WALDEN RESIDENTIAL PROPERTIES INC, 10-Q, 1996-08-07

WALDEN RESIDENTIAL PROPERTIES INC
10-Q, 1996-08-07
REAL ESTATE INVESTMENT TRUSTS

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<PAGE> 1

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

-------------------------

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 1996

-----------------------------------

Commission file number: 1-12592

WALDEN RESIDENTIAL PROPERTIES, INC.
(Exact name of Registrant as specified in its Charter)

MARYLAND 75-2506197
State or other jurisdiction (I.R.S. Employer Identification
of corporation or organization) Number)

One Lincoln Centre
5400 LBJ Freeway, Suite 400
Dallas, Texas 75240
(Address of principal executive offices)

(214) 788-0510
(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

YES X NO
------- -------

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date:

As of August 2, there were 13,990,058 shares of Common Stock,
$0.01, par value outstanding.
<PAGE> 2
WALDEN RESIDENTIAL PROPERTIES, INC.

PART 1. FINANCIAL INFORMATION

<TABLE>
<S> <C>
Item 1. Financial Statements

Condensed Consolidated Balance Sheets as of June 30, 1996
(Unaudited) and December 31, 1995 . . . . . . . . . . . . . . . . . . . . . . 3

Condensed Consolidated Statements of Income for the Three Months
and Six Months Ended June 30, 1996 and 1995 (Unaudited) . . . . . . . . . . . 4

Condensed Consolidated Statements of Cash Flows for the
Six Months Ended June 30, 1996 and 1995 (Unaudited) . . . . . . . . . . . . . 5

Notes to Condensed Consolidated Financial Statements (Unaudited) . . . . . . . . . 6

Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . 10

PART 2. OTHER INFORMATION

Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Item 2. Changes in Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Item 3. Defaults Upon Senior Securities . . . . . . . . . . . . . . . . . . . . . . . . . 16

Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . . . 16

Item 5. Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . 17
</TABLE>

- 2 -
<PAGE> 3
PART 1. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

WALDEN RESIDENTIAL PROPERTIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)

<TABLE>
<CAPTION>
June 30, 1996 December 31, 1995
------------- -----------------
(Unaudited)
<S> <C> <C>
ASSETS
Real estate assets, at cost
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 65,619 $ 60,637
Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 480,982 452,704
--------- ---------
546,601 513,341
Less: Accumulated depreciation . . . . . . . . . . . . . . . . . . . (31,052) (23,734)
--------- ---------

515,549 489,607
Real estate assets held for sale (at lower of carrying amount or
estimated net realizable value) . . . . . . . . . . . . . . . . . . . . . . 13,744 --
Receivable from and investment in WDN Management . . . . . . . . . . . . . . . 1,072 1,005
Rent and other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . 960 1,448
Prepaid and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,452 1,353
Deferred financing costs, net . . . . . . . . . . . . . . . . . . . . . . . . . 5,961 4,359
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,241 6,801
Restricted cash:
Escrow deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,016 4,105
Additional collateral on loans . . . . . . . . . . . . . . . . . . . . . . 2,520 1,870
--------- ---------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 557,515 $ 510,548
========= =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Mortgage notes payable . . . . . . . . . . . . . . . . . . . . . . . . . . $ 256,409 $ 252,515
Credit facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,000 6,500
Accrued real estate taxes . . . . . . . . . . . . . . . . . . . . . . . . 5,383 6,522
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,810 4,815
Accrued expenses and other liabilities . . . . . . . . . . . . . . . . . . 4,509 4,608
Preferred distribution payable on convertible equity securities . . . . . 471 461
--------- ---------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 286,582 275,421
Commitments and contingencies
Stockholders' equity:
Convertible equity securities . . . . . . . . . . . . . . . . . . . . . . 18,608 18,608
Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141 142
Preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 --
Additional paid in capital . . . . . . . . . . . . . . . . . . . . . . . . 281,413 238,899
Notes receivable from Company officers and directors . . . . . . . . . . . (5,263) (4,971)
Distributions in excess of net income . . . . . . . . . . . . . . . . . . (23,984) (17,551)
--------- ---------
Total stockholders' equity . . . . . . . . . . . . . . . . . . . . . . 270,933 235,127
--------- ---------

Total liabilities and stockholders' equity . . . . . . . . . . . . . . $ 557,515 $ 510,548
========= =========
</TABLE>

See Notes to Condensed Consolidated Financial Statements.

- 3 -
<PAGE> 4
WALDEN RESIDENTIAL PROPERTIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share information)
(Unaudited)

<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
----------------------------- ---------------------

1996 1995 1996 1995
------- ------- ------- -------
<S> <C> <C> <C> <C>
REVENUES
Rental income . . . . . . . . . . . . . . . . . . . . $24,437 $16,533 $48,570 $32,365
Other property income . . . . . . . . . . . . . . . . 919 677 1,746 1,314
Interest income . . . . . . . . . . . . . . . . . . . 508 218 719 371
Other income . . . . . . . . . . . . . . . . . . . . . 98 143 202 250
------- ------- ------- -------
Total revenues . . . . . . . . . . . . . . . . . . 25,962 17,571 51,237 34,300
EXPENSES
Property operating and maintenance . . . . . . . . . . 8,829 6,263 17,471 12,179
Real estate taxes . . . . . . . . . . . . . . . . . . 2,296 1,462 4,649 2,826
General and administrative . . . . . . . . . . . . . . 1,261 914 2,406 1,715
Interest . . . . . . . . . . . . . . . . . . . . . . . 4,765 3,755 9,687 7,391
Amortization . . . . . . . . . . . . . . . . . . . . . 219 230 394 436
Depreciation . . . . . . . . . . . . . . . . . . . . . 4,747 3,355 9,265 6,613
------- ------- ------- -------
Total expenses . . . . . . . . . . . . . . . . . . 22,117 15,979 43,872 31,160
------- ------- ------- -------

Operating income . . . . . . . . . . . . . . . . . . . . . 3,845 1,592 7,365 3,140
Gain on disposition of real property . . . . . . . . . . . 1,272 1,110 1,272 1,110
------- ------- ------- -------
Income before extraordinary item . . . . . . . . . . . . . 5,117 2,702 8,637 4,250
Extraordinary loss on debt extinguishment . . . . . . . . . (96) (465) (584) (465)
------- ------- ------- -------
Net income . . . . . . . . . . . . . . . . . . . . . . . . 5,021 2,237 8,053 3,785
Preferred distributions . . . . . . . . . . . . . . . . . . (813) -- (1,284) --
------- ------- ------- -------
Net income available to common stockholders . . . . . . . . $ 4,208 $ 2,237 $ 6,769 $ 3,785
======= ======= ======= =======

Income per share:
Before extraordinary item, less preferred
distributions . . . . . . . . . . . . . . . . . . . $ .31 $ .26 $ .52 $ .42

Extraordinary loss on debt extinguishment . . . . . . (.01) (.04) (.04) (.05)
------- ------- ------- -------
Net income available to common stockholders . . . . . $ .30 $ .22 $ .48 $ .37
======= ======= ======= =======

Distributions per share of common stock . . . . . . . . . . $ .465 $ .455 $ .93 $ .91
======= ======= ======= =======

Weighted average number of common stock and
common stock equivalent shares outstanding . . . . . . 14,151 10,393 14,179 10,233
======= ======= ======= =======
</TABLE>

See Notes to Condensed Consolidated Financial Statements.

