SECURITIES AND EXCHANGE COMMISSION

              Washington, D.C. 20549


                     FORM 8-K
                  CURRENT REPORT

      Pursuant to Section 13 or 15(d) of the
          Securities Exchange Act of 1934



 Date of Report (Date of earliest event reported):
                   July 1, 1997


              Avalon Properties, Inc.
(Exact name of Registrant as specified in its charter)




         Maryland               1-12452           06-1379111 
(State or other jurisdiction (Commission File    (I.R.S. Employer
     of incorporation)           Number)        Identification No.)



     15 River Road, Wilton, Connecticut 06897
(Address of principal executive offices and zip code)



Registrant's telephone number, including area code:
                   203-761-6500


     ITEM 5.  OTHER EVENTS

     On July 1, 1997 Avalon Properties, Inc. sold 2,163,000
shares (including the over-allotment option of 263,000
shares) of Common Stock to PaineWebber Incorporated under
its existing shelf registration statement at a per share
price to the public of $28.0625.  The Company intends to use
the net cash proceeds from the sale of the Common Stock
($57,670,987 before payment of offering expenses) to repay
outstanding indebtedness, to fund the acquisition and
development of additional apartment communities and for
general corporate purposes.


     ITEM 7.   FINANCIAL STATEMENTS, PRO FORMA FINANCIAL
INFORMATION AND EXHIBITS.

     (a)  Financial statements of business acquired:

          Not Applicable

     (b)  Pro Forma financial information:

          Not Applicable

     (c)  Exhibits:

Exhibit No.

     1.1  Underwriting Agreement dated June 25, 1997.

     1.2  Price Determination Agreement dated June 25,
1997.



                    SIGNATURES
 
     Pursuant to the requirements of the Securities
Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned
hereunto duly authorized.


Date:     July 15, 1997            AVALON PROPERTIES, INC.



                         /s/    Thomas J. Sargeant      
   
                         By: Thomas J. Sargeant
                         Chief Financial Officer
                         and Treasurer
DOCSC\529844.1

EXHIBIT 1.1

                1,900,000 Shares
                        
             AVALON PROPERTIES, INC.
                        
                  Common Stock
           (par value $0.01 per share)
                        
             UNDERWRITING AGREEMENT
                        
                        
                                     June 25, 1997


PaineWebber Incorporated
1285 Avenue of the Americas
New York, New York 10019

Dear Sirs:

          Avalon Properties, Inc., a Maryland corporation
(the "Company"), proposes to sell an aggregate of 1,900,000
shares (the "Firm Shares") of the Company's Common Stock, $.01
par value per share (the "Common Shares"), to you in
connection with the offering and sale of the Firm Shares.  The
Company has also agreed to grant to you an option (the
"Option") to purchase up to an additional 285,000 Common
Shares (the "Option Shares") on the terms and for the purposes
set forth in Section 1(b) hereof.  The Firm Shares and the
Option Shares are hereinafter collectively referred to as the
"Shares".

          The public offering price per share for the Shares
and the purchase price per share for the Shares to be paid by
you shall be agreed upon by the Company and you, and such
agreement shall be set forth in a separate written instrument
substantially in the form of Exhibit A hereto (the "Price
Determination Agreement").  The Price Determination Agreement
may take the form of an exchange of any standard form of
written telecommunication among the Company and you and shall
specify such applicable information as is indicated in
Exhibit A hereto.  The offering of the Shares will be governed
by this Agreement, as supplemented by the Price Determination
Agreement.  From and after the date of the execution and
delivery of the Price Determination Agreement, this Agreement
shall be deemed to incorporate, and, unless the context
otherwise indicates, all references contained herein to "this
Agreement" and to the phrase "herein" shall be deemed to
include, the Price Determination Agreement.

          The Company confirms as follows its agreements
with you:

          1.   Agreement to Sell and Purchase.

               (a)  On the basis of the representations,
warranties and agreements of the Company herein contained and
subject to all the terms and conditions of this Agreement, the
Company agrees to sell to you, and you agree to purchase from
the Company at the purchase price per share for the Firm
Shares to be agreed upon by you and the Company in accordance
with Section 1(c) hereof and set forth in the Price
Determination Agreement, the number of Firm Shares set forth
on Schedule I.

               (b)  Subject to all the terms and
conditions of this Agreement, the Company grants the Option to
you to purchase up to 285,000 Option Shares from the Company
at the same price per share as you shall pay for the Firm
Shares.  The Option may be exercised only to cover over-allotments in
the sale of the Firm Shares by you and may be
exercised in whole or in part at any time (but not more than
once) on or before the 30th day after the date of this
Agreement, upon written or telegraphic notice (the "Option
Shares Notice") by you to the Company.  The date for the
closing of the sale of the Option Shares (the "Option Closing
Date") shall be determined by you but shall be no later than
10 days after delivery of the Option Shares Notice.  On the
Option Closing Date, the Company will issue and sell to you
the number of Option Shares set forth in the Option Shares
Notice.  The right to purchase the Option Shares or any
portion thereof may be surrendered and terminated at any time
upon notice by you to the Company.

               (c)  The public offering price per share
for the Firm Shares and the purchase price per share for the
Firm Shares to be paid by you shall be agreed upon and set
forth in the Price Determination Agreement.

          2.   Delivery and Payment.  Delivery of the Firm
Shares shall be made to you at the office of PaineWebber
Incorporated, 1285 Avenue of the Americas, New York, New York
against payment of the purchase price by wire transfer of
same-day funds to the Company.  Such payments shall be made at
10:00 a.m., New York City time, on the fourth business day
following the date of this Agreement (or if the New York Stock
Exchange or American Stock Exchange or commercial banks in the
City of New York are not open on such day, the next day on
which such exchanges and banks are open), or at such time on
such other date, not later than eight full business days after
the date of this Agreement, as may be agreed upon by the
Company and you (such date is hereinafter referred to as the
"Closing Date").

          To the extent the Option is exercised, delivery of
the Option Shares against payment by you (in the manner
specified above) will take place at the offices specified
above at the time and date (which may be the Closing Date)
specified in the Option Shares Notice.

          If requested by you, certificates evidencing the
Shares shall be in definitive form and shall be registered in
such names and in such denominations as you shall request at
least two business days prior to the Closing Date or the
Option Closing Date, as the case may be, by written notice to
the Company.  For the purpose of expediting the checking and
packaging of certificates for the Shares, the Company agrees
to make such certificates available for inspection at least 24
hours prior to the Closing Date or the Option Closing Date, as
the case may be.

          The cost of original issue tax stamps, if any, in
connection with the issuance and delivery of the Firm Shares
and Option Shares by the Company to you shall be borne by the
Company.  The Company will pay and save you and any subsequent
holder of the Shares harmless from any and all liabilities
with respect to or resulting from any failure or delay in
paying Federal and state stamp and other transfer taxes, if
any, which may be payable or determined to be payable in
connection with the original issuance or sale to you of the
Firm Shares and Option Shares.

          3.   Representations and Warranties of the
Company.  The Company represents, warrants and covenants to
you that:

               (a)  The Company meets the requirements for
use of Form S-3 and a registration statement (Registration
No. 333-22281) on Form S-3 relating to the Shares, including
a prospectus, has been carefully prepared by the Company in
conformity with the requirements of the Securities Act of
1933, as amended (the "Act"), and the rules and regulations
(the "Rules and Regulations") of the Securities and Exchange
Commission (the "Commission") thereunder and has been filed
with the Commission and has become effective.  Such
registration statement and prospectus may have been amended or
supplemented prior to the date of this Agreement; any such
amendment or supplement was so prepared and filed, and any
such amendment filed after the effective date of such
registration statement has become effective.  No stop order
suspending the effectiveness of the registration statement has
been issued, and no proceeding for that purpose has been
instituted or, to the Company's knowledge, threatened by the
Commission.  Copies of such registration statement and
prospectus, any such amendments or supplements and all
documents incorporated by reference therein that were filed
with the Commission on or prior to the date of this Agreement
have been delivered to you.  A prospectus supplement (the
"Prospectus Supplement") setting forth the terms of the Common
Shares and of their sale and distribution has been or will be
so prepared and will be filed pursuant to Rule 424(b) of the
Rules and Regulations on or before the second business day
after the date hereof (or such earlier time as may be required
by the Rules and Regulations).  The registration statement, as
it may have heretofore been amended, is referred to herein as
the "Registration Statement," and the final form of prospectus
included in the Registration Statement, as supplemented by the
Prospectus Supplement, is referred to herein as the
"Prospectus".  Each form of Prospectus, or Prospectus and
Prospectus Supplement heretofore made available for use in
offering the Shares is referred to herein as a "Preliminary
Prospectus."  Any reference herein to the Registration
Statement, the Prospectus, any amendment or supplement thereto
or any Preliminary Prospectus shall be deemed to refer to and
include the exhibits thereto (or, in the case of the
Prospectus or Preliminary Prospectus, to the exhibits to the
Registration Statement) and the documents incorporated by
reference therein, and any reference herein to the terms
"amend," "amendment" or "supplement" with respect to
Registration Statement or Prospectus shall be deemed to refer
to and include the filing after the execution hereof of any
document with the Commission deemed to be incorporated by
reference therein.  

