UNCONDITIONAL GUARANTY OF PAYMENT AND PERFORMANCE


  FOR AND IN CONSIDERATION OF the sum of Ten and No/100 Dollars
($10.00) and other good and valuable consideration paid or
delivered to the undersigned WALDEN RESIDENTIAL PROPERTIES, INC.,
a Maryland corporation (hereinafter referred to as "Walden"),
WALDEN RESIDENTIAL OPERATING PARTNERSHIP, L.P., a Georgia limited
partnership (hereinafter referred to as "WROP"), and WDN
PROPERTIES, INC., a New York corporation (hereinafter referred to
as "WDN Properties"; Walden, WROP and WDN Properties are
sometimes hereinafter referred to individually as "Guarantor" and
collectively  as "Guarantors"), the receipt and sufficiency
whereof are hereby acknowledged by Guarantors, and for the
purpose of seeking to induce THE FIRST NATIONAL BANK OF BOSTON, a
national banking association, BANK OF MONTREAL, CHICAGO BRANCH,
DRESDNER BANK AG NEW YORK AND GRAND CAYMAN BRANCHES, and SIGNET
BANK (hereinafter referred to collectively as"Lender", which term
shall also include each other Bank which may now or hereafter
become party to the "Credit Agreement" (as hereinafter defined)
and shall also include any such individual Bank acting as agent
for all of the Banks), to extend credit or otherwise provide
financial accommodations to WDN PROPERTIES, LTD., a Texas limited
partnership (hereinafter referred to as "Borrower"), which
extension of credit and provision of financial accommodations
will be to the direct interest, advantage and benefit of
Guarantors, Guarantors do hereby, jointly and severally
absolutely, unconditionally and irrevocably guarantee to Lender:

  (a)  the full and prompt payment when due, whether by
acceleration or otherwise, either before or after maturity
thereof, of (i) that certain Note of even date herewith made by
Borrower to the order of FNBB in the principal face amount of
Eighty Million and No/100 Dollars ($80,000,000.00) and that
certain Swing Loan Note of even date herewith made by Borrower to
the order of FNBB in the principal face amount of Ten Million and
No/100 Dollars ($10,000,000.00) (hereinafter referred to
collectively as the "FNBB Note"), and (ii) those certain Notes
(hereinafter referred to collectively as the "Additional Notes")
of even date herewith made by Borrower to the order of the Banks
(other than FNBB) in the aggregate principal face amount of
Seventy Million and No/100 Dollars ($70,000,000.00), together
with interest as provided in the FNBB Note and the Additional
Notes, together with any replacements, supplements, renewals,
modifications, consolidations, restatements and extensions
thereof; and

  (b)  the full and prompt payment when due, whether by
acceleration or otherwise, either before or after maturity
thereof, of each other note as may be issued under that certain
Revolving Credit Agreement dated of even date herewith
(hereinafter referred to as the "Credit Agreement") among
Borrower and FNBB, for itself and as agent, and the other lenders
now or hereafter a party thereto, together with interest as
provided in each such note, together with any replacements,
supplements, renewals, modifications, consolidations,
restatements and extensions thereof (the FNBB Note, the
Additional Notes and each of the notes described in this
subparagraph (b) is hereinafter referred to collectively as the
"Note"); and

  (c)  the full and prompt payment and performance of all
obligations of Borrower to Lender under the terms of the Credit
Agreement, including, without limitation, the obligations of
Borrower concerning hazardous materials contained in Section 8.6 of the
Credit Agreement, together with any replacements, supplements,
renewals, modifications, consolidations, restatements and
extensions thereof; and

  (d)  the full and prompt payment and performance of any and
all other obligations of Borrower to Lender under any other
agreements, documents or instruments now or hereafter evidencing,
securing or otherwise relating to the indebtedness evidenced by
the Note or the Credit Agreement (the Note, the Credit Agreement
and said other agreements, documents and instruments are
hereinafter collectively referred to as the "Loan Documents" and
individually referred to as a "Loan Document").  All terms used
herein and not otherwise defined herein shall have the meanings
set forth in the Credit Agreement.

  1. Agreement to Pay and Perform; Costs of Collection. 
Guarantors do hereby agree that if the Note is not paid by
Borrower in accordance with its terms, or if any and all sums
which are now or may hereafter become due from Borrower to Lender
under the Loan Documents are not paid by Borrower in accordance
with their terms, or if any and all other obligations of Borrower
to Lender under the Note and the Loan Documents are not performed
by Borrower in accordance with their terms, Guarantors will
immediately make such payments and perform such obligations. 
Guarantors further agree to pay Lender on demand all reasonable
costs and expenses (including court costs and reasonable
attorneys' fees and disbursements) paid or incurred by Lender in
endeavoring to collect the indebtedness guaranteed hereby, to
enforce any of the other obligations of Borrower guaranteed
hereby, or any portion thereof, or to enforce this Guaranty, and
until paid to Lender, such sums shall bear interest at the
default rate set forth in the Credit Agreement unless collection
from Guarantors of interest at such rate would be contrary to
applicable law, in which event such sums shall bear interest at
the highest rate which may be collected from Guarantors under
applicable law.