- 4 -
<PAGE> 5
WALDEN RESIDENTIAL PROPERTIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended June 30,
-------------------------------
1996 1995
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8,053 $ 3,785
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . 9,659 7,049
Gain on disposition of real property . . . . . . . . . . . . . . . . . (1,272) (1,110)
Extraordinary loss on debt extinguishment . . . . . . . . . . . . . . 584 465
Net effect of changes in operating accounts:
Escrow deposits . . . . . . . . . . . . . . . . . . . . . . . . . (8,911) (1,205)
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 356 2,201
Accrued real estate taxes . . . . . . . . . . . . . . . . . . . . (1,139) (27)
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . (522) (336)
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . (99) 1,564
-------- ---------
Net cash provided by operating activities . . . . . . . . . . 6,709 12,386

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of real estate assets, net of noncash items shown below . . . . . (45,948) (73,978)
Real estate asset additions . . . . . . . . . . . . . . . . . . . . . . . (2,784) (2,853)
Proceeds from disposition of real property . . . . . . . . . . . . . . . . 8,300 8,650
-------- ---------
Net cash used in investing activities . . . . . . . . . . . . . . . . (40,432) (68,181)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from stock issuance, net of issuance costs . . . . . . . . . . . 45,675 62,020
Purchase of the Company's common stock . . . . . . . . . . . . . . . . . . (3,531) --
Proceeds from mortgage notes payable and credit facility . . . . . . . . . 48,470 111,121
Payment of mortgage notes payable and credit facility . . . . . . . . . . (38,970) (101,870)
Payment of financing costs . . . . . . . . . . . . . . . . . . . . . . . . (2,631) (2,632)
Additional collateral on loans . . . . . . . . . . . . . . . . . . . . . . (650) (101)
Distributions paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . (14,476) (9,272)
Principal reductions of debt . . . . . . . . . . . . . . . . . . . . . . . (3,724) (409)
-------- ---------
Net cash provided by financing activities . . . . . . . . . . . . . . 30,163 58,857
-------- ---------

NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,560) 3,062

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD . . . . . . . . . . . . . . . . 6,801 4,289
-------- ---------

CASH AND CASH EQUIVALENTS, END OF PERIOD . . . . . . . . . . . . . . . . . . . $ 3,241 $ 7,351
======== =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,824 $ 7,450
======== =========

SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND
FINANCING ACTIVITIES:
Items related to purchase of assets:
Mortgage notes assumed . . . . . . . . . . . . . . . . . . . . . . . . $ 7,618 $ 73,055
======== =========
Stock issued for purchase of assets . . . . . . . . . . . . . . . . . -- $ 22,825
======== =========
Notes receivable for officer and director stock purchases . . . . . . . . $ 292 $ --
======== =========
Preferred distribution payable on convertible equity securities . . . . . $ 471 $ --
======== =========
</TABLE>

See Notes to Condensed Consolidated Financial Statements.

- 5 -
<PAGE> 6
WALDEN RESIDENTIAL PROPERTIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

1. INTERIM UNAUDITED FINANCIAL INFORMATION

Walden Residential Properties, Inc. (the "Company") is a
self-administered and self-managed equity real estate investment trust, as
defined under the Internal Revenue Code of 1986, as amended. As of June 30,
1996, the Company owned 60 multifamily properties, containing 18,495 apartment
units, primarily in the Southwest and Southeast regions of the United States.
Of such properties owned, two properties consisting of 448 apartment units were
held for sale as of June 30, 1996, both of which the Company has entered into
an agreement to sell.

The accompanying unaudited financial statements should be read in
conjunction with the Company's Form S-3 Registration Statement dated March 19,
1996 and Form 8-K dated April 23, 1996 and the financial statements and notes
thereto included in the Company's Form 10-Q for the three months ended March
31, 1996 and Forms 10-K, as amended, for the periods ended December 31, 1995
and 1994, all of which were filed with the Securities and Exchange Commission
("SEC"). The accompanying interim unaudited financial information has been
prepared pursuant to the rules and regulations of the SEC. Certain information
and footnote disclosures normally included in the annual financial statements
have been condensed or omitted pursuant to the rules and regulations of the
SEC. Management believes that the disclosures contained in this Form 10-Q are
adequate to make the information presented not misleading. In the opinion of
management, all adjustments and eliminations, consisting only of normal
recurring adjustments, necessary to present fairly the consolidated financial
position of the Company and its subsidiaries as of June 30, 1996 and December
31, 1995 and the consolidated results of their operations and cash flows for
the six months ended June 30, 1996 and 1995, have been included. The
consolidated results of operations for the six months ended June 30, 1996
and 1995 are not necessarily indicative of the results for the full year.

2. ACQUISITIONS AND DISPOSITIONS

During the second quarter of 1996, the Company purchased six apartment
properties, consisting of 384 units located in Mesa, Arizona, 874 units in San
Antonio, Texas and 416 units in Austin, Texas, for an aggregate cost of
approximately $53.6 million. The Arizona property acquisition was funded
through the assumption of $7.6 million of fixed rate tax-exempt debt (see Note
3). The other acquisitions were funded by a $16 million borrowing under the
Company's credit facility and proceeds from the preferred stock offering (see
Note 5).

On April 24, 1996, the Company sold a 384-unit apartment property
located in Wichita, Kansas for $8.3 million and recognized a gain of $1.3
million.

3. DEBT MODIFICATIONS AND ASSUMPTIONS

On May 7, 1996, the Company refinanced $22 million of variable rate
tax-exempt debt on two properties through the issuance of tax-exempt bonds,
which are insured by Financial Security

- 6 -
<PAGE> 7
WALDEN RESIDENTIAL PROPERTIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)
(UNAUDITED)

Assurance, Inc. The new mortgage loans require monthly payments of principal,
with a 30-year amortization period, and interest at a fixed rate of 6.7%,
including credit enhancement and servicing fees. The mortgage loans mature in
March 2026.

In connection with the acquisition of a 384-unit apartment property in
Arizona (see Note 2), the Company assumed a mortgage loan financed through
proceeds of tax-exempt bonds issued by the Industrial Development Authority of
the County of Maricopa. The mortgage loan has an outstanding balance of $7.6
million and requires monthly payments of principal, with a 25-year amortization
period, and bears interest at a fixed rate of 6.5%. The mortgage loan matures
in July 2019.

In June 1996, additional participating lenders were obtained for the
Company's credit facility ("Credit Facility"). As a result, effective July 1,
1996, the lenders' total commitment under the Credit Facility increased from
$30 million to $75 million.

4. CONVERTIBLE EQUITY SECURITIES

In June 1995, the Company acquired a controlling interest in a limited
partnership (the "Partnership") which owns 10 apartment properties. This
Partnership is being accounted for as wholly-owned since the limited
partnership interests in the Partnership which were not purchased by the
Company are only exchangeable for an aggregate of 1,012,660 shares of the
Company's common stock, and are accounted for as convertible equity securities.
A preferred distribution of $471,000 on the convertible equity securities was
accrued as of June 30, 1996.

5. PREFERRED STOCK

On April 26, 1996, the Company issued 1,800,000 shares of Series A
Convertible Redeemable Preferred Stock, pursuant to a shelf registration
statement declared effective in June 1995. The preferred stock was priced at
$25 per share with a current distribution rate of 9.16%, which rate increases
proportionately with increases in the amount of common stock distributions.
The preferred stock is convertible at any time into 1.1406 shares of common
stock. The preferred stock is not redeemable by the Company prior to April 30,
2006, and thereafter is redeemable at $25 per share.

In July 1996, the majority of the Series A preferred stock was
exchanged for Series B Convertible Redeemable Preferred Stock. The Series B
preferred stock contains the same features described above for the Series A
preferred stock.

In connection with the preferred stock offering, the Company received
net proceeds of approximately $43.6 million. The proceeds were used to repay
approximately $13 million of existing indebtedness and acquire five apartment
properties (see Note 2).

- 7 -
<PAGE> 8
WALDEN RESIDENTIAL PROPERTIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(UNAUDITED)

6. RETIRED COMMON STOCK

As of June 30, 1996, the Company had acquired 270,100 shares of its
common stock at a cost of $5,474,000, of which 122,600 shares were reissued to
Company officers and directors in December 1995 and January 1996 and the
remaining 147,500 shares were retired in the second quarter of 1996.

7. NET INCOME PER SHARE OF COMMON STOCK

Net income per share of common stock has been computed by dividing net
income available to common stockholders by the weighted average number of
common stock and common stock equivalent shares outstanding. Net income
available to common stockholders is net income less the preferred distributions
on the convertible equity securities and preferred stock (see Notes 4 and 5).
Common stock equivalents include the weighted average number of assumed
equivalent shares outstanding from stock options, if dilutive. Fully diluted
net income per share of common stock is not materially dilutive and is not
presented.

8. PRO FORMA STATEMENTS OF INCOME (UNAUDITED)

The following unaudited condensed pro forma information for the six
months ended June 30, 1996 and 1995 was prepared from the financial statements
of the Company by adjusting for properties acquired or disposed of in 1996 and
1995, including the related debt or stock offerings used to finance the
acquisitions or debt that was repaid from proceeds of dispositions, as if all
of these transactions had occurred on January 1, 1996 and 1995. This
information is not necessarily indicative of what the performance would have
been had the Company owned these properties for the entire period, nor does it
purport to represent future results of operations of the Company. (In
thousands, except per share information.)