               (b)  Each part of the Registration
Statement, when such part became or becomes effective, each
Preliminary Prospectus on the date of filing thereof with the
Commission, and the Prospectus and any amendment or supplement
thereto, on the date of filing thereof with the Commission and
at the Closing Date, and if later, the Option Closing Date,
including the financial statements included or to be included
or incorporated by reference or to be incorporated by
reference into the Prospectus, conformed or will conform in
all material respects with the requirements of the Act, the
Securities Exchange Act of 1934, as amended (the "Exchange
Act"), the rules and regulations thereunder (the "Exchange Act
Rules and Regulations") and the Rules and Regulations and will
contain all statements required to be stated therein in
accordance with the Act, the Exchange Act, the Exchange Act
Rules and Regulations and the Rules and Regulations; each part
of the Registration Statement, when such part became or
becomes effective, did not or will not contain an untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the
statements therein not misleading; each Preliminary Prospectus
on the date of filing thereof with the Commission, and the
Prospectus and any amendment or supplement thereto, on the
date of filing thereof with the Commission and at the Closing
Date, did not or will not include an untrue statement of a
material fact or omit to state a material fact necessary to
make the statements therein, in the light of the circumstances
under which they were made, not misleading.  The foregoing
representations and warranties in this Section 3(b) do not
apply to any statements or omissions made in reliance on and
in conformity with information relating to you furnished in
writing to the Company by you specifically for inclusion in
the Registration Statement or Prospectus or any amendment or
supplement thereto.  The Company acknowledges that the
statements set forth under the heading "Underwriting" in the
Registration Statement, the Preliminary Prospectus and the
Prospectus constitute the only information relating to you
furnished in writing to the Company by you expressly for
inclusion in the Registration Statement, the Preliminary
Prospectus or the Prospectus.  The Company has not distributed
any offering material in connection with the offering or sale
of the Shares other than the Registration Statement, the
Preliminary Prospectus, the Prospectus or any other materials,
if any, permitted by the Act.

               (c)  The documents incorporated or to be
incorporated by reference in the Registration Statement, the
Prospectus, any amendment or supplement thereto or any
Preliminary Prospectus or from which information is so
incorporated by reference, when they became or become
effective or were or are filed with the Commission, as the
case may be, complied or will comply in all material respects
with the requirements of the Act or the Exchange Act, as
applicable, the Exchange Act Rules and Regulations and the
Rules and Regulations.

               (d)  The only subsidiaries (as defined in
the Rules and Regulations) of the Company are the subsidiaries
listed on Exhibit C hereto (the "subsidiaries").  The Company
and each of its subsidiaries is, and at the Closing Date will
be, an entity duly organized or formed, as the case may be,
and, in the case of an entity that is not a general
partnership, validly existing and in good standing under the
laws of the jurisdiction of its organization or incorporation. 
The Company and each of its subsidiaries has, and at the
Closing Date will have, full power and authority to conduct
all the activities conducted by it, to own or lease all the
assets owned or leased by it and to conduct its business as
described in the Registration Statement and the Prospectus. 
The Company and each of its subsidiaries is, and at the
Closing Date will be, duly licensed or qualified to do
business and is and will be in good standing as a corporation,
limited liability company or limited partnership, as the case
may be, in all jurisdictions in which the nature of the
activities conducted by it or the character of the assets
owned or leased by it makes such licensing or qualification
necessary except where the failure to be so qualified does not
have a material adverse effect on the business, properties,
financial position or results of the Company and its
subsidiaries, taken as a whole.  Except for the stock or other
equity interests of the subsidiaries and as disclosed in the
Registration Statement, the Company does not own, and at the
Closing Date will not own, directly or indirectly, any shares
of stock or any other equity or long-term debt securities of
any corporation or have any equity interest in any firm,
partnership, joint venture, association or other entity. 
Complete and correct copies of the Amended and Restated
Articles of Incorporation and Amended and Restated Bylaws of
the Company and the charter documents of each of its
subsidiaries and all amendments thereto have been delivered to
you, and no changes therein will be made subsequent to the
date hereof and prior to the Closing Date or, if later, the
Option Closing Date.

               (e)  The outstanding Common Shares, the
outstanding shares of 9% of Series A Cumulative Redeemable
Preferred Stock, $.01 par value (the "Series A Preferred") and
the outstanding shares of 8.96% Series B Cumulative Redeemable
Preferred Stock, $.01 par value (the "Series B Preferred"), of
the Company have been, and the Shares to be issued and sold by
the Company upon such issuance and payment pursuant hereto of
the purchase price thereof will be, duly authorized, validly
issued, fully paid and nonassessable and will not be subject
to any preemptive or similar right.  The description of the
Shares in the Registration Statement and the Prospectus is,
and at the Closing Date will be, in all material respects,
complete and accurate.  Except as set forth in the
Registration Statement, the Company does not have outstanding,
and at the Closing Date will not have outstanding, any options
to purchase, or any rights or warrants to subscribe for, or
any securities or obligations convertible into, or any
contracts or commitments to issue or sell, any Common Shares,
Series A Preferred or Series B Preferred, any shares of
capital stock of any subsidiary or any such warrants, convert-
ible securities or obligations.

               (f)  The financial statements and schedules
of the Company included or incorporated by reference in the
Registration Statement or the Prospectus present fairly the
consolidated financial condition of the Company as of the
respective dates thereof and the consolidated results of
operations and cash flows of the Company for the respective
periods covered thereby, except in the case of interim
unaudited financial statements, for normal recurring year end
adjustments, all in conformity with generally accepted
accounting principles applied on a consistent basis throughout
the entire period involved, except as otherwise disclosed in
the Prospectus.  No other financial statements or schedules of
the Company are required by the Act, the Exchange Act or the
Rules and Regulations to be included in the Registration
Statement or the Prospectus.  Coopers & Lybrand L.L.P.,
independent public accountants (the "Accountants"), who have
reported on those of such financial statements and schedules
which are audited, are independent accountants with respect to
the Company as required by the Act and the Rules and
Regulations.  The statements included in the Registration
Statement with respect to the Accountants pursuant to Rule 509
of Regulation S-K of the Rules and Regulations are true and
correct in all material respects.

               (g)  The Company maintains a system of
internal accountings control sufficient to provide reasonable
assurance that (i) transactions are executed in accordance
with management's general or specific authorization;
(ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with
generally accepted accounting principles and to maintain
accountability for assets; (iii) access to assets is permitted
only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets
is compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.

               (h)  Subsequent to the respective dates as
of which information is given in the Registration Statement
and the Prospectus and prior to the Closing Date, except as
set forth in or contemplated by the Registration Statement and
the Prospectus, (i) there has not been and will not have been
any change in the capitalization of the Company, or in the
business, properties, business prospects, condition (financial
or otherwise) or results of operations of the Company and its
subsidiaries, arising for any reason whatsoever, (ii) neither
the Company nor any of its subsidiaries has incurred nor will
it incur any material liabilities or obligations, direct or
contingent, nor has it entered into nor will it enter into any
material transactions other than pursuant to this Agreement
and the transactions referred to herein and (iii) the Company
has not and will not have paid or declared any dividends or
other distributions of any kind on any class of its capital
stock.

