UNITED DOMINION REALTY TRUST INC
S-3, 1999-02-24
REAL ESTATE INVESTMENT TRUSTS
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As filed with the Securities and Exchange Commission on February 24, 1999
                                                   Registration No. 333-



                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                   ----------
                                    FORM S-3
                             REGISTRATION STATEMENT
                                      UNDER
                           THE SECURITIES ACT OF 1933


                       UNITED DOMINION REALTY TRUST, INC.

             (Exact name of registrant as specified in its charter)
          Virginia                                              54-0857512
(State or other jurisdiction                                 (I.R.S. Employer 
      of incorporation)                                     Identification No.)

                               10 South 6th Street
                          Richmond, Virginia 23219-3802
                                  (804)780-2691
               (Address, including zip code, and telephone number,
        including area code, of registrant's principal executive offices)

                               KATHERYN E. SURFACE
                    Senior Vice President and General Counsel
                       United Dominion Realty Trust, Inc.
                               10 South 6th Street
                          Richmond, Virginia 23219-3802
                                 (804) 780-2691
            (Name, address, including zip code, and telephone number,
                   including area code, of agent for service)

                                   Copies to:

                           JAMES W. FEATHERSTONE, III
                                RANDALL S. PARKS
                                Hunton & Williams
                          Riverfront Plaza, East Tower
                              951 East Byrd Street
                          Richmond, Virginia 23219-4074
                                 (804) 788-8267

         Approximate  date of commencement of proposed sale to the public:  From
time to time after the effective date of this Registration Statement.

         If the only securities  being registered on this form are being offered
pursuant to dividend or interest  reinvestment plans, please check the following
box. [ ]

         If any securities  being registered on this form are to be offered on a
delayed or continuous  basis  pursuant to Rule 415 under the  Securities  Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]

         If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list  the  Securities  Act  registration  statement  number  of the  earlier
effective statement for the same offering. [ ]

         If this  form is a  post-effective  amendment  filed  pursuant  to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act  registration   statement  number  of  the  earlier  effective  registration
statement for the same offering. [ ]

         If delivery of the  prospectus  is expected to be made pursuant to Rule
434, please check the following box. [ ]
<TABLE>

                                             CALCULATION OF REGISTRATION FEE
====================================================================================================================================
   Title of Each Class of            Amount         Proposed Maximum Offering      Proposed Maximum Aggregate         Amount of
Securities to be Registered    to be Registered         Price Per Unit (1)             Offering Price (1)          Registration Fee
- ------------------------------------------------------------------------------------------------------------------------------------
<S>                             <C>                           <C>                        <C>                         <C>    
Common stock,
$1.00 par value                 130,416 shares                $9.6250                    $1,255,254                  $349.00
- ------------------------------------------------------------------------------------------------------------------------------------
Rights to Purchase Series C
Junior Participating            130,416 rights                  N/A                          N/A                       N/A
Redeemable Preferred Stock,
no par value (2)
====================================================================================================================================
</TABLE>
(1) Determined pursuant to Rule 457(c).
(2) The rights will be attached to and trade with the common stock.

         The registrant hereby amends this  registration  statement on such date
or dates as may be necessary to delay its  effective  date until the  registrant
shall file a further amendment which specifically  states that this registration
statement shall  thereafter  become effective in accordance with Section 8(a) of
the Securities  Act of 1933, or until the  registration  statement  shall become
effective on such date as the  Commission,  acting pursuant to Section 8(a), may
determine.


<PAGE>



                 SUBJECT TO COMPLETION, DATED February 24, 1999
- --------------------------------------------------------------------------------

         The  information in this prospectus is not complete and may be changed.
We may not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to  sell  these  securities  and it is not  soliciting  an  offer  to buy  these
securities in any state where the offer or sale is not permitted.

- --------------------------------------------------------------------------------

                                 130,416 Shares

                       UNITED DOMINION REALTY TRUST, INC.

                                  Common Stock

         This  Prospectus  relates  to the  possible  issuance  of up to 130,416
shares of common stock to certain  individuals and entities (the  "Unitholders")
who sold 278 multi-family  apartment homes to United Dominion Realty Trust, Inc.
("United  Dominion")  on February 5, 1998.  As partial  consideration  for their
properties,  the  Unitholders  received  130,416  units of  limited  partnership
interest in United Dominion  Realty,  L.P. United Dominion will issue the shares
of common stock to the Unitholders if

          (1)  the Unitholders choose to redeem their units, and

          (2)  United  Dominion,  as  United  Dominion  Realty,  L.P.'s  general
               partner, elects to purchase the units for shares of common stock.

         The  Unitholders  will  receive one share of common stock for each unit
they sell to United Dominion.  The Unitholders will not pay, and United Dominion
will not receive, any cash for the shares of common stock.

         The  common  stock is traded on the New York Stock  Exchange  under the
symbol "UDR."

         So that United Dominion may qualify as a real estate  investment  trust
("REIT") under the Internal Revenue Code of 1986, as amended,  United Dominion's
Amended Articles of Incorporation permit its Board of Directors

          (1)  to limit the  number of shares of common  stock that may be owned
               by any single person or affiliated group and

          (2)  to  restrict  the  transfer  of  shares  of  common  stock if the
               transfer would prevent United Dominion from qualifying as a REIT.
               See "Restrictions on Transfer of Capital Stock."

         Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus  is truthful or  complete.  Any  representation  to the contrary is a
criminal offense.


                 The date of this Prospectus is February   , 1999.

<PAGE>
                                TABLE OF CONTENTS


                                                                           Page
                                                                           ----

UNITED DOMINION REALTY TRUST, INC............................................2
RECENT DEVELOPMENTS..........................................................2
DESCRIPTION OF CAPITAL STOCK.................................................4
   General...................................................................4
   Common Stock..............................................................4
   Preferred Stock...........................................................4
RESTRICTIONS ON TRANSFER OF CAPITAL STOCK....................................5
REDEMPTION OF UNITS..........................................................5
   Redemption Rights.........................................................5
   Comparison of Ownership of Units and Redemption Shares....................6
FEDERAL INCOME TAX CONSEQUENCES OF UNITED DOMINION'S STATUS AS A REIT.......11
Tax Consequences of Redemption..............................................12
Taxation of United Dominion.................................................14
Requirements for Qualification..............................................15
   Income Tests.............................................................16
   Asset Tests..............................................................18
   Distribution Requirements................................................19
   Recordkeeping Requirements...............................................20
   Failure to Qualify.......................................................20
Taxation of Taxable U.S. Stockholders.......................................20
   Taxation of U.S. Stockholders on the Disposition of the Common Stock.....21
   Capital Gains and Losses.................................................21
   Information Reporting Requirements and Backup Withholding................21
Taxation of Tax-Exempt Stockholders.........................................22
Taxation of Non-U.S. Stockholders...........................................22
Other Tax Consequences......................................................24
   State and Local Taxes....................................................24
PLAN OF DISTRIBUTION........................................................24
EXPERTS.....................................................................24
LEGAL MATTERS...............................................................25
IF YOU WOULD LIKE ADDITIONAL INFORMATION....................................26

<PAGE>

                       UNITED DOMINION REALTY TRUST, INC.

         United  Dominion Realty Trust,  Inc.  ("United  Dominion"),  a Virginia
corporation  headquartered in Richmond,  Virginia,  is a self-administered  real
estate investment trust ("REIT"),  whose business is the ownership and operation
of apartment  communities located throughout the United States.  United Dominion
is a fully  integrated  real estate company with  acquisition,  development  and
property  management  capabilities.  At December  31,  1998,  United  Dominion's
portfolio consisted of 326 communities containing 86,893 apartment homes. United
Dominion's  apartment  portfolio  also  included  eight  communities  with 2,292
apartment  homes  under  development  (of  which  662  were  completed)  and two
additions to existing  communities  with 316 apartment homes (none of which were
completed). United Dominion had approximately 2,800 employees as of December 31,
1998.

         United  Dominion  operates as a REIT under the federal income tax laws.
To qualify as a REIT, United Dominion must meet certain tests which, among other
things,  require that (1) its assets consist  primarily of real estate,  (2) its
income be derived primarily from real estate and (3) at least 95% of its taxable
income be distributed to its  shareholders  each year.  Because United  Dominion
qualifies as a REIT, it generally is not subject to federal income taxes.

                               RECENT DEVELOPMENTS

         ASR Merger.  Effective  as of the close of business on March 27,  1998,
ASR  Investments   Corporation   ("ASR"),   a  publicly  traded,   Tucson-based,
multifamily  REIT that owned and operated 39  communities  with 7,550  apartment
homes was merged into United  Dominion (the "ASR  Merger").  Pursuant to the ASR
Merger  agreement,  each share of ASR's  common  stock was  exchanged  for 1.575
shares of United  Dominion's  common stock.  The ASR Merger was  structured as a
tax-free transaction and was treated as a purchase for accounting  purposes.  In
connection  with the ASR Merger,  United  Dominion  acquired  real estate assets
totaling  $313.7  million.  Consideration  given  by  United  Dominion  included
7,742,839 shares of common stock valued at $14 per share for an aggregate equity
value of $108.4 million,  plus the issuance of 1,529,990  operating  partnership
units in Heritage Communities, L.P. valued at $21.4 million. In addition, United
Dominion  assumed,  at fair market value,  mortgage debt totaling $179.4 million
and other liabilities of $13.6 million.  The aggregate purchase price in the ASR
Merger was $323.1 million, including transaction costs.

         AAC Merger.  On December 7, 1998,  United  Dominion  acquired  American
Apartment Communities II, Inc. ("AAC"), a San Francisco-based private REIT, from
a fund managed by Lazard Freres Real Estate  Investors  LLC and other  investors
(the "AAC Merger").  The AAC Merger included 53 properties with 14,001 apartment
homes and  allowed  United  Dominion  to enter  growing  markets in  California,
improve  economies of scale by increasing  the number of its apartment  homes in
the Seattle,  Columbus,  Tampa and South Florida markets, and position itself in
Oregon,  Colorado,  Michigan and  Indiana.  The AAC Merger was  structured  as a
tax-free  merger and was  treated  as a purchase  for  accounting  purposes.  In
connection with the AAC Merger,  United Dominion acquired  primarily real estate
assets totaling $766.9  million.  The aggregate  purchase price consisted of the
following:  (A) 8,000,000 shares of United  Dominion's 7.5% Series D Convertible
Preferred Stock ($25  liquidation  preference  value) which is convertible  into
shares of United Dominion's common stock at $16.25 per share, with a fair market
value of  approximately  $175 million,  (B) the issuance of 5,614,035  operating
partnership units to holders of the 21% minority interest in American  Apartment
Communities II, L.P. with an aggregate fair market value of approximately  $67.4
million,  (C) the  assumption of  approximately  $457.7 million of secured notes
payable at fair  value,  (D) the  assumption  of other  liabilities  aggregating
approximately  $27.8  million  and (E)  $59.8  million  of cash.  The  aggregate
purchase  price of the AAC  Merger  was $793.7  million,  including  transaction
costs. With the acquisition, United Dominion owns approximately 87,000 completed
apartments and operates nationally in 34 major U.S. markets.



                                       2
<PAGE>

         Other  Acquisitions.  In addition to the ASR Merger and the AAC Merger,
during 1998,  United Dominion acquired 24 communities with 6,959 apartment homes
at a total cost  (including  closing  costs) of $314.7  million,  or $45,200 per
home.

         Disposition  of  Investments.  During  1998,  United  Dominion  sold 18
communities  with 5,318  apartment homes and one shopping center at an aggregate
sales price of $156.6  million  including  the sale of one community on December
31, 1998.

         Financing Activities. During the first quarter of 1998, United Dominion
entered  into  two  separate  transactions  to sell  its  common  stock  to unit
investment trusts ("UITs"). In February 1998, United Dominion issued 1.7 million
shares of its common  stock at a gross sales price of $14.31 per share to a UIT.
In March 1998,  United Dominion issued 1.1 million shares of its common stock at
a gross sales price of $14.19 per share to a second UIT. The net  proceeds  from
the two UIT  transactions  aggregated  $38.0 million and were  primarily used to
repay bank debt.

         During 1998,  United  Dominion  issued  2,824,627  shares of its common
stock and  received  $36.6  million  under its Dividend  Reinvestment  and Stock
Purchase Plan,  which included  $23.5 million in optional cash  investments  and
$13.1 million of reinvested distributions.

         In  order  to  reduce  the  interest  rate  risk  associated  with  the
anticipated  issuance of unsecured notes during 1998,  United  Dominion  entered
into a $100 million (notional amount) fixed-pay, forward-starting swap agreement
(interest rate risk management  agreement)  with a major Wall Street  investment
banking firm in July 1997. This interest rate risk  management  agreement had an
unfavorable  position to United Dominion of $16.8 million at September 30, 1998.
United Dominion settled the interest rate risk management  agreement on November
9, 1998, by paying $15.6 million to the  counterparty.  United Dominion  elected
not to  issue  the  unsecured  notes  contemplated  by the  interest  rate  risk
management agreement,  and accordingly,  the cost associated with the settlement
of this agreement was expensed during the fourth quarter of 1998.

         Debt Offerings. On November 10, 1998, United Dominion sold an aggregate
$212.5  million of senior  unsecured  notes payable in two  simultaneous  public
offerings which consist of the following:

          o         $150 million of 8.125% Notes due November 15, 2000, and

          o         $62.5 million (including the over-allotment  option) of 8.5%
                    Monthly Income Notes due November 15, 2008.

         Net proceeds from the two  offerings  (net of  underwriting  discounts,
commissions and offering expenses) of approximately  $207.6 million were used to
repay bank debt outstanding  under United  Dominion's  various credit facilities
and to fund the acquisition of AAC.

         In January and February 1999, United Dominion sold an aggregate of $150
million of medium-term notes payable in four offerings which consisted of:

          o         $70 million of three-year  notes maturing  January 25, 2002,
                    priced at 7.60%,

          o         $10 million of four-year  notes  maturing  January 27, 2003,
                    priced at a floating rate that was swapped into a fixed rate
                    at 7.52%,

          o         $58 million of five-year  notes  maturing  January 26, 2004,
                    priced at 7.67%, and

          o         $12 million of 7.22% Notes due February 19, 2003.

         Net  proceeds  from the sale of the notes  were used to repay bank debt
outstanding  under United  Dominion's  various  credit  facilities  and to repay
mortgage debt.




                                       3
<PAGE>

                          DESCRIPTION OF CAPITAL STOCK


General

         United  Dominion is  authorized to issue  150,000,000  shares of common
stock,  $1.00 par value, and 25,000,000 shares of preferred stock, no par value.
At January ___, 1999, there were outstanding  103,639,117 shares of common stock
and  18,200,000  shares of preferred  stock,  consisting of 4,200,000  shares of
United  Dominion's 9 1/4% Series A Cumulative  Redeemable  Preferred  Stock (the
"Series A Preferred"),  6,000,000  shares of United  Dominion's  8.60 % Series B
Cumulative  Redeemable  Preferred Stock (the "Series B Preferred"),  0 shares of
United Dominion's Series C Junior Participating  Cumulative Redeemable Preferred
Stock (the "Series C Preferred) and 8,000,000  shares of United  Dominion's 7.5%
Series D Convertible  Preferred Stock (the "Series D Preferred").  The following
statements  with respect to the capital stock of United  Dominion are subject to
the detailed provisions of United Dominion's Restated Articles of Incorporation,
as amended (the  "Articles"),  and bylaws (the "Bylaws") as currently in effect.
These  statements  do not purport to be complete,  or to give full effect to the
terms of the  provisions of statutory or common law, and are subject to, and are
qualified  in their  entirety by  reference  to, the terms of the  Articles  and
Bylaws, which are filed as exhibits to the registration  statement of which this
prospectus is a part.

Common Stock

         Holders of common stock are entitled to receive  dividends  when and as
declared by the Board of  Directors  after  payment of, or provision  for,  full
cumulative  dividends  on and any  required  redemptions  of shares of preferred
stock  then  outstanding.  Holders  of common  stock have one vote per share and
non-cumulative  voting rights,  which means that holders of more than 50% of the
shares  voting can elect all of the  directors  if they choose to do so, and, in
such event,  the holders of the  remaining  shares will not be able to elect any
directors.  In  the  event  of  any  voluntary  or  involuntary  liquidation  or
dissolution  of United  Dominion,  holders of common stock are entitled to share
ratably  in  the  distributable   assets  of  United  Dominion  remaining  after
satisfaction  of the prior  preferential  rights of the preferred  stock and the
satisfaction of all debts and liabilities of United Dominion.  Holders of common
stock do not have  preemptive  rights.  The dividend and  liquidation  rights of
holders of the common stock are specifically  limited by the terms of the Series
A  Preferred,  the Series B Preferred,  the Series C Preferred  and the Series D
Preferred,  as described in the description of United Dominion's preferred stock
contained in United Dominion's  registration statements on Form 8-A, as amended,
filed  pursuant to Section 12 of the Exchange Act on May 1, 1995,  June 11, 1997
and February 4, 1998.  The  transfer  agent for the common stock is Chase Mellon
Shareholder Services, L.L.C., Ridgefield Park, New Jersey.

Rights to Purchase Series C Preferred Stock

         Each share of common  stock has  attached  to it one right to  purchase
from the Company one one-thousandth of a share of Series C Junior  Participating
Cumulative Redeemable Preferred Stock (the "Series C Preferred Stock"). Each one
one-thousandth  of a share of Series C Preferred  Stock is  structured to be the
equivalent  of one share of common  stock.  The exercise  price of the rights is
$45.00, subject to adjustment.

         The rights will  separate from the common stock and a  distribution  of
certificates  evidencing  the  rights  will  occur  upon the  earlier  of (i) 10
business days following a public  announcement that a person or group of related
persons has acquired, or obtained the right to acquire,  beneficial ownership of
more than 15% of the  outstanding  shares of common  stock,  or (ii) 10 business
days following the  commencement  of a tender offer or exchange offer that would
result in a person or group beneficially owning more than 15% of the outstanding
shares of common stock.




                                       4
<PAGE>

         The rights  will  expire at the close of  business on February 4, 2008,
unless earlier redeemed or exchanged by the Company. A more complete description
of the rights and the Series C Preferred Stock is contained in United Dominion's
registration statement on Form 8-A, as amended, as filed on February 4, 1998.


Preferred Stock

         The  preferred  stock is  described in United  Dominion's  registration
statements on Form 8-A, as amended, filed pursuant to Section 12 of the Exchange
Act on May 1, 1995, June 11, 1997 and February 4, 1998.

                    RESTRICTIONS ON TRANSFER OF CAPITAL STOCK

         For United Dominion to qualify as a REIT under federal income tax laws,
its shares of capital  stock  must be held by a minimum  of 100  persons  for at
least 335 days in each calendar year or during a proportionate part of a shorter
calendar year. In addition, at all times during the second half of each calendar
year,  no more  than 50% in value  of the  shares  of  capital  stock of  United
Dominion may be owned,  directly or indirectly by five or fewer individuals (the
"5/50 Rule"). Because the Board of Directors believes it is essential for United
Dominion  to  continue to qualify as a REIT,  the  Articles  permit the Board of
Directors to prevent an  individual or  individuals  from directly or indirectly
owning shares to the extent that such ownership would disqualify United Dominion
as a REIT.

         If the  Board of  Directors,  in its  good  faith,  determines  that an
individual's or individuals'  ownership of stock may disqualify  United Dominion
as a REIT,  the Board of Directors  may call for a  redemption  (by lot or other
equitable  means) to redeem a number of shares  sufficient  to  maintain  United
Dominion's REIT status. The redemption price per share shall be the closing sale
price on the NYSE as of the  business day  preceding  the day on which notice of
redemption is given.  In addition,  United  Dominion may stop any acquisition or
transfer of shares that would jeopardize United Dominion's REIT status.

                               REDEMPTION OF UNITS


Redemption Rights

         Pursuant to the agreement  governing the Partnership (the  "Partnership
Agreement"), the limited partners of the Partnership generally have the right to
cause  the  redemption  (the  "Redemption  Rights")  of their  interests  in the
Partnership  (the  "Units").  Each  limited  partner  may,  subject  to  certain
limitations,  require that the Partnership  redeem all or a portion of his Units
at any time after one year from the date the Units were acquired by delivering a
notice of exercise of redemption  right to the Partnership and United  Dominion.
The form of notice is an exhibit to the Partnership Agreement. A limited partner
must request the redemption of at least 1,000 Units (or all of the Units held by
such holder, if less than 1,000 are so held).

         Upon redemption,  each limited partner  generally will receive from the
Partnership  cash equal to the value of the Units being  redeemed.  The value of
each Unit will be assumed to be equal to the market value of one share of common
stock.  The market  value of the common  stock for this purpose will be equal to
the average of the closing  trading  prices of the common  stock (or  substitute
information,  if no such closing  prices are  available) on the NYSE for the ten
consecutive  trading  days  before  the day on which the  redemption  notice was
received by United Dominion.

         Instead of the Partnership redeeming the Units, United Dominion, in its
sole  discretion,  may elect to  purchase  the Units  directly  by paying to the
limited  partner  either  (A) a number of shares  of common  stock  equal to the
number of Units being redeemed  ("Redemption  Shares"), or (B) cash in an amount
equal to the cash value of the Units,  as  determined  pursuant to the preceding
paragraph.  If United Dominion  exercises its right to purchase the Units,  then
the Partnership has no obligation to redeem the Units.



                                       5
<PAGE>

         United  Dominion  anticipates  that it generally will elect to purchase
Units through the issuance of the Redemption Shares pursuant to this Prospectus.
Such an  acquisition  will be treated as a sale of the Units to United  Dominion
for federal income tax purposes.  See "-- Tax Consequences of Redemption."  Upon
purchase  or  redemption,  a limited  partner  will no longer  have the right to
receive distributions with respect to the Units.

         A limited  partner may not redeem his Units if receipt of common  stock
in exchange for those Units would (A) result in such partner or any other person
owning, directly or indirectly,  more than 9.8% of the outstanding common stock,
(B) result in common  stock being  owned by fewer than 100  persons  (determined
without  reference to any rules of  attribution),  (C) result in United Dominion
being  "closely  held"  under the  federal  income  tax laws,  (D) cause  United
Dominion  to own,  actually  or  constructively,  10% or  more of the  ownership
interests in a tenant of United Dominion's or the  Partnership's  real property,
or (E) cause the  acquisition of common stock by such partner to be "integrated"
with any other  distribution  of common stock for purposes of complying with the
registration  provisions  of the  Securities  Act of 1933,  as  amended.  United
Dominion,  in its sole  discretion,  may waive  this  restriction  and  permit a
limited  partner to  exercise  its  Redemption  Rights,  but only if the limited
partner receives cash in exchange for the Units.


Comparison of Ownership of Units and Redemption Shares

         The   information   below   highlights  a  number  of  the  significant
differences  between the Partnership  and United  Dominion and compares  certain
legal  rights   associated  with  the  ownership  of  Units  and  common  stock,
respectively.  These  comparisons are intended to assist limited partners of the
Partnership in understanding how their investment will be changed if their Units
are redeemed for  Redemption  Shares.  This  discussion is summary in nature and
does not  constitute a complete  discussion of these  matters.  Holders of Units
should  carefully  review the balance of this  Prospectus  and the  registration
statement  of  which  this  Prospectus  is  a  part  for  additional   important
information about United Dominion.

         Form of Organization  and Assets Owned. The Partnership is organized as
a Virginia  limited  partnership.  United  Dominion  is a Virginia  corporation.
United  Dominion  elected to be taxed as a REIT under the Code effective for its
taxable year ended  December 31, 1972 and intends to maintain its  qualification
as a REIT.

         Length of Investment.  The Partnership has a stated termination date of
December  31,  2051,  although  it  may  be  terminated  earlier  under  certain
circumstances.  United Dominion has a perpetual term and intends to continue its
operations for an indefinite time period.

         Additional  Equity.  The  Partnership  is authorized to issue Units and
other  partnership  interests  to its  partners  or to  other  persons  for such
consideration  and on such terms and conditions as United Dominion,  in its sole
discretion,  may deem  appropriate.  In addition,  United Dominion may cause the
Partnership to issue additional Units, or other partnership  interests in one or
more  different  series or classes  which may be senior to the Units,  to United
Dominion.  Consideration  for  additional  partnership  interests may be cash or
other property or other assets permitted by Virginia law.

         Under the Articles,  the total number of shares of all classes of stock
that United Dominion has the authority to issue is 150,000,000  shares of common
stock  and  25,000,000  shares  of  preferred  stock.  As of the  date  of  this
Prospectus, 18,200,000 shares of preferred stock are outstanding.

         Management and Control. All management and control over the business of
the  Partnership  are  vested in United  Dominion,  as  general  partner  of the
Partnership,  and no limited partner has any right to participate in or exercise
management or control over the business of the Partnership.  Upon the occurrence
of an event of bankruptcy or the dissolution of United Dominion, United Dominion
shall be deemed to be removed as general partner; otherwise, United Dominion may
not be removed by the limited partners with or without cause.



                                       6
<PAGE>

         The Board of Directors  has  exclusive  control over United  Dominion's
business and affairs subject to the restrictions in the Articles and Bylaws. The
Board of Directors has adopted  certain  policies with respect to  acquisitions,
development,  investing,  financing and conflict of interest, but these policies
may be altered or eliminated  without a vote of the  shareholders.  Accordingly,
except  for their  vote in the  elections  of  directors,  shareholders  have no
control over the ordinary business policies of United Dominion.

         Fiduciary Duties. Under Virginia law, United Dominion is accountable to
the Partnership as a fiduciary and,  consequently,  is required to exercise good
faith in all of its dealings with respect to partnership affairs. However, under
the Partnership  Agreement,  United Dominion is under no obligation to take into
account the tax  consequences  to any limited partner of any action taken by it,
and United  Dominion will have no liability to a limited  partner as a result of
any damages suffered by or benefits not derived by a limited partner as a result
of an action or inaction of United  Dominion so long as United Dominion acted in
good faith.

         Under  Virginia law,  United  Dominion's  directors  must perform their
duties in good faith,  in a manner that they believe to be in the best interests
of United  Dominion  and with the care an  ordinarily  prudent  person in a like
situation  would  exercise  under  similar  circumstances.  Directors  of United
Dominion  who act in such a  manner  generally  will  not be  liable  to  United
Dominion for monetary damages arising from their activities.

         Management Limitation of Liability and Indemnification. The Partnership
Agreement  generally  provides that United  Dominion will incur no liability for
monetary  damages to the Partnership or any limited partner for losses sustained
as a result of errors in judgment  or of any act or omission if United  Dominion
acted in good faith.  In addition,  United  Dominion is not  responsible for any
misconduct  or negligence on the part of its agents,  provided  United  Dominion
appointed such agents in good faith. The Partnership Agreement also provides for
indemnification  of  United  Dominion,  the  directors  and  officers  of United
Dominion  and such  other  persons  as  United  Dominion  may from  time to time
designate,  against any and all losses, claims,  damages,  liabilities (joint or
several),  expenses (including  reasonable legal fees and expenses),  judgments,
fines, settlements,  and other amounts arising from any and all claims, demands,
actions,  suits or  proceedings,  whether  civil,  criminal,  administrative  or
investigative,  that relate to the  operations of the  Partnership in which such
person  may  be  involved,  or  is  threatened  to  be  involved.  However,  the
Partnership  shall not  indemnify  any such person (A) for an act or omission of
such person that was material to the matter  giving rise to the  proceeding  and
either was  committed  in bad faith or was the  result of active and  deliberate
dishonesty,  (B) if such person actually  received an improper benefit in money,
property  or  services or (C) in the case of any  criminal  proceeding,  if such
person had  reasonable  cause to believe that the act or omission was  unlawful.
Any indemnification will be made only out of assets of the Partnership.

         United  Dominion's  Articles  obligate  it  to  indemnify  and  advance
expenses  to present and former  directors  and  officers to the maximum  extent
permitted by Virginia law. The Virginia Stock Corporation Act ("VSCA") permits a
corporation  to indemnify its present and former  directors and officers,  among
others, against judgments, settlements,  penalties, fines or reasonable expenses
incurred  with  respect  to a  proceeding  to which  they may be made a party by
reason  of  their  service  in those or  other  capacities  if (A) such  persons
conducted themselves in good faith, (B) they reasonably believed, in the case of
conduct in their official  capacities with the  corporation,  that their conduct
was in its best  interests  and, in all other cases,  that their  conduct was at
least not  opposed to its best  interests,  and (C) in the case of any  criminal
proceeding,  they had no  reasonable  cause to believe  that their  conduct  was
unlawful.  Any  indemnification by United Dominion pursuant to the provisions of
the Articles  described  above will be paid out of the assets of United Dominion
and will not be recoverable from the shareholders.

         The VSCA  permits  the charter of a Virginia  corporation  to include a
provision eliminating or limiting the personal liability of its directors to the
corporation  or its  shareholders  for monetary  damages for breach of fiduciary
duty as a director,  except that such  provision  cannot  eliminate or limit the
liability of a director (A) for any breach of the director's  duty of loyalty to
the corporation or its shareholders, (B) for acts or omissions not in good faith
or which involve  intentional  misconduct or a knowing  violation of the law, or
(C) for  unlawful  distributions  that exceed  what could have been  distributed
without  violating  the VSCA or the  corporation's  charter.  United  Dominion's
Articles contain a provision eliminating the personal liability of its directors
or officers  to United  Dominion or its  shareholders  for money  damages to the
maximum extent permitted by Virginia law from time to time.



