company's common stock as the  common  dividend  was  raised  above  the
equivalent preferred dividend.

    FUNDS  FROM  OPERATIONS.  Funds from operations rose 8.8% to $102.4 million
in 1997 as compared  to  $94.0 million in 1996 and $79.4 million in 1995. Funds
from operations available  to common shares rose 11.8% to $83.3 million in 1997
compared to $74.4 million in  1996  and  $61.2 million in 1995. These increases
were principally due to higher same store  net  operating income, higher rental
operating income resulting from the growth of the  Company's apartment holdings
and higher leverage.     Other income from securities totaled $5.0 million 
for 1997 versus  $6.0  million for 1996 and $4.3 million for 1995.  "Core  
FFO",  those earnings produced exclusively by non cash management activities, 
rose 10.7% to $97.3 million in 1997 as compared to $88.0 million in 1996 and 
$75.0 million in 1995.    

     The  following is a reconciliation  of net income to funds from operations
(data in thousands, except per share data):

<TABLE>
<CAPTION>
                                                           1997     1996     1995
                                                           ----     ----     ----
<S>                                                       <C>      <C>       <C>
Net income                                             $ 65,503  $64,006  $53,537
Less preferred dividends paid                            23,257   19,843   18,129
                                                       --------  -------  -------
Net income available for common shares                   42,246   44,163   35,408
Add depreciation of real estate owned                    42,464   34,490   26,265
Less net realized gains                                   1,456    4,207    1,813
Plus non-recurring expenses                                  --       --    1,370
                                                       --------  -------  -------
Funds from operations available to common shares         83,254   74,446   61,230
Add convertible preferred dividends                      19,113   19,601   18,129
   
Funds from operations--fully diluted (1)               $102,367  $94,047  $79,359
                                                       ========  =======  =======
Less Other Income from Securities                      $  5,018  $ 6,022  $ 4,336
                                                       ========  =======  =======
Core Funds from Operations                             $ 97,349  $88,025  $75,023
                                                       ========  =======  =======
    
Weighted average common shares outstanding--
       Basic                                             38,461   35,919   33,368
       Fully diluted(1)                                  48,747   46,577   43,112
</TABLE>
_____________

(1)  Assumes conversion of all convertible preferred shares.

     The Company believes that funds from operations is an important measure of
its operating performance. Funds from operations  does not represent cash flows
from operations as defined by generally accepted accounting  principles,  GAAP,
and should not be considered as an alternative to net income or as an indicator
of  the  Company's  operating  performance,  or  as  a measure of the Company's
liquidity. Based on published recommendations of a task  force  of the National
Association  of Real Estate Investment Trusts, the Company defines  funds  from
operations  as   net   income  computed  in  accordance  with  GAAP,  excluding
non-recurring costs and  net realized gains (other than gains included in other
income as cash management  income),  plus  depreciation  of real property. This
revised  definition eliminates from funds from operations any  amortization  of
debt costs  and  any  non-real  estate depreciation. Revision of the definition
reduced the Company's funds from  operations  by  $1.1  million,  $0.9 and $0.7
million in 1997, 1996 and 1995, respectively.

LIQUIDITY AND CAPITAL RESOURCES

    FINANCIAL  STRUCTURE.   The Company's senior notes and its preferred  stock
are rated investment grade by Standard & Poor's Corporation (BBB+/BBB), Moody's
Investors Services, Inc. (Baa2/Baa3),  and  Duff  &  Phelps  Credit  Rating Co.
(BBB+/BBB).   At   December   31,   1997,  total  debt  equaled  43%  of  total
capitalization at cost, and 34% of total  capitalization  with equity valued at
market. At that date, the Company's financial structure was as follows (dollars
in thousands):

<TABLE>
<CAPTION>
                                                                   Equity at
                                                         % of       Market   % of
                                               Book(1)   Total       Value   Total
                                               ------    -----     --------- -----
<S>                                            <C>        <C>        <C>      <C>
Advances under line of credit              $    67,800    5%
Mortgage loans                                  70,282     5
6.625% senior unsecured notes, 1999             40,000     3
6.625% senior unsecured notes, 2000             40,000     3
6.625% senior unsecured notes, 2001             40,000     3
7.250% senior unsecured notes, 2002             40,000     3
6.875% senior unsecured notes, 2003             40,000     3
6.875% senior unsecured notes, 2004             40,000     3
7.250% senior unsecured notes, 2005            120,000     7
6.690% senior unsecured notes, 2006             50,000     4
6.900% senior unsecured notes, 2007             50,000     4
                                            ----------  ---- -----------  ----
Total debt                                     598,082    43 $   598,082   34%
Series D preferred equity                       50,000     4      50,000     3
Common and convertible preferred equity(2)     747,332    53   1,130,140    63
                                            ----------  ---- -----------  ----
Total equity                                   797,332    57   1,180,140    66
Total capitalization                        $1,395,414  100%  $1,778,222  100%
                                            ==========  ==== ===========  ====
</TABLE>
______________

(1)  Represents  principal amount of debt, face amount of preferred  stock  and
      book value of common stock.
(2)  Assumes conversion  of  all  outstanding  convertible preferred stock into
      common stock.

     At December 31, 1997, the Company had $67.8 million borrowings outstanding
under  its  $200.0  million  line of credit. Borrowings  under  the  line  bear
interest at 0.60% above the thirty  day  London  Interbank  Offered  Rates.  At
December  31,  1997,  the Company's loan agreements and the covenants under its
senior unsecured notes  would  have  allowed  it to borrow $220.3 million on an
unsecured basis.

    It generally is not the practice of the Company to finance its acquisitions
using  mortgage  debt, though at times the Company  finds  it  advantageous  to
assume  such  debt in  order  to  successfully  negotiate  and  close  property
acquisitions. At  December  31,  1997,  the  Company  had  seven mortgage loans
outstanding, which were assumed in connection with the purchase  of the Mariner
Club,  Estate  on  Quarry  Lake,  Plantations  at Killearn, Richmond Townhomes,
Trails at Briar Forest, Parc Royale, and La Tour Fontaine communities.

    LIQUIDITY.    Merry   Land   expects  to  meet  its  short-term   liquidity
requirements with cash provided by  operating activities and by borrowing under
its  line  of  credit. The Company's primary  short-term  liquidity  needs  are
operating  expenses,   apartment   acquisitions  and  development  and  capital
improvements. The Company has essentially  completed  the  liquidation  of  its
holdings  of marketable securities which were acquired as temporary investments
pending the acquisition or development of additional apartment communities.

     The  Company   expects  to  meet  its  long-term  liquidity  requirements,
including  scheduled debt  maturities  and  permanent  financing  for  property
acquisitions  and  development,  from a variety of sources, including operating
cash flow, additional borrowings and  the  issuance and sale of debt and equity
securities in the public and private markets.

    The following table summarizes the Company's estimated capital requirements
resulting from its development commitments as  of  December 31, 1997, pro forma
for the sale of the Series E Preferred Stock on February 13, 1998. Not included
in  this  table  are  additional acquisitions and developments,  including  the
Trammell Crow Residential  Portfolio, debt repayments or the additional sale of
debt or equity securities (dollars in thousands):

Estimated capital requirements:
Development costs through 12/31/99                                   $ 222,415
Less development costs paid through 12/31/97                         (124,414)
Development costs through 1999                                          98,001
Acquisition of communities under development                            70,500
     Total future development commitments                              168,501
Estimated capital sources:
Cash on hand at 12/31/97, pro forma                                  29,420(1)
Funds available under line of credit at 12/31/97, pro forma         200,000(2)
     Total capital sources                                             229,420
Excess of capital sources over capital requirements                  $  60,919
______________

(1) Represents cash on hand  at  12/31/97 of $570, plus net proceeds of $96,650
    from the sale of Series E Preferred  Stock,  less  the  balance  of $67,800
    repaid under the Company's line of credit at 12/31/97.
(2) See footnote (1).

     CASH FLOWS.  The following table summarizes cash flows for 1997, 1996, and
1995   including   the   availability  of  marketable  securities  (dollars  in
thousands):

<TABLE>
<CAPTION>
                                                       Sources and Uses of Cash
                                                       ------------------------
                                                     1997        1996        1995
                                                     ----        ----        ----
<S>                                                 <C>         <C>         <C>
Operating activities                            $ 110,925   $  91,666   $  82,224
Sales of Merry Land common and preferred stock     17,212     118,512     118,895
Net borrowings                                    210,536      27,546     148,234
Sale of real property                              21,710          --          --
Other sources                                       7,254      15,731       9,738
                                                ---------   ---------   ---------
Total sources of cash                             367,637     253,455     359,091
Acquisitions of and improvements to properties  (277,419)   (152,177)   (213,521)
Development of properties                        (58,711)    (63,081)    (12,813)
Dividends paid                                   (83,297)    (73,729)    (64,868)
Other uses                                        (2,269)       (178)     (4,021)
                                                ---------   ---------   ---------                                     
Total uses                                      (421,696)   (289,165)   (295,223)
Increase (decrease) in cash, cash equivalents 
  and marketable securities                    $ (54,059)  $ (35,710)   $ 63,868

</TABLE>
       Cash, cash equivalents  and  marketable  securities  decreased  by $54.1
million  in  1997  as the Company invested funds raised in equity offerings  in
1996 in apartments.  With  the  expansion  of the Company's apartment holdings,
operating cash flow has grown to $110.9 million  in  1997 from $91.7 million in
1996  and  $82.2  million in 1995. During 1997 net borrowings  provided  $210.5
million in funds. In  July  and  October  the  Company issued a total of $100.0
million of senior unsecured notes; drawings under  the Company's line of credit
totaled $67.8 million at December 31, 1997; and $43.0  million of mortgage debt
was  assumed  in  connection  with the purchase of four apartment  communities.
$16.3  million was reinvested by  shareholders  under  the  Company's  Dividend
Reinvestment and Stock Purchase Plans.

