SENIOR MEZZANINE COMPLETION GUARANTY

Exhibit 10.7

SENIOR MEZZANINE COMPLETION GUARANTY

This Senior Mezzanine Completion Guaranty (“Guaranty”) is entered into as of September 29, 2006, jointly and severally by CFP Residential L.P., a Texas limited partnership, Kenneth Valach, an individual, J. Ronald Terwilliger, an individual and Bruce Hart, an individual (collectively, the “Guarantor”) for the benefit of Behringer Harvard Alexan Nevada, LLC, a Delaware limited liability company, and/or any subsequent holder of the Note (the “Lender”).

RECITALS

A.                                   SW 109 Wagon Wheel SM LLC, a Delaware limited liability company (the “Borrower”) has requested that Lender make a loan to Borrower in the amount of Six Million Nine Hundred Thousand Dollars ($6,900,000) (the “Loan”). The Loan will be evidenced by a Promissory Note from Borrower to Lender dated as of the date of this Guaranty (the “Note”). The Note will be secured by a Pledge and Security Agreement dated the same date as the Note made by Borrower in favor of Lender (the “Security Instrument”).

B.                                     The Loan is being made to finance the purchase by SW 106 Wagon Wheel Holdings LLC, a Delaware limited liability company (“Property Owner”), which is a wholly-owned subsidiary of Borrower, of certain real property (the “Property”), as more particularly described in the Loan Agreement dated as of the date of this Guaranty between Borrower and Lender (the “Loan Agreement”) and to facilitate the construction of a 213 unit apartment project on the Property to be known as the Alexan at Nevada State Drive (the “Project).

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

D.                                    As a condition to making the Loan to Borrower, Lender requires that the Guarantor execute this Guaranty. Guarantor has an economic interest in Borrower or will otherwise obtain a material financial benefit from the Loan.

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

1.                                       Defined Terms. “Indebtedness” and other capitalized terms used but not defined in this Guaranty shall have the meanings assigned to them in the Loan Agreement.

2.                                       Guaranty.

a)                                      Guarantor hereby guarantees to Lender, upon written demand by Lender, at Lender’s option and in its sole discretion, that Guarantor will (i) complete the Project substantially in accordance with the plans and specifications for the Project, as modified from time to time as allowed by the Loan Agreement (the “Plans and Specifications”) and in accordance with the terms and conditions of the Loan Agreement and other Loan Documents if, for any reason, or under any contingency, Property Owner shall abandon construction of the Project or shall fail to complete the Project within the construction time set forth in the Loan Agreement and Loan

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Documents and (ii) pay all cost overruns for construction of the Project to the extent Borrower or Property Owner fails to do so; provided that Lender shall reimburse Guarantor for all costs incurred by Guarantor in completing the Project (provided that such completion costs are included in the Project Budget (as defined below) to the extent such costs do not constitute cost overruns. In the preceding sentence, “cost overruns” means costs of constructing the Project that, in the aggregate, exceed the amount provided in the budget attached hereto as Exhibit “A” (the “Project Budget”). All amounts reimbursed to Guarantor by Lender in accordance with this Section 2(a) shall correspondingly increase the amount of Loan to Borrower and shall be payable by Borrower to Lender in accordance with the terms of the Loan Agreement. The Project will be deemed substantially completed in accordance with the Plans and Specifications upon the issuance of the final certificate of occupancy, the issuance of a certificate of substantial completion from the Property Owner’s architect, receipt of a contractor’s release and the receipt of lien waivers or similar evidence of payment 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 Lender shall deem the Project substantially complete then Lender shall deem the Project substantially complete (“Completion”).

b)                                     Without limiting the rights and remedies of Lender, if after the occurrence of an Event of Default and after Lender has so requested, Guarantor does not proceed with and diligently prosecute Completion of the Project in accordance with the Loan Agreement, then Lender may, at its option, without notice to Guarantor or anyone else, complete the Project either before or after commencement of foreclosure proceedings, and either on or before the exercise of any other right or remedy of Lender against Borrower or Guarantor, with such changes to the Plans and Specifications that Lender deems necessary or advisable to complete the Project and Guarantor waives any right to contest such necessary expenditures. The amount of any and all expenditures made by Lender for the foregoing purposes, to the extent they exceed the unexpended portion of the Project Budget shall bear interest from the date made until repaid to Lender, at a rate per annum equal to the interest rate provided for in the Note and, together with such interest, shall be due and payable by Guarantor to Lender upon demand. Lender does not have and shall never have any obligation to complete the Project or take such action.