                                       7
<PAGE>

         Anti-Takeover  Provisions.  Except  in  limited  circumstances,  United
Dominion  has  exclusive  management  power over the business and affairs of the
Partnership.  United  Dominion  may not be  removed  as  general  partner by the
limited partners with or without cause. Under the Partnership Agreement,  United
Dominion  may,  in  its  sole   discretion,   prevent  a  limited  partner  from
transferring  his interest or any rights as a limited  partner.  United Dominion
may  exercise  this right of  approval  to deter,  delay or hamper  attempts  by
persons to acquire a controlling interest in the Partnership.

         As described above under  "Restrictions  on Transfer of Capital Stock,"
United  Dominion's  Board of Directors may restrict the acquisition of shares of
common stock.

         In addition, Virginia has enacted several statutory provisions to deter
takeovers of Virginia corporations. The VSCA generally requires that any merger,
share exchange or sale of  substantially  all of the assets of a corporation not
in the  ordinary  course of business be approved by at least  two-thirds  of the
votes  entitled to be cast by each  voting  group  entitled to vote,  unless the
articles of incorporation  provide for a greater or lesser vote (but in no event
less than a  majority  of votes cast by each such  voting  group at a meeting at
which a quorum of the voting  group  exists).  United  Dominion's  Articles  and
Bylaws  do not  provide  for a  greater  or  lesser  vote  for the  approval  of
extraordinary transactions.

         The VSCA also contains provisions governing "Affiliated  Transactions."
These provisions,  with several exceptions  discussed below, require approval of
material acquisition  transactions between a Virginia corporation and any holder
of more than 10% of any class of its  outstanding  voting shares (an "Interested
Shareholder")  by the holders of at least  two-thirds  of the  remaining  voting
shares.  Affiliated  Transactions  subject to this approval  requirement include
mergers,  share exchanges,  material dispositions of corporate assets not in the
ordinary course of business,  any dissolution of the corporation  proposed by or
on behalf  of an  Interested  Shareholder,  or any  reclassification,  including
reverse stock splits,  recapitalization  or merger of the  corporation  with its
subsidiaries  which increases the percentage of voting shares owned beneficially
by an Interested Shareholder by more than five percent.

         For  three  years  following  the time that an  Interested  Shareholder
becomes an owner of 10% of the outstanding  voting shares of a corporation,  the
corporation  cannot engage in an  Affiliated  Transaction  with such  Interested
Shareholder without approval of two-thirds of the voting shares other than those
shares beneficially owned by the Interested  Shareholder,  and majority approval
of the "Disinterested  Directors." A Disinterested  Director means, with respect
to a particular Interested  Shareholder,  a member of the board of directors who
was (A) a  member  on the  date on which an  Interested  Shareholder  became  an
Interested  Shareholder  and (B)  recommended for election by, or was elected to
fill a  vacancy  and  received  the  affirmative  vote  of,  a  majority  of the
Disinterested  Directors then on the board.  At the expiration of the three-year
period,  the statute requires approval of Affiliated  Transactions by two-thirds
of the  voting  shares  other than those  beneficially  owned by the  Interested
Shareholder.

         The principal  exceptions to the special  voting  requirement  apply to
transactions proposed after the three-year period has expired and require either
that  the   transaction   be  approved  by  a  majority  of  the   corporation's
Disinterested   Directors  or  that  the  transaction   satisfy  the  fair-price
requirements of the statute.  In general,  the fair-price  requirement  provides
that in a two-step acquisition transaction,  the Interested Shareholder must pay
the  shareholders  in the second step either the same amount of cash or the same
amount and type of  consideration  paid to acquire  the  Virginia  corporation's
shares in the first step.

         None of the  foregoing  limitations  and  special  voting  requirements
applies to a transaction with an Interested Shareholder (A) whose acquisition of
shares making such person an Interested  Shareholder  was approved by a majority
of  the  Virginia  corporation's  Disinterested  Directors  or  (B)  who  was an
Interested  Shareholder  on the date the  corporation  became  subject  to these
provisions by virtue of its having 300 shareholders of record.



                                       8
<PAGE>

         In  addition,  the statute  provides  that,  by  affirmative  vote of a
majority  of the  voting  shares  other  than  shares  owned  by any  Interested
Shareholder,   a  corporation   can  adopt  an  amendment  to  its  articles  of
incorporation  or bylaws providing that the Affiliated  Transactions  provisions
shall not apply to the  corporation.  United Dominion has not "opted out" of the
Affiliated Transactions provisions.

         The VSCA also contains  provisions  regulating  certain  "control share
acquisitions,"  which are transactions causing the voting strength of any person
acquiring  beneficial ownership of shares of a public corporation in Virginia to
meet or exceed certain threshold  percentages (20%, 33 1/3% or 50%) of the total
votes  entitled to be cast for the election of directors.  Shares  acquired in a
control share acquisition have no voting rights unless (A) the voting rights are
granted by a majority  vote of all  outstanding  shares other than those held by
the acquiring person or any officer or employee director of the corporation,  or
(B) the  articles of  incorporation  or bylaws of the  corporation  provide that
these Virginia law provisions do not apply to  acquisitions  of its shares.  The
acquiring  person may require that a special meeting of the shareholders be held
to  consider  the grant of voting  rights to the shares  acquired in the control
share acquisition.  United Dominion has not adopted an amendment to its Articles
or Bylaws making these provisions inapplicable to acquisition of its shares.

         Voting Rights.  Under the Partnership  Agreement,  the limited partners
have voting rights only as to the  continuation  of the  Partnership  in certain
circumstances  and as to certain  amendments of the  Partnership  Agreement,  as
described more fully below.  Otherwise,  all decisions relating to the operation
and management of the Partnership are made by United  Dominion.  At February 22,
1999, United Dominion held approximately 79% of the outstanding interests in the
Partnership.  As Units held by limited partners are redeemed,  United Dominion's
percentage  ownership of the Partnership will increase.  If additional Units are
issued  to  third  parties,   United  Dominion's  percentage  ownership  of  the
Partnership will decrease.

         Shareholders  of United Dominion have the right to vote on, among other
things, a merger or sale of substantially  all of the assets of United Dominion,
certain  amendments  to the Articles and  dissolution  of United  Dominion.  All
shares of common  stock  have one vote,  and the  Articles  permit  the Board of
Directors to classify  and issue  preferred  stock in one or more series  having
voting power which may differ from that of the common stock. See "Description of
Capital Stock."

         Amendment of the Partnership Agreement or the Articles. The Partnership
Agreement may be amended by United  Dominion  without the consent of the limited
partners  in  any  respect,   except  that  certain  amendments   affecting  the
fundamental  rights of a limited  partner must be approved by consent of limited
partners  (other than  United  Dominion or any  subsidiary  of United  Dominion)
holding more than 50% of the Units.  Such consent is required for any  amendment
that would (A) affect the Redemption  Rights, (B) adversely affect the rights of
limited partners to receive  distributions payable to them under the Partnership
Agreement,  (C) alter the Partnership's  profit and loss allocations,  (D) alter
the provisions  relating to the amendment of the Partnership  Agreement,  or (E)
impose any  obligation  upon the  limited  partners to make  additional  capital
contributions to the Partnership.

         The Articles may be amended by the affirmative vote of the holders of a
majority of the shares of each voting group  entitled to vote on the  amendment.
United  Dominion's Bylaws may be amended by the Board of Directors or by vote of
the holders of a majority of the outstanding shares.

         Vote Required to Dissolve the  Partnership or United  Dominion.  At any
time  prior  to  December  31,  2051  (upon  which  date the  Partnership  shall
terminate),  United  Dominion may elect to dissolve the  Partnership in its sole
discretion.   Such  dissolution  shall  also  occur  upon  (A)  the  bankruptcy,
dissolution  or  withdrawal  of United  Dominion  (unless the  limited  partners
unanimously elect to continue the Partnership), (B) the passage of 90 days after
the sale or other  disposition  of all or  substantially  all the  assets of the
Partnership  or (C) the redemption of all of the  outstanding  Units (other than
those held by United Dominion or any subsidiary of United Dominion, if any).



                                       9
<PAGE>

         Under Virginia law, the Board of Directors generally must recommend and
the holders of two-thirds of the outstanding  common stock entitled to vote must
approve any proposal in order to dissolve United Dominion.

         Vote Required to Sell Assets or Merge. Under the Partnership Agreement,
the sale, exchange, transfer or other disposition of all or substantially all of
the Partnership's  assets or merger or consolidation of the Partnership requires
only the consent of United  Dominion.  Under  Virginia  law, any merger or share
exchange  of United  Dominion  requires  the  separate  approval of the Board of
Directors  and each group of  shareholders  entitled  to vote on such  matter by
two-thirds of all votes  entitled to be cast by such group.  Under Virginia law,
the sale of all or substantially all of the assets of United Dominion other than
in the normal course of business requires the approval of the Board of Directors
and holders of two-thirds of the outstanding shares of common stock. No approval
of the shareholders is required for the sale of United  Dominion's assets in the
usual and regular course of business.

         Compensation, Fees and Distributions.  United Dominion does not receive
any compensation  for its services as general partner of the  Partnership.  As a
partner  in the  Partnership,  however,  United  Dominion  has the same right to
allocations and distributions as other partners of the Partnership. In addition,
the  Partnership  will  reimburse  United  Dominion  for all  expenses  incurred
relating  to the  ongoing  operation  of the  Partnership  and any  offering  of
partnership interests in the Partnership or capital stock of United Dominion.

         Liability of Investors.  Under the Partnership Agreement and applicable
state law, the liability of the limited partners for the Partnership's debts and
obligations  is  generally  limited  to the  amount of their  investment  in the
Partnership,  and  limited  partners  are  generally  not  liable for any debts,
liabilities, contracts or obligations of the Partnership.

         Under Virginia law, United  Dominion's  shareholders are not personally
liable for the debts or obligations of United Dominion.

         Nature of Investments.  The Units constitute equity interests entitling
each  limited  partner to his pro rata share of cash  distributions  made to the
limited partners of the Partnership. The Partnership generally intends to retain
and  reinvest  in its  business  proceeds  of the  sale of  property  or  excess
refinancing proceeds.

         The  shares of  common  stock  constitute  equity  interests  in United
Dominion.  United  Dominion  is  entitled  to  receive  its pro  rata  share  of
distributions  made by the  Partnership  with  respect  to the  Units,  and each
shareholder  will  be  entitled  to his  pro  rata  share  of any  dividends  or
distributions  paid with respect to the common stock.  The dividends  payable to
the  shareholders  are not  fixed in amount  and are only  paid if,  when and as
declared  by the  Board of  Directors.  In order to  qualify  as a REIT,  United
Dominion must  distribute at least 95% of its annual taxable  income  (excluding
capital gains), and any taxable income (including capital gains) not distributed
will be subject to corporate income tax.

         Potential  Dilution of Rights.  United  Dominion is authorized,  in its
sole  discretion and without the consent of the limited  partners,  to cause the
Partnership to issue additional limited  partnership  interests and other equity
securities for any partnership purpose at any time to the limited partners or to
other persons on terms and conditions established by United Dominion.

         The Board of Directors of United Dominion may issue, in its discretion,
additional  shares of common stock and a variety of other equity  securities  of
United  Dominion  with  such  powers,  preferences  and  rights  as the Board of
Directors  may  designate.  The issuance of  additional  shares of either common
stock or other similar or senior equity securities may result in the dilution of
the interests of the shareholders.

         Liquidity.  Subject to certain  exceptions,  a limited  partner may not
transfer all or any portion of his Units without (A) obtaining the prior written
consent  of United  Dominion,  which  consent  may be  withheld  in the sole and
absolute   discretion  of  United  Dominion,   and  (B)  meeting  certain  other
requirements  set forth in the Partnership  Agreement.  limited  partners should
expect to hold their  Units  until they redeem them for cash or shares of common
stock, or until the Partnership terminates.  The right of a transferee to become
a substituted limited partner also is subject to the consent of United Dominion,
which  consent may be withheld in its sole and  absolute  discretion.  If United
Dominion does not consent to the admission of a transferee,  the transferee will
succeed to all economic rights and benefits  attributable to such Units but will
not become a limited  partner or possess  any other  rights of limited  partners
(including  the right to vote on or  consent  to  actions  of the  Partnership).
United  Dominion has the right to redeem any Units held by a transferee who does
not  become  a  substituted  limited  partner  within  20  business  days of the
transfer.  United Dominion may require, as a condition of any transfer, that the
transferring  limited  partner assume all costs  incurred by the  Partnership in
connection with such transfer.

         Federal  Income  Taxation.  The  Partnership  is not subject to federal
income taxes.  Instead, each holder of an interest in the Partnership takes into
account  its  allocable  share of the  Partnership's  taxable  income or loss in
determining its federal income tax liability. As of January 1, 1999, the maximum
federal  income tax rate for  individuals  was  39.6%.  Income and loss from the
Partnership  generally is subject to the "passive activity"  limitations.  Under
the  "passive  activity"  rules,  income and loss from the  Partnership  that is
considered  "passive"  income or loss generally can be offset against income and


                                       10
<PAGE>

loss  (including  passive  loss  carry-forwards  from  prior  years)  from other
investments  that  constitute  "passive  activities"  (unless the Partnership is
considered a "publicly  traded  partnership," in which case income and loss from
the  Partnership  can only be  offset  against  other  income  and loss from the
Partnership).  Income  of the  Partnership,  however,  that is  attributable  to
dividends  or interest  does not qualify as passive  income and cannot be offset
with losses and deductions from a "passive  activity." Cash  distributions  from
the  Partnership  are not taxable to a holder of Units except to the extent they
exceed such  holder's  basis in its Units  (which  will  include  such  holder's
allocable share of the  Partnership's  debt).  Each year,  holders of Units will
receive  a  Schedule  K-1 tax  form  containing  detailed  tax  information  for
inclusion in preparing  their federal  income tax returns.  Holders of Units are
required in some cases to file state income tax returns  and/or pay state income
taxes in the states in which the Partnership owns property, even if they are not
residents of those states,  and in some such states the  Partnership is required
to remit a withholding tax with respect to distributions to such nonresidents.

         United Dominion elected to be taxed as a REIT effective for its taxable
year ended December 31, 1972. As long as it qualifies as a REIT, United Dominion
generally will be permitted to deduct  distributions  paid to its  shareholders,
which  effectively  will  reduce  (or  eliminate)  the  "double  taxation"  that
typically results when a corporation earns income and distributes that income to
its  shareholders  in the form of  dividends.  A REIT,  however,  is  subject to
federal income tax on income that is not  distributed and also may be subject to
federal income and excise taxes in certain  circumstances.  The maximum  federal
income tax rate for corporations  currently is 35% and for individuals is 39.6%.
Dividends  paid by United  Dominion  will be treated as  "portfolio"  income and
cannot be offset with losses from "passive  activities."  Distributions  made by
United  Dominion  to  its  taxable  domestic  shareholders  out  of  current  or
accumulated  earnings and profits will be taken into account by them as ordinary
income.  Distributions  that are designated as capital gain dividends  generally
will be taxed  as  long-term  capital  gain,  subject  to  certain  limitations.
Distributions in excess of current and accumulated  earnings and profits will be
treated as a  non-taxable  return of  capital  to the extent of a  shareholder's
adjusted basis in its common stock, and the excess over a shareholder's adjusted
basis will be taxed as capital gain. Each year,  shareholders of United Dominion
(other than  certain  types of  institutional  investors)  will receive IRS Form
1099,  which  is  used  by  corporations  to  report  dividends  paid  to  their
shareholders.  Shareholders who are individuals generally should not be required
to file state income tax returns  and/or pay state income taxes outside of their
state  of  residence   with  respect  to  United   Dominion's   operations   and
distributions.  United  Dominion  may be  required  to pay state  income  and/or
franchise taxes in certain states.


                         FEDERAL INCOME TAX CONSEQUENCES
                      OF UNITED DOMINION'S STATUS AS A REIT

         The following  sections  summarize  the federal  income tax issues that
you,  as a  redeeming  limited  partner and  prospective  shareholder  of United
Dominion, may consider relevant.  Because this section is a summary, it does not
address all of the tax issues that may be important  to you. In  addition,  this
section does not address the tax issues that may be  important to certain  types
of shareholders  that are subject to special  treatment under the federal income
tax laws, such as insurance companies,  tax-exempt  organizations (except to the
extent discussed in "--Taxation of Tax-Exempt  Stockholders"  below),  financial
institutions   or   broker-dealers,   and  non-U.S.   individuals   and  foreign
corporations (except to the extent discussed in "--Taxation of Non-U.S.
Stockholders" below).



                                       11
<PAGE>

         The statements in this section are based on the current  federal income
tax laws governing our  qualification  as a REIT.  United Dominion cannot assure
you that new laws, interpretations thereof, or court decisions, any of which may
take effect  retroactively,  will not cause any  statement in this section to be
inaccurate.

         United Dominion urges you to consult your own tax advisor regarding the
specific tax consequences to you of redeeming your Units for common stock and of
United  Dominion's  election  to be taxed as a REIT.  Specifically,  you  should
consult your own tax advisor regarding the federal,  state,  local,  foreign and
other tax consequences of such investment and election,  and regarding potential
changes in applicable tax laws.


                         Tax Consequences of Redemption

         The  following   discussion   summarizes  certain  federal  income  tax
considerations that may be relevant to a limited partner who exercises his right
to require the redemption of his Units.

         Tax Treatment of Redemption of Units. Upon a limited partner's exercise
of his redemption  right,  United Dominion may elect to purchase the Units.  See
"--- Redemption  Rights." If United Dominion  assumes the redemption  obligation
and purchases Units from a redeeming limited partner, the Partnership  Agreement
provides  that  the  redemption  will  be  treated  by  United   Dominion,   the
Partnership, and the redeeming limited partner as a sale of Units by the limited
partner to United  Dominion.  The sale will be fully  taxable  to the  redeeming
limited partner, and he will realize for tax purposes an amount equal to the sum
of the cash or the value of the common stock received in exchange for the Units,
plus the amount of any partnership  liabilities  allocable to the redeemed Units
at the time of the purchase.

         If United  Dominion does not elect to assume the obligation to redeem a
limited  partner's  Units,  then the Partnership may either (A) redeem the Units
for cash that United Dominion contributes to the Partnership,  or (B) redeem the
Units for cash that United Dominion does not contribute to the  Partnership.  If
the Partnership  redeems the Units for cash contributed by United Dominion,  the
redemption likely would be treated for tax purposes as a sale of such Units in a
fully taxable transaction.  In that event, the redeeming partner will realize an
amount equal to the sum of the cash received in connection  with the redemption,
plus the amount of any partnership  liabilities  allocable to the redeemed Units
at the time of the redemption.  The  determination of the amount of gain or loss
in the event of sale treatment is discussed more fully below.

         If the  Partnership  chooses  to  redeem  Units  for  cash  that is not
contributed  by  United  Dominion,  the tax  consequences  would  be the same as
described in the previous paragraph, except that if the Partnership redeems less
than all of the Units owned by a limited partner,  the limited partner would not
be permitted to recognize  any loss  occurring on the  transaction.  The limited
partner will  recognize  taxable gain only to the extent that (A) the sum of the
cash and the amount of any  partnership  liabilities  allocable  to the redeemed
Units exceeds (B) his adjusted basis in all of his Units immediately  before the
redemption.

         Tax Treatment of Disposition of Units by Limited Partner Generally.  If
a Unit is redeemed  in a manner  that is treated as a sale of the Unit,  or if a
limited partner  otherwise  disposes of a Unit (other than in a transaction that
is treated as a redemption for tax purposes),  the determination of gain or loss
from such sale or other disposition will be based on the difference  between the
amount  realized for tax purposes and the tax basis in such Unit.  See "-- Basis
of Units."



                                       12
<PAGE>

         Upon the sale of a Unit, the "amount  realized" will be measured by the
sum of the cash and fair market value of other property (e.g.,  shares of common
stock) received, plus the amount of any partnership liabilities allocable to the
Unit sold. To the extent that the amount realized exceeds the limited  partner's
basis in the Unit sold, the limited  partner will recognize  gain. The amount of
gain  recognized,  or even the tax  liability  resulting  from such gain,  could
exceed the amount of cash and the value of any other  property  received  during
the sale.

         Except as described  below,  any gain  recognized  upon a sale or other
disposition  of  Units  will be  treated  as gain  attributable  to the  sale or
disposition  of a capital  asset.  To the extent,  however,  that (A) the amount
realized  upon the sale of a Unit that is  attributable  to a limited  partner's
share of the Partnership's  "unrealized  receivables" (as defined in the federal
income tax laws) exceeds (B) the limited  partner's basis  attributable to those
assets,  the excess will be treated as ordinary income.  Unrealized  receivables
include, to the extent not previously included in the Partnership's  income, any
rights  to  payment  for  services  rendered  or  to  be  rendered.   Unrealized
receivables  also include amounts that would be subject to recapture as ordinary
income if the  Partnership had sold its assets at their fair market value at the
time of the transfer of a Unit.

         Basis of Units.  In general,  if a limited  partner  received his Units
upon  liquidation  of a  partnership,  he will have an initial  tax basis in his
Units  ("Initial  Basis")  equal to his basis in his interest in the  liquidated
partnership.  Similarly,  in general, if a limited partner received his Units in
exchange for a contribution  of a partnership  interest or other property to the
Partnership, he will have an Initial Basis equal to his basis in the contributed
partnership interest or other property.

         A limited  partner's  Initial  Basis  generally is increased by (1) his
share of the Partnership's  taxable income and (2) increases in his share of the
Partnership's  liabilities  (including  any increase in his share of liabilities
occurring in connection with the  transactions  resulting in the issuance of the
Units).

         Generally, a limited partner's basis in his Units is decreased (but not
below zero) by (1) his share of the Partnership's  distributions,  (2) decreases
in his share of the  Partnership's  liabilities  (including  any decrease in his
share of liabilities occurring in connection with the transactions  resulting in
the issuance of the Units),  (3) his share of the  Partnership's  losses and (4)
his  share  of  the  Partnership's   nondeductible  expenditures  that  are  not
chargeable to capital.

         Potential  Application of Disguised Sale Regulations to a Redemption of
Units.  There  is a risk  that a  redemption  of Units  may  cause  the  limited
partner's original transfer of property to the Partnership in exchange for Units
to be treated as a "disguised sale" of property.

         Federal  income tax law generally  provides  that,  unless an exception
applies,  if (A) a partner  contributes  property to a  partnership  and (B) the
partnership   at  the  same  time  or  afterwards   transfers   money  or  other
consideration  (including the assumption of or taking subject to a liability) to
the partner,  then the  transaction  will be treated as a  "disguised  sale," in
whole or in part,  of the  property  by the partner to the  partnership.  In the
absence  of  an  applicable  exception,  if  money  or  other  consideration  is
transferred  by a  partnership  to a partner  within two years of the  partner's
contribution  of property to the  partnership,  the  transactions  will be, when
viewed  together,  presumed to be a sale of the contributed  property unless the
facts and circumstances clearly establish that the transfers do not constitute a
sale. However, if two years have passed between the contribution of property and
the transfer of money or other  consideration from the partnership to a partner,
the  transactions  will  be  presumed  not to be a sale  unless  the  facts  and
circumstances clearly establish that the transfers constitute a sale.

         Accordingly,  if the Partnership  redeems a Unit, the Internal  Revenue
Service could argue that the  transaction  should be treated as a sale,  because
the  redeeming  limited  partner  will  receive  cash  after he has  contributed
property to the  Partnership.  If the Internal Revenue Service were to make that
argument successfully,  the original issuance of the Units could be taxable as a
disguised sale under the federal income tax laws.  Any gain  recognized  thereby
may be eligible for installment reporting under Section 453 of the Code, subject
to certain limitations.




                                       13
<PAGE>

                           Taxation of United Dominion

         United Dominion  elected to be taxed as a REIT under the federal income
tax laws  commencing  with its taxable  year ended  December  31,  1972.  United
Dominion believes that it has operated in a manner intended to qualify as a REIT
since its  election to be a REIT and it intends to continue to so operate.  This
section  discusses the laws governing the federal income tax treatment of a REIT
and its shareholders. These laws are highly technical and complex.

         United  Dominion's  qualification  as a REIT  depends on its ability to
meet on a continuing basis certain  qualification tests set forth in the federal
tax laws. Those qualification tests involve the percentage of income that United
Dominion  earns from specified  sources,  the percentage of its assets that fall
within  certain  categories,  the  diversity  of its  share  ownership,  and the
percentage of its earnings that it distributes. The REIT qualification tests are
described in more detail below.  For a discussion of the tax treatment of United
Dominion and its shareholders if United Dominion fails to qualify as a REIT, see
"--Failure to Qualify."

         If  United  Dominion  qualifies  as a REIT,  it  generally  will not be
subject to federal  income tax on the taxable  income that it distributes to its
shareholders.  The benefit of that tax  treatment  is that it avoids the "double
taxation"  (i.e., at both the corporate and  stockholder  levels) that generally
results from owning stock in a  corporation.  However,  United  Dominion will be
subject to federal tax in the following circumstances:

          o         United  Dominion  will pay  federal  income  tax on  taxable
                    income  (including  net  capital  gain)  that  it  does  not
                    distribute to its shareholders during, or within a specified
                    time period after,  the calendar year in which the income is
                    earned.

          o         United Dominion may be subject to the  "alternative  minimum
                    tax"  on any  items  of tax  preference  that  it  does  not
                    distribute or allocate to its shareholders.

          o         United Dominion will pay income tax at the highest corporate
                    rate on (A) net income from the sale or other disposition of
                    property   acquired   through   foreclosure    ("foreclosure
                    property")  that it holds primarily for sale to customers in
                    the ordinary course of business and (B) other non-qualifying
                    income from foreclosure property.

          o         United  Dominion  will  pay a 100%  tax on net  income  from
                    certain sales or other  dispositions of property (other than
                    foreclosure  property)  that it holds  primarily for sale to
                    customers  in the ordinary  course of business  ("prohibited
                    transactions").

          o         If United  Dominion  fails to satisfy  the 75% gross  income
                    test or the 95% gross income test (as described  below under
                    "--Requirements  for   Qualification--Income   Tests"),  and
                    nonetheless  continues to qualify as a REIT because it meets
                    certain  other  requirements,  it will pay a 100% tax on (A)
                    the gross income  attributable to the greater of the amounts
                    by  which  it  fails  the 75% and 95%  gross  income  tests,
                    multiplied  by  (B)  a  fraction  intended  to  reflect  its
                    profitability.

          o         If United  Dominion  fails to  distribute  during a calendar
                    year at least the sum of (A) 85% of its REIT ordinary income
                    for such year,  (B) 95% of its REIT  capital gain net income
                    for such year, and (C) any undistributed taxable income from
                    prior periods,  it will pay a 4% excise tax on the excess of
                    such  required  distribution  over the  amount  it  actually
                    distributed.

          o         United  Dominion  may elect to retain  and pay income tax on
                    its net long-term capital gain.

          o         If United  Dominion  acquires any asset from a C corporation
                    (i.e.,   a   corporation    generally    subject   to   full
                    corporate-level  tax) in a merger  or other  transaction  in
                    which it acquires a basis in the asset that is determined by
                    reference  to the C  corporation's  basis in the  asset  (or


                                       14
<PAGE>

                    another  asset)),  it will  pay tax at the  highest  regular
                    corporate rate  applicable if it recognizes gain on the sale
                    or disposition of such asset during the 10-year period after
                    it acquires such asset.  The amount of gain on which it will
                    pay tax is the  lesser  of (i) the  amount  of gain  that it
                    recognizes at the time of the sale or  disposition  and (ii)
                    the amount of gain that it would have  recognized  if it had
                    sold the asset at the time it acquired  the asset.  The rule
                    described in this  paragraph will apply assuming that United
                    Dominion  makes an election  under IRS Notice 88-19 upon its
                    acquisition of an asset from a C corporation.


                         Requirements for Qualification

         A REIT is a corporation, trust, or association that meets the following
requirements:

          1.        it is managed by one or more trustees or directors;

          2.        its  beneficial   ownership  is  evidenced  by  transferable
                    shares,  or  by  transferable   certificates  of  beneficial
                    interest;

          3.        it would  be  taxable  as a  domestic  corporation,  but for
                    provisions of federal income tax law defining a REIT;

          4.        it is  neither  a  financial  institution  nor an  insurance
                    company subject to certain  provisions of the federal income
                    tax law;

          5.        at least 100 persons are beneficial  owners of its shares or
                    ownership certificates;

          6.        not more  than 50% in value  of its  outstanding  shares  or
                    ownership certificates is owned, directly or indirectly,  by
                    five or fewer  individuals (as defined in the federal income
                    tax laws to include certain  entities)  during the last half
                    of any taxable year (the "5/50 Rule");

          7.        it  elects  to be a REIT (or has made  such  election  for a
                    previous taxable year) and satisfies all relevant filing and
                    other administrative requirements established by the Service
                    that must be met to elect and maintain REIT status;

          8.        it uses a calendar year for federal  income tax purposes and
                    complies with the recordkeeping  requirements of the federal
                    income tax laws; and

          9.        it meets certain other qualification tests, described below,
                    regarding the nature of its income and assets.

         United  Dominion must meet  requirements  1 through 4 during its entire
taxable year and must meet  requirement  5 during at least 335 days of a taxable
year of 12 months, or during a proportionate part of a taxable year of less than
12  months.   If  United  Dominion   complies  with  all  the  requirements  for
ascertaining  the ownership of its outstanding  shares in a taxable year and has
no reason  to know that it  violated  the 5/50  Rule,  it will be deemed to have
satisfied the 5/50 Rule for such taxable year. For purposes of determining share
ownership under the 5/50 Rule, an "individual" generally includes a supplemental
unemployment compensation benefits plan, a private foundation, or a portion of a
trust  permanently  set aside or used  exclusively for charitable  purposes.  An
"individual,"  however,  generally  does not include a trust that is a qualified
employee  pension or profit sharing trust under the federal income tax laws, and
beneficiaries  of such a trust  will be  treated  as  holding  shares  of United
Dominion's capital stock in proportion to their actuarial interests in the trust
for purposes of the 5/50 Rule.



