**Exhibit 10.8**

** **

**MEZZANINE GUARANTY**

** **

This Mezzanine Guaranty (“**Guaranty**”)is entered into as of December 31, 2008, by CFP Residential, L.P., a Texaslimited partnership, Kenneth J. Valach, an individual, Bruce Hart, anindividual, and J. Ronald Terwilliger, an individual (collectively, the “**Guarantor**”) for the benefit of Behringer Harvard St. RoseREIT, LLC, a Delaware limited liability company, and/or any subsequent holderof the Note (the “**Lender**”).

 

**RECITALS**

** **

A.                                   SW 131 St. RoseMezzanine Borrower LLC, a Delaware limited liability company (the “**Borrower**”) has requested that Lender make one or more loans(structured as one loan, or as a senior loan and a junior loan, or in anothermanner agreed on by the Mezzanine Lender and the Borrower) in the aggregateamount of up to Twenty One Million Forty Three Thousand One Hundred NinetySeven and No/100 Dollars ($21,043,197) (the “**Loan**”).  The Loan will be evidenced by a SeniorMezzanine Promissory Note and a Junior Mezzanine Promissory Note from Borrowerto Lender each dated as of the date of this Guaranty (collectively, the “**Note**”).  As of thedate of this Guaranty, the Note will be secured by liens on the Land (asdefined in the Loan Agreement) created by subordinate deeds of trust, dated thesame date as the Note, for the benefit of Lender (each, a “**Deed of Trust**”), made by SW 132 St. RoseSenior Borrower LLC, a Delaware limited liability company (“**Mortgagor**”), which is a wholly owned subsidiary ofBorrower.  Each Deed of Trust is referredto herein collectively as the “**Security Instrument.**”

 

B.                                     The Loan isbeing made as more particularly described in the Senior Mezzanine LoanAgreement and Junior Mezzanine Loan Agreement, each dated as of the date ofthis Guaranty, between Borrower and Lender (collectively, the “**Loan Agreement**”). Borrower will cause Mortgagor to construct on the Land (as defined inthe Loan Agreement) the Project (as defined in the Loan Agreement).

 

C.                                     The Project isto be constructed in accordance with, and pursuant to the terms and conditionsand requirements of, the Loan Agreement and other Loan Documents.

 

D.                                    As a conditionto making the Loan to Borrower, Lender requires that the Guarantor execute thisGuaranty.  Guarantor has an economicinterest in Borrower or will otherwise obtain a material financial benefit fromthe Loan.

 

NOW, THEREFORE, in order to induce Lender to makethe Loan to Borrower, and in consideration thereof, the Guarantor herebyagrees, unconditionally and irrevocably as follows:

 

1.                                       Defined Terms. Unless otherwise expressly defined herein, capitalized terms used inthis Guaranty shall have the meaning given to such terms in the Loan Agreement.

 

2.                                       Guaranteed Obligations.

 

(a)                                  As an inducement to Lender to extend orcontinue to extend credit and other financial accommodations to Borrower,Guarantor, for value received, does hereby unconditionally and absolutelyguarantee the prompt and complete performance and 

 

-1-

----

payment of the GuaranteedObligations.  For purposes of this Guaranty,the term “**Guaranteed Obligations**” shall mean (i) the“**Completion Obligations**” (as hereinafterdefined), and (ii) the “**Bankruptcy Obligations**”(as hereinafter defined).

 