  2. Reinstatement of Refunded Payments.  If, for any reason,
any payment to Lender of any of the obligations guaranteed
hereunder is required to be refunded by Lender to Borrower, or
paid or turned over to any other person, including, without
limitation, by reason of the operation of bankruptcy,
reorganization, receivership or insolvency laws or similar laws
of general application relating to creditors' rights and remedies
now or hereafter enacted, Guarantors agree to pay the amount so
required to be refunded, paid or turned over (the "Turnover
Payment"), the obligations of Guarantors shall not be treated as
having been discharged by the original payment to Lender giving
rise to the Turnover Payment, and this Guaranty shall be treated
as having remained in full force and effect for any such Turnover
Payment so made by Lender, as well as for any amounts not
theretofore paid to Lender on account of such obligations.

  3. Rights of Lender to Deal with Collateral, Borrower and
Other Persons.  Each Guarantor hereby consents and agrees that
Lender may at any time, and from time to time, without thereby
releasing any Guarantor from any liability hereunder and without
notice to or further consent from any other Guarantor, either
with or without consideration:  release or surrender any lien or
other security of any kind or nature whatsoever held by it or by
any person, firm or corporation on its behalf or for its account,
securing any indebtedness or liability hereby guaranteed;
substitute for any collateral so held by it, other collateral of
like kind, or of any kind; modify the terms of the Note or the
Loan Documents; extend or renew the Note for any period; grant
releases, compromises and indulgences with respect to the Note or
the Loan Documents and to any persons or entities now or
hereafter liable thereunder or hereunder; release any other
Guarantor, surety, endorser or accommodation party of the Note or
any other Loan Documents; or take or fail to take any action of
any type whatsoever.  No such action which Lender shall take or
fail to take in connection with the Note or the Loan Documents,
or any of them, or any security for the payment of the
indebtedness of Borrower to Lender or for the performance of any
obligations or undertakings of Borrower, nor any course of
dealing with Borrower or any other person, shall release any
Guarantor's obligations hereunder, affect this Guaranty in any
way or afford any Guarantor any recourse against Lender.  The
provisions of this Guaranty shall extend and be applicable to all
replacements, supplements, renewals, amendments, extensions,
consolidations, restatements and modifications of the Note and
the Loan Documents, and any and all references herein to the Note
and the Loan Documents shall be deemed to include any such
replacements, supplements, renewals, extensions, amendments,
consolidations, restatements or modifications thereof.  Without
limiting the generality of the foregoing, Guarantors acknowledge
the terms of Section 18.3 of the Credit Agreement and agrees that
this Guaranty shall extend and be applicable to each new or
replacement note delivered by Borrower pursuant thereto without
notice to or further consent from Guarantors.

  4. No Contest with Lender; Subordination.  So long as any
obligation hereby guaranteed remains unpaid or undischarged,
Guarantors will not, by paying any sum recoverable hereunder
(whether or not demanded by Lender) or by any means or on any
other ground, claim any set-off or counterclaim against Borrower
in respect of any liability of Guarantors to Borrower or, in
proceedings under federal bankruptcy law or insolvency
proceedings of any nature, prove in competition with Lender in
respect of any payment hereunder or be entitled to have the
benefit of any counterclaim or proof of claim or dividend or
payment by or on behalf of Borrower or the benefit of any other
security for any obligation hereby guaranteed which, now or
hereafter, Lender may hold or in which it may have any share.
Guarantors hereby expressly waive any right of contribution from
or indemnity against Borrower, whether at law or in equity,
arising from any payments made by Guarantors pursuant to the
terms of this Guaranty, and Guarantors acknowledge that
Guarantors have no right whatsoever to proceed against Borrower
for reimbursement of any such payments.  In connection with the
foregoing, Guarantors expressly waive any and all rights of
subrogation to Lender against Borrower, and Guarantors hereby
waive any rights to enforce any remedy which Lender may have
against Borrower and any rights to participate in any collateral
for Borrower's obligations under the Loan Documents.  Guarantors
hereby subordinate any and all indebtedness of Borrower now or
hereafter owed to Guarantors to all indebtedness of Borrower to
Lender, and agree with Lender that (a) Guarantors shall not
demand or accept any payment from Borrower on account of such
indebtedness, (b) Guarantors shall not claim any offset or other
reduction of Guarantors' obligations hereunder because of any
such indebtedness, and (c) Guarantors shall not take any action
to obtain any interest in any of the security described in and
encumbered by the Loan Documents because of any such
indebtedness; provided, however, that, if Lender so requests,
such indebtedness shall be collected, enforced and received by
Guarantors as trustee for Lender and be paid over to Lender on
account of the indebtedness of Borrower to Lender, but without
reducing or affecting in any manner the liability of Guarantors
under the other provisions of this Guaranty except to the extent
the principal amount of such outstanding indebtedness shall have
been reduced by such payment.