                                       15
<PAGE>

         United  Dominion  believes it has issued  sufficient  common stock with
sufficient  diversity  of ownership  to satisfy  requirements  5 and 6 set forth
above.  In addition,  United  Dominion's  Articles  restrict the  ownership  and
transfer of the common stock so that United  Dominion should continue to satisfy
requirements 5 and 6. The provisions of the Articles  restricting  the ownership
and transfer of the common stock are described in  "Restrictions  on Transfer of
Capital Stock."

         United Dominion currently has several direct corporate subsidiaries and
may have additional corporate  subsidiaries in the future. A corporation that is
a "qualified REIT subsidiary" is not treated as a corporation  separate from its
parent REIT. All assets, liabilities, and items of income, deduction, and credit
of a "qualified REIT subsidiary" are treated as assets,  liabilities,  and items
of income, deduction, and credit of the REIT. A "qualified REIT subsidiary" is a
corporation,  all of the capital  stock of which is owned by the REIT.  Thus, in
applying the requirements  described herein,  any "qualified REIT subsidiary" of
United  Dominion  will be  ignored,  and all assets,  liabilities,  and items of
income,  deduction,  and  credit of such  subsidiary  will be treated as assets,
liabilities,  and items of income,  deduction,  and  credit of United  Dominion.
United  Dominion's  corporate  subsidiaries  are  qualified  REIT  subsidiaries.
Accordingly,  they are not subject to federal corporate income taxation,  though
they may be subject to state and local taxation.

         In the case of a REIT that is a partner in a  partnership,  the REIT is
treated as owning its  proportionate  share of the assets of the partnership and
as  earning  its  allocable  share of the gross  income of the  partnership  for
purposes of the applicable REIT  qualification  tests.  Thus,  United Dominion's
proportionate  share of the  assets,  liabilities  and  items of  income  of the
Partnership  and of any other  partnership in which United Dominion has acquired
or will acquire an interest,  directly or indirectly,  are treated as assets and
gross  income of United  Dominion  for  purposes  of applying  the various  REIT
qualification requirements.


Income Tests

         United  Dominion  must  satisfy  two gross  income  tests  annually  to
maintain its  qualification  as a REIT.  First, at least 75% of its gross income
(excluding gross income from prohibited transactions) for each taxable year must
consist of defined types of income that it derives, directly or indirectly, from
investments relating to real property or mortgages on real property or temporary
investment income (the "75% gross income test").
Qualifying income for purposes of the 75% gross income test includes:

          o         "rents from real property,"

          o         interest on debt secured by mortgages on real property or on
                    interests in real property, and

          o         dividends or other  distributions  on and gain from the sale
                    of shares in other REITs.

         Second,  at least 95% of its gross income  (excluding gross income from
prohibited  transactions)  for each  taxable year must consist of income that is
qualifying  income for purposes of the 75% gross income test,  dividends,  other
types of interest, gain from the sale or disposition of stock or securities,  or
any  combination of the foregoing  (the "95% gross income test").  The following
paragraphs discuss the specific application of these tests to United Dominion.

         Rents  and  Interest.  Rent that  United  Dominion  receives  from real
property  that it owns and leases to tenants  will  qualify as "rents  from real
property"  (which is  qualifying  income for  purposes  of the 75% and 95% gross
income tests) only if the following conditions are met.

          o         First,  the rent must not be based,  in whole or in part, on
                    the income or profits of any  person.  However,  "rents from
                    real  property"  generally does not exclude an amount solely
                    because it is based on a fixed  percentage or percentages of
                    receipts or sales.

          o         Second,  neither  United  Dominion  nor a direct or indirect
                    owner  of 10% or more of its  stock  may  own,  actually  or
                    constructively,  10%  or  more  of a  tenant  from  whom  it
                    receives rent.



                                       16
<PAGE>

          o         Third,  all of the  rent  received  under  a  lease  of real
                    property  will not  qualify  as "rents  from real  property"
                    unless the rent attributable to the personal property leased
                    in  connection  with  such  lease is no more than 15% of the
                    total rent received under the lease.

          o         Finally,  United  Dominion  generally  must not  operate  or
                    manage its real  property  or furnish or render  services to
                    its tenants, other than through an "independent  contractor"
                    who is adequately  compensated and from whom United Dominion
                    does not derive revenue.  However,  United Dominion need not
                    provide  services  through an "independent  contractor," but
                    instead may provide services  directly,  if the services are
                    "usually or  customarily  rendered" in  connection  with the
                    rental of space  for  occupancy  only and are not  otherwise
                    considered  "rendered to the occupant." In addition,  United
                    Dominion may render a de minimis  amount of  "non-customary"
                    services to the tenants of a property, other than through an
                    independent  contractor,  as long  as its  income  from  the
                    services  does not exceed 1% of its income  from the related
                    property.

         United  Dominion  does not receive any rent that is based on the income
or profits of any person. In addition, United Dominion does not own, directly or
indirectly,  10% or more of any tenant.  Furthermore,  United Dominion  believes
that any personal property rented in connection with our apartment facilities is
well  within the 15%  restriction.  Finally,  United  Dominion  does not provide
services (other than within the 1% de minimis exception  described above) to its
tenants that are not  customarily  furnished or rendered in connection  with the
rental of the apartment units, other than through an independent contractor.

         United Dominion,  through the Partnership  (which is not an independent
contractor),  provides  certain services with respect to the facilities and will
provide  certain   services  with  respect  to  any  newly  acquired   apartment
facilities. Such services include (1) common area services, such as cleaning and
maintaining  public  entrances,  exits,  stairways,  walkways,  lobbies and rest
rooms, removing snow and debris, collecting trash, and painting the exteriors of
the  facilities  and  common  areas,  (2)  providing  general  security  for the
facilities,  (3) cleaning and repairing  units at the facilities as tenants move
in and out,  (4) at the request of the tenant,  and without  additional  charge,
accepting  delivery of goods from  carriers or unlocking a particular  unit when
goods are delivered to a facility  (however,  the Partnership does not otherwise
assist tenants in the storage or removal of goods or belongings from the units),
(5) permitting tenants to use the fax machine at a facility for occasional local
faxes without  additional  charge and for occasional  long-distance  faxes for a
nominal charge, (6) maintaining underground utilities and structural elements of
the facilities,  and (7) paying real and personal  property taxes or the cost of
replacing or  refurbishing  personal  property with respect to real and personal
property owned by the Partnership at a facility.  United Dominion  believes that
the services  provided by the Partnership are customarily  furnished or rendered
in  connection  with  the  rental  of  space  for  occupancy  only by  apartment
facilities in the geographic areas in which its facilities are located.

         United  Dominion's   investment,   through  the  Partnership,   in  the
facilities in major part gives rise to rental  income that is qualifying  income
for  purposes  of the 75% and 95%  gross  income  tests.  Gains  on sales of the
facilities (other than from prohibited  transactions,  as described below) or of
United  Dominion's  interest in the  Partnership  generally  will be  qualifying
income for  purposes  of the 75% and 95% gross  income  tests.  United  Dominion
anticipates  that  income on its  other  investments  will not  result in United
Dominion's failing the 75% or 95% gross income test for any year.

         Prohibited  Transaction  Rules. A REIT will incur a 100% tax on the net
income derived from any  "prohibited  transaction."  A "prohibited  transaction"
generally is a sale or other  disposition  of property  (other than  foreclosure
property)  that the REIT holds  primarily  for sale to customers in the ordinary
course of a trade or business.  United Dominion believes that none of its or the
Partnership's  assets is held for sale to customers  and that a sale of any such
asset would not be in the ordinary course of its business.  Whether a REIT holds
an asset  "primarily for sale to customers in the ordinary  course of a trade or
business" depends,  however,  on the facts and circumstances in effect from time
to time,  including those related to a particular  asset.  Nevertheless,  United
Dominion will attempt to comply with the terms of safe-harbor  provisions in the
Code  prescribing  when an asset sale will not be  characterized as a prohibited


                                       17
<PAGE>

transaction.  United Dominion cannot assure you,  however,  that United Dominion
can comply  with such  safe-harbor  provisions  or that  United  Dominion or the
Partnership  will avoid owning  property that may be  characterized  as property
that it holds "primarily for sale to customers in the ordinary course of a trade
or business."

         Hedging  Transactions.  From  time  to  time,  United  Dominion  or the
Partnership may enter into hedging  transactions  with respect to one or more of
its assets or  liabilities.  Its hedging  activities  may include  entering into
interest rate swaps,  caps and floors (or options to purchase  such items),  and
futures  and  forward  contracts.  To the extent  that  United  Dominion  or the
Partnership enters into an interest rate swap or cap contract,  option,  futures
contract,  forward rate agreement or any similar  financial  instrument to hedge
its indebtedness incurred to acquire or carry "real estate assets," any periodic
income or gain from the disposition of such contract should be qualifying income
for purposes of the 95% gross income test, but not the 75% gross income test. To
the extent that United  Dominion or the  Partnership  hedges with other types of
financial instruments,  or in other situations, it is not entirely clear how the
income from those  transactions will be treated for purposes of the gross income
tests. United Dominion intends to structure any hedging transactions in a manner
that does not jeopardize its status as a REIT.

         Failure to Qualify.  If United Dominion fails to satisfy one or both of
the 75% and 95% gross income tests for any taxable  year,  it  nevertheless  may
qualify  as a REIT  for such  year if it  qualifies  for  relief  under  certain
provisions of the Code. Those relief  provisions  generally will be available if
its failure to meet such tests is due to reasonable cause and not due to willful
neglect, United Dominion attaches a schedule of the sources of its income to its
tax return,  and any incorrect  information on the schedule was not due to fraud
with intent to evade tax. United Dominion  cannot predict,  however,  whether in
all circumstances it would qualify for the relief  provisions.  In addition,  as
discussed  above  in  "--Taxation  of  United  Dominion,"  even  if  the  relief
provisions  apply,  United  Dominion  would incur a 100% tax on the gross income
attributable  to the  greater  of the  amounts by which it fails the 75% and 95%
gross  income  tests,   multiplied  by  a  fraction   intended  to  reflect  its
profitability.


Asset Tests

         To maintain its  qualification  as a REIT,  United  Dominion  also must
satisfy  two asset  tests at the close of each  quarter  of each  taxable  year.
First,  at least 75% of the value of its total  assets  must  consist of cash or
cash items (including certain receivables),  government securities, "real estate
assets," or qualifying  temporary  investments (the "75% asset test").  The term
"real estate assets" includes interests in real property, interests in mortgages
on real  property and stock in other REITs.  For purposes of the 75% asset test,
the term "interest in real  property"  includes an interest in mortgage loans or
land and improvements  thereon,  a leasehold of real property,  and an option to
acquire real property (or a leasehold of real  property).  Qualifying  temporary
investments  are  investments in stock or debt  instruments  during the one-year
period following United Dominion's receipt of new capital that it raises through
equity or long-term (at least five-year) debt offerings.

         The second asset test has two components.  First, of United  Dominion's
investments  not included in the 75% asset  class,  the value of its interest in
any one  issuer's  securities  (which does not include its stock in other REITs,
the  Partnership,  or any qualified  REIT  subsidiary)  may not exceed 5% of the
value of its total assets (the "5% asset test"). Second, United Dominion may not
own more than 10% of any one issuer's  outstanding voting securities (which does
not include its stock in other REITs,  the  Partnership,  or any qualified  REIT
subsidiary) (the "10% asset test").

         For purposes of the asset tests,  United  Dominion is deemed to own its
proportionate  share of the assets of the Partnership,  rather than its interest
in the  Partnership.  United  Dominion  has  operate  and intends to continue to
operate so that it has not  acquired  or  disposed,  and in the future  will not
acquire or  dispose,  of assets in a way that would  cause it to violate  either
asset test.



                                       18
<PAGE>

         If United Dominion should fail to satisfy the asset tests at the end of
a calendar  quarter,  it would not lose its REIT status if (A) it satisfied  the
asset  tests  at the  close  of the  preceding  calendar  quarter  and  (B)  the
discrepancy  between  the value of its assets  and the asset  test  requirements
arose  from  changes  in the  market  values of its assets and was not wholly or
partly caused by the acquisition of one or more non-qualifying assets. If United
Dominion did not satisfy the condition  described in clause (B) of the preceding
sentence,  it still could avoid  disqualification  as a REIT by eliminating  any
discrepancy  within 30 days after the close of the calendar quarter in which the
discrepancy arose.


Distribution Requirements

         Each taxable year,  United  Dominion must distribute  dividends  (other
than capital gain dividends and deemed  distributions  of retained capital gain)
to its shareholders in an aggregate amount at least equal to:

          o         the sum of (A) 95% of its "REIT  taxable  income"  (computed
                    without  regard to the dividends  paid deduction and its net
                    capital  gain or loss) and (B) 95% of its net income  (after
                    tax), if any, from foreclosure property,

          o         minus the sum of certain items of non-cash income.

         United  Dominion  must pay such  distributions  in the taxable  year to
which  they  relate,  or in  the  following  taxable  year  if it  declares  the
distribution  before it timely files its federal income tax return for such year
and pays the  distribution on or before the first regular  dividend payment date
after such declaration.

         United   Dominion  will  pay  federal  income  tax  on  taxable  income
(including  net  capital  gain)  that it does not  distribute  to  shareholders.
Furthermore,  if it fails to distribute  during a calendar year (or, in the case
of  distributions  with  declaration  and record dates falling in the last three
months of the calendar year, by the end of January following such calendar year)
at least the sum of:

          o         85% of its REIT ordinary income for such year,

          o         95% of its REIT capital gain income for such year, and

          o         any undistributed taxable income from prior periods,

         it will  incur a 4%  nondeductible  excise  tax on the  excess  of such
required distribution over the amounts it actually distributed.  United Dominion
may elect to retain  and pay  income tax on the net  long-term  capital  gain it
receives in a taxable year. See "--Taxation of Taxable U.S. Stockholders." If it
so elects, it will be treated as having distributed any such retained amount for
purposes of the 4% excise tax described  above.  United  Dominion has made,  and
intends to  continue to make,  timely  distributions  sufficient  to satisfy the
annual distribution requirements.

         It is possible that, from time to time,  United Dominion may experience
timing  differences  between (A) the actual receipt of income and actual payment
of  deductible  expenses and (B) the  inclusion of that income and  deduction of
such  expenses in arriving  at its REIT  taxable  income.  For  example,  United
Dominion  may not  deduct  recognized  capital  losses  from its  "REIT  taxable
income." Further, it is possible that, from time to time, United Dominion may be
allocated a share of net capital gain  attributable  to the sale of  depreciated
property that exceeds its allocable share of cash  attributable to that sale. As
a result of the foregoing,  United Dominion may have less cash than is necessary
to distribute all of its taxable income and thereby avoid  corporate  income tax
and the excise tax imposed on certain undistributed income. In such a situation,
it may need to borrow funds or issue preferred stock or additional common stock.

         Under certain  circumstances,  United Dominion may be able to correct a
failure to meet the  distribution  requirement for a year by paying  "deficiency
dividends" to its shareholders in a later year. United Dominion may include such
deficiency  dividends in its deduction for dividends  paid for the earlier year.
Although United Dominion may be able to avoid income tax on amounts  distributed
as  deficiency  dividends,  it will be required to pay  interest to the Internal
Revenue  Service based upon the amount of any deduction it takes for  deficiency
dividends.




                                       19
<PAGE>

Recordkeeping Requirements

         United Dominion must maintain  certain records in order to qualify as a
REIT.  In addition,  to avoid a monetary  penalty,  it must request on an annual
basis certain information from its shareholders  designed to disclose the actual
ownership of its outstanding stock. United Dominion has complied, and intends to
continue to comply, with such requirements.


Failure to Qualify

         If United Dominion failed to qualify as a REIT in any taxable year, and
no  relief  provision  applied,  it would  be  subject  to  federal  income  tax
(including  any  applicable  alternative  minimum tax) on its taxable  income at
regular corporate rates. In calculating its taxable income in a year in which it
failed to qualify as a REIT, United Dominion would not be able to deduct amounts
paid out to  shareholders.  In fact,  United  Dominion  would not be required to
distribute  any amounts to  shareholders  in such year.  In such  event,  to the
extent of its current and accumulated earnings and profits, all distributions to
shareholders would be taxable as ordinary income. Subject to certain limitations
of the Code, corporate shareholders might be eligible for the dividends received
deduction.  Unless United Dominion qualified for relief under specific statutory
provisions,  it also would be disqualified  from taxation as a REIT for the four
taxable  years  following  the year during which it ceased to qualify as a REIT.
United Dominion cannot predict whether in all circumstances it would qualify for
such statutory relief.


                      Taxation of Taxable U.S. Stockholders

         As  long as  United  Dominion  qualifies  as a REIT,  a  taxable  "U.S.
Stockholder"  must  take into  account  distributions  out of United  Dominion's
current or  accumulated  earnings and profits (and that it does not designate as
capital gain dividends or retained long-term capital gain) as ordinary income. A
U.S. Stockholder will not qualify for the dividends received deduction generally
available to corporations.  As used herein, the term "U.S.  Stockholder" means a
holder of United  Dominion's  common  stock  that for U.S.  federal  income  tax
purposes is

          o         a citizen or resident of the United States,

          o         a  corporation,  partnership,  or other  entity  created  or
                    organized in or under the laws of the United States or of an
                    political subdivision thereof,

          o         an estate  whose  income  from  sources  outside  the United
                    States is includible in gross income for U.S. federal income
                    tax purposes  regardless of its connection  with the conduct
                    of a trade or business within the United States, or

          o         any trust with respect to which (A) a U.S.  court is able to
                    exercise primary supervision over the administration of such
                    trust and (B) one or more U.S. persons have the authority to
                    control all substantial decisions of the trust.

         A U.S.  Stockholder will recognize  distributions  that United Dominion
designates  as capital gain  dividends as long-term  capital gain (to the extent
they do not exceed  United  Dominion's  actual net capital  gain for the taxable
year) without regard to the period for which the U.S.  Stockholder  has held its
common stock. Subject to certain limitations, United Dominion will designate its
capital gain dividends as either 20% or 25% rate distributions. A corporate U.S.
Stockholder, however, may be required to treat up to 20% of certain capital gain
dividends as ordinary income.



                                       20
<PAGE>

         United  Dominion  may elect to  retain  and pay  income  tax on the net
long-term  capital gain that it receives in a taxable year. In that case, a U.S.
Stockholder  would be  taxed on its  proportionate  share of  United  Dominion's
undistributed  long-term  capital  gain.  The U.S.  Stockholder  would receive a
credit or refund for its  proportionate  share of the tax United  Dominion paid.
The U.S.  Stockholder would increase the basis in its stock by the amount of its
proportionate share of United Dominion's  undistributed  long-term capital gain,
minus its share of the tax United Dominion paid.

         A U.S.  Stockholder  will not incur tax on a distribution  in excess of
United  Dominion's  current  and  accumulated   earnings  and  profits  if  such
distribution does not exceed the adjusted basis of the U.S. Stockholder's common
stock.  Instead, such distribution will reduce the adjusted basis of such common
stock. A U.S. Stockholder will recognize a distribution in excess of both United
Dominion's   current  and   accumulated   earnings  and  profits  and  the  U.S.
Stockholder's  adjusted basis in its common stock as long-term  capital gain (or
short-term capital gain if the common stock has been held for one year or less),
assuming  the  common  stock  is a  capital  asset  in the  hands  of  the  U.S.
Stockholder. In addition, if United Dominion declares a distribution in October,
November,  or  December  of any year that is  payable to a U.S.  Stockholder  of
record on a specified date in any such month, such distribution shall be treated
as both paid by United Dominion and received by the U.S. Stockholder on December
31 of such year,  provided that United Dominion  actually pays the  distribution
during January of the following  calendar year. United Dominion will notify U.S.
Stockholders  after  the close of its  taxable  year as to the  portions  of the
distributions  attributable  to that year  that  constitute  ordinary  income or
capital gain dividends.


Taxation of U.S. Stockholders on the Disposition of the Common Stock

         In general,  a U.S.  Stockholder who is not a dealer in securities must
treat any gain or loss realized upon a taxable  disposition  of the common stock
as long-term  capital gain or loss if the U.S.  Stockholder  has held the common
stock for more than one year and otherwise as  short-term  capital gain or loss.
However,  a U.S.  Stockholder  must  treat any loss upon a sale or  exchange  of
common  stock held by such  shareholder  for six months or less (after  applying
certain  holding  period  rules) as a  long-term  capital  loss to the extent of
capital gain dividends and other  distributions  from United  Dominion that such
U.S.  Stockholder treats as long-term capital gain. All or a portion of any loss
a U.S.  Stockholder  realizes upon a taxable disposition of the common stock may
be disallowed  if the U.S.  Stockholder  purchases  other shares of common stock
within 30 days before or after the disposition.


Capital Gains and Losses

         A taxpayer  generally  must hold a capital asset for more than one year
for gain or loss  derived  from its sale or exchange to be treated as  long-term
capital gain or loss. The highest marginal  individual income tax rate is 39.6%.
The maximum tax rate on  long-term  capital  gain  applicable  to  non-corporate
taxpayers is 20% for sales and  exchanges of assets held for more than one year.
The  maximum  tax rate on  long-term  capital  gain from the sale or exchange of
"section 1250 property"  (i.e.,  depreciable real property) is 25% to the extent
that such gain would have been treated as ordinary  income if the property  were
"section 1245  property."  With respect to  distributions  that United  Dominion
designates as capital gain  dividends  and any retained  capital gain that it is
deemed to distribute,  United Dominion may designate (subject to certain limits)
whether such a distribution  is taxable to its  non-corporate  shareholders at a
20% or 25%  rate.  Thus,  the tax rate  differential  between  capital  gain and
ordinary income for non-corporate taxpayers may be significant. In addition, the
characterization  of income as capital  gain or  ordinary  income may affect the
deductibility  of capital losses.  A  non-corporate  taxpayer may deduct capital
losses not offset by capital  gains  against  its  ordinary  income only up to a
maximum  annual  amount of $3,000.  A  non-corporate  taxpayer may carry forward
unused capital losses indefinitely. A corporate taxpayer must pay tax on its net
capital  gain at  ordinary  corporate  rates.  A corporate  taxpayer  can deduct
capital  losses only to the extent of capital  gains,  with unused  losses being
carried back three years and forward five years.




                                       21
<PAGE>

Information Reporting Requirements and Backup Withholding

         United  Dominion  will report to its  shareholders  and to the Internal
Revenue Service the amount of  distributions  it pays during each calendar year,
and the amount of tax it withholds,  if any. Under the backup withholding rules,
a  shareholder  may be  subject  to backup  withholding  at the rate of 31% with
respect to distributions unless such holder (A) is a corporation or comes within
certain other exempt  categories and, when required,  demonstrates  this fact or
(B)  provides  a  taxpayer  identification  number,  certifies  as to no loss of
exemption from backup  withholding,  and otherwise  complies with the applicable
requirements of the backup withholding rules. A shareholder who does not provide
United  Dominion  with its correct  taxpayer  identification  number also may be
subject to penalties imposed by the Internal Revenue Service. Any amount paid as
backup  withholding  will be  creditable  against the  shareholder's  income tax
liability. In addition, United Dominion may be required to withhold a portion of
capital  gain  distributions  to any  shareholders  who  fail to  certify  their
non-foreign status to United Dominion.  The Treasury Department has issued final
regulations  regarding  the backup  withholding  rules as  applied  to  Non-U.S.
Stockholders.  Those regulations alter the current system of backup  withholding
compliance and are effective for distributions made after December 31, 1999. See
"--Taxation of Non-U.S. Stockholders."


                       Taxation of Tax-Exempt Stockholders

         Tax-exempt  entities,  including  qualified employee pension and profit
sharing  trusts  and  individual  retirement  accounts  and  annuities  ("Exempt
Organizations"),  generally are exempt from federal  income  taxation.  However,
they  are  subject  to  taxation  on their  unrelated  business  taxable  income
("UBTI").  While many  investments  in real estate  generate  UBTI, the Internal
Revenue Service has issued a published ruling that dividend distributions from a
REIT to an exempt employee pension trust do not constitute  UBTI,  provided that
the exempt employee  pension trust does not otherwise use the shares of the REIT
in an unrelated  trade or business of the pension  trust.  Based on that ruling,
amounts  that United  Dominion  distributes  to Exempt  Organizations  generally
should not constitute UBTI.  However,  if an Exempt Organization were to finance
its acquisition of the common stock with debt, a portion of the income that they
receive  from  United   Dominion   would   constitute   UBTI   pursuant  to  the
"debt-financed  property" rules.  Furthermore,  social clubs, voluntary employee
benefit  associations,  supplemental  unemployment  benefit trusts and qualified
group legal services plans that are exempt from taxation under  paragraphs  (7),
(9),  (17),  and (20),  respectively,  of Code  section  501(c)  are  subject to
different  UBTI  rules,  which  generally  will  require  them  to  characterize
distributions  that they  receive  from  United  Dominion as UBTI.  Finally,  in
certain circumstances, a qualified employee pension or profit sharing trust that
owns more than 10% of United  Dominion's stock is required to treat a percentage
of the  dividends  that it  receives  from  United  Dominion  as UBTI (the "UBTI
Percentage").  The UBTI  Percentage is equal to the gross income United Dominion
derives from an unrelated trade or business  (determined as if it were a pension
trust)  divided  by its  total  gross  income  for the year in which it pays the
dividends.  The UBTI rule  applies to a pension  trust  holding more than 10% of
United Dominion's stock only if:

          o         the UBTI Percentage is at least 5%;

          o         United  Dominion  qualifies  as a  REIT  by  reason  of  the
                    modification of the 5/50 Rule that allows the  beneficiaries
                    of  the  pension  trust  to be  treated  as  holding  United
                    Dominion's stock in proportion to their actuarial  interests
                    in the pension trust; and

          o         United Dominion is a "pension-held  REIT" (i.e.,  either (i)
                    one  pension  trust  owns  more than 25% of the value of its
                    stock or (ii) a group of pension trusts individually holding
                    more than 10% of the value of its  stock  collectively  owns
                    more than 50% of the value of its stock).


                        Taxation of Non-U.S. Stockholders

         The rules governing U.S.  federal income taxation of nonresident  alien
individuals,  foreign  corporations,  foreign  partnerships,  and other  foreign
shareholders (collectively,  "Non-U.S.  Stockholders") are complex. This section
is only a summary of such rules. United Dominion urges Non-U.S.  Stockholders to
consult  their own tax advisors to determine the impact of federal,  state,  and
local income tax laws on ownership of the common stock,  including any reporting
requirements.



                                       22
<PAGE>

         A  Non-U.S.  Stockholder  that  receives  a  distribution  that  is not
attributable  to gain from  United  Dominion's  sale or  exchange  of U.S.  real
property  interests  (as  defined  below)  and  that  United  Dominion  does not
designate as a capital  gain  dividend or retained  capital gain will  recognize
ordinary income to the extent that United Dominion pays such distribution out of
its current or accumulated  earnings and profits. A withholding tax equal to 30%
of  the  gross  amount  of  the  distribution  ordinarily  will  apply  to  such
distribution  unless an applicable  tax treaty  reduces or  eliminates  the tax.
However, if a distribution is treated as effectively connected with the Non-U.S.
Stockholder's  conduct of a U.S.  trade or business,  the  Non-U.S.  Stockholder
generally will be subject to federal income tax on the distribution at graduated
rates,  in the same manner as U.S.  Stockholders  are taxed with respect to such
distributions (and also may be subject to the 30% branch profits tax in the case
of a Non-U.S. Stockholder that is a non-U.S. corporation). United Dominion plans
to withhold  U.S.  income tax at the rate of 30% on the gross amount of any such
distribution  paid to a  Non-U.S.  Stockholder  unless (i) a lower  treaty  rate
applies  and  the  Non-U.S.  Stockholder  files  the  required  form  evidencing
eligibility  for that  reduced  rate with United  Dominion or (ii) the  Non-U.S.
Stockholder  files an IRS Form  4224  with  United  Dominion  claiming  that the
distribution is effectively  connected income. The U.S. Treasury  Department has
issued final  regulations  that modify the manner in which United  Dominion will
comply with the withholding  requirements.  Those  regulations are effective for
distributions made after December 31, 1999.

         A Non-U.S.  Stockholder  will not incur tax on a distribution in excess
of United  Dominion's  current  and  accumulated  earnings  and  profits if such
distribution  does not exceed the adjusted  basis of its common stock.  Instead,
such a  distribution  will reduce the  adjusted  basis of such common  stock.  A
Non-U.S.  Stockholder will be subject to tax on a distribution that exceeds both
United Dominion's current and accumulated  earnings and profits and the adjusted
basis of its  common  stock,  if the  Non-U.S.  Stockholder  otherwise  would be
subject  to tax on gain from the sale or  disposition  of its common  stock,  as
described below.  Because United Dominion generally cannot determine at the time
it makes a distribution  whether or not the distribution will exceed its current
and  accumulated  earnings and  profits,  it normally  will  withhold tax on the
entire  amount of any  distribution  at the same rate as it would  withhold on a
dividend.  However,  a Non-U.S.  Stockholder may obtain a refund of amounts that
United  Dominion  withholds if it later  determines  that a distribution in fact
exceeded its current and accumulated earnings and profits.

         United Dominion must withhold 10% of any distribution  that exceeds its
current and accumulated earnings and profits. Consequently,  although it intends
to withhold at a rate of 30% on the entire  amount of any  distribution,  to the
extent that it does not do so, it will  withhold at a rate of 10% on any portion
of a distribution not subject to withholding at a rate of 30%.