(i)                                     For purposes of this Guaranty, the term “**Completion Obligations**” shall mean that (i) Guarantorwill cause the Completion of the Project in substantial accordance with thePlans, and in accordance with the terms and conditions of the Loan Agreementand other Loan Documents, if for any reason, or under any contingency,Mortgagor shall abandon construction of the Project or shall fail to cause theCompletion of the Project within the construction time set forth in the LoanAgreement and Loan Documents, and (ii) Guarantor will pay all costoverruns for construction of the Project. In the preceding sentence, “cost overruns” means costs of constructingthe Project that, in the aggregate, exceed the amount provided in theConstruction Budget, except that the following expenses shall not be includedin calculating cost overruns: operating deficits, taxes and, solely to theextent increased by force majeure, construction interest.  “**Completion**” ofthe Project will occur upon the issuance of the final certificate of occupancy;the receipt of evidence reasonably satisfactory to Lender that no building hasbeen constructed over any easements or setback areas and no other improvementsprohibited by the terms of the easements or setbacks have been constructedwithin such easements or setbacks, as applicable; the issuance of a certificateof substantial completion from the Mortgagor’s architect; and receipt of acontractor’s release and the receipt of lien waivers or similar evidence ofpayment from the general contractor and all major subcontractors (*i.e.*, subcontractors whose contract amount exceeds $100,000)to Lender’s reasonable satisfaction; provided, however, that if Senior Lendershall deem the Project to have reached Completion, then Lender shall deem theProject to have reached Completion.

 

(ii)                                  For purposes of this Guaranty, the term “**Bankruptcy Obligations**” shall mean all principal, interestand other amounts due and owing by Borrower under the Note, the SecurityInstruments and any other Loan Documents, but only if there is a filing of avoluntary bankruptcy or insolvency proceeding of the Borrower prior toCompletion.

 

(b)                                 Without limiting the rights and remediesof Lender, if after the occurrence of an Event of Default and after Lender hasso requested, Guarantor does not promptly proceed with and diligently prosecutethe applicable Completion Obligations, then Lender may, at its option, withoutnotice to Guarantor or anyone else, cause Completion of the Project eitherbefore or after commencement of foreclosure proceedings, and either on orbefore the exercise of any other right or remedy of Lender against Borrower orGuarantor, with such changes to the Plans that Lender deems necessary oradvisable to complete the Project, and Guarantor waives any right to contestsuch necessary expenditures.  The amountof any and all expenditures made by Lender for the foregoing purposes, to theextent they exceed the unexpended portion of the Construction Budget shall bearinterest from the date made until repaid to Lender, at a rate per annum equalto the Interest Rate provided for in the Note and, together with such interest,shall be due 

 

-2-

----

and payable by Guarantorto Lender upon demand.  Lender does nothave and shall never have any obligation to cause the Completion of the Projector take such action.

 

3.                                       Survival.  Theobligations of Guarantor under this Guaranty shall survive any foreclosureproceeding, any foreclosure sale, any delivery of any deed in lieu offoreclosure, and any release of record of the Security Instruments.

 

4.                                       Guaranty of Performance and Payment. Guarantor’s performance and payment obligations under this Guarantyconstitute a guaranty of performance and payment and not merely a guaranty ofcollection.

 

5.                                       Present, Unconditional and IrrevocableGuaranty; Waivers.  The obligations of Guarantor under thisGuaranty shall be performed without demand by Lender, other than as providedherein and shall be present, unconditional, absolute and irrevocableirrespective of the genuineness, validity, regularity or enforceability of theNote, the Security Instruments, or any other Loan Document, and without regardto any other circumstance which might otherwise constitute a legal or equitabledischarge of a surety or a guarantor. This Guaranty shall be effective as a waiver of, and Guarantor expresslywaives, any and all rights to which Guarantor may otherwise have been entitledunder any suretyship laws in effect from time to time, including (withoutlimitation) any rights pursuant to Rule 31 of the Texas Rules ofCivil Procedure, Section 17.001 of the Texas Civil Practice andRemedies Code, and Chapter 34 of the Texas Business and CommerceCode.  Without limiting the generality ofthe foregoing, Guarantor hereby waives, to the fullest extent permitted by law,diligence in collecting the Guaranteed Obligations, presentment, demand forpayment, protest, all notices with respect to the Note and this Guaranty whichmay be required by statute, rule of law or otherwise to preserve Lender’srights against Guarantor under this Guaranty, including notice of acceptance,notice of any amendment of the Loan Documents, notice of the occurrence of anydefault or Event of Default, notice of intent to accelerate, notice ofacceleration, notice of dishonor, notice of foreclosure, notice of protest, andnotice of the incurring by Borrower of any obligation or indebtedness.  Guarantor also waives, to the fullest extentpermitted by law, all rights to require Lender to (a) proceed againstBorrower or any other guarantor of Borrower’s payment or performance with respectto the Guaranteed Obligations (an “**Other Guarantor**”),(b) if Borrower or any Other Guarantor is a partnership, proceed againstany general partner of Borrower or the Other Guarantor, (c) proceedagainst or exhaust any collateral held by Lender to secure the repayment of theGuaranteed Obligations, or (d) pursue any other remedy it may now orhereafter have against Borrower, or, if Borrower is a partnership, any generalpartner of Borrower.