  5. Waiver of Defenses.  Guarantors hereby agree that their
obligations hereunder shall not be affected or impaired by, and
hereby waive and agree not to assert or take advantage of any
defense based on:

     (a)  any statute of limitations in any action hereunder or
for the collection of the Note or for the payment or performance
of any obligation hereby guaranteed;

     (b)  the incapacity, lack of authority, death or disability
of Borrower or any other person or entity, or the failure of
Lender to file or enforce a claim against the estate (either in
administration, bankruptcy or in any other proceeding) of
Borrower or any Guarantor or any other person or entity;

     (c)  the dissolution or termination of existence of Borrower
or any Guarantor;

     (d)  the voluntary or involuntary liquidation, sale or other
disposition of all or substantially all of the assets of
Borrower;

     (e)  the voluntary or involuntary receivership, insolvency,
bankruptcy, assignment for the benefit of creditors,
reorganization, assignment, composition, or readjustment of, or
any similar proceeding affecting, Borrower or any Guarantor, or
any of Borrower's or any Guarantor's properties or assets;

     (f)  the damage, destruction, condemnation, foreclosure or
surrender of all or any part of the Real Estate or any of the
improvements located thereon;

     (g)  the failure of Lender to give notice of the existence,
creation or incurring of any new or additional indebtedness or
obligation or of any action or nonaction on the part of any other
person whomsoever in connection with any obligation hereby
guaranteed;

     (h)  any failure or delay of Lender to commence an action
against Borrower, to assert or enforce any remedies against
Borrower under the Note or the Loan Documents, or to realize upon
any security;

     (i)  any failure of any duty on the part of Lender to
disclose to any Guarantor any facts it may now or hereafter know
regarding Borrower, the Real Estate or any of the improvements
located thereon, whether such facts materially increase the risk
to Guarantors or not;

     (j)  failure to accept or give notice of acceptance of this
Guaranty by Lender;

     (k)  failure to make or give notice of presentment and
demand for payment of any of the indebtedness or performance of
any of the obligations hereby guaranteed;

     (l)  failure to make or give protest and notice of dishonor
or of default to Guarantors or to any other party with respect to
the indebtedness or performance of obligations hereby guaranteed;

     (m)  any and all other notices whatsoever to which
Guarantors might otherwise be entitled;

     (n)  any lack of diligence by Lender in collection,
protection or realization upon any collateral securing the
payment of the indebtedness or performance of obligations hereby
guaranteed;

     (o)  the invalidity or unenforceability of the Note or any
of the Loan Documents;

     (p)  the compromise, settlement, release or termination of
any or all of the obligations of Borrower under the Note or the
Loan Documents;

     (q)  any transfer by Borrower of all or any part of the
security encumbered by the Loan Documents;

     (r)  the failure of Lender to perfect any security or to
extend or renew the perfection of any security; or

     (s)  to the fullest extent permitted by law, any other
legal, equitable or surety defenses whatsoever to which
Guarantors might otherwise be entitled, it being the intention
that the obligations of Guarantors hereunder are absolute,
unconditional and irrevocable.

  6. Guaranty of Payment and Performance and Not of
Collection.  This is a Guaranty of payment and performance and
not of collection.  The liability of Guarantors under this
Guaranty shall be primary, direct and immediate and not
conditional or contingent upon the pursuit of any remedies
against Borrower or any other person, nor against securities or
liens available to Lender, its successors, successors in title,
endorsees or assigns.  Guarantors hereby waive any right to
require that an action be brought against Borrower or any other
person or to require that resort be had to any security or to any
balance of any deposit account or credit on the books of Lender
in favor of Borrower or any other person.

  7. Rights and Remedies of Lender.  In the event of a default
under the Note or the Loan Documents, or any of them, Lender
shall have the right to enforce its rights, powers and remedies
thereunder or hereunder or under any other agreement, document or
instrument now or hereafter evidencing, securing or otherwise
relating to the indebtedness evidenced by the Note or secured by
the Loan Documents, in any order, and all rights, powers and
remedies available to Lender in such event shall be nonexclusive
and cumulative of all other rights, powers and remedies provided
thereunder or hereunder or by law or in equity.  Accordingly,
Guarantors hereby authorize and empower Lender upon the
occurrence of any event of default under the Note or the Loan
Documents, at its sole discretion, and without notice to
Guarantors, to exercise any right or remedy which Lender may
have, including, but not limited to, judicial foreclosure,
exercise of rights of power of sale, acceptance of a deed or
assignment in lieu of foreclosure, appointment of a receiver to
collect rents and profits, exercise of remedies against personal
property, or enforcement of any assignment of leases, as to any
security, whether real, personal or intangible.  At any public or
private sale of any security or collateral for any indebtedness
or any part thereof guaranteed hereby, whether by foreclosure or
otherwise, Lender may, in its discretion, purchase all or any
part of such security or collateral so sold or offered for sale
for its own account and may apply against the amount bid therefor
all or any part of the balance due it pursuant to the terms of
the Note or any other Loan Document without prejudice to Lender's
remedies hereunder against Guarantors for deficiencies.  If the
indebtedness guaranteed hereby is partially paid by reason of the
election of Lender to pursue any of the remedies available to
Lender, or if such indebtedness is otherwise partially paid, this
Guaranty shall nevertheless remain in full force and effect, and
Guarantors shall remain liable for the entire balance of the
indebtedness guaranteed hereby even though any rights which
Guarantors may have against Borrower may be destroyed or
diminished by the exercise of any such remedy.