               (i)  The Company is not an "investment
company" or an "affiliated person" of, or "promoter" or
"principal underwriter" for, an "investment company," as such
terms are defined in the Investment Company Act of 1940, as
amended.

               (j)  Except as set forth in the
Registration Statement and the Prospectus, there are no
actions, suits or proceedings pending or, to the Company's
best knowledge, threatened against or affecting the Company or
any of its subsidiaries or any of their respective officers in
their capacity as such, before or by any Federal or state
court, commission, regulatory body, administrative agency or
other governmental body, domestic or foreign, wherein an
unfavorable ruling, decision or finding might materially and
adversely affect the Company or any of its subsidiaries or its
business, properties, business prospects, condition (financial
or otherwise) or results of operations.

               (k)  The Company and each of its
subsidiaries has, and at the Closing Date will have, (i) all
governmental licenses, permits, consents, orders, approvals
and other authorizations necessary to carry on its business as
contemplated in the Prospectus, (ii) complied in all respects
with all laws, regulations and orders applicable to it or its
business and (iii) performed all its obligations required to
be performed by it, and is not, and at the Closing Date will
not be, in default, under any indenture, mortgage, deed of
trust, voting trust agreement, loan agreement, bond, deben-
ture, note agreement, lease, contract or other agreement or
instrument (collectively, a "contract or other agreement") to
which it is a party or by which its property is bound or
affected, the violation of which would have a material adverse
effect on the business, properties, financial position or
results of operations of the Company and its subsidiaries,
taken as a whole.  To the best knowledge of the Company and
each of its subsidiaries, no other party under any contract or
other agreement to which it is a party is in default in any
material respect thereunder.  The Company is not, nor at the
Closing Date will be, in violation of any provision of its
Amended and Restated Articles of Incorporation or Amended and
Restated Bylaws.  No subsidiary of the Company is, nor at the
Closing Date will any of them be, in violation of any
provision in their respective charter documents.

               (l)  No consent, approval, authorization or
order of, or any filing or declaration with, any court or
governmental agency or body is required for the consummation
by the Company of the transactions on its part herein contem-
plated, except such as have been obtained under the Act or the
Rules and Regulations and such as may be required under state
securities or Blue Sky laws in connection with the purchase
and distribution by you of the Shares to be sold by the
Company.

               (m)  The Company has full corporate power
and corporate authority to enter into this Agreement.  This
Agreement has been duly authorized, executed and delivered by
the Company and constitutes a valid and binding agreement of
the Company and is enforceable against the Company in
accordance with the terms hereof.  The performance of this
Agreement and the consummation of the transactions
contemplated hereby will not result in the creation or
imposition of any lien, charge or encumbrance upon any of the
assets of the Company or any of its subsidiaries pursuant to
the terms or provisions of, or result in a breach or violation
of any of the terms or provisions of, or constitute a default
under, or give any other party a right to terminate any of its
obligations under, or result in the acceleration of any
obligation under, the Amended and Restated Articles of
Incorporation, Amended and Restated Bylaws of the Company or
the charter documents of any of its subsidiaries, any contract
or other agreement to which the Company or any of its
subsidiaries is a party or by which the Company or any of its
subsidiaries or any of its properties is bound or affected, or
violate or conflict with any judgment, ruling, decree, order,
statute, rule or regulation of any court or other governmental
agency or body applicable to the business or properties of the
Company or any of its subsidiaries.

               (n)  The Company and each of its
subsidiaries has good and marketable title to all properties
and assets described in the Prospectus as owned by it, free
and clear of all liens, charges, encumbrances or restrictions,
except such as (i) are described in the Prospectus or (ii) are
not material to the business of the Company or its
subsidiaries, taken as a whole.  The Company and each of its
subsidiaries has valid, subsisting and enforceable leases for
the properties described in the Prospectus as leased by it,
with such exceptions as are not material and do not materially
interfere with the use made and proposed to be made of such
properties by the Company and such subsidiaries; no tenant
under any of the leases pursuant to which the Company leases
its properties has an option or right of first refusal to
purchase the premises demised under such lease; the use and
occupancy of each of the properties of the Company complies in
all material respects with all applicable codes and zoning
laws and regulations; the Company has no knowledge of any
pending or threatened condemnation or zoning change that will
in any material respect affect the size of, use of,
improvements of, construction on, or access to any of the
properties of the Company; and the Company has no knowledge of
any pending or threatened proceeding or action that will in
any manner affect the size of, use of, improvements on,
construction on, or access to any of the properties of the
Company.

               (o)  Title insurance in favor of the
Company is maintained with respect to (i) each of the Current
Communities (as such term is defined in the Prospectus) in an
amount at least equal to the cost of acquisition of such
Current Community and (ii) each of the Development Communities
(as such term is defined in the Prospectus) in an amount at
least equal to the total budgeted cost of such Development
Community, except, in each case, where the failure to maintain
such title insurance would not have a material adverse effect
on the condition, financial or otherwise, or the earnings,
business affairs or business prospects of the Company and its
subsidiaries taken as a whole.  Title insurance in favor of
the mortgagee is maintained in an amount equal to the maximum
commitment of the related loan.

               (p)  The Company has no knowledge of (i)
the unlawful presence of any hazardous substances, hazardous
materials, toxic substances or waste materials (collectively,
"Hazardous Materials") on any of the properties owned by it,
or (ii) any unlawful spills, releases, discharges or disposal
of Hazardous Materials that have occurred or are presently
occurring off such properties as a result of any construction
on or operation and use of such properties, which presence or
occurrence would have a material adverse effect on the
condition, financial or otherwise, or the earnings, business
affairs or business prospects of the Company and its
subsidiaries taken as a whole.  In connection with the
construction or operation and use of the properties owned by
the Company, the Company represents that, as of the date of
this Agreement, it has no knowledge of any failure to comply
with all applicable local, state and federal environmental
laws, regulations, ordinances and administrative and judicial
orders relating to the generation, recycling, reuse, sale,
storage, handling, transport and disposal of any Hazardous
Materials, which failure would have a material adverse effect
on the condition, financial or otherwise, or the earnings,
business affairs or business prospects of the Company and its
subsidiaries taken as a whole.

               (q)  Property and casualty insurance in
favor of the Company is maintained with respect to each of the
properties owned by it in an amount and on such terms as is
reasonable and customary for businesses of this type.

               (r)  There is no document or contract of a
character required to be described in the Registration
Statement or the Prospectus or to be filed as an exhibit to
the Registration Statement which is not described or filed as
required.  All such contracts and all contracts relating to
any tax exempt financings to which the Company or any
subsidiary is a party have been duly authorized, executed and
delivered by the Company or such subsidiary, constitute valid
and binding agreements of the Company or such subsidiary and
are enforceable against the Company or such subsidiary in
accordance with the terms thereof.

               (s)  No statement, representation, warranty
or covenant made by the Company in this Agreement or made in
any certificate or document required by this Agreement to be
delivered to you was or will be, when made, inaccurate, untrue
or incorrect.

               (t)  Neither the Company nor any of its
directors, officers or controlling persons has taken, directly
or indirectly, any action intended, or which might reasonably
be expected, to cause or result, under the Act or otherwise,
in, or which has constituted, stabilization or manipulation of
the price of any security of the Company to facilitate the
sale or resale of the Shares.

               (u)  No holder of securities of the Company
has rights to the registration of any securities of the
Company because of the filing of the Registration Statement.

               (v)  The Company has applied to list the
Shares on the New York Stock Exchange.

               (w)  Neither the Company nor any of its
subsidiaries is involved in any material labor dispute nor, to
the knowledge of the Company, is any such dispute threatened. 


               (x)  Neither the Company nor any of its
subsidiaries nor, to the Company's knowledge, any employee or
agent of the Company or any subsidiary has made any payment of
funds of the Company or any subsidiary or received or retained
any funds in violation of any law, rule or regulation or of a
character required to be disclosed in the Prospectus.