      The  primary use of cash has been apartment acquisitions, development and
improvements  and  dividends.  Dividends  paid  in 1997 increased from the same
periods in 1996 and 1995 due to an increase in the average amount of common and
preferred stock outstanding, and in the case of the  Company's Common Stock, an
increase in the dividends per share to $1.56 from $1.48  in  1996  and $1.40 in
1995.

       CAPITAL  EXPENDITURES.  The Company capitalizes the direct and  indirect
cost of expenditures  for  the acquisition or development of apartments and for
replacements and improvements.  Replacements  are non-revenue producing capital
expenditures which recur on a regular basis, but  which  have  estimated useful
lives  of  more  than  one  year,  such as carpet, vinyl flooring and  exterior
repainting.  Improvements are expenditures  which  significantly  increase  the
revenue  producing  capability  or  which  significantly  reduce  the  cost  of
operating  assets.  At  newly  acquired communities, the Company often finds it
necessary to upgrade the physical  appearance of the properties and to complete
maintenance and repair work which had  been  deferred  by  prior  owners. These
activities often result in heavier capital expenditures in the early  years  of
Company  ownership,  and  some  of these expenditures which would be considered
replacements at stabilized communities  (as  defined  below)  are classified as
improvements at newly acquired properties. In addition to the direct  costs  of
construction,  interest,  real  estate  taxes and other carrying costs incurred
during the development period of apartments  under construction are capitalized
and, upon completion of the project, depreciated over the lives of the project.

      The following table summarizes capital expenditures  for  1997,  1996 and
1995 (dollars in thousands, except per unit data):

<TABLE>
<CAPTION>
                                                    1997        1996        1995
                                                    ----        ----        ----
<S>                                                 <C>         <C>          <C>
Apartment communities:
  Acquisitions                                   $260,213    $139,066    $198,339
  Development projects:
    Development costs                              53,453      59,917      11,749
    Capitalized interest                            5,258       3,164       1,064
  Replacements for stabilized communities(1)        8,250       5,250       3,178
  Improvements(2)                                   6,928       6,979      11,103
Commercial properties                                 175         462         373
Corporate level expenditures                        1,853         419         528
                                                 --------    --------    --------
                                                 $336,130    $215,257    $226,334
                                                 ========    ========    ========
Per Unit:
  Replacements for stabilized communities(1)    $     390   $     285   $     233
  Improvements(2)                               $     235   $     278   $     498
</TABLE>
_____________

(1)   Stabilized communities are those properties which have been owned  for at
      least  two full calendar years. In 1997, 21,156 units were stabilized  as
      compared to 18,410 units in 1996 and 13,665 units in 1995.
(2)   Improvements  include  expenditures  for  all properties owned during the
      period, including replacements at newly acquired communities.

     INFLATION.  Substantially all of the Company's leases are for terms of one
year or less, which should enable the Company to  replace  existing leases with
new  leases at higher rentals in times of rising prices. The  Company  believes
that this would offset the effect of cost increases stemming from inflation.

    FORWARD  LOOKING  STATEMENTS.   This  filing  includes  statements that are
"forward  looking  statements"  regarding expectations with respect  to  market
conditions,  development  projects,   acquisitions,  occupancy  rates,  capital
requirements, sources of funds, expense levels, operating performance and other
matters.  These assumptions and statements  are  subject  to  various  factors,
unknown risks  and  uncertainties, including general economic conditions, local
market factors, delays  and  cost overruns in construction, completion and rent
up  of development communities,  performance  of  consultants  or  other  third
parties,  environmental  concerns,  and  interest rates, any of which may cause
actual results to differ from the Company's current expectations.

<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To the Stockholders of
Merry Land & Investment Company, Inc.

We have audited the accompanying consolidated  balance  sheets  of Merry Land &
Investment  Company, Inc. (a Georgia corporation) as of December 31,  1997  and
1996  and  the   related   consolidated   statements   of  income,  changes  in
stockholders' equity, and cash flows for each of the three  years in the period
ended  December 31, 1997. These financial statements are the responsibility  of
the Company's  management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally  accepted  auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance  about  whether  the  financial  statements  are  free  of
material  misstatement.  An audit includes examining, on a test basis, evidence
supporting the amounts and  disclosures  in  the financial statements. An audit
also  includes  assessing  the  accounting  principles   used  and  significant
estimates  made  by  management,  as  well as evaluating the overall  financial
statement presentation. We believe that  our  audits provide a reasonable basis
for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly,  in  all material respects, the financial  position  of  Merry  Land  &
Investment Company,  Inc.  as  of December 31, 1997 and 1996 and the results of
its operations and its cash flows  for  each  of  the three years in the period
ended  December  31,  1997  in  conformity with generally  accepted  accounting
principles.

    /S/  ARTHUR ANDERSEN LLP
    ------------------------
         Arthur Andersen LLP

Atlanta, Georgia
January 16, 1998

<PAGE>
PART II

Item 8--Financial Statements and Supplementary Data

                     Merry Land & Investment Company, Inc.
                          CONSOLIDATED BALANCE SHEETS
                                (In thousands)
<TABLE>
<CAPTION>
                                                                   December 31,
                                                                   ------------
                                                                1997        1996
                                                                ----        ----
<S>                                                             <C>          <C>
PROPERTIES AT COST
 Apartments                                                $1,496,109  $1,175,427
 Apartments under development                                  48,342      56,110
 Commercial rental property                                     5,363       6,874
 Land held for investment or future development                 4,090       4,090
 Operating equipment                                            3,676       1,817
                                                           ----------  ----------
                                                            1,557,580   1,244,318
 Less accumulated depreciation and depletion                (142,617)   (102,277)
                                                            1,414,963   1,142,041
CASH AND SECURITIES
 Cash and cash equivalents                                        570      32,793
 Marketable securities                                          1,963      23,799
                                                            ---------   ---------
                                                                2,533      56,592
OTHER ASSETS
 Notes receivable                                               1,412         726
 Other receivable                                                 249       2,449
 Deferred loan costs                                            4,639       3,497
 Other                                                          4,085       2,941
                                                            ---------   ---------
                                                               10,385       9,613
TOTAL ASSETS                                               $1,427,881  $1,208,246

NOTES PAYABLE
 Mortgage loans                                            $   70,282  $   27,546
 Senior notes                                                 460,000     360,000
 Note payable--credit line                                     67,800         --
                                                            ---------   ---------
                                                              598,082     387,546
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
 Accrued interest                                               6,622       4,016
 Resident security deposits                                     1,597       1,669
 Accrued property taxes                                        10,780       7,642
 Accrued employee compensation                                  3,471       2,284
 Other                                                          9,997       6,317
                                                            ---------   ---------
                                                               32,467      21,928
STOCKHOLDERS' EQUITY
Preferred  stock,  at  $25  and  $50  
liquidation   preference,  20,000  shares authorized;
 188 and 359 shares $1.75 Series A Cumulative Convertible       4,692       8,970
 4,000 shares $2.205 Series B Cumulative Convertible          100,000     100,000
 4,599 shares, $2.15 Series C Cumulative Convertible          114,985     114,995
 1,000 shares, $4.145 Series D Cumulative Redeemable Preferred 50,000      50,000
Common stock, at $1 stated value, 100,000 shares authorized; 
39,177 and 37,784
 shares issued                                                 39,177      37,784
 Capital surplus                                              525,744     498,907
 Cumulative undistributed net earnings                       (15,730)       2,064
 Notes receivable from stockholders and ESOP                 (21,691)    (17,502)
 Unrealized gain on securities                                    155       3,554
                                                           ----------   ---------
                                                              797,332     798,772
                                                           ----------   ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                 $1,427,881  $1,208,246
                                                           ==========  ==========
</TABLE>

The accompanying notes are an integral part of these consolidated balance 
sheets.

<PAGE>
PART II

Item 8--Financial Statements and Supplementary Data

                      Merry Land & Investment Company, Inc.
                       CONSOLIDATED STATEMENTS OF INCOME
                     (In thousands, except per share data)

<TABLE>
<CAPTION>
                                                       Years ended December 31,
                                                       ------------------------
                                                    1997        1996        1995
                                                    ----        ----        ----
<S>                                                 <C>         <C>         <C>
INCOME
Rental income                                    $208,871    $176,620    $144,778
Mineral royalties                                   1,401         369         436
Mortgage interest                                      84          70          79
Other interest                                      1,794       2,206       5,435
Dividends                                             725       3,178       1,394
Other income                                        5,086       6,177       4,476
                                                 --------    --------    --------
                                                  217,961     188,620     156,598
EXPENSES
Rental expense                                     56,023      48,350      42,180
Interest                                           25,900      22,527      15,646
Depreciation--real estate                          42,464      34,490      26,265
Depreciation--other                                   412         290         208
Amortization--financing costs                         737         569         462
Taxes and insurance                                23,712      19,737      16,347
General and administrative expense                  4,666       2,858       2,396
Other non-recurring expense                            --          --       1,370
                                                 --------    --------    --------
                                                  153,914     128,821     104,874
Income before net realized gains                   64,047      59,799      51,724
Net realized gains                                  1,456       4,207       1,813
                                                 --------    --------    --------
NET INCOME                                         65,503      64,006      53,537
                                                 ========    ========    ========
Dividends to preferred shareholders                23,257      19,843      18,129
                                                 ========    ========    ========
NET INCOME AVAILABLE FOR COMMON SHARES           $ 42,246    $ 44,163    $ 35,408
                                                 ========    ========    ========
Weighted average common shares
 Outstanding                                       38,461      35,919      33,368
 Diluted                                           38,928      36,676      33,418
EARNINGS PER COMMON SHARE
 Basic                                           $   1.10    $   1.23    $   1.06
 Diluted                                         $   1.10    $   1.23    $   1.06
                                                 ========    ========    ========
CASH DIVIDENDS DECLARED PER COMMON SHARE         $   1.56    $   1.48    $   1.40


</TABLE>
 The accompanying notes are an integral part of these consolidated statements.

