EMPLOYMENT AGREEMENT


     THIS EMPLOYMENT AGREEMENT (the "Agreement"), dated as of
October 1, 1997, by and between Walden Residential Properties,
Inc., a Maryland corporation (the "Company"), and Michael E.
Masterson (the "Executive").

                       W I T N E S S E T H:

     WHEREAS, Executive has served as the President of Drever
Partners, Inc. ("Drever") since 1992 and, through such service, has
acquired special and unique knowledge, ability and expertise and is
expected to make major contributions to the short- and long-term
profitability, growth and financial strength of the Company
following the consummation of the Contribution (as hereinafter
defined);

     WHEREAS, pursuant to that certain Contribution Agreement dated
as of May 21, 1997 (the "Contribution Agreement"), a subsidiary of
the Company will acquire all of the outstanding shares of capital
stock of Drever (the "Contribution");

     WHEREAS, the Company desires (a) to assure itself of both
present and future continuity of management, (b) to provide certain
minimum termination benefits for Executive, and (c) to provide
additional inducements for Executive to continue to remain in the
employ of the Company following the date hereof; and

     WHEREAS, Executive is willing to render services to the
Company on the terms and subject to the conditions set forth in
this Agreement.

     NOW, THEREFORE, in consideration of the foregoing premises and
the agreements set forth herein, the Company and Executive agree as
follows:

     1.   Employment.  Subject to the provisions of Section 3(c)
hereof, the Company agrees to and does hereby employ Executive to
perform the duties of Vice Chairman of the Company, and Executive
accepts such employment, upon the terms and conditions set forth
herein.

     2.   Term.  The term of this Agreement shall be the period
commencing as of the date set forth above and continuing thereafter
for a period of five years (as extended as hereinafter provided,
the "Term"); provided, however, that at the end of such five year
period and each anniversary date thereafter, the Term will
automatically be extended for an additional year unless, not later
than 60 days prior to the end of such five year period or any such
anniversary date, as the case may be, the Company or Executive
shall have given notice that the Company or Executive, as the case
may be, does not wish to have the Term extended.

     3.   Duties and Services.

          (a)  Subject to the provisions of Section 3(c) hereof,
     Executive agrees to serve the Company as the Vice Chairman and
     to devote his full time, attention and energies to the
     business of the Company and will not, without the prior
     written consent of the Board of Directors of the Company (the
     "Board"), be engaged (whether or not during normal business
     hours) in any other business or professional activity, whether
     or not such activities are pursued for gain, profit or other
     pecuniary advantage.  Notwithstanding the foregoing, Executive
     will not be prevented from (i) engaging in any civic or
     charitable activity for which Executive receives no
     compensation or other pecuniary advantage; (ii) investing his
     personal assets in businesses which do not compete with the
     Company provided that such investment will not require any
     services on the part of Executive in the operation of the
     affairs of the businesses in which investments are made and
     provided further that Executive's participation in such
     businesses is solely that of an investor; (iii) purchasing
     securities in any corporation whose securities are publicly
     traded, provided that such purchases will not result in
     Executive owning beneficially at any time five percent (5%) or
     more of the equity securities of any corporation engaged in a
     business competitive with that of the Company; or (iv)
     participating in any other activity approved in advance in
     writing by the Board.  Executive also agrees to perform from
     time to time such other executive services as the Company
     shall reasonably request, provided that such services shall be
     consistent with his position and status as Vice Chairman.  In
     attending to the business and affairs of the Company,
     Executive agrees to serve the Company faithfully, diligently
     and to the best of his ability.

          (b)  The duties and responsibilities of Executive shall
     be commensurate with those of the vice chairman of any large,
     publicly-held corporation similar to the Company.