               (y)  The Company has continuously been
organized and operated in conformity with the requirements for
qualification as a real estate investment trust under the
Internal Revenue Code of 1986, as amended (the "Code") for all
taxable years commencing with its taxable year ended December
31, 1993.  The Company has filed an election to be taxable as
a real estate investment trust for its taxable year ended
December 31, 1993, and such election has not been terminated. 
The Company's method of operation will permit it to continue
to meet the requirements for taxation as a real estate
investment trust under the Code.  The Company intends to
continue to operate in a manner which would permit it to
qualify as a real estate investment trust under the Code.

          4.   Agreements of the Company.  The Company
agrees with you as follows:

               (a)  The Company will cause the Prospectus
Supplement to be filed as required by Section 3(a) hereof (but
only if you have not reasonably objected thereto by notice to
the Company after having been furnished a copy within a
reasonable time prior to filing) and will notify you promptly
of such filing.  The Company will not during such period as
the Prospectus is required by law to be delivered in
connection with sales of the Shares by you or a dealer, file
any amendment or supplement to the Registration Statement or
the Prospectus, unless a copy thereof shall first have been
submitted to you within a reasonable period of time prior to
the filing thereof and you shall not have objected thereto in
good faith.

               (b)  The Company will notify you promptly,
and will confirm such advice in writing, (1) when any post-effective
amendment to the Registration Statement becomes
effective, (2) of any request by the Commission for amendments
or supplements to the Registration Statement or the Prospectus
or for additional information, (3) of the issuance by the
Commission of any stop order suspending the effectiveness of
the Registration Statement or the initiation of any
proceedings for that purpose or the threat thereof, (4) of the
happening of any event during the period mentioned in the
second sentence of Section 4(e) that in the judgment of the
Company makes any statement made in the Registration Statement
or the Prospectus untrue or that requires the making of any
changes in the Registration Statement or the Prospectus in
order to make the statements therein, in light of the
circumstances in which they are made, not misleading and
(5) of receipt by the Company or any representative or
attorney of the Company of any other communication from the
Commission relating to the Company, the Registration
Statement, any Preliminary Prospectus or the Prospectus.  If
at any time the Commission shall issue any order suspending
the effectiveness of the Registration Statement, the Company
will make every reasonable effort to obtain the withdrawal of
such order at the earliest possible moment.

               (c)  The Company will furnish to you
without charge two signed copies of the Registration Statement
and of any post-effective amendment thereto, including
financial statements and schedules, and all exhibits thereto
(including any document filed under the Exchange Act and
deemed to be incorporated by reference into the Prospectus).

               (d)  The Company will comply with all the
provisions of any undertakings contained in the Registration
Statement.

               (e)  The Company will deliver to you,
without charge, as many copies of the Prospectus containing
the Prospectus Supplement or any amendment or supplement
thereto as you may reasonably request.  The Company consents
to the use of the Prospectus or any amendment or supplement
thereto by you and by all dealers to whom the Shares may be
sold, both in connection with the offering or sale of the
Shares and for any period of time thereafter during which the
Prospectus is required by law to be delivered in connection
therewith.  If during such period of time any event shall
occur which in the judgment of the Company or your counsel
should be set forth in the Prospectus in order to make any
statement therein, in the light of the circumstances under
which it was made, not misleading, or if it is necessary to
supplement or amend the Prospectus to comply with law, the
Company will forthwith prepare and duly file with the
Commission an appropriate supplement or amendment thereto, and
will deliver to you, without charge, such number of copies of
such supplement or amendment to the Prospectus as you may
reasonably request.  The Company shall not file any document
under the Exchange Act before the termination of the offering
of the Shares by you if such document would be deemed to be
incorporated by reference into the Prospectus to which you
reasonably object.

               (f)  Prior to any public offering of the
Shares the Company will cooperate with you and your counsel in
connection with the registration or qualification of the
Shares for offer and sale under the securities or Blue Sky
laws of such jurisdictions as you may request including,
without limitation, other jurisdictions outside of the United
States; provided, that in no event shall the Company be
obligated to qualify to do business in any jurisdiction where
it is not now so qualified or to take any action which would
subject it to general service of process in any jurisdiction
where it is not now so subject.

               (g)  During the period of five years
commencing on the date hereof, the Company will furnish to you
copies of such financial statements and other periodic and
special reports as the Company may from time to time
distribute generally to the holders of any class of its
capital stock, and will furnish to you a copy of each annual
or other report it shall be required to file with the
Commission.

               (h)  The Company will make generally
available to holders of its securities as soon as may be
practicable but in no event later than the last day of the
fifteenth full calendar month following the end of the
Company's current fiscal quarter, an earnings statement (which
need not be audited but shall be in reasonable detail) for a
period of 12 months beginning after the date upon which the
Prospectus Supplement is filed pursuant to Rule 424 under the
Act, and satisfying the provisions of Section 11(a) of the Act
(including Rule 158 of the Rules and Regulations).

               (i)  Whether or not the transactions
contemplated by this Agreement are consummated or this
Agreement is terminated, the Company will pay, or reimburse if
paid by you, all fees, costs and expenses incident to the
performance of the obligations of the Company under this
Agreement, including but not limited to fees, costs and
expenses of or relating to (1) the preparation, printing and
filing of the Registration Statement and exhibits to it, each
Preliminary Prospectus, the Prospectus and any amendment or
supplement to the Registration Statement or the Prospectus,
(2) the preparation and delivery of certificates representing
the Shares, (3) the printing of this Agreement and any Dealer
Agreements, (4) furnishing (including costs of shipping and
mailing) such copies of the Registration Statement, the
Prospectus and any Preliminary Prospectus, and all amendments
and supplements thereto, as may be requested for use in
connection with the offering and sale of the Shares by you or
by dealers to whom Shares may be sold, (5) the listing of the
Shares on the New York Stock Exchange, (6) filings required to
be made by or on behalf of the Company or you, including
without limitation filings to be made by the Company with the
Commission, and the fees, disbursements and other charges of
counsel for the Company in connection therewith, (7) the
registration or qualification of the Shares for offer and sale
under the securities or Blue Sky laws of such jurisdictions
designated pursuant to Section 4(f), including the reasonable
fees, disbursements and other charges of counsel to you in
connection therewith, and the preparation and printing of
preliminary, supplemental and final Blue Sky memoranda,
(8) counsel to the Company and any surveyors, engineers,
appraisers, photographers, accountants and other professionals
engaged by or on behalf of the Company, (9) the transfer agent
and registrar for the Shares, and (10) preparation of slides,
overheads and other presentation material to be used in any
"road show" or other presentation to potential investors and
the hotel, travel and other expenses of the Company's
employees in connection with any such "road show" or
presentation.

               (j)  If this Agreement shall be terminated
by the Company pursuant to any of the provisions hereof
(otherwise than pursuant to Section 8 hereof) or if for any
reason the Company shall be unable to perform its obligations
hereunder or thereunder, the Company will reimburse you for
all out-of-pocket expenses (including the fees, disbursements
and other charges of your counsel) reasonably incurred by them
in connection herewith.

               (k)  The Company will not at any time,
directly or indirectly, take any action intended, or which
might reasonably be expected, to cause or result in, or which
will constitute, stabilization of the price of the Shares to
facilitate the sale or resale of any of the Shares.

               (l)  The Company will apply the net
proceeds from the offering and sale of the Shares to be sold
by the Company in the manner set forth in the Prospectus under
"Use of Proceeds."

               (m)  The Company will continue to elect to
qualify as a "real estate investment trust" under the Code,
and will use its best efforts to continue to meet the
requirements to qualify as a "real estate investment trust."

          5.   Conditions of Your Obligations.  In addition
to the execution and delivery of the Price Determination
Agreement, your obligations hereunder are subject to the
following conditions:

               (a)  The Prospectus shall have been filed
as required by Section 3(a) and (i) no stop order suspending
the effectiveness of the Registration Statement shall have
been issued and no proceedings for that purpose shall be
pending or threatened by the Commission, (ii) no order
suspending the effectiveness of the Registration Statement or
the qualification or registration of the Shares under the
securities or Blue Sky laws of any jurisdiction shall be in
effect and no proceeding for such purpose shall be pending
before or threatened or contemplated by the Commission or the
authorities of any such jurisdiction, (iii) any request for
additional information on the part of the staff of the
Commission or any such authorities shall have been complied
with to the satisfaction of the staff of the Commission or
such authorities and (iv) after the date hereof no amendment
or supplement to the Registration Statement or the Prospectus
shall have been filed unless a copy thereof was first submit-
ted to you and you did not object thereto in good faith, and
you shall have received certificates, dated the Closing Date
and the Option Closing Date and signed by the Chief Executive
Officer or the Chairman of the Board of Directors of the
Company and the Chief Financial Officer of the Company (who
may, as to proceedings threatened, rely upon the best of their
information and belief), to the effect of clauses (i), (ii)
and (iii).