         For any year in which United  Dominion  qualifies as a REIT, a Non-U.S.
Stockholder will incur tax on  distributions  that are attributable to gain from
its sale or exchange of "U.S. real property  interests"  under the provisions of
the Foreign  Investment  in Real Property Tax Act of 1980  ("FIRPTA").  The term
"U.S. real property  interests"  includes certain interests in real property and
stock in corporations at least 50% of whose assets consists of interests in real
property,  but excludes  mortgage loans and  mortgage-backed  securities.  Under
FIRPTA, a Non-U.S.  Stockholder is taxed on  distributions  attributable to gain
from sales of U.S.  real  property  interests  as if such gain were  effectively
connected  with  a  U.S.  business  of  the  Non-U.S.  Stockholder.  A  Non-U.S.
Stockholder  thus would be taxed on such a  distribution  at the normal  capital
gain rates applicable to U.S.  Stockholders  (subject to applicable  alternative
minimum tax and a special  alternative  minimum tax in the case of a nonresident
alien  individual).  A non-U.S.  corporate  shareholder  not  entitled to treaty
relief  or  exemption  also may be  subject  to the 30%  branch  profits  tax on
distributions  subject to  FIRPTA.  United  Dominion  must  withhold  35% of any
distribution  that it could  designate  as a capital gain  dividend.  A Non-U.S.
Stockholder may receive a credit against its FIRPTA tax liability for the amount
United Dominion withholds.



                                       23
<PAGE>

         A Non-U.S.  Stockholder  generally  will not incur tax under  FIRPTA on
gain  from  the  sale  of its  common  stock  as long as  United  Dominion  is a
"domestically  controlled  REIT." A "domestically  controlled REIT" is a REIT in
which at all times during a specified  testing  period  non-U.S.  persons  held,
directly or indirectly, less than 50% in value of the stock. However, a Non-U.S.
Stockholder  that owned,  actually or  constructively,  5% or less of the common
stock at all times  during a specified  testing  period will not incur tax under
FIRPTA if the common stock is "regularly  traded" on an  established  securities
market.  If the gain on the sale of the common stock were taxed under FIRPTA,  a
Non-U.S. Stockholder would be taxed in the same manner as U.S. Stockholders with
respect to such gain (subject to applicable  alternative  minimum tax, a special
alternative  minimum tax in the case of nonresident alien  individuals,  and the
possible  application  of the 30%  branch  profits  tax in the case of  non-U.S.
corporations).  However,  a  Non-U.S.  Stockholder  will  incur  tax on gain not
subject to FIRPTA if:

          o         the  gain  is   effectively   connected  with  the  Non-U.S.
                    Stockholder's  U.S.  trade or  business,  in which  case the
                    Non-U.S.  Stockholder  will be subject to the same treatment
                    as U.S. Stockholders with respect to such gain, or

          o         the Non-U.S.  Stockholder is a nonresident  alien individual
                    who was present in the U.S.  for 183 days or more during the
                    taxable year and has a "tax home" in the United  States,  in
                    which case the Non-U.S.  Stockholder will incur a 30% tax on
                    his capital gains.


                             Other Tax Consequences


State and Local Taxes

         United  Dominion  and/or  you may be  subject to state and local tax in
various states and  localities,  including  those states and localities in which
United Dominion or you transact business,  own property or reside. The state and
local tax treatment in such jurisdictions may differ from the federal income tax
treatment described above. Consequently, you should consult your own tax advisor
regarding  the  effect of state and  local  tax laws upon an  investment  in the
common stock.


                              PLAN OF DISTRIBUTION

         This Prospectus  relates to the possible issuance by United Dominion of
the Redemption  Shares if, and to the extent that, the  Unitholders  tender such
Units for redemption and United Dominion elects to purchase the Units for shares
of common stock.  United  Dominion is registering the issuance of the Redemption
Shares to make it  possible  to provide the  Unitholders  with freely  tradeable
securities upon redemption of their Units. However,  registration of such shares
does not  necessarily  mean  that any of such  shares  will be  issued by United
Dominion or offered or sold by such Unitholder.

         United  Dominion  may from time to time issue  Redemption  Shares  upon
purchase of Units tendered for redemption. United Dominion will acquire Units in
exchange for any  Redemption  Shares that United  Dominion  issues in connection
with  these  acquisitions.  Consequently,  with  each  such  redemption,  United
Dominion's interest in the Partnership will increase.

                                     EXPERTS

         The consolidated  financial  statements and schedule of United Dominion
appearing in the annual report (Form 10-K) of United Dominion Realty Trust, Inc.
for the year ended  December  31,  1997 have been  audited by Ernst & Young LLP,
independent  auditors, as set forth in their report thereon included therein and
incorporated  herein by reference.  Such consolidated  financial  statements and
schedule are incorporated herein by reference in reliance upon such report given
upon the authority of such firm as experts in accounting and auditing.



                                       24
<PAGE>

                  The  consolidated  financial  statements  and  schedule of ASR
appearing in the annual report (Form 10-K) of ASR  Investments  Corporation  for
the year ended  December  31,  1997 have been  audited by Deloitte & Touche LLP,
independent  auditors, as set forth in their report thereon included therein and
incorporated  herein by reference.  Such consolidated  financial  statements and
schedule are incorporated herein by reference in reliance upon such report given
upon the authority of such firm as experts in accounting and auditing.

         The consolidated financial statements of American Apartment Communities
II,  Inc.  and  American  Apartment  Communities  II,  L.P.,  for the year ended
December  31, 1997,  included in United  Dominion's  current  report on Form 8-K
filed with the  Securities  and  Exchange  Commission  on October 23,  1998,  as
amended,  incorporated herein by reference, have been audited by Arthur Andersen
LLP, independent public accountants,  as indicated in their reports with respect
thereto,  and are included herein in reliance upon the authority of said firm as
experts in giving said reports.

         The statement of rental  operations of Dogwood Creek Apartments and the
combined  statement of rental  operations of Trails at Mount Moriah  Apartments,
Trails  at  Kirby  Parkway  Apartments,   Cinnamon  Trails  Apartments,  Audubon
Apartments,   Carmel  Apartments,   Cimarron  City  Apartments,   Grand  Cypress
Apartments, Kenton Apartments,  Peppermill Apartments, The Crest Apartments, and
Villages of Thousand  Oaks  Apartments,  included in United  Dominion's  current
report on Form 8-K dated June 9,  1998,  filed on June 24,  1998,  as amended by
Amendment  No. 1 on Form  8-K/A  dated  and  filed on  August  13,  1998,  1998,
incorporated by reference herein, has been incorporated  herein in reliance upon
the reports  dated May 1, 1998,  May 8, 1998 and June 29, 1998 of L. P. Martin &
Company, P.C., independent auditors,  also incorporated by reference herein, and
upon the authority of such firm as experts in accounting and auditing.


                                  LEGAL MATTERS

         The  validity  of the  issuance of the shares of common  stock  offered
pursuant to this  Prospectus will be passed upon for United Dominion by Hunton &
Williams.



                                       25
<PAGE>

                    IF YOU WOULD LIKE ADDITIONAL INFORMATION

         United  Dominion  files annual,  quarterly and special  reports,  proxy
statements  and  other  information  with  the  U.S.   Securities  and  Exchange
Commission  ("SEC").  You may read and copy this information at the SEC's public
reference rooms, which are located at:

      450 Fifth Street, NW               7 World Trade Center, Suite 1300
      Washington, DC  20549                      New York, NY 10048

                       500 West Madison Street, Suite 1400
                             Chicago, IL 60661-2511

         Please call the SEC at  1-800-SEC-0330  for further  information on the
public reference rooms.  This information is also available  on-line through the
SEC's Electronic Data Gathering, Analysis, and Retrieval System (EDGAR), located
on the SEC's web site (http://www.sec.gov.).

         Also, United Dominion will provide you (free of charge) with any of its
documents filed with the SEC. To get your free copies, please call or write:

                  United Dominion Realty Trust, Inc.
                  10 South 6th Street
                  Richmond, Virginia 23219-3802
                  (804) 780-2691

         United Dominion has filed a Registration Statement with the SEC on Form
S-3 with respect to the  Redemption  Shares.  This  prospectus  is a part of the
Registration Statement, but the prospectus does not repeat important information
that you can find in the  Registration  Statement,  reports and other  documents
that  United  Dominion  filed with the SEC.  The SEC allows  United  Dominion to
"incorporate by reference" those documents, which means that United Dominion can
disclose important  information to you by referring you to other documents.  The
documents that are incorporated by reference are legally considered to be a part
of this prospectus. The documents incorporated by reference are:

          (1)       Annual  Report on Form 10-K for the year ended  December 31,
                    1997, filed on March 31, 1998;

          (2)       Quarterly Report on Form 10-Q for the period ended March 31,
                    1998,  filed on May 15, 1998;  Quarterly Report on Form 10-Q
                    for the  period  ended  June 30,  1998,  filed on August 14,
                    1998;  Quarterly  Report on Form 10-Q for the  period  ended
                    September 30, 1998, filed on November 16, 1998;

          (3)       Current Report on Form 8-K dated January 27, 1998,  filed on
                    February 4, 1998; Current Report on Form 8-K dated and filed
                    on February 13, 1998;  Current  Report on Form 8-K dated and
                    filed on February 17, 1998;  Current  Report dated March 27,
                    1998, filed on April 13, 1998, as amended by Amendment No. 1
                    on Form  8-K/A  dated  and filed on June 12,  1998;  Current
                    Report on Form 8-K  dated  June 9,  1998,  filed on June 24,
                    1998,  as amended by Amendment No. 1 on Form 8-K/A dated and
                    filed on August 13, 1998;  Current  Report on Form 8-K dated
                    May 28, 1998,  filed on October 19, 1998;  Current Report on
                    Form 8-K dated  September  11,  1998,  filed on October  23,
                    1998,  as amended by Amendment No. 1 on Form 8-K/A dated and
                    filed on December 21, 1998; Current Report on Form 8-K dated
                    and filed on October 28,  1998;  Current  Report on Form 8-K
                    dated November 2, 1998,  filed on November 6, 1998;  Current
                    Report  on Form  8-K  dated  November  10,  1998,  filed  on
                    November 12, 1998; Current Report on Form 8-K dated December
                    7, 1998, filed on December 21, 1998;  Current Report on Form
                    8-K dated and filed on January 20, 1999;



                                       26
<PAGE>

          (4)       The  description  of the common  stock and  preferred  stock
                    contained in United  Dominion's  Registration  Statements on
                    Form 8-A dated April 9, 1990, May 1, 1995, June 10, 1997 and
                    February 4, 1998,  filed under the Exchange  Act,  including
                    any  amendments or reports filed for the purpose of updating
                    such descriptions;

          (5)       Any filings with the SEC pursuant to Section  13(a),  13(c),
                    14 or 15(d) of the  Exchange Act of 1934 between the date of
                    this  prospectus and the  termination of the offering of all
                    of the Redemption Shares.

         As you read the above documents,  you may find some  inconsistencies in
information from one document to another.  If you find  inconsistencies  between
the documents, or between a document and this prospectus, you should rely on the
statements made in the most recent document.

You should rely only on the  information in this  prospectus or  incorporated by
reference.  United  Dominion has not  authorized  anyone to provide you with any
different information.




                                       27
<PAGE>

         Prospective  investors may     UNITED DOMINION REALTY TRUST, INC.
rely on the  information  contained
in this Prospectus. United Dominion
has  not   authorized   anyone   to
provide prospective  investors with               130,416 SHARES
information   different  from  that
contained in this Prospectus.  This
Prospectus  is not an offer to sell
nor is it  seeking  an offer to buy
these securities in any state where
the offer or sale is not permitted.                COMMON STOCK
The  information  contained in this
Prospectus  is  correct  only as of
the   date  of   this   Prospectus,
regardless   of  the  time  of  the
delivery of this  Prospectus or any
sale of these securities.                         ---------------


                                                    PROSPECTUS

                                                  ---------------










                                                  February , 1999


<PAGE>
                                     PART II

                     INFORMATION NOT REQUIRED IN PROSPECTUS

Item 14.          Other Expenses of Issuance and Distribution

         The estimated expenses in connection with the offering are as follows:

         Securities and Exchange Commission registration fee .......  $  349.00
         Accounting fees and expenses...............................   5,000.00
         Legal fees and expenses ...................................   2,500.00
         Printing and postage expenses..............................     500.00
         Miscellaneous..............................................       0.00

                  TOTAL ............................................  $8,349.00

Item 15.           Indemnification of Officers and Directors

         Directors and officers of United  Dominion may be  indemnified  against
liabilities,  fines, penalties, and claims imposed upon or asserted against them
as  provided  in the  Virginia  Stock  Corporation  Act and the  Articles.  Such
indemnification  covers all costs and expenses reasonably incurred by a Director
or  officer.  The  Board  of  Directors,  by a  majority  vote  of a  quorum  of
disinterested  Directors or, under certain  circumstances,  independent  counsel
appointed by the Board of Directors, must determine that the Director or officer
seeking  indemnification  was not  guilty  of  willful  misconduct  or a knowing
violation of the criminal law. In addition,  the Virginia Stock  Corporation Act
and United  Dominion's  Articles may under certain  circumstances  eliminate the
liability of Directors and officers in a shareholder or derivative proceeding.

         If the person involved is not a Director or officer of United Dominion,
the Board of Directors may cause United Dominion to indemnify to the same extent
allowed for Directors and officers of United  Dominion such person who was or is
a party to a proceeding,  by reason of the fact that he is or was an employee or
agent of United Dominion, or is or was serving at the request of United Dominion
as a director,  officer, employee or agent of another corporation,  partnership,
joint venture, trust, employee benefit plan or other enterprise.

Item 16           Exhibits

2(a)    --        Agreement  and Plan of Merger  dated as of December  19, 1997,
                  between United Dominion,  ASR Investments  Corporation and ASR
                  Acquisition  Sub,  Inc.  (filed  as  Exhibit  2(a)  to  United
                  Dominion's  Form S-4  Registration  Statement,  filed with the
                  Commission  on  January  30,  1998 (File No.  333-45305),  and
                  incorporated by reference herein)

2(b)    --        Agreement  and Plan of Merger  dated as of  October  1,  1996,
                  between  United  Dominion,  United  Sub,  Inc.  and South West
                  Property   Trust  Inc.   (filed  as  Exhibit  2(a)  to  United
                  Dominion's  Form S-4  Registration  Statement,  filed with the
                  Commission  on  October  9,  1996  (File No.  333-13745),  and
                  incorporated by reference herein)

2(c)    --        Agreement  and Plan of Merger dated as of September  10, 1998,
                  between United Dominion and American Apartment Communities II,
                  Inc.  including as exhibits  thereto the proposed terms of the
                  Series D Preferred  Stock and the proposed  form of Investment
                  Agreement  between United  Dominion,  United Dominion  Realty,
                  L.P.,  American  Apartment   Communities  II,  Inc.,  American
                  Apartment Communities II, L.P., American Apartment Communities
                  Operating  Partnership,  L.P., Schnitzer Investment Corp., AAC
                  Management LLC and LF Strategic Realty Investors,  L.P. (filed
                  as Exhibit  2(c) to United  Dominion's  Form S-3  Registration
                  Statement,  filed with the  Commission  on September  25, 1998
                  (File No. 333-64281), and incorporated by reference herein)



                                      II-1
<PAGE>

2(d)    --        Partnership  Interest Purchase and Exchange Agreement dated as
                  of  September  10,  1998,  between  United  Dominion,   United
                  Dominion  Realty,   L.P.,   American   Apartment   Communities
                  Operating  Partnership,  L.P., AAC Management  LLC,  Schnitzer
                  Investment  Corp,  Fox  Point  Ltd.  and  James  D.  Klingbeil
                  including as an exhibit thereto the proposed form of the Third
                  Amended and Restated limited  partnership  Agreement of United
                  Dominion  Realty,  L.P.  (filed  as  Exhibit  2(d)  to  United
                  Dominion's  Form S-3  Registration  Statement,  filed with the
                  Commission  on September  25, 1998 (File No.  333-64281),  and
                  incorporated by reference herein)

4(a)    --        Restated  Articles of  Incorporation of United Dominion (filed
                  as Exhibit  4(b) to United  Dominion's  Form S-3  Registration
                  Statement, filed with the Commission on January 16, 1998 (File
                  No. 333-44463), and incorporated by reference herein)

4(a)(i) --        Amendment  of Articles  of  Incorporation  of United  Dominion
                  (filed as Exhibit 3 to United Dominion's Form 8-A Registration
                  Statement  dated  February  4, 1998  (File No.  1-10524),  and
                  incorporated by reference herein)

4(a)(ii)--        Restated  Articles of Incorporation of United Dominion,  dated
                  January 21, 1999.

4(b)    --        Restated  Bylaws of United  Dominion (filed as Exhibit 3(b) to
                  United  Dominion's  quarterly  report  on  Form  10-Q  for the
                  quarter  ended  March  31,  1997  (File  No.   1-10524),   and
                  incorporated by reference herein)

4(c)    --        Specimen United Dominion  common stock  certificate  (filed as
                  Exhibit 4(i) to United  Dominion's  Annual Report on Form 10-K
                  for the year ended December 31, 1993 (File No.  1-10524),  and
                  incorporated by reference herein)

4(d)(i) --        Loan  Agreement  dated as of November 7, 1993,  between United
                  Dominion and Aid Association  for Lutherans  (filed as Exhibit
                  6(c)(1) to United  Dominion's Form 8-A Registration  Statement
                  dated April 19, 1990 (File No.  10524),  and  incorporated  by
                  reference herein)

4(d)(ii)--        Note Purchase  Agreement dated as of January 15, 1993, between
                  United  Dominion and CIGNA  Property  and  Casualty  Insurance
                  Company,   Connecticut   General   Life   Insurance   Company,
                  Connecticut General Life Insurance Company on behalf of one or
                  more separate  accounts,  Insurance  Company of North America,
                  Principal Mutual Life Insurance  Company,  and Aid Association
                  for Lutherans  (filed as Exhibit 6(c)(5) to United  Dominion's
                  Form 8-A Registration Statement dated April 19, 1990 (File No.
                  1-10524), and incorporated by reference herein)

4(e)    --        Rights Agreement dated as of January 27, 1998,  between United
                  Dominion and  ChaseMellon  Shareholder  Services,  L.L.C.,  as
                  Rights Agent (filed as Exhibit 1 to United Dominion's Form 8-A
                  Registration  Statement  dated  February  4,  1998  (File  No.
                  1-10524) and incorporated by reference herein)

4(f)    --        Form of Rights Certificate (included in Exhibit 4(e))

5       --        Opinion of Hunton & Williams

23(a)   --        Consent of Ernst & Young LLP (to be filed by amendment)

23(b)   --        Consent  of L.P.  Martin  &  Company,  P.C.  (to be  filed  by
                  amendment)

23(c)   --        Consent of Deloitte & Touch LLP (to be filed by amendment)



                                       II-2
<PAGE>

23(d)   --        Consent of Arthur Andersen (to be filed by amendment)

23(e)   --        Consent of Hunton & Williams (included in Exhibit 5)

24      --        Power of Attorney (see signature page)

Item 17.          Undertakings

         (a)      The undersigned registrant hereby undertakes:

                  (1) To file,  during any  period in which  offers or sales are
                  being made, a  post-effective  amendment to this  Registration
                  Statement:

                             (i) To include any  prospectus  required by Section
                             10(a)(3) of the Securities Act;

                             (ii) To  reflect  in the  prospectus  any  facts or
                             events  arising  after  the  effective  date of the
                             Registration   Statement   (or  the   most   recent
                             post-effective     amendment     thereof)    which,
                             individually  or  in  the  aggregate,  represent  a
                             fundamental  change in the information set forth in
                             the Registration Statement;

                             (iii) To  include  any  material  information  with
                             respect to the plan of distribution  not previously
                             disclosed  in  the  Registration  Statement  or any
                             material   change  to  such   information   in  the
                             Registration Statement;

                                    Provided, however, that paragraphs (a)(1)(i)
                             and  (a)(1)(ii)  do not  apply  if the  information
                             required  to  be   included  in  a   post-effective
                             amendment  by  those  paragraphs  is  contained  in
                             periodic  reports filed by the registrant  pursuant
                             to Section 13 or Section  15(d) of the Exchange Act
                             that  are   incorporated   by   reference   in  the
                             Registration Statement.

                  (2) That, for the purpose of determining  any liability  under
                  the Securities Act, each such  post-effective  amendment shall
                  be deemed to be a new registration  statement  relating to the
                  securities   offered   therein,   and  the  offering  of  such
                  securities at that time shall be deemed to be the initial bona
                  fide offering thereof.

                  (3) To remove from  registration by means of a  post-effective
                  amendment any of the securities  being registered which remain
                  unsold at the termination of the offering.

         (b) The undersigned  registrant hereby undertakes that, for purposes of
determining  any  liability  under  the  Securities  Act,  each  filing  of  the
registrant's  annual  report  pursuant to Section  13(a) or Section 15(d) of the
Exchange Act (and, where  applicable,  each filing of an employee benefit plan's
annual  report   pursuant  to  Section  15(d)  of  the  Exchange  Act)  that  is
incorporated by reference in this registration statement shall be deemed to be a
new registration  statement relating to the securities offered therein,  and the
offering of such  securities at that time shall be deemed to be the initial bona
fide offering thereof.

         (c)  Insofar  as  indemnification  for  liabilities  arising  under the
Securities Act may be permitted to directors,  officers and controlling  persons
of the registrant  pursuant to the provisions of the Virginia Code, the Articles
of  Incorporation  or By-laws of the  registrant or  resolutions of the Board of
Directors  of  the  registrant  adopted  pursuant  thereto,  or  otherwise,  the
registrant  has been advised that in the opinion of the  Securities and Exchange
Commission  such  indemnification  is against  public policy as expressed in the
Securities Act, and is, therefore,  unenforceable. In the event that a claim for
indemnification  against  such  liabilities  (other  than  the  payment  by  the
registrant of expenses  incurred or paid by a director,  officer or  controlling
person of the  registrant  in the  successful  defense  of any  action,  suit or
proceeding)  is  asserted by such  director,  officer or  controlling  person in
connection with the securities being registered,  the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit  to a  court  of  appropriate  jurisdiction  the  question  whether  such
indemnification  by it is against  public policy as expressed in the  Securities
Act and will be governed by the final adjudication of such issue.

                                      II-3
<PAGE>
                                   SIGNATURES

         Pursuant  to the  requirements  of the  Securities  Act  of  1933,  the
registrant  has duly  caused  this  Registration  Statement  to be signed on its
behalf by the undersigned,  thereunto duly authorized,  in the City of Richmond,
Commonwealth of Virginia on the 26th day of January, 1999.

                                            UNITED DOMINION REALTY TRUST, INC.



                                            By  /s/ John P. McCann
                                               --------------------------------
                                               John P. McCann
                                               Chief Executive Officer

                                Power of Attorney

         Know All Men and Women By These  Presents  that each  individual  whose
signature  appears below constitutes and appoints John P. McCann and Katheryn E.
Surface,  and each of them, such individual's true and lawful  attorneys-in-fact
and agents with full power of  substitution,  for such  individual and in his or
her  name,  place  and  stead,  in any and all  capacities,  to sign any and all
amendments (including post-effective  amendments) to this registration statement
and any  registration  statement  related to the offering  contemplated  by this
registration  statement  that is to be  effective  upon filing  pursuant to Rule
462(b) under the Securities Act of 1933, as amended,  and to file the same, with
all exhibits  thereto,  and all  documents  in  connection  therewith,  with the
Securities and Exchange  Commission,  granting unto said  attorneys-in-fact  and
agents and each of them,  full power and  authority  to do and perform  each and
every  act and  thing  requisite  and  necessary  to be done  in and  about  the
premises, as fully to all intents and purposes as he or she might or could do in
person,  hereby  ratifying and  confirming all that said  attorneys-in-fact  and
agents, or either of them, or their or his or her substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.

         Pursuant  to the  requirements  of the  Securities  Act of  1933,  this
registration  statement  has  been  signed  by  the  following  persons  in  the
capacities indicated on January 26, 1999.
<TABLE>
         Signature                                 Title & Capacity
         ---------                                 ----------------
<S> <C>
 /s/ John P.McCann                          Chairman, Chief Executive Officer (Principal
- ----------------------------                Executive Officer) and Director
         John P. McCann


 /s/ Kevin W. Walsh                         Vice President, Finance (Principal Financial
- ----------------------------                Officer)
         Kevin W. Walsh


  /s/ Robin R. Flanagan                     Principal Accounting Officer
- ----------------------------
        Robin R. Flanagan

 /s/ Jeff C. Bane                           Director
- ----------------------------
        Jeff C. Bane


 /s/ R. Toms Dalton                         Director
- ----------------------------
        R. Toms Dalton, Jr.




                                      II-4
<PAGE>

 /s/ Robert P. Freeman                      Director
- ----------------------------
        Robert P. Freeman


 /s/ Jon A. Grove                           Director
- ----------------------------
        Jon A. Grove


 /s/ Barry M. Kornblau                      Director
- ----------------------------
        Barry M. Kornblau


 /s/ James D. Klingbeil                     Director
- ----------------------------
        James D. Klingbeil


 /s/ Lynne B. Sagalyn                       Director
- ----------------------------
        Lynne B. Sagalyn


  /s/ Mark J. Sandler                       Director
- ----------------------------
        Mark J. Sandler


 /s/ Robert W. Scharar                      Director
- ----------------------------
        Robert W. Scharar


 /s/ John S. Schneider                      President and Director
- ----------------------------
        John S. Schneider


 /s/ C. Harmon Williams                     Director
- ----------------------------
        C. Harmon Williams, Jr.

</TABLE>
                                      II-5
<PAGE>

                                  EXHIBIT INDEX

Exhibit                                 Document
- -------                                 --------

2(a)    --        Agreement  and Plan of Merger  dated as of December  19, 1997,
                  between United Dominion,  ASR Investments  Corporation and ASR
                  Acquisition  Sub,  Inc.  (filed  as  Exhibit  2(a)  to  United
                  Dominion's  Form S-4  Registration  Statement,  filed with the
                  Commission  on  January  30,  1998 (File No.  333-45305),  and
                  incorporated by reference herein)

2(b)    --        Agreement  and Plan of Merger  dated as of  October  1,  1996,
                  between  United  Dominion,  United  Sub,  Inc.  and South West
                  Property   Trust  Inc.   (filed  as  Exhibit  2(a)  to  United
                  Dominion's  Form S-4  Registration  Statement,  filed with the
                  Commission  on  October  9,  1996  (File No.  333-13745),  and
                  incorporated by reference herein)

2(c)    --        Agreement  and Plan of Merger dated as of September  10, 1998,
                  between United Dominion and American Apartment Communities II,
                  Inc.  including as exhibits  thereto the proposed terms of the
                  Series D Preferred  Stock and the proposed  form of Investment
                  Agreement  between United  Dominion,  United Dominion  Realty,
                  L.P.,  American  Apartment   Communities  II,  Inc.,  American
                  Apartment Communities II, L.P., American Apartment Communities
                  Operating  Partnership,  L.P., Schnitzer Investment Corp., AAC
                  Management LLC and LF Strategic Realty Investors,  L.P. (filed
                  as Exhibit  2(c) to United  Dominion's  Form S-3  Registration
                  Statement,  filed with the  Commission  on September  25, 1998
                  (File No. 333-64281), and incorporated by reference herein)

2(d)    --        Partnership  Interest Purchase and Exchange Agreement dated as
                  of  September  10,  1998,  between  United  Dominion,   United
                  Dominion  Realty,   L.P.,   American   Apartment   Communities
                  Operating  Partnership,  L.P., AAC Management  LLC,  Schnitzer
                  Investment  Corp,  Fox  Point  Ltd.  and  James  D.  Klingbeil
                  including as an exhibit thereto the proposed form of the Third
                  Amended and Restated limited  partnership  Agreement of United
                  Dominion  Realty,  L.P.  (filed  as  Exhibit  2(d)  to  United
                  Dominion's  Form S-3  Registration  Statement,  filed with the
                  Commission  on September  25, 1998 (File No.  333-64281),  and
                  incorporated by reference herein)

4(a)    --        Restated  Articles of  Incorporation of United Dominion (filed
                  as Exhibit  4(b) to United  Dominion's  Form S-3  Registration
                  Statement, filed with the Commission on January 16, 1998 (File
                  No. 333-44463), and incorporated by reference herein)

4(a)(i) --        Amendment  of Articles  of  Incorporation  of United  Dominion
                  (filed as Exhibit 3 to United Dominion's Form 8-A Registration
                  Statement  dated  February  4, 1998  (File No.  1-10524),  and
                  incorporated by reference herein)

4(a)(ii)--        Restated  Articles of Incorporation of United Dominion,  dated
                  January 21, 1999.