 

6.                                       Valuation of the Property UponForeclosure.  The following shall be the basis for thedetermination of the fair market value of any property encumbered by the Deedof Trust (the “**Mortgaged Property**”) as of thedate of the foreclosure sale in proceedings governed by Sections 51.003, 51.004and 51.005 of the Texas Property Code (as amended from time to time), to theextent those provision apply: (i) the Mortgaged Property shall be valuedin an “as is” condition as of the date of the foreclosure sale, without anyassumption or expectation that the Mortgaged Property will be repaired orimproved in any manner before a resale of the Mortgaged Property afterforeclosure; (ii) the valuation shall be based upon an assumption that theforeclosure purchaser desires a resale of the Mortgaged Property for cashpromptly (but no 

 

-3-

----

later than twelve (12) months) following theforeclosure sale; (iii) all reasonable closing costs customarily borne bythe seller in commercial real estate transactions should be deducted from thegross fair market value of the Mortgaged Property, including, withoutlimitation, brokerage commissions, title insurance, a survey of the Property,tax prorations, attorneys’ fees, and marketing costs; (iv) the gross fairmarket value of the Mortgaged Property shall be further discounted to accountfor any estimated holding costs associated with maintaining the MortgagedProperty pending sale, including, without limitation, utilities expenses,property management fees, taxes and assessments (to the extent not accountedfor in (iii) above), and other maintenance, operational and ownershipexpenses; and (v) any expert opinion testimony given or considered inconnection with a determination of the fair market value of the MortgagedProperty must be given by persons having at least five (5) yearsexperience in appraising property similar to the Mortgaged Property and whohave conducted and prepared a complete written appraisal of the MortgagedProperty taking into consideration the factors set forth above.

 

7.                                       Modification of Loan Documents. At any time or from time to time and any number of times, without noticeto Guarantor and without affecting the liability of Guarantor, (a) thetime for payment of the principal of or interest on the Guaranteed Obligationsmay be extended or the Guaranteed Obligations may be renewed in whole or inpart; (b) the time for Borrower’s performance of or compliance with anycovenant or agreement contained in the Note, the Loan Agreement, the SecurityInstruments or any other Loan Document, whether presently existing orhereinafter entered into, may be extended or such performance or compliance maybe waived; (c) the Maturity Date may be accelerated as provided in theNote, the Security Instruments or any other Loan Document; (d) the Note,the Loan Agreement, the Security Instruments or any other Loan Document may bemodified or amended by Lender and Borrower in any respect, including anincrease in the principal amount; and (e) any security for the GuaranteedObligations may be modified, exchanged, surrendered or otherwise dealt with oradditional security may be pledged or mortgaged for the Guaranteed Obligations.

 

8.                                       Joint and Several Guaranty. If more than one person executes this Guaranty, the obligations of thosepersons under this Guaranty shall be joint and several.  Lender, in its discretion, may (a) bringsuit against Guarantor, or any one or more of the Persons constitutingGuarantor, and any Other Guarantor, jointly and severally, or against any oneor more of them; (b) compromise or settle with any one or more of thePersons constituting Guarantor, or any Other Guarantor, for such considerationas Lender may deem proper; (c) release one or more of the Personsconstituting Guarantor, or any Other Guarantor, from liability; and (d) otherwisedeal with Guarantor and any Other Guarantor, or any one or more of them, in anymanner, and no such action shall impair the rights of Lender to collect fromanother Guarantor any amount guaranteed by such other Guarantor under thisGuaranty.  Nothing contained in thisparagraph shall in any way affect or impair the rights or obligations ofGuarantor with respect to any Other Guarantor.