<TABLE>
<CAPTION>
Pro Forma
-----------------------------
Six Months Ended
June 30,
-----------------------------
1996 1995
---------- ----------
<S> <C> <C>
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . $ 55,147 $ 52,073
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . 46,670 45,381
-------- --------
Net income . . . . . . . . . . . . . . . . . . . . . . . . 8,477 6,692
Preferred distributions . . . . . . . . . . . . . . . . . (3,003) (3,003)
-------- --------
Net income available to common stockholders . . . . . . . . $ 5,474 $ 3,689
======== ========
Net income available to common stockholders per share . . . $ .39 $ .27
======== ========
Weighted averages shares of common stock outstanding . . . 14,179 13,803
======== ========
</TABLE>

- 8 -
<PAGE> 9
WALDEN RESIDENTIAL PROPERTIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(UNAUDITED)

9. COMMITMENTS AND CONTINGENCIES

As of June 30, 1996, the Company had executed five contracts to
acquire five apartment properties consisting of 1,250 units. In connection
therewith, the Company deposited $400,000 of earnest money. One property,
consisting of 224 units, was acquired on August 7, 1996 (see Note 10), while
the acquisition of the other properties is subject to the completion of normal
due diligence procedures and there is no assurance the Company will purchase
such properties.

10. SUBSEQUENT EVENTS

In July 1996, the Company purchased (and retired) an additional
152,000 shares of its common stock for a cost of $3,042,000.

In July 1996, the Company executed five additional contracts to
acquire five apartment properties consisting of 1,154 units. In connection
therewith, the Company deposited $200,000 of earnest money. The acquisition of
the properties is subject to the completion of normal due diligence procedures
and there is no assurance the Company will purchase such properties.

On August 7, 1996, the Company acquired a 224-unit apartment property,
located in Jacksonville, Florida, for approximately $6.9 million. The
acquisition was funded by a borrowing under the Company's credit facility.

- 9 -
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

Results of Operations

The following discussion should be read in conjunction with the
"Supplemental Financial and Operating Data" and all of the consolidated
financial statements and notes thereto included elsewhere in this Form 10-Q.
Such financial statements and information have been prepared to reflect the
historical condensed consolidated operations of the Company for the three
months and six months ended June 30, 1996 and 1995, and the condensed
consolidated balance sheet data of the Company as of June 30, 1996 and December
31, 1995.

The changes in revenues and expenses related to property operations
between the periods are primarily the result of the increased number of units
owned due to acquisitions of additional multifamily properties by the Company.
Where appropriate, comparisons are made on a dollars-per-weighted-average-unit
basis in order to adjust for changes in the number of units owned during each
period.

The following financial and operating data (see Page 11) is provided
as supplemental information to all financial statements included elsewhere in
this Form 10-Q. Such supplemental information is unaudited except the balance
sheet data as of December 31, 1995.

- 10 -
<PAGE> 11
SUPPLEMENTAL FINANCIAL AND OPERATING DATA
(In thousands, except per share and property data)
(Unaudited)

<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- ----------------
OPERATING DATA 1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C>
Revenues
Rental income . . . . . . . . . . . . . . . . . . . . . $24,437 $16,533 $48,570 $32,365
Other property income . . . . . . . . . . . . . . . . . 919 677 1,746 1,314
Interest income . . . . . . . . . . . . . . . . . . . . 508 218 719 371
Other income . . . . . . . . . . . . . . . . . . . . . . 98 143 202 250
------- ------- ------- -------
Total revenues . . . . . . . . . . . . . . . . . . . 25,962 17,571 51,237 34,300
------- ------- ------- -------
Expenses
Property operating and maintenance . . . . . . . . . . . 8,829 6,263 17,471 12,179
Real estate taxes . . . . . . . . . . . . . . . . . . . 2,296 1,462 4,649 2,826
General and administrative . . . . . . . . . . . . . . . 1,261 914 2,406 1,715
Interest . . . . . . . . . . . . . . . . . . . . . . . . 4,765 3,755 9,687 7,391
Amortization . . . . . . . . . . . . . . . . . . . . . . 219 230 394 436
Depreciation . . . . . . . . . . . . . . . . . . . . . . 4,747 3,355 9,265 6,613
------- ------- ------- -------
Total expenses . . . . . . . . . . . . . . . . . . . 22,117 15,979 43,872 31,160
------- ------- ------- -------
Operating income . . . . . . . . . . . . . . . . . . . . . . 3,845 1,592 7,365 3,140
Gain on disposition of real property . . . . . . . . . . . . 1,272 1,110 1,272 1,110
------- ------- ------- -------
Income before extraordinary item . . . . . . . . . . . . . . 5,117 2,702 8,637 4,250
Extraordinary loss on debt extinguishment . . . . . . . . . (96) (465) (584) (465)
------- ------- ------- -------
Net income . . . . . . . . . . . . . . . . . . . . . . . . . 5,021 2,237 8,053 3,785
Preferred distributions . . . . . . . . . . . . . . . . . . (813) -- (1,284) -
------- ------- ------- -------
Net income available to common stockholders . . . . . . . . $ 4,208 $ 2,237 $ 6,769 $ 3,785
======= ======= ======= =======

Distributions per share of common stock . . . . . . . . . . $ .465 $ .455 $ .93 $ .91
======= ======= ======= =======

Weighted average number of common stock and
common stock equivalent shares outstanding . . . . . . . 14,151 10,393 14,179 10,233
======= ======= ======= =======
- -------------------------------------------------------------------------------------------------------------------------

PROPERTY DATA
Total properties (at end of period) . . . . . . . . . . . . 60 52 60 52
Total units (at end of period) . . . . . . . . . . . . . . . 18,495 16,385 18,495 16,385
Total units (weighted average) . . . . . . . . . . . . . . . 17,084 12,673 17,145 12,608
Weighted average monthly property revenue per unit . . . . . $ 495 $ 453 $ 489 $ 445
- -------------------------------------------------------------------------------------------------------------------------

OTHER DATA
Funds from operations (new definition) . . . . . . . . . . . $ 8,592 $ 4,947 $16,630 $ 9,753

- -------------------------------------------------------------------------------------------------------------------------

June 30, December 31,
1996 1995
------------ ------------
BALANCE SHEET DATA
Real estate assets, at cost . . . . . . . . . . . . . . $515,549 $489,607
Mortgage notes payable and credit facility . . . . . . . 272,409 259,015
Stockholders' equity . . . . . . . . . . . . . . . . . . 270,933 235,127
</TABLE>

- 11 -
<PAGE> 12
Comparison of Three Months and Six Months Ended June 30, 1996 to Three Months
and Six Months Ended June 30, 1995

The weighted average number of units owned for the second quarter of
1996 increased by 4,411 units, or 34.8%, from 12,673 units for the second
quarter of 1995 to 17,084 units for the second quarter of 1996 as a result of
the acquisition of additional properties. The portfolio had a weighted average
occupancy of 94.7% and 94.8% for the second quarter of 1995 and 1996,
respectively.

The weighted average number of units owned for the six months ended
June 30, 1996, increased by 4,537 units, or 36.0%, from 12,608 units for the
first six months of 1995 to 17,145 units for the first six months of 1996 as a
result of the acquisition of additional properties. Total units owned at June
30, 1995 and 1996 were 16,385 and 18,495, respectively. The portfolio had a
weighted average occupancy of 94.2% and 94.6% for the first six months of 1995
and 1996, respectively.