4(b)    --        Restated  Bylaws of United  Dominion (filed as Exhibit 3(b) to
                  United  Dominion's  quarterly  report  on  Form  10-Q  for the
                  quarter  ended  March  31,  1997  (File  No.   1-10524),   and
                  incorporated by reference herein)

4(c)    --        Specimen United Dominion  common stock  certificate  (filed as
                  Exhibit 4(i) to United  Dominion's  Annual Report on Form 10-K
                  for the year ended December 31, 1993 (File No.  1-10524),  and
                  incorporated by reference herein)

4(d)(i) --        Loan  Agreement  dated as of November 7, 1993,  between United
                  Dominion and Aid Association  for Lutherans  (filed as Exhibit
                  6(c)(1) to United  Dominion's Form 8-A Registration  Statement
                  dated April 19, 1990 (File No.  10524),  and  incorporated  by
                  reference herein)

4(d)(ii)--        Note Purchase  Agreement dated as of January 15, 1993, between
                  United  Dominion and CIGNA  Property  and  Casualty  Insurance
                  Company,   Connecticut   General   Life   Insurance   Company,
                  Connecticut General Life Insurance Company on behalf of one or
                  more separate  accounts,  Insurance  Company of North America,
                  Principal Mutual Life Insurance  Company,  and Aid Association
                  for Lutherans  (filed as Exhibit 6(c)(5) to United  Dominion's
                  Form 8-A Registration Statement dated April 19, 1990 (File No.
                  1-10524), and incorporated by reference herein)

4(e)    --        Rights Agreement dated as of January 27, 1998,  between United
                  Dominion and  ChaseMellon  Shareholder  Services,  L.L.C.,  as
                  Rights Agent (filed as Exhibit 1 to United Dominion's Form 8-A
                  Registration  Statement  dated  February  4,  1998  (File  No.
                  1-10524) and incorporated by reference herein)

4(f)    --        Form of Rights Certificate (included in Exhibit 4(e))

5       --        Opinion of Hunton & Williams

23(a)   --        Consent of Ernst & Young LLP (to be filed by amendment)

23(b)   --        Consent  of L.P.  Martin  &  Company,  P.C.  (to be  filed  by
                  amendment)

23(c)   --        Consent of Deloitte & Touch LLP (to be filed by amendment)

23(d)   --        Consent of Arthur Andersen (to be filed by amendment)

23(e)   --        Consent of Hunton & Williams (included in Exhibit 5)

24      --        Power of Attorney (see signature page)




                       UNITED DOMINION REALTY TRUST, INC.

                             ARTICLES OF RESTATEMENT


1. The name of the corporation is UNITED DOMINION REALTY TRUST, INC.

2. The text of the restated  Articles of Incorporation is attached hereto and is
incorporated herein by reference.

3.  The   restatement   does  not  contain  an  amendment  to  the  Articles  of
Incorporation requiring shareholder approval.

4. The Board of  Directors  of the  corporation  adopted  the  restatement  by a
unanimous vote at its meeting held on December 8, 1998.


                                  UNITED DOMINION REALTY TRUST, INC.



                                  By:     /s/ Katheryn E. Surface
                                      -----------------------------------
                                             Katheryn E. Surface
                                         Senior Vice President and
                                                  Secretary


         Dated: January 21, 1999


<PAGE>

                       RESTATED ARTICLES OF INCORPORATION

                                       OF

                       UNITED DOMINION REALTY TRUST, INC.


1. The name of the corporation is UNITED DOMINION REALTY TRUST, INC.

2. The purpose for which the  corporation  is organized is to qualify as a "real
estate  investment  trust," as defined in section 856(a) and related sections of
the  Internal  Revenue  Code of 1954,  as amended  (together  with the  Treasury
Regulations  promulgated pursuant thereto,  the "Code").  Except as its business
may be limited by the purpose set forth above,  the corporation may transact any
and all lawful business not required to be specifically stated in these Articles
for which  corporations may be incorporated under the Virginia Stock Corporation
Act (the "Act").

3. The corporation  shall have authority to issue  150,000,000  shares of common
stock having a par value of $1.00 per share and  25,000,000  shares of preferred
stock without par value. The Board of Directors of the corporation,  by adoption
of an amendment of these Articles of Incorporation,  may fix in whole or in part
the preferences, limitations and relative rights, within the limits set forth in
the Act, of any series  within the  preferred  stock  before the issuance of any
shares of that series.  Stockholders shall not have preemptive rights to acquire
unissued shares of the corporation.

         (a)      9 1/4% Series A Cumulative Redeemable Preferred Stock.

                  (1) Designation and Number.  A series of the preferred  stock,
                  designated   the  "9  1/4%  Series  A  Cumulative   Redeemable
                  Preferred  Stock"  (the  "Series  A  Preferred"),   is  hereby
                  established.  The number of shares of the  Series A  Preferred
                  shall be 4,200,000.

                  (2)  Relative  Seniority.  In  respect  of rights  to  receive
                  dividends and to participate in  distributions  or payments in
                  the event of any liquidation, dissolution or winding up of the
                  corporation,  the Series A Preferred  shall rank senior to the
                  common stock and any other  capital  stock of the  corporation
                  ranking,  as to dividends and upon liquidation,  junior to the
                  Series A Preferred (collectively, "Junior Stock").

                  (3) Dividends.  The holders of the then  outstanding  Series A
                  Preferred  shall be entitled to receive,  when and as declared
                  by the Board of Directors out of any funds  legally  available
                  therefor,  cumulative  preferential cash dividends at the rate
                  of 9 1/4%  of the  liquidation  preference  of  the  Series  A
                  Preferred (equivalent to $2.3125 per share) per annum, payable
                  quarterly in arrears in cash on the fifteenth day, or the next
                  succeeding  business day, of January,  April, July and October
                  in each  year,  beginning  July 15,  1995 (each such day being
                  hereinafter  called a "Dividend  Payment Date" and each period
                  beginning  on the day next  following a Dividend  Payment Date
                  and ending on the next following  Dividend  Payment Date being
                  hereinafter  called a "Dividend  Period"),  to shareholders of
                  record  at the  close  of  business  on the  first  day of the
                  calendar month in which the applicable  Dividend  Payment Date
                  falls  on or such  date as  shall  be  fixed  by the  Board of
                  Directors  at the time of  declaration  of the  dividend  (the
                  "Dividend  Record Date"),  which shall be not less than 10 nor
                  more than 30 days  preceding the Dividend  Payment  Date.  The
                  amount of any dividend payable for the initial Dividend Period
                  and for any other partial Dividend Period shall be computed on
                  the  basis of a  360-day  year  consisting  of  twelve  30-day
                  months.  Dividends  on the shares of Series A Preferred  shall
                  accrue  and be  cumulative  from  and  including  the  date of
                  original issue thereof, whether or not (i) the corporation has
                  earnings,  (ii) dividends on such shares are declared or (iii)
                  on any  Dividend  Payment  Date there  shall be funds  legally
                  available for the payment of such  dividends.  When  dividends
                  are not paid in full upon the shares of Series A Preferred and
                  the shares of any other series of preferred stock ranking on a
                  parity as to dividends  with the Series A Preferred  (or a sum
                  sufficient  for such full payment is not set apart  therefor),
                  all  dividends  declared upon shares of Series A Preferred and
                  any other series of preferred  stock ranking on a parity as to
                  dividends  with the Series A Preferred  shall be declared  pro
                  rata so that the amount of dividends declared per share on the
                  Series A Preferred  and such other series of  preferred  stock
                  shall in all  cases  bear to each  other the same  ratio  that
                  accrued  dividends  per  share  on  the  shares  of  Series  A
                  Preferred  and such other  series of  preferred  stock bear to
                  each other.

                           Except  as  provided  in  the  immediately  preceding
                  paragraph,  unless full  cumulative  dividends on the Series A
                  Preferred have been or contemporaneously are declared and paid
                  or declared and a sum sufficient  for the payment  thereof set
                  apart  for  payment  on the  Series A  Preferred  for all past
                  dividend periods and the then current dividend period,  (i) no
                  dividends  shall be  declared or paid or set apart for payment
                  on the  preferred  stock  of the  corporation  ranking,  as to
                  dividends,  on a  parity  with  or  junior  to  the  Series  A
                  Preferred for any period, and (ii) no dividends (other than in
                  Junior  Stock)  shall be  declared  or paid or set  aside  for
                  payment or other  distribution  or shall be  declared  or made
                  upon  the  Junior  Stock  or any  other  capital  stock of the
                  corporation ranking on a parity with the Series A Preferred as
                  to dividends or upon liquidation  ("Parity Stock"),  nor shall
                  any Junior Stock or any Parity Stock be redeemed, purchased or
                  otherwise  acquired  for any  consideration  (or any moneys be
                  paid  to  or  made  available  for  a  sinking  fund  for  the
                  redemption  of any shares of Junior Stock or Parity  Stock) by
                  the  corporation  (except by  conversion  into or exchange for
                  Junior Stock).

                           Any  dividend  payment made on shares of the Series A
                  Preferred shall first be credited against the earliest accrued
                  but unpaid  dividend  due with  respect to such  shares  which
                  remains payable.

                           No dividends on shares of Series A Preferred shall be
                  declared by the Board of Directors of the  corporation or paid
                  or set apart for  payment by the  corporation  at such time as
                  the terms and provisions of any agreement of the  corporation,
                  including   any  agreement   relating  to  its   indebtedness,
                  prohibits  such  declaration,  payment  or  setting  apart for
                  payment or provides that such declaration,  payment or setting
                  apart for  payment  would  constitute  a breach  thereof  or a
                  default thereunder, or if such declaration or payment shall be
                  restricted or prohibited by law.

                           The amount of any dividends  accrued on any shares of
                  Series A Preferred at any  Dividend  Payment Date shall be the
                  amount of any unpaid  dividends  accumulated  thereon,  to and
                  including such Dividend Payment Date, whether or not earned or
                  declared, and the amount of dividends accrued on any shares of
                  Series A Preferred  at any date other than a Dividend  Payment
                  Date  shall be equal to the sum of the  amount  of any  unpaid
                  dividends  accumulated  thereon,  to and  including  the  last
                  preceding  Dividend  Payment  Date,  whether  or not earned or
                  declared, plus an amount calculated on the basis of the annual
                  dividend  rate  for  the  period  after  such  last  preceding
                  Dividend  Payment Date to and  including  the date as of which
                  the  calculation  is made,  based on a 360-day  year of twelve
                  30-day months.

                           Accrued  but  unpaid   dividends   on  the  Series  A
                  Preferred  will not bear  interest.  Holders  of the  Series A
                  Preferred  will not be entitled to any  dividends in excess of
                  full cumulative dividends as described above.

                           Except as  provided in these  Articles,  the Series A
                  Preferred shall not be entitled to participate in the earnings
                  or assets of the corporation.

                   (4)     Liquidation Rights.

                           (A) Upon the  voluntary or  involuntary  dissolution,
                  liquidation or winding up of the  corporation,  the holders of
                  shares of the Series A  Preferred  then  outstanding  shall be
                  entitled  to  receive  and to be paid out of the assets of the
                  corporation   legally   available  for   distribution  to  its
                  shareholders,  before  any  distribution  shall be made to the
                  holders  of  common  stock or any other  capital  stock of the
                  corporation  ranking  junior to the  Series A  Preferred  upon
                  liquidation,  a  liquidation  preference  of $25.00 per share,
                  plus  accrued  and  unpaid  dividends  thereon  to the date of
                  payment.

                           (B) After the payment to the holders of the shares of
                  the  Series A  Preferred  of the full  liquidation  preference
                  provided for in this  paragraph (4), the holders of the Series
                  A Preferred as such shall have no right or claim to any of the
                  remaining assets of the corporation.

                           (C)   If,   upon   any   voluntary   or   involuntary
                  dissolution,  liquidation,  or winding up of the  corporation,
                  the amounts payable with respect to the liquidation preference
                  of the shares of the Series A Preferred  and any other  shares
                  of  stock  of  the   corporation   ranking   as  to  any  such
                  distribution  on a parity  with  the  shares  of the  Series A
                  Preferred  are not paid in full,  the holders of the shares of
                  the Series A  Preferred  and of such other  shares  will share
                  ratably in any such  distribution of assets of the corporation
                  in proportion to the full respective  liquidation  preferences
                  to which they are entitled.

                           (D) Neither the sale,  lease,  transfer or conveyance
                  of all or  substantially  all the  property or business of the
                  corporation,   nor  the   merger  or   consolidation   of  the
                  corporation  into or with any other  corporation or the merger
                  or  consolidation  of any other  corporation  into or with the
                  corporation, shall be deemed to be a dissolution,  liquidation
                  or winding up,  voluntary or involuntary,  for the purposes of
                  this paragraph (4).

                  (5)      Redemption.

                           (A)  Right  of  Optional  Redemption.  The  Series  A
                  Preferred is not  redeemable  prior to April 24, 2000.  On and
                  after  April 24,  2000,  the  corporation  may, at its option,
                  redeem  at any time  all or,  from  time to time,  part of the
                  Series  A  Preferred  at a price  per  share  (the  "Series  A
                  Redemption Price"),  payable in cash, of $25.00, together with
                  all accrued and unpaid  dividends  to and  including  the date
                  fixed for redemption (the "Series A Redemption Date"), without
                  interest.  In case of  redemption  of less than all  shares of
                  Series A  Preferred  at the time  outstanding,  the  shares of
                  Series A Preferred  to be redeemed  shall be selected pro rata
                  from the holders of record of such shares in proportion to the
                  number of shares of Series A  Preferred  held by such  holders
                  (as nearly as may be practicable  without creating  fractional
                  shares) or by any other  equitable  method  determined  by the
                  corporation.

                           (B) Procedures for Redemption.

                           (i)  Notice  of any  redemption  will be (a) given by
                  publication in a newspaper of general  circulation in the City
                  of New York, New York, such publication to be made once a week
                  for two successive  weeks commencing not less than 30 nor more
                  than 60 days prior to the Series A  Redemption  Date,  and (b)
                  mailed by the corporation,  postage prepaid,  not less than 30
                  nor more than 60 days prior to the Series A  Redemption  Date,
                  addressed to the respective  holders of record of the Series A
                  Preferred to be redeemed at their respective addresses as they
                  appear on the stock transfer  records of the  corporation.  No
                  failure to give such  notice or any  defect  therein or in the
                  mailing  thereof shall affect the validity of the  proceedings
                  for the redemption of any Series A Preferred  except as to the
                  holder to whom the  corporation  has failed to give  notice or
                  except  as to the  holder to whom  notice  was  defective.  In
                  addition  to  any  information  required  by  law  or  by  the
                  applicable rules of any exchange upon which Series A Preferred
                  may be listed or admitted to trading, such notice shall state:
                  (a) the Series A Redemption  Date; (b) the Series A Redemption
                  Price;  (c) the number of shares of Series A  Preferred  to be
                  redeemed;  (d) the place or places where certificates for such
                  shares  are to be  surrendered  for  payment  of the  Series A
                  Redemption  Price;  and (e) that dividends on the shares to be
                  redeemed  will cease to  accumulate on the Series A Redemption
                  Date.  If less than all the shares of Series A Preferred  held
                  by any holder are to be  redeemed,  the notice  mailed to such
                  holder  shall  also  specify  the number of shares of Series A
                  Preferred held by such holder to be redeemed.

                           (ii) If notice of  redemption of any shares of Series
                  A Preferred has been  published and mailed in accordance  with
                  subparagraph  (5)(B)(i)  above and provided  that on or before
                  the Series A  Redemption  Date  specified  in such  notice all
                  funds   necessary   for  such   redemption   shall  have  been
                  irrevocably set aside by the  corporation,  separate and apart
                  from its other  funds in trust for the  benefit of any holders
                  of the shares of Series A Preferred so called for  redemption,
                  so as to be, and to continue to be available  therefor,  then,
                  from and after the Series A Redemption Date, dividends on such
                  shares of Series A Preferred  shall cease to accrue,  and such
                  shares shall no longer be deemed to be  outstanding  and shall
                  not have the  status of Series A  Preferred  and all rights of
                  the holders thereof as shareholders of the corporation (except
                  the right to receive  the  Series A  Redemption  Price)  shall
                  terminate.  Upon surrender, in accordance with said notice, of
                  the  certificates  for any  shares  of Series A  Preferred  so
                  redeemed (properly  endorsed or assigned for transfer,  if the
                  corporation  shall so require and the notice  shall so state),
                  such  shares of Series A  Preferred  shall be  redeemed by the
                  corporation  at the Series A  Redemption  Price.  In case less
                  than all the shares of Series A Preferred  represented  by any
                  such   certificate   are  redeemed,   a  new   certificate  or
                  certificates  shall  be  issued  representing  the  unredeemed
                  shares  of  Series  A  Preferred  without  cost to the  holder
                  thereof.

                           (iii)  The  deposit  of  funds  with a bank or  trust
                  company for the purpose of redeeming  Series A Preferred shall
                  be irrevocable except that:

                                    (a) the  corporation  shall be  entitled  to
                           receive from such bank or trust  company the interest
                           or other  earnings,  if any,  earned  on any money so
                           deposited  in trust,  and the  holders  of any shares
                           redeemed  shall  have no  claim to such  interest  or
                           other earnings; and

                                    (b) any  balance of moneys so  deposited  by
                           the  corporation  and unclaimed by the holders of the
                           Series A Preferred entitled thereto at the expiration
                           of two years from the applicable  Series A Redemption
                           Date shall be repaid,  together  with any interest or
                           other earnings  earned thereon,  to the  corporation,
                           and  after any such  repayment,  the  holders  of the
                           shares  entitled  to  the  funds  so  repaid  to  the
                           corporation  shall look only to the  corporation  for
                           payment without interest or other earnings.

                           (C)      Limitations on Redemption

                           (i) The Series A  Redemption  Price  (other  than the
                  portion  thereof  consisting of accrued and unpaid  dividends)
                  shall be  payable  solely  out of the sale  proceeds  of other
                  capital stock of the corporation and from no other source.

                           (ii) Unless full  cumulative  dividends on all shares
                  of Series A Preferred shall have been or contemporaneously are
                  declared  and paid or declared  and a sum  sufficient  for the
                  payment  thereof set apart for  payment for all past  Dividend
                  Periods  and the then  current  Dividend  Period,  no Series A
                  Preferred shall be redeemed (unless all outstanding  shares of
                  Series A Preferred are  simultaneously  redeemed) or purchased
                  or  otherwise  acquired  directly  or  indirectly  (except  by
                  exchange  for  Junior  Stock);  provided,  however,  that  the
                  foregoing  shall  not  prevent  the  redemption  of  Series  A
                  Preferred pursuant to Article 4 or the purchase or acquisition
                  of Series A Preferred pursuant to a purchase or exchange offer
                  made on the same terms to holders of all outstanding shares of
                  Series A Preferred.

                           (D)  Rights  to  Dividends   on  Shares   Called  for
                  Redemption.  If the  Series  A  Redemption  Date  is  after  a
                  Dividend Record Date and before the related  Dividend  Payment
                  Date, the dividend payable on such Dividend Payment Date shall
                  be paid to the  holder  in whose  name the  shares of Series A
                  Preferred  to be  redeemed  are  registered  at the  close  of
                  business  on such  Dividend  Record Date  notwithstanding  the
                  redemption  thereof  between such Dividend Record Date and the
                  related Dividend Payment Date or the corporation's  default in
                  the payment of the  dividend  due.  Except as provided in this
                  paragraph  (5),  the  corporation  will  make  no  payment  or
                  allowance for unpaid dividends,  whether or not in arrears, on
                  called Series A Preferred.

                  (6) Voting  Rights.  Except as required by the Virginia  Stock
                  Corporation  Act and  except  as  otherwise  provided  in this
                  paragraph (6), the holders of the Series A Preferred shall not
                  be  entitled to vote at any  meeting of the  shareholders  for
                  election of directors or for any other purpose or otherwise to
                  participate  in any  action  taken by the  corporation  or the
                  shareholders  thereof,  or to receive notice of any meeting of
                  shareholders.

                           (A)  Whenever  dividends  on any  shares  of Series A
                  Preferred  shall  be in  arrears  for six or more  consecutive
                  quarterly  periods,  the  holders  of such  shares of Series A
                  Preferred (voting  separately as a class with all other series
                  of  preferred  stock upon which like  voting  rights have been
                  conferred  and are  exercisable)  will be entitled to vote for
                  the election of two additional directors of the corporation at
                  a special  meeting called by the holders of record of at least
                  10% of the  Series A  Preferred  or the  holders  of any other
                  series of preferred  stock so in arrears  (unless such request
                  is  received  less than 90 days  before the date fixed for the
                  next annual or special meeting of the  shareholders) or at the
                  next annual meeting of  shareholders,  and at each  subsequent
                  annual meeting until all dividends  accumulated on such shares
                  of Series A Preferred  for the past  Dividend  Periods and the
                  then  current  Dividend  Period  shall have been fully paid or
                  declared  and a sum  sufficient  for the  payment  thereof set
                  aside for payment. In such case, the entire Board of Directors
                  of the corporation will be increased by two directors.

                           (B) So long  as any  shares  of  Series  A  Preferred
                  remain  outstanding,  the corporation  shall not,  without the
                  affirmative  vote of the holders of at least a majority of the
                  shares of the Series A Preferred  outstanding at the time, (i)
                  authorize  or create,  or increase  the  authorized  or issued
                  amount of, any class or series of capital  stock ranking prior
                  to the Series A Preferred with respect to payment of dividends
                  or the distribution of assets upon liquidation, dissolution or
                  winding up or reclassify any  authorized  capital stock of the
                  corporation  into any such  shares,  or create,  authorize  or
                  issue  any   obligation  or  security   convertible   into  or
                  evidencing  the right to  purchase  any such  shares;  or (ii)
                  amend,  alter or  repeal  the  provisions  of these  Articles,
                  whether  by  merger,  consolidation  or  otherwise,  so  as to
                  materially  and  adversely   affect  any  right,   preference,
                  privilege  or voting  power of the Series A  Preferred  or the
                  holders thereof;  provided,  however, that any increase in the
                  amount of the  authorized  preferred  stock or the creation or
                  issuance  of any  other  series  of  preferred  stock,  or any
                  increase in the amount of authorized shares of such series, in
                  each case  ranking on a parity  with or junior to the Series A
                  Preferred   with  respect  to  payment  of  dividends  or  the
                  distribution  of  assets  upon  liquidation,   dissolution  or
                  winding up, shall not be deemed to  materially  and  adversely
                  affect such rights, preferences, privileges or voting powers.

                           (C) The foregoing  voting  provisions  will not apply
                  if, at or prior to the time when the act with respect to which
                  such vote would  otherwise be required shall be effected,  all
                  outstanding  shares  of  Series A  Preferred  shall  have been
                  redeemed  or called  for  redemption  upon  proper  notice and
                  sufficient  funds shall have been deposited in trust to effect
                  such redemption.

                           (D) So long as the  Series A  Preferred  is listed or
                  admitted  to  trading  on the New York  Stock  Exchange,  then
                  notwithstanding  anything to the  contrary in these  Articles,
                  including  without  limitation  Article  8,  approval  by  the
                  holders of at least  two-thirds of the  outstanding  shares of
                  the Series A Preferred  shall be required  for adoption of any
                  amendment   of  these   Articles  or  of  the  bylaws  of  the
                  corporation that would materially affect the existing terms of
                  the Series A Preferred.

                  (7)  Conversion of Series A Preferred.  The Series A Preferred
                  is not convertible into or exchangeable for any other property
                  or securities of the corporation.

                  (b)      8.60% Series B Cumulative Redeemable Preferred Stock.

                  (1) Designation and Number.  A series of the preferred  stock,
                  designated the "8.60% Series B Cumulative Redeemable Preferred
                  Stock" (the "Series B Preferred"), is hereby established.  The
                  number of shares of the Series B Preferred shall be 6,000,000.

                  (2)  Relative  Seniority.  In  respect  of rights  to  receive
                  dividends and to participate in  distributions  or payments in
                  the event of any liquidation, dissolution or winding up of the
                  corporation, the Series B Preferred shall rank pari passu with
                  the Series A Preferred  and senior to the common stock and any
                  other  capital  stock  of  the  corporation   ranking,  as  to
                  dividends  and  upon  liquidation,  junior  to  the  Series  A
                  Preferred (collectively, "Junior Stock").

                  (3) Dividends.  The holders of the then  outstanding  Series B
                  Preferred  shall be entitled to receive,  when and as declared
                  by the Board of Directors out of any funds  legally  available
                  therefor,  cumulative  preferential cash dividends at the rate
                  of  8.60%  of  the  liquidation  preference  of the  Series  B
                  Preferred  (equivalent to $2.15 per share) per annum,  payable
                  quarterly  in  arrears  in cash on the last  day,  or the next
                  succeeding business day, of February, May, August and November
                  in each year,  beginning  August 31, 1997 (each such day being
                  hereinafter  called a "Dividend  Payment Date" and each period
                  beginning  on the day next  following a Dividend  Payment Date
                  and ending on the next following  Dividend  Payment Date being
                  hereinafter  called a "Dividend  Period"),  to shareholders of
                  record at the close of  business on the  fifteenth  day of the
                  calendar month in which the applicable  Dividend  Payment Date
                  falls  on or such  date as  shall  be  fixed  by the  Board of
                  Directors  at the time of  declaration  of the  dividend  (the
                  "Dividend  Record Date"),  which shall be not less than 10 nor
                  more than 30 days  preceding the Dividend  Payment  Date.  The
                  amount of any dividend payable for the initial Dividend Period
                  and for any partial  Dividend  Period shall be computed on the
                  basis of a 360-day year  consisting of twelve  30-day  months.
                  Dividends on the shares of Series B Preferred shall accrue and
                  be cumulative  from and  including the date of original  issue
                  thereof, whether or not (i) the corporation has earnings, (ii)
                  dividends on such shares are declared or (iii) on any Dividend
                  Payment Date there shall be funds  legally  available  for the
                  payment of such dividends. When dividends are not paid in full
                  upon the  shares of Series B  Preferred  and the shares of any
                  other  series of  preferred  stock  ranking  on a parity as to
                  dividends with the Series B Preferred (or a sum sufficient for
                  such full payment is not set apart  therefor),  all  dividends
                  declared  upon  shares  of  Series B  Preferred  and any other
                  series of preferred  stock ranking on a parity as to dividends
                  with the Series B Preferred shall be declared pro rata so that
                  the  amount of  dividends  declared  per share on the Series B
                  Preferred  and such other series of  preferred  stock shall in
                  all cases  bear to each  other  the same  ratio  that  accrued
                  dividends  per share on the shares of Series B  Preferred  and
                  such other series of preferred stock bear to each other.

                           Except  as  provided  in  the  immediately  preceding
                  paragraph,  unless full  cumulative  dividends on the Series B
                  Preferred have been or contemporaneously are declared and paid
                  or declared and a sum sufficient  for the payment  thereof set
                  apart  for  payment  on the  Series B  Preferred  for all past
                  dividend periods and the then current dividend period,  (i) no
                  dividends  shall be  declared or paid or set apart for payment
                  on the  preferred  stock  of the  corporation  ranking,  as to
                  dividends,  on a  parity  with  or  junior  to  the  Series  B
                  Preferred for any period, and (ii) no dividends (other than in
                  Junior  Stock)  shall be  declared  or paid or set  aside  for
                  payment or other  distribution  or shall be  declared  or made
                  upon  the  Junior  Stock  or any  other  capital  stock of the
                  corporation ranking on a parity with the Series B Preferred as
                  to dividends or upon liquidation  ("Parity Stock"),  nor shall
                  any Junior Stock or any Parity Stock be redeemed, purchased or
                  otherwise  acquired  for any  consideration  (or any moneys be
                  paid  to  or  made  available  for  a  sinking  fund  for  the
                  redemption  of any shares of Junior Stock or Parity  Stock) by
                  the  corporation  (except by  conversion  into or exchange for
                  Junior Stock).

                           Any  dividend  payment made on shares of the Series B
                  Preferred shall first be credited against the earliest accrued
                  but unpaid  dividend  due with  respect to such  shares  which
                  remains payable.

                           No dividends on shares of Series B Preferred shall be
                  declared by the Board of Directors of the  corporation or paid
                  or set apart for  payment by the  corporation  at such time as
                  the terms and provisions of any agreement of the  corporation,
                  including   any  agreement   relating  to  its   indebtedness,
                  prohibits  such  declaration,  payment  or  setting  apart for
                  payment or provides that such declaration,  payment or setting
                  apart for  payment  would  constitute  a breach  thereof  or a
                  default thereunder, or if such declaration or payment shall be
                  restricted or prohibited by law.

                           The amount of any dividends  accrued on any shares of
                  Series B Preferred at any  Dividend  Payment Date shall be the
                  amount of any unpaid  dividends  accumulated  thereon,  to and
                  including such Dividend Payment Date, whether or not earned or
                  declared, and the amount of dividends accrued on any shares of
                  Series B Preferred  at any date other than a Dividend  Payment
                  Date  shall be equal to the sum of the  amount  of any  unpaid
                  dividends  accumulated  thereon,  to and  including  the  last
                  preceding  Dividend  Payment  Date,  whether  or not earned or
                  declared, plus an amount calculated on the basis of the annual
                  dividend  rate  for  the  period  after  such  last  preceding
                  Dividend  Payment Date to and  including  the date as of which
                  the  calculation  is made,  based on a 360-day  year of twelve
                  30-day months.

                           Accrued  but  unpaid   dividends   on  the  Series  B
                  Preferred  will not bear  interest.  Holders  of the  Series B
                  Preferred  will not be entitled to any  dividends in excess of
                  full cumulative dividends as described above.

                           Except as  provided in these  Articles,  the Series B
                  Preferred shall not be entitled to participate in the earnings
                  or assets of the corporation.

                  (4)      Liquidation Rights.

                           (A) Upon the  voluntary or  involuntary  dissolution,
                  liquidation or winding up of the  corporation,  the holders of
                  shares of the Series B  Preferred  then  outstanding  shall be
                  entitled  to  receive  and to be paid out of the assets of the
                  corporation   legally   available  for   distribution  to  its
                  shareholders,  before  any  distribution  shall be made to the
                  holders  of  common  stock or any other  capital  stock of the
                  corporation  ranking  junior to the  Series B  Preferred  upon
                  liquidation,  a  liquidation  preference  of $25.00 per share,
                  plus  accrued  and  unpaid  dividends  thereon  to the date of
                  payment.

