<PAGE>
                                                          Exhibit 10.27

                      SECOND MODIFICATION AGREEMENT
                    REGARDING UNSECURED LINE OF CREDIT

                                    TO

                            BRE PROPERTIES, INC.



                              MADE BY VARIOUS
                           FINANCIAL INSTITUTIONS
                                    WITH
                           BANK OF AMERICA NT & SA
                                  AS AGENT


<PAGE>


                                TABLE OF CONTENTS
                                                                        PAGE

CERTAIN DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

1.   LINE OF CREDIT AMOUNT AND TERMS . . . . . . . . . . . . . . . . . . . 5
     1.1  Line of Credit Amount. . . . . . . . . . . . . . . . . . . . . . 5
     1.2  Availability Period. . . . . . . . . . . . . . . . . . . . . . . 6
     1.3  Interest Rate. . . . . . . . . . . . . . . . . . . . . . . . . . 6
     1.4  Loan Documents . . . . . . . . . . . . . . . . . . . . . . . . . 6

2.   FEES, EXPENSES. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
     2.1  Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
     2.2  Expenses and Costs . . . . . . . . . . . . . . . . . . . . . . . 7

3.   DISBURSEMENTS, PAYMENTS AND COSTS . . . . . . . . . . . . . . . . . . 7
     3.1  Requests for Credit. . . . . . . . . . . . . . . . . . . . . . . 7
     3.2  Disbursement and Payment Record. . . . . . . . . . . . . . . . . 8
     3.3  Authorization. . . . . . . . . . . . . . . . . . . . . . . . . . 8
     3.4  Banking Days . . . . . . . . . . . . . . . . . . . . . . . . . . 8

4.   CONDITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
     4.1  Authorizations . . . . . . . . . . . . . . . . . . . . . . . . . 8
     4.2  Governing Documents; Good Standing Certificates. . . . . . . . . 9
     4.3  Loan Documents . . . . . . . . . . . . . . . . . . . . . . . . . 9
     4.4  Payment of Fees. . . . . . . . . . . . . . . . . . . . . . . . . 9
     4.5  Other Items. . . . . . . . . . . . . . . . . . . . . . . . . . . 9

5.   REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . . . . 9
     5.1  Organization of the Borrower; Good Standing. . . . . . . . . . . 9
     5.2  Authorization; Enforceable Agreement . . . . . . . . . . . . . . 9
     5.3  Financial Information. . . . . . . . . . . . . . . . . . . . . . 9
     5.4  Lawsuits . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
     5.5  Title to Assets. . . . . . . . . . . . . . . . . . . . . . . . .10
     5.6  Permits, Franchises. . . . . . . . . . . . . . . . . . . . . . .11
     5.7  Income Tax Returns . . . . . . . . . . . . . . . . . . . . . . .11
     5.8  ERISA Plans. . . . . . . . . . . . . . . . . . . . . . . . . . .11
     5.9  Other Obligations. . . . . . . . . . . . . . . . . . . . . . . .11
     5.10 Event of Default . . . . . . . . . . . . . . . . . . . . . . . .11
     5.11 Status as a REIT . . . . . . . . . . . . . . . . . . . . . . . .12

6.   COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
     6.1  Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . .12
     6.2  Financial Information. . . . . . . . . . . . . . . . . . . . . .12
     6.3  Other Information. . . . . . . . . . . . . . . . . . . . . . . .13
     6.4  Financial Covenants. . . . . . . . . . . . . . . . . . . . . . .14
     6.5  Taxes and Other Liabilities. . . . . . . . . . . . . . . . . . .16
     6.6  Notices to the Bank. . . . . . . . . . . . . . . . . . . . . . .16
     6.7  Audits; Books and Records. . . . . . . . . . . . . . . . . . . .16
     6.8  Compliance with Laws . . . . . . . . . . . . . . . . . . . . . .17
     6.9  Preservation of Rights . . . . . . . . . . . . . . . . . . . . .17

                                     - i -

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                                TABLE OF CONTENTS
                                    (Continued)                         PAGE