          (c)  Notwithstanding anything in this Agreement to the
     contrary, for a sixty (60) day period, commencing on the
     second anniversary of the date hereof, Executive shall have
     the right to resign his position as Vice Chairman and elect
     (the "Consultant Election") to be employed as a consultant to
     the Company for the remainder of the Term by delivering
     written notice of such election to the Company prior to the
     expiration of such 60-day period.  If Executive exercises the
     Consultant Election, then for the remainder of the Term
     Executive will hold himself ready to render to the Company and
     its subsidiaries and affiliates such advisory and consulting
     services as may be requested by the Company's Chief Executive
     Officer, President or other authorized officer.  In furnishing
     any such consulting services, Executive will act as an
     independent contractor and not as an employee of the Company.
     As a consultant, Executive shall have no authority to act for
     or bind the Company.  The Company shall not exercise any
     control over the execution of the services or manner of
     performance of the consulting services provided by Executive
     following the exercise of the Consultant Election, and
     Executive, as a consultant, shall be responsible to the
     Company only for the ultimate results required by the Company.
     Subject to the provisions of Section 17 hereof, it is
     understood that, following the exercise of the Consultant
     Election, Executive will or may have other occupations or
     employments during the Term, and in using the services of
     Consultant hereunder, the Company will exercise due regard for
     other commitments of Executive.

          (d)  As of the date hereof, the Board shall elect
     Executive to serve as a director of the Company until the
     Company's 1998 annual meeting of stockholders.  The Company
     agrees to use its best efforts to nominate Executive and cause
     him to be elected by the stockholders of the Company at the
     Company's 1998 annual meeting for a period commencing on the
     date of such meeting and continuing until the annual meeting
     of stockholders of the Company to be determined by the Board's
     Nominating and Corporate Governance Committee prior to such
     1998 annual meeting, with any subsequent re-election being
     subject to the procedures for election of directors set forth
     in the Company's Articles of Incorporation and Bylaws and the
     Maryland General Corporation Law.

     4.   Compensation.

          (a)  (i) As consideration for the services to be rendered
          hereunder by Executive as Vice Chairman, the Company
          agrees to pay Executive, and Executive agrees to accept,
          payable in accordance with the Company's standard payroll
          practices for executives, but payable in not less than
          bi-weekly installments, compensation of Two Hundred Fifty
          Thousand Dollars ($250,000.00) per annum or such greater
          amount as may be determined from time to time by the
          Board pursuant to performance reviews to be conducted on
          an annual basis or such shorter time period as the Board
          shall deem appropriate.

               (ii) From and after the date Executive exercises the
          Consultant Election, as consideration for the services to
          be rendered hereunder by Executive as a consultant, the
          Company agrees to pay Executive, and Executive agrees to
          accept, payable in accordance with the Company's standard
          payroll practices, but payable in not less than bi-weekly
          installments, compensation of One Hundred Thousand
          Dollars ($100,000.00) per annum.  The amounts payable to
          Executive pursuant to this Section 4(a) is referred to
          together herein as the "Salary."

          (b)  At all times during the Term prior to the exercise
     of the Consultant Election, Executive shall be eligible to
     receive an annual incentive bonus as provided for in any
     incentive plan of the Company, based on the level of
     accomplishment of specific performance targets established by
     the Board or any committee thereof, or such other bonus plans
     as may be adopted by the Board from time to time in the
     future.  In addition, Executive shall participate in any
     Company perquisite and supplemental benefit programs
     established for the benefit of senior executives of the
     Company.

          (c)  Executive shall not receive any additional
     compensation for his services as a member of the Board.

     5.   Restricted Stock; Options.

          (a)  Subject to approval of certain amendments to the
     Company's Amended and Restated 1994 Stock Option Plan (the
     "Plan") by the stockholders of the Company, the Company will
     issue to Executive 10 year stock options (the "Options"),
     covering an aggregate of 225,000 shares of common stock, par
     value $.01 per share, of the Company (the "Common Stock"),
     issued under the Plan pursuant to an option agreement to be
     dated as of the date hereof between the Company and Executive,
     the form of which is attached hereto as Exhibit A (the "Option
     Agreement).  The exercise price for the Options will be equal
     to the closing price per share of Common Stock as reported on
     the New York Stock Exchange (the "NYSE") on the NYSE trading
     day immediately preceding the date hereof.  The exercise price
     shall be payable, and the options shall vest, pursuant to the
     terms of the Option Agreement.

          (b)  The Company will issue to Executive shares of
     restricted stock pursuant to the Company's Long-Term Incentive
     Plan with an aggregate market value of $500,000 (the number of
     whole shares to be issued will be determined by dividing
     $500,000 by the closing price per share of Common Stock as
     reported on the NYSE on the NYSE trading day immediately
     preceding the date of issue) on each of (i) January 1, 1999 if
     this Agreement is still in effect on such date and the closing
     price per share of Common Stock as reported on the NYSE for
     the NYSE trading day immediately preceding January 1, 1999 is
     at least $30.00 and (ii) January 1, 2000 if this Agreement is
     still in effect and the closing price per share of Common
     Stock reported on the NYSE for the NYSE trading day
     immediately preceding January 1, 2000 is at least $35.00.  The
     restrictions on transfer of the shares of restricted stock
     issued pursuant to this Section 5(b) will lapse as to
     one-third of such shares on the business day immediately
     preceding the first, second and third anniversaries of the
     date such shares are issued.