  8. Application of Payments.  Guarantors hereby authorize
Lender, without notice to Guarantors, to apply all payments and
credits received from Borrower or from Guarantors or realized
from any security in such manner and in such priority as Lender
in its sole judgment shall see fit to the indebtedness,
obligation and undertakings which are the subject of this
Guaranty.

  9. Business Failure, Bankruptcy or Insolvency.  In the event
of the business failure of any Guarantor or if there shall be
pending any bankruptcy or insolvency case or proceeding with
respect to any Guarantor under federal bankruptcy law or any
other applicable law or in connection with the insolvency of any
Guarantor, or if a liquidator, receiver, or trustee shall have
been appointed for any Guarantor or any Guarantor's properties or
assets, Lender may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the
claims of Lender allowed in any proceedings relative to such
Guarantor, or any of such Guarantor's properties or assets, and,
irrespective of whether the indebtedness or other obligations of
Borrower guaranteed hereby shall then be due and payable, by
declaration or otherwise, Lender shall be entitled and empowered
to file and prove a claim for the whole amount of any sums or
sums owing with respect to the indebtedness or other obligations
of Borrower guaranteed hereby, and to collect and receive any
moneys or other property payable or deliverable on any such
claim.  Guarantors covenant and agree that upon the commencement
of a voluntary or involuntary bankruptcy proceeding by or against
Borrower, Guarantors shall not seek a supplemental stay or
otherwise pursuant to 11 U.S.C. Section 105 or any other provision of
the Bankruptcy Reform Act of 1978, as amended, or any other
debtor relief law (whether statutory, common law, case law, or
otherwise) of any jurisdiction whatsoever, now or hereafter in
effect, which may be or become applicable, to stay, interdict,
condition, reduce or inhibit the ability of Lender to enforce any
rights of Lender against Guarantors by virtue of this Guaranty or
otherwise.

  10.  Financial Statements and Other Information.  Guarantors
hereby represent and warrant to Lender that all financial
statements of Guarantors and their respective Subsidiaries
heretofore delivered by Guarantors to Lender are true and correct
in all material respects, have been prepared in accordance with
generally accepted accounting principles consistently applied,
and fairly present the financial condition of Guarantors and
their respective Subsidiaries as at the close of business on the
date thereof and the results of operations for the period then
ended; that no material adverse change has occurred in the
assets, liabilities, financial condition or business of
Guarantors and their respective Subsidiaries as shown or
reflected therein since the date thereof; and that Guarantors and
their respective Subsidiaries have no liabilities or known
contingent liabilities involving material amounts which are not
reflected in such financial statements or referred to in the
notes thereto other than Guarantors' obligations under this
Guaranty.  Guarantors hereby agree that until all indebtedness
guaranteed hereby has been completely repaid, all obligations and
undertakings of Borrower under, by reason of, or pursuant to the
Note and the Loan Documents have been completely performed and
Lender has no further obligation to make Loans to Borrower
pursuant to the Credit Agreement, Guarantors will deliver to
Lender:

     (a)  all financial statements, balance sheets, reports,
certifications or other financial information required to be
delivered by Guarantors to Lender pursuant to the Credit
Agreement as and when required;

     (b)  contemporaneously with the delivery of the financial
statements referred to in Section 7.4(a) of the Credit Agreement, a
statement of all contingent liabilities of Guarantors which are
not reflected in such financial statements or referred to in the
notes thereto (including, without limitation, all guarantees,
endorsements and other contingent obligations in respect of
indebtedness of others, and obligations to reimburse the issuer
in respect of any letters of credit), and a statement of
projected cash flows of Guarantors for the current fiscal year,
all in reasonable detail and certified by the principal financial
or accounting officer of Guarantors;

     (c)  promptly after they are filed with the Internal Revenue
Service, copies of all annual federal income tax returns and
amendments thereto of Guarantors;

     (d)  concurrently with the delivery of the financial
statements described in Section 7.4(b) and (c) of the Credit Agreement,
a certificate signed by the President or Chief Financial Officer
of Guarantors to the effect that, having read this Guaranty, and
that based upon an examination which they deem sufficient to
enable them to make an informed statement, there does not exist
any Default or Event of Default, or if such Default or Event of
Default has occurred, specifying the facts with respect thereto;

     (e)  promptly upon becoming aware thereof, written notice
from Guarantors of any event or condition which might have a
material adverse effect on the business, operations, assets,
condition (financial or otherwise) or prospects of Guarantors or
the ability of Guarantors to perform under this Guaranty
(including but not limited to, litigation commenced or threatened
in writing against any Guarantor, judgments rendered against any
Guarantor, liens filed against any property of a Guarantor,
defaults claimed under indebtedness for borrowed money for which
a Guarantor is primarily or secondarily liable, or bankruptcy,
insolvency or trustee or receivership proceedings commenced
against a Guarantor), such notice to specify the nature and the
period of existence of such event or condition, the anticipated
effect thereof, and what action Guarantors are taking or propose
to take with respect thereto; and

     (f)  with reasonable promptness, such other information
respecting the business, operations, assets, liabilities and
financial condition of Guarantors as Lender may from time to time
reasonably request.

