March 31, 1999

Shareholders of
United Dominion Realty Trust, Inc.

Re:      1998 Stock Option Grant

The proxy  statement for our 1998 Annual Meeting of  Shareholders  discloses the
granting  of stock  options to  officers  in 1998 under the  caption,  "Ten year
Options/SAR  Repricings."  While the news media has  criticized  the Company for
"repricing"  certain stock  options,  this  characterization  is not  completely
correct. We wanted to tell you what we did and why we did it.

In the second quarter of 1998,  after losing three key  executives,  the Company
employed KPMG-Peat Marwick to do a compensation  study, with special emphasis on
long-term  incentive  compensation.  The Board asked the  consultant to design a
plan that would  better  bind  officers  to the  Company  while  aligning  their
interests with those of the shareholders. Among the consultant's recommendations
in  furtherance  of both of these goals was an annual grant of stock  options to
officers that would vest  one-third in each of the years  subsequent to the year
of grant. The Compensation  Committee of the Board of Directors adopted this and
other  recommendations for 1998. The extended vesting period and annual grant of
stock have two key benefits for the Company.  They better bind associates to the
Company because if associates leave, they lose a significant  number of unvested
options.  Also,  with an annual grant,  the average stock option  exercise price
reflects various market  conditions.  The Committee also adopted a shareholders'
value plan, as recommended by the  consultant,  that is based on the performance
of the Company, including the stock price, versus other apartment REITs.

In the fourth  quarter of 1998,  the Company  asked the  officers  and other key
associates  to  agree  to  have  part  of the  options  granted  to them in 1997
cancelled so that these options  would go back into the  Company's  stock option
plan and be available for future annual grants. Effectively what the Company did
was to cancel  approximately 30% of the outstanding stock options,  all of which
would  vest at the  end of  1999.  None  of the  vested  options  were  changed.
Canceling  these options would be less dilutive to the  shareholders in the long
term than allowing these options to remain  outstanding and granting  additional
stock options in 1998.






The Board of  Directors  thought that it was critical for the Company to grant a
target  number  of  stock  options  at the end of 1998  because  of the  binding
benefit.  At its meeting in December,  the  Compensation  Committee of the Board
granted 1,137,665 stock options to 47 officers of the Company, vesting one-third
per year at the end of 1999  through  2001.  The option price of $10.875 was the
closing stock price on the date of grant. On a fully converted basis, this grant
of stock options for 1998 represented approximately 0.9% of the Company's common
stock.  The Company,  on an annual basis,  expects to grant  similar  numbers of
stock options to the officers of the Company in future years. This percentage of
the fully  converted  common stock,  0.9%,  as an annual grant,  is in line with
other  REITs  and  other  companies.   The  3,359,000  stock  options  currently
outstanding to directors and officers have an average exercise price of $12.89.

The Company has always been applauded for being a shareholder  friendly company.
We continue to be that kind of company.  Eight of the  Company's  Board  members
have more than $1 million invested in our Company. The interests of the Board of
Directors  and  officers  are closely  aligned  with the  shareholders,  and the
implementation of a revised long-term incentive compensation plan further aligns
these interests.

Please  feel free to  contact  our  Shareholder  Relations  Department  at (804)
780-2691 or by e-mail at ir@udrt.com with any questions that you might have.

Thank you.

Sincerely,

United Dominion Realty Trust, Inc.



John P. McCann
Chairman

JPM/dej