<PAGE>
PART II

Item 8--Financial Statements and Supplementary Data

                     Merry Land &Investment Company, Inc.
          CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                                (In thousands)

<TABLE>
<CAPTION>
                                                                   Cumulative        Total
                            Preferred Stock  Common Stock  Capital Undistributed  Stockholders'
                           Shares   Amount Shares  Amount  Surplus  Net Earnings     Equity
                           ------   ------ ------  ------  ------- -------------  ------------
<S>                          <C>      <C>   <C>     <C>     <C>           <C>          <C>
BALANCE, DECEMBER 31, 1994  6,516 $162,908 30,744 $30,744 $368,086     $23,113     $584,851
1995 net income                --       --     --      --       --      53,537       53,537
Sale of preferred stock     4,600  115,000     --      --  (5,314)          --      109,686
Common stock issued in conversion
 of preferred stock       (1,849) (46,225)  2,478   2,478   43,747          --           --
Employee purchase and sale of
 common stock                  --      --     226     226    3,966          --        4,192
Increase in notes receivable from
 stockholders                  --      --     --      --   (3,453)          --       (3,453)
Common stock dividends         --      --     --      --       --      (46,734)     (46,734)
Preferred stock dividends      --      --     --      --       --      (18,129)     (18,129)
Dividend reinvestment and stock
 purchase plan                 --      --    552     552   10,618           --       11,170
Common stock redeemed          --      --  (124)   (124)  (2,576)           --       (2,700)
Sale of common stock to ESOP   --      --     --      --  (2,059)           --       (2,059)
Unrealized gain on securities  --      --     --      --    5,498           --        5,498
                              ---   -----  -----  ------  -------   ----------     --------  
BALANCE, DECEMBER 31, 1995 9,267 $231,683 33,876 $33,876 $418,513     $ 11,787     $695,859
1996 net income                --      --     --      --       --        64,006      64,006
Sale of common stock           --      --  2,773   2,773   53,259           --       56,032
Sale of preferred stock     1,000  50,000     --      --  (1,275)           --       48,725
Common stock issued in conversion
 of preferred stock         (308) (7,718)    414     414   7,304            --           --
Employee purchase and sale of
 common stock                  --      --     72      72   1,500            --        1,572
Increase in notes receivable from
 stockholders                  --      --     --      --   (974)      --     (974)
Common stock dividends         --      --     --      --      -- (53,886) (53,886)
Preferred stock dividends      --      --     --      --      -- (19,843) (19,843)
Dividend reinvestment and stock
 purchase plan                 --      --    679     679  13,153      --   13,832
Common stock redeemed          --      --   (30)    (30)   (645)      --     (675)
Sale of common stock to ESOP   --      --     --      --   (732)      --     (732)
Unrealized gain on securities  --      --     --      -- (5,144)      --   (5,144)
                             ---- -------  -----  ------ -------   -----   ------
BALANCE, DECEMBER 31, 1996 9,959 $273,965 37,784 $37,784$484,959 $ 2,064 $798,772
1997 net income                --      --     --      --      --  65,503   65,503
Common stock issued in conversion
 of preferred stock         (172) (4,288)    231     231   4,057      --       --
Employee purchase and sale of
 common stock                  --      --    378     378   7,425      --    7,803
Increase in notes receivable from
 stockholders                  --      --     --      -- (5,262)      --   (5,262)
Common stock dividends         --      --     --      --      -- (60,040) (60,040)
Preferred stock dividends      --      --     --      --      -- (23,257) (23,257)
Dividend reinvestment and stock
 purchase plan                 --      --    784     784  15,354      --   16,138
Sale of common stock to ESOP   --      --     --      --   1,073      --    1,073
Unrealized gain on securities  --      --     --      --  (3,398)     --   (3,398)
                            ----- ------- ------ ------- -------- -------- -------
BALANCE, DECEMBER 31, 1997 9,787 $269,677 39,177 $39,177 $504,208 $(15,730) $797,332

</TABLE>
 The accompanying notes are an integral part of these consolidated statements.

<PAGE>
PART II

Item 8--Financial Statements and Supplementary Data

                     Merry Land & Investment Company, Inc.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (In thousands)

<TABLE>
<CAPTION>
                                                           Years Ended December 31,
                                                           ------------------------
                                                          1997     1996      1995
                                                          ----     ----      ----
<S>                                                       <C>      <C>        <C>
OPERATING ACTIVITIES:
   Rents and royalties received                       $ 210,608 $ 176,968 $145,232
   Interest received                                      2,005     2,345    4,887
   Dividends received                                       725     3,921    1,394
   Rental expense                                      (54,899)  (48,516) (40,981)
   General and administrative expense                   (4,408)   (2,637)  (2,257)
   Interest expense                                    (23,294)  (22,806) (13,575)
   Property taxes and insurance expense                (21,054)  (16,644) (12,461)
   Other                                                  1,241     (965)     (15)
                                                      --------- --------- --------
      Net cash provided by operating activities:        110,925   91,666   82,224
INVESTING ACTIVITIES:
   Principal received on notes receivable                 (687)       85      125
   Sale of securities and temporary investments          26,549   31,340  274,944
   Purchase of securities and temporary investments          --  (5,408)(284,189)
   Sale of real property                                 21,710   14,904      156
   Purchase of real property                          (260,213)(139,066)(198,339)
   Development of real property                        (58,711) (63,081) (12,813)
   Improvements to real property                       (17,206) (13,111) (15,182)
   Nonrecurring expenditures                                 --       --  (1,546)
   Other                                                (1,582)       33  (2,475)
                                                      --------- -------- --------
      Net cash used in investing activities           (290,140)(174,304)(239,319)
FINANCING ACTIVITIES:
   Issuance of senior unsecured notes                   100,000       --  240,000
   Net borrowings (repayments)--bank debt                67,800       -- (57,600)
   Net borrowings (repayments)--repurchase agreements       --        -- (17,375)
   Assumption of mortgage loans                          42,979   27,546    7,041
   Repayments of mortgage loans                           (243)       -- (23,832)
   Cash dividends paid--common                         (60,040) (53,886) (46,739)
   Cash dividends paid--preferred                      (23,257) (19,843) (18,129)
   Sale of common stock--public offerings                    --   56,032       --
   Sale of common stock--reinvested
      dividends and stock purchase plan                  16,138   13,832   11,170
   Sale of common stock--employees                        2,542    3,266      977
   Sale of preferred stock (net of conversions)--           
   public offering                                           --   48,725  109,686
   Common stock retired                                      --  (3,343)  (2,938)
   Net (borrowings) repayments--ESOP                      1,073    (732)  (2,050)
                                                       -------- -------- --------
      Net cash provided by financing activities         146,992   71,597  200,211
NET INCREASE (DECREASE) IN CASH                        (32,223) (11,041)   43,116
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD         32,793   43,834      718
                                                       -------- -------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD            $     570 $ 32,793 $ 43,834
                                                      ========= ======== ========
     RECONCILIATION OF NET INCOME TO CASH FLOWS FROM OPERATING ACTIVITIES
Net income                                            $  65,503 $ 64,006 $ 53,537
Adjustments  to  reconcile  net  income  to  net  cash  provided  by  operating
activities:
Depreciation and amortization                            43,613   35,349   26,935
(Increase) decrease in interest and accounts receivable      69  (1,572)    (586)
(Increase) decrease in other assets                     (2,604)    (865)  (2,012)
Increase (decrease) in accounts payable and accrued 
 interest                                                 4,727  (1,853)    6,163
Gain on the sale of marketable securities                 (996)  (2,679)  (1,673)
Gain on the sale of real estate                           (460)  (1,528)    (140)
ESOP contributions                                        1,073      808      --
                                                       -------- -------- --------
Net cash provided by operating activities             $ 110,925 $ 91,666 $ 82,224
                                                      ========= ======== ========
</TABLE>
 The accompanying notes are an integral part of these consolidated statements.


<PAGE>
PART II

Item 8--Financial Statements and Supplementary Data

                     MERRY LAND & INVESTMENT COMPANY, INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  NATURE OF BUSINESS

    Merry  Land  &  Investment Company, Inc. is an apartment operating company,
which acquires, builds  and  operates  upscale apartment communities throughout
the Southern United States. The Company  is  taxed  as a real estate investment
trust (REIT).

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

  RECOGNITION OF INCOME

    The Company leases its apartment properties generally for terms of one year
or less. Rental income is recognized when    earned    .

  DEPRECIATION AND AMORTIZATION

    Depreciation  of buildings and equipment is computed  on  the straight-line
method  for  financial reporting purposes using the following estimated  useful
lives:

Apartments                                                        40-50 years
Land improvements                                                 50    years
Commercial rental buildings                                       40-50 years
Furniture, fixtures, equipment and carpet                         5-15  years
Operating equipment                                               3-5   years

     Straight-line  and  accelerated  methods are used for income tax reporting
purposes. Betterments, renewals and extraordinary repairs that extend the lives
of assets are capitalized; other repairs and maintenance are expensed. In 1996,
the  Company  adopted  Statement  of  Financial  Accounting  Standard  ("SFAS")
No. 121. The adoption had no effect on the financial statements.

  INCOME TAXES

    As a real estate investment trust, the Company does not pay income taxes on
its distributed income. It does pay income  taxes  on  that income which is not
distributed, and it may be subject to excise taxes on income  distributed after
certain dates. See Note 5 for a further discussion of income taxes.

  EARNINGS PER SHARE AND SHARE INFORMATION

    In 1997, the Company adopted SFAS 128, "Earnings Per Share."  In accordance
with  this standard, basic earnings per share is computed on the basis  of  the
weighted average number of shares outstanding during the year. Diluted earnings
per share  is  computed  giving  effect  to dilutive stock options and dilutive
preferred stock (Series A) with an applicable reduction in preferred dividends.

  PRINCIPLES OF CONSOLIDATION

    The consolidated financial statements  include  the accounts of the Company
and  its  wholly-owned corporations and limited partnerships.  Any  significant
intercompany transactions and accounts have been eliminated in consolidation.