Guarantors will permit any officer designated by Lender, at
Guarantors' expense, to visit and inspect any of the properties
of Guarantors and their respective Subsidiaries, to examine the
records and books of account of Guarantors (and to make copies
thereof and extracts therefrom) and to discuss the affairs,
finances and accounts of Guarantors with, and to be advised as to
the same by, its officers, all at such reasonable times and
intervals Lender may reasonably request.

  11.  Covenants of Guarantors.  Guarantors hereby covenant and
agree with Lender that until all indebtedness guaranteed hereby
has been completely repaid, all obligations and undertakings of
Borrower under, by reason of, or pursuant to the Note and the
Loan Documents have been completely performed and Lender has no
further obligation to make Loans to Borrower pursuant to the
Credit Agreement:

     (a)  Guarantors will, and will cause each of their
respective Subsidiaries to, do or cause to be done all things
necessary to preserve and keep in full force and effect its
corporate or legal existence, material rights and franchises, as
applicable, to effect and maintain its foreign qualifications,
licensing, domestication or authorization, and to comply with all
applicable laws and regulations (including, without limitation,
environmental laws);

     (b)  Guarantors will, and will cause each of their
respective Subsidiaries to, duly pay and discharge, before the
same shall become in arrears, all taxes, assessments and other
governmental charges imposed upon it and its properties, sales or
activities, or upon the income or profits therefrom, as well as
claims for labor, material, or supplies which if unpaid might
become a lien or charge on any of its property; provided that any
such tax, assessment, charge or claim need not be paid if the
validity or amount thereof shall currently be contested in good
faith by appropriate proceedings and if Guarantors or such
Subsidiary shall have set aside on its books adequate reserves
with respect thereto; and provided further that Guarantors or
such Subsidiary shall pay all such taxes, assessments, charges
and claims forthwith upon the commencement of proceedings to
foreclose any lien that may have attached as security therefor;

     (c)  Guarantors will, and will cause each of their
respective Subsidiaries to, maintain and keep the properties used
or deemed by it to be useful in its business in first-class
repair, working order and condition, and make or cause to be made
all necessary and proper repairs thereto and replacements
thereof;

     (d)  Guarantors will, and will cause each of their
respective Subsidiaries to, maintain with financially sound and
reputable insurers, insurance with respect to its properties and
business against such casualties and contingencies and in such
types and amounts as shall be in accordance with sound business
practices for companies in similar business similarly situated;

     (e)  Guarantors will keep, and will cause each of their
respective Subsidiaries to keep, complete, proper and accurate
records and books of account in which full, true and correct
entries will be made in accordance with generally accepted
accounting principles consistent with the preparation of the
financial statements heretofore delivered to Lender and will
maintain adequate accounts and reserves for all taxes (including
income taxes), all depreciation, depletion, and amortization of
its properties and the properties of its Subsidiaries, all other
contingencies, and all other proper reserves;

     (f)  Guarantors will not, and will not permit any of
Walden's Subsidiaries to, create, incur, assume, guarantee or be
or remain liable, contingently or otherwise, with respect to any
Indebtedness other than:

                     (i)     Indebtedness to Lender arising under any of the
     Note, the Loan Documents and this Guaranty;
     
                    (ii)     current liabilities of Guarantors incurred in
     the ordinary course of business but not incurred through the
     borrowing of money or the obtaining of credit except for
     credit on an open account basis customarily extended and in
     fact extended in connection with normal purchases of goods
     and services;
     
                   (iii)     Indebtedness in respect of taxes, assessments
     and governmental charges to the extent that payment therefor
     shall not at the time be required to be made in accordance
     with the provisions of subparagraph (b) of this paragraph;
     
                    (iv)     Indebtedness in respect of judgments or awards
     that have been in force for less than the applicable period
     for taking an appeal so long as execution is not levied
     thereunder or in respect of which Guarantors shall at the
     time in good faith be prosecuting an appeal or proceedings
     for review and in respect of which a stay of execution shall
     have been obtained pending such appeal or review; 
     
                     (v)     endorsements for collection, deposit or
     negotiation and warranties of products or services, in each
     case incurred in the ordinary course of business; and 
     
                    (vi)     Indebtedness permitted under Section8.1 of the
              Credit Agreement.
     