                           (B) After the payment to the holders of the shares of
                  the  Series B  Preferred  of the full  liquidation  preference
                  provided for in this  paragraph (4), the holders of the Series
                  B Preferred as such shall have no right or claim to any of the
                  remaining assets of the corporation.

                           (C)   If,   upon   any   voluntary   or   involuntary
                  dissolution, liquidation or winding up of the corporation, the
                  amounts payable with respect to the liquidation  preference of
                  the shares of the Series B Preferred  and any other  shares of
                  stock of the corporation  ranking as to any such  distribution
                  on a parity with the shares of the Series B Preferred  are not
                  paid in  full,  the  holders  of the  shares  of the  Series B
                  Preferred  and of such other shares will share  ratably in any
                  such  distribution  of assets of the corporation in proportion
                  to the full respective  liquidation  preferences to which they
                  are entitled.

                           (D) Neither the sale,  lease,  transfer or conveyance
                  of all or  substantially  all the  property or business of the
                  corporation,   nor  the   merger  or   consolidation   of  the
                  corporation  into or with any other  corporation or the merger
                  or  consolidation  of any other  corporation  into or with the
                  corporation, shall be deemed to be a dissolution,  liquidation
                  or winding up,  voluntary or involuntary,  for the purposes of
                  this paragraph (4).

                  (5)      Redemption.

                           (A)  Right  of  Optional  Redemption.  The  Series  B
                  Preferred  is not  redeemable  prior to May 29,  2007.  On and
                  after May 29, 2007, the corporation may, at its option, redeem
                  at any time all or,  from time to time,  part of the  Series B
                  Preferred  at a price per  share  (the  "Series  B  Redemption
                  Price"), payable in cash, of $25.00, together with all accrued
                  and  unpaid  dividends  to and  including  the date  fixed for
                  redemption (the "Series B Redemption Date"), without interest.
                  In case of  redemption  of less  than all  shares  of Series B
                  Preferred  at the time  outstanding,  the  shares  of Series B
                  Preferred  to be redeemed  shall be selected pro rata from the
                  holders of record of such shares in  proportion  to the number
                  of shares  of  Series B  Preferred  held by such  holders  (as
                  nearly  as  may be  practicable  without  creating  fractional
                  shares) or by any other  equitable  method  determined  by the
                  corporation.

                           (B) Procedures for Redemption.

                           (i)  Notice  of any  redemption  will be (a) given by
                  publication in a newspaper of general  circulation in the City
                  of New York, New York, such publication to be made once a week
                  for two successive  weeks commencing not less than 30 nor more
                  than 60 days prior to the Series B  Redemption  Date,  and (b)
                  mailed by the corporation,  postage prepaid,  not less than 30
                  nor more than 60 days prior to the Series B  Redemption  Date,
                  addressed to the respective  holders of record of the Series B
                  Preferred to be redeemed at their respective addresses as they
                  appear on the stock transfer  records of the  corporation.  No
                  failure to give such  notice or any  defect  therein or in the
                  mailing  thereof shall affect the validity of the  proceedings
                  for the redemption of any Series B Preferred  except as to the
                  holder to whom the  corporation  has failed to give  notice or
                  except  as to the  holder to whom  notice  was  defective.  In
                  addition  to  any  information  required  by  law  or  by  the
                  applicable rules of any exchange upon which Series B Preferred
                  may be listed or admitted to trading, such notice shall state:
                  (a) the Series B Redemption  Date; (b) the Series B Redemption
                  Price;  (c) the number of shares of Series B  Preferred  to be
                  redeemed;  (d) the place or places where certificates for such
                  shares  are to be  surrendered  for  payment  of the  Series B
                  Redemption  Price;  and (e) that dividends on the shares to be
                  redeemed  will cease to  accumulate on the Series B Redemption
                  Date.  If less than all the shares of Series B Preferred  held
                  by any holder are to be  redeemed,  the notice  mailed to such
                  holder  shall  also  specify  the number of shares of Series B
                  Preferred held by such holder to be redeemed.

                           (ii) If notice of  redemption of any shares of Series
                  B Preferred has been  published and mailed in accordance  with
                  subparagraph  (5)(B)(i)  above and provided  that on or before
                  the Series B  Redemption  Date  specified  in such  notice all
                  funds   necessary   for  such   redemption   shall  have  been
                  irrevocably set aside by the  corporation,  separate and apart
                  from its other  funds in trust for the  benefit of any holders
                  of the shares of Series B Preferred so called for  redemption,
                  so as to be, and to continue to be available  therefor,  then,
                  from and after the Series B Redemption Date, dividends on such
                  shares of Series B Preferred  shall cease to accrue,  and such
                  shares shall no longer be deemed to be  outstanding  and shall
                  not have the  status of Series B  Preferred  and all rights of
                  the holders thereof as shareholders of the corporation (except
                  the right to receive  the  Series B  Redemption  Price)  shall
                  terminate.  Upon surrender, in accordance with said notice, of
                  the  certificates  for any  shares  of Series B  Preferred  so
                  redeemed (properly  endorsed or assigned for transfer,  if the
                  corporation  shall so require and the notice  shall so state),
                  such  shares of Series B  Preferred  shall be  redeemed by the
                  corporation  at the Series B  Redemption  Price.  In case less
                  than all the shares of Series B Preferred  represented  by any
                  such   certificate   are  redeemed,   a  new   certificate  or
                  certificates  shall  be  issued  representing  the  unredeemed
                  shares  of  Series  B  Preferred  without  cost to the  holder
                  thereof.

                           (iii)  The  deposit  of  funds  with a bank or  trust
                  company for the purpose of redeeming  Series B Preferred shall
                  be irrevocable except that:

                                    (a) the  corporation  shall be  entitled  to
                           receive from such bank or trust  company the interest
                           or other  earnings,  if any,  earned  on any money so
                           deposited  in trust,  and the  holders  of any shares
                           redeemed  shall  have no  claim to such  interest  or
                           other earnings; and

                                    (b) any  balance of moneys so  deposited  by
                           the  corporation  and unclaimed by the holders of the
                           Series B Preferred entitled thereto at the expiration
                           of two years from the applicable  Series B Redemption
                           Date shall be repaid,  together  with any interest or
                           other earnings  earned thereon,  to the  corporation,
                           and  after any such  repayment,  the  holders  of the
                           shares  entitled  to  the  funds  so  repaid  to  the
                           corporation  shall look only to the  corporation  for
                           payment without interest or other earnings.

                           (C)      Limitations on Redemption

                           (i) The Series B  Redemption  Price  (other  than the
                  portion  thereof  consisting of accrued and unpaid  dividends)
                  shall be  payable  solely  out of the sale  proceeds  of other
                  capital stock of the corporation and from no other source.

                           (ii) Unless full  cumulative  dividends on all shares
                  of Series B Preferred shall have been or contemporaneously are
                  declared  and paid or declared  and a sum  sufficient  for the
                  payment  thereof set apart for  payment for all past  Dividend
                  Periods  and the then  current  Dividend  Period,  no Series B
                  Preferred shall be redeemed (unless all outstanding  shares of
                  Series B Preferred are  simultaneously  redeemed) or purchased
                  or  otherwise  acquired  directly  or  indirectly  (except  by
                  exchange  for  Junior  Stock);  provided,  however,  that  the
                  foregoing  shall  not  prevent  the  redemption  of  Series  B
                  Preferred pursuant to Article 4 or the purchase or acquisition
                  of Series B Preferred pursuant to a purchase or exchange offer
                  made on the same terms to holders of all outstanding shares of
                  Series B Preferred.

                           (D)  Rights  to  Dividends   on  Shares   Called  for
                  Redemption.  If the  Series  B  Redemption  Date  is  after  a
                  Dividend Record Date and before the related  Dividend  Payment
                  Date, the dividend payable on such Dividend Payment Date shall
                  be paid to the  holder  in whose  name the  shares of Series B
                  Preferred  to be  redeemed  are  registered  at the  close  of
                  business  on such  Dividend  Record Date  notwithstanding  the
                  redemption  thereof  between such Dividend Record Date and the
                  related Dividend Payment Date or the corporation's  default in
                  the payment of the  dividend  due.  Except as provided in this
                  paragraph  (5),  the  corporation  will  make  no  payment  or
                  allowance for unpaid dividends,  whether or not in arrears, on
                  called Series B Preferred.

                  (6) Voting  Rights.  Except as required by the Virginia  Stock
                  Corporation  Act and  except  as  otherwise  provided  in this
                  paragraph (6), the holders of the Series B Preferred shall not
                  be  entitled to vote at any  meeting of the  shareholders  for
                  election of directors or for any other purpose or otherwise to
                  participate  in any  action  taken by the  corporation  or the
                  shareholders  thereof,  or to receive notice of any meeting of
                  shareholders.

                           (A)  Whenever  dividends  on any  shares  of Series B
                  Preferred  shall  be in  arrears  for six or more  consecutive
                  quarterly  periods,  the  holders  of such  shares of Series B
                  Preferred (voting  separately as a class with all other series
                  of  preferred  stock upon which like  voting  rights have been
                  conferred  and are  exercisable)  will be entitled to vote for
                  the election of two additional directors of the corporation at
                  a special  meeting called by the holders of record of at least
                  10% of the  Series B  Preferred  or the  holders  of any other
                  series of preferred  stock so in arrears  (unless such request
                  is  received  less than 90 days  before the date fixed for the
                  next annual or special meeting of the  shareholders) or at the
                  next annual meeting of  shareholders,  and at each  subsequent
                  annual meeting until all dividends  accumulated on such shares
                  of Series B Preferred  for the past  Dividend  Periods and the
                  then  current  Dividend  Period  shall have been fully paid or
                  declared  and a sum  sufficient  for the  payment  thereof set
                  aside for payment. In such case, the entire Board of Directors
                  of the corporation will be increased by two directors.

                           (B) So long  as any  shares  of  Series  B  Preferred
                  remain  outstanding,  the corporation  shall not,  without the
                  affirmative  vote of the holders of at least a majority of the
                  shares of the Series B Preferred  outstanding at the time, (i)
                  authorize  or create,  or increase  the  authorized  or issued
                  amount of, any class or series of capital  stock ranking prior
                  to the Series B Preferred with respect to payment of dividends
                  or the distribution of assets upon liquidation, dissolution or
                  winding up or reclassify any  authorized  capital stock of the
                  corporation  into any such  shares,  or create,  authorize  or
                  issue  any   obligation  or  security   convertible   into  or
                  evidencing  the right to  purchase  any such  shares;  or (ii)
                  amend,  alter or  repeal  the  provisions  of these  Articles,
                  whether  by  merger,  consolidation  or  otherwise,  so  as to
                  materially  and  adversely   affect  any  right,   preference,
                  privilege  or voting  power of the Series B  Preferred  or the
                  holders thereof;  provided,  however, that any increase in the
                  amount of the  authorized  preferred  stock or the creation or
                  issuance  of any  other  series  of  preferred  stock,  or any
                  increase in the amount of authorized shares of such series, in
                  each case  ranking on a parity  with or junior to the Series B
                  Preferred   with  respect  to  payment  of  dividends  or  the
                  distribution  of  assets  upon  liquidation,   dissolution  or
                  winding up, shall not be deemed to  materially  and  adversely
                  affect such rights, preferences, privileges or voting powers.

                           (C) The foregoing  voting  provisions  will not apply
                  if, at or prior to the time when the act with respect to which
                  such vote would  otherwise be required shall be effected,  all
                  outstanding  shares  of  Series B  Preferred  shall  have been
                  redeemed  or called  for  redemption  upon  proper  notice and
                  sufficient  funds shall have been deposited in trust to effect
                  such redemption.

                           (D) So long as the  Series B  Preferred  is listed or
                  admitted  to  trading  on The New York  Stock  Exchange,  then
                  notwithstanding  anything to the  contrary in these  Articles,
                  including  without  limitation  Article  8,  approval  by  the
                  holders of at least  two-thirds of the  outstanding  shares of
                  the Series B Preferred  shall be required  for adoption of any
                  amendment   of  these   Articles  or  of  the  bylaws  of  the
                  corporation that would materially affect the existing terms of
                  the Series B Preferred.

                  (7)  Conversion of Series B Preferred.  The Series B Preferred
                  is not convertible into or exchangeable for any other property
                  or securities of the corporation.

         (c)      Series C Junior Participating Redeemable Preferred Stock.

                  (1) Designation and Number.  A series of the preferred  stock,
                  designated  the  "Series  C  Junior  Participating  Cumulative
                  Redeemable  Preferred  Stock" (the "Series C  Preferred"),  is
                  hereby  established.  The  number of  shares  of the  Series C
                  Preferred shall be 1,000,000.

                  (2)  Relative  Seniority.  In  respect  of rights  to  receive
                  dividends and to participate in  distributions  or payments in
                  the event of any liquidation, dissolution or winding up of the
                  corporation,  the Series C Preferred  shall rank junior to the
                  Series   A   Preferred,    the   Series   B   Preferred    and
                  (notwithstanding  anything to the contrary in paragraph (d)(2)
                  of this Article 3) the Series D  Preferred,  and senior to the
                  common stock and any other  capital  stock of the  corporation
                  ranking,  as to dividends and upon liquidation,  junior to the
                  Series C Preferred (collectively, "Junior Stock").

                  (3) Dividends.  The holders of the then  outstanding  Series C
                  Preferred  shall be entitled to receive,  when and as declared
                  by the Board of Directors out of any funds  legally  available
                  therefor,   cumulative  preferential  cash  dividends  payable
                  quarterly  on March 31, June 30,  September 30 and December 31
                  (each  such date  being  referred  to  herein as a  "Quarterly
                  Dividend  Payment  Date" and each period  beginning on the day
                  next following a Quarterly Dividend Payment date and ending on
                  the next  following  Quarterly  Dividend  Payment  date  being
                  referred to herein as a "Dividend Period"),  commencing on the
                  first Quarterly Dividend Payment Date after the first issuance
                  of a share or fraction of a share of Series C Preferred, in an
                  amount per share  (rounded to the  nearest  cent) equal to the
                  greater of (i) $.01 or (ii) subject to adjustment  hereinafter
                  set forth,  1,000 times the  aggregate per share amount of all
                  cash dividends, and 1,000 times the aggregate per share amount
                  (payable  in  kind)  of  all   non-cash   dividends  or  other
                  distributions  (other  than  dividends  payable  in  shares of
                  common stock,  as  constituted  on the date of such  payment),
                  declared on the common stock since the  immediately  preceding
                  Quarterly Dividend Payment Date, or, with respect to the first
                  Quarterly  Dividend  Payment Date, since the first issuance of
                  any share or fraction of a share of Series C Preferred.

                           In the event the corporation  shall at any time after
                  February 4, 1998 (the "Rights Dividend Declaration Date"), (i)
                  declare any dividend on the common stock  payable in shares of
                  common stock, (ii) subdivide the outstanding  common stock, or
                  (iii)  combine the  outstanding  shares of common stock into a
                  smaller number of shares, then in each such case the amount to
                  which  holders  of  shares  of the  Series  C  Preferred  were
                  entitled  immediately prior to such event under clause (ii) of
                  the preceding  paragraph shall be adjusted by multiplying such
                  amount by a fraction (the "Adjustment Factor"),  the numerator
                  of which is the number of shares of common  stock  outstanding
                  immediately  after such event and the  denominator of which is
                  the number of shares of common stock  outstanding  immediately
                  prior to such event.

                           The   corporation   shall   declare  a  dividend   or
                  distribution  on the Series C Preferred  immediately  after it
                  declares a dividend or distribution on the common stock (other
                  than a dividend  payable in shares of common stock);  provided
                  that, in the event no dividend or distribution shall have been
                  declared  on the common  stock  during the period  between any
                  Quarterly  Dividend  Payment  Date  and  the  next  subsequent
                  Quarterly  Dividend  Payment  Date,  a dividend at the rate of
                  $.01 per share on the Series C Preferred shall nevertheless be
                  declared payable on such subsequent Quarterly Dividend Payment
                  Date.

                           Dividends  on the shares of Series C Preferred  shall
                  accrue and be  cumulative  from and  including  the  Quarterly
                  Dividend Payment Date next preceding the date of issue of such
                  shares of Series C Preferred, unless the date of issue of such
                  shares is prior to the  record  date for the  first  Quarterly
                  Dividend Payment Date, in which event dividends on such shares
                  shall accrue and be cumulative  from and including the date of
                  issue  of such  shares,  or  unless  the  date of  issue  is a
                  Quarterly  Dividend Payment Date or is a date after the record
                  date for the  determination  of  holders of shares of Series C
                  Preferred  entitled to receive a quarterly dividend and before
                  such  Quarterly  Dividend  Payment  Date,  in  either of which
                  events such dividends  shall accrue and be cumulative from and
                  including such Quarterly Dividend Payment Date, whether or not
                  (i) the  corporation  has  earnings,  (ii)  dividends  on such
                  shares are declared or (iii) on any Quarterly Dividend Payment
                  Date there shall be funds legally available for the payment of
                  such  dividends.  When dividends are not paid in full upon the
                  shares  of  Series C  Preferred  and the  shares  of any other
                  series of preferred  stock ranking on a parity as to dividends
                  with the Series C Preferred (or a sum sufficient for such full
                  payment is not set apart  therefor),  all  dividends  declared
                  upon  shares of  Series C  Preferred  and any other  series of
                  preferred  stock ranking on a parity as to dividends  with the
                  Series  C  Preferred  shall be  declared  pro rata so that the
                  amount  of  dividends  declared  per  share  on the  Series  C
                  Preferred  and such other series of  preferred  stock shall in
                  all cases  bear to each  other  the same  ratio  that  accrued
                  dividends  per share on the shares of Series C  Preferred  and
                  such other series of preferred stock bear to each other.

                           Except  as  provided  in  the  immediately  preceding
                  paragraph,  unless full  cumulative  dividends on the Series C
                  Preferred have been or contemporaneously are declared and paid
                  or declared and a sum sufficient  for the payment  thereof set
                  apart  for  payment  on the  Series C  Preferred  for all past
                  dividend periods and the then current dividend period,  (i) no
                  dividends  shall be  declared or paid or set apart for payment
                  on the  preferred  stock  of the  corporation  ranking,  as to
                  dividends,  on a  parity  with  or  junior  to  the  Series  C
                  Preferred for any period, and (ii) no dividends (other than in
                  Junior  Stock)  shall be  declared  or paid or set  aside  for
                  payment or other  distribution  or shall be  declared  or made
                  upon  the  Junior  Stock  or any  other  capital  stock of the
                  corporation ranking on a parity with the Series C Preferred as
                  to dividends or upon liquidation  ("Parity Stock"),  nor shall
                  any Junior Stock or any Parity Stock be redeemed, purchased or
                  otherwise  acquired  for any  consideration  (or any moneys be
                  paid  to  or  made  available  for  a  sinking  fund  for  the
                  redemption  of any shares of Junior Stock or Parity  Stock) by
                  the  corporation  (except by  conversion  into or exchange for
                  Junior Stock).

                           Any  dividend  payment made on shares of the Series C
                  Preferred shall first be credited against the earliest accrued
                  but unpaid  dividend  due with  respect to such  shares  which
                  remains payable.

                           No dividends on shares of Series C Preferred shall be
                  declared by the Board of Directors of the  corporation or paid
                  or set apart for  payment by the  corporation  at such time as
                  the terms and provisions of any agreement of the  corporation,
                  including   any  agreement   relating  to  its   indebtedness,
                  prohibits  such  declaration,  payment  or  setting  apart for
                  payment or provides that such declaration,  payment or setting
                  apart for  payment  would  constitute  a breach  thereof  or a
                  default thereunder, or if such declaration or payment shall be
                  restricted or prohibited by law.

                           Accrued  but  unpaid   dividends   on  the  Series  C
                  Preferred  will not bear  interest.  Holders  of the  Series C
                  Preferred  will not be entitled to any  dividends in excess of
                  full cumulative dividends as described above.

                           Except as  provided in these  Articles,  the Series C
                  Preferred shall not be entitled to participate in the earnings
                  or assets of the corporation.

                           The Board of Directors  may fix a record date for the
                  determination  of  holders  of shares  of  Series C  Preferred
                  entitled  to receive  payment of a  dividend  or  distribution
                  declared  thereon,  which record date shall be no more than 30
                  days prior to the date fixed for the payment thereof.

                  (4)      Liquidation Rights.

                           (A) Upon the  voluntary or  involuntary  dissolution,
                  liquidation or winding up of the  corporation,  the holders of
                  shares of the Series C  Preferred  then  outstanding  shall be
                  entitled  to  receive  and to be paid out of the assets of the
                  corporation   legally   available  for   distribution  to  its
                  shareholders,  before  any  distribution  shall be made to the
                  holders  of  common  stock or any other  capital  stock of the
                  corporation  ranking  junior to the  Series C  Preferred  upon
                  liquidation,  a liquidation preference of $1,000.00 per share,
                  plus  accrued  and  unpaid  dividends  thereon  to the date of
                  payment (the "Series C Preferred Liquidation Preference").

                           (B) After the payment to the holders of the shares of
                  the  Series  C  Preferred  of  the  full  Series  C  Preferred
                  Liquidation Preference,  the holders of the Series C Preferred
                  as such shall  have no right or claim to any of the  remaining
                  assets of the  corporation  until the holders of common  stock
                  shall  have   received  an  amount  per  share  (the   "Common
                  Adjustment")  equal to the  quotient  obtained by dividing (i)
                  the Series C Preferred  Liquidation  Preference  by (ii) 1,000
                  (as appropriately adjusted as set forth in paragraph (D) below
                  to reflect such events as stock  splits,  stock  dividends and
                  recapitalizations  with  respect  to the  common  stock)  (the
                  number  determined  pursuant to clause (ii) being  hereinafter
                  referred to as the "Adjustment Number"). Following the payment
                  of the  full  amount  of the  Series C  Preferred  Liquidation
                  Preference  in respect of all  outstanding  shares of Series C
                  Preferred,  the  full  amount  of any  liquidation  preference
                  payable  to  holders  of any  other  shares  of  stock  of the
                  corporation  ranking as to any distribution upon any voluntary
                  or involuntary  dissolution,  liquidation or winding up of the
                  corporation  on a  parity  with  the  shares  of the  Series C
                  Preferred  and  the  full  amount  of the  Common  Adjustment,
                  respectively, holders of shares of Series C Preferred, holders
                  of such  other  shares and  holders of shares of common  stock
                  shall  receive their  ratable and  proportionate  share of the
                  remaining  assets  to be  distributed  in  the  ratio  of  the
                  Adjustment Number to 1 with respect to such shares of Series C
                  Preferred,  such other shares and shares of common stock, on a
                  per share basis, respectively.

                           (C)   If,   upon   any   voluntary   or   involuntary
                  dissolution, liquidation or winding up of the corporation, the
                  amounts  payable  with  respect  to  the  Series  C  Preferred
                  Liquidation  Preference and the liquidation  preference of any
                  other  shares of stock of the  corporation  ranking  as to any
                  such  distribution on a parity with the shares of the Series C
                  Preferred  are not paid in full,  the holders of the shares of
                  the Series C  Preferred  and of such other  shares  will share
                  ratably in any such  distribution of assets of the corporation
                  in proportion to the full respective  liquidation  preferences
                  to which they are entitled.  In the event, however, that there
                  are not sufficient  assets  available after payment in full of
                  the Series C Preferred  Liquidation  Preference and such other
                  liquidation  preferences  to  permit  payment  in  full of the
                  Common   Adjustment,   then  the  remaining  assets  shall  be
                  distributed ratably to the holders of the common stock.

                           (D) In the  event the  corporation  shall at any time
                  after the Rights  Dividend  Declaration  Date (i)  declare any
                  dividend  on the  common  stock  payable  in  shares of common
                  stock,  (ii) subdivide the outstanding  common stock, or (iii)
                  combine the outstanding  shares of common stock into a smaller
                  number of shares, then in each such case the Adjustment Number
                  in effect immediately prior to such event shall be adjusted by
                  multiplying such Adjustment Number by the Adjustment Factor.

                           (E) Neither the sale,  lease,  transfer or conveyance
                  of all or  substantially  all the  property or business of the
                  corporation,   nor  the   merger  or   consolidation   of  the
                  corporation  into or with any other  corporation or the merger
                  or  consolidation  of any other  corporation  into or with the
                  corporation, shall be deemed to be a dissolution,  liquidation
                  or winding up,  voluntary or involuntary,  for the purposes of
                  this paragraph (4).

                  (5)      Redemption

                           (A) Right of  Optional  Redemption.  The  outstanding
                  shares of Series C Preferred  may be redeemed at the option of
                  the Board of  Directors  as a whole,  but not in part,  at any
                  time,  or from time to time, at a price per share (the "Series
                  C Redemption  Price")  equal to (i) 100% of the product of the
                  Adjustment Number times the Average Market Value (as such term
                  is  hereinafter  defined) of the Common  Stock,  plus (ii) all
                  accrued and unpaid  dividends to and  including the date fixed
                  for redemption (the "Series C Redemption  Date"). The "Average
                  Market  Value" is the average of the closing  sale prices of a
                  share of the common stock during the 30-day period immediately
                  preceding  the date before the  redemption  date quoted on the
                  Composite Tape for New York Stock Exchange Listed Stocks,  or,
                  if the common stock is not quoted on the  Composite  Tape,  on
                  The New York Stock  Exchange,  or, if the common  stock is not
                  listed  on  such  exchange,  on the  principal  United  States
                  securities  exchange  registered under the Securities Exchange
                  Act of 1934, as amended,  on which the common stock is listed,
                  or, if the common  stock is not  listed on any such  exchange,
                  the average of the closing bid  quotations  with  respect to a
                  share of common stock during such 30-day  period on The NASDAQ
                  Stock Market, or if no such quotations are available, the fair
                  market value of a share of common stock as  determined  by the
                  Board of Directors in good faith.

                           (B) Procedures for Redemption.

                           (i)  Notice  of any  redemption  will be (a) given by
                  publication in a newspaper of general  circulation in the City
                  of New York, New York, such publication to be made once a week
                  for two successive  weeks commencing not less than 30 nor more
                  than 60 days prior to the Series C  Redemption  Date,  and (b)
                  mailed by the corporation,  postage prepaid,  not less than 30
                  nor more than 60 days prior to the Series C  Redemption  Date,
                  addressed to the respective  holders of record of the Series C
                  Preferred to be redeemed at their respective addresses as they
                  appear on the stock transfer  records of the  corporation.  No
                  failure to give such  notice or any  defect  therein or in the
                  mailing  thereof shall affect the validity of the  proceedings
                  for the redemption of any Series C Preferred  except as to the
                  holder to whom the  corporation  has failed to give  notice or
                  except  as to the  holder to whom  notice  was  defective.  In
                  addition  to  any  information  required  by  law  or  by  the
                  applicable rules of any exchange upon which Series C Preferred
                  may be listed or admitted to trading, such notice shall state:
                  (a) the Series C Redemption  Date; (b) the Series C Redemption
                  Price; (c) the place or places where certificates for Series C
                  Preferred  are to be  surrendered  for payment of the Series C
                  Redemption  Price;  and (d)  that  dividends  on the  Series C
                  Preferred  will cease to accumulate on the Series C Redemption
                  Date.

                           (ii)  If  notice  of   redemption  of  the  Series  C
                  Preferred has been  published  and mailed in  accordance  with
                  subparagraph  (5)(B)(i)  above and provided  that on or before
                  the Series C  Redemption  Date  specified  in such  notice all
                  funds   necessary   for  such   redemption   shall  have  been
                  irrevocably set aside by the  corporation,  separate and apart
                  from its other  funds in trust for the  benefit of the holders
                  of the Series C Preferred,  so as to be, and to continue to be
                  available  therefor,   then,  from  and  after  the  Series  C
                  Redemption  Date,  dividends  on the Series C Preferred  shall
                  cease to accrue, and the Series C Preferred shall no longer be
                  deemed to be outstanding and all rights of the holders thereof
                  as  shareholders  of the  corporation  (except  the  right  to
                  receive the Series C Redemption  Price) shall terminate.  Upon
                  surrender, in accordance with said notice, of the certificates
                  for the Series C Preferred  (properly endorsed or assigned for
                  transfer,  if the corporation  shall so require and the notice
                  shall so state),  the Series C Preferred  shall be redeemed by
                  the corporation at the Series C Redemption Price.

                           (iii)  The  deposit  of  funds  with a bank or  trust
                  company for the purpose of redeeming  Series C Preferred shall
                  be irrevocable except that:

                                    (a) the  corporation  shall be  entitled  to
                           receive from such bank or trust  company the interest
                           or other  earnings,  if any,  earned  on any money so
                           deposited  in trust,  and the  holders  of any shares
                           redeemed  shall  have no  claim to such  interest  or
                           other earnings; and

                                    (b) any  balance of moneys so  deposited  by
                           the  corporation  and unclaimed by the holders of the
                           Series C Preferred entitled thereto at the expiration
                           of two years from the applicable  Series C Redemption
                           Date shall be repaid,  together  with any interest or
                           other earnings  earned thereon,  to the  corporation,
                           and  after any such  repayment,  the  holders  of the
                           shares  entitled  to  the  funds  so  repaid  to  the
                           corporation  shall look only to the  corporation  for
                           payment without interest or other earnings.

                           (C)  Rights  to  Dividends   on  Shares   Called  for
                  Redemption.  If the Series C Redemption Date is after a record
                  date for payment of  dividends  on the Series C Preferred  and
                  before  the  related  Quarterly  Dividend  Payment  Date,  the
                  dividend payable on such Quarterly Dividend Payment Date shall
                  be paid to the  holders  in whose  name the shares of Series C
                  Preferred  are  registered  at the close of  business  on such
                  record date  notwithstanding  the redemption  thereof  between
                  such record date and the related  Quarterly  Dividend  Payment
                  Date  or  the  corporation's  default  in the  payment  of the
                  dividend due.  Except as provided in this  paragraph  (5), the
                  corporation  will make no  payment  or  allowance  for  unpaid
                  dividends,  whether  or not in  arrears,  on  called  Series C
                  Preferred.