  USE OF ESTIMATES

    The preparation  of  these financial statements required the use of certain
estimates  by management in  determining  the  Company's  assets,  liabilities,
revenue and expenses. Actual results may differ from these estimates.

  CASH AND CASH EQUIVALENTS

    For purposes  of  the  statements  of cash flows, all investments purchased
with an original maturity of three months  or  less  are  considered to be cash
equivalents.

  RECENT ACCOUNTING PRONOUNCEMENTS

    In June 1997, SFAS No. 130, "Reporting Comprehensive Income,"  was  issued,
effective   for  years  beginning  after  December  15,  1997.  This  statement
establishes standards for reporting and display of comprehensive income and its
components in  a  full  set  of  general purpose financial statements. Based on
current accounting standards, this  new accounting statement is not expected to
have a material impact on the Company's  consolidated financial statements. The
Company will adopt this accounting standard in 1998.

    Also  in  June  1997,  SFAS  No.  131, "Disclosure  about  Segments  of  an
Enterprise and Related Information," was  issued, effective for years beginning
after December 15, 1997. This statement requires companies to identify segments
consistent with the manner in which management makes decisions about allocating
resources  to  segments and measuring their performance.  Disclosures  for  the
newly  identified   segments  are  similar  to  those  required  under  current
standards, with the addition  of  certain quarterly disclosure requirements. It
also establishes standards for related disclosures about products and services,
geographic areas and major customers.  The  Company  will adopt this accounting
standard in 1998.

  DEVELOPMENT ACTIVITIES

    The  cost  of  developed  properties  includes  interest,  property  taxes,
insurance and allocated development overhead incurred  during  the construction
period. Interest of $5.3 million and $3.2 million was capitalized  during  1997
and 1996, respectively.

3.  MARKETABLE SECURITIES

    The  cost  and  market  value  of  securities  by  major  classification at
December 31 were as follows:
<TABLE>
<CAPTION>
                                1997               1996                 1995
                                ----               ----                 ----
                           COST    MARKET     COST     MARKET      COST     MARKET
                           ----    ------     ----     ------      ----     ------
<S>                        <C>      <C>      <C>        <C>       <C>        <C>     
Common stocks             $1,808   $1,963   $18,339   $21,361    $37,864   $46,018
Corporate debentures          --       --     1,906     2,438      1,906     2,450
                          ------   ------   -------   -------    -------   -------
                          $1,808   $1,963   $20,245   $23,799    $39,770   $48,468
                          ======   ======   =======   =======    =======   =======
</TABLE>
     On January 1, 1994, the Company adopted SFAS No. 115 and began classifying
its  marketable securities as available for sale and reporting them  at  market
value  with  unrealized  gains  and  losses reported as a separate component of
shareholders'  equity.  Changes  in  net  unrealized   gains  are  recorded  as
adjustments to this account and not as credits or charges to earnings.

4.  BORROWINGS

    Borrowings outstanding at December 31, 1997 and 1996  were  as  follows (in
thousands):

<TABLE>
<CAPTION>
                                                                1997        1996
                                                                ----        ----                   
<S>                                                             <C>         <C>
9.760% mortgage notes(a)                                     $ 12,642    $ 12,720
7.750% mortgage note(b)                                         9,600       9,600
7.625% mortgage note(c)                                         5,147       5,226
7.210% mortgage note(d)                                         9,423          --
7.125% mortgage note(e)                                        14,713          --
7.570% mortgage note(f)                                         9,828          --
8.250% mortgage note(g)                                         8,929          --
6.625% senior unsecured notes(h)                              120,000     120,000
7.250% senior unsecured notes(i)                               40,000      40,000
6.875% senior unsecured notes(j)                               40,000      40,000
6.875% senior unsecured notes(k)                               40,000      40,000
7.250% senior unsecured notes(l)                              120,000     120,000
6.690% senior unsecured notes(m)                               50,000          --
6.900% senior unsecured notes(n)                               50,000          --
Advance under unsecured line of credit(o)                      67,800          --
                                                             --------    --------
                                                             $598,082    $387,546

</TABLE>
(a)  $10.6  million  and  $2.0  million,  9.760% mortgage notes, principal  and
      interest payable monthly, maturity 2001.
(b)  7.750% mortgage note, interest payable monthly, maturity 2002.
(c)  7.625%  mortgage note, principal and interest  payable  monthly,  maturity
      2005.
(d)  7.210% mortgage  note,  principal  and  interest payable monthly, maturity
      2001.
(e)  $0.8 million and $8.0 million and $5.9  million,  7.125%  mortgage
     notes, principal and interest payable monthly, maturity 2006.
(f)  7.570% mortgage  note,  principal  and  interest payable monthly, maturity
      2001.
(g)  8.250%  mortgage note, principal and interest  payable  monthly,  maturity
      2001.
(h)  6.625% notes,  interest  payable  semi-annually, principal installments of
      $40.0 million each due 1999, 2000, and 2001.
(i)  7.250% notes, interest payable semi-annually, maturity 2002.
(j)  6.875% notes, interest payable semi-annually, maturity 2003.
(k)  6.875% notes, interest payable semi-annually, maturity 2004.
(l)  7.250% notes, interest payable semi-annually, maturity 2005.
(m)  6.690% notes, principal and interest payable semi-annually, maturity 2006.
(n)  6.900%  notes,  principal  and interest  payable  semi-annually,  maturity
      August, 2007.
(o)  $200 million line of credit  bearing interest equal to floating LIBOR plus
      0.60%, maturity September, 2000.

     The  Company  estimates  that  the  aggregate  fair  value  of  borrowings
approximates  their  carrying  value  at   December  31,  1997.  Maturities  of
borrowings at December 31, 1997 were as follows (in thousands):
<TABLE>
<CAPTION>
                                                                            Loan
                                                                           Amount
                                                                           ------
<S>                                                                          <C>
1998                                                                     $ 68,511
1999                                                                       40,768
2000                                                                       40,829
2001                                                                       80,038
2002                                                                       54,700
2003                                                                       40,364
2004                                                                       40,391
2005                                                                      120,419
2006                                                                       62,062
2007                                                                       50,000
                                                                         --------
                                                                         $598,082
                                                                         ========
</TABLE>

5.  INCOME TAXES

    As discussed in Note 1, the Company has  elected to be taxed as a REIT. The
Internal Revenue Code provides that a REIT, which  in  any  taxable  year meets
certain  requirements and distributes to its stockholders at least 95%  of  its
ordinary taxable  income,  will  not  be  subject to federal income taxation on
taxable  income  which  is distributed. The Company  distributed  the  required
amounts of income for the  periods  reported.  Accordingly,  no  provision  for
income taxes is required.

    The  Company's  taxable  income  differs  from  its  income reported in the
accompanying financial statements because of the difference  in  the  timing of
recognition  of  certain  items  of  income  and  expense  for  tax purposes. A
reconciliation of tax and book income follows:


<TABLE>
<CAPTION>
                                                           1997     1996     1995
                                                           ----     ----     ----
<S>                                                        <C>      <C>       <C>
Net income                                              $65,503  $64,006  $53,537
Excess of tax over accounting depreciation              (5,725)  (5,451)  (6,944)
Other                                                     2,572     (85)    2,423

Estimated taxable income                                $62,350  $58,470  $49,016
                                                        =======  =======  =======
</TABLE>

6.  INCENTIVE STOCK OPTION PLAN

    Under  the  Company's  incentive stock option plan, at December  31,  1997,
there were 1,727,800 shares available for grant and 619,100 exercisable options
outstanding. Options granted under the plan expire ten years from date of grant
and may not be exercised at  a  rate  greater  than  20% per year. Shares under
option which subsequently expire or are canceled are available  for  subsequent
grant. The option price is equal to the market price of the shares on  the date
of the option grants.

    Options  outstanding for the years ended December 31, 1997, 1996, and  1995
are as follows:

Balance, December 31, 1995                                         510,000
   Issued (at $20.88 per share)                                    790,000
   Exercised (weighted average $18.58 per share)                   (50,300)
   Canceled (weighted average $19.98 per share)                    (66,000)
                                                                 ---------
Balance, December 31, 1996                                       1,183,700
   Issued (weighted average $21.03 per share)                      577,500
   Exercised (weighted average $20.51 per share)                  (220,700)
   Canceled (weighted average $20.66 per share)                    (75,300)
                                                                 ---------
Balance, December 31, 1997 (weighted average $20.31 per share)   1,465,200

The following  table  summarizes information about stock options outstanding at
December 31, 1997:

<TABLE>
<CAPTION>
                                                                          Number
                                                                       Exercisable
       Award         Outstanding     Remaining                              at
       Date          at 12/31/97  Contractual Life   Exercise Price      12/31/97
      ------         -----------  ----------------   --------------     ----------
      <S>               <C>            <C>                 <C>             <C>
     3/16/92            14,000       4.3 yrs.             $8.25            14,000
     7/12/93            54,000       5.6 yrs.             16.63            54,000
      9/1/93            25,000       5.8 yrs.             18.75            25,000
     1/18/94            45,000       6.1 yrs.             20.88            36,000
     8/18/94           206,700       6.7 yrs.             19.00           160,700
     11/3/94            20,000       6.9 yrs.             17.88            16,000
     4/15/96           541,500       8.3 yrs.             20.88           212,400
     1/17/97           211,000       9.0 yrs.             21.50            37,000
     4/28/97           243,000       9.3 yrs.             20.50            47,000
     5/12/97            50,000       9.4 yrs.             21.13            10,000
     5/19/97            10,000       9.4 yrs.             20.88             2,000
     5/20/97            25,000       9.4 yrs.             21.00             5,000
     7/28/97             7,500       9.6 yrs.             21.88                 0
    10/27/97            12,500       9.8 yrs.             21.94                 0
                     ---------                                            -------
                     1,465,200                                            619,100

</TABLE>
     During 1997, 1996  and  1995,  the  Company  loaned officers and employees
$10.5 million, $3.3 million and $4.4 million respectively,  to  purchase shares
of  the Company's common stock. The loans are secured by the shares  purchased,
carry a 0% interest rate, and are due upon demand. The Company requires that at
least  60% of dividends paid on these shares be used to repay the indebtedness.
$5.2 million, $2.3 million and $0.9 million were repaid in 1997, 1996 and 1995.
At  December   31,  1997,  the  balance  of  officer  and  employee  loans  was
$19 million.