              (g)  Guarantors will not, and will not permit any of
their respective  Subsidiaries to, create or incur or suffer to
be created or incurred or to exist any Lien; provided that
Guarantors and any Subsidiary of Guarantors may create or incur
or suffer to be created or incurred or to exist:

                     (i)     liens to secure taxes, assessments and other
     governmental charges or claims for labor, material or
     supplies in respect of obligations not overdue;
     
                    (ii)     liens with respect of judgments or awards, the
     Indebtedness with respect to which is permitted by
     subparagraph (f)(iv) of this paragraph; 
     
                   (iii)     liens in favor of Lender as security for the
     Obligations; and
     
                    (iv)     liens specifically permitted pursuant to
     Section 8.2 of the Credit Agreement;
     
              (h)  Guarantors will not, and will not permit any of
their respective  Subsidiaries to, become a party to any merger,
consolidation or other business combination, or agree to effect
any asset acquisition, stock acquisition or other acquisition
without the prior written consent of the Majority Banks, which
consent shall not be unreasonably withheld, except (i) the merger
or consolidation or one or more of the Subsidiaries of a
Guarantor with and into a Guarantor, or (ii) the merger or
consolidation of two or more Subsidiaries of a Guarantor;
provided, however, that in no event shall the Borrower or any
Guarantor be merged, consolidated or combined with or into any
Guarantor or any Subsidiary thereof without the prior written
consent of the Majority Banks;

         (i)  Walden will not, and will not permit any of its
Subsidiaries to, become a party to or agree to or affect any
disposition of assets, other than Distributions to its
shareholders as permitted in the Credit Agreement; 

         (j)  Walden will not, directly or indirectly, make or
permit to be made, by voluntary or involuntary means, (i) any
sale, assignment, transfer, disposition, mortgage, pledge,
hypothecation or encumbrance of its interest in Borrower, WDN
Properties, WROP or WDN Operating, Inc., or any dilution of its
interest in Borrower, WDN Properties, WROP or WDN Operating,
Inc., or (ii) any sale, assignment, transfer, disposition,
mortgage, pledge, hypothecation or encumbrance of the interest of
Walden Operating, Inc. in WROP, or any dilution of the interest
of Walden Operating, Inc. in WROP;

         (k)  WDN Properties will not, directly or indirectly,
make or permit to be made, by voluntary or involuntary means, any
sale, assignment, transfer, disposition, mortgage, pledge,
hypothecation or encumbrance of its interest in Borrower or WROP,
or any dilution of its interest in Borrower or WROP;

         (l)  Walden shall contribute or otherwise downstream to
Borrower any cash or other assets received by Walden from third
parties (including, without limitation, the proceeds from any
Debt Offering or Equity Offering);

         (m)  Subject to the terms of the Credit Agreement,
Walden shall at all times comply with all requirements of
applicable laws and regulations necessary to maintain REIT Status
and shall operate, and shall cause its Subsidiaries to operate,
their respective businesses as described in the Prospectus and in
compliance with the terms and conditions of this Guaranty and the
other Loan Documents;

         (n)  Subject to Section 8.7 of the Credit Agreement, Walden
shall cause all of its Subsidiaries to promptly distribute to
Walden (but not less frequently than once each fiscal quarter of
Walden), whether in the form of dividends, distributions or
otherwise, all profits, proceeds or other income relating to or
arising from its Subsidiaries' use, operation, financing,
refinancing, sale or other disposition of their respective assets
and properties after (a) the payment by each Subsidiary of its
Debt Service and operating expenses for such quarter and (b) the
establishment of reasonable reserves for the payment of operating
expenses not paid on at least a quarterly basis and capital
improvements to be made to such Subsidiary's assets and
properties approved by such Subsidiary in the ordinary course of
business consistent with its past practices;

         (o)  Guarantors shall at all times comply with all
covenants and provisions of the Credit Agreement and the Loan
Documents applicable to Guarantors, including without limitation,
the provisions of Section 8.7 and Section 9.2 of the Credit Agreement
applicable to Walden; and

         (p)  Guarantors will cooperate with Lender and execute
such further instruments and documents as Lender shall reasonably
request to carry out to their satisfaction the transactions
contemplated by this Guaranty and the other Loan Documents.

    12.  Security and Rights of Set-off.  Guarantors hereby
grant to Lender, as security for the full and prompt payment and
performance of Guarantors' obligations hereunder, a continuing
lien on and security interest in any and all securities or other
property belonging to Guarantors now or hereafter held by Lender
and in any and all deposits (general or specific, time or demand,
provisional or final, regardless of currency, maturity, or the
branch of Lender where the deposits are held) now or hereafter
held by Lender and other sums credited by or due from Lender to a
Guarantor or subject to withdrawal by a Guarantor; and regardless
of the adequacy of any collateral or other means of obtaining
repayment of such obligations, during the continuance of any
Event of Default under the Note or the Loan Documents, Lender may
at any time and without notice to Guarantors set-off and apply
the whole or any portion or portions of any or all such deposits
and other sums against amounts payable under this Guaranty,
whether or not any other person or persons could also withdraw
money therefrom.  Any security now or hereafter held by or for
Guarantors and provided by Borrower, or by anyone on Borrower's
behalf, in respect of liabilities of Guarantors hereunder shall
be held in trust for Lender as security for the liabilities of
Guarantors hereunder.