               (b)  Since the respective dates as of which
information is given in the Registration Statement and the
Prospectus, (i) there shall not have been a material adverse
change in the general affairs, business, business prospects,
properties, management, condition (financial or otherwise) or
results of operations of the Company and its subsidiaries,
taken as a whole, whether or not arising from transactions in
the ordinary course of business, in each case other than as
set forth in or contemplated by the Registration Statement and
the Prospectus and (ii) neither the Company nor any of its
subsidiaries shall have sustained any material loss or
interference with its business or properties from fire,
explosion, flood or other casualty, whether or not covered by
insurance, or from any labor dispute or any court or legisla-
tive or other governmental action, order or decree, which is
not set forth in the Registration Statement and the Prospec-
tus, if in your judgment any such development makes it
impracticable or inadvisable to consummate the sale and
delivery of the Shares by you at the public offering price.

               (c)  Since the respective dates as of which
information is given in the Registration Statement and the
Prospectus, there shall have been no litigation or other
proceeding instituted against the Company or any of its
subsidiaries or any of their respective officers or directors
in their capacities as such, before or by any Federal, state
or local court, commission, regulatory body, administrative
agency or other governmental body, domestic or foreign, in
which litigation or proceeding an unfavorable ruling, decision
or finding would materially and adversely affect the business,
properties, business prospects, condition (financial or
otherwise) or results of operations of the Company and its
subsidiaries taken as a whole.

               (d)  Each of the representations and
warranties of the Company contained herein shall be true and
correct in all material respects at the Closing Date and, with
respect to the Option Shares, at the Option Closing Date, as
if made at the Closing Date and, with respect to the Option
Shares, at the Option Closing Date, and all covenants and
agreements contained herein to be performed on the part of the
Company and all conditions contained herein to be fulfilled or
complied with by the Company at or prior to the Closing Date
and, with respect to the Option Shares, at or prior to the
Option Closing Date, shall have been duly performed, fulfilled
or complied with.

               (e)  You shall have received one or more
opinions, dated the Closing Date and, with respect to the
Option Shares, the Option Closing Date, satisfactory in form
and substance to your counsel, from Goodwin, Procter & Hoar
LLP, counsel to the Company, to the effect set forth in
Exhibit B.

               (f)  You shall have received an opinion,
dated the Closing Date and the Option Closing Date, from
O'Melveny & Myers LLP, your counsel, with respect to the
Registration Statement, the Prospectus and this Agreement,
which opinion shall be satisfactory in all respects to you.

               (g)  Concurrently with the execution and
delivery of this Agreement, the Accountants shall have
furnished to you a letter, dated the date of its delivery,
addressed to you and in form and substance satisfactory to
you, confirming that they are independent accountants with
respect to the Company as required by the Act and the Rules
and Regulations and with respect to the financial and other
statistical and numerical information contained in the
Registration Statement or incorporated by reference therein. 
At the Closing Date and, as to the Option Shares, the Option
Closing Date, the Accountants shall have furnished to you a
letter, dated the date of its delivery, which shall confirm,
on the basis of a review in accordance with the procedures set
forth in the letter from the Accountants, that nothing has
come to their attention during the period from the date of the
letter referred to in the prior sentence to a date (specified
in the letter) not more than three days prior to the Closing
Date and the Option Closing Date which would require any
change in their letter dated the date hereof if it were
required to be dated and delivered at the Closing Date and the
Option Closing Date.

               (h)  Concurrently with the execution and
delivery of this Agreement and at the Closing Date and, as to
the Option Shares, the Option Closing Date, there shall be
furnished to you an accurate certificate, dated the date of
its delivery, signed by each of the Chief Executive Officer
and the Chief Financial Officer of the Company, in form and
substance satisfactory to you, to the effect that:

                    (i)  Each signer of such certificate
     has carefully examined the Registration Statement and
     the Prospectus (including any documents filed under the
     Exchange Act and deemed to be incorporated by reference
     into the Prospectus) and (A) as of the date of such
     certificate, such documents are true and correct in all
     material respects and do not omit to state a material
     fact required to be stated therein or necessary in order
     to make the statements therein not untrue or misleading
     and (B) in the case of the certificate delivered at the
     Closing Date and the Option Closing Date, no event has
     occurred as a result of which it is necessary to amend
     or supplement the Prospectus in order to make the
     statements therein not untrue or misleading in any
     material respect and there has been no document required
     to be filed under the Exchange Act and the Exchange Act
     Rules and Regulations that upon such filing would be
     deemed to be incorporated by reference into the
     Prospectus that has not been so filed.

                    (ii) Each of the representations and
     warranties of the Company contained in this Agreement
     were, when originally made, and are, at the time such
     certificate is delivered, true and correct in all
     material respects.

                    (iii)     Each of the covenants required
     to be performed by the Company herein on or prior to the
     delivery of such certificate has been duly, timely and
     fully performed and each condition herein required to be
     complied with by the Company on or prior to the date of
     such certificate has been duly, timely and fully com-
     plied with.

               (i)  The Shares shall be qualified for sale
in such states as you may reasonably request, each such
qualification shall be in effect and not subject to any stop
order or other proceeding on the Closing Date and the Option
Closing Date.

               (j)  The Company shall have furnished to
you such certificates, in addition to those specifically
mentioned herein, as you may have reasonably requested as to
the accuracy and completeness at the Closing Date and the
Option Closing Date of any statement in the Registration
Statement or the Prospectus or any documents filed under the
Exchange Act and deemed to be incorporated by reference into
the Prospectus, as to the accuracy at the Closing Date and the
Option Closing Date of the representations and warranties of
the Company herein, as to the performance by the Company of
its obligations hereunder, or as to the fulfillment of the
conditions concurrent and precedent to your obligations
hereunder.

          6.   Indemnification.

               (a)  The Company will indemnify and hold
harmless you and each of your directors, officers, employees
and agents and each person, if any, who controls you within
the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, from and against any and all losses, claims,
liabilities, expenses and damages (and actions in respect
thereof) (including any and all investigative, legal and other
expenses reasonably incurred in connection with, and any
amount paid in settlement of, any action, suit or proceeding
or any claim asserted), to which they, or any of them, may
become subject under the Act, the Exchange Act or other
Federal or state statutory law or regulation, at common law or
otherwise, insofar as such losses, claims, liabilities,
expenses or damages arise out of or are based on a breach of
any representation, warranty, agreement or covenant made by
the Company in this Agreement or based upon an untrue
statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus, the Registration
Statement or the Prospectus or any amendment or supplement to
the Registration Statement or the Prospectus or in any
documents filed under the Exchange Act and deemed to be
incorporated by reference into the Prospectus, or the omission
or alleged omission to state in such document a material fact
required to be stated in it or necessary to make the
statements in it not misleading, provided that the Company
will not be liable to the extent that such loss, claim,
liability, expense or damage arises from the sale of the
Shares in the public offering to any person by you and is
based on an untrue statement or omission or alleged untrue
statement or omission made in reliance on and in conformity
with information relating to you furnished in writing to the
Company by you expressly for inclusion in any  Preliminary
Prospectus, the Registration Statement or the Prospectus and
provided further that the Company shall not be liable to you
under the indemnity agreement in this subsection with respect
to the Preliminary Prospectus to the extent that any such
loss, claim, damage or liability of you results solely from an
untrue statement or alleged untrue statement of material fact
contained in, or the omission or alleged omission of a
material fact from, such Preliminary Prospectus which untrue
statement or omission was corrected in the Prospectus, if the
Company shall sustain the burden of proving that you sold
Shares to the person alleging such loss, claim, damage or
liability without sending or giving, at or prior to the
written confirmation of such sale, a copy of the Prospectus
(or of the Prospectus as then amended or supplemented) if the
Company had previously furnished copies thereof to you.  The
Company acknowledges that the statements set forth under the
heading "Underwriting" in the Preliminary Prospectus and the
Prospectus constitute the only information relating to you
furnished in writing to the Company by you expressly for
inclusion in the Registration Statement, the Preliminary
Prospectus or the Prospectus.  This indemnity agreement will
be in addition to any liability that the Company might
otherwise have.

