INDEMNITY AND GUARANTY AGREEMENT

Exhibit 10.11

INDEMNITY AND GUARANTY AGREEMENT

     THIS INDEMNITY AND GUARANTY AGREEMENT (as the same may hereafter be amended, consolidated, renewed or replaced, this “ Agreement ”), made as of December 28, 2006, by NNN APARTMENT REIT, INC., a Maryland corporation (“ Indemnitor ”), whose address is 1551 North Tustin Avenue, Suite 300, Santa Ana, California 92705, in favor of WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking association (together with its successors and assigns, “ Lender ”), whose address is Commercial Real Estate Services, 8739 Research Drive URP — 4, NC 1075, Charlotte, North Carolina 28262.

W I T N E S S E T H:

     WHEREAS, Apartment REIT Hidden Lakes, LP, a Texas limited partnership (“ Borrower ”), has obtained a loan (the “ Loan ”) in the principal amount of Nineteen Million Two Hundred Eighteen Thousand and No/100 Dollars ($19,218,000.00) from Lender; and

     WHEREAS, the Loan is evidenced by a Promissory Note (as the same may from time to time be amended, consolidated, renewed or replaced, the “ Note ”) dated of even date herewith, executed by Borrower and payable to the order of Lender, in the stated principal amount of Nineteen Million Two Hundred Eighteen Thousand and No/100 Dollars ($19,218,000.00), and is secured by a Deed of Trust, Security Agreement and Fixture Filing dated of even date herewith (as the same may from time to time be amended, consolidated, renewed or replaced, the “ Security Instrument ”) from Borrower for the benefit of Lender, encumbering that certain real property situated in the County of Bexar, State of Texas, as more particularly described on Exhibit “A” attached hereto and incorporated herein by this reference, together with the buildings, structures and other improvements now or hereafter located thereon (the “ Property ”) and by other documents and instruments (the Note, the Security Instrument and such other documents and instruments, as the same may from time to time be amended, consolidated, renewed or replaced, being collectively referred to herein as the “ Loan Documents ”); and

     WHEREAS, as a condition to making the Loan to Borrower, Lender has required that Indemnitor indemnify Lender from and against and guarantee payment to Lender of those items for which Borrower is personally liable and for which Lender has recourse against Borrower under the terms of the Note and the Security Instrument; and

     WHEREAS, the extension of the Loan to Borrower is of substantial benefit to Indemnitor and, therefore, Indemnitor desires to indemnify Lender from and against and guarantee payment to Lender of those items for which Borrower is personally liable and for which Lender has recourse against Borrower under the terms of the Note and the Security Instrument.

     NOW, THEREFORE, to induce Lender to extend the Loan to Borrower and in consideration of the foregoing premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Indemnitor hereby covenants and agrees for the benefit of Lender, as follows:

     1.  Indemnity and Guaranty . Indemnitor hereby assumes liability for, hereby guarantees payment to Lender of, hereby agrees to pay, protect, defend and save Lender harmless from and against, and hereby indemnifies Lender from and against any and all liabilities, obligations, losses, damages, costs and expenses (including, without limitation, attorneys’ fees), causes of action, suits, claims, demands and

judgments of any nature or description whatsoever (collectively, “ Costs ”) which may at any time be imposed upon, incurred by or awarded against Lender as a result of:

          (a) Proceeds paid under any insurance policies (or paid as a result of any other claim or cause of action against any person or entity) by reason of damage, loss or destruction to all or any portion of the Property, to the full extent of such proceeds not previously delivered to Lender, but which, under the terms of the Loan Documents, should have been delivered to Lender;

          (b) Proceeds or awards resulting from the condemnation or other taking in lieu of condemnation of all or any portion of the Property to the full extent of such proceeds or awards not previously delivered to Lender, but which, under the terms of the Loan Documents, should have been delivered to Lender;

          (c) All tenant security deposits or other refundable deposits paid to or held by Borrower or any other person or entity in connection with leases of all or any portion of the Property, which are not applied in accordance with the terms of the applicable lease or other agreement;

