Exhibit 10.6

                               GUARANTY OF PAYMENT


         This  GUARANTY OF PAYMENT  (this  "Guaranty of  Payment"),  dated as of
March 8, 2000, made by Capital Trust,  Inc. ("CT") in favor of Travelers Limited
Real Estate Mezzanine  Investments I, LLC, a Delaware limited  liability company
("Limited REMI I"), Travelers General Real Estate Mezzanine  Investments II, LLC
("General REMI II"), a Delaware limited liability company, and Travelers Limited
Real Estate Mezzanine  Investments II, LLC, a Delaware limited liability company
("Limited REMI II" and collectively with Limited REMI I and General REMI II, the
"CIG  Parties").  Terms not  otherwise  defined  herein  shall have the meanings
assigned to such terms in the Venture Agreement, as defined below.


                             PRELIMINARY STATEMENTS

         WHEREAS,  CT, its wholly  owned  subsidiaries,  CT-F1,  LLC, a Delaware
limited liability company ("CT-F1"), CT-F2-GP, LLC, a Delaware limited liability
company  ("CT-F2-GP"),  CT-F2-LP,  LLC, a  Delaware  limited  liability  company
("CT-F2-LP"),  and  CT  Investment  Management  Co.,  LLC,  a  Delaware  limited
liability company ("CTIMCO" and collectively with CT-F1,  CT-F2-GP and CT-F2-LP,
the "CT Parties"), and the CIG Parties intend to enter into that certain venture
agreement,  dated as of the date hereof,  pursuant to which, among other things,
the parties thereto will co-sponsor, commit to invest capital in and manage real
estate mezzanine opportunity funds (the "Venture Agreement").

         WHEREAS,  as a  condition  to the  Parties  entering  into the  Venture
Agreement, CT has agreed to execute and deliver this Guaranty of Payment.

         NOW, THEREFORE, in consideration of the promises and in order to induce
CIG Parties to enter into the Venture Agreement, CT hereby agrees as follows:

         SECTION 1.  Unconditional Guarantee; Enforcement.

                  (a) CT hereby  unconditionally and irrevocably  guarantees for
         the benefit of the CIG Parties the full and prompt  payment when and as
         due  of the  CT  Parties'  funding,  contribution  and  indemnification
         obligations under the Venture  Agreement subject to any defense,  right
         of set-off or counterclaim,  other than on account of or resulting from
         the  Bankruptcy of any of the CT Parties,  that the CT Parties may have
         or assert,  which defense,  right of set-off or  counterclaim  shall be
         available to CT hereunder to the same extent that it would be available
         to the applicable CT Party ("Guaranteed Obligations.")

                  (b) It  shall  not be a  condition  to  the  obligation  of CT
         hereunder  to  guarantee  and ensure  the  performance,  observance  or
         payment of any of the Guaranteed Obligations that the CIG Parties shall
         have  first made any  request of or demand  upon or given any notice to
         the CT Parties, or have instituted any action or proceeding against the
         CT Parties in

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         respect thereof. The CIG Parties may proceed to enforce the Guaranteed
         Obligations of CT hereunder without first pursuing or exhausting any
         right or remedy that it may have against the CT Parties.

         SECTION 2. Obligations Absolute.  CT guarantees,  undertakes and agrees
with and for the benefit of the CIG Parties to ensure the performance of all the
Guaranteed  Obligations  strictly  in  accordance  with the terms of the Venture
Agreement.  The obligations of CT under this Guaranty of Payment are independent
of the Guaranteed  Obligations,  and a separate action or actions may be brought
and prosecuted  against CT to enforce this Guaranty of Payment,  irrespective of
whether  any action is brought  against the CT Parties or whether the CT Parties
are joined in any such  action(s).  The obligations of CT under this Guaranty of
Payment shall be absolute and unconditional irrespective of:

                  (a) any Bankruptcy of any CT Parties;

                  (b) any change in the time,  manner or place of payment of, or
         in any other term of, all or any of the Guaranteed Obligations,  or any
         other  amendment  or waiver of or any  consent  to  departure  from the
         Venture  Agreement or any other  agreement  entered into in  connection
         therewith or as contemplated thereby;

                  (c) any taking,  exchange,  release or  non-perfection  of any
         collateral, or any taking, release or amendment or waiver of or consent
         to departure from any other guaranty,  for all or any of the Guaranteed
         Obligations;

                  (d) any  manner of  application  of  collateral,  or  proceeds
         thereof, to all or any of the Guaranteed Obligations,  or any manner of
         sale  or  other  disposition  of any  collateral  for all or any of the
         Guaranteed  Obligations or any other assets of the CT Parties or any of
         their subsidiaries; or

                  (e) any change,  restructuring or termination of the corporate
         structure or existence of the CT Parties or any of their subsidiaries.

This Guaranty of Payment shall continue to be effective or be reinstated, as the
case may be, if at any time any payment of any of the Guaranteed Obligations is
rescinded or must otherwise be returned by the CIG Parties upon the insolvency,
bankruptcy or reorganization of the CT Parties or otherwise, all as though such
payment had not been made.

