1




                                  EXHIBIT 99.1
                                  ------------

                                 [NEWS RELEASE]

             BAY APARTMENT COMMUNITIES STRENGTHENS CAPITAL STRUCTURE
             -------------------------------------------------------
                        WITH $50 MILLION EQUITY OFFERING
                        --------------------------------

     (SAN JOSE, CA), May 10, 1996 - Bay Apartment Communities (NYSE: BAY)
announced today that it has substantially strengthened its capital structure
through the sale of approximately $50.5 million in new equity. The offering
consisted of a direct placement of approximately $30.5 million in common stock
and an underwritten offering of approximately $10.0 million in common stock and
$10.0 million in Series B Convertible Preferred Stock. The shares of common
stock were sold in the direct placement at a price of $24.44 per share,
reflecting approximately a 1% discount from the average closing price of Bay's
common stock during the ten trading days ending May 2, 1996, the last trading
day prior to the date on which the sale was priced. The underwritten shares of
common stock and Series B Convertible Preferred Stock were also sold at a
weighted average sales price of $24.44 per share. The proceeds of the offering
will be used to acquire additional properties and to repay outstanding
indebtedness.

     The new shares of preferred stock will be paid a dividend equal to 103% of
the dividend paid on Bay's common stock, or $.4112 per share, versus Bay's
current quarterly common stock dividend of $.40 per share. The preferred stock
generally has no voting rights and is subject to limit conversion rights during
the approximately two and one-half years following issuance. Thereafter, the
preferred stock may be converted on a share-for-share basis into shares of
common stock, subject to certain ownership limitations. After approximately nine
and one-half years, all outstanding shares of the new preferred stock will be
converted into shares of common stock.

   2


     "While this transaction will increase our weighted average shares
outstanding on a fully diluted basis by approximately 14.8%, we believe that we
will be able to quickly use the proceeds to acquire additional apartment
communities, which should make the dilutive impact very short term," noted
Gilbert M. Meyer, Chairman and President.

     "The offering," he continued, "provides us with additional resources to
both capitalize on an opportunistic acquisition environment and reduce our debt
costs. We intend to quickly use the proceeds from the offering to acquire
additional apartment communities. We will also use a portion of the proceeds to
pay off variable interest rate credit lines, eliminating all of Bay's variable
rate debt prior to acquiring additional apartment home communities."

     Bay Apartment Communities is a fully integrated multi-family real estate
investment trust focused on the acquisition, development, construction,
reconstruction and management of high quality apartment communities in the San
Francisco Bay area and Northern California. The company owns 25 apartment
communities containing more than 6,450 apartment homes.