     6.10 Maintenance of Properties. . . . . . . . . . . . . . . . . . . .17
     6.11 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . .17
     6.12 ERISA Plans. . . . . . . . . . . . . . . . . . . . . . . . . . .17
     6.13 Additional Negative Covenants. . . . . . . . . . . . . . . . . .17
     6.14 Continued Status as a REIT; Prohibited Transactions. . . . . . .18
     6.15 NYSE Listed Company. . . . . . . . . . . . . . . . . . . . . . .18
     6.16 Conduct of Business. . . . . . . . . . . . . . . . . . . . . . .18
     6.17 Cooperation. . . . . . . . . . . . . . . . . . . . . . . . . . .19

7.   COLLATERAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19

8.   DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
     8.1  Failure to Pay . . . . . . . . . . . . . . . . . . . . . . . . .19
     8.2  False Information. . . . . . . . . . . . . . . . . . . . . . . .19
     8.3  Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . . . . .19
     8.4  Receivers. . . . . . . . . . . . . . . . . . . . . . . . . . . .19
     8.5  Lawsuits . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
     8.6  Judgments. . . . . . . . . . . . . . . . . . . . . . . . . . . .20
     8.7  ERISA Plans. . . . . . . . . . . . . . . . . . . . . . . . . . .20
     8.8  Government Action. . . . . . . . . . . . . . . . . . . . . . . .20
     8.9  Material Adverse Change. . . . . . . . . . . . . . . . . . . . .20
     8.10 Other Breach Under This Agreement or Other Loan Documents. . . .20
     8.11 Cross-Default. . . . . . . . . . . . . . . . . . . . . . . . . .20

9.   ENFORCING THIS AGREEMENT; MISCELLANEOUS . . . . . . . . . . . . . . .21
     9.1  Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
     9.2  California Law . . . . . . . . . . . . . . . . . . . . . . . . .21
     9.3  Arbitration. . . . . . . . . . . . . . . . . . . . . . . . . . .21
     9.4  Presentment, Demands and Notice. . . . . . . . . . . . . . . . .22
     9.5  Indemnification. . . . . . . . . . . . . . . . . . . . . . . . .22
     9.6  Attorneys' Fees. . . . . . . . . . . . . . . . . . . . . . . . .22
     9.7  Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
     9.8  Successors and Assigns . . . . . . . . . . . . . . . . . . . . .23
     9.9  No Third Parties Benefited . . . . . . . . . . . . . . . . . . .23
     9.10 Integration; Relation to Any Loan Commitment; Headings . . . . .23
     9.11 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . .23
     9.12 Severability; Waivers; Amendments. . . . . . . . . . . . . . . .24
     9.13 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . .25

EXHIBIT A - BORROWING NOTICE . . . . . . . . . . . . . . . . . . . . . . A-1

REQUESTED ADVANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . A-3

                                    - ii -

<PAGE>

                          SECOND MODIFICATION AGREEMENT

     This Second Modification Agreement ("Agreement") is made as of October 
22, 1996, by and between BRE PROPERTIES, INC., a Maryland corporation 
("Borrower"); BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, a 
national banking association ("Agent"); and the several financial 
institutions a party to this Agreement (collectively, the "Banks"; 
individually a "Bank").

                               FACTUAL BACKGROUND

     A.   Bank of America National Trust and Savings Association ("BofA"), 
Manufacturers Bank ("Manufacturers"), and The Industrial Bank of Japan, 
Limited, Los Angeles Agency ("IBJ") have agreed to make a loan (the "Loan") 
to the Borrower in accordance with an Unsecured Line of Credit Loan Agreement 
dated April 4, 1996 (as amended, the "Loan Agreement").  The Loan Agreement 
has previously been amended by the Modification Agreement to Syndicate Loan, 
dated as of April 4, 1996 (the "First Modification"), and BofA has previously 
assigned a portion of its interest under the Loan to IBJ pursuant to an 
Assignment and Assumption Agreement dated as of June 19, 1996 (the "IBJ 
Assignment"). Capitalized terms used herein without definition have the 
meanings given to them in the Loan Agreement.  The Loan is evidenced by a 
Note dated April 4, 1996 in the stated principal amount of $70,000,000.  