     The Company  accounts  for  its  stock-based  compensation plans under APB
No.  25,  under which no compensation expense has been  recognized,  since  all
options have been granted with an exercise price equal to the fair value of the
Company's stock  on the date of grant. The Company adopted SFAS No. 123 in 1996
for disclosure purposes  and  estimated  the  fair  value  of each option grant
during  1997  and  1996 as of the date of grant using the Black-Scholes  option
pricing  model  with the  following  weighted  average  assumptions:  risk-free
interest rate of  6.6%,  expected  life of seven years, dividend yield of 7.4%,
and expected volatility of 25%. Using  these assumptions, the fair value of the
stock  options  granted  in 1997 and 1996 is  $1.5  million  and  $2.0  million
respectively which would be  amortized as compensation expense over the vesting
period of the options. Options  generally  vest  equally  over  five years. Had
compensation expense for the plans been recorded in accordance with  SFAS  123,
the  Company's  net  income  available for common shareholders and earnings per
share would have been reduced to the pro forma amounts indicated below:

<TABLE>
<CAPTION>
                                                                 1997        1996
                                                                 ----        ----
<S>                                                             <C>          <C>
Net Income:
   As reported                                                $42,246     $44,163
   Pro Forma                                                  $41,601     $43,865
Earnings per Share:
   As reported (basic and diluted)                               1.10        1.23
   Pro Forma (basic and diluted)                              $  1.08     $  1.22

</TABLE>
Basic and diluted earnings per share are computed as follows:

<TABLE>
<CAPTION>
                                                    1997        1996        1995
                                                    ----        ----        ----
<S>                                                <C>          <C>         <C>
BASIC:
   Net income                                 $65,503,469 $64,006,073 $53,537,199
   Preferred dividend requirement              23,257,662  19,842,834  18,129,144
                                              ----------- ----------- -----------
   Net income available for common            $42,245,807 $44,163,239 $35,408,055
                                              =========== =========== ===========
   Average common shares outstanding           38,460,687  35,918,565  33,367,527
   Basic earnings per share                   $      1.10 $      1.23 $      1.06
                                              =========== =========== ===========
DILUTED:
   Net income                                 $65,503,469 $64,006,073 $53,537,199
   Preferred dividend requirement              22,779,499  18,944,799  18,129,144
                                              ----------- ----------- -----------
   Net income available for common            $42,723,970 $45,061,274 $35,408,055
                                              =========== =========== ===========
   Dilutive convertible preferred shares          366,136     687,638           0
   Dilutive stock options                         101,300      70,100      50,200
   Average common shares outstanding           38,460,687  35,918,565  33,367,527
                                              ----------- ----------- -----------
   Average diluted common shares outstanding   38,928,123  36,676,303  33,417,727
                                              =========== =========== ===========
   Diluted earnings per share                 $      1.10 $      1.23 $      1.06

</TABLE>
7.  EMPLOYEE STOCK OWNERSHIP PLAN

    The Company maintains an Employee  Stock  Ownership  Plan  under  which the
Company  makes  annual  contributions  to  a  trust for the benefit of eligible
employees  in the form of either cash or common  shares  of  the  Company.  The
amount of the  annual  contribution  is  discretionary. The Company contributed
$0.9 million, $1.1 million and $0.8 million  in  1997,  1996 and 1995. In 1996,
the Company loaned the ESOP $1.5 million to buy 75,000 shares  of the Company's
common  stock.  At December 31, 1997, the balance of this note and  a  previous
note was $2.4 million. Both notes bear an interest rate equal to the thirty-day
LIBOR rate plus 65  basis  points.  The  notes  are  due  December 31, 2002 and
December 31, 2003.

8.  PREFERRED STOCK

     On December 5, 1996, the Company in a public offering  issued  1.0 million
shares   of   Series   D   Redeemable  Preferred  Stock  for  net  proceeds  of
$48.7 million. On March 8, 1995,  the  Company  issued  4.6  million  shares of
Series  C  Cumulative Convertible Preferred Stock in a public offering for  net
proceeds of  $109.8  million.  In  1994, the Company sold 4.0 million shares of
Series  B  Cumulative  Convertible  Preferred   Stock   for   net  proceeds  of
$96.7  million  to  a small group of institutional investors. The  Company  has
granted registration rights to the holders of the Series B and Series D shares.
In 1993, the Company  sold  to  the  public  4.6  million  shares  of  Series A
Cumulative  Convertible  Preferred  Stock  for  net proceeds of $109.2 million.
During 1997, Series A Cumulative Convertible Preferred  shareholders  converted
170 thousand shares to 230 thousand shares of the Company's common stock and at
December  31,  1997,  4.4  million  shares  of  Series  A had been converted to
5.9  million  shares  of  common stock leaving 0.2 million shares  outstanding.
Preferred stock at December 31, 1997 was as follows:

<TABLE>
<CAPTION>
                        PREFERRED A          PREFERRED B    PREFERRED C       PREFERRED D
                        -----------          -----------    -----------       -----------
<S>                         <C>                  <C>            <C>              <C>
Price per share            $25.00              $25.00         $25.00            $50.00
Shares issued           4,600,000           4,000,000      4,600,000         1,000,000
Shares outstanding        187,666           4,000,000      4,599,400         1,000,000
Dividend per share          $1.75              $2.205       $2.15(a)            $4.145
Call date           June 30, 1998    October 31, 1999 March 31, 2000 December 10, 2026
Conversion price           $18.65              $21.04         $22.00             --(b)
</TABLE>
______________

(a)  The Series C Preferred Stock contains a "ratchet" provision which provides
      that the preferred dividend  rate shall be increased if necessary so that
      it will always be the greater of $2.15 per share or the dividends payable
      on the number of shares of common stock into which the Series C Preferred
      Stock is convertible.
(b)  The Series D Preferred Stock is  not convertible into any other securities
      of the Company.

9.  DIVIDENDS

    In 1997, the Company paid dividends per share as follows:

<TABLE>
<CAPTION>
                                    COMMON PREFERRED A PREFERRED B PREFERRED C PREFERRED D
                                    ------ ----------- ----------- ----------- ----------- 
      <S>                             <C>       <C>        <C>          <C>        <C>        
     March 31                         $.39      $.4375    $.55125      $.5375    $1.03625
     June 30                           .39       .4375     .55125       .5375     1.03625
     September 29                      .39       .4375     .55125       .5375     1.03625
     December 29                       .39       .4375     .55125       .5375     1.03625
     Total                           $1.56     $1.7500   $2.20500     $2.1500    $4.14500

</TABLE>
     The ordinary, long-term capital gains  and return of capital distributions
for 1997 were as follows:

<TABLE>
<CAPTION>
                                    Common  Preferred A Preferred B Preferred C Preferred D
                                   Dividends Dividends   Dividends   Dividends   Dividends
                                   --------- ---------  ----------  ----------- -----------
<S>                                  <C>        <C>        <C>         <C>         <C>
Ordinary                            56.44%     84.88%     84.88%       84.88%    84.88%
Return of Capital                   33.50          0          0            0         0
Long-term capital gain              10.06      15.12      15.12        15.12     15.12
                                   ------     ------     ------       -------   ------     
                                   100.00%    100.00%    100.00%      100.00%   100.00%

</TABLE>
     On January 19, 1998, the Company declared  a $.41 per common share, $.4375
per Preferred A share, $.55125 per Preferred B share,  $.5375  per  Preferred C
share  and  $1.03625  per  Preferred D per share dividend payable on March  31,
1998.

     The Company's dividend  reinvestment  plan allows any shareholder to elect
to use all or a portion of cash dividends paid  to acquire additional shares of
the Company's common stock at a price equal to 95%  of  the  higher of: (a) the
average of the high and low sales prices of the Company's common  stock  on the
dividend  payment  date,  or  (b)  the  average of the daily high and low sales
prices for the ten trading days prior to  the  dividend  payment  date.  During
1997, 550,876 shares were issued at a total value of $11.5 million.

    In  December  1993,  the  Company  established  a Stock Purchase Plan which
provides  holders  of  the Company's common stock and preferred  stock  with  a
method of purchasing additional  common  stock  of the Company through optional
cash payments without fees and at a 5% discount.  Optional  cash  payments  are
subject  to  the limitation that the number of shares of common stock which can
be purchased cannot  exceed  the number of shares of common and preferred stock
owned by the shareholder. During  1997,  233,031 shares were issued for a total
value of $4.9 million.

<PAGE>
PART II

Item  9--Changes  in  and  Disagreements with  Accountants  on  Accounting  and
Financial Disclosure

    None


PART III

Item 10--Directors and Executive Officers of the Registrant

     Incorporated by reference  to  the Company's definitive proxy statement to
     be filed with the Securities and Exchange Commission.

Item 11--Executive Compensation

     Incorporated by reference to the  Company's  definitive proxy statement to
     be filed with the Securities and Exchange Commission.

Item 12--Security Ownership of Certain Beneficial Owners and Management

     Incorporated by reference to the Company's definitive  proxy  statement to
     be filed with the Securities and Exchange Commission.

Item 13--Certain Relationships and Related Transactions

     Incorporated  by reference to the Company's definitive proxy statement  to
     be filed with the Securities and Exchange Commission.


