Exhibit 10.7

                               GUARANTY OF PAYMENT


         This  GUARANTY OF PAYMENT  (this  "Guaranty of  Payment"),  dated as of
March  8,  2000,  made  by  The  Travelers   Insurance  Company,  a  Connecticut
corporation  ("TIC") in favor of Capital  Trust,  Inc.,  a Maryland  corporation
("CT"),  and 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,  CT-F2-LP and CTIMCO,  the "CT
Parties").  Terms not otherwise  defined herein shall have the meanings assigned
to such terms in the Venture Agreement, as defined below.


                             PRELIMINARY STATEMENTS

         WHEREAS,  Travelers Limited Real Estate Mezzanine Investments I, LLC, a
Delaware limited liability  company  ("Limited REMI I"),  Travelers General Real
Estate  Mezzanine  Investments  II, LLC, a Delaware  limited  liability  company
("General REMI II"), 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"),  CT and the CT
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, TIC has agreed to execute and deliver this Guaranty of Payment.

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

         SECTION 1.  Unconditional Guarantee; Enforcement.

                  (a) TIC hereby  unconditionally and irrevocably guarantees for
         the benefit of CT and the CT Parties the full and prompt  payment  when
         and  as   due  of  the   CIG   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 CIG Parties,  that the CIG
         Parties  may  have or  assert,  which  defense,  right  of  set-off  or
         counterclaim  shall be  available  to TIC  hereunder to the same extent
         that it would be available  to the  applicable  CIG Party  ("Guaranteed
         Obligations").

                  (b)  It  shall  not  be a  condition  to  the  obligation  of
          TIC hereunder  to  guarantee  and ensure the  performance, observance
          or payment of any of the Guaranteed Obligations

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         that CT and the CT Parties  shall  have  first  made any  request of or
         demand upon or given any notice to the CIG Parties,  or have instituted
         any action or proceeding against the CIG Parties in respect thereof. CT
         and the CT Parties may proceed to enforce the Guaranteed Obligations of
         TIC hereunder  without first pursuing or exhausting any right or remedy
         that they may have against the CIG Parties.

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

                  (a)      any Bankruptcy of any CIG 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 CIG Parties or any of
         their subsidiaries; or

               (e) any change,  restructuring  or  termination  of the corporate
          structure   or   existence   of  the  CIG  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 CT and the CT  Parties  upon the
insolvency, bankruptcy or reorganization of the CIG Parties or otherwise, all as
though such payment had not been made.

         SECTION 3. Waiver. TIC 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 CT and the CT
Parties protect, secure, perfect or insure any security

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interest or lien or any collateral  subject thereto or exhaust any right or take
any action against the CIG Parties or any other Person or any collateral.

         SECTION 4. Subrogation.  TIC hereby  irrevocably  confirms that it will
subordinate  to the claims  and  rights of CT and the CT  Parties  any claims or
other  rights it may have  against  the CIG  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 CT and the CT  Parties  against  the CIG
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 CIG 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  TIC may have  now or in the  future  against  the CIG
Parties. TIC 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, TIC 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. TIC 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.  TIC represents and
warrants as follows:

               (a)  Organization  and Good  Standing.  It is a corporation  duly
          organized,  validly existing and in good standing under the applicable
          laws of its jurisdiction of incorporation;  has all requisite power to
          own,  lease and operate its assets,  properties  and  business  and to
          carry on its  business as now  conducted;  and is in good  standing in
          every jurisdiction in which the nature of its business or the location
          of  its  properties  requires  such  qualification,  except  for  such
          jurisdictions  where  the  failure  to so  qualify  would  not  have a
          material  adverse  effect  upon  its  ability  to  perform  fully  its
          obligations under this Guaranty of Payment.


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               (b)  Authority  to Execute  and  Perform  Agreements.  It has all
          requisite  corporate  power and  authority to enter into,  execute and
          deliver this Guaranty of Payment and to perform fully its  obligations
          hereunder.

               (c) Due Authorization; Enforceability. It has taken all corporate
          actions  necessary to authorize it to enter into and perform fully its
          obligations  under this  Guaranty  of Payment  and to  consummate  the
          transactions  contemplated  herein.  This Guaranty of Payment has been
          duly and validly  executed by it and constitutes the legal,  valid and
          binding  obligation of it,  enforceable in accordance  with its terms,
          except  as  the  same  may  be  limited  by   applicable   bankruptcy,
          insolvency,  reorganization,  moratorium  or similar  applicable  laws
          affecting   creditors'   rights  generally  or  by  general  equitable
          principles affecting the enforcement of contracts.

               (d) No  Violation.  Neither  its  execution  or  delivery of this
          Guaranty  of  Payment  nor  the   consummation  of  the   transactions
          contemplated herein will: (a) violate any provision of its certificate
          of  incorporation  or by-laws;  or (b) violate in any material respect
          any applicable law or order.

               (e)  Regulatory  and  Other  Approvals.  No  consent,   approval,
          authorization,  notice, filing, exemption or other requirement must be
          obtained  by it from any  authority  or  Person or must  otherwise  be
          satisfied  by it in order that the  consummation  of the  transactions
          contemplated  in this  Guaranty  of  Payment  will not  violate in any
          material respect any applicable law or order or any material  contract
          to which it is a party.

               (f)  Litigation.  It  is  not  (i)  subject  to  any  outstanding
          injunction, judgment, order, decree, ruling, or charge, and (ii) there
          is no material claim, action,  proceeding or investigation pending or,
          to its  knowledge,  threatened  against or  relating  to it before any
          court or  quasi-judicial  or  administrative  agency  of any  federal,
          state,  local or foreign  jurisdiction or before any arbitrator  which
          challenges the ability or legality of such party' s entering into this
          Guaranty of Payment.

         SECTION 8. Amendments,  Etc. No amendment or waiver of any provision of
this Guaranty of Payment, and no consent to any departure by TIC herefrom, shall
be  effective  unless the same  shall be in writing  and signed by CT and the CT
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  and,  in the case of TIC,  shall be  addressed  to the mailing
address as shown on the signature  page hereto,  with copies as indicated  below
its address, or at such other address designated by TIC to CT and the CT Parties
in writing.


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         SECTION 10. No Waiver;  Remedies.  No failure on the part of CT and the
CT Parties to exercise,  and no delay in exercising,  any right  hereunder shall
operate as a waiver  thereof;  nor 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 TIC hereunder shall
(a)  remain  in full  force and  effect  until  the  performance  in full of the
Guaranteed Obligations, (b) be binding upon TIC, its successors and assigns, and
(c) inure to the  benefit of, and be  enforceable  by, CT and the CT 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 CT and the CT 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.  TIC 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 TIC 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.

                                             TRAVELERS INSURANCE COMPANY


                                             By:   /s/  Michael Watson
                                                -------------------------------
                                                Michael Watson
                                                Vice President




                                             With copies to:

                                             Loeb & Loeb LLP
                                             1000 Wilshire Boulevard, Suite 1900
                                             Los Angeles, California 90017
                                             Attn: Andrew S. Clare, Esq.

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