GUARANTY

EXHIBIT 10.18

GUARANTY

     THIS GUARANTY (MEZZANINE LOAN) (this “Guaranty”) dated as of October 31, 2006, executed and delivered by each of the undersigned and the other Persons from time to time party hereto pursuant to the execution and delivery of a Joinder Agreement (Mezzanine Loan) (all of the undersigned, together with such other Persons each a “Guarantor” and collectively, the “Guarantors”) in favor of (a) WACHOVIA BANK, NATIONAL ASSOCIATION, in its capacity as Agent (the “Agent”) for the Lenders under that certain Mezzanine Credit Agreement dated as of October 31, 2006 (as amended, restated, supplemented or otherwise modified from time to time, the “Mezzanine Credit Agreement”), by and among NNN APARTMENT REIT HOLDINGS, L.P., a Virginia limited partnership (the “Borrower”), the financial institutions party thereto and their assignees under Section 12.5 thereof (the “Lenders”), the Agent, and the other parties thereto, and (b) the Lenders (the parties described in (a) and (b) are hereinafter referred to collectively as the “Credit Parties”).

     WHEREAS, pursuant to the Mezzanine Credit Agreement, the Credit Parties have agreed to make available to the Borrower certain financial accommodations on the terms and conditions set forth in the Mezzanine Credit Agreement;

     WHEREAS, either (i) Borrower is the owner, directly or indirectly, of at least a majority of the issued and outstanding Equity Interests in each Guarantor, or (ii) each Guarantor is the owner, directly or indirectly of a substantial amount of the Equity Interests in Borrower;

     WHEREAS, the Borrower and each of the Guarantors, though separate legal entities, are mutually dependent upon each other in the conduct of their respective businesses as an integrated operation and have determined it to be in their mutual best interests to obtain financing from the Credit Parties through their collective efforts;

     WHEREAS, each Guarantor acknowledges that it will receive direct and indirect benefits from the Credit Parties making such financial accommodations available to the Borrower under the Mezzanine Credit Agreement and, accordingly, each Guarantor is willing to guarantee the Borrower’s obligations to the Credit Parties on the terms and conditions contained herein; and

     WHEREAS, each Guarantor’s execution and delivery of this Guaranty is a condition to the Credit Parties making, and continuing to make, such financial accommodations to the Borrower.

     NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by each Guarantor, each Guarantor agrees as follows:

     Section 1. Guaranty . Each Guarantor hereby absolutely, irrevocably and unconditionally guaranties the due and punctual payment and performance when due, whether at stated maturity, by acceleration or otherwise, of all of the following (collectively referred to as the “Guarantied Obligations”): (a) all indebtedness and obligations owing by the Borrower to any Credit Party under or in connection with the Mezzanine Credit Agreement and any other Loan Document, including without limitation, the repayment of all principal of the Loans, and the payment of all interest, Fees, charges, attorneys’ fees and other amounts payable to any Credit Party thereunder or in connection therewith; (b) any and all extensions, renewals, modifications, amendments or substitutions of the foregoing; (c) all expenses, including, without limitation, reasonable attorneys’ fees and disbursements, that are actually incurred by the Credit Parties in the enforcement of any of the foregoing or any obligation of such Guarantor hereunder; and (d) all other Obligations.

     Section 2. Guaranty of Payment and Not of Collection . This Guaranty is a guaranty of payment, and not of collection, and a debt of each Guarantor for its own account. Accordingly, none of the Credit Parties shall be obligated or required before enforcing this Guaranty against any Guarantor: (a) to pursue any right or remedy any of them may have against Borrower, any other Guarantor or any other Person or commence any suit or other proceeding against Borrower, any other Guarantor or any other Person in any court or other tribunal; (b) to make any claim in a liquidation or bankruptcy of Borrower, any other Guarantor or any other Person; or (c) to make demand of Borrower, any other Guarantor or any other Person or to enforce or seek to enforce or realize upon any collateral security held by a Credit Party which may secure any of the Guarantied Obligations.