 

9.                                       Subordination. Any indebtedness of Borrower held by Guarantor now or in the future(including but not limited to (i) all debts and liabilities of Borrower toGuarantor whether the obligations of Borrower are direct, contingent, primary,secondary, joint and several or otherwise, whether the obligations areevidenced by note, contract, open account or otherwise and irrespective of thecreation of such debts or liabilities or manner acquired by Guarantor, (ii) anydividends and payments pursuant to debtor relief or insolvency proceedingsreferred to 

 

-4-

----

belowand (iii) all liens, security interests, judgment liens, charges or otherencumbrances on Borrower’s assets securing payment thereof) is and shall besubordinated to the Guaranteed Obligations, and upon the occurrence of an Eventof Default, but without reducing or affecting in any manner the liability ofGuarantor under the other provisions of this Guaranty, except to the extentthat such amounts are actually applied toward Borrower’s or Mortgagor’sobligations under the Loan Documents, Guarantor shall not receive, or collect,directly or indirectly any amount in connection with the foregoing.  If any amount is received by Guarantor onsuch indebtedness of Borrower held by Guarantor at the time an Event of Defaultexists, it shall be received by Guarantor in trust, as trustee for Lender, andGuarantor agrees to pay such amounts promptly to Lender.  In the event ofreceivership, bankruptcy, reorganization, arrangement or other debtor relief orinsolvency proceedings involving Borrower as debtor, Lender shall have theright to prove its claims in any such proceeding so as to establish its rightshereunder and shall have the right to receive directly from the receiver,trustee or other custodian (whether or not an Event of Default shall haveoccurred or be continuing under any of the Loan Documents), dividends andpayments that are payable upon any obligation of Borrower to Guarantor nowexisting or hereafter arising, and to have all benefits of any securitytherefor, until the Guaranteed Obligations have been fully and finally paid andperformed.  Guarantor hereby acknowledges and agrees that theforegoing provisions shall be operative without the necessity of execution ofany further documents.  Notwithstandingthe foregoing, upon the request of Lender, Guarantor hereby agrees to execute asubordination agreement, in form and content reasonably acceptable to Lender,evidencing the provisions of this Section 9.

 

10.                                 Waiver of Subrogation Rights. Any right or claim for subrogation or reimbursement against Borrower by reasonof any payment by Guarantor under this Guaranty, is subordinated to theGuaranteed Obligations on the terms provided in Section 9 above, whethersuch right or claim arises at law or in equity or under any contract orstatute.

 

11.                                 No Discharge of Guarantor. If any payment by Borrower is held to constitute a preference under anyapplicable bankruptcy, insolvency, or similar laws, or if for any other reasonLender is required to refund any sums to Borrower, such refund shall notconstitute a release of any liability of Guarantor under this Guaranty.

 

12.                                 Financial Statements. Guarantor agrees that, until Completion, Guarantor will provide toLender no later than December 31 of each year a Collateral Value Statementfor each of the Persons constituting Guarantor dated as of the preceding June 30,prepared using substantially the same methodology as the Collateral ValueStatements of the Guarantors dated as of June 30, 2008, with the exceptionthat the capitalization rate employed in establishing property values may bereduced to a rate not lower than 6.5%. Each such Collateral Value Statement shall be accompanied by acertificate executed by the Person to whom such Collateral Value Statementrelates certifying that, to the knowledge of such Person, the Collateral ValueStatement fairly presents the collateral value of the assets shown in suchCollateral Value Statement determined on the same basis as described in thenotes to the Collateral Value Statements, dated as of June 30, 2008,qualified as appropriate if the capitalization rate employed in establishingproperty values is reduced as contemplated above.