c)                                      In addition to the foregoing, and notwithstanding anything to the contrary set forth herein or in any of the Loan Documents, Guarantor hereby further guarantees to Lender the full and prompt payment of all principal, interest and other amounts due and owing by Borrower under the Note, the Security Instrument and any other Loan Document from and after the filing of a voluntary bankruptcy or insolvency proceeding of Property Owner, or Borrower prior to Completion.

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3.                                       Survival. The obligations of Guarantor under this Guaranty shall survive any foreclosure proceeding, any foreclosure sale, any delivery of any deed in lieu of foreclosure, and any release of record of the Security Instrument.

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

5.                                       Present, Unconditional and Irrevocable Guaranty; Waivers. The obligations of Guarantor under this Guaranty shall be performed without demand by Lender, other than as provided herein and shall be present, unconditional, absolute and irrevocable irrespective of the genuineness, validity, regularity or enforceability of the Note, the Security Instrument, or any other Loan Document, and without regard to any other circumstance which might otherwise constitute a legal or equitable discharge of a surety or a guarantor. This Guaranty shall be effective as a waiver of, and Guarantor expressly waives, any and all rights to which Guarantor may otherwise have been entitled under any suretyship laws in effect from time to time. Without limiting the generality of the foregoing, Guarantor hereby waives, to the fullest extent permitted by law, diligence in collecting the Indebtedness, presentment, demand for payment, protest, all notices with respect to the Note and this Guaranty which may be required by statute, rule of law or otherwise to preserve Lender’s rights against Guarantor under this Guaranty, including notice of acceptance, notice of any amendment of the Loan Documents, notice of the occurrence of any default or Event of Default, notice of intent to accelerate, notice of acceleration, notice of dishonor, notice of foreclosure, notice of protest, and notice of the incurring by Borrower of any obligation or indebtedness. Guarantor also waives, to the fullest extent permitted by law, all rights to require Lender to (a) proceed against Borrower or any other guarantor of Borrower’s payment or performance with respect to the Indebtedness (an “Other Guarantor”), (b) if Borrower or any Other Guarantor is a partnership, proceed against any general partner of Borrower or the Other Guarantor, (c) proceed against or exhaust any collateral held by Lender to secure the repayment of the Indebtedness, or (d) pursue any other remedy it may now or hereafter have against Borrower, or, if Borrower is a partnership, any general partner of Borrower.

6.                                       Modification of Loan Documents. At any time or from time to time and any number of times, without notice to Guarantor and without affecting the liability of Guarantor, (a) the time for payment of the principal of or interest on the Indebtedness may be extended or the Indebtedness may be renewed in whole or in part; (b) the time for Borrower’s performance of or compliance with any covenant or agreement contained in the Note, the Loan Agreement, the Pledge Agreement or any other Loan Document, whether presently existing or hereinafter entered into, may be extended or such performance or compliance may be waived; (c) the maturity of the Indebtedness may be accelerated as provided in the Note, the Security Instrument, or any other Loan Document; (d) the Note, the Loan Agreement, the Security Instrument, or any other Loan Document may be modified or amended by Lender and Borrower in any respect, including an increase in the principal amount; and (e) any security for the Indebtedness may be modified, exchanged, surrendered or otherwise dealt with or additional security may be pledged or mortgaged for the Indebtedness.