     Section 3. Guaranty Absolute . Each Guarantor guarantees that the Guarantied Obligations will be paid strictly in accordance with the terms of the documents evidencing the same, regardless of any Applicable Law now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of the Credit Parties with respect thereto. The liability of each Guarantor under this Guaranty shall be absolute, irrevocable and unconditional in accordance with its terms and shall remain in full force and effect without regard to, and shall not be released, suspended, discharged, terminated or otherwise affected by, any circumstance or occurrence whatsoever, including without limitation, the following (whether or not such Guarantor consents thereto or has notice thereof):

          (a) (i) any change in the amount, interest rate or due date or other term of any of the Guarantied Obligations, (ii) any change in the time, place or manner of payment of all or any portion of the Guarantied Obligations, (iii) any amendment or waiver of, or consent to the departure from or other indulgence with respect to, the Mezzanine Credit Agreement, any other Loan Document, or any other document or instrument evidencing or relating to any Guarantied Obligations, or (iv) any waiver, renewal, extension, addition, or supplement to, or deletion from, or any other action or inaction under or in respect of, the Mezzanine Credit Agreement, any of the other Loan Documents, or any other documents, instruments or agreements relating to the Guarantied Obligations or any other instrument or agreement referred to therein or evidencing any Guarantied Obligations or any assignment or transfer of any of the foregoing;

          (b) any lack of validity or enforceability of the Mezzanine Credit Agreement, any of the other Loan Documents, or any other document, instrument or agreement referred to therein or evidencing any Guarantied Obligations or any assignment or transfer of any of the foregoing;

          (c) any furnishing to a Credit Party of any security for the Guarantied Obligations, or any sale, exchange, release or surrender of, or realization on, any collateral securing any of the Obligations;

          (d) any settlement or compromise of any of the Guarantied Obligations, any security therefor, or any liability of any other party with respect to the Guarantied Obligations, or any subordination of the payment of the Guarantied Obligations to the payment of any other liability of the Borrower or any other Obligor;

          (e) any act or failure to act by Borrower, any other Obligor or any other Person which may adversely affect such Guarantor’s subrogation rights, if any, against Borrower or any other Person to recover payments made under this Guaranty;

          (f) any nonperfection or impairment of any security interest or other Lien on any collateral, if any, securing in any way any of the Obligations;

          (g) any application of sums paid by the Borrower, any other Guarantor or any other Person with respect to the liabilities of the Credit Parties, regardless of what liabilities of the Borrower remain unpaid;

          (h) any statute of limitations in any action hereunder or for the collection of the Notes or for the payment or performance of the Guarantied Obligations;

          (i) the incapacity or lack of authority of Borrower or any other Person, or the failure of any Credit Party to file or enforce a claim against the estate (either in administration, bankruptcy or in any other proceeding) of Borrower or any Guarantor or any other Person;

          (j) the dissolution or termination of existence of Borrower, any Guarantor or any other Person;

          (k) the voluntary or involuntary liquidation, sale or other disposition of all or substantially all of the assets of Borrower or any other Person;

          (l) the voluntary or involuntary receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, assignment, composition, or readjustment of, or any similar proceeding affecting, Borrower or any Guarantor or any other Person, or any of Borrower’s or any Guarantor’s or any other Person’s properties or assets;

          (m) the damage, destruction, condemnation, foreclosure or surrender of all or any part of any Collateral, any Property or any of the improvements located thereon;

          (n) the failure of a Credit Party to give notice of the existence, creation or incurring of any new or additional indebtedness or obligation or of any action or nonaction on the part of any other person whomsoever in connection with any Guarantied Obligation;

          (o) any failure or delay of a Credit Party to commence an action against Borrower or any other Person, to assert or enforce any remedies against Borrower or any other Person under the Notes or the Loan Documents, or to realize upon any security;

          (p) any failure of any duty on the part of a Credit Party to disclose to any Guarantor any facts it may now or hereafter know regarding Borrower, any other Person, the Collateral or the Properties or any of the improvements located thereon, whether such facts materially increase the risk to Guarantors or not;

          (q) failure to accept or give notice of acceptance of this Guaranty by the Credit Parties;

          (r) failure to make or give notice of presentment and demand for payment of any of the indebtedness or performance of any of the Guarantied Obligations;

          (s) failure to make or give protest and notice of dishonor or of default to Guarantors or to any other party with respect to the indebtedness or performance of the Guarantied Obligations;

          (t) except as otherwise specifically provided in this Guaranty, any and all other notices whatsoever to which Guarantors might otherwise be entitled;