 

13.                                 Representation and Warranty. Guarantor represents and warrants to Lender, jointly and severally, that(i) CFP Residential, L.P., has the limited partnership power and 

 

-5-

----

authorityto enter into this Guaranty, to incur the obligations provided for herein, andto execute and deliver the same to Lender, (ii) when executed anddelivered, this Guaranty will constitute a valid and legally binding obligationof each Guarantor, enforceable against such Guarantor in accordance with itsterms (subject to bankruptcy, insolvency, reorganization and similar laws andto general principles of equity) and (iii) each Guarantor will directly orindirectly benefit from the Loan.

 

14.                                 Counterparts. This Guaranty may be executed in one or more counterparts, each of whichshall be deemed an original, and all of which, when taken together, shallconstitute one and the same instrument. The persons comprising Guarantor may execute different counterparts ofthis Guaranty.

 

15.                                 Notices.  Any notice,election, communication, request, approval or other document or demand requiredor permitted under this Guaranty shall be in writing.  Each notice, election, communication,request, approval or other document or demand shall be addressed to theintended recipient, in the case of Lender, at its address set forth in the LoanAgreement or, in the case of a Guarantor, at its address set forth on thesignature page of this Guaranty. Each notice, election, communication, request, approval or otherdocument or demand shall be deemed given on the earliest to occur of (1) thedate when the notice is received by the addressee; (2) the first BusinessDay after the notice is delivered to a recognized overnight courier service,with arrangements made for payment of charges, for next Business Day delivery;or (3) the third Business Day after the notice is deposited in the UnitedStates mail with postage prepaid, certified mail, return receiptrequested.  As used in this Section 15,the term “Business Day” means any day other than a Saturday, a Sunday or anyother legal holiday.  Any party to thisAgreement may change the address to which notices intended for it are to bedirected by means of notice given to the other party in accordance with this Section 15.

 

16.                                 Assignment by Lender. Lender may assign its rights under this Guaranty in whole or in partand, upon any such assignment, all the terms and provisions of this Guarantyshall inure to the benefit of such assignee to the extent so assigned. Theterms used to designate any of the parties herein shall be deemed to includethe estate, legal representatives, successors and assigns of such party.

 

17.                                 Entire Agreement. This Guaranty and the other Loan Documents represent the final agreementbetween the parties and may not be contradicted by evidence of prior,contemporaneous or subsequent oral agreements. There are no unwritten oralagreements between the parties.  Allprior or contemporaneous agreements, understandings, representations, andstatements, oral or written, are merged into this Guaranty and the other LoanDocuments.  Guarantor acknowledges thatit has received a copy of the Note and all other Loan Documents.  Neither this Guaranty nor any of itsprovisions may be waived, modified, amended, discharged, or terminated exceptby an agreement in writing signed by the party against which the enforcement ofthe waiver, modification, amendment, discharge, or termination is sought, andthen only to the extent set forth in that agreement.

 

18.                                 Governing Law. This Guaranty shall be governed by, and construed in accordance with,the substantive law of the State of Texas without regard to the application ofchoice of law principles.

 