     B.   Borrower has requested that the Maximum Loan Amount under the 
Commitment be increased to $120,000,000.  In connection with such increase, 
Commerzbank AG, Los Angeles Branch ("Commerzbank"), desires to become a party 
to the Loan Agreement and to participate in the Commitment in an amount equal 
to $25,000,000, IBJ desires to increase its share of the Commitment from 
$5,000,000 to $25,000,000 and BofA desires to increase its share of the 
Commitment from $50,000,000 to $55,000,000.

     C.   The Borrower, Agent and the Banks wish to modify the Loan Documents 
to increase the Commitment as referred to above, and to make certain related 
modifications, all as set forth herein.

                                    AGREEMENT

     Therefore, the Borrower, the Banks and Agent agree as follows:

     1.   MODIFICATION OF LOAN DOCUMENTS.  The Loan Documents are hereby 
amended as follows, subject to the terms and conditions hereof:

          (a)  As of the Effective Date (as defined below), Section 1.1(a) of 
the Loan Agreement is hereby amended by deleting the reference therein to 
"Seventy Million Dollars ($70,000,000)" and inserting in lieu thereof "One 
Hundred Twenty Million Dollars ($120,000,000)".  All references in the Loan 
Documents to the Commitment and the Maximum Loan Amount shall be understood 
to mean $120,000,000.

          (b)  Concurrent with the execution with this Agreement, the 
Borrower shall execute and deliver to Agent the Amended and Restated 
Promissory Note in the form attached hereto as EXHIBIT A.  All references to 
the "Note" in the Loan Documents shall mean and refer to said Amended and 
Restated Promissory Note. Promptly following the Effective Date, Agent shall 
mark the Prior Note (as defined in the Amended and Restated Promissory Note) 
"superseded" and return same to the Borrower.

          (c)  Pursuant to Section 2.1(a) of the Loan Agreement, the Borrower
shall pay to Agent, on or before the Effective Date, a fee equal to 0.25% of the
$50,000,000 increase in the Commitment agreed to under this Agreement, prorated
based upon the number of days remaining in the 


<PAGE>

Availability Period, as measured from and including the Effective Date, to 
but not including the Maturity Date. Portions of said additional commitment 
fee shall be paid by Agent to IBJ and Commerzbank in accordance with separate 
letter understandings between Agent and each such Bank.

          (d)  Section 6.4(h) of the Loan Agreement is hereby amended by 
deleting the reference therein to "One Hundred Million Dollars 
($100,000,000)" and inserting in lieu thereof "One Hundred Fifty Million 
Dollars ($150,000,000)".

          (e)  Section 26 of the First Modification is hereby amended to change
the address of BofA as Agent to the following:

          Bank of America National Trust and Savings Association
          Commercial Real Estate Services/National Accounts 9105
          50 California Street, 11th Floor
          San Francisco, CA  94111
          Attention:  Janice L. Sears
          Phone:  (415) 445-4448
          Fax:    (415) 445-4154

     2.   THE CREDIT.  
     
          (a)  The Borrower and each Bank acknowledge that, as of the 
Effective Date, the Loan, the principal amount outstanding thereunder, and 
each Bank's Pro Rata Share are:


             (i)   The Loan:                          $120,000,000

            (ii)   Total Current Outstanding          $ 49,000,000
                   Principal 
                   (as of October 24, 1996):
           (iii)   Each Bank's Pro Rata Share of the 
                   Loan:

                        BofA:                        45.8333333334%
                        Manufacturers:               12.5000000000%
                        IBJ:                         20.8333333333%
                        Commerzbank:                 20.8333333333%
                                                     --------------
                                                    100.0000000000%
 
          (b)  Subject to the terms and conditions of the Loan Documents, each
Bank agrees to fund its Pro Rata Share of each Advance of Loan proceeds from 
time to time until the Maturity Date of the Loan.  Such Loan proceeds shall 
be delivered to the Borrower in accordance with provisions of the Loan 
Documents.