The Company owned 38 properties with 11,636 units throughout both
periods in 1996 and 1995 ("same store"). A summary of the operating
performance for same store properties is as follows:

<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
---------------------- --------------------------
% %
1996 1995 Change 1996 1995 Change
---- ---- ------ ---- ---- ------
<S> <S> <C> <C> <C> <C> <C>
Rental and other property revenue (in thousands). . $ 16,702 $15,812 5.6% $33,088 $31,151 6.2%
Property operating expenses (in thousands) (1) . . 7,397 7,081 4.5% 14,642 13,914 5.2%
-------- ------- ------- -------
Property operating income (in thousands). . . . . . $ 9,305 $ 8,731 6.6% $18,446 $17,237 7.0%
======== ======= ======= =======
Weighted average physical occupancy . . . . . . . . 94.6% 94.9% 94.5% 94.3%
======== ======= ======= =======
Average monthly revenue per unit . . . . . . . . . $ 478 $ 453 5.5% $ 474 $ 446 6.3%
======== ======= ======= =======
Average annualized operating and maintenance
expenses per unit . . . . . . . . . . . . . . . $ 2,077 $ 1,988 4.5% $ 2,045 $ 1,952 4.8%
======== ======= ======= =======
Average annualized real estate taxes per unit . . . $ 466 $ 447 4.3% $ 472 $ 440 7.3%
======== ======= ======= =======
Operating expense ratio . . . . . . . . . . . . . . 44.3% 44.8% N/A 44.3% 44.7% N/A
======== ======= ======= =======
</TABLE>

The operating performance of properties not owned throughout both
periods in 1996 and 1995 is summarized as follows:

<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- -------------------
1996 1995 1996 1995
-------- -------- -------- -------
<S> <C> <C> <C> <C>
Rental and other property revenue (in thousands). . . . . . $ 8,654 $ 1,398 $ 17,228 $ 2,528
Property operating expenses (in thousands) (1) . . . . . . 3,728 644 7,478 1,091
-------- -------- -------- -------
Property operating income (in thousands) . . . . . . . . . $ 4,926 $ 754 $ 9,750 $ 1,437
======== ======== ======== =======
Weighted average number of units . . . . . . . . . . . . . 5,448 1,037 5,509 972
======== ======== ======== =======
Weighted average physical occupancy . . . . . . . . . . . . 95.2% 92.5% 94.8% 93.0%
======== ======== ======== =======
Average monthly revenue per unit . . . . . . . . . . . . . $ 529 $ 449 $ 521 $ 433
======== ======== ======== =======
Average annualized operating and maintenance
expenses per unit . . . . . . . . . . . . . . . . . . . $ 2,047 $ 1,856 $ 2,023 $ 1,698
======== ======== ======== =======
Average annualized real estate taxes per unit . . . . . . . $ 691 $ 628 $ 691 $ 547
======== ======== ======== =======
Operating expense ratio . . . . . . . . . . . . . . . . . . 43.1% 46.1% 43.4% 43.2%
======== ======== ======== =======
</TABLE>

(1) Consists of property operating and maintenance and real estate tax
expenses.

- 12 -
<PAGE> 13
Interest income increased $290,000 for the second quarter of 1996, or
133.0%, from $218,000 for the second quarter of 1995 to $508,000 for the second
quarter of 1996. Interest income increased $348,000 for the first six months
of 1996, or 93.8%, from $371,000 for the first six months of 1995 to $719,000
for the first six months of 1996. The increases in interest income were
primarily due to interest earned on approximately $30 million of net proceeds
from the preferred stock offering in April 1996 and $8.3 million of proceeds
from the April 1996 property disposition, both of which were invested in
short-term investments throughout the remainder of the second quarter of 1996.

General and administrative expenses increased $347,000 for the second
quarter of 1996, or 38.0%, from $914,000 for the second quarter of 1995 to
$1,261,000 for the second quarter of 1996. This represented a per unit
increase of $7, or 2.4%, on an annualized basis. General and administrative
expenses increased $691,000 for the first six months of 1996, or 40.3%, from
$1,715,000 for the first six months of 1995 to $2,406,000 for the first six
months of 1996. This represents a per unit increase of $9, or 3.3%, on an
annualized basis. The increases in general and administrative expenses were
primarily the result of the increase in the occupancy cost due to the
relocation of the Company's corporate office, increases in salaries and
increased costs associated with the increased number of stockholders.

Interest expense increased $1,010,000 for the second quarter of 1996,
or 26.9%, from $3,755,000 for the second quarter of 1995 to $4,765,000 for the
second quarter of 1996. Interest expense increased $2,296,000 for the first
six months of 1996, or 31.1%, from $7,391,000 for the first six months of 1995
to $9,687,000 for the first six months of 1996. The increases were primarily
due to debt incurred in connection with the acquisition of additional
properties, partially offset by a decrease in the weighted average interest
rate on debt between periods.

Depreciation expense increased $1,392,000 for the second quarter of
1996, or 41.5%, from $3,355,000 for the second quarter of 1995 to $4,747,000
for the second quarter of 1996. Depreciation increased $2,652,000 for the
first six months of 1996, or 40.1%, from $6,613,000 for the first six months of
1995 to $9,265,000 for the first six months of 1996. The increases were due to
depreciation on additional properties acquired.

The $584,000 extraordinary loss on debt extinguishment recorded in the
six months ended June 30, 1996, resulted from the write off of unamortized
deferred financing costs due to the refinancing of the Company's credit
facility in February 1996 ($488,000) and the refinancing of $22 million of
variable rate tax-exempt debt in May 1996 ($96,000). The $465,000
extraordinary loss on debt extinguishment recorded in the first six months of
1995 resulted from the write off of unamortized deferred financing costs and
prepayment penalties incurred in connection with the refinancing of two
mortgage loans.

The $1,272,000 gain on disposition of real property recorded in the
three months and six months ended June 30, 1996 represented the gain on the
sale of a 384-unit apartment property, located in Wichita, Kansas, in April
1996. The disposition generated approximately $8.3 million of net sale
proceeds which are held in escrow to be used to purchase an additional property
in a tax-free exchange. The purchase is anticipated to be completed in August
1996. The $1,110,000 gain on disposition of real property recorded in the
three months and six months ended June 30, 1995 resulted from the sale of a
property in April 1995 for approximately $8.7 million.

- 13 -
<PAGE> 14
Liquidity and Capital Resources

The Company's principal demands for liquidity are distributions to its
stockholders, ongoing maintenance and repair of its properties, capital
improvements to its properties, acquisitions of properties, interest on
indebtedness and debt repayments.

The Company intends to meet its short-term liquidity requirements,
including capital expenditures related to the maintenance and improvements of
its properties, through cash flow provided by operations. Historically, cash
provided by the Company's operating activities has been adequate to meet both
its operating requirements and distributions to stockholders. Net cash flow
from operating activities was $6.7 million for the first six months of 1996
(which included a reduction for $8.3 million of proceeds which are held in
escrow from the disposition of a property in April 1996). In the first six
months of 1996, the Company paid distributions of $14.5 million and expended
$1.3 million and $1.5 million, respectively, for capital expenditures and
acquisition rehabilitation costs. Such amounts were funded by the net cash
flow from operating activities from the first six months of 1996 and existing
working capital from the prior year. Capital expenditures and rehabilitation
on acquisition properties are anticipated to be approximately $2.3 million
and $4.2 million, respectively, on existing properties for the remainder of
1996.

As of June 30, 1996, the Company had outstanding indebtedness in the
aggregate principal amount of $272.4 million, consisting of fixed rate debt of
$205.3 million and variable rate debt of $67.1 million (including $16.0 million
under the Company's credit facility). The weighted average interest rate on
the Company's outstanding indebtedness at June 30, 1996 was approximately 7.3%.

The Company's ability to meet its long-term liquidity requirements,
such as refinancing mortgages and property acquisitions, including capital
improvements on property acquisitions, is dependent upon its ability to obtain
long-term borrowings, both secured and unsecured, and to issue debt or equity
securities. The Company has a $75 million credit facility (the "Credit
Facility"), which expires in February 1998, which was increased from $30
million in June 1996 upon obtaining additional participating lenders. The
Credit Facility has been used to finance property acquisitions, including
capital improvements. The availability of funds to the Company under the
Credit Facility is subject, however, to certain borrowing base restrictions and
other customary restrictions. As of August 7, 1996, the Company's borrowing
base was approximately $43 million. The Company is in the process of
securitizing five additional properties under its Credit Facility, which upon
completion will bring the borrowing base to approximately $70 million. The
Company currently has ten apartment properties under contract which aggregate
to a cost of approximately $81 million. One property was acquired on August 7,
1996, with the remaining acquisitions anticipated to close during the next six
months. The acquisitions would be funded by borrowings under the Credit
Facility, other borrowings or from the proceeds of debt or equity security
offerings.

Investing activities of the Company used $40.4 million in the first
six months of 1996, consisting of $45.9 million used for the purchase of real
estate assets, $1.3 million spent for capital expenditures and $1.5 million
spent for acquisition rehabilitation. These amounts were offset by $8.3
million of proceeds received from the disposition of a property.