               (b)  You will indemnify and hold harmless
the Company, each person, if any, who controls the Company
within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act, each director of the Company and each
officer of the Company who signs the Registration Statement to
the same extent as the foregoing indemnity from the Company to
you, but only insofar as losses, claims, liabilities, expenses
or damages (or actions in respect thereof) arise out of or are
based on any untrue statement or omission or alleged untrue
statement or omission of a material fact contained in any part
of the Registration Statement when such part became effective,
or in the Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to
make the statements therein not misleading, in each case to
the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission
was made therein in reliance on and in conformity with
information relating to you furnished in writing to the
Company by you expressly for use in the Registration
Statement, the Preliminary Prospectus or the Prospectus.  This
indemnity will be in addition to any liability that you might
otherwise have.  The Company acknowledges that the statements
set forth under the heading "Underwriting" in the Registration
Statement, the Preliminary Prospectus and the Prospectus
constitute the only information relating to you furnished in
writing to the Company by you expressly for inclusion in the
Registration Statement, the Preliminary Prospectus or the
Prospectus.

               (c)  Any party that proposes to assert the
right to be indemnified under this Section 6 will, promptly
after receipt of notice of commencement of any action against
such party in respect of which a claim is to be made against
an indemnifying party or parties under this Section 6, notify
each such indemnifying party of the commencement of such
action, enclosing a copy of all papers served, but the
omission so to notify such indemnifying party will not relieve
it from any liability that it may have to any indemnified
party under the foregoing provisions of this Section 6 unless,
and only to the extent that, such omission results in the
forfeiture of substantive rights or defenses by the
indemnifying party.  If any such action is brought against any
indemnified party and it notifies the indemnifying party of
its commencement, the indemnifying party will be entitled to
participate in and, to the extent that it elects by delivering
written notice to the indemnified party promptly after
receiving notice of the commencement of the action from the
indemnified party, jointly with any other indemnifying party
similarly notified, to assume the defense of the action, with
counsel satisfactory to the indemnified party, and after
notice from the indemnifying party to the indemnified party of
its election to assume the defense, the indemnifying party
will not be liable to the indemnified party for any legal or
other expenses except as provided below and except for the
reasonable costs of investigation subsequently incurred by the
indemnified party in connection with the defense.  The
indemnified party will have the right to employ its own
counsel in any such action, but the fees, expenses and other
charges of such counsel will be at the expense of such
indemnified party unless (1) the employment of counsel by the
indemnified party has been authorized in writing by the
indemnifying party, (2) the indemnified party has reasonably
concluded (based on advice of counsel) that there may be legal
defenses available to it or other indemnified parties that are
different from or in addition to those available to the
indemnifying party, (3) a conflict or potential conflict
exists (based on advice of counsel to the indemnified party)
between the indemnified party and the indemnifying party (in
which case the indemnifying party will not have the right to
direct the defense of such action on behalf of the indemnified
party) or (4) the indemnifying party has not in fact employed
counsel to assume the defense of such action within a
reasonable time after receiving notice of the commencement of
the action, in each of which cases the reasonable fees,
disbursements and other charges of counsel will be at the
expense of the indemnifying party or parties.  It is
understood that the indemnifying party or parties shall not,
in connection with any proceeding or related proceedings in
the same jurisdiction, be liable for the reasonable fees,
disbursements and other charges of more than one separate firm
admitted to practice in such jurisdiction at any one time for
all such indemnified party or parties.  All such fees,
disbursements and other charges will be reimbursed by the
indemnifying party promptly as they are incurred.  An
indemnifying party will not be liable for any settlement of
any action or claim effected without its written consent
(which consent will not be unreasonably withheld).

               (d)  In order to provide for just and
equitable contribution in circumstances in which the
indemnification provided for in the foregoing paragraphs of
this Section 6 is applicable in accordance with its terms but
for any reason is held to be unavailable from the Company or
you, the Company and you will contribute to the total losses,
claims, liabilities, expenses and damages (including any
investigative, legal and other expenses reasonably incurred in
connection with, and any amount paid in settlement of, any
action, suit or proceeding or any claim asserted, but after
deducting any contribution received by the Company from
persons other than you, such as persons who control the
Company within the meaning of the Act, officers of the Company
who signed the Registration Statement and directors of the
Company, who also may be liable for contribution) to which the
Company and you may be subject in such proportion as shall be
appropriate to reflect the relative benefits received by the
Company on the one hand and you on the other.  The relative
benefits received by the Company on the one hand and you on
the other shall be deemed to be in the same proportion as the
total net proceeds from the offering (before deducting
expenses) received by the Company bear to the total
underwriting discounts and commissions received by you in each
case as set forth in the table on the cover page of the
Prospectus.  If, but only if, the allocation provided by the
foregoing sentence is not permitted by applicable law, the
allocation of contribution shall be made in such proportion as
is appropriate to reflect not only the relative benefits
referred to in the foregoing sentence but also the relative
fault of the Company, on the one hand, and you, on the other,
with respect to the statements or omissions which resulted in
such loss, claim, liability, expense or damage, or action in
respect thereof, as well as any other relevant equitable
considerations with respect to such offering.  Such relative
fault shall be determined by reference to whether the untrue
or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to informa-
tion supplied by the Company or you, the intent of the parties
and their relative knowledge, access to information and
opportunity to correct or prevent such statement or omission. 
The Company and you agree that it would not be just and
equitable if contributions pursuant to this Section 6(d) were
to be determined by pro rata allocation or by any other method
of allocation which does not take into account the equitable
considerations referred to herein.  The amount paid or payable
by an indemnified party as a result of the loss, claim,
liability, expense or damage, or action in respect thereof,
referred to above in this Section 6(d) shall be deemed to
include, for purpose of this Section 6(d), any legal or other
expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or
claim.  Notwithstanding the provisions of this Section 6(d),
you shall not be required to contribute any amount in excess
of the underwriting discounts received by it, and no person
found guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) will be entitled to
contribution from any person who was not guilty of such
fraudulent misrepresentation.  For purposes of this Section
6(d), any person who controls a party to this Agreement within
the meaning of the Act will have the same rights to
contribution as that party, and each officer of the Company
who signed the Registration Statement will have the same
rights to contribution as the Company, subject in each case to
the provisions hereof.  Any party entitled to contribution,
promptly after receipt of notice of commencement of any action
against such party in respect of which a claim for
contribution may be made under this Section 6(d), will notify
any such party or parties from whom contribution may be
sought, but the omission so to notify will not relieve the
party or parties from whom contribution may be sought from any
other obligation it or they may have under this Section 6(d). 
No party will be liable for contribution with respect to any
action or claim settled without its written consent (which
consent will not be unreasonably withheld).

          7.   Representations and Agreements to Survive
Delivery.  All representations, warranties, agreements and
covenants of the Company herein or in certificates delivered
pursuant hereto, and your agreements contained in Section 6
hereof, shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of you or
any controlling persons, or the Company or any of its
officers, directors or any controlling persons, and shall
survive (i) termination of this Agreement and (ii) delivery of
and payment for the Shares hereunder.