          (c)  BofA and IBJ agree that the IBJ Assignment (which is not a Loan 
Document) shall be modified to conform to the terms of this Agreement with 
respect to the amended Commitment and Pro Rata Shares.

     3.   ADDITION OF COMMERZBANK.

          (a)  As of the Effective Date, Commerzbank shall be a party to the 
Loan Documents and the Co-Lender Agreement and, accordingly, shall succeed to 
all of the rights and be obligated to perform all of the obligations of a 
Bank thereunder, with an interest in the Loan equal to its Pro Rata Share as 
set forth above.  Without limiting the foregoing, Commerzbank hereby appoints 
and authorizes Agent to take such action as Agent on its behalf and to 
exercise such powers as are delegated to Agent by the Banks pursuant to the 
terms of the Loan Documents and Co-Lender Agreement.  

          (b)  Commerzbank shall furnish to Agent and the Borrower, concurrently
with the execution of this Agreement, an appropriate U.S. Internal Revenue
Service form regarding exemption from or reduced rate of U.S.

                                     - 2 -

<PAGE>

federal withholding tax on interest payments and fees under the Loan 
Documents.



                                     - 3 -

<PAGE>

          (c)  Commerzbank acknowledges that neither Agent nor any Bank (i) 
makes any representation or warranty or assumes any responsibility with 
respect to any statements, warranties or representations made in connection 
with the Loan Documents or Co-Lender Agreement or the execution, legality, 
validity, enforceability, genuineness, sufficiency or value of the Loan 
Documents, Co-Lender Agreement or any other instrument or document furnished 
pursuant thereto, or (ii) makes any representation or warranty in connection 
with, or assumes any responsibility with respect to, the solvency, financial 
condition or statements of the Borrower or the performance or observance by 
the Borrower of any of its respective obligations under the Loan Documents or 
any other instrument or document furnished in connection therewith.  
Commerzbank acknowledges that it has received a copy of the Loan Documents, 
the Co-Lender Agreement and such other documents and information as it has 
deemed appropriate and requested in order to make its own credit and legal 
analysis and decision to enter into this Agreement, and will continue to make 
its own credit and legal decisions in taking or not taking action under the 
Loan Documents independently based on such documents and information as it 
shall deem appropriate at the time and without reliance upon Agent or any 
other Bank.

          (d)  Commerzbank hereby specifies the following as its Lending 
Office and address for purposes of all communications and notices under the 
Loan Documents and Co-Lender Agreement:

               Commerzbank AG, Los Angeles Branch
               660 S. Figueroa, Suite 1450
               Los Angeles, CA  90017
               Attn:  Werner Schmidbauer
               Telephone:  (213) 623-8223
               Facsimile:  (213) 623-0039

EXHIBIT B attached sets forth certain additional addresses and payment
instructions of Commerzbank for use by the Agent.

     4.   EFFECTIVE DATE; ALLOCATION OF PAYMENTS.

          (a)  The effective date ("Effective Date") for this Agreement shall be
the date that the following conditions precedent have been satisfied:

               (i)  This Agreement and each other document or instrument
     referred to herein as being executed in connection herewith shall have been
     fully executed and delivered by all parties thereto;

               (ii)  The Borrower shall have paid to Agent the additional
     commitment fee referred to in Section 1(c) above; 

               (iii)  The Borrower shall have provided to Agent an authorizing
     resolution of the Board of Directors of Borrower (as certified by the
     Secretary of Borrower) approving the execution, delivery and performance of
     this Agreement by the Borrower; and

               (iv)  IBJ and Commerzbank shall have funded to Agent, in the
     manner set forth in the Loan Documents, and the Agent shall have allocated
     and paid such funds to BofA and Manufacturers, in each case in the amounts
     specified to the Banks by the Agent, as necessary in order to balance
     outstanding advances under the Loan to the Pro Rata Shares of the Banks as
     set in Section 2(a) above.