     6.   Termination for Cause.

          (a)  In the event that Executive shall be discharged for
     "Cause" as provided in Section 6(b) hereof, all compensation
     payable to Executive pursuant to Section 4 in respect of
     periods after such discharge shall terminate immediately upon
     such discharge, and the Company shall have no obligations with
     respect thereto, nor shall the Company be obligated to pay
     Executive severance compensation under Section 8 hereof.

          (b)  For the purposes of this Agreement, "Cause" shall
     mean that, prior to any termination pursuant to Section 6(a)
     hereof, Executive shall have committed:

                       (i)    an intentional act or acts of fraud,
          embezzlement or theft constituting a felony and resulting
          or intended to result directly or indirectly in gain or
          personal enrichment for Executive at the expense of the
          Company; or

                      (ii)    the continued, repeated, intentional and
          willful refusal to perform the duties associated with
          Executive's position with the Company, which is not cured
          within 15 days following written notice to Executive.

For purposes of this Agreement, no act or failure to act on the
part of Executive shall be deemed "intentional" if it was due
primarily to an error in judgment or negligence, but shall be
deemed "intentional" only if done or omitted to be done by
Executive not in good faith and without reasonable belief that his
action or omission was in the best interest of the Company.

     Executive shall not be deemed to have been terminated for
"Cause" hereunder unless and until there shall have been delivered
to Executive a copy of a resolution duly adopted by the affirmative
vote of not less than a majority of the Board then in office at a
meeting of the Board called and held for such purpose, after
reasonable notice to Executive and an opportunity for Executive,
together with his counsel (if Executive chooses to have counsel
present at such meeting), to be heard before the Board, finding
that, in the good faith opinion of the Board, Executive had
committed an act constituting "Cause" as herein defined and
specifying the particulars thereof in detail.  Nothing herein will
limit the right of Executive or his beneficiaries to contest the
validity or propriety of any such determination.

     7.   Termination Without Cause.  Either the Company or
Executive may terminate this Agreement without Cause, but only upon
delivery to the other party of a written notice of termination
specifying a termination date at least 30 days, but not more than
60 days, after the date of delivery of such notice.  Executive may
elect to terminate this Agreement under this Section 7 at any time
prior to receiving the Board resolution described in Section 6(b)
hereof notwithstanding that the Company claims a right to terminate
Executive under Section 6(a) hereof and such election by Executive
shall be binding on both parties.

     8.   Termination Compensation.

          (a)  If, during the Term, this Agreement is terminated
     (i) for any reason other than (A) pursuant to Section 6(a)
     hereof, (B) by reason of death, (C) by reason of "Disability,"
     or (D) by notice by Executive pursuant to Section 7 hereof or
     (ii) by Executive due to "Constructive Discharge," then
     Executive shall receive termination pay in an amount equal to
     the highest annualized rate of Executive's Salary prior to the
     date of termination (x) under Section 4(a)(i) hereof if
     Executive is Vice Chairman on the date of termination or (y)
     under Section 4(a)(ii) hereof if Executive has exercised the
     Consultant Election prior to the date of termination, payable
     in cash within five business days of the date of termination.

          (b)  For the purposes of this Agreement, "Constructive
     Discharge" shall mean:

                       (i)    any reduction in Salary;

                      (ii)    a material reduction in Executive's job
          function, authority, duties or responsibilities, or a
          similar change in Executive's reporting relationships;

                     (iii)    a required relocation of Executive of more than
          35 miles from Executive's current job location;

                      (iv)    any breach of any of the terms of this
          Agreement by the Company which is not cured within 15
          days following written notice thereof by Executive to the
          Company; or

                       (v)    in the event of a "Change in Control" (as
          hereinafter defined) Executive has reasonably determined
          that, as a result of a change in circumstances following
          the Change in Control of the Company that significantly
          affect his relationship with the Company, he is unable to
          exercise the authority, duties and responsibilities
          contemplated by Section 3 hereof;

provided, however, that the term "Constructive Discharge" shall not
include a specific event described in the preceding clause (i),
(ii), (iii), (iv) or (v) unless Executive actually terminates his
employment with the Company within 60 days after the occurrence of
such event.