- 14 -
<PAGE> 15
Financing activities of the Company generated $30.2 million in the
first six months of 1996, primarily due to (i) $45.7 million of net proceeds
from the preferred stock offering in April 1996 and common stock issued under
the Company's dividend reinvestment plan, and (ii) $9.5 million of net
borrowings under the Credit Facility. This amount was primarily offset by
$14.5 million of distributions paid to stockholders, $3.5 million of purchases
of the Company's common stock and $3.7 million of principal payments on debt.

Funds from Operations

Industry analysts generally consider funds from operations ("FFO") an
appropriate measure of the performance of an equity real estate investment
trust. FFO is defined as net income (determined in accordance with generally
accepted accounting principles), excluding gains (or losses) from debt
restructuring and sales of property, plus depreciation of real estate assets.
The Company believes that in order to facilitate a clear understanding of its
operating results, FFO should be examined in conjunction with net income as
presented herein. FFO does not represent cash generated from operating
activities in accordance with generally accepted accounting principles and is
not necessarily indicative of cash available to fund cash needs and cash
distributions. FFO should not be considered as an alternative to net income
(determined in accordance with generally accepted accounting principles) as an
indication of the Company's performance or as an alternative to cash flow
(determined in accordance with generally accepted accounting principles) as a
measure of liquidity. Effective January 1, 1996, the Company adopted the
modified definition of FFO as recommended by the National Association of Real
Estate Investment Trusts. FFO for the three months and six months ended June
30, 1996 and 1995 (as restated to conform to the new definition of FFO) are as
follows (unaudited):

<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- ------------------
1996 1995 1996 1995
-------- ------- ------- --------
<S> <C> <C> <C> <C>
Funds from operations:
Net income available to common stockholders . . . . $ 4,208 $ 2,237 $ 6,769 $ 3,785
Preferred distributions . . . . . . . . . . . . . . 813 -- 1,284 --
Extraordinary loss on debt extinguishment . . . . . 96 465 584 465
Gain on disposition of real property . . . . . . . . (1,272) (1,110) (1,272) (1,110)
Depreciation of real estate assets . . . . . . . . . 4,747 3,355 9,265 6,613
-------- -------- ------- --------
Funds from operations . . . . . . . . . . . . . $ 8,592 $ 4,947 $16,630 $ 9,753
======== ======== ======= ========
</TABLE>

Inflation

The Company leases apartments under lease terms generally ranging from
six to 12 months. Management believes that such short-term lease contracts
lessen the impact of inflation on the cost of property operations, as well as
allows for the adjustment of rental rates to market levels as leases expire.

- 15 -
<PAGE> 16
PART 2. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 2. CHANGES IN SECURITIES

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

(a) The Company's Annual Meeting of Stockholders was held on May 15,
1996.

(b) (1) The Stockholders elected five Directors nominated by the Board
of Directors:

<TABLE>
<CAPTION>
Affirmative Negative Abstentions
----------- -------- -----------
<S> <C> <C> <C>
Marshall B. Edwards 13,001,923 35,075 --
Francesco Galesi 12,993,173 43,825 --
Arch K. Jacobson 12,993,123 43,875 --
Louis G. Munin 12,990,473 46,525 --
J. Otis Winters 12,990,623 46,375 --
</TABLE>

(2) The Stockholders approved amendments to the Company's 1994
Stock Option Plan:

<TABLE>
<CAPTION>
Affirmative Negative Abstentions Broker Non-Votes
----------- --------- ----------- ----------------
<S> <C> <C> <C>
5,493,783 3,007,844 113,766 4,421,605
</TABLE>

(3) The Stockholders ratified the appointment of Deloitte & Touche
LLP as independent auditors of the Company for the year ending
December 31, 1996:

<TABLE>
<CAPTION>
Affirmative Negative Abstentions
----------- -------- -----------
<S> <C> <C>
12,952,720 57,176 27,102
</TABLE>

ITEM 5. OTHER INFORMATION

None.

- 16 -
<PAGE> 17
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

See Index to Exhibits - Page E-1

(b) Reports

None.

- 17 -
<PAGE> 18
SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Walden Residential Properties, Inc. certifies that it has
duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

WALDEN RESIDENTIAL PROPERTIES, INC.

By: / s / Don R. Daseke
-------------------------------
Don R. Daseke
Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed by the following persons on behalf of Walden
Residential Properties, Inc. and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
Signatures Title Date
----------- ----- ----
<S> <C> <C>
/ s / Don R. Daseke Chairman of the Board of Directors, August 7, 1996
- ----------------------------- Chief Executive Officer and Director
Don R. Daseke (Principal Executive Officer)

/ s / Mark S. Dillinger Executive Vice President, Chief August 7, 1996
- ----------------------------- Financial Officer and Director
Mark S. Dillinger (Principal Financial and Accounting Officer)

/ s / Marshall B. Edwards President, Chief Acquisitions Officer August 7, 1996
- ----------------------------- and Director
Marshall B. Edwards
</TABLE>

- 18 -
<PAGE> 19

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
<S> <C>
10.1 Promissory Note by and between Crossing & Meadows Partnership, Ltd. and
Collin County Housing Finance Corporation ($12,580,000) dated as of February
1, 1996.

10.2 Promissory Note by and between Crossing & Meadows Partnership, Ltd. and
Collin County Housing Finance Corporation ($9,390,000) dated as of February
1, 1996.

10.3 Purchase and Sale Agreement by and between Walden Residential Properties,
Inc. and America First Arizona REIT, Inc. dated as of April 12, 1996 (Laguna
Point Apartments).

10.4 Assignment and Assumption Agreement by and among America First Arizona REIT,
Inc., Walden AZ Corporation, The Industrial Development Authority of the
County of Maricopa and First Bank National Association dated as of June 4,
1996.

10.5 Purchase and Sale Agreement by and between Walden Residential Properties,
Inc. and IBEX Costa del Sol Corp., dated as of April 29, 1996 (Costa del Sol
Apartments).

10.6 Purchase and Sale Agreement by and between Walden Residential Properties,
Inc. and IBEX Remington Corp., dated as of April 29, 1996 (Remington
Apartments).

10.7 Purchase and Sale Agreement by and between Walden Residential Properties,
Inc. and IBEX Summer Oaks Corporation, dated as of April 29, 1996 (Summer
Oaks Apartments).

10.8 Purchase and Sale Agreement by and between Walden Residential Properties,
Inc. and IBEX St. Moritz Corp., dated as of April 29, 1996 (Villas of St.
Moritz Apartments).
</TABLE>

E - 1
<PAGE> 20
EXHIBIT INDEX
(Continued)

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
<S> <C>
10.9 Real Estate Acquisition Contract and Escrow Instructions by and between
Stonegate Lewisville Associated, Ltd. and Walden Residential Properties,
Inc. dated as of May 21, 1996 (Ashbury Parke Apartments).

11.1 Computation of Net Income per Share

12 Computation of Ratio of Earnings to Combined Fixed
Charges and Preferred Stock Dividends

27 Financial Data Schedule
</TABLE>

E - 2

<PAGE> 1
EXHIBIT 10.1

PROMISSORY NOTE

$12,580,000

FOR VALUE RECEIVED, the undersigned, CROSSING & MEADOWS PARTNERSHIP,
LTD., a Texas limited partnership (the "Borrower"), hereby promises to pay to
the order of COLLIN COUNTY HOUSING FINANCE CORPORATION (the "Issuer"), the
principal sum of Twelve Million Five Hundred Eighty Thousand Dollars
($12,580,000), in installments, on the dates and in the amounts set forth
below, together with interest on the unpaid portion of any such principal
amount from the date hereof, at the rates per annum set forth below. Interest
shall be computed on the basis of a 360-day year having twelve 30-day months.
The Borrower further agrees to pay as the premium hereon the amount of the
premium due upon any redemption or repayment in whole or in part of the Bonds
(hereinafter defined).

This Note has been issued to evidence a loan made by the Issuer to the
Borrower in accordance with that one certain Loan Agreement dated as of
February 1, 1996 (the "Agreement") between the Borrower and the Issuer.
Pursuant to the Agreement, the Issuer has loaned the Borrower the proceeds of
the Issuer's $12,580,000 aggregate principal amount of Multifamily Housing
Revenue Bonds (Summer Meadows Apartments Project) Series 1996A (the "Bonds").
The Bonds were issued by the Issuer pursuant to and in accordance with a Trust
Indenture dated as of February 1, 1996 (the "Indenture") between the Issuer and
Bank One, Texas, N.A., in the City of Fort Worth, Texas, trustee (the
"Trustee").