    13.  Changes in Writing; No Revocation.  This Guaranty may
not be changed orally, and no obligation of Guarantors can be
released or waived by Lender except by a writing signed by a duly
authorized officer of Lender.  This Guaranty shall be irrevocable
by Guarantors until all indebtedness guaranteed hereby has been
completely repaid and all obligations and undertakings of
Borrower under, by reason of, or pursuant to the Note and the
Loan Documents have been completely performed and Borrower has no
further rights to receive Loans under the Credit Agreement.

    14.  Notices.  All notices, demands or requests provided for
or permitted to be given pursuant to this Guaranty (hereinafter
in this paragraph referred to as "Notice") must be in writing and
shall be deemed to have been properly given or served by personal
delivery or by sending same by overnight courier or by depositing
the same in the United States mail, postpaid and registered or
certified, return receipt requested, at the addresses set forth
below.  Each Notice shall be effective upon being delivered
personally or upon being sent by overnight courier or upon being
deposited in the United States Mail as aforesaid.  The time
period in which a response to any such Notice must be given or
any action taken with respect thereto, however, shall commence to
run from the date of receipt if personally delivered or sent by
overnight courier or, if so deposited in the United States Mail,
the earlier of three (3) Business Days following such deposit and
the date of receipt as disclosed on the return receipt. 
Rejection or other refusal to accept or the inability to deliver
because of changed address of which no Notice was given shall be
deemed to be receipt of the Notice sent.  By giving at least
fifteen (15) days prior Notice thereof, Guarantors or Lender
shall have the right from time to time and at any time during the
term of this Guaranty to change their respective addresses and
each shall have the right to specify as its address any other
address within the United States of America.  For the purposes of
this Guaranty:

    The address of Lender is:

         The First National Bank of Boston
         100 Federal Street
         Boston, Massachusetts 02110
         Attn:  Real Estate Division
         
    with a copy to:

         The First National Bank of Boston
         115 Perimeter Center Place, N.E.
         Suite 500
         Atlanta, Georgia 30346
         Attn:  Jeffrey L. Warwick

and a copy to each other Lender which may now or hereafter become
a party to the Credit Agreement at such address as may be
designated by such Lender.

    The address of Guarantors is:

         Walden Residential Properties, Inc.
         One Lincoln Center
         5400 LBJ Freeway
         Suite 400, LB45
         Dallas, Texas  75240
         Attn:     Mark S. Dillinger

    and to:

         Walden Residential Operating Partnership, L.P.
         One Lincoln Center
         5400 LBJ Freeway
         Suite 400, LB45
         Dallas, Texas 75240
         Attn: Mark S. Dillinger

    and to:

         WDN Properties, Inc.
         80 Business Park Drive
         Suite 309
         Armonk, New York 10504
         Attn:     President

    with a copy to:

         Robin K. Minick, Esq.
         Munsch Hardt Kopf Harr & Dinan
         1445 Ross Avenue
         4000 Fountain Place
         Dallas, Texas  75202

    15.  Governing Law.  GUARANTORS ACKNOWLEDGE AND AGREE THAT
THIS GUARANTY AND THE OBLIGATIONS OF GUARANTORS HEREUNDER SHALL
BE GOVERNED BY AND INTERPRETED AND DETERMINED IN ACCORDANCE WITH
THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS (EXCLUDING THE LAWS
APPLICABLE TO CONFLICTS OR CHOICE OF LAW).