          (c)  The amount of compensation payable pursuant to this
     Section 8 is not subject to any deduction (except for
     withholding taxes), reduction, offset or counterclaim, and the
     Company may not give advance notice of termination in lieu of
     the payment provided for in this Section 8.

     9.   Termination in the Event of Death.  This Agreement shall
terminate automatically upon the death of Executive.  In such
event, the Company shall pay to Executive's legal representative
only the base salary due to Executive up to the date of termination
as well as incentive bonuses, which have accrued through the date
of termination, and benefits payable pursuant to this Agreement.

     10.  Termination in the Event of Disability.  If during the
Term, Executive becomes physically or mentally disabled so as to
become unable, for a period of more than six (6) consecutive
months, to perform his duties hereunder on substantially a full
time basis ("Disability"), the Company may at its option terminate
this Agreement upon not less than thirty (30) days' written notice.
In the event of such termination, Executive shall be entitled to
continue to receive his base salary and benefits, excluding any
incentive bonuses, for a period equal to the lesser of (a)
twenty-four (24) months from the date of termination and (b) the
remainder of the Term, and then shall receive such benefits as are
available to senior executives of the Company under any applicable
disability plan.

     11.  Change in Control of the Company.

          (a)  If a Change in Control (as hereinafter defined) of
     the Company occurs prior to the scheduled expiration of the
     Term and within three years after the Change in Control of the
     Company (i) Executive is terminated by the Company for reasons
     other than (A) death, (B) Disability, or (C) Cause or (ii)
     Executive terminates his employment as a result of
     Construction Discharge, the Company or any successor thereto,
     within 30 days of Executive's termination of employment, will
     pay to Executive, in lieu of any severance obligation under
     Section 8 hereof, an amount equal to 2.99 times Executive's
     compensation, which, for purposes of this Section 11, shall
     mean an amount equal to the highest annualized rate of
     Executive's Salary prior to the date of termination (x) under
     Section 4(a)(i) hereof if Executive is Vice Chairman at the
     time of the Change in Control or (y) under Section 4(a)(ii)
     hereof if Executive shall have exercised the Consultant
     Election prior to the Change in Control, plus Executive's cash
     bonus for the year immediately prior to such termination.

          (b)  For purposes of this Agreement, a "Change in
     Control" shall have occurred if at any time during the Term
     any of the following events occurs:

               (i)  The Company is merged, consolidated or
          reorganized into or with another corporation or
          other legal person and as a result of such merger,
          consolidation or reorganization less than a
          majority of the combined voting power of the
          then-outstanding securities of such corporation or
          person immediately after such transaction are held
          in the aggregate by the holders of Voting Stock (as
          hereinafter defined) of the Company immediately
          prior to such transaction;

               (ii) The Company sells all or
          substantially all of its assets to any other
          corporation or other legal person, less than a
          majority of the combined voting power of the
          then-outstanding voting securities of which
          are held in the aggregate by the holders of
          Voting Stock of the Company immediately prior
          to such sale;

               (iii)     There is a report filed on
          Schedule 13D or Schedule 14D-1 (or any
          successor schedule, form or report), each as
          promulgated pursuant to the Securities
          Exchange Act of 1934, as amended (the
          "Exchange Act"), disclosing that any person
          (as the term "person" is used in
          Section 13(d)(3) or Section 14(d)(2) of the
          Exchange Act) has become the beneficial owner
          (as the term "beneficial owner" is defined
          under Rule 13d-3 or any successor rule or
          regulation promulgated under the Exchange Act)
          of securities representing 25% or more of the
          combined voting power of the then-outstanding
          securities of the Company entitled to vote
          generally in the election of directors of the
          Company ("Voting Stock"), other than as a
          result of the transactions contemplated by the
          Contribution Agreement and the Exchange
          Agreement, dated as of May 21, 1997 by and
          among the Company, Drever and the other
          parties named therein;

               (iv) The Company files a report or proxy
          statement with the Securities and Exchange
          Commission pursuant to the Exchange Act
          disclosing in response to Form 8-K or
          Schedule 14A (or any successor schedule, form
          or report or item therein) that a change in
          control of the Company has or may have
          occurred or will or may occur in the future
          pursuant to any then-existing contract or
          transaction; or

               (v)  If during any period of two
          consecutive years, individuals who at the
          beginning of any such period constitute the
          directors of the Company cease for any reason
          to constitute at least a majority thereof
          unless the election, or the nomination for
          election by the Company's stockholders, of
          each director of the Company first elected
          during such period was approved by a vote of
          at least two-thirds of the directors of the
          Company then still in office who were
          directors of the Company at the beginning of
          any such period.