Interest on this Note shall be due on March 1 and September 1 of each
year, commencing on September 1, 1996 (each an "Interest Payment Date"), and
the principal of this Note shall be due in installments on March 1 of each year
(each a "Principal Payment Date"), in an amount equal to the principal amount
of Bonds maturing or scheduled for mandatory sinking fund redemption on such
March 1 as set forth in the Indenture. Interest on the principal amount of
this Note ascribed to payment of the Series 1996A-1 Bonds (as described in the
Indenture) shall be at the rate of 6.20% per annum, and interest on the
principal amount of this Note ascribed to payment of the Series 1996A-2 Bonds
(as described in the Indenture) shall be at the rate of 6.00% per annum.
Notwithstanding the foregoing, the principal of and interest on this Note shall
be payable in advance of the due dates thereof, in monthly installments payable
on the dates and in the amounts as follows:

(a) Interest on this Note shall be payable in advance on
June 25, 1996, and on the twenty-fifth day of each month thereafter,
through and including August 25, 1996, in an amount (after taking into
consideration earnings on amounts then on deposit in the Interest Fund
(as defined in the Indenture) equal to one-third (1/3rd) of the
interest coming due on the Bonds on the next succeeding Interest
Payment Date, and on September 25, 1996, and on the twenty-fifth day
of each month thereafter, in an amount (after taking into
consideration earnings on amounts then on deposit in the Interest
Fund) equal to one-sixth (1/6th) of the interest due on the Bonds on
the next succeeding Interest Payment Date; and
<PAGE> 2
(b) The principal of this Note shall be payable in
advance on June 25, 1996, and on the twenty-fifth day of each month
thereafter, through and including February 25, 1997, in an amount
(after taking into consideration earnings on amounts then on deposit
in the Principal Fund) equal to one-ninth (1/9th) of the principal
coming due on the Bonds on the next Principal Payment Date and on the
twenty-fifth day of each month thereafter, in an amount (after taking
into consideration earnings on the amounts then on deposit in the
Principal Fund) equal to one-twelfth (1/12th) of the principal due of
the Bonds on the next succeeding Principal Payment Date.

The advance monthly installments of principal of and interest on this
Note shall only be credited against the Borrower's obligations hereunder on
each Interest Payment Date with respect to the Borrower's obligation to pay
interest hereon and on each Principal Payment Date with respect to the
Borrower's obligation to pay the principal amount hereof and, notwithstanding
the receipt by the Trustee of the advance monthly installments of principal in
accordance with (b) above, the full principal amount of this Note outstanding
shall continue to bear interest until such credit is made on the applicable
Principal Payment Date.

Payments of both principal and interest are to be irrevocably assigned
by the Issuer to the Trustee pursuant to the Indenture. Such assignment is to
be made as security for the payment of the Bonds of the Issuer. All of the
terms, conditions, and provisions of the Indenture are, by this reference
thereto, incorporated herein as part of this Note.

This Note is issued pursuant to the Agreement and is entitled to the
benefits and is subject to the conditions thereof. All the terms, conditions,
and provisions of the Agreement are, by this reference thereto, incorporated
herein as part of this Note, and shall control in the interpretation and
enforcement of this Note.

In addition to the foregoing, the Borrower hereby promises to pay to
the full extent required by the Indenture and the Agreement: (i) the Rebate
Amount (as defined in the Tax Agreement); (ii) any payments and additional
charges set forth in the Agreement; and (iii) all costs and expenses of
collection incurred in connection with any default by the Borrower hereunder
and all other payments required to be made by the Borrower pursuant to the
Indenture and the Agreement.

In the event the Borrower fails to make any of the payments required
in this Note, such payment so in default shall continue as an obligation of the
Borrower until the amount in default shall have been fully paid, and the
Borrower agrees to pay the same with interest thereon (to the extent legally
enforceable) at a rate equal to the interest on the Note until paid.

The principal of this Note is subject to optional and mandatory
prepayment by the Borrower from time to time, and the Borrower is entitled to
certain credits against payments hereon, in the manner and under the
circumstances and upon payment of the amounts set forth in the Agreement and in
the Indenture.

In the event the due date of any installment under this Note is not a
Business Day (as defined in the Indenture), such installment shall be due on
the next succeeding Business Day.
<PAGE> 3
The Borrower agrees that if, and as often as, this Note upon the
consent and direction of Financial Security Assurance Inc. is placed in the
hands of any attorney for collection or to defend or enforce any of the
Issuer's or the Trustee's rights hereunder, the Borrower will pay to the Issuer
or the Trustee its attorney's fees, together with all court costs and other
expenses actually paid or incurred by the Issuer or the Trustee.

The Borrower and all other persons who may become liable for all or
part of this obligation severally waive presentation for payment, demand,
notice of nonpayment, and protest, all pleas of division and discussion, and
consent to any extension of time (whether one or more) or renewal hereof. Any
such extension or renewal may be made without notice and without discharging
liability hereunder solely in the discretion of and at the direction of
Financial Security Assurance Inc.

Upon default in any of the terms or conditions of this Note or upon
the occurrence and continuation of an "Event of Default" under the Agreement or
the Indenture, at the option of the holder hereof and only with the consent and
direction of Financial Security Assurance Inc., the entire indebtedness hereby
evidenced shall become due, payable, and collectible then and thereafter as the
holder may elect, regardless of the date of maturity hereof. Notice of the
exercise of such option is hereby expressly waived.

During the existence of any such default, the Trustee, with the
consent and at the direction of Financial Security Assurance Inc., shall apply
any payments received on any amount due hereunder or under the terms of the
Agreement or the Indenture as the Trustee may determine in accordance with the
terms of Section 8.5 of the Indenture.

The obligations of the Borrower to make the payments required under
the Agreement and hereunder shall be absolute and unconditional without any
defense or right of compensation, setoff, counterclaim or recoupment by reason
of any default by the Issuer under the Agreement or under any other agreement
between the Borrower and the Issuer or out of any indebtedness or liability at
any time owing to the Borrower by the Issuer or for any other reason (except
payment). Notwithstanding the foregoing, the Borrower may maintain a separate
action against the Issuer for the Issuer's failure to perform in accordance
with the Agreement and the Indenture.

The records of the Trustee shall be prima facie evidence of the amount
owing on this Note.

This Note is to be construed according to the laws of the State of
Texas without regard to any conflicts of law provisions contained therein.

Notwithstanding anything in this Note to the contrary, the obligations
of the Borrower hereunder are limited as provided in Section 8.13 of the
Agreement.
<PAGE> 4
IN WITNESS WHEREOF, the undersigned has executed this instrument on
May 8, 1996.

CROSSING & MEADOWS PARTNERSHIP, LTD.,
a Texas limited partnership

By CROSSING & MEADOWS CORPORATION,
a Texas corporation, its sole general partner

By:
-----------------------------------------------
Mark S. Dillinger
Executive Vice President

<PAGE> 1
EXHIBIT 10.2

PROMISSORY NOTE

$9,390,000

FOR VALUE RECEIVED, the undersigned, CROSSING & MEADOWS PARTNERSHIP,
LTD., a Texas limited partnership (the "Borrower"), hereby promises to pay to
the order of COLLIN COUNTY HOUSING FINANCE CORPORATION (the "Issuer"), the
principal sum of Nine Million Three Hundred Ninety Thousand Dollars
($9,390,000), in installments, on the dates and in the amounts set forth below,
together with interest on the unpaid portion of any such principal amount from
the date hereof, at the rates per annum set forth below. Interest shall be
computed on the basis of a 360-day year having twelve 30-day months. The
Borrower further agrees to pay as the premium hereon the amount of the premium
due upon any redemption or repayment in whole or in part of the Bonds
(hereinafter defined).

This Note has been issued to evidence a loan made by the Issuer to the
Borrower in accordance with that one certain Loan Agreement dated as of
February 1, 1996 (the "Agreement") between the Borrower and the Issuer.
Pursuant to the Agreement, the Issuer has loaned the Borrower the proceeds of
the Issuer's $9,390,000 aggregate principal amount of Multifamily Housing
Revenue Bonds (Summer's Crossing Apartments Project) Series 1996B (the
"Bonds"). The Bonds were issued by the Issuer pursuant to and in accordance
with a Trust Indenture dated as of February 1, 1996 (the "Indenture") between
the Issuer and Bank One, Texas, N.A., in the City of Fort Worth, Texas, trustee
(the "Trustee").