          8.   Termination.  Your obligations under this
Agreement may be terminated at any time on or prior to the
Closing Date (or, with respect to the Option Shares, on or
prior to the Option Closing Date), by notice to the Company
from you, without liability on the part of you to the Company,
if, prior to delivery and payment for the Shares (or the
Option Shares, as the case may be), in your sole judgment, (i)
trading in any of the equity securities of the Company shall
have been suspended by the Commission, by an exchange that
lists the Shares or by the National Association of Securities
Dealers Automated Quotation National Market System, (ii)
trading in securities generally on the New York Stock Exchange
shall have been suspended or limited or minimum or maximum
prices shall have been generally established on such exchange,
or additional material governmental restrictions, not in force
on the date of this Agreement, shall have been imposed upon
trading in securities generally by such exchange or by order
of the Commission or any court or other governmental
authority, (iii) a general banking moratorium shall have been
declared by either Federal or New York State authorities or
(iv) any material adverse change in the financial or securi-
ties markets in the United States or in political, financial
or economic conditions in the United States or any outbreak or
material escalation of hostilities or declaration by the
United States of a national emergency or war or other calamity
or crisis shall have occurred the effect of any of which is
such as to make it, in your sole judgment, impracticable or
inadvisable to market the Shares on the terms and in the
manner contemplated by the Prospectus.


          9.   Miscellaneous.  Notice given pursuant to any
of the provisions of this Agreement shall be in writing and,
unless otherwise specified, shall be mailed or delivered (a)
if to the Company, at the office of the Company, 15 River
Road, Suite 210, Wilton, Connecticut 06897, Attention: Thomas
J. Sargeant, or (b) if to PaineWebber Incorporated, at the
offices of PaineWebber Incorporated, 1285 Avenue of the
Americas, New York, New York 10019, Attention: Corporate Real
Estate Department.  Any such notice shall be effective only
upon receipt.  Any notice under Section 8 hereof may be made
by telex or telephone, but if so made shall be subsequently
confirmed in writing.

          This Agreement has been and is made solely for the
benefit of you and the Company and of the controlling persons,
directors and officers referred to in Section 6, and their
respective successors and assigns, and no other person shall
acquire or have any right under or by virtue of this
Agreement.  The term "successors and assigns" as used in this
Agreement shall not include a purchaser, as such purchaser, of
Shares from you.

          THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

          This Agreement may be signed in two or more coun-
terparts with the same effect as if the signatures thereto and
hereto were upon the same instrument.

          In case any provision in this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any
way be affected or impaired thereby.

          The Company and you each hereby irrevocably waive
any right they may have to a trial by jury in respect of any
claim based upon or arising out of this Agreement or the
transactions contemplated hereby.


          Please confirm that the foregoing correctly sets
forth the agreement among the Company and you.

                    Very truly yours,

                    AVALON PROPERTIES, INC.

                    By:  ____________________________
                         Name:
                         Title:

Confirmed as of the date first
above mentioned:

PAINEWEBBER INCORPORATED



By:  ______________________________
     Name:  Frederick T. Caven, Jr.
     Title:  Managing Director



                    SCHEDULE I




Number of
Firm Shares
to be
Purchased 


PaineWebber Incorporated . . . . . . . . . . . . .
1,900,000







                     _________






                                         EXHIBIT A


       Form of Price Determination Agreement


              AVALON PROPERTIES, INC.

               _____________________


           Price Determination Agreement


                                     June 25, 1997



PaineWebber Incorporated 
1285 Avenue of the Americas
New York, New York 10019

Dear Sirs:

          Reference is made to the Underwriting Agreement,
dated concurrently herewith (the "Underwriting Agreement"),
among Avalon Properties, Inc., a Maryland corporation (the
"Company"), and you.  The Underwriting Agreement provides for
the purchase by you from the Company, subject to the terms and
conditions set forth therein, of an aggregate of 1,900,000
shares (the "Firm Shares") of the Company's Common Stock, par
value $.01 per share.  This Agreement is the Price
Determination Agreement referred to in the Underwriting
Agreement.

          Pursuant to Section 1 of the Underwriting
Agreement, the undersigned agree with you as follows:

               1.  The public offering price per share for
the Firm Shares shall be $_______.

               2.   The purchase price per share for the
Firm Shares to be paid by you shall be $_______ representing
an amount equal to the public offering price set forth above,
less $______ per share.

          The Company represents and warrants to you that
the representations and warranties of the Company set forth in
Section 3 of the Underwriting Agreement are accurate as though
expressly made at and as of the date hereof.


          This Agreement shall be governed by and construed
in accordance with the laws of the State of New York.

          If the foregoing is in accordance with your
understanding of the agreement among you and the Company,
please sign and return to the Company a counterpart hereof,
whereupon this instrument along with all counterparts and
together with the Underwriting Agreement shall be a binding
agreement among you and the Company in accordance with its
terms and the terms of the Underwriting Agreement.


                         Very truly yours,

                         AVALON PROPERTIES, INC.


                         /s/ Richard L. Michaux
                         Name: Richard L. Michaux
                         Title: Chairman of the Board and
                         Chief Executive Officer

Confirmed as of the date
  first above mentioned:

PAINEWEBBER INCORPORATED



By:  /s/ Frederick T. Caven, Jr.
     Name:  Frederick T. Caven, Jr.
     Title:  Managing Director