    16.  CONSENT TO JURISDICTION; WAIVERS.  GUARANTORS HEREBY
IRREVOCABLY AND UNCONDITIONALLY (A) SUBMIT TO PERSONAL
JURISDICTION IN THE COMMONWEALTH OF MASSACHUSETTS OVER ANY SUIT,
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY,
AND (B) WAIVE ANY AND ALL PERSONAL RIGHTS UNDER THE LAWS OF ANY
STATE (I) TO THE RIGHT, IF ANY, TO TRIAL BY JURY, (II) TO OBJECT
TO JURISDICTION WITHIN THE COMMONWEALTH OF MASSACHUSETTS OR VENUE
IN ANY PARTICULAR FORUM WITHIN THE COMMONWEALTH OF MASSACHUSETTS,
AND (III) TO THE RIGHT, IF ANY, TO CLAIM OR RECOVER ANY SPECIAL,
EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER
THAN OR IN ADDITION TO ACTUAL DAMAGES.  GUARANTORS AGREE THAT, IN
ADDITION TO ANY METHODS OF SERVICE OF PROCESS PROVIDED FOR UNDER
APPLICABLE LAW, ALL SERVICE OF PROCESS IN ANY SUCH SUIT, ACTION
OR PROCEEDING MAY BE MADE BY CERTIFIED OR REGISTERED MAIL, RETURN
RECEIPT REQUESTED, DIRECTED TO GUARANTORS AT THE ADDRESS SET
FORTH IN PARAGRAPH 14 ABOVE, AND SERVICE SO MADE SHALL BE
COMPLETE FIVE (5) DAYS AFTER THE SAME SHALL BE SO MAILED. 
NOTHING CONTAINED HEREIN, HOWEVER, SHALL PREVENT LENDER FROM
BRINGING ANY SUIT, ACTION OR PROCEEDING OR EXERCISING ANY RIGHTS
AGAINST ANY SECURITY AND AGAINST GUARANTORS PERSONALLY, AND
AGAINST ANY PROPERTY OF GUARANTORS, WITHIN ANY OTHER STATE. 
INITIATING SUCH SUIT, ACTION OR PROCEEDING OR TAKING SUCH ACTION
IN ANY STATE SHALL IN NO EVENT CONSTITUTE A WAIVER OF THE
AGREEMENT CONTAINED HEREIN THAT THE LAWS OF THE COMMONWEALTH OF
MASSACHUSETTS SHALL GOVERN THE RIGHTS AND OBLIGATIONS OF
GUARANTORS AND LENDER HEREUNDER OR OF THE SUBMISSION HEREIN MADE
BY GUARANTORS TO PERSONAL JURISDICTION WITHIN THE COMMONWEALTH OF
MASSACHUSETTS.  EACH GUARANTOR HEREBY WAIVES ANY OBJECTION THAT
IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY
SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT COURT. 
GUARANTORS CERTIFY THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF
ANY LENDER HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
LENDER WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVERS AND ACKNOWLEDGE THAT LENDER HAS BEEN INDUCED TO
ENTER INTO THIS GUARANTY AND THE OTHER LOAN DOCUMENTS TO WHICH
THEY ARE PARTIES BY, AMONG OTHER THINGS, THE WAIVERS AND
CERTIFICATIONS CONTAINED IN THIS PARAGRAPH 16.  GUARANTORS
ACKNOWLEDGE THAT THEY HAVE HAD AN OPPORTUNITY TO REVIEW THIS
PARAGRAPH 16 WITH THEIR LEGAL COUNSEL AND THAT GUARANTORS AGREE
TO THE FOREGOING AS THEIR FREE, KNOWING AND VOLUNTARY ACT.   

    17.  Successors and Assigns.  The provisions of this
Guaranty shall be binding upon Guarantors and their respective
heirs, successors, successors in title, legal representatives,
and assigns, and shall inure to the benefit of Lender, its
successors, successors in title, legal representatives and
assigns.

    18.  Assignment by Lender.  This Guaranty is assignable by
Lender in whole or in part in conjunction with any assignment of
the Note or portions thereof, and any assignment hereof or any
transfer or assignment of the Note or portions thereof by Lender
shall operate to vest in any such assignee the rights and powers,
in whole or in part, as appropriate, herein conferred upon and
granted to Lender.

    19.  Severability.  If any term or provision of this
Guaranty shall be determined to be illegal or unenforceable, all
other terms and provisions hereof shall nevertheless remain
effective and shall be enforced to the fullest extent permitted
by law.

    20.  Disclosure.  Guarantors agree that in addition to
disclosures made in accordance with standard banking practices,
any Lender may disclose information obtained by such Lender
pursuant to this Guaranty to assignees or participants and
potential assignees or participants hereunder.

    21.  No Unwritten Agreements.  THIS GUARANTY REPRESENTS THE
FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED
BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.

    22.  Time of the Essence.  Time is of the essence with
respect to each and every covenant, agreement and obligation of
Guarantors under this Guaranty.

    23.  Ratification.  Guarantors do hereby restate, reaffirm
and ratify each and every warranty and representation regarding
Guarantors or their Subsidiaries set forth in the Credit
Agreement as if the same were more fully set forth herein.

    24.  Joint and Several Liability.  Each of the Guarantors
covenants and agrees that each and every covenant and obligation
of Guarantors hereunder shall be the joint and several
obligations of each of the Guarantors.

    25.  Counterparts.  This Guaranty and any amendment hereof
may be executed in several counterparts and by each party on a
separate counterpart, each of which when so executed and
delivered shall be an original, and all of which together shall
constitute one instrument.  In proving this Guaranty it shall not
be necessary to produce or account for more than one such
counterpart signed by the party against whom enforcement is
sought.

    IN WITNESS WHEREOF, Guarantors have executed this Guaranty
under seal this _____ day of December, 1996.

                             WALDEN RESIDENTIAL PROPERTIES,
                             INC.,
                             a Maryland corporation

                             By:  ______________________________
                             Title:  ___________________________

                                  [CORPORATE SEAL]


                             WALDEN RESIDENTIAL OPERATING
                             PARTNERSHIP, L.P., a Georgia
                             limited partnership, by its sole
                             general partner

                             By: Walden Operating, Inc.
                                  a Delaware corporation

                                                           

                                  By:  _________________________
                                  Title:  ______________________

                                       [CORPORATE SEAL]


                             WDN PROPERTIES, INC.,
                             a New York corporation

                             By:  ______________________________
                             Title:  ___________________________

                                  [CORPORATE SEAL]