Interest on this Note shall be due on March 1 and September 1 of each
year, commencing on September 1, 1996 (each an "Interest Payment Date"), and
the principal of this Note shall be due in installments on March 1 of each year
(each a "Principal Payment Date"), in an amount equal to the principal amount
of Bonds maturing or scheduled for mandatory sinking fund redemption on such
March 1 as set forth in the Indenture. Interest on the principal amount of
this Note ascribed to payment of the Series 1996B-1 Bonds (as described in the
Indenture) shall be at the rate of 6.20% per annum, and interest on the
principal amount of this Note ascribed to payment of the Series 1996B-2 Bonds
(as described in the Indenture) shall be at the rate of 6.00% per annum.
Notwithstanding the foregoing, the principal of and interest on this Note shall
be payable in advance of the due dates thereof, in monthly installments payable
on the dates and in the amounts as follows:

In the event the due date of any installment under this Note is not a
Business Day (as defined in the Indenture), such installment shall be due on
the next succeeding Business Day.
<PAGE> 3
The Borrower agrees that if, and as often as, this Note upon the
consent and direction of Financial Security Assurance, Inc. is placed in the
hands of any attorney for collection or to defend or enforce any of the
Issuer's or the Trustee's rights hereunder, the Borrower will pay to the Issuer
or the Trustee its attorney's fees, together with all court costs and other
expenses actually paid or incurred by the Issuer or the Trustee.

Upon default in any of the terms or conditions of this Note or upon
the occurrence and continuation of an "Event of Default" under the Agreement or
the Indenture, at the option of the holder hereof and only with the consent and
direction of Financial Security Assurance, Inc., the entire indebtedness hereby
evidenced shall become due, payable, and collectible then and thereafter as the
holder may elect, regardless of the date of maturity hereof. Notice of the
exercise of such option is hereby expressly waived.

The records of the Trustee shall be prima facie evidence of the amount
owing on this Note.

This Note is to be construed according to the laws of the State of
Texas without regard to any conflicts of law provisions contained therein.

CROSSING & MEADOWS PARTNERSHIP, LTD.,
a Texas limited partnership

By CROSSING & MEADOWS CORPORATION,
a Texas corporation, its sole general partner

By:
-----------------------------------------------
Mark S. Dillinger
Executive Vice President

<PAGE> 1
EXHIBIT 10.3

PURCHASE AND SALE AGREEMENT

LAGUNA POINT APARTMENTS
MESA, ARIZONA

This PURCHASE AND SALE AGREEMENT ("Agreement") is entered into as of
the ________ day of April, 1996.

1. Parties. The parties to this Agreement are as follows:

Walden Residential Properties, Inc., a Maryland corporation,
maintaining its principal office at 5400 LBJ Freeway, One Lincoln Centre, Suite
400, LB 45, Dallas, Texas 75240, Attn: Marshall B. Edwards, President.

America First Arizona REIT, Inc., an Arizona corporation, maintaining
its principal office at c/o Mid-America Apartment Communities, Inc., 6584
Poplar Avenue, Suite 340, Memphis, Tennessee 38138, Attn: George E. Cates,
Chairman and CEO.

2. Definitions. As used in this Agreement, the following terms
shall have the meanings hereinafter set forth in this Paragraph:

(a) Agencies: All governmental agencies having
jurisdiction over the construction, zoning and operation of the Property.

(b) Appurtenant Interests: All of the Seller's interest
in and to the appurtenances to the Land and in and to all streets, alley and
other public ways adjacent thereto.

(c) Bonds: $7,900,000.00 Industrial Revenue Authority of
the county of Maricopa, Arizona Multi- family Housing Revenue Refunding Bonds
(Laguna Point Apartments Project) Series 1994, placed July 1, 1994, all as more
particularly described on Schedule II hereto and incorporated herein by
reference for all purposes.

(d) Closing: The consummation of the transfer of title
to the Property as contemplated hereunder and payment of the consideration
thereof in the manner provided at Paragraph 8 hereof.

(e) Current Rent Roll: The current schedule attached
hereto as Exhibit G, dated not more than thirty (30) days prior to the
Effective Date, setting forth, as of the date hereof, the Tenant Leases.

(f) Earnest Money Deposit: An amount equal to TWO
HUNDRED THOUSAND AND NO/100 DOLLARS ($200,000.00), together with all earnings
(if any) thereon.
<PAGE> 2
(g) Effective Date: The date upon which this Agreement,
executed by both Purchaser and Seller, shall have been delivered to Title
Insurer together with the Earnest Money Deposit.

(h) Excluded Personal Property: The tangible personal
property listed at Exhibit F hereto.

(i) Feasibility Period: The period commencing with the
receipt by Purchaser of the last to be received of the items listed in Schedule
I attached hereto and incorporated herein by reference and ending on the
twentieth (20th) day thereafter; provided, however, Purchaser shall have a
period of fourteen (14) days following receipt of the Title Commitment and all
documents referenced therein, the Survey and any environmental assessments
performed by Purchaser in the course of Purchaser's inspections of the
Property, within which to review same.

(j) Improvements: All of the buildings, fixtures and
improvements located on the Land, together with all mechanical systems,
fixtures and equipment, electrical systems, fixtures and equipment, plumbing
fixtures, systems and equipment, heating fixtures, systems and equipment and
air-conditioning fixtures, systems and equipment installed in, belonging to or
constructed as components of the Improvements.

(k) Included Personal Property: All tangible personal
property listed at Exhibit E hereto, together with (to the extent same are
located therein as of the Effective Date), for each apartment unit comprising
the Improvements, whether or not thus listed, all carpeting, window coverings,
ranges, ovens, dishwashers, ceiling fan(s), bookshelves, range hoods,
refrigerators, heating units, air conditioning units, sinks and garbage
disposals, and washers and dryers, and all other furniture, fixtures,
equipment, machinery, supplies and other tangible personal property and all
leases of tangible personal property located on the Land and Improvements and
belonging to the Property and/or used in the normal operation and maintenance
of the Land and Improvements.

(l) Land: The land more particularly described at
Exhibit A and shown on the existing boundary survey more particularly described
at Exhibit B hereto.

(m) Material Damage: Damage to the Property of a nature
such that the cost of restoring the Improvements to its condition prior to the
fire or other casualty, as mutually agreed by Seller and Purchaser, (but in
full compliance with all then applicable building, health, zoning, and similar
laws, ordinances, and regulations) will exceed $150,000, whether or not such
damage is covered by insurance.

(n) Owner Policy: An Owner Policy of Title Insurance
issued by the Title Insurer in the standard form promulgated by Arizona law.

PURCHASE AND SALE AGREEMENT PAGE 2
<PAGE> 3
(o) Permitted Title Exceptions: Any items which
Purchaser waives or to which Purchaser does not object within the time period
provided in Paragraph 6(c) hereof.

(p) Plans and Specifications: To the extent in the
possession of Seller, the final plans and specifications, including the final
site plan, pursuant to which the Improvements were constructed.

(q) Property: The property to be purchased and sold
pursuant to this Agreement and comprised of the Land, Improvements, Included
Personal Property, Appurtenant Interests, Tenant Leases and all other property
described in Paragraph 4 hereof.

(r) Proration Date: 12:01 a.m., Central Daylight Time,
on the date of Closing or such other date as shall be specified in Paragraph 9
hereof.

(s) Purchase Price: The total consideration to be paid
by Purchaser for the Property as set forth in Paragraph 5 hereof.

(t) Purchaser: Walden Residential Properties, Inc., a
Maryland corporation, together with any assignee thereof described in Paragraph
21 hereof.

(u) Rent Roll: Collectively, the Current Rent Roll and
the Revised Rent Roll, or either of them as of the context may required.

(v) Revised Rent Roll: A revision of the Current Rent
Roll dated not earlier than five (5) days prior to Closing.

(w) Seller: America First Arizona REIT, Inc., an Arizona
corporation.

(x) Service Contracts: All assignable service or
maintenance contracts relating to the Property as described at Exhibit K
hereto.

(y) Street Rents: The rents for space in the Property
being offered to the public as of the date of this Agreement and at which the
public is renting such space.