Notwithstanding the foregoing provisions of Section 11(b)(iii) or
11(b)(iv) hereof, a "Change in Control" shall not be deemed to have
occurred for purposes of this Agreement solely because the Company,
an entity in which the Company directly or indirectly beneficially
owns 50% or more of the voting securities of such entity, any
Company-sponsored employee stock ownership plan or any other
employee benefit plan of the Company either files or becomes
obligated to file a report or a proxy statement under or in
response to Schedule 13D, Schedule 14D-1, Form 8-K or Schedule 14A
(or any successor schedule, form or report or item therein) under
the Exchange Act, disclosing beneficial ownership by it of shares
of voting securities of the Company, whether in excess of 25% or
otherwise, or because the Company, reports that a change in control
of the Company has or may have occurred or will or may occur in the
future by reason of such beneficial ownership.

     12.  Certain Additional Payments by the Company.

          (a)  Anything in this Agreement to the contrary
     notwithstanding, in the event that it shall be determined (as
     hereafter provided) that any payment or distribution by the
     Company to or for the benefit of Executive, whether paid or
     payable or distributed or distributable pursuant to the terms
     of this Agreement or otherwise pursuant to or by reason of any
     other agreement, policy, plan, program or arrangement (a
     "Payment"), would be subject to the excise tax imposed by
     Section 4999 (or any successor provision thereto) of the
     Internal Revenue Code of 1986, as amended (the "Code"), or any
     interest or penalties with respect to such excise tax (such
     excise tax, together with any such interest and penalties, are
     hereafter collectively referred to as the "Excise Tax"), then
     Executive shall be entitled to receive an additional payment
     or payments (a "Gross-Up Payment") in an amount such that,
     after payment by Executive of all taxes (including any
     interest or penalties imposed with respect to such taxes),
     including any Excise Tax imposed upon the Gross-Up Payment,
     Executive retains an amount of the Gross-Up Payment equal to
     the Excise Tax imposed upon the Payments.

          (b)  All determinations required to be made under this
     Section 12, including whether an Excise Tax is payable by
     Executive and the amount of such Excise Tax and whether a
     Gross-Up Payment is required and the amount of such Gross-Up
     Payment, shall be made by a nationally recognized firm of
     certified public accountants (the "Accounting Firm") selected
     by Executive in his sole discretion.  Executive shall direct
     the Accounting Firm to submit its determination and detailed
     supporting calculations to both the Company and Executive
     within 15 calendar days after the termination date, if
     applicable, or such earlier time or times as may be requested
     by the Company or Executive.  If the Accounting Firm
     determines that any Excise Tax is payable by Executive, the
     Company shall pay the required Gross-Up Payment to Executive
     within five business days after receipt of such determination
     and calculations.  If the Accounting Firm determines that no
     Excise Tax is payable by Executive, it shall, at the same time
     as it makes such determination, furnish Executive with an
     opinion that he has substantial authority not to report any
     Excise Tax on his federal income tax return.  Any
     determination by the Accounting Firm as to the amount of the
     Gross-Up Payment shall be binding upon the Company and
     Executive.  As a result of the uncertainty in the application
     of Section 4999 of the Code (or any successor provision
     thereto) at the time of the initial determination by the
     Accounting Firm hereunder, it is possible that Gross-Up
     Payments which will not have been made by the Company should
     have been made (an "Underpayment"), consistent with the
     calculations required to be made hereunder.  In the event that
     Executive is required to make a payment of any Excise Tax,
     Executive shall direct the Accounting Firm to determine the
     amount of the Underpayment that has occurred and to submit its
     determination and detailed supporting calculations to both the
     Company and Executive as promptly as possible.  Any such
     Underpayment shall be promptly paid by the Company to, or for
     the benefit of, Executive within five business days after
     receipt of such determination and calculations.