                                                  Exhibit B



                Form of Opinion of
              Counsel to the Company


          1.   The Company and each of its subsidiaries is
an entity duly organized, validly existing and in good
standing under the laws of the jurisdiction of its
organization, is duly licensed or qualified to do business and
is in good standing as a foreign corporation in all
jurisdictions in which the nature of the activities conducted
by it or the character of the assets owned or leased by it
makes such license or qualification necessary, has full power
and authority to conduct all the activities conducted by it,
to own or lease all the assets owned or leased by it and to
conduct its business as described in the Registration State-
ment and the Prospectus and has all governmental licenses,
permits, consents, orders, approvals and other authorizations
necessary to carry on its business as contemplated in the
Prospectus.  The Company is the sole record and beneficial
owner of all of the capital stock of each of its subsidiaries.
          2.   All of the outstanding Common Shares, Series
A Preferred and Series B Preferred have been, and the Shares
when paid for by PaineWebber Incorporated in accordance with
the terms of the Agreement will be, duly authorized, validly
issued, fully paid and nonassessable and will not be subject
to any preemptive or similar right.
          3.   No consent, approval, authorization or order
of, or any filing or declaration with, any court or govern-
mental agency or body is required in connection with the
authorization, issuance, transfer, sale or delivery of the
Shares by the Company, in connection with the execution,
delivery and performance of the Agreement by the Company or in
connection with the taking by the Company of any action
contemplated thereby, except such as have been obtained under
the Act and the Rules and Regulations and such as may be
required by the by-laws and rules of the NASD in connection
with the purchase and distribution by PaineWebber Incorporated
of the Shares.  All references in this opinion to the
Agreement shall include the Price Determination Agreement.
          4.   The authorized and outstanding capital stock
of the Company is as set forth in the Registration Statement
and the Prospectus.  The description of the Common Shares
contained in the Prospectus conforms to the terms thereof
contained in the Company's Amended and Restated Articles of
Incorporation.
          5.   The Registration Statement and the
Prospectus (including any documents incorporated by reference
into the Prospectus, at the time they were filed) comply or
complied in all material respects as to form with the
requirements of the Act, the Exchange Act, the Exchange Act
Rules and Regulations and the Rules and Regulations (except
that we express no opinion as to financial statements,
schedules and other financial and statistical data contained
in the Registration Statement or the Prospectus or
incorporated by reference therein).
          6.   We have participated in the preparation of
the Registration Statement and the Prospectus and nothing has
come to our attention which has caused us to believe that,
both as of the date of filing of the Prospectus and as of the
Closing Date and the Option Closing Date, the Registration
Statement, or any amendment thereto, contained or contains any
untrue statement of a material fact or omitted or omits to
state a material fact required to be stated therein or
necessary to make the statements therein not misleading or
that any Prospectus or any amendment or supplement thereto
including any documents incorporated by reference into the
Prospectus, at the time such Prospectus was issued, at the
time any such amended or supplemented Prospectus was issued,
at the Closing Date and the Option Closing Date, contained or
contains any untrue statement of a material fact or omitted or
omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances in which
they were made not misleading (except that we express no
opinion as to financial statements, schedules and other
financial or statistical data contained in the Registration
Statement or the Prospectus or incorporated by reference
therein).
          7.   The Registration Statement has become effec-
tive under the Act and, to the best of our knowledge, no order
suspending the effectiveness of the Registration Statement has
been issued and no proceeding for that purpose has been
instituted or is threatened, pending or contemplated.
          8.   We have reviewed all contracts, instruments
or other documents referred to in the Registration Statement
and the Prospectus and such contracts or other documents are
fairly summarized or disclosed therein, and filed as exhibits
thereto as required, and, after due inquiry, we do not know of
any contracts, instruments or other documents required to be
so summarized or disclosed or filed or required to be filed
under the Exchange Act if upon such filing they would be
incorporated, in whole or in part, by reference therein which
have not been so summarized or disclosed or filed.
          9.   All descriptions in the Prospectus of stat-
utes, regulations or legal or governmental proceedings are
accurate and fairly present the information required to be
shown.
          10.  The Company has full corporate power and
authority to enter into the Agreement, and the Agreement has
been duly authorized, executed and delivered by the Company,
is a valid and binding agreement of the Company and, except
for the indemnification and contribution provisions thereof,
as to which we express no opinion, and subject to applicable
bankruptcy laws, is enforceable against the Company in
accordance with the terms thereof.
          11.  The execution and delivery of the Agreement
by the Company, the consummation by the Company of the trans-
actions therein contemplated and the compliance by the Company
with the terms of the Agreement do not and will not result in
the creation or imposition of any lien, charge or encumbrance
upon any of the assets of the Company or any of its subsi-
diaries pursuant to the terms or provisions of, or result in
a breach or violation of any of the terms or provisions of, or
constitute a default or result in the acceleration of any
obligation under, the Amended and Restated Articles of
Incorporation or Amended and Restated Bylaws of the Company or
organizational documents of any of its subsidiaries, any
indenture, mortgage, deed of trust, voting trust agreement,
loan agreement, bond, debenture, note agreement or other
evidence of indebtedness, lease, contract or other agreement
or instrument known to us to which the Company or any of its
subsidiaries is a party or by which it or any of its proper-
ties is bound or affected, or any judgment, ruling, decree,
order, statute, rule or regulation of any court or other
governmental agency or body applicable to the business or
properties of the Company or any of its subsidiaries (except
that we express no opinion as to the securities or Blue Sky
laws of any jurisdiction other than the United States).
          12.  Delivery of certificates for the Shares will
transfer valid and marketable title thereto to PaineWebber
Incorporated and we are not aware, after due inquiry, of any
adverse claim with respect thereto, and such Shares are free
and clear of all liens, encumbrances and claims.
          13.  We know of no actions, suits or proceedings
pending or threatened against or affecting the Company or any
of its subsidiaries or the business, properties, business
prospects, condition (financial or otherwise) or results of
operations of the Company or any of its subsidiaries, or any
of their respective officers in their capacities as such,
before or by any Federal or state or foreign court, commis-
sion, regulatory body, administrative agency or other govern-
mental body, wherein an unfavorable ruling, decision or
finding might materially and adversely affect the Company or
any of its subsidiaries or its business, properties, business
prospects, condition (financial or otherwise) or results of
operations, except as set forth in or contemplated by the
Registration Statement and the Prospectus.
          14.  To the best of our knowledge, neither the
Company nor any of its subsidiaries is in violation of its
organizational documents or in default (nor has an event
occurred which with notice or lapse of time or both would
constitute a default or acceleration) in the performance of
any obligation, agreement or condition contained in any
indenture, mortgage, deed of trust, voting trust agreement,
loan agreement, bond, debenture, note agreement or other
evidence of indebtedness, lease, contract or other agreement
or instrument known to us to which the Company or any of its
subsidiaries is a party or by which it or its properties is
bound or affected and neither the Company nor any of its
subsidiaries is in violation of any judgment, ruling, decree,
order, franchise, license or permit known to us or any
statute, rule or regulation of any court or other governmental
agency or body applicable to the business or properties of the
Company or any of its subsidiaries, which violation or default
might have a material adverse effect on the business, proper-
ties, business prospects, condition (financial or otherwise)
or results of operations of the Company or any of its subsid-
iaries.
          15.  The Company is not an "investment company"
or an "affiliated person" of, or "promoter" or "principal
underwriter" for, an "investment company," as such terms are
defined in the Investment Company Act of 1940, as amended.
          16.  The Shares have been duly authorized for
listing by the New York Stock Exchange upon official notice of
issuance.
          In rendering the foregoing opinion, counsel may
rely, to the extent they deem such reliance proper, on the
opinions (in form and substance reasonably satisfactory to
PaineWebber Incorporated's counsel) of other counsel
reasonably acceptable to PaineWebber Incorporated's counsel as
to matters governed by the laws of jurisdictions other than
the United States, and as to matters of fact, upon
certificates of officers of the Company and of government
officials; provided that such counsel shall state that the
opinion of any other counsel is in form satisfactory to such
counsel and, in such counsel's opinion, such counsel and
PaineWebber Incorporated is justified in relying on such opin-
ions of other counsel.  Copies of all such opinions and
certificates shall be furnished to counsel to PaineWebber
Incorporated on the Closing Date.

                            Exhibit C


            Subsidiaries of the Company



Avalon Town Green II, Inc.
Avalon Chase Ridge, Inc.
Avalon Chase Glen, Inc.
Avalon Chase Grove, Inc.
Avalon Chase Hampton II, Inc.
Avalon Chase Heritage, Inc.
Avalon Chase Lea, Inc.
Lexington Ridge-Avalon, Inc.
Avalon Town Meadows, Inc.
Avalon Town View, Inc.
Avalon 4100 Massachusetts Avenue, Inc.
Town Cove Jersey City Urban Renewal, Inc.
Avalon Transactions, Inc.
Avalon Decoverly, Inc.
Avalon Lake Arbor, Inc.
Avalon Commons, Inc.
4100 Massachusetts Avenue Associates L.P.
Avalon Lake Arbor Associates L.P.
Avalon Decoverly Associates L.P.
Town Grove L.L.C.
Town Close Associates L.P.
Smithtown Galleria Associates Limited Partnership
Avalon Collateral, Inc.
Avalon Fairway II, Inc.
Avalon Fairway Hills I Associates
Avalon Fairway Hills II Associates
Bronxville West Limited Liability Company
Avalon Ballston II Limited Partnership


EXHIBIT 1.2
              AVALON PROPERTIES, INC.

               _____________________


           Price Determination Agreement


                                     June 25, 1997



PaineWebber Incorporated 
1285 Avenue of the Americas
New York, New York 10019

Dear Sirs:

          Reference is made to the Underwriting Agreement,
dated concurrently herewith (the "Underwriting Agreement"),
among Avalon Properties, Inc., a Maryland corporation (the
"Company"), and you.  The Underwriting Agreement provides for
the purchase by you from the Company, subject to the terms and
conditions set forth therein, of an aggregate of 1,900,000
shares (the "Firm Shares") of the Company's Common Stock, par
value $.01 per share.  This Agreement is the Price
Determination Agreement referred to in the Underwriting
Agreement.

          Pursuant to Section 1 of the Underwriting
Agreement, the undersigned agree with you as follows:

               17.  The public offering price per share for
the Firm Shares shall be $28.0625.

               18.  The purchase price per share for the
Firm Shares to be paid by you shall be $26.6625 representing
an amount equal to the public offering price set forth above,
less $1.40 per share.

          The Company represents and warrants to you that
the representations and warranties of the Company set forth in
Section 3 of the Underwriting Agreement are accurate as though
expressly made at and as of the date hereof.

          This Agreement shall be governed by and construed
in accordance with the laws of the State of New York.

          If the foregoing is in accordance with your
understanding of the agreement between the Company and you,
please sign and return to the Company a counterpart hereof,
whereupon this instrument along with all counterparts and
together with the Underwriting Agreement shall be a binding
agreement among you and the Company in accordance with its
terms and the terms of the Underwriting Agreement.


                         Very truly yours,

                         AVALON PROPERTIES, INC.


                         By:  /s/ Richard L. Michaux
                         Name: Richard L. Michaux
                         Title: Chairman of the Board and
                              Chief Executive Officer



Confirmed as of the date
  first above mentioned:

PAINEWEBBER INCORPORATED


By:  /s/ Frederick T. Caven, Jr.
     Frederick T. Caven, Jr.
     Title:  Managing Director


DOCSC\529844.1