-6-

----

19.                                 **SUBMISSION TOJURISDICTION/SERVICE OF PROCESS****.  GUARANTOR HEREBY IRREVOCABLYSUBMITS TO THE PERSONAL JURISDICTION OF THE STATE COURTS OF THE STATE OF TEXASLOCATED IN DALLAS COUNTY, TEXAS FOR THE PURPOSES OF ANY SUIT, ACTION OR OTHERPROCEEDING ARISING OUT OF OR BASED UPON THIS GUARANTY, THE SUBJECT MATTERHEREOF, OR THE LOAN. GUARANTOR TO THE EXTENT PERMITTED BY APPLICABLE LAW (A) HEREBYWAIVES, AND AGREES NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE, OR OTHERWISE,IN ANY SUCH SUIT, ACTION OR OTHER PROCEEDING BROUGHT IN THE ABOVE-NAMED COURTSANY CLAIM THAT IT IS NOT SUBJECT PERSONALLY TO THE JURISDICTION OF SUCH COURTS,THAT THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THATTHE VENUE OF THE SUIT, ACTION OR PROCEEDING IS IMPROPER OR THAT THIS GUARANTY,THE SUBJECT MATTER HEREOF, OR THE LOAN (AS APPLICABLE) MAY NOT BE ENFORCEDIN OR BY SUCH COURT AND (B) HEREBY WAIVES THE RIGHT TO REMOVE ANY SUCHACTION, SUIT OR PROCEEDING INSTITUTED BY LENDER IN STATE COURT TO FEDERALCOURT, OR TO REMAND AN ACTION INSTITUTED IN FEDERAL COURT TO STATE COURT(UNLESS THE FEDERAL COURT HAS NO SUBJECT MATTER JURISDICTION).  EACH GUARANTOR HEREBY CONSENTS TO SERVICE OFPROCESS BY MAIL AT THE ADDRESS TO WHICH NOTICES ARE TO BE GIVEN TO IT PURSUANTHERETO, BUT SERVICE WILL BE EFFECTIVE ONLY UPON DELIVERY.  GUARANTOR AGREES THAT ITS SUBMISSION TOJURISDICTION AND CONSENT TO SERVICE OF PROCESS BY MAIL IS MADE FOR THE EXPRESSBENEFIT OF LENDER AND ITS ASSIGNS.  FINALJUDGMENT AGAINST GUARANTOR IN ANY SUCH ACTION, SUIT OR PROCEEDING SHALL BECONCLUSIVE, AND MAY BE ENFORCED IN ANY OTHER JURISDICTION (X) BYSUIT, ACTION OR PROCEEDING ON THE JUDGMENT, A CERTIFIED OR TRUE COPY OF WHICHSHALL BE CONCLUSIVE EVIDENCE OF THE FACT AND OF THE AMOUNT OF INDEBTEDNESS ORLIABILITY OF GUARANTOR THEREIN DESCRIBED, OR (Y) IN ANY OTHER MANNERPROVIDED BY OR PURSUANT TO THE LAWS OF SUCH OTHER JURISDICTION.  LENDER MAY AT ITS OPTION BRING SUIT, ORINSTITUTE OTHER JUDICIAL PROCEEDINGS, AGAINST GUARANTOR OR ANY OF ITS ASSETS INANY STATE OR FEDERAL COURT OF THE UNITED STATES OR OF ANY COUNTRY OR PLACEWHERE THE SUBMITTING PARTY OR SUCH ASSETS MAY BE FOUND.**

 

20.                                 WAIVER WITH RESPECT TO DAMAGES.  GUARANTORACKNOWLEDGES THAT LENDER DOES NOT HAVE ANY FIDUCIARY RELATIONSHIP WITH, ORFIDUCIARY DUTY TO, GUARANTOR ARISING OUT OF OR IN CONNECTION WITH THIS GUARANTYOR ANY OTHER LOAN DOCUMENT, AND THE RELATIONSHIP BETWEEN LENDER AND GUARANTOR,IN CONNECTION HEREWITH AND THEREWITH IS SOLELY THAT OF GUARANTOR OF A DEBTORAND CREDITOR.  TO THE EXTENT PERMITTED BYAPPLICABLE LAW, GUARANTOR AND LENDER EACH SHALL NOT ASSERT, AND GUARANTOR ANDLENDER EACH HEREBY WAIVES, ANY CLAIMS AGAINST THE OTHER, ON ANY THEORY OFLIABILITY, FOR SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES 

 

-7-

----

(ASOPPOSED TO DIRECT OR ACTUAL DAMAGES) ARISING OUT OF, IN CONNECTION WITH, OR ASA RESULT OF, THIS GUARANTY, ANY OTHER LOAN DOCUMENT, ANY AGREEMENT ORINSTRUMENT CONTEMPLATED HEREBY OR THEREBY, OR THE TRANSACTIONS CONTEMPLATEDHEREBY OR THEREBY.