          (c)  The Company and Executive shall each provide the
     Accounting Firm access to and copies of any books, records and
     documents in the possession of the Company or Executive, as
     the case may be, reasonably requested by the Accounting Firm,
     and otherwise cooperate with the Accounting Firm in connection
     with the preparation and issuance of the determination
     contemplated by Section 12(b) hereof.

          (d)  The fees and expenses of the Accounting Firm for its
     services in connection with the determinations and
     calculations contemplated by Section 12(b) hereof shall be
     borne by the Company.  If such fees and expenses are initially
     paid by Executive, the Company shall reimburse Executive the
     full amount of such fees and expenses within five business
     days after receipt from Executive of a statement therefor and
     reasonable evidence of his payment thereof.

     13.  Life Insurance.  At all times during the Term prior to
the exercise of the Consultant Election, the Company shall, at its
sole expense, obtain and maintain in full force and effect life
insurance on Executive's life in an amount equal to twice
Executive's Salary, payable to a beneficiary of Executive's choice.

     14.  Other Benefits.

          (a)  Except as expressly provided herein, this Agreement
     shall not:

                       (i)    be deemed to limit or affect the right of
          Executive to receive other forms of additional
          compensation or to participate in any insurance,
          retirement, disability, profit-sharing, stock purchase,
          stock option, stock appreciation rights, cash or stock
          bonus or other plan or arrangement or in any other
          benefits now or hereafter provided by the Company or any
          of the Company's affiliated companies for its employees;
          or

                      (ii)    be deemed to be a waiver by Executive of any
          vested rights which Executive may have or may hereafter
          acquire under any employee benefit plan or arrangement of
          the Company or any of the Company's affiliated companies.

          (b)  It is contemplated that, in connection with his
     services hereunder, Executive may be required to incur
     reasonable business, entertainment, telephone and travel
     expenses.  The Company agrees to reimburse Executive in full
     for all reasonable and necessary business, entertainment,
     telephone and other related expenses, including travel
     expenses, incurred or expended by him incident to the
     performance of his duties hereunder, upon submission by
     Executive to the Company of such vouchers or expense
     statements satisfactorily evidencing such expenses as may be
     reasonably requested by the Company.

          (c)  It is understood and agreed by the Company that
     during the term of Executive's employment hereunder as Vice
     Chairman, he shall be entitled to annual paid vacations (taken
     consecutively or in segments), the length of which shall be
     consistent with the effective discharge of Executive's duties
     and the general customs and practices of the Company
     applicable to its executive officers.

     15.  No Mitigation Obligation.  The Company hereby
acknowledges that it will be difficult and may be impossible
(a) for Executive to find reasonably comparable employment
following the date of termination, and (b) to measure the amount of
damages which Executive may suffer as a result of termination of
employment hereunder.  Accordingly, the payment of the termination
compensation by the Company to Executive in accordance with the
terms of this Agreement is hereby acknowledged by the Company to be
reasonable and will be liquidated damages, and Executive will not
be required to mitigate the amount of any payment provided for in
this Agreement by seeking other employment or otherwise, nor will
any profits, income, earnings or other benefits from any source
whatsoever create any mitigation, offset, reduction or any other
obligation on the part of Executive hereunder or otherwise.

     16.  Confidentiality.

          (a)  Recognizing that the knowledge and information about
     the business methods, systems, plans and policies of the
     Company and of its affiliated companies which Executive has
     heretofore and shall hereafter receive, obtain or establish as
     an employee of the Company or its affiliated companies are
     valuable and unique assets of the Company and its affiliated
     companies, Executive agrees that he shall not (otherwise than
     pursuant to his duties hereunder) disclose, without the
     written consent of the Company, any confidential knowledge or
     information pertaining to the Company or its affiliated
     companies, or their business, personnel or plans, to any
     person, firm, corporation or other entity, which would result
     in any material harm or damage to the Company, its business or
     prospects, for any reason or purpose whatsoever, unless
     required by law or legal process.  In the event Executive is
     required by law or legal process to provide documents or
     disclose information, he shall take all reasonable steps to
     maintain confidentiality of documents and information,
     including notifying the Company and giving it an opportunity
     to seek a protective order, at its sole cost and expense.