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7.                                       Joint and Several Guaranty. If more than one person executes this Guaranty, the obligations of those persons under this Guaranty shall be joint and several. Lender, in its discretion, may (a) bring suit against Guarantor, or any one or more of the Persons constituting Guarantor, and any Other Guarantor, jointly and severally, or against any one or more of them; (b) compromise or settle with any one or more of the Persons constituting Guarantor, or any Other Guarantor, for such consideration as Lender may deem proper; (c) release one or more of the Persons constituting Guarantor, or any Other Guarantor, from liability; and (d) otherwise deal with Guarantor and any Other Guarantor, or any one or more of them, in any manner, and no such action shall impair the rights of Lender to collect from Guarantor any amount guaranteed by Guarantor under this Guaranty. Nothing contained in this paragraph shall in any way affect or impair the rights or obligations of Guarantor with respect to any Other Guarantor.

8.                                       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 to Guarantor whether the obligations of Borrower are direct, contingent, primary, secondary, joint and several or otherwise, whether the obligations are evidenced by note, contract, open account or otherwise and irrespective of the creation of such debts or liabilities or manner acquired by Guarantor, (ii) any dividends and payments pursuant to debtor relief or insolvency proceedings referred to below and (iii) all liens, security interests, judgment liens, charges or other encumbrances on Borrower’s assets securing payment thereof) is and shall be subordinated to the Indebtedness, and upon the occurrence of an Event of Default, but without reducing or affecting in any manner the liability of Guarantor under the other provisions of this Guaranty, except to the extent that such amounts are actually applied toward Borrower’s obligations 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 on such indebtedness of Borrower held by Guarantor at the time an Event of Default exists, it shall be received by Guarantor in trust, as trustee for Lender, and Guarantor agrees to pay such amounts promptly to Lender. In the event of receivership, bankruptcy, reorganization, arrangement or other debtor relief or insolvency proceedings involving Borrower as debtor, Lender shall have the right to prove its claims in any such proceeding so as to establish its rights hereunder and shall have the right to receive directly from the receiver, trustee or other custodian (whether or not an Event of Default shall have occurred or be continuing under any of the Loan Documents), dividends and payments that are payable upon any obligation of Borrower to Guarantor now existing or hereafter arising, and to have all benefits of any security therefor, until the Indebtedness has been fully and finally paid and performed. Guarantor hereby acknowledges and agrees that the foregoing provisions shall be operative without the necessity of execution of any further documents. Notwithstanding the foregoing, upon the request of Lender, Guarantor hereby agrees to execute of a subordination agreement, in form and content reasonably acceptable to Lender, evidencing the provisions of this Section 8.

9.                                       Waiver of Subrogation Rights. Any right or claim for subrogation or reimbursement against Borrower by reason of any payment by Guarantor under this Guaranty, is subordinated to the Indebtedness on the terms provided in Section 8 above, whether such right or claim arises at law or in equity or under any contract or statute.

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10.                                 No Discharge of Guarantor. If any payment by Borrower is held to constitute a preference under any applicable bankruptcy, insolvency, or similar laws, or if for any other reason Lender is required to refund any sums to Borrower, such refund shall not constitute a release of any liability of Guarantor under this Guaranty.

11.                                 Financial Statements. Guarantor agrees that, until Completion, Guarantor will provide to Lender no later than December 31 of each year a Collateral Value Statement for each of the Persons constituting Guarantor dated as of the preceding June 30, in each case accompanied by a certificate executed by the Person to whom such Collateral Value Statement relates certifying that, to the knowledge of such Person, the Collateral Value Statement fairly presents the collateral value of the assets shown in such Collateral Value Statement determined on the same basis as described in the notes to the Collateral Value Statements, dated as of June 30, 2005, provided for each Guarantor.

12.                                 Representation and Warranty. Guarantor represents and warrants to Lender, jointly and severally, that (i) CFP Residential, L.P. has the limited partnership power and authority to enter into this Guaranty, to incur the obligations provided for herein, and to execute and deliver the same to Lender, (ii) when executed and delivered, this Guaranty will constitute a valid and legally binding obligation of each Guarantor, enforceable against such Guarantor in accordance with its terms (subject to bankruptcy, insolvency, reorganization and similar laws and to general principles of equity) and (iii) each Guarantor will directly or indirectly benefit from the Loan.

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

14.                                 Notices. Any notice, election, communication, request, approval or other document or demand required or permitted under this Guaranty shall be in writing. Each notice, election, communication, request, approval or other document or demand shall be addressed to the intended recipient, in the case of Lender