                  (6)      Voting Rights.

                           (A)   Subject  to  the   provision   for   adjustment
                  hereinafter set forth,  each share of Series C Preferred shall
                  entitle  the  holder  thereof  to 1,000  votes on all  matters
                  submitted to a vote of the shareholders of the corporation. In
                  the event the  Corporation  shall at any time after the Rights
                  Declaration  Date (i) declare any dividend on the common stock
                  payable  in  shares  of  common  stock,   (ii)  subdivide  the
                  outstanding  common stock,  or (iii)  combine the  outstanding
                  shares of common stock into a smaller  number of shares,  then
                  in each  such  case the  number  of votes  per  share to which
                  holders  of  shares  of  Series  C  Preferred   were  entitled
                  immediately   prior  to  such  event   shall  be  adjusted  by
                  multiplying  such number by the Adjustment  Factor.  Except as
                  otherwise provided herein, in the Articles of Incorporation or
                  under  applicable  law,  the  holders  of  shares  of Series C
                  Preferred and the holders of shares of common stock shall vote
                  together  as one voting  group on all matters  submitted  to a
                  vote of stockholders of the corporation.

                           (B)  Whenever  dividends  on any  shares  of Series C
                  Preferred  shall  be in  arrears  for six or more  consecutive
                  quarterly  periods,  the  holders  of such  shares of Series C
                  Preferred (voting  separately as a class with all other series
                  of  preferred  stock upon which like  voting  rights have been
                  conferred  and are  exercisable)  will be entitled to vote for
                  the election of two additional directors of the corporation at
                  a special  meeting called by the holders of record of at least
                  10% of the  Series C  Preferred  or the  holders  of any other
                  series of preferred  stock so in arrears  (unless such request
                  is  received  less than 90 days  before the date fixed for the
                  next annual or special meeting of the  shareholders) or at the
                  next annual meeting of  shareholders,  and at each  subsequent
                  annual meeting until all dividends  accumulated on such shares
                  of Series C Preferred  for the past  Dividend  Periods and the
                  then  current  Dividend  Period  shall have been fully paid or
                  declared  and a sum  sufficient  for the  payment  thereof set
                  aside for payment. In such case, the entire Board of Directors
                  of the corporation will be increased by two directors.

                           (B) The foregoing  voting  provisions  will not apply
                  if, at or prior to the time when the act with respect to which
                  such vote would  otherwise be required shall be effected,  all
                  outstanding  shares  of  Series C  Preferred  shall  have been
                  redeemed  or called  for  redemption  upon  proper  notice and
                  sufficient  funds shall have been deposited in trust to effect
                  such redemption.

                           (C) In the  event  that  the  Series C  Preferred  is
                  listed or admitted to trading on The New York Stock  Exchange,
                  then  notwithstanding   anything  to  the  contrary  in  these
                  Articles,  including without limitation Article 8, approval by
                  the holders of at least  two-thirds of the outstanding  shares
                  of the Series C Preferred  shall be required  for  adoption of
                  any  amendment  of  these  Articles  or of the  bylaws  of the
                  corporation that would materially affect the existing terms of
                  the Series C Preferred.

                  (7)  Conversion of Series C Preferred.  The Series C Preferred
                  is not convertible into or exchangeable for any other property
                  or securities of the corporation.

                  (8) Consolidation,  Merger,  Share Exchange,  etc. In case the
                  corporation shall enter into any consolidation,  merger, share
                  exchange, combination or other transaction in which the shares
                  of common stock are  exchanged for or changed into other stock
                  or  securities,  cash and/or any other  property,  then in any
                  such case the shares of Series C  Preferred  shall at the same
                  time be similarly  exchanged or changed in an amount per share
                  (subject  to the  provision  for  adjustment  hereinafter  set
                  forth)  equal to 1,000  times the  aggregate  amount of stock,
                  securities,  cash and/or any other property (payable in kind),
                  as the case may be,  into  which or for  which  each  share of
                  common  stock  is  changed  or  exchanged.  In the  event  the
                  corporation  shall  at any  time  after  the  Rights  Dividend
                  Declaration  Date (i) declare any dividend on the common stock
                  payable  in  shares  of  common  stock,   (ii)  subdivide  the
                  outstanding  common stock,  or (iii)  combine the  outstanding
                  shares of common stock into a smaller  number of shares,  then
                  in each  such  case the  amount  set  forth  in the  preceding
                  sentence  with  respect to the exchange or change of shares of
                  Series C  Preferred  shall be  adjusted  by  multiplying  such
                  amount by the Adjustment Factor.

                  (9)  Fractional  Shares.  Series C Preferred  may be issued in
                  fractions  of one  one-thousandth  of a  share  (and  integral
                  multiples   thereof)  which  shall  entitle  the  holder,   in
                  proportion to such  holders'  fractional  shares,  to exercise
                  voting rights, receive dividends, participate in distributions
                  and to have the  benefit  of all other  rights of  holders  of
                  Series C Preferred.

         (d)      Series D Cumulative Convertible Preferred Stock.

                  (1) Designation and Number.  A series of the preferred  stock,
                  designated  the "Series D  Cumulative  Convertible  Redeemable
                  Preferred  Stock"  (the  "Series  D  Preferred"),   is  hereby
                  established.  The number of shares of the  Series D  Preferred
                  shall be 8,000,000.

                  (2)  Relative  Seniority.  In  respect  of rights  to  receive
                  dividends and to participate in  distributions  or payments in
                  the event of any liquidation, dissolution or winding up of the
                  corporation,  the  Series D  Preferred  shall rank on a parity
                  with the Series A  Preferred,  the Series B Preferred  and the
                  Series C  Preferred  and any other  class or series of capital
                  stock  of  the  corporation  not  constituting   Junior  Stock
                  (collectively, "Parity Stock"), and senior to the common stock
                  and  any  other  class  or  series  of  capital  stock  of the
                  corporation  ranking,  as to dividends  and upon  liquidation,
                  junior  to  the  Series  D  Preferred  (collectively,  "Junior
                  Stock").

                  (3)      Dividends.

                           (A) The  holders  of the  then  outstanding  Series D
                  Preferred  shall be entitled to receive,  when and as declared
                  by the Board of Directors out of any funds  legally  available
                  therefor,  cumulative  preferential cash dividends at the rate
                  of  7.5%  of  the  Liquidation  Preference  of  the  Series  D
                  Preferred  (equivalent to $1.875 per share) per annum (subject
                  to  adjustment  as  provided  in  subparagraph   (F)  of  this
                  paragraph  (3)),  payable  quarterly in arrears in cash on the
                  last day,  or the next  succeeding  Business  Day, of January,
                  April,  July and October in each year,  beginning  February 1,
                  1999  (each  such day  being  hereinafter  called a  "Dividend
                  Payment  Date"  and  each  period  beginning  on the day  next
                  following  a  Dividend  Payment  Date and  ending  on the next
                  following  Dividend  Payment Date being  hereinafter  called a
                  "Dividend Period"),  to shareholders of record at the close of
                  business  on  the  Friday  occurring  between  the  tenth  and
                  fifteenth  days of the calendar  month in which the applicable
                  Dividend  Payment Date falls on or such date as shall be fixed
                  by the Board of  Directors at the time of  declaration  of the
                  dividend (the "Dividend Record Date"), which shall be not less
                  than 10 nor more than 30 days  preceding the Dividend  Payment
                  Date.  The  amount of any  dividend  payable  for the  initial
                  Dividend  Period  and for any other  partial  Dividend  Period
                  shall be computed on the basis of a 360-day year consisting of
                  twelve  30-day  months.  Dividends  on the  shares of Series D
                  Preferred  shall accrue and be  cumulative  from and including
                  the date of original issue thereof (the "Issue Date"), whether
                  or not (i) the  corporation  has earnings,  (ii)  dividends on
                  such shares are declared or (iii) on any Dividend Payment Date
                  there shall be funds legally available for the payment of such
                  dividends. When dividends are not paid in full upon the shares
                  of Series D  Preferred  and the shares of any other  series of
                  preferred  stock ranking on a parity as to dividends  with the
                  Series D Preferred (or a sum  sufficient for such full payment
                  is not set apart therefor), all dividends declared upon shares
                  of Series D Preferred and any other series of preferred  stock
                  ranking  on a  parity  as  to  dividends  with  the  Series  D
                  Preferred  shall be  declared  pro rata so that the  amount of
                  dividends  declared  per share on the Series D  Preferred  and
                  such other series of  preferred  stock shall in all cases bear
                  to each other the same ratio that accrued  dividends per share
                  on the shares of Series D Preferred  and such other  series of
                  preferred stock bear to each other.  "Business Day" shall mean
                  any day,  other than a Saturday  or Sunday,  that is neither a
                  legal holiday nor a day on which banking  institutions  in New
                  York  City,  New  York  are  authorized  or  required  by law,
                  regulation or executive order to close.

                           (B) Except as  provided in  subparagraph  (A) of this
                  paragraph (3), unless full cumulative  dividends on the Series
                  D Preferred  have been or  contemporaneously  are declared and
                  paid or declared and a sum sufficient for the payment  thereof
                  set apart for payment on the Series D  Preferred  for all past
                  dividend  periods and the then  current  dividend  period,  no
                  dividends  (other than in Junior  Stock)  shall be declared or
                  paid or set aside for payment or other  distribution  or shall
                  be declared or made upon any Parity Stock or Junior Stock, nor
                  shall  any  Junior  Stock or any  Parity  Stock  be  redeemed,
                  purchased or otherwise  acquired for any consideration (or any
                  moneys be paid to or made available for a sinking fund for the
                  redemption  of any shares of Junior Stock or Parity  Stock) by
                  the corporation or any subsidiary of the  corporation  (except
                  by conversion into or exchange for Junior Stock).

                           (C) Any dividend payment made on shares of the Series
                  D  Preferred  shall first be  credited  against  the  earliest
                  accrued but unpaid  dividend  due with  respect to such shares
                  which remains payable.

                           The amount of any dividends  accrued on any shares of
                  Series D Preferred at any  Dividend  Payment Date shall be the
                  amount of any unpaid  dividends  accumulated  thereon,  to and
                  including such Dividend Payment Date, whether or not earned or
                  declared, and the amount of dividends accrued on any shares of
                  Series D Preferred  at any date other than a Dividend  Payment
                  Date  shall be equal to the sum of the  amount  of any  unpaid
                  dividends  accumulated  thereon,  to and  including  the  last
                  preceding  Dividend  Payment  Date,  whether  or not earned or
                  declared, plus an amount calculated on the basis of the annual
                  dividend  rate  for  the  period  after  such  last  preceding
                  Dividend  Payment Date to and  including  the date as of which
                  the  calculation  is made,  based on a 360-day  year of twelve
                  30-day months.

                           Accrued  but  unpaid   dividends   on  the  Series  D
                  Preferred  will not bear  interest.  Holders  of the  Series D
                  Preferred  will not be entitled to any  dividends in excess of
                  full cumulative dividends as described above.

                           (D) No  dividends  on shares  of  Series D  Preferred
                  shall be declared by the Board of Directors of the corporation
                  or paid or set apart for  payment by the  corporation  at such
                  time as the  terms  and  provisions  of any  agreement  of the
                  corporation,   including   any   agreement   relating  to  its
                  indebtedness,  prohibits such declaration,  payment or setting
                  apart for payment or provides that such  declaration,  payment
                  or setting apart for payment would constitute a breach thereof
                  or a default  thereunder,  or if such  declaration  or payment
                  shall be restricted or prohibited by law.

                           (E) Except as provided in these Articles,  the Series
                  D  Preferred  shall  not be  entitled  to  participate  in the
                  earnings or assets of the corporation.

                           (F) In the event  that the per share  cash  dividends
                  declared on the common stock  during any Dividend  Period (the
                  "Current Common  Dividend")  shall be greater or less than the
                  per share cash  dividends  declared on the common stock during
                  the immediately  preceding  Dividend Period (the "Prior Common
                  Dividend"),  then the dividend  rate of the Series D Preferred
                  (as it may have  previously  been  adjusted  pursuant  to this
                  subparagraph  (F))  shall  be  automatically  adjusted  in the
                  proportion that the Current Common Dividend bears to the Prior
                  Common  Dividend,  such  adjustment  to be  effective  for the
                  Dividend  Period during which the Current  Common  Dividend is
                  paid and all subsequent  Dividend Periods until again adjusted
                  in accordance with this paragraph;  provided, however, that in
                  no event  shall the  adjusted  dividend  rate of the  Series D
                  Preferred be less than 7.5% of the  Liquidation  Preference of
                  the Series D Preferred per annum.  No  adjustment  pursuant to
                  this  subparagraph (F) shall be made on account of any special
                  common stock dividend or distribution declared for the purpose
                  of assuring  continued  qualification  of the corporation as a
                  "real estate investment trust" under the Code.

                   (4)     Liquidation Rights.

                           (A) Upon the  voluntary or  involuntary  dissolution,
                  liquidation or winding up of the  corporation,  the holders of
                  shares of the Series D  Preferred  then  outstanding  shall be
                  entitled  to  receive  and to be paid out of the assets of the
                  corporation   legally   available  for   distribution  to  its
                  shareholders,  before  any  distribution  shall be made to the
                  holders  of  common  stock or any other  capital  stock of the
                  corporation  ranking  junior to the  Series D  Preferred  upon
                  liquidation, a liquidation preference of $25.00 per share (the
                  "Liquidation  Preference"),  plus accrued and unpaid dividends
                  thereon to the date of payment.

                           (B) After the payment to the holders of the shares of
                  the  Series D  Preferred  of the full  Liquidation  Preference
                  provided for in this  paragraph (4), the holders of the Series
                  D Preferred as such shall have no right or claim to any of the
                  remaining assets of the corporation.

                           (C)   If,   upon   any   voluntary   or   involuntary
                  dissolution,  liquidation,  or winding up of the  corporation,
                  the amounts payable with respect to the Liquidation Preference
                  and any other shares of stock of the corporation ranking as to
                  any such  distribution  on a parity  with  the  shares  of the
                  Series D  Preferred  are not paid in full,  the holders of the
                  shares of the Series D Preferred and of such other shares will
                  share  ratably  in any  such  distribution  of  assets  of the
                  corporation in proportion to the full  respective  liquidation
                  preferences to which they are entitled.

                           (D) Neither the sale,  lease,  transfer or conveyance
                  of all or  substantially  all the  property or business of the
                  corporation,   nor  the   merger  or   consolidation   of  the
                  corporation  into or with any other  corporation or the merger
                  or  consolidation  of any other  corporation  into or with the
                  corporation, shall be deemed to be a dissolution,  liquidation
                  or winding up,  voluntary or involuntary,  for the purposes of
                  this paragraph (4).

                  (5)      Redemption.

                           (A)  Right  of  Optional  Redemption.  The  Series  D
                  Preferred is not redeemable prior to the fifth  anniversary of
                  the Issue  Date.  On and after  the fifth  anniversary  of the
                  Issue Date, the corporation may, at its option,  redeem at any
                  time all or, from time to time, part of the Series D Preferred
                  at a price  per  share  (the  "Series  D  Redemption  Price"),
                  payable in cash,  of $25.00,  together  with all  accrued  and
                  unpaid   dividends  to  and   including  the  date  fixed  for
                  redemption (the "Series D Redemption Date"), without interest;
                  provided,  however,  that the  corporation  may not redeem any
                  Series D Preferred  pursuant to this  paragraph (5) unless the
                  Current  Market  Price of the  common  stock on each of the 20
                  consecutive  Trading Days  immediately  preceding the Series D
                  Redemption   Date  shall  at  least  equal  the  then  current
                  Conversion Price, as defined in paragraph (7). "Current Market
                  Price" of the common stock or any other class of capital stock
                  or other  security of the  corporation or any other issuer for
                  any day shall mean the last reported sale price,  regular way,
                  on such  day or,  if no sale  takes  place  on such  day,  the
                  average of the  reported  closing bid and asked prices on such
                  day,  regular  way, in either case as reported on the New York
                  Stock Exchange  ("NYSE") or, if such security is not listed or
                  admitted for trading on the NYSE,  on the  principal  national
                  securities  exchange  on which  such  security  is  listed  or
                  admitted for trading or, if not listed or admitted for trading
                  on any national  securities  exchange,  on the NASDAQ National
                  Market  or,  if such  security  is not  quoted  on the  NASDAQ
                  National  Market,  the  average of the  closing  bid and asked
                  prices on such day in the over-the-counter  market as reported
                  by NASDAQ  or, if bid and asked  prices for such  security  on
                  such day shall  not have been  reported  through  NASDAQ,  the
                  average of the bid and asked  prices on such day as  furnished
                  by any NYSE  member  firm  regularly  making a market  in such
                  security  and  selected  for  such  purpose  by the  Board  of
                  Directors. "Trading Day" in respect of any security shall mean
                  any day on which such  security  is traded on the NYSE,  or if
                  such  security  is not listed or  admitted  for trading on the
                  NYSE, on the principal national  securities  exchange on which
                  such  security is listed or admitted  for  trading,  or if not
                  listed or  admitted  for  trading on any  national  securities
                  exchange,  on the NASDAQ  National Market or, if such security
                  is not quoted on the NASDAQ National Market, in the applicable
                  securities market in which the security is traded.

                           In case of  redemption  of less  than all  shares  of
                  Series D  Preferred  at the time  outstanding,  the  shares of
                  Series D Preferred  to be redeemed  shall be selected pro rata
                  from the holders of record of such shares in proportion to the
                  number of shares of Series D  Preferred  held by such  holders
                  (as nearly as may be practicable  without creating  fractional
                  shares) or by any other  equitable  method  determined  by the
                  corporation.

                           (B) Procedures for Redemption.

                           (i)  Notice of any  redemption  will be mailed by the
                  corporation,  postage prepaid,  not less than 30 nor more than
                  60 days prior to the Series D  Redemption  Date,  addressed to
                  the respective  holders of record of the Series D Preferred to
                  be redeemed at their  respective  addresses  as they appear on
                  the stock transfer records of the  corporation.  No failure to
                  give  such  notice or any  defect  therein  or in the  mailing
                  thereof shall affect the validity of the  proceedings  for the
                  redemption  of any Series D Preferred  except as to the holder
                  to whom the corporation has failed to give notice or except as
                  to the holder to whom notice was defective. In addition to any
                  information  required by law, such notice shall state: (a) the
                  Series D Redemption  Date; (b) the Series D Redemption  Price;
                  (c) the number of shares of Series D Preferred to be redeemed;
                  (d) the place or places where certificates for such shares are
                  to be  surrendered  for  payment  of the  Series D  Redemption
                  Price;  and (e) that  dividends  on the shares to be  redeemed
                  will cease to accumulate  on the Series D Redemption  Date. If
                  less than all the  shares of  Series D  Preferred  held by any
                  holder are to be  redeemed,  the notice  mailed to such holder
                  shall also  specify the number of shares of Series D Preferred
                  held by such holder to be redeemed.

                           (ii) If notice of  redemption of any shares of Series
                  D Preferred has been mailed in accordance  with section (i) of
                  subparagraph (B) of this paragraph (5) above and provided that
                  on or before the Series D  Redemption  Date  specified in such
                  notice all funds necessary for such redemption shall have been
                  irrevocably set aside by the  corporation,  separate and apart
                  from its other  funds in trust for the  benefit of any holders
                  of the shares of Series D Preferred so called for  redemption,
                  so as to be, and to continue to be available  therefor,  then,
                  from and after the Series D Redemption Date, dividends on such
                  shares of Series D Preferred  shall cease to accrue,  and such
                  shares shall no longer be deemed to be  outstanding  and shall
                  not have the  status of Series D  Preferred  and all rights of
                  the holders thereof as shareholders of the corporation (except
                  the right to receive  the  Series D  Redemption  Price)  shall
                  terminate.  Upon surrender, in accordance with said notice, of
                  the  certificates  for any  shares  of Series D  Preferred  so
                  redeemed (properly  endorsed or assigned for transfer,  if the
                  corporation  shall so require and the notice  shall so state),
                  such  shares of Series D  Preferred  shall be  redeemed by the
                  corporation  at the Series D  Redemption  Price.  In case less
                  than all the shares of Series D Preferred  represented  by any
                  such   certificate   are  redeemed,   a  new   certificate  or
                  certificates  shall  be  issued  representing  the  unredeemed
                  shares  of  Series  D  Preferred  without  cost to the  holder
                  thereof.

                           (iii)  The  deposit  of  funds  with a bank or  trust
                  company for the purpose of redeeming  Series D Preferred shall
                  be irrevocable except that:

                                    (a) the  corporation  shall be  entitled  to
                           receive from such bank or trust  company the interest
                           or other  earnings,  if any,  earned  on any money so
                           deposited  in trust,  and the  holders  of any shares
                           redeemed  shall  have no  claim to such  interest  or
                           other earnings; and

                                    (b) any  balance of moneys so  deposited  by
                           the  corporation  and unclaimed by the holders of the
                           Series D Preferred entitled thereto at the expiration
                           of two years from the applicable  Series D Redemption
                           Date shall be repaid,  together  with any interest or
                           other earnings  earned thereon,  to the  corporation,
                           and  after any such  repayment,  the  holders  of the
                           shares  entitled  to  the  funds  so  repaid  to  the
                           corporation  shall look only to the  corporation  for
                           payment without interest or other earnings.

                           (C)      Limitations on Redemption

                           (i) The Series D  Redemption  Price  (other  than the
                  portion  thereof  consisting of accrued and unpaid  dividends)
                  shall be  payable  solely  out of the sale  proceeds  of other
                  capital stock of the corporation and from no other source.

                           (ii) Unless full  cumulative  dividends on all shares
                  of Series D Preferred shall have been or contemporaneously are
                  declared  and paid or declared  and a sum  sufficient  for the
                  payment  thereof set apart for  payment for all past  Dividend
                  Periods  and the then  current  Dividend  Period,  no Series D
                  Preferred shall be redeemed (unless all outstanding  shares of
                  Series D Preferred are  simultaneously  redeemed) or purchased
                  or  otherwise   acquired   directly  or   indirectly   by  the
                  corporation  (except by exchange for Junior Stock);  provided,
                  however,  that the foregoing  shall not prevent the redemption
                  of Series D Preferred pursuant to Article 4 or the purchase or
                  acquisition  of Series D  Preferred  pursuant to a purchase or
                  exchange  offer  made on the  same  terms  to  holders  of all
                  outstanding shares of Series D Preferred.

                           (iii) The corporation  shall not redeem in any period
                  of 12  consecutive  months  a number  of  shares  of  Series D
                  Preferred having an aggregate  Liquidation  Preference of more
                  than $100,000,000,  provided that this restriction shall lapse
                  and be of no further force or effect if in any such period any
                  holder  of  record  of such  number  of  shares  of  Series  D
                  Preferred or shares of common stock  issued on  conversion  of
                  such  number of shares of Series D  Preferred  shall  transfer
                  beneficial  ownership  of such  number  of  shares of Series D
                  Preferred or such common stock,  or a combination of shares of
                  Series D Preferred  and such common  stock  representing  such
                  number  of  shares  of  Series D  Preferred,  except  (a) in a
                  distribution  of such  shares  of  Series D  Preferred  and/or
                  shares of common stock to the security  holders of such holder
                  of  record  or (b) in a bona  fide  pledge  to a bank or other
                  financial  institution  to  secure  obligations  for  borrowed
                  money, or as margin collateral, or upon foreclosure or private
                  sale under such pledge.

                           (D)  Rights  to  Dividends   on  Shares   Called  for
                  Redemption.  If the  Series  D  Redemption  Date  is  after  a
                  Dividend Record Date and before the related  Dividend  Payment
                  Date, the dividend payable on such Dividend Payment Date shall
                  be paid to the  holder  in whose  name the  shares of Series D
                  Preferred  to be  redeemed  are  registered  at the  close  of
                  business  on such  Dividend  Record Date  notwithstanding  the
                  redemption  thereof  between such Dividend Record Date and the
                  related Dividend Payment Date or the corporation's  default in
                  the payment of the  dividend  due.  Except as provided in this
                  paragraph  (5),  the  corporation  will  make  no  payment  or
                  allowance for unpaid dividends,  whether or not in arrears, on
                  called Series D Preferred.

                  (6) Voting  Rights.  Except as required by the Virginia  Stock
                  Corporation  Act and  except  as  otherwise  provided  in this
                  paragraph (6), the holders of the Series D Preferred shall not
                  be  entitled to vote at any  meeting of the  shareholders  for
                  election of directors or for any other purpose or otherwise to
                  participate  in any  action  taken by the  corporation  or the
                  shareholders  thereof,  or to receive notice of any meeting of
                  shareholders.

                           (A)  Whenever  dividends  on any  shares  of Series D
                  Preferred  shall be in arrears for any  Dividend  Period,  the
                  holders of such  shares of Series D  Preferred  shall have all
                  rights to notices and voting entitlements of holders of common
                  stock  under  the  Virginia  Stock  Corporation  Act and these
                  Articles,  and the Series D  preferred  and the  common  stock
                  shall  be  a  single   voting   group,   until  all  dividends
                  accumulated  on such shares of Series D Preferred for all past
                  Dividend  Periods and the then current  Dividend  Period shall
                  have been fully paid or declared and a sum  sufficient for the
                  payment thereof set aside for payment.

                           (B) So long  as any  shares  of  Series  D  Preferred
                  remain  outstanding,  the corporation  shall not,  without the
                  affirmative  vote of the holders of at least a majority of the
                  shares of the Series D Preferred  outstanding at the time, (i)
                  authorize  or create,  or increase  the  authorized  or issued
                  amount of, any class or series of capital  stock ranking prior
                  to the Series D Preferred with respect to payment of dividends
                  or the distribution of assets upon liquidation, dissolution or
                  winding up or reclassify any  authorized  capital stock of the
                  corporation  into any such  shares,  or create,  authorize  or
                  issue  any   obligation  or  security   convertible   into  or
                  evidencing  the right to  purchase  any such  shares;  or (ii)
                  amend,  alter or  repeal  the  provisions  of these  Articles,
                  whether  by  merger,  consolidation  or  otherwise,  so  as to
                  materially  and  adversely   affect  any  right,   preference,
                  privilege  or voting  power of the Series D  Preferred  or the
                  holders thereof;  provided,  however, that any increase in the
                  amount of the  authorized  preferred  stock or the creation or
                  issuance  of any  other  series  of  preferred  stock,  or any
                  increase in the amount of authorized shares of such series, in
                  each case  ranking on a parity  with or junior to the Series D
                  Preferred   with  respect  to  payment  of  dividends  or  the
                  distribution  of  assets  upon  liquidation,   dissolution  or
                  winding up, shall not be deemed to  materially  and  adversely
                  affect such rights, preferences, privileges or voting powers.

                           (C) The foregoing  voting  provisions  will not apply
                  if, at or prior to the time when the act with respect to which
                  such vote would  otherwise be required shall be effected,  all
                  outstanding  shares  of  Series D  Preferred  shall  have been
                  redeemed  or called  for  redemption  upon  proper  notice and
                  sufficient  funds shall have been deposited in trust to effect
                  such redemption.

                  (7) Conversion of Series D Preferred.

                           (A) As used  in this  paragraph  (7),  the  following
terms shall have the indicated meanings:

                           "Adjustment    Factor,"    for    purposes   of   any
                  determination  provided for in this  paragraph  (7)  requiring
                  reference to the Adjustment Factor, shall equal the Conversion
                  Price in effect on the determination date divided by $16.25.

                           "Conversion  Price" shall mean the  conversion  price
                  per share of common  stock at which the Series D Preferred  is
                  convertible into common stock, as such Conversion Price may be
                  adjusted  pursuant to subparagraph  (E) of this paragraph (7).
                  The initial Conversion Price shall be $16.25.

                           "Conversion  Rate"  shall  mean the rate at which the
                  Series D Preferred is convertible  into common stock,  as such
                  Conversion Rate may be adjusted  pursuant to subparagraph  (E)
                  of this  paragraph (7). The initial  Conversion  Rate shall be
                  1.5385  shares  of  common  stock  for each  share of Series D
                  Preferred.

                           "Fair  Market  Value," in the case of any security or
                  property not having a market value  ascertainable by reference
                  to any quotation medium or other objective source,  shall mean
                  the fair market value  thereof as  determined in good faith by
                  the Board of Directors,  which  determination  shall be final,
                  conclusive and binding on all persons

                           "Transfer Agent" shall mean  ChaseMellon  Shareholder
                  Services,   LLC,   or  such  other  agent  or  agents  of  the
                  corporation  as may be designated by the Board of Directors as
                  the transfer agent for the Series D Preferred.

                           (B)   Subject  to  and  upon   compliance   with  the
                  provisions of this paragraph (7), a holder of shares of Series
                  D Preferred shall have the right (the  "Conversion  Right"),at
                  his option, at any time and from time to time, to convert such
                  shares   into  the   number  of  shares  of  fully   paid  and
                  nonassessable  common stock obtained by dividing the aggregate
                  Liquidation Preference of such shares of Series D Preferred by
                  the Conversion Price (as in effect at the time and on the date
                  provided for in the last paragraph of subparagraph (C) of this
                  paragraph  (7)) by  surrendering  such shares to be converted,
                  such   surrender  to  be  made  in  the  manner   provided  in
                  subparagraph  (C) of this  paragraph (7);  provided,  however,
                  that  the  right  to  convert  shares  called  for  redemption
                  pursuant  to  paragraph  (5) shall  terminate  at the close of
                  business  on the  Series  D  Redemption  Date  fixed  for such
                  redemption,  unless the  corporation  shall  default in making
                  payment of any  amounts  payable  upon such  redemption  under
                  paragraph (5).