          (u) any lack of diligence by the Credit Parties in collection, protection or realization upon any collateral securing the payment of the indebtedness or performance of the Guaranteed Obligations;

          (v) the compromise, settlement, release or termination of any or all of the obligations of Borrower under the Notes or the Loan Documents or any Collateral;

          (w) any transfer by Borrower or any other Person of all or any part of the security encumbered by the Loan Documents;

          (x) any defense based upon an election of remedies by the Credit Parties, including any election to proceed by judicial or nonjudicial foreclosure of any security, whether real property or personal property security, or by deed in lieu thereof, and whether or not every aspect of any foreclosure sale is commercially reasonable, or any election of remedies, including remedies relating to real property or personal property security, which destroys or otherwise impairs the subrogation rights of Guarantor or the rights of Guarantor to proceed against Borrower or any other Person for reimbursement, or both (including, without limitation, California Code of Civil Procedure Sections 580a, 580b, 580d and 726);

          (y) any defense based upon any statute or rule of law which provides that the obligation of a surety must be neither larger in amount nor in any other aspects more burdensome than that of a principal;

          (z) any right of subrogation, reimbursement, exoneration, contribution or indemnity, or any right to enforce any remedy which the Credit Parties now have or may hereafter have against Borrower or any other Person or any benefit of, or any right to participate in, any security now or hereafter held by the Credit Parties;

          (aa) any and all of the rights and defenses described in Section 2856(a) of the California Civil Code;

          (bb) without limiting the generality of the foregoing or any other provision hereof, all rights of subrogation, reimbursement, indemnification and contribution and any other rights and defenses that are or may become available to Borrower, a Guarantor or any other surety by reason of California Civil Code Sections 2787 to 2855 inclusive, or by reason of California Civil Code Sections 2899 and 3433, or otherwise; or

          (cc) any right to require the Credit Parties to proceed against Borrower or any other guarantor of the Obligations, proceed against or exhaust any security received from Borrower or any other guarantor of the Guaranteed Obligations, or pursue any other remedy whatsoever;

     Guarantors understand that the exercise by the Credit Parties of certain rights and remedies may affect or eliminate Guarantors’ right of subrogation against Borrower or other Persons and that Guarantors may therefore incur partially or totally nonreimbursable liability hereunder. Nevertheless, Guarantors hereby authorize and empower the Credit Parties, their successors, endorsees and assigns, to exercise in its or their sole discretion, any rights and remedies, or any combination thereof, which may then be available, it being the purpose and intent of Guarantors that the obligations hereunder shall be absolute, continuing, independent and unconditional under any and all circumstances. Notwithstanding any other provision of this Guaranty to the contrary (but except as expressly provided in the Contribution Agreement), each Guarantor hereby waives and releases any claim or other rights which such Guarantor may now have or hereafter acquire against Borrower or any other Person of all or any of the obligations of Guarantors hereunder that arise from the existence or performance of such Guarantors’ obligations

under this Guaranty or any of the other Loan Documents, including, without limitation, any right of subrogation, reimbursement, exoneration, contribution or indemnification, any right to participate in any claim or remedy of the Credit Parties against Borrower or any other Person or any collateral which the Credit Parties now have or hereafter acquire, whether or not such claim, remedy or right arises in equity or under contract, statute or common law, by any payment made hereunder or otherwise, including, without limitation, the right to take or receive from Borrower or any other Person, directly or indirectly, in cash or other property or by setoff or in any other manner, payment or security on account of such claim or other rights. Guarantors understand that: (a) Section 580d of the California Code of Civil Procedure generally prohibits a deficiency judgment against a borrower after a non-judicial foreclosure; (b) Guarantors’ subrogation rights may be destroyed by a non-judicial foreclosure under the Security Documents (because Guarantors may not be able to pursue Borrower or any other Person for a deficiency judgment by reason of the application of Section 580d of the California Code of Civil Procedure); and (c) under Union Bank v. Gradsky, 265 Cal. App. 2nd 40 (1968), a lender may be estopped from pursuing a guarantor for a deficiency judgment after a non-judicial foreclosure (on the theory that a guarantor should be exonerated if a lender elects a remedy that eliminates the guarantor’s subrogation rights) absent an explicit waiver. Without limitation on the generality of the other waivers contained in this Guara