LETTER OF AGREEMENT DATED AUGUST 30, 1996

EXHIBIT 10.1



August 30, 1996



Bay Apartment Communities, Inc.
4340 Stevens Creek Blvd.
Suite 275
San Jose, California 95129

Attention: Gilbert M. Meyer, President


Re: $150,000,000 revolving credit loan (the "Loan") made pursuant to a
Revolving Loan Agreement, dated as of May 8, 1996, among you, as
Borrower, Union Bank of Switzerland (New York Branch) ("UBS") as
Administrative Agent, and UBS, as Co-Agent and Bank, as modified
by a letter agreement, dated June 26, 1996 (said Revolving Loan
Agreement, as modified, the Loan Agreement")


Dear Sirs:

Capitalized terms used below shall, unless otherwise indicated, have
the meanings given such terms in the Loan Agreement.

You have applied to the undersigned, who constitute all the Banks under
the Loan Agreement as of the date hereof, to increase the Total Loan Commitment
by the sum of $50,000,000 (to be allocated entirely to the Loan Commitment of
UBS) and to otherwise modify the Loan Agreement, and the undersigned have agreed
to such increase and modification, subject to the terms and conditions
hereinafter set forth.

NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, you and the undersigned agree as follows:

1. In Section 1.01 of the Loan Agreement, the definition of the term
"Co-Agent" is amended to refer to each of UBS and UBC individually, and the
definition of the term "Co-Agents" is amended to refer to UBS and UBC
collectively.
2. The amounts of the "Loan Commitments" of UBS and UBC under the Loan
Agreement are amended to the following:

UBS $150,000,000
UBC 50,000,000

The amounts of the Loan Commitments of the Banks shall be subject to
change as a result of assignments by one or more of the Banks pursuant to the
third paragraph of Section 12.05 of the Loan Agreement.

3. The definition of the term "Restricted Properties" in Section 1.01
of the Loan Agreement is amended and restated in its entirety as follows:

" 'Restricted Properties' means those properties listed in EXHIBIT F,
together with such other properties as may become Restricted Properties
pursuant to Section 2.17".

4. Exhibit F to the Loan Agreement is amended and restated in its
entirety by EXHIBIT F attached hereto.

5. Section 2.17 of the Loan Agreement is amended by deleting the word
"and" immediately before clause (2) of the first paragraph thereof and inserting
the following language before the period at the end of said first paragraph:

"and (3) in the event Borrower desires that (subject to the right of
approval of Administrative Agent and Co-Agents) the property that is the
subject of the Acquisition become a Restricted Property, an agreement, duly
executed by Borrower, in form satisfactory to Administrative Agent, amending
EXHIBIT F to add such property as a Restricted Property".

6. In Section 10.14 of the Loan Agreement, the figure "16.67%" is
amended to "12.5%".

7. In the first sentence of the third paragraph of Section 12.05 of the
Loan Agreement, the phrase "having a Loan Commitment of $30,000,000 or more" in
the second line thereof is deleted, and the figure "$15,000,000" in the
sixteenth line thereof is deleted and the following is inserted in its place:

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"$10,000,000, provided, further, however, that the assigning Bank shall not
be required to maintain a Loan Commitment in the minimum amount aforesaid in
the event it assigns all of its rights and obligations under this Agreement
and its Note".

The obligation of the undersigned to increase and modify the Loan as
set forth above shall be conditioned on (a) Administrative Agent's receipt of
(i) a note, in the principal amount of $50,000,000, payable to UBS, duly
executed by you, which shall evidence the $50,000,000 increase in the Loan
Commitment of UBS and shall constitute, together with the $100,000,000 Note to
UBS dated May 29, 1996, the "Note" of UBS; (ii) an amendment, duly executed by
you, to the Supplemental Fee Letter; (iii) a resolution of your board of
directors authorizing you to execute this letter agreement and the documents
contemplated hereby (including documents in connection with the syndication of
the Loan referred to in clause (b) below) and to enter into the transactions
contemplated hereby; (iv) an opinion of your counsel with respect to the
transactions contemplated hereby (each of the items required by the foregoing
clauses (i) through (iv) to be in form and substance satisfactory to each of the
undersigned); and (v) the fees required to be paid pursuant to the
aforementioned amendment to the Supplemental Fee Letter and the reasonable fees
and expenses of your counsel in connection with the transactions contemplated
hereby (including the syndication of the Loan); and (b) the closing, immediately
upon the closing of the increase and modification of the Loan, of assignments
pursuant to Section 12.05 of the Loan Agreement of interests in the Loan such
that the amount of the Loan Commitment of each of UBC and UBS shall be reduced
to $30,000,000 and Assignees of UBC and UBS shall become Banks having Loan
Commitments in an amount aggregating $140,000,000.

Except as modified hereby, the Loan Agreement and other Loan Documents
shall remain unchanged and in full force and effect.




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Kindly indicate your acknowledgment of the foregoing by signing and
returning the enclosed copy of this letter.

Very truly yours,

UNION BANK OF SWITZERLAND
(New York Branch)


By /s/ Joseph Bassil
-----------------------------
Name: Joseph Bassil
Title: Vice President


By /s/ Albert Rabil III
-----------------------------
Name: Albert Rabil III
Title: Vice President


UNION BANK OF CALIFORNIA, N.A.

By /s/ James B. Wohlleb
-----------------------------
Name: James B. Wohlleb
Title: Vice President

By /s/ J. Michael Stedman
-----------------------------
Name: J. Michael Stedman
Title: Vice President

Acknowledged this ___
day of August, 1996

BAY APARTMENT COMMUNITIES, INC.

BY /s/ Gilbert M. Meyer
-----------------------
Name: Gilbert M. Meyer
Title: President




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EXHIBIT F

RESTRICTED PROPERTIES


Regatta Bay Foster City, CA

Sommerset Vacaville, CA

The Promenade Sunnyvale, CA

The Pointe Fairfield, CA

Hampton Place Fremont, Ca

Carriage Square San Jose, CA

Park Centre Union City, CA

Parkside Commons Sunnyvale, CA

Sunset Towers San Francisco, CA

The Fountains San Jose, CA

Mill Creek Costa Mesa, CA