          (b)  The provisions of this Section 16 shall survive the
     expiration or termination of this Agreement, without regard to
     the reason therefor, for a period of two years from the
     earlier of (i) expiration of the Term or (ii) the date of
     termination.

     17.  Non-Competition.

          (a)  Except as otherwise provided in Section 3(a) hereof,
     during the Term and any period during which Executive receives
     any severance payments hereunder (the "Noncompetition
     Period"), Executive shall not, directly or indirectly, either
     for himself or any other person, own, manage, control,
     participate in, invest in, permit his name to be used by, act
     as consultant or advisor to, render services for (alone or in
     association with any individual, entity or other business
     organization) or otherwise assist in any manner any individual
     or entity that engages in or owns, invests in, manages or
     controls any venture or enterprise engaged in (each, a
     "Competitive Activity") the ownership, management, acquisition
     or development of multifamily residential properties.

          Executive will not in any manner induce, attempt to
     induce or assist others to induce or attempt to induce any
     investor, client or tenant of the Company to terminate its,
     his or her association with the Company or do anything to
     interfere with the relationship between the Company and any of
     its customers, clients, tenants or persons or concerns dealing
     with the Company during the Noncompetition Period.  Executive
     shall not, without the prior consent of a majority of the
     Company's independent directors, solicit, hire away or employ
     any person who is an employee of the Company during the
     Noncompetition Period.

          (b)  In the event that any restriction contained in this
     Section 17 shall be held too broad to allow enforcement of
     such restriction to its full extent, then such restriction
     shall be enforced to the maximum extent permitted by law, and
     Executive hereby consents and agrees that such scope may be
     judicially modified accordingly in any proceeding brought to
     enforce such restrictions.

          (c)  Executive acknowledges and agrees that the Company's
     remedy at law for any breach of his obligations under this
     Section 17 may be inadequate, and agrees and consents that
     temporary and/or permanent injunctive relief may be entered
     enjoining him from breaching this Agreement and further agrees
     that any proceeding which may be brought to enforce any
     provision of this Section 17 without being requested to prove
     actual damages as a result of the premature breach of this
     Agreement.

     18.  Legal Fees and Expenses.  It is the intent of the Company
that Executive not be required to incur legal fees and the related
expenses associated with the interpretation, enforcement or defense
of Executive's rights under this Agreement by litigation or
otherwise because the cost and expense thereof would substantially
detract from the benefits intended to be extended to Executive
hereunder.  Accordingly, if it should appear to Executive that the
Company has failed to comply with any of its obligations under this
Agreement or in the event that the Company or any other person
takes or threatens to take any action to declare this Agreement
void or unenforceable or in any way reduce the possibility of
collecting the amounts due hereunder, or institutes any litigation
or other action or proceeding designed to deny, or to recover from,
Executive any payments or benefits provided hereunder, the Company
irrevocably authorizes Executive from time to time to retain
counsel of Executive's choice, at the expense of the Company as
hereafter provided, to advise and represent Executive in connection
with any such interpretation, enforcement or defense, including,
without limitation, the initiation or defense of any litigation or
other legal action, whether by or against the Company or any
director, officer, stockholder or other person affiliated with the
Company, in any jurisdiction.  The Company will pay and be solely
financially responsible for any and all attorneys' and related fees
and expenses incurred by Executive in connection with any of the
foregoing, except only in the event of litigation where the Company
fully and finally prevails on all causes of action.

     19.  Withholding of Taxes.  The Company may withhold from any
amounts payable under this Agreement all federal, state, city or
other taxes as the Company is required to withhold pursuant to any
law or government regulation or ruling.

     20.  Successors and Binding Agreement.

          (a)  The Company will require any successor (whether
     direct or indirect, by purchase, merger, consolidation,
     reorganization or otherwise) to all or substantially all of
     the business or assets of the Company, by agreement in form
     and substance satisfactory to Executive, expressly to assume
     and agree to perform this Agreement in the same manner and to
     the same extent the Company would be required to perform if no
     such succession had taken place.  This Agreement will be
     binding upon and inure to the benefit of the Company and any
     successor to the Company, including, without limitation, any
     persons acquiring directly or indirectly all or substantially
     all of the business or assets of the Company whether by
     purchase, merger, consolidation, reorganization or otherwise
     (and such successor shall thereafter be deemed the "Company"
     for the purposes of this Agreement), but will not otherwise be
     assignable, transferable or delegable by the Company.