         SECTION 3. Waiver. CT hereby waives  promptness,  diligence,  notice of
acceptance  and  any  other  notice  with  respect  to  any  of  the  Guaranteed
Obligations  and this  Guaranty  of  Payment  and any  requirement  that the CIG
Parties protect,  secure, perfect or insure any security interest or lien or any
collateral  subject  thereto or exhaust any right or take any action against the
CT Parties or any other Person or any collateral.


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         SECTION 4.  Subrogation.  CT hereby  irrevocably  confirms that it will
subordinate  to the  claims and  rights of the CIG  Parties  any claims or other
rights it may have against the CT Parties or any of their respective  properties
that arise solely from the existence, payment, performance or enforcement of any
obligation  under  this  Guaranty  of  Payment  or the  Guaranteed  Obligations,
including  (without  limitation):  (a) any right of subrogation,  reimbursement,
exoneration,  contribution or indemnification or (b) any right to participate in
any claim or remedy of the CIG Parties  against  the CT Parties,  whether or not
such  claim,  remedy or right  arises in equity or under  contract,  statute  or
common law, including (without limitation) the right to take or receive from the
CT Parties,  directly or indirectly,  in cash or other property or by set-off or
in any other  manner,  payment or security  on account of such claim,  remedy or
right.  The provisions of this paragraph shall apply solely to claims made under
the Guaranty of Payment and shall not apply to any other rights or claims CT may
have now or in the future against the CT Parties.  CT acknowledges  that it will
receive  direct and indirect  benefits  from the Venture  Agreement and that the
confirmation  set forth in this paragraph is knowingly made in  contemplation of
such benefits.

         SECTION  5.  Consent to  Jurisdiction.  Subject to Section 6, CT hereby
irrevocably  submits  to the  non-exclusive  jurisdiction  of the  courts of the
County of New York,  State of New York and of any Federal  court  located in the
County of New York, State of New York (and any appellate court from any thereof)
in any action or  proceeding  arising  out of or  relating  to this  Guaranty of
Payment or the transactions  contemplated  hereby. CT hereby  irrevocably waives
any objection that it may have to the laying of venue of any such proceeding and
any claim that any such proceeding has been brought in an inconvenient forum.

         SECTION 6. Dispute Resolution.  Any dispute arising under this Guaranty
of Payment shall be subject to and settled pursuant to the procedures in Section
4.2 of the Venture Agreement.

         SECTION  7.  Representations  and  Warranties.   CT  hereby  makes  the
representations and warranties set forth in Section 3.1 of the Venture Agreement
and all references  therein to the Transaction  Documents and CT shall be deemed
to be  references  to this  Guaranty  of Payment  and CT,  respectively,  hereby
incorporated herein by reference.

         SECTION 8. Amendments,  Etc. No amendment or waiver of any provision of
this Guaranty of Payment, and no consent to any departure by CT herefrom,  shall
be effective  unless the same shall be in writing and signed by the CIG Parties,
and then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given.

         SECTION 9. Addresses for Notices.  All notices and other communications
provided for  hereunder  shall (a) be in writing,  (b) be delivered  pursuant to
Section 8.2 of the Venture  Agreement and (c) be effective as and when described
in such section.

         SECTION  10. No  Waiver;  Remedies.  No  failure on the part of the CIG
Parties to  exercise,  and no delay in  exercising,  any right  hereunder  shall
operate as a waiver thereof; nor

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shall any single or partial  exercise of any right hereunder  preclude any other
or further  exercise  thereof or the exercise of any other  right.  The remedies
herein  provided are  cumulative  and not exclusive of any remedies  provided by
law.

         SECTION 11. Binding  Agreement.  The  obligations of CT hereunder shall
(a)  remain  in full  force and  effect  until  the  performance  in full of the
Guaranteed Obligations,  (b) be binding upon CT, its successors and assigns, and
(c) inure to the  benefit of, and be  enforceable  by, the CIG Parties and their
successors, transferees and assigns.

         SECTION 12. No Third Party  Beneficiaries.  This Guaranty of Payment is
not  intended to confer upon any person other than the CIG Parties any rights or
remedies hereunder.

         SECTION 13.  Governing  Law. This Guaranty of Payment shall be governed
by, and construed in accordance with, the internal laws of the State of New York
(including Section 5- 1401 of the New York General Obligations Law).

         SECTION 14.  Waiver of Jury  Trial.  CT hereby  irrevocably  waives all
right to trial by jury in any action,  proceeding or counterclaim (whether based
on contract,  tort or otherwise)  arising out of or relating to this Guaranty of
Payment or the  actions of CT in the  negotiation,  performance  or  enforcement
thereof.

         SECTION  15.  Execution  in  Counterparts.   Delivery  of  an  executed
counterpart of a signature page to this Guaranty of Payment by telecopier  shall
be effective as delivery of a manually executed  counterpart of this Guaranty of
Payment.



                            [Signature Page Follows]




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         IN WITNESS WHEREOF, the undersigned has caused this Guaranty of Payment
to be duly executed and delivered by its officer thereunto duly authorized as of
the date first above written.

                            CAPITAL TRUST, INC.



                            By:      /s/  John R. Klopp
                                     -----------------------------------------
                                     John R. Klopp
                                     Vice Chairman and Chief Executive Officer


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