<PAGE>
PART IV

Item 14--Exhibits, Financial Statement Schedules, and Reports on Form 8-K

    (a)  FINANCIAL STATEMENTS.   The  following  schedule  lists  the financial
statements as filed as part of this report:

         Report of Independent Public Accountants
         Balance Sheets
         Statements of Income
         Statements of Changes in Stockholders' Equity
         Statements of Cash Flows
         Reconciliation of Net Income to Cash Flows
           Notes to Financial Statements

2.  FINANCIAL STATEMENT SCHEDULES.  The following schedule lists the  financial
statement schedules required to be filed by Item 8 and Item 14(d) of Form 10-K:

         Report of Independent Public Accountants on Schedules
         Real Estate and Accumulated Depreciation

3.  Exhibits.

(3.i) --  Amended  and Restated Articles of Incorporation (incorporated  herein
          by reference  to  Exhibit  4(a)  to  the Company's Shelf Registration
          Statement on Form S-3 filed December 15, 1995, file number 33-65067),
          as amended by Articles of Amendment to  Articles  of Incorporation re
          Series  D  Preferred  Stock  (incorporated  herein  by  reference  to
          Exhibit  4  to  the  Company's  current  report  on  Form  8-K  filed
          December  11,  1996), and as further amended by Articles of Amendment
          to  Articles  of  Incorporation   re   Series   E   Preferred   Stock
          (incorporated  herein  by  reference  to  Exhibit  B of the Company's
          Form 8-A filed February 11, 1998).
(3.ii) -- By-laws (incorporated herein by reference to Exhibit 3(ii) of Item 14
          of  the  Company's  Annual  Report  on Form 10-K for the  year  ended
          December 31, 1993).
(4)  --   INSTRUMENTS DEFINING RIGHTS OF SECURITY HOLDERS, INCLUDING INDENTURES
(4.1) --  The Company's $120,000,000 7 1/4% Notes due 2005 (incorporated herein
          by reference to Item 7, Exhibit 4A to  the  Company's  Form 8-K filed
          June 23, 1995).
(4.2) --  Indenture (incorporated herein by reference to Item 7, Exhibit  4B to
          the Company's Form 8-K filed June 23, 1995).
(4.3) --  First  Supplemental  Indenture  (incorporated  herein by reference to
          Item 7, Exhibit 4C to the Company's Form 8-K filed June 23, 1995).
(4.4) --  The Company's $40,000,000 7 1/4% Notes due 2002  (incorporated herein
          by  reference  to  Exhibit  4A  to  the Company's on Form  8-K  filed
          September 1, 1995).
(4.5) --  The  Company's  $40,000,000 6.875% Notes  due  2003  and  $40,000,000
          6.875% Notes due 2004 (incorporated herein by reference to Exhibit 4A
          to the Company's Form 8-K filed November 8, 1995.)
(4.6) --  The Company's $50,000,000  6.90%  Notes due 2007 (incorporated herein
          by reference to Exhibit 4A to the Company's  Form  8-K filed July 29,
          1997.)
(4.7) --  The  Company's $50,000,000 6.69% Notes due 2006 (incorporated  herein
          by  reference   to  Exhibit  4A  to  the  Company's  Form  8-K  filed
          October 31, 1997.)
(10) --   MATERIAL CONTRACTS.
(10.1) -- $120,000,000   6.625%    Senior    Notes/Note    Purchase   Agreement
          (incorporated herein by reference to Exhibit 10.ii  of  Item 6 of the
          Company's  Quarterly  Report  on  Form  10-Q  for  the  quarter ended
          September 30, 1993).
(10.2) -- Executive   Officer   Restricted   Stock   Loan   Plan,   as  amended
          (incorporated   herein  by  reference  to  Exhibit  (10.2.2)  of  the
          Company's Annual  Report on Form 10-K for the year ended December 31,
          1993).
(10.3) -- Employee  Stock Ownership  Plan  and  Trust  Agreement  (incorporated
          herein by reference  to  Exhibit (10.2.3) of Item 14 of the Company's
          Annual Report on Form 10-K for the year ended December 31, 1993).
(10.4) -- Credit Agreement between the  Company and Lenders dated September 16,
          1997, (incorporated herein by reference  to Item 7, Exhibit 10 to the
          Company's report on Form 8-K filed September 22, 1997)
(10.5) -- Stock Option and Incentive Plan (incorporated  herein by reference to
          Appendix "A" to the Company's 1997 Proxy Statement  on  Form  DEF-14A
          filed March 24, 1997)
(11) --   Statement regarding computation of per share earnings.
(21) --   Subsidiaries  of the subsidiaries of Merry Land & Investment Company,
          Inc.:

                                          State of     Names Under Which
Name                Type of Entity        Formation  Subsidiary Does Business
----                --------------        ---------  ------------------------
Merry Land Apartment                                   Merry Land Apartment
Communities, Inc.       Corporation        Maryland       Communities

ML Apartments Limited   Corporation        Maryland  ML Apartment Limited

ML Texas Apartments LP Limited Partnership  Texas    ML Texas Apartments

ML North Carolina                                    ML North Carolina
  Apartments LP        Limited Partnership Georgia     Apartments LP

ML Tennessee           Limited Partnership Georgia   ML Tennessee
Apartments LP                                          Apartments LP

ML Alabama               Corporation       Alabama   ML Alabama
Apartments, Inc.                                       Apartments LP

MLA, Inc.                Corporation       Georgia   MLA, Inc.

McCaslin Riverhill,    Limited Partnership  Texas    McCaslin Riverhill
Ltd.

The Wimberly Apartment Limited Partnership  Texas    The Wimberly
Homes, Ltd.                                            Apartment Homes

McCaslin Hidden Lakes, Limited Partnership  Texas    McCaslin Hidden Lakes
Ltd.

(23) --   Consent of Arthur Andersen, LLP
(27) --   Financial Data Schedule (for SEC use only).

   b) --  Reports on Form  8-K. The registrant filed reports on Form 8-K during
          the last quarter of  1997  as  follows  with respect to the following
          matters.

<TABLE>
<CAPTION>

FORM        ITEMS               DATE FILED       LOCATION           FINANCIAL STATEMENTS
----        -----               ----------       --------           --------------------
<S>         <C>                  <C>               <C>                 <C>
8-K   5,7 (Acquisition of four  October 8, 1997   Duluth, Ga        Audited Statements
      apartment communities)                      Dallas, Tex.      and Pro Forma
                                                                    Financial Statements
8-K   5 (Acquisition of two     October 8, 1997   Houston, Tex.     N/A
      apartment communities)

8-K   5,7 ($50MM 6.69% Notes    October 31, 1997     N/A            N/A
      due 2006)

8-K   5 (Completion of Public   February 13, 1998    N/A            N/A
      Offering of Series E 
      Preferred Stock)


<PAGE>

To the Shareholders of
Merry Land & Investment Company, Inc.

We have audited in accordance with generally accepted  auditing  standards, the
consolidated financial statements included in this Form 10-K, and  have  issued
our  report  thereon dated January 16, 1998. Our audit was made for the purpose
of forming an  opinion  on  those  statements  taken  as a whole. The schedules
listed in Item 14 are the responsibility of the Company's  management  and  are
presented   for   purposes  of  complying  with  the  Securities  and  Exchange
Commission's rules  and  are  not part of the basic financial statements. These
schedules have been subjected to  the  auditing procedures applied in the audit
of the basic financial statements and, in  our  opinion,  fairly  state  in all
material  respects  the  financial  data  required  to  be set forth therein in
relation to the basic financial statements taken as a whole.

    /S/  ARTHUR ANDERSEN LLP
           Arthur Andersen LLP

Atlanta, Georgia
January 16, 1998


<PAGE>
PART IV

Item  14--Schedule XI--Real Estate and Accumulated Depreciation  for the Year
Ending December 31, 1997:


</TABLE>
<TABLE>
<CAPTION>
                                          Cost Capitalized            Gross Amount at Which
                Initial Cost to Company Subsequent to Acquisition Carried at December 31, 1997 Accumulated           Depre-
                  Buildings &                 Carrying             Buildings &   Total  Depreciation   Date of  Date ciable 
Residential Land  Improvements Improvements   Cost         Land    Improvements   (a)       (aP)       Constr.  Acq.  Life
----------- ----  ------------ ------------   -----        ----    ------------  -----    -------   ----------  ----  ----
<S>         <C>     <C>             <C>         <C>        <C>         <C>       <C>        <C>        <C>      <C>  <C>    
1.    $1,500,000  $ 12,712,085  $14,334,143            $1,500,000  $27,046,228 $28,546,228 $2,105,408  1987    1994 5-50 yr.
2.     3,576,000    15,671,192    1,127,193             3,576,000   16,798,385  20,374,385  2,567,866  1990    1993 5-50 yr.
3.     1,110,000     6,330,825    1,027,057             1,110,000    7,357,882   8,467,882  1,192,864  1988    1993 5-50 yr.
4.     3,840,000    17,219,224    1,831,230             3,840,000   19,050,454  22,890,454  2,945,724  1991    1993 5-50 yr.
5.     2,080,000     9,957,175      384,122             2,080,000   10,341,297  12,421,297  1,073,315  1990    1995 5-50 yr.
6.     1,580,000    10,983,800      971,654             1,580,000   11,955,454  13,535,454  1,802,704  1988    1993 5-50 yr.
7.     2,120,000    13,195,900    1,418,343             2,120,000   14,614,243  16,734,243  2,157,767  1988    1993 5-50 yr.
8.       805,550     7,166,331    1,051,951               805,550    8,218,282   9,023,832  2,270,885  1982    1990 5-50 yr.
9.     1,503,000    13,553,192      919,341             1,503,000   14,472,533  15,975,533  1,419,457  1989    1994 5-50 yr.
10.    2,592,000    13,375,363    1,158,803             2,592,000   14,534,166  17,126,166  2,061,461  1991    1993 5-50 yr.
11.       65,000       259,675    1,567,939                65,000    1,827,614   1,892,614    576,333  1918(b) 1983 5-50 yr.
12.      954,000     9,083,755      448,371               954,000    9,532,126  10,486,126    907,966  1988    1994 5-50 yr.
13.    1,134,000    10,158,363      569,070             1,134,000   10,727,433  11,861,433  1,017,354  1987    1994 5-50 yr.
14.    1,818,000    21,740,650      150,043             1,818,000   21,890,693  23,708,693    212,144  1996    1997 5-50 yr.
15.      700,000     5,620,292    1,105,789               700,000    6,726,081   7,426,081  2,048,209  1986    1990 5-50 yr.
16.      635,000     2,901,168   20,711,036               635,000   23,612,204  24,247,204  1,130,975  1986    1994 5-50 yr.
17.    2,048,000     9,710,500    2,080,518             2,048,000   11,791,018  13,839,018  1,497,947  1986    1993 5-50 yr.
18.      891,000    10,883,905      362,725               891,000   11,246,630  12,137,630  1,048,827  1984    1994 5-50 yr.
19.    1,500,000    16,142,858      826,636             1,500,000   16,969,494  18,469,494  2,388,834  1991    1993 5-50 yr.
20.    1,936,000     7,939,000    1,541,663             1,936,000    9,480,663  11,416,663  1,249,086  1987    1993 5-50 yr.
21.    1,200,000     9,985,256      997,101             1,200,000   10,982,357  12,182,357  1,970,553  1989    1992 5-50 yr.
22.      912,000     7,717,525      490,213               912,000    8,207,738   9,119,738    351,970  1987    1996 5-50 yr.
23.    2,160,000    19,980,440      137,073             2,160,000   20,117,513  22,277,513    327,271  1996    1997 5-50 yr.
24.    1,630,000    12,880,863    1,734,707             1,630,000   14,615,570  16,245,570  2,254,648  1990    1993 5-50 yr.
25.    1,008,000     5,133,133    1,000,503             1,008,000    6,133,636   7,141,636  1,018,817  1983    1993 5-50 yr.
26.    1,629,000    15,936,411      987,441             1,629,000   16,923,852  18,552,852  1,650,774  1987    1994 5-50 yr.
27.    1,260,000     8,584,736      696,681             1,260,000    9,281,417  10,541,417    947,313  1984    1994 5-50 yr.
28.      888,000     4,241,225      228,921               888,000    4,470,146   5,358,146    293,958  1989    1996 5-50 yr.
29.    1,963,000    16,037,341      285,468             1,963,000   16,322,809  18,285,809    773,253  1995    1996 5-50 yr.
30.    1,440,000     6,210,000      940,447             1,440,000    7,150,447   8,590,447  1,074,647  1985    1993 5-50 yr.
31.      325,000     6,001,731    1,065,060               325,000    7,066,791   7,391,791  2,077,609  1983    1986 5-50 yr.
32.    2,632,000    16,839,075    1,433,842             2,632,000   18,272,917  20,904,917  2,635,148  1990    1992 5-50 yr.
33.      258,277    21,126,910            0               258,277   21,126,910  21,385,187    258,814  1990    1992 5-50 yr.
34.      752,000     9,759,351    1,068,936               752,000   10,828,287  11,580,287  1,885,051  1986    1992 5-50 yr.
35.      480,000     5,917,041      672,998               480,000    6,590,039   7,070,039  1,464,170  1985    1991 5-50 yr.
36.    1,323,000    12,864,616    1,410,628             1,323,000   14,275,244  15,598,244  1,418,863  1984    1994 5-50 yr.
37.    1,872,000    18,134,684      133,848             1,872,000   18,268,532  20,140,532    177,901  1996    1997 5-50 yr.
38.      450,000     5,256,127      833,452               450,000    6,089,579   6,539,579  1,467,167  1987    1991 5-50 yr.
39.      990,000     9,016,445      894,165               990,000    9,910,610  10,900,610  1,748,398  1990    1992 5-50 yr.
40.      485,100     4,371,125      478,590               485,100    4,849,715   5,334,815    846,763  1986    1992 5-50 yr.
41.    1,520,000     9,414,575      680,577             1,520,000   10,095,152  11,615,152  1,204,856  1989    1994 5-50 yr.
42.    1,040,000     8,071,809      526,330             1,040,000    8,598,139   9,638,139    876,504  1986    1995 5-50 yr.
43.    2,916,000    12,418,026       81,250             2,916,000   12,499,276  15,415,276             1994    1997 5-50 yr.
44.    1,058,975     8,096,736    1,583,233             1,058,975    9,679,969  10,738,944  2,105,636  1984  1989(c)5-50 yr.
45.    2,100,000     9,600,000      408,950             2,100,000   10,008,950  12,108,950  1,306,296  1991    1993 5-50 yr.
46.    1,314,000     9,978,363      538,603             1,314,000   10,516,966  11,830,966  1,046,636  1986    1994 5-50 yr.
47.    4,800,000    20,742,850      936,471             4,800,000   21,679,321  26,479,321  2,237,950  1989    1995 5-50 yr.
48.    5,760,000    24,320,449    1,729,762             5,760,000   26,050,211  31,810,211  3,475,702  1990    1993 5-50 yr.
49.    2,016,000     8,518,000      846,151             2,016,000    9,364,151  11,380,151  1,329,915  1988    1993 5-50 yr.
50.    2,240,000    11,960,000      980,063             2,240,000   12,940,063  15,180,063  1,825,613  1988    1993 5-50 yr.
51.    2,470,000    21,562,604      390,469             2,470,000   21,953,073  24,423,073  2,144,146  1995    1995 5-50 yr.
52.    3,055,000    25,957,233      595,430             3,055,000   26,552,663  29,607,663  2,147,427  1995    1995 5-50 yr.
53.    1,300,000    12,613,527      172,478             1,300,000   12,786,005  14,086,005    995,869  1995    1995 5-50 yr.
54.      838,529     7,369,277   33,776,110               838,529   41,145,387  41,983,916    674,124  1996    1996 5-50 yr.
55.    2,626,000    22,060,707      525,830             2,626,000   22,586,537  25,212,537  2,037,188  1995    1995 5-50 yr.
56.    2,535,000    20,986,021      383,551             2,535,000   21,369,572  23,904,572  1,674,579  1995    1995 5-50 yr.
57.    1,046,500     9,054,154      366,784             1,046,500    9,420,938  10,467,438    646,117  1995    1996 5-50 yr.
58.    2,444,000    22,020,109      516,804             2,444,000   22,536,913  24,980,913  2,118,479  1995    1995 5-50 yr.
59.      351,001     4,159,438    1,198,887               351,001    5,358,325   5,709,326  1,461,626  1986    1986 5-50 yr.
60.    1,824,000    16,227,875      430,803             1,824,000   16,658,678  18,482,678  1,093,465  1988    1996 5-50 yr.
61.      329,786     6,649,280    1,124,748               329,786    7,774,028   8,103,814  2,206,008  1983    1986 5-50 yr.
62.    2,432,000    14,107,966      803,187             2,432,000   14,911,153  17,343,153  2,118,959  1991    1993 5-50 yr.
63.      720,000     7,959,871    2,935,193               720,000   10,895,064  11,615,064  2,261,396  1984    1991 5-50 yr.
64.    2,196,744    18,053,471      162,921             2,196,744   18,216,392  20,413,136    356,981  1996    1997 5-50 yr.
65.    2,223,000    10,598,821       68,750             2,223,000   10,667,571  12,890,571          0  1994    1997 5-50 yr.
66.    1,200,000    11,010,416       99,977             1,200,000   11,110,393  12,310,393    182,789  1990    1997 5-50 yr.
67.      828,000     6,563,020      294,134               828,000    6,857,154   7,685,154    275,988  1990    1996 5-50 yr.
68.    1,700,000    19,600,290      228,253             1,700,000   19,828,543  21,528,543    388,061  1996    1997 5-50 yr.
69.    1,640,000    12,945,374      827,473             1,640,000   13,772,847  15,412,847  2,035,558  1991    1993 5-50 yr.
70.    1,386,000    14,775,063      330,178             1,386,000   15,105,240  16,491,240    398,211  1991    1997 5-50 yr.
71.      864,000     5,252,025    2,444,531               864,000    7,696,556   8,560,556  1,259,496  1984    1992 5-50 yr.
72.    2,171,000    18,535,275      374,936             2,171,000   18,910,211  21,081,211  1,682,822  1994    1994 5-50 yr.
73.      580,000     8,216,250      885,105               580,000    9,101,355   9,681,355  1,894,352  1986    1989 5-50 yr.
74.      777,000    10,480,126       95,684               777,000   10,575,810  11,352,810    278,974  1996    1997 5-50 yr.
75.      890,000    10,318,505      252,582               890,000   10,571,087  11,461,087    448,552  1986    1996 5-50 yr.
76.      940,000    11,919,983      102,992               940,000   12,022,975  12,962,975    117,059  1995    1997 5-50 yr.
77.    2,004,000    19,980,334    (106,874)             2,004,000   19,873,460  21,877,460    194,702  1996    1997 5-50 yr.
78.    1,988,000     9,663,149      754,412             1,988,000   10,417,561  12,405,561  1,559,864  1991    1993 5-50 yr.
79.      960,000     4,937,213      493,690               960,000    5,430,903   6,390,903    824,483  1986    1993 5-50 yr.
80.    2,574,000    24,834,228      305,720             2,574,000   25,139,948  27,713,948  1,961,223  1995    1996 5-50 yr.
81.    1,140,000     8,397,085      449,955             1,140,000    8,847,040   9,987,040  1,053,170  1989    1994 5-50 yr.
82.    1,380,000     9,437,830      709,707             1,380,000   10,147,537  11,527,537    497,626  1986    1996 5-50 yr.
83.      360,000     4,235,504    1,005,194               360,000    5,240,698   5,600,698  1,546,712  1983    1990 5-50 yr.
84.    1,536,000    13,614,751    1,795,060             1,536,000   15,409,811  16,945,811  2,885,884  1986    1992 5-50 yr.
85.    1,111,500     7,671,643      520,873             1,111,500    8,192,516   9,304,016    822,147  1986    1994 5-50 yr.
86.      411,500     6,891,173    1,043,287               411,500    7,934,460   8,345,960  2,192,178  1985    1985 5-50 yr.
87.      500,000     4,571,011    1,369,336               500,000    5,940,347   6,440,347  1,029,963  1986    1992 5-50 yr.
88.      800,000     5,214,004      635,302               800,000    5,849,306   6,649,306  1,392,730  1986    1991 5-50 yr.
89.    1,988,000     9,833,825    1,013,729             1,988,000   10,847,554  12,835,554  1,754,512  1987    1993 5-50 yr.
90.    2,380,000    19,936,610      168,768             2,380,000   20,105,378  22,485,378    198,882  1991    1997 5-50 yr.
91.      873,000     9,033,168      291,166               873,000    9,324,334  10,197,334    397,505  1990    1996 5-50 yr.
92.      960,000    11,022,351      906,223               960,000   11,928,574  12,888,574  2,065,934  1991    1992 5-50 yr.
93.    3,024,000    15,027,450    1,328,306             3,024,000   16,355,756  19,379,756  2,555,627  1988    1993 5-50 yr.
94.      900,000    10,222,867      131,512               900,000   10,354,378  11,254,378    436,642  1994    1996 5-50 yr.
95.    1,888,000    10,950,825      868,740             1,888,000   11,819,565  13,707,565  1,244,745  1989    1994 5-50 yr.
96.      448,000     6,490,069    1,000,539               448,000    7,490,608   7,938,608  1,799,737  1985    1988 5-50 yr.
97.    3,648,000    13,152,000    1,632,824             3,648,000   14,784,824  18,432,824  2,024,155  1991    1993 5-50 yr.
98.      960,000     5,597,500      704,280               960,000    6,301,780   7,261,780    951,766  1985    1993 5-50 yr.
99.    1,120,000     6,088,097      706,973             1,120,000    6,795,070   7,915,070  1,081,288  1985    1993 5-50 yr.
100.   2,232,000    24,274,684      182,792             2,232,000   24,457,476  26,689,476    237,448  1996    1997 5-50 yr.
101.   1,224,000     9,971,854      989,319             1,224,000   10,961,173  12,185,173  1,036,709  1982    1994 5-50 yr.
102.     377,500     6,195,990    1,618,101               377,500    7,814,091   8,191,591  1,724,596  1984    1989 5-50 yr.
103.      73,163            --    8,293,835  523,036       73,163    8,625,884   8,699,047  2,674,414  1982    1983 5-50 yr.
104.     125,000     1,076,646      352,155               125,000    1,428,801   1,553,801    643,579  1975    1982 5-50 yr.
Miscell  138,399       626,133      869,118               138,399    1,495,251   1,633,650    469,971various various5-50 yr.