          (b)  This Agreement will inure to the benefit of and be
     enforceable by Executive's personal or legal representatives,
     executors, administrators, successors, heirs, distributees and
     legatees.

          (c)  This Agreement is personal in nature and neither of
     the parties hereto shall, without the consent of the other,
     assign, transfer or delegate this Agreement or any rights or
     obligations hereunder except as expressly provided in
     Sections 20(a) and 20(b) hereof and with respect to the
     Company's obligation to pay legal fees and expenses under
     Section 18 hereof.  Without limiting the generality or effect
     of the foregoing, Executive's right to receive payments
     hereunder will not be assignable, transferable or delegable,
     whether by pledge, creation of a security interest or
     otherwise, other than by a transfer by Executive's will or by
     the laws of descent and distribution and, in the event of any
     attempted assignment or transfer contrary to this
     Section 20(c), the Company shall have no liability to pay any
     amount so attempted to be assigned, transferred or delegated,
     except with respect to legal fees and expenses, as and to the
     extent provided in Section 18 hereof.

     21.  Notices.  For all purposes of this Agreement, all
communications, including, without limitation, notices, consents,
requests or approvals, required or permitted to be given hereunder
will be in writing and will be deemed to have been duly given when
hand delivered or dispatched by electronic facsimile transmission
(with receipt thereof orally confirmed), or five business days
after having been mailed by United States registered or certified
mail, return receipt requested, postage prepaid, or three business
days after having been sent by a nationally recognized overnight
courier service such as Federal Express, UPS or Purolator,
addressed to the Company (to the attention of the Secretary of the
Company) at the address set forth on the signature pages of this
Agreement and to Executive at the address set forth on the
signature pages of this Agreement, or to such other address as
either party may have furnished to the other in writing and in
accordance herewith, except that notices of changes of address
shall be effective only upon receipt.

     22.  Governing Law.  The validity, interpretation,
construction and performance of this Agreement will be governed by
and construed in accordance with the substantive laws of the State
of Texas, without giving effect to the principles of conflict of
laws of such State.

     23.  Validity.  If any provision of this Agreement or the
application of any provision hereof to any person or circumstances
is held invalid, unenforceable or otherwise illegal, the remainder
of this Agreement and the application of such provision to any
other person or circumstances will not be affected, and the
provision so held to be invalid, unenforceable or otherwise illegal
will be reformed to the extent (and only to the extent) necessary
to make it enforceable, valid or legal.

     24.  Miscellaneous.  No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing signed by Executive and the
Company.  No waiver by either party hereto at any time of any
breach by the other party hereto or compliance with any condition
or provision of this Agreement to be performed by such other party
will be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time.  No
agreements or representations, oral or otherwise, expressed or
implied with respect to the subject matter hereof have been made by
either party which are not set forth expressly in this Agreement.
Except as otherwise identified, references to Sections are
references to Sections of this Agreement.

     25.  Survival of Certain Provisions.  Notwithstanding anything
herein to the contrary, the obligations of the Company under
Sections 8, 10, 11, 12, 14 and 18 hereof, to the extent applicable,
shall remain operative and in full force and effect regardless of
the expiration, for any reason, of the Term.

     26.  Counterparts.  This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original
but all of which together will constitute one and the same
agreement.

     27.  Warranty.  Executive warrants and represents that he is
not a party to any agreement, contract or understanding, whether of
employment or otherwise, which would in any way restrict or
prohibit him from undertaking or performing employment in
accordance with the terms and conditions of this Agreement.

     28.  Board Approval.  By executing this Agreement, the Company
acknowledges that this Agreement has been reviewed and approved by
the Compensation Committee of the Board.

<PAGE>
     IN WITNESS WHEREOF, the parties hereto have executed this
Agreement.

                              WALDEN RESIDENTIAL PROPERTIES, INC.


                              By:    /s/ Don R. Daseke
                                   Don R. Daseke
                                   Chairman of the Board
                                   and Chief Executive Officer


                              Address:
                              One Lincoln Centre
                              5400 LBJ Freeway, Suite 400
                              Dallas, Texas  75240



                                   /s/ Michael E. Masterson
                              Michael E. Masterson, Individually

                              Address:
                              P. O. Box 241
                              Tiburon, California  94920



DA971760019
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