 

21.                                 Liability.

 

(a)                                  Notwithstanding anything in this Guarantyto the contrary, Lender shall look for satisfaction of the obligations of a Guarantorunder this Guaranty only to the following real and personal property of suchGuarantor (the “**Available Assets**”):

 

(1)                                                                                  the legal and beneficial interests ofsuch Guarantor in any entity that is, at the time of enforcement of thisGuaranty, (i) engaged in the business of holding, constructing, developingor providing property management or overhead services for real estate designedfor residential use in the United States and (ii) affiliated in any waywith Trammell Crow Residential Company, or any subsidiary thereof or anysuccessor or assign of all or substantially all of the assets thereof; and

 

(2)                                                                                  any receivables due the Guarantors fromany entity described in the foregoing item (1).

 

Exceptfor the Available Assets, Lender shall not look to a Guarantor’s tangible orintangible real and personal property (including cash, cash equivalents,securities, partnership interests, receivable or similar intangible personalproperty) for satisfaction of any Guarantor’s obligations under thisGuaranty.  Subject to Section 21(b),Lender may not look to the tangible or intangible proceeds of any assets of aGuarantor, including proceeds of the Available Assets, except as specificallyprovided in paragraph (2) above.

 

(b)                                 Notwithstanding the limitations in Section 21(a),Lender may look to proceeds of Available Assets realized by a Guarantor (i) afterthe Aggregate Collateral Value, as reported in the annual Collateral ValueStatements prepared for the Guarantors, is less than $80,000,000 or (ii) asa result of a transaction that causes the Aggregate Collateral Value to be lessthan $80,000,000.  As used in thisparagraph, the term “Aggregate Collateral Value” means the aggregate value ofthe Available Assets as calculated on the basis provided in the notes to theCollateral Value Statements of the Guarantors dated as of June 30, 2008,with the exception that the capitalization rate employed in establishingproperty values may be reduced to a rate not lower than 6.5% at the option ofGuarantor.  However, notwithstanding thisSection 21(b), in no event will Lender be entitled to satisfy anyobligation of a Guarantor from any of the following assets (collectively, “ExcludedAssets”): (i) the personal residences of the Guarantor, (ii) theGuarantor’s nonbusiness real estate, including rural, vacation and resortproperty, up to $1,000,000 in value, (iii) the Guarantor’s personalautomobiles and other tangible personal property, including household goods,clothing, silverware, gems, jewelry and works of art, not to exceed $1,500,000in values, (iv) the interests listed in Section 21(c) and (v) proceedsof Excluded Assets.

 

-8-

----

(c)                                  In no case may Lender look to any of thefollowing owned by a Guarantor (even if it otherwise would be available underthe terms of this Section 21) or any proceeds thereof: stock in AvalonBayCommunities, Inc., units in Avalon DownREIT V, L.P., stock in GablesResidential Trust, units in Gables Realty Limited Partnership, units in EquityResidential Properties Trust, units in ERP Operating Limited Partnership, stockin BRE Properties, Inc, units in BRE Property Investors, LLC, units in AMLIResidential Property Trust, units in AMLI Residential Properties, L.P., unitsin Merry Land DownREIT I, L.P., ownership in J. Ronald Terwilliger GrantorTrust, stock in JRT Holdings, Inc., ownership in Terwilliger Partners,LLLP and interests in TCR Affordable Housing Limited Partnership.

 

(d)                                 The term “residential” as used in this Section 21means single family and multi family dwellings, residential land/lotdevelopments, and senior living communities.