          (d) Rent and other payments received from tenants under leases of all or any portion of the Property paid more than one (1) month in advance;

          (e) Rents, issues, profits and revenues of all or any portion of the Property received or applicable to a period after the occurrence of an Event of Default under the Loan Documents, or any event which with notice or the passage of time, or both, would constitute an Event of Default, which are not either applied to the ordinary and necessary expenses of owning and operating the Property or paid to Lender;

          (f) Waste committed on the Property, damage to the Property as a result of the intentional misconduct or gross negligence of Borrower or any of its principals, officers, general partners or members, any guarantor, any indemnitor, or any agent or employee of any such persons, or any removal of all or any portion of the Property in violation of the terms of the Loan Documents, to the full extent of the losses or damages incurred by Lender and/or any of its affiliates on account of such occurrence;

          (g) Failure to pay any valid taxes, assessments, mechanic’s liens, materialmen’s liens or other liens which could create liens on any portion of the Property which would be superior to the lien or security title of the Security Instrument or the other Loan Documents except, with respect to any such taxes or assessments, to the extent that funds have been deposited with Lender pursuant to the terms of the Security Instrument specifically for the applicable taxes or assessments and not applied by Lender to pay such taxes and assessments; and

          (h) Fraud, intentional misrepresentation, failure to disclose a material fact, any untrue statement of a material fact or omission to state a material fact in the written materials and/or information provided to Lender or any of its affiliates by or on behalf of Borrower or any of its affiliates, principals, officers, general partners or members, any guarantor, any indemnitor, or any agent, employee or other person authorized or apparently authorized to make statements, representations or disclosures on behalf of Borrower, any affiliate, principal, officer, general partner or member of Borrower, or any guarantor or any indemnitor, to the full extent of any losses, damages and expenses of Lender and/or any of its affiliates on account thereof.

          In addition to the foregoing, and notwithstanding anything to the contrary set forth in this Agreement or any of the other Loan Documents, Indemnitor shall be fully liable for all principal, interest

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and other amounts which may be due and owing by Borrower under the Note, the Security Instrument and any other Loan Document from and after (i) a default by Borrower, Indemnitor or any general partner, manager or managing member of Borrower of any of the covenants set forth in Section 2.9 or Section 2.29 of the Security Instrument, or (ii) the Property or any part thereof becoming an asset in (x) a voluntary bankruptcy or insolvency proceeding of Borrower or Indemnitor, or (y) an involuntary bankruptcy or insolvency proceeding of Borrower or Indemnitor in which Borrower or Indemnitor colludes with creditors in such bankruptcy or insolvency proceeding and which is not dismissed within sixty (60) days of filing.

     This is a guaranty of payment and performance and not of collection. The liability of Indemnitor under this Agreement shall be direct and immediate and not conditional or contingent upon the pursuit of any remedies against Borrower or any other person (including, without limitation, other guarantors, if any), nor against the collateral for the Loan. Indemnitor waives any right to require that an action be brought against Borrower or any other person or to require that resort be made to any collateral for the Loan or to any balance of any deposit account or credit on the books of Lender in favor of Borrower or any other person. In the event of a default under the Loan Documents which is not cured within any applicable grace or cure period, Lender shall have the right to enforce its rights, powers and remedies (including, without limitation, foreclosure of all or any portion of the collateral for the Loan) thereunder or hereunder, in any order, and all rights, powers and remedies available to Lender in such event shall be non-exclusive and cumulative of all other rights, powers and remedies provided thereunder or hereunder or by law or in equity. If the indebtedness and obligations guaranteed hereby are partially paid or discharged by reason of the exercise of any of the remedies available to Lender, this Agreement shall nevertheless remain in full force and effect, and Indemnitor shall remain liable for all remaining indebtedness and obligations guaranteed hereby, even though any rights which Indemnitor may have against Borrower may be destroyed or diminished by the exercise of any such remedy.