          (b)  Upon payment by the Borrower, Agent shall allocate interest and
the unused commitment fee (i) for the period to but not including the Effective
Date, to those Banks (and in accordance with their respective Pro Rata Shares)
in effect under the Loan Documents prior to the effectiveness of this Agreement,
and (ii) from and including the Effective Date, to the Banks in accordance with
their Pro Rata Shares as set forth in this Agreement.

                                     - 4 -

<PAGE>

     5.   MISCELLANEOUS.

          (a)  The Borrower shall reimburse to Agent all of its costs and
expenses (including legal fees) incurred in connection with the negotiation,
preparation and execution of this Agreement and all related documents.

          (b)  This Agreement shall be binding upon and inure to the benefit 
of the parties and their respective successors and assigns, subject however 
to the provisions of the Loan Documents and the Co-Lender Agreement.

          (c)  This Agreement may be executed in counterparts all of which 
taken together shall be deemed to constitute one and the same instrument.

          (d)  This Agreement shall be governed by the laws of the State of 
California.

          (e)  This Agreement (and those documents and instruments expressly 
referred to herein) integrates all the terms and conditions hereof, 
constitutes the entire agreement and understanding between the parties hereto 
and supersedes any and all prior agreements and understandings related to the 
subject matter hereof.  In the event of any conflict between the terms and 
conditions of this Agreement and any other document, this Agreement shall 
prevail.

                                     - 5 -

<PAGE>

     IN WITNESS WHEREOF, the parties have executed this Agreement of the date
set forth above.


BORROWER:                     BRE PROPERTIES, INC.


                              By:                            
                                  ---------------------------
                              Name:  Frank C. McDowell
                              Title: President & Chief Executive Officer


                              By:                         
                                  ---------------------------
                              Name:  LeRoy E. Carlson
                              Title: Secretary & Chief Financial Officer


BANKS:                        BANK OF AMERICA NATIONAL TRUST
                              AND SAVINGS ASSOCIATION


                              By:                            
                                  ---------------------------
                              Name:                          
                                     ------------------------
                              Title:                         
                                     ------------------------

                              THE INDUSTRIAL BANK OF JAPAN,
                              LIMITED, LOS ANGELES AGENCY

                              By:                            
                                  ---------------------------
                              Name:                          
                                     ------------------------
                              Title:                         
                                     ------------------------

                              MANUFACTURERS BANK

                              By:                            
                                  ---------------------------
                              Name:                          
                                     ------------------------
                              Title:                         
                                     ------------------------


                              By:                            
                                  ---------------------------
                              Name:                          
                                     ------------------------
                              Title:                         
                                     ------------------------


                              COMMERZBANK AG, LOS ANGELES BRANCH

                              By:                            
                                  ---------------------------
                              Name:                          
                                     ------------------------
                              Title:                         
                                     ------------------------

AGENT:                        BANK OF AMERICA NATIONAL TRUST
                              AND SAVINGS ASSOCIATION, as Agent

                              By:                            
                                  ---------------------------
                              Name:                          
                                     ------------------------
                              Title:                         
                                     ------------------------

                             - 6 -

<PAGE>
                                  EXHIBIT B

A.   COMMERZBANK ADMINISTRATIVE CONTACTS - Borrowings, Paydown, Interest, Fees,
     etc.:

          Christina Humphrey, Commerzbank AG, New York Branch
          2 World Financial Center
          New York, New York  10281-1050
          Telephone:  (212) 266-7315
          Facsimile:  (212) 266-7593

B.   COMMERZBANK PAYMENT INSTRUCTIONS:

     Name of Bank where funds are to be transferred:

          Commerzbank AG, New York Branch

     Routing Transit/ABA number of Bank were funds are to be transferred:

          026008044

     Name of Account:              Commerzbank AG, Los Angeles Branch
     Account Number:               150/940123300USD
     Additional Information:       Ref:  BRE Properties, Inc.
                                   Acct. No.:  123/2920056/05USD