 

(e)                                  If the collective aggregate value of theAvailable Assets of the Guarantor, as reported in the Collateral ValueStatement delivered under Section 12 (prepared using substantially thesame methodology as the Collateral Value Statements of the Guarantors dated asof June 30, 2008, with the exception that the capitalization rate employedin establishing property values may be reduced to a rate not lower than 6.5%)falls to less than $80,000,000 and if the Guarantor, Mortgagor and/or Borrowerfail to correct such deficiency within 30 days following delivery of adeficiency notice from Lender, then such failure shall, at the option ofLender, constitute an Event of Default on the part of Borrower under the LoanDocuments.  Guarantor, Mortgagor and/orthe Borrower shall have the right to correct any deficiency in Available Assetsby (i) obtaining and delivering to Lender one or more new guaranties, eachof which shall be in the form and content substantially the same as thisGuaranty from one or more persons whose Available Assets  are sufficient to correct the deficiency, (ii) deliveringto Lender and thereafter maintaining in full force and effect (for so long asthe deficiency exists) an unconditional and irrevocable letter of credit, in aface amount sufficient to correct the deficiency, naming Lender as beneficiary,and otherwise in form and content and issued by an institution acceptable toLender in the exercise of good faith business judgment, or (iii) theamendment of this Guaranty (in form and substance acceptable to Lender in theexercise of its good faith business judgment) in such a manner such that thedefinition of Available Assets is expanded to include  additional assets that are not then includedin the definition of Available Assets, sufficient to correct the deficiency andotherwise acceptable to Lender in its good faith business judgment.

 

22.                                 Change of Address. Guarantor (or each Guarantor, if more than one) agrees to notify Lender(in the manner for giving notices provided in Section 15 above) ofany change in Guarantor’s address within a reasonable time after such change ofaddress occurs.

 

23.                                 Successors and Assigns. This Guaranty shall be binding upon Guarantor and Guarantor’s executors,personal representatives, successors and assigns and shall inure to the benefitof Lender and its successors and assigns.

 

-9-

----

24.                                 Attorney’s Fees. If it becomes necessary for Lender to employ counsel to enforce theobligations of Guarantor hereunder, Guarantor agrees to pay the reasonableattorneys’ fees and expenses incurred by Lender in connection therewith.

 

25.                                 **WAIVER OF JURY TRIAL****. GUARANTOR AND LENDER EACH (A) AGREES NOT TO ELECT A TRIAL BY JURYWITH RESPECT TO ANY ISSUE ARISING OUT OF THIS GUARANTY OR THE RELATIONSHIPBETWEEN THE PARTIES AS GUARANTOR AND LENDER THAT IS TRIABLE OF RIGHT BY A JURYAND (B) WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO SUCH ISSUE TOTHE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN THE FUTURE.  THIS WAIVER OF RIGHT TO TRIAL BY JURY ISSEPARATELY GIVEN BY EACH PARTY, KNOWINGLY AND VOLUNTARILY WITH THE BENEFIT OFCOMPETENT LEGAL COUNSEL.**

 

*[Signature Pages Follow]*

 

-10-

----

**IN WITNESS WHEREOF**, Guarantor has signed anddelivered this Guaranty or has caused this Guaranty to be signed and deliveredby its duly authorized representative.

 
| ** ** | **GUARANTOR:**                                      |
|------------|-----------------------------------------------------|
|       |                                                |
|       | CFP Residential, L.P., a  Texas limited partnership |
|       |                                                |   |
|       | By:                                                 | Crow Family, Inc., a  Texas corporation, its general partner |
|       |                                                |   |
|       |                                                |   |
|       |                                                | By: | /s/ Harlan R. Crow |
|       |                                                |   | Harlan R. Crow, Chief  Executive Officer |
|            |                                                     |  |  |  |

 

----

 
|   | Kenneth Valach, an  individual |   |
|--------|--------------------------------|--------|
|   |                           |   |
|   |                           |   |
|   | /s/ Kenneth Valach             |

 

----

 
|   | J. Ronald Terwilliger, an  individual |   |
|--------|---------------------------------------|--------|
|   |                                  |   |
|   |                                  |   |
|   | /s/ J. Ronald Terwilliger             |

 

----

 
|   | Bruce Hart, an individual |   |
|--------|---------------------------|--------|
|   |                      |   |
|   |                      |   |
|   | /s/ Bruce Hart            |

 

----