     2.  Indemnification Procedures .

          (a) If any action shall be brought against Lender based upon any of the matters for which Lender is indemnified hereunder, Lender shall notify Indemnitor in writing thereof and Indemnitor shall promptly assume the defense thereof, including, without limitation, the employment of counsel acceptable to Lender and the negotiation of any settlement; provided , however , that any failure of Lender to notify Indemnitor of such matter shall not impair or reduce the obligations of Indemnitor hereunder. Lender shall have the right, at the expense of Indemnitor (which expense shall be included in Costs), to employ separate counsel in any such action and to participate in the defense thereof. In the event Indemnitor shall fail to discharge or undertake to defend Lender against any claim, loss or liability for which Lender is indemnified hereunder, Lender may, at its sole option and election, defend or settle such claim, loss or liability. The liability of Indemnitor to Lender hereunder shall be conclusively established by such settlement, provided such settlement is made in good faith, the amount of such liability to include both the settlement consideration and the costs and expenses, including, without limitation, attorneys’ fees and disbursements, incurred by Lender in effecting such settlement. In such event, such settlement consideration, costs and expenses shall be included in Costs and Indemnitor shall pay the same as hereinafter provided. Lender’s good faith in any such settlement shall be conclusively established if the settlement is made on the advice of independent legal counsel for Lender.

          (b) Indemnitor shall not, without the prior written consent of Lender: (i) settle or compromise any action, suit, proceeding or claim or consent to the entry of any judgment that does not include as an unconditional term thereof the delivery by the claimant or plaintiff to Lender of a full and complete written release of Lender (in form, scope and substance satisfactory to Lender in its sole discretion) from all liability in respect of such action, suit, proceeding or claim and a dismissal with prejudice of such action, suit, proceeding or claim; or (ii) settle or compromise any action, suit,

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proceeding or claim in any manner that may adversely affect Lender or obligate Lender to pay any sum or perform any obligation as determined by Lender in its sole discretion.

          (c) All Costs shall be immediately reimbursable to Lender when and as incurred and, in the event of any litigation, claim or other proceeding, without any requirement of waiting for the ultimate outcome of such litigation, claim or other proceeding, and Indemnitor shall pay to Lender any and all Costs within ten (10) days after written notice from Lender itemizing the amounts thereof incurred to the date of such notice. In addition to any other remedy available for the failure of Indemnitor to periodically pay such Costs, such Costs, if not paid within said ten-day period, shall bear interest at the Default Interest Rate (as defined in the Note).

     3.  Reinstatement of Obligations . If at any time all or any part of any payment made by Indemnitor or received by Lender from Indemnitor under or with respect to this Agreement is or must be rescinded or returned for any reason whatsoever (including, but not limited to, the insolvency, bankruptcy or reorganization of Indemnitor or Borrower), then the obligations of Indemnitor hereunder shall, to the extent of the payment rescinded or returned, be deemed to have continued in existence, notwithstanding such previous payment made by Indemnitor, or receipt of payment by Lender, and the obligations of Indemnitor hereunder shall continue to be effective or be reinstated, as the case may be, as to such payment, all as though such previous payment by Indemnitor had never been made.

     4.  Waivers by Indemnitor . To the extent permitted by law, Indemnitor hereby waives and agrees not to assert or take advantage of:

          (a) Any right to require Lender to proceed against Borrower or any other person or to proceed against or exhaust any security held by Lender at any time or to pursue any other remedy in Lender’s power or under any other agreement before proceeding against Indemnitor hereunder;

          (b) Any defense that may arise by reason of the incapacity, lack of authority, death or disability of any other person or persons or the failure of Lender to file or enforce a claim against the estate (in administration, bankruptcy or any other proceeding) of any other person or persons;

          (c) Demand, presentment for payment, notice of nonpayment, protest, notice of protest and all other notices of any kind, or the lack of any thereof, including, without limiting the generality of the foregoing, notice of the existence, creation or incurring of any new or additional indebtedness or obligation or of any action or non-action on the part of Borrower, Lender, any endorser or creditor of Borrower or of Indemnitor or on the part of any other person whomsoever under this or any other instrument in connection with any obligation or evidence of indebtedness held by Lender;