TOTAL RESIDENTIAL
     ----------- ------------- ------------  -------   -----------   ----------  ----------  --------- ----   ---- --------
    $157,301,524$1,181,664,767 $156,810,925 $523,036$157,301,524$1,383,807,741$1,496,109,265$139,883,740
     ----------- ------------- ------------  -------   -----------   ----------  ----------  --------- ----   ---- --------
Commercial
         791,726     3,089,125    1,482,180       --     791,726     4,571,305     5,363,031 1,370,506various various5-50 yr.
Development in Progress    
      14,395,165            --   29,968,766 3,977,716 24,698,865    23,642,782    48,341,647      --
Land                        
       4,089,470            --           --       --   4,089,470            --     4,089,470    29,526
     ----------- ------------- ------------  -------   -----------   ----------  ----------  ----------
TOTAL 
   $176,303,820 $1,184,753,892 $188,261,781$4,500,752$186,607,520$1,367,021,828$1,553,873,887$141,283,772
   ============ ============== ============ ========= =========== ============= ============= ===========
</TABLE>


<PAGE>

Notes:

(a)  Reconciliations  of  total  real  estate  carrying  value  and accumulated
       depreciation for the years ending December 31, 1997, 1996  and  1995 are
       as follows:

<TABLE>
<CAPTION>
                                                               Real Estate                            Accumulated Depreciation
                                                   1997           1996           1995            1997           1996            1995
                                                   ----           ----           ----            ----           ----            ----
<S>                                            <C>              <C>             <C>            <C>             <C>            <C>
Balance at beginning of period           $1,242,471,071  $1,040,255,976   $814,435,663   $101,267,134    $67,627,934     $41,362,624
Additions--acquisitions and improvements    335,099,751     216,470,076    225,806,187     42,463,748     34,489,629      26,265,310
Deductions--cost of real estate sold         23,696,935      14,224,981         15,874      2,447,110        850,429               0
                                         --------------  -------------- --------------   ------------   ------------     -----------
Balance at end of period                 $1,553,873,887  $1,242,471,071 $1,040,225,976   $141,283,772   $101,267,134     $67,627,934
                                         ==============  ============== ==============   ============   ============     ===========
<FN>
1. Adams Farm
2. Audubon Village
3. Augustine Club
4. Auvers Village
5. Beach Club
6. Belmont Crossing
7. Belmont Landing
8. Berkshire Place
9. Bermuda Cove
10. Bishop Park
11. Broadway
12. Champions Club
13. Champions Park
14. Chatelaine Park
15. Chatham Wood
16. Cherry Creek
17. Claire Pointe
18. Clary's Crossing
19. Colony Place
20. Conway Station
21. Copper Terrace
22. Country Club Place
23. Coventry at City View
24. Cypress Cove
25. Deerbrook
26. Duraleigh Woods
27. English Hills
28. Essex Place
29. Estate at Quarry Lake (e)
30. Falls
31. Greentree
32. Gwinnett Crossing
33. Hammocks at Long Point
34. Harvest Grove
35. Haywood Pointe
36. Hickory Creek
37. Hidden Lakes
38. Hollows
39. Hunt Club
40. Huntington
41. Indigo Plantation
42. Kimmerly Glen
43. La Tour Fontaine (g)
44. Lake Point
45. Lakeridge
46. Landings
47. Laurel Gardens
48. Lexington Glen
49. Lexington Park
50. Lofton Place
51. Madison at Cedar Springs
52. Madison at Chase Oaks
53. Madison at Melrose
54. Madison at River Sound
55. Madison at Round Grove
56. Madison at Stone Creek
57. Madison at the Arboretum
58. Madison on the Parkway
59. Magnolia Villa
60. Mariner Club (f)
61. Marsh Cove
62. Mission Bay
63. Misty Woods
64. The Oaks
65. Parc Royale (h)
66. Palms at South Shore
67. Plantations at Killearn (d)
68. The Point
69. Polos
70. Polos East
71. Princeton Square
72. Promenade
73. Quarterdeck
74. Ranchstone
75. Regency
76. Richmond Townhomes (j)
77. Riverhill
78. Royal Oaks
79. Sailboat Bay
80. Sedona Springs
81. Shadow Lake
82. Shoal Run
83. Somerset Place
84. Spicewood Springs
85. Steeple Chase
86. Summit Place
87. Sweetwater Glen
88. Timber Hollow
89. Timberwalk
90. Trails at Briar Forest (i)
91. Valencia Plantation
92. Viridian Lake
93. Waterford
94. Waterford Place
95. Waterford Village
96. Waters Edge
97. Welleby Lake
98. West Wind Landing
99. Willow Trail
100. Wimberly
101. Windridge
102. Windsor Place
103. Woodcrest
104. Woodknoll
Miscellaneous

</TABLE>

ENCUMBRANCES
------------

(b)  This  property  was  substantially  renovated  by  the  Company  following
       acquisition.
(c)  Additional apartment units acquired in 1992.
(d)  This  property  secures  a  term  loan.  At December 31, 1997, the balance
       outstanding was $5,146,989.
(e)  This property secures two term loans. At December  31,  1997, the balances
       outstanding were $1,983,098 and $10,659,152.
(f)  This  property  secures  a  term loan. At December 31, 1997,  the  balance
       outstanding was $9,600,000.
(g)  This property secures a term  loan.  At  December 31,1997, the balance was
       $9,827,808.
(h)  This property secures a term loan. At December  31,1997,  the  balance was
       $8,928,467.
(i)  This property secures three term loans. At December 31, 1997, the balances
       outstanding were $773,035, $8,016,267, and $5,923,839.
(j)  This  property  secures a term loan. At December 31,1997, the balance  was
       $9,423,036.


<PAGE>
Signatures

Pursuant to the requirements  of  Section  13  or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused  this  report  to be
signed on its behalf by the undersigned,

MERRY LAND & INVESTMENT
COMPANY, INC.
(Registrant)

    /S/  W. TENNENT HOUSTON
    -----------------------
    W. Tennent Houston
PRESIDENT AND CHIEF EXECUTIVE OFFICER

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report  has  been  signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

     SIGNATURE                   TITLE                DATE

/S/ BOONE A. KNOX         Chairman of the Board      April 9, 1998
----------------------    and Director
  Boone A. Knox           

/S/ W. TENNENT HOUSTON    President, Chief Executive April 9, 1998
----------------------    Officer and Director
W. Tennent Houston        

/S/ MICHAEL N. THOMPSON   Executive Vice President,  April 9, 1998
----------------------    Chief Operating Officer and
Michael N. Thompson       Director

/S/ W. HALE BARRETT       Secretary and Director     April 9, 1998
----------------------
 W. Hale Barrett

/S/ HUGH CALVIN LONG II   Director                   April 9, 1998
----------------------
Hugh Calvin Long II

/S/ ROBERT P. KIRBY       Director                   April 9, 1998
----------------------
 Robert P. Kirby

/S/ PAUL S. SIMON         Director                   April 9, 1998
----------------------
  Paul S. Simon

/S/ DORRIE E. GREEN       Vice President and Chief   April 9, 1998
----------------------    Financial Officer
 Dorrie E. Green          

/S/ RONALD J. BENTON      Vice President and         April 9, 1998
----------------------    Controller
Ronald J. Benton