                           (C) In order to exercise the  Conversion  Right,  the
                  holder of each  share of Series D  Preferred  to be  converted
                  shall  surrender the certificate  evidencing such share,  duly
                  endorsed or assigned to the  corporation  or in blank,  at the
                  office of the Transfer Agent, accompanied by written notice to
                  the corporation that the holder thereof elects to convert such
                  share  of  Series  D  Preferred.  Unless  the  certificate  or
                  certificates for shares of common stock issuable on conversion
                  are to be  registered  in the  same  name as the name in which
                  such  certificate  for Series D Preferred is registered,  each
                  certificate surrendered for conversion shall be accompanied by
                  instruments  of  transfer,   in  form   satisfactory   to  the
                  corporation, duly executed by the holder or such holder's duly
                  authorized agent and an amount  sufficient to pay any transfer
                  or similar tax (or  evidence  reasonably  satisfactory  to the
                  corporation demonstrating that such taxes have been paid).

                           Holders  of  Series  D  Preferred  at  the  close  of
                  business  on a  Dividend  Record  Date  shall be  entitled  to
                  receive the  dividend  payable on the  corresponding  Dividend
                  Payment Date  notwithstanding the conversion thereof following
                  such Dividend  Record Date and prior to such Dividend  Payment
                  Date.  However,  shares of Series D Preferred  surrendered for
                  conversion  during  the  period  beginning  with the  close of
                  business  on any  Dividend  Record  Date and  ending  with the
                  opening of business on the corresponding Dividend Payment Date
                  (except  shares  converted  after the  issuance of a notice of
                  redemption  specifying  a Series D Redemption  Date  occurring
                  within such period or coinciding  with such  Dividend  Payment
                  Date,  such  shares  being  entitled  to such  dividend on the
                  Dividend  Payment Date) must be  accompanied  by payment of an
                  amount  equal to the  dividend  payable on such shares on such
                  Dividend  Payment  Date.  A  holder  of  shares  of  Series  D
                  Preferred on a Dividend Record Date who (or whose  transferee)
                  surrenders  any such shares for  conversion  into common stock
                  after the opening of business  on the  corresponding  Dividend
                  Payment  Date  will  receive  the  dividend   payable  by  the
                  corporation  on such Series D Preferred on such date,  and the
                  converting  holder need not  include  payment of the amount of
                  such dividend upon such surrender.  The corporation shall make
                  further  payment or allowance  for,  and a  converting  holder
                  shall be entitled to, unpaid  dividends in arrears  (excluding
                  the   then-current   quarter)  on  converted  shares  and  for
                  dividends on the common stock issued upon such conversion.

                           As promptly as  practicable  after the  surrender  of
                  certificates   for  Series  D  Preferred  as  aforesaid,   the
                  corporation  shall  issue and shall  deliver at such office to
                  such  holder,  or on  his  written  order,  a  certificate  or
                  certificates  for the  number of full  shares of common  stock
                  issuable  upon the  conversion  of such Series D Preferred  in
                  accordance  with the provisions of this paragraph (7), and any
                  fractional  interest in respect of common  stock  arising upon
                  such  conversion  shall be settled as provided in subparagraph
                  (D) of this paragraph (7). Each conversion  shall be deemed to
                  have been effected  immediately prior to the close of business
                  on the date on which the  certificates  for Series D Preferred
                  shall  have  been   surrendered   and  such   notice  (and  if
                  applicable, payment of an amount equal to the dividend payable
                  on such shares) received by the corporation as aforesaid,  and
                  the person or  persons in whose name or names any  certificate
                  or  certificates  for common stock shall be issuable upon such
                  conversion  shall be  deemed  to have  become  the  holder  or
                  holders  of record of the shares  represented  thereby at such
                  time  on  such  date,  and  such  conversion  shall  be at the
                  Conversion  Price in  effect  at such  time and on such  date,
                  unless the share  transfer books of the  corporation  shall be
                  closed on that date,  in which  event  such  person or persons
                  shall be deemed to have  become  such  holder  or  holders  of
                  record at the opening of business on the next  succeeding  day
                  on  which  such  share  transfer  books  are  open,  but  such
                  conversion  shall be at the Conversion  Price in effect on the
                  date on which such  certificates  for Series D Preferred  have
                  been surrendered and such notice received by the corporation.

                           (D)  No  fractional  shares  or  scrip   representing
                  fractions of common stock shall be issued upon  conversion  of
                  the  Series  D  Preferred.  In lieu of  issuing  a  fractional
                  interest in common stock that would  otherwise be  deliverable
                  upon the  conversion  of a share of  Series D  Preferred,  the
                  corporation shall pay to the holder of such share an amount in
                  cash based upon the Current  Market  Price of the common stock
                  on  the  Trading  Day   immediately   preceding  the  date  of
                  conversion. If more than one share of Series D Preferred shall
                  be surrendered  for conversion at one time by the same holder,
                  the  number  of full  shares  of common  stock  issuable  upon
                  conversion  thereof  shall  be  computed  on the  basis of the
                  aggregate   number  of  shares  of  Series  D   Preferred   so
                  surrendered.

                           (E) The Conversion Rate and Conversion Price shall be
adjusted from time to time as follows:

                           (i) If the corporation shall after the Issue Date (a)
                  declare  and pay a dividend to holders of any class of capital
                  stock  of  the  corporation   payable  in  common  stock,  (b)
                  subdivide its  outstanding  common stock into a greater number
                  of shares,  (c) combine its  outstanding  common  stock into a
                  smaller  number of shares or (d)  reclassify its common stock,
                  the  Conversion  Rate shall be  adjusted so that the holder of
                  any Series D Preferred  thereafter  surrendered for conversion
                  shall be  entitled  to receive  the number of shares of common
                  stock that such holder would have owned or have been  entitled
                  to receive after the happening of any of the events  described
                  above had such shares been converted  immediately prior to the
                  record date in the case of a dividend or the effective date in
                  the case of a subdivision, combination or reclassification. An
                  adjustment  made  pursuant to this  section  (i) shall  become
                  effective immediately after the opening of business on the day
                  next   following  the  record  date  (except  as  provided  in
                  subparagraph  (I) below) in the case of a  dividend  and shall
                  become effective  immediately after the opening of business on
                  the day next  following  the  effective  date in the case of a
                  subdivision,    combination    or    reclassification.    Such
                  adjustment(s)  shall be made successively  whenever any of the
                  events listed above shall occur.

                           (ii) If the  corporation  shall issue after the Issue
                  Date  rights,  options or  warrants  to all  holders of common
                  stock entitling them to subscribe for or purchase common stock
                  (or securities  convertible  into common stock) at a price per
                  share (or having a  conversion  price per share) less than 98%
                  of the Current Market Price of the common stock  determined as
                  of the  record  date  for the  determination  of  shareholders
                  entitled to receive such rights, options or warrants, then the
                  Conversion   Price  shall  be  adjusted  to  equal  the  price
                  determined by multiplying  (A) the Conversion  Price in effect
                  immediately prior to the close of business on such record date
                  (B) a fraction, the numerator of which shall be the sum of (I)
                  the number of shares of common stock  outstanding on the close
                  of  business on such record date and (II) the number of shares
                  of common stock that could be purchased at the Current  Market
                  Price on such record date with the  aggregate  proceeds to the
                  corporation  from the  exercise  of such  rights,  options  or
                  warrants (or the aggregate conversion price of the convertible
                  securities so offered),  and the denominator of which shall be
                  the  sum  of  (x)  the  number  of  shares  of  common   stock
                  outstanding  on the close of  business on such record date and
                  (y) the  number  of  shares  of  common  stock  issuable  upon
                  exercise in full of such rights,  options or warrants (or into
                  which the convertible  securities so offered are convertible).
                  Such adjustment shall become effective  immediately  after the
                  opening of business on the day next following such record date
                  (except as provided in subparagraph (I) below). In determining
                  whether any rights, options or warrants entitle the holders of
                  common stock to subscribe for or purchase common stock at less
                  than 98% of the  Current  Market  Price,  there shall be taken
                  into  account any  consideration  received by the  corporation
                  upon  issuance and upon  exercise of such  rights,  options or
                  warrants, the value of such consideration, if other than cash,
                  to be  determined by the Board of  Directors,  whose  decision
                  shall be final,  conclusive,  and binding on all persons.  Any
                  adjustment(s) made pursuant to this section (ii) shall be made
                  successively  whenever  any of the events  listed  above shall
                  occur.

                           (iii) If the  corporation  shall after the Issue Date
                  distribute  to all  holders of its common  stock any shares of
                  capital stock of the corporation  (other than common stock) or
                  evidence of its indebtedness or assets  (including  securities
                  or cash,  but excluding cash dividends not exceeding in amount
                  current or  accumulated  funds from  operations at the date of
                  declaration, determined on the basis of the corporation's most
                  recent annual or quarterly  report to shareholders at the time
                  of the  declaration of such  dividends) or rights,  options or
                  warrants to subscribe  for or purchase  any of its  securities
                  (excluding rights,  options or warrants referred to in section
                  (ii) above) (any of the foregoing  being  hereinafter  in this
                  section (iii) called the "Securities"),  then in each case the
                  Conversion  Price shall be adjusted so that it shall equal the
                  price  determined by multiplying  (A) the Conversion  Price in
                  effect  immediately  prior  to the  close of  business  on the
                  record  date  fixed  for  the  determination  of  shareholders
                  entitled to receive such  distribution by (B) a fraction,  the
                  numerator  of which shall be (I) the Current  Market Price per
                  share of common  stock on such record date or, if  applicable,
                  the deemed record date described in the immediately  following
                  paragraph,  less  (II)  the  then  Fair  Market  Value  of the
                  Securities or assets so distributed applicable to one share of
                  common  stock,  and the  denominator  of  which  shall  be the
                  Current  Market Price per share of common stock on such record
                  date or, if  applicable,  the  record  date  described  in the
                  immediately following paragraph.  Such adjustment shall become
                  effective  immediately  at  the  opening  of  business  on the
                  Business   Day  next   following   (except  as   provided   in
                  subparagraph (I)) such record date.

                           For purposes of this section (iii), distribution of a
                  Security which is  distributed  not only to the holders of the
                  common stock on the record date fixed for the determination of
                  shareholders  entitled  to  such  distribution,  but  is  also
                  delivered   with  each  share  of  common  stock  issued  upon
                  conversion of Series D Preferred after such record date, shall
                  not require an adjustment of the Conversion  Price pursuant to
                  this  section  (iii);  provided  that on the date,  if any, on
                  which such Security ceases to be deliverable with common stock
                  upon conversion of Series D Preferred  (other than as a result
                  of the expiration or termination  of all such  Securities),  a
                  distribution  of  such  Securities  shall  be  deemed  to have
                  occurred,  and the  Conversion  Price  shall  be  adjusted  as
                  provided in this section  (iii) (and such date shall be deemed
                  for  purposes of this  section  (iii) to be the  "record  date
                  fixed  for  the  determination  of  shareholders  entitled  to
                  receive such distribution" and the "record date").

                           Adjustment(s)  made  pursuant to this  section  (iii)
                  shall be made  successively  whenever any of the events listed
                  above shall occur.

                           (iv) If after  the  Issue  Date  (i) the  corporation
                  shall  merge  or  consolidate   with  any  other  real  estate
                  investment  trust,  corporation or other  business  entity and
                  shall not be the survivor in such transaction (without respect
                  to  the  legal  structure  of  the   transaction),   (ii)  the
                  corporation shall transfer or sell all or substantially all of
                  its assets  other than to an affiliate  or  subsidiary  of the
                  corporation  or (iii)  the  corporation  shall  liquidate  and
                  dissolve,  and the  consideration  allocable  to each share of
                  common  stock in any such  transaction  shall  not have a Fair
                  Market Value of at least $15 times the Adjustment  Factor, the
                  Conversion  Price in effect at the  opening of business on the
                  date on which such transaction is consummated or effective, if
                  greater  than  $15  times  the  Adjustment  Factor,  shall  be
                  adjusted  effective at the opening of business on such date to
                  equal $15 times the Adjustment Factor.

                           (v) If the Current  Market  Price of the common stock
                  on at least 20  consecutive  Trading Days during the period of
                  36 consecutive  months beginning on the second  anniversary of
                  the  Issue  Date is not at  least  $14  times  the  Adjustment
                  Factor,  and the Conversion  Price in effect at the opening of
                  business  on the fifth  anniversary  of the Issue  Date or the
                  next succeeding Business Day, if such fifth anniversary is not
                  a Business  Day, is greater than $15.25  times the  Adjustment
                  Factor,  the Conversion  Price shall be adjusted  effective at
                  the opening of business on such fifth  anniversary or the next
                  following  Business  Day, if such fifth  anniversary  is not a
                  Business Day, to equal $15.25 times the Adjustment Factor.

                           (vi) No adjustment in the  Conversion  Price shall be
                  required  unless such  adjustment  would  require a cumulative
                  increase or  decrease of at least 1% in such price;  provided,
                  however,  that any adjustments  that by reason of this section
                  (vi) are not required to be made shall be carried  forward and
                  taken into account in any  subsequent  adjustment  until made;
                  and provided,  further,  that any adjustment shall be required
                  and made in accordance  with the  provisions of this paragraph
                  (7) (other than this section (vi)) not later than such time as
                  may be required in order to preserve the tax-free  nature of a
                  dividend to the holders of common stock.  Notwithstanding  any
                  other provisions of this paragraph (7), the corporation  shall
                  not be required to make any adjustment to the Conversion Price
                  for the  issuance  of any common  stock  pursuant  to any plan
                  providing  for  the  reinvestment  of  dividends  or  interest
                  payable on securities of the corporation and the investment of
                  additional  optional  amounts in common stock under such plan.
                  All calculations under this paragraph (7) shall be made to the
                  nearest  cent  (with  $.005  being  rounded  upward) or to the
                  nearest  one-tenth  of a  share  (with  .05 of a  share  being
                  rounded upward), as the case may be.

                           (F) If the corporation  shall after the Issue Date be
                  a party to any  transaction  (including  without  limitation a
                  merger,  consolidation,  statutory share exchange, self tender
                  offer for all or substantially  all of the outstanding  common
                  stock,  sale of all or substantially  all of the corporation's
                  assets, recapitalization or reclassification of capital stock,
                  but  excluding  any   transaction  to  which  section  (i)  of
                  subparagraph  (E) of this  paragraph  (7) applies (each of the
                  foregoing  being  referred to herein as a  "Transaction"),  in
                  each case upon  consummation  of which  common  stock shall be
                  converted into the right to receive shares, stock,  securities
                  or other property  (including cash) or any combination thereof
                  ("Transaction   Consideration"),   each   share  of  Series  D
                  Preferred  which is not  itself  converted  into the  right to
                  receive  Transaction  Consideration  in  connection  with such
                  Transaction  shall thereafter be convertible into the kind and
                  amount  of   Transaction   Consideration   payable   upon  the
                  consummation of such  Transaction  with respect to that number
                  of  shares of common  stock  into  which one share of Series D
                  Preferred   was   convertible   immediately   prior   to  such
                  Transaction.  The  corporation  shall  not be a  party  to any
                  Transaction   unless  the  terms  of  such   Transaction   are
                  consistent with this subparagraph (F) and enable the holder of
                  each  share of Series D  Preferred  that  remains  outstanding
                  after  consummation of such  Transaction to convert such share
                  at the Conversion  Price in effect  immediately  prior to such
                  Transaction  into the Transaction  Consideration  payable with
                  respect  to the  number of shares of common  stock  into which
                  such  share of Series D  Preferred  is then  convertible.  The
                  provisions of this  subparagraph  (F) shall similarly apply to
                  successive Transactions.

                           (G) If after the Issue Date:

                           (i) the  corporation  shall declare  dividends on the
                  common stock, excluding cash dividends not exceeding in amount
                  current or  accumulated  funds from  operations at the date of
                  declaration, determined on the basis of the corporation's most
                  recent annual or quarterly  report to shareholders at the time
                  of the declaration of such dividends; or

                           (ii) the corporation  shall authorize the granting to
                  the holders of the common stock of rights, options or warrants
                  to  subscribe  for or purchase  any shares of any class or any
                  other rights, options or warrants; or

                           (iii)  there  shall  be  any  Transaction  for  which
                  approval of any shareholders of the corporation is required or
                  self tender for all or  substantially  all of the  outstanding
                  common stock; or

                           (iv) there shall occur the  voluntary or  involuntary
                  liquidation, dissolution or winding up of the corporation;

                           then the corporation shall cause to be filed with the
                  Transfer  Agent and shall cause to be mailed to the holders of
                  the  Series D  Preferred  at their  addresses  as shown on the
                  share records of the corporation, as promptly as possible, but
                  at  least  15  days  prior  to the  earliest  applicable  date
                  hereinafter specified, a notice stating (A) the record date as
                  of which the holders of common stock  entitled to receive such
                  dividend  or grant of rights,  options or  warrants  are to be
                  determined,  provided, however, that no such notification need
                  be made in respect of a record date for a dividend or grant of
                  rights,   options  or   warrants   unless  the   corresponding
                  adjustment  in the  Conversion  Price  would be an increase or
                  decrease  of at  least  1%,  or (B)  the  date on  which  such
                  Transaction, self tender, liquidation,  dissolution or winding
                  up is expected to become  effective,  and the date as of which
                  it is expected that holders of common stock of record shall be
                  entitled to exchange  their  common  stock for  securities  or
                  other property,  if any,  deliverable  upon such  Transaction,
                  self tender,  liquidation,  dissolution or winding up. Failure
                  to give such notice or any defect therein shall not affect the
                  legality  or  validity of the  proceedings  described  in this
                  paragraph (7).

                           (H)  Whenever  the  Conversion  Price is  adjusted as
                  herein provided,  the corporation shall promptly file with the
                  Transfer Agent a certificate  of its chief  financial or chief
                  accounting  officer  setting forth the Conversion  Price after
                  such  adjustment  and setting  forth a brief  statement of the
                  facts requiring such adjustment,  which  certificate  shall be
                  conclusive  evidence  of the  correctness  of such  adjustment
                  absent  manifest  error.   Promptly  after  delivery  of  such
                  certificate,  the  corporation  shall prepare a notice of such
                  adjustment of the Conversion  Price setting forth the adjusted
                  Conversion   Price  and  the  effective  date  on  which  such
                  adjustment  becomes  effective  and shall mail such  notice of
                  such adjustment of the Conversion  Price to the holder of each
                  share of Series D Preferred at such  holder's  last address of
                  record.

                           (I) In any  case in  which  subparagraph  (E) of this
                  paragraph  (7)  provides  that  an  adjustment   shall  become
                  effective  on the date next  following  the record date for an
                  event,  the corporation may defer until the occurrence of such
                  event (i)  issuing  to the  holder of any  Series D  Preferred
                  converted  after such record date and before the occurrence of
                  such event the  additional  common  stock  issuable  upon such
                  conversion by reason of the adjustment  required by such event
                  over and above the common stock issuable upon such  conversion
                  before   giving   effect   to   such   adjustment   and   (ii)
                  fractionalizing  any share of common stock into which Series D
                  Preferred is convertible  and/or paying to such holder cash in
                  lieu of such fractional  interest pursuant to subparagraph (D)
                  of this paragraph (7).

                           (J) There shall be no  adjustment  of the  Conversion
                  Price in case of the  issuance of any shares of capital  stock
                  of the corporation in a  reorganization,  acquisition or other
                  similar  transaction  except as specifically set forth in this
                  paragraph (7).

                           (K) The  corporation  will at all times  reserve  and
                  keep  available,  free  from  preemptive  rights,  out  of its
                  authorized  but  unissued  common  stock,  for the  purpose of
                  effecting  conversion  of the  Series  D  Preferred,  the full
                  number  of  shares  of  common  stock   deliverable  upon  the
                  conversion   of  all   outstanding   Series  D  Preferred  not
                  theretofore converted.  For purposes of this subparagraph (K),
                  the  number of shares of  common  stock  deliverable  upon the
                  conversion  of all  outstanding  shares of Series D  Preferred
                  shall be  computed as if at the time of  computation  all such
                  outstanding shares were held by a single holder.

                           (L) The corporation  will pay any and all documentary
                  stamp or similar issue or transfer taxes payable in respect of
                  the issue or delivery of common stock or other  securities  or
                  property  on  conversion  of the Series D  Preferred  pursuant
                  hereto;  provided,  however, that the corporation shall not be
                  required  to pay any tax that may be payable in respect of any
                  transfer  involved in the issue or delivery of common stock or
                  other  securities or property in a name other than that of the
                  holder of the Series D Preferred to be converted,  and no such
                  issue or  delivery  shall be made  unless and until the person
                  requesting  such issue or delivery has paid to the corporation
                  the  amount  of  any  such  tax  or  has  established,  to the
                  reasonable satisfaction of the corporation,  that such tax has
                  been paid.

                           In  addition  to  the  foregoing   adjustments,   the
                  corporation  shall be entitled to make such  reductions in the
                  Conversion  Price, in addition to those required herein, as it
                  in its discretion  considers to be advisable in order that any
                  share dividends,  subdivisions of shares,  reclassification or
                  combination of shares, dividend of rights,  options,  warrants
                  to  purchase  shares or  securities,  or a  dividend  of other
                  assets (other than cash  dividends) will not be taxable or, if
                  that is not  possible,  to diminish  any income taxes that are
                  otherwise payable because of such event.

                           (M) Definitions. Unless the context otherwise clearly
                  indicates,  terms defined in any subdivision of this paragraph
                  (7)  shall  have  the  same  meanings  wherever  used  in this
                  paragraph (7).

4. If the Board of Directors of the  corporation  shall, at any time and in good
faith,  be of the opinion  that direct or  indirect  ownership  of shares of the
corporation  has or may become  concentrated in any individual or individuals to
an extent which would  disqualify the  corporation as a "real estate  investment
trust" under the  requirements  of the Code applicable of the  qualification  of
"real estate investment  trusts" (the "REIT  provisions'),  then the corporation
shall have the power.

         (a) to call for  redemption  by lot or other means deemed  equitable by
the Board of Directors and to redeem a number of concentrated shares sufficient,
in the  opinion of the Board of  Directors,  to  maintain or bring the direct or
indirect  ownership of shares of the  corporation  into conformity with the REIT
provisions; and

         (b) to stop the transfer of its shares to any person whose  acquisition
thereof  would,  in the  opinion  of the  Board  of  Directors,  result  in such
disqualification.

The per  share  redemption  price  of any  shares  redeemed  by the  corporation
pursuant to  paragraph  (a) of this  Article 4 shall be the highest  closing bid
price  quotation (if then traded over the counter) or the closing sale price (if
then listed on a national securities exchange) for the shares as of the business
day  preceding the day on which notice of redemption is given as reported by any
source  reasonably  believed  reliable by the Board of Directors,  or, if no bid
price quotation or closing sale price for the shares is available, as determined
in good  faith by the Board of  Directors,  From and  after  the date  fixed for
redemption  by the Board of  Directors,  the  holder of any shares so called for
redemption  shall  cease to be entitled to  dividends,  voting  rights and other
benefits with respect to such shares  excepting only the right to payment of the
redemption  price fixed as  aforesaid.  For the  purpose of this  Article 4, the
terms "individual" and "ownership" of shares shall be defined in accordance with
or by reference to the REIT provisions.

5.  Holders of shares of the  corporation  shall  upon  demand  disclose  to the
corporation  in writing  such  information  with  respect to direct and indirect
ownership  thereof as the Board of  Directors  may deem  necessary to enable the
corporation  to  comply  with  the  REIT   provisions  or  to  comply  with  the
requirements of any other taxing authority.

6. The number of directors of the  corporation  shall be fixed by the bylaws or,
in the absence of a bylaw fixing such number, shall be three.

7. (a) To the full  extent  that the Act, as it exists on the date hereof or may
hereafter be amended,  permits the limitation or elimination of the liability of
directors or  officers,  a director or officer of the  corporation  shall not be
liable to the corporation or its stockholders for monetary damages. In the event
that the Act shall be construed  to require in any case in which such  liability
may be so limited or  eliminated,  as a condition of limitation  or  elimination
thereof, specification in these Articles of an amount in dollars and/or cents as
the amount of the  liability of  directors  or  officers,  such amount is hereby
specified  at zero  dollars  and zero  cents  ($0.00),  in  cases in which  such
liability may be  eliminated,  and at the minimum  amount  permitted by the Act,
expressed  in dollars  and/or  cents,  in cases in which such  liability  may be
limited.

         (b) To the full extent  permitted  and in the manner  prescribed by the
Act, as it exists on the date hereof or may hereafter be amended,  and any other
applicable  law, the  corporation  shall  indemnify a director or officer of the
corporation  who is or was a party to any  proceeding by reason of the fact that
he is or was such a director  or officer or is or was  serving at the request of
the  corporation  as  a  director,   officer,   employee  or  agent  of  another
corporation,  partnership,  joint venture, trust, employee benefit plan or other
enterprise.  The Board of Directors is hereby  empowered,  by majority vote of a
quorum of  disinterested  directors,  to  contract in advance to  indemnify  any
director or officer.

         (c) The Board of Directors is hereby  empowered,  by majority vote of a
quorum of  disinterested  directors,  to cause the  corporation  to indemnify or
contract in advance to indemnify  any person not  specified in paragraph  (b) of
this  Article 7 who was or is a party to any  proceeding,  by reason of the fact
that he is or was an employee or agent of the corporation,  or is or was serving
at the request of the corporation as a director,  officer,  employee or agent of
another corporation, partnership, joint venture, trust, employee benefit plan or
other  enterprise,  to the same  extent as if such  person  were  required to be
indemnified by paragraph (b).

         (d) The corporation may purchase and maintain insurance to indemnify it
against the whole or any portion of its  liability  under this Article 7 and may
also procure insurance, in such amounts as the Board of Directors may determine,
on behalf of any person who is or was a director,  officer, employee or agent of
the  corporation,  or is or was serving at the request of the  corporation  as a
director, officer, employee or agent of another corporation,  partnership, joint
venture, trust, employee benefit plan or other enterprise, against any liability
asserted against or incurred by such person in any such capacity or arising from
his status as such, whether or not the corporation would have power to indemnify
such person against such liability under the provisions of this Article 7.

         (e) In the  event  there  has been a  change  in the  composition  of a
majority of the Board of Directors after the date of the alleged act or omission
with  respect to which  indemnification  is  claimed,  any  determination  as to
indemnification  and  advancement  of  expenses  with  respect  to any claim for
indemnification  made  pursuant to paragraph (a) of this Article 7 shall be made
by special legal counsel  agreed upon by the Board of Directors and the proposed
indemnitee.  If the Board of Directors and the proposed indemnitee are unable to
agree upon such special legal  counsel,  the Board of Directors and the proposed
indemnitee  each shall  select a nominee,  and the  nominees  shall  select such
special legal counsel.

         (f)  The  provisions  of this  Article  7 shall  be  applicable  to all
actions,  claims,  suits or proceedings  commenced  after the adoption hereof by
stockholders,  whether arising from any action taken or failure to act before or
after such adoption. No amendment or repeal of this Article 7 shall diminish the
rights provided hereby or diminish the right to indemnification  with respect to
any claim, issue or matter in any then pending or subsequent  proceeding that is
based in any material  respect on any alleged  action or failure to act prior to
such amendment or repeal.

         (g) References herein to directors, officers, employees or agents shall
include former  directors,  officers,  employees and agents and their respective
heirs, executors and administrators.

8. Except as otherwise  required by the Act, by these Articles,  or by the Board
of Directors  acting pursuant to Subsection C of Section 13.1-707 of the Act, or
any  successor  provision,   the  vote  required  to  approve  an  amendment  or
restatement  of these  Articles,  other than an  amendment or  restatement  that
amends or affects the shareholder  vote required by the Act to approve a merger,
share exchange,  sale of all or substantially all of the corporation's assets or
the dissolution of the corporation, shall be a majority of all votes entitled to
be cast by each voting group entitled to vote on the amendment.

                                                                       EXHIBIT 5

                               HUNTON & WILLIAMS
                              951 East Byrd Street
                          Riverfront Plaza, East Tower
                               Richmond, VA 23219




                                February 24, 1999

Board of Directors
United Dominion Realty Trust, Inc.
10 South 6th Street
Richmond, Virginia 23219-3802

                       Registration Statement on Form S-3

Ladies and Gentlemen:

         We are acting as counsel for United  Dominion  Realty Trust,  Inc. (the
"Company") in connection with its registration  under the Securities Act of 1993
of up to 130,416 shares of its common stock (the  "Shares"),  which are proposed
to be offered and sold as described in the Company's  Registration  Statement on
Form S-3 (the  "Registration  Statement")  to be filed today with the Securities
and Exchange Commission (the "Commission").

         In rendering this opinion, we have relied upon, among other things, our
examination of such records of the Company and  certificates of its officers and
of public officials as we have deemed necessary.

         Based upon the foregoing, we are of the opinion that:

         1. The Company is a corporation duly incorporated, validly existing and
in good standing under the laws of the Commonwealth of Virginia.

         2. The  Shares  have  been duly  authorized,  and when the  Shares  are
offered  and sold as  described  in the  Registration  Statement,  they  will be
legally issued fully paid and nonassessable.

         We hereby  consent to the filing of this opinion with the Commission as
an exhibit to the  Registration  Statement  and  reference to our firm under the
heading "Legal Matters" in the Registration Statement.

                                   Very truly yours,

                                   /s/Hunton & Williams


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