          (d) Any defense based upon an election of remedies by Lender;

          (e) Any right or claim of right to cause a marshalling of the assets of Indemnitor;

          (f) Any principle or provision of law, statutory or otherwise, which is or might be in conflict with the terms and provisions of this Agreement;

          (g) Any duty on the part of Lender to disclose to Indemnitor any facts Lender may now or hereafter know about Borrower or the Property, regardless of whether Lender has reason to believe that any such facts materially increase the risk beyond that which Indemnitor intends to assume or has reason to believe that such facts are unknown to Indemnitor or has a reasonable opportunity to communicate such facts to Indemnitor, it being understood and agreed that Indemnitor is fully responsible for being and keeping informed of the financial condition of Borrower, of the condition of the Property

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and of any and all circumstances bearing on the risk that liability may be incurred by Indemnitor hereunder;

          (h) Any lack of notice of disposition or of manner of disposition of any collateral for the Loan;

          (i) Any invalidity, irregularity or unenforceability, in whole or in part, of any one or more of the Loan Documents;

          (j) Any deficiencies in the collateral for the Loan or any deficiency in the ability of Lender to collect or to obtain performance from any persons or entities now or hereafter liable for the payment and performance of any obligation hereby guaranteed;

          (k) An assertion or claim that the automatic stay provided by 11 U.S.C. §362 (arising upon the voluntary or involuntary bankruptcy proceeding of Borrower) or any other stay provided under any other debtor relief law (whether statutory, common law, case law or otherwise) of any jurisdiction whatsoever, now or hereafter in effect, which may be or become applicable, shall operate or be interpreted to stay, interdict, condition, reduce or inhibit the ability of Lender to enforce any of its rights, whether now or hereafter required, which Lender may have against Indemnitor or the collateral for the Loan;

          (l) Any modifications of the Loan Documents or any obligation of Borrower relating to the Loan by operation of law or by action of any court, whether pursuant to the Bankruptcy Reform Act of 1978, as amended, or any other debtor relief law (whether statutory, common law, case law or otherwise) of any jurisdiction whatsoever, now or hereafter in effect, or otherwise. Without limiting the generality of the foregoing, Indemnitor expressly waives any and all rights to which Indemnitor may otherwise have been entitled under any suretyship laws in effect from time to time, including (without limitation) any rights pursuant to Rule 31 of the Texas Rules of Civil Procedure, Section 17.001 of the Texas Civil Practice and Remedies Code, and Chapter 34 of the Texas Business and Commerce Code.

          (m) Any action, occurrence, event or matter consented to by Indemnitor under Section 6(h ) hereof, under any other provision hereof, or otherwise;

          5. Representation and Warranty . Indemnitor hereby represents, warrants and covenants that Indemnitor’s net worth is, and at all times while this Agreement shall be in effect, shall be not less than $10,000,000 with Liquid Assets (as hereinafter defined) exceeding $1,000,000. For the purposes of this Section 5, “ Liquid Assets ” shall mean assets in the form of cash, cash deposits, available lines of credit, accounts receivables, “soft” earnest money deposits, obligations of (or fully guaranteed as to principal and interest by) the United States or any agency or instrumentality thereof (provided the full faith and credit of the United States supports such obligation or guarantee), securities listed and traded on a recognized stock exchange or traded over the counter and listed in the National Association of Securities Dealers Automatic Quotations, or liquid debt instruments that have a readily ascertainable value and are regularly traded in a recognized financial market.

     6.  General Provisions .

          (a) Fully Recourse . All of the terms and provisions of this Agreement are recourse obligations of Indemnitor and not restricted by any limitation on personal liability set forth in any of the Loan Documents.

          (b) Unsecured Obligations . Indemnitor hereby acknowledges that Lender’s appraisal of the Property is such that Lender is not willing to accept the consequences of the inclusion of Indemnitor’s indemnity set forth herein among the obligations secured by the Security Instrument and the other Loan Documents and that Lender would not make the Loa