(z) Survey: An on-the-ground survey of the Land and
Improvements prepared by a qualified, registered public surveyor selected by
Purchaser and the Title Insurer (i) containing a field note description of the
Land which (A) establishes a beginning point by reference to a permanent
monument, (B) states the distances, bearing and angles of all sides or
boundaries of the Land, (C) if appropriate, states the length of arc, central
angle and radius of circle for arc, central angle and radius of circle for arc
and chord distance and bearing of all curving sides or boundaries of the Land,
(D) establishes a

PURCHASE AND SALE AGREEMENT PAGE 3
<PAGE> 4
single perimeter description, and (E) references all abutting or encroaching
streets, roadways and fence lines, including a statement of width, (ii) noting,
by plat, the size and location of all Improvements and other physical
conditions affecting the Property, (iii) noting, by plat, the size and location
of all abutting or encroaching streets, roadways and fence lines, (iv) noting,
by plat, the size and location of all encroachments or protrusions, (v) noting,
by plat, the size, location and recording data of all easements, ditches,
rights-of-way, setback lines, curb cuts and similar matters, (vi) locating any
portion of the Land or Improvements determined to be flood prone or within the
100-year flood plain under the Flood Disaster Protection Act of 1973 or
otherwise determined to be flood prone or within the flood plain by the Federal
Emergency Management Agency, the United States Army Corps of Engineers, a unit
or department of the United States, the engineer preparing the Survey, or any
other state or federal agency, (vii) certifying the number of acres of land in
the Land, both as to total acreage and as to net acreage, (viii) certified by
the surveyor as conforming to the current Arizona law, (ix) being dated or
recertified as of a date not earlier than the Effective Date, (x) containing a
certificate in the form attached hereto as Exhibit C, and (xi) otherwise
containing such items and revisions as Purchaser's lender may require.

(aa) Tenant Leases: The lease agreements relating to the
Land and Improvements and existing at Closing.

(bb) Title Commitment: A Commitment for Title Insurance
issued by the Title Insurer in the standard form promulgated by Arizona law.

(cc) Title Insurer: Commonwealth Land Title Insurance
Company, or other title insurance company acceptable to Purchaser in its sole
discretion, acting through its agent, Transnation Title Company, 234 N.
Central, Suite 670, Phoenix, Arizona 85004, Attn: Harley Brown or Vicki
Castillo.

3. Agreement of Purchase and Sale. Subject to the terms and
conditions thereof and for the consideration of One Hundred and No/100 Dollars
($100.00) paid to Seller by Purchaser on the Effective Date, the receipt and
sufficiency of which hereby is acknowledged and which sum is nonrefundable to
Purchaser and in no event shall be applied against the Purchase Price and for
the Purchase Price set forth at Paragraph 5, Purchaser hereby agrees to
purchase, and Seller hereby agrees to sell, the Property, such Property being
located in Mesa, Arizona, at 150 South Roosevelt Road, and constituting,
generally, an apartment project commonly known as "Laguna Point Apartments,"
all as more particularly described at Paragraph 4.

PURCHASE AND SALE AGREEMENT PAGE 4
<PAGE> 5
covering the Included Personal Property and the Improvements, (B) the trademark
or tradename "Laguna Point Apartments" and any other trademark or tradename
used by Seller in connection with the Property; (C) the Service Contracts and
(D) all licenses, permits, approvals and other intangible property rights
relating to the Property.

5. Purchase Price. The Purchase Price shall be FIFTEEN MILLION
FOUR HUNDRED THOUSAND AND NO/100 DOLLARS ($15,400,000), payable in United
States dollars as follows:

(a) Earnest Money Deposit. $200,000, payable by delivery
of the Earnest Money Deposit to the Title Insurer in accordance with this
Agreement.

(b) Cash at Closing. $15,400,000, in cash, at Closing,
less (i) any sum paid Seller at Closing from the Earnest Money Deposit and (ii)
the amount of the obligations ("Bond Obligations") relating to the Bonds
assumed by Purchaser at Closing.

6. Evidence of Title.

(a) Title Commitment. On the Effective Date, Seller
shall provide to Purchaser a copy of the current owner's policy covering the
Property and, at Seller's sole expense, shall order a current Title Commitment
from the Title Insurer in the amount of the Purchase Price covering the Land
and Improvements. The Title Commitment shall be issued as of or subsequent to
the Effective Date and shall include good, legible copies of all documents
constituting exceptions to Seller's title as reflected in the Title Commitment.
The Title Commitment shall reflect good and marketable fee simple title vested
in Seller.

(b) Survey. On the Effective Date, Seller shall deliver
to Purchaser a copy of the most recent survey of the Property in Seller's
possession and, at Seller's sole expense, shall order the Survey of the Land
and Improvements. The Survey shall be sufficient to permit the Title Insurer
to modify the standard printed exception in the Owner Policy pertaining to
discrepancies, conflicts, shortages in area or boundary lines, encroachments,
overlapping of improvements or similar matters.

(c) Review. Purchaser shall have through and including
the expiration of the Feasibility Period in which to review such items and to
deliver to Seller in writing such objections as Purchaser may have to anything
contained or set forth therein. Any items to which Purchaser does not object
to prior to the expiration of the Feasibility Period shall be Permitted Title
Exceptions. If Purchaser makes any timely written objections then Seller shall
have the right, but not the obligation, within the time period or extension
thereof as Purchaser shall agree to in writing, to take all necessary action to
cure such objections. In the event that Seller is unable or unwilling to cure
such objections and so notifies Purchaser in writing within five (5) days of
receipt of Purchaser's written objections, then, at Purchaser's election, to be
exercised in writing within three (3) days of

PURCHASE AND SALE AGREEMENT PAGE 5
<PAGE> 6
receipt of Seller's written notice to Purchaser, Purchaser shall be entitled to
terminate this Agreement and the rights and liabilities of the parties hereto
shall cease and the Earnest Money Deposit shall be returned to Purchaser
immediately, or Purchaser shall be entitled, in its sole discretion, to waive
any such objections and to proceed to consummate this transaction with no
reduction in the Purchase Price, in which event such objections shall be deemed
to be Permitted Title Exceptions.

(d) Owner Policy. At Closing, the special warranty deed
to the Land and Improvements referred to in Subparagraph 8(b)(i) hereof shall
be recorded, and Seller shall deliver to Purchaser, at Seller's sole expense,
the Owner Policy, with extended coverage, insuring good and marketable fee
simple title to be vested in Purchaser and insuring Purchaser's title in an
amount equal to the Purchase Price, subject only to the Permitted Title
Exceptions and the standard printed exceptions, except that:

(i) the exception relating to restrictions
against the Property shall be endorsed by Title Insurer to read "None of
record" except for such restrictions as may be included in the Permitted Title
Exceptions;

(ii) the exception relating to discrepancies,
conflicts, shortages in area, boundaries, encroachments, or overlaps shall be
modified, at Purchaser's sole cost and expense, by deleting such exception,
save any shortages in area and the Permitted Title Exceptions; and

(iii) the exception relating to ad valorem taxes
shall except only to taxes owing for the current year of Closing and subsequent
years and subsequent assessments for prior years due to change in land usage or
ownership, not yet due and payable.

(e) Uniform Commercial Code Search. Seller shall obtain
and deliver to Purchaser, at Closing, at Seller's cost and expense, Uniform
Commercial Code financing statement searches covering Seller and any general
partner of the Seller for the state constituting the situs of the Property and
the county in which the Property is located showing that all of the Included
Personal Property is free and clear of all liens and encumbrances other than
the Permitted Title Exceptions.

7. Representations, Warranties and Covenants.

7.1. Disclaimer. EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED IN AND
LIMITED BY PARAGRAPH 7 OF THIS AGREEMENT, PURCHASER ACKNOWLEDGES AND AGREES
THAT SELLER HAS NOT MADE, DOES NOT MAKE AND SPECIFICALLY DISCLAIMS ANY
REPRESENTATIONS, WARRANTIES, PROMISES, COVENANTS, AGREEMENTS OR GUARANTIES OF
ANY KIND OR CHARACTER WHATSOEVER, WHETHER EXPRESS OF IMPLIED, ORAL OR WRITTEN,
PAST, PRESENT OR

PURCHASE AND SALE AGREEMENT PAGE 6
<PAGE> 7
FUTURE, OF, AS TO, CONCERNING OR WITH RESPECT TO (A) THE NATURE, QUALITY OR
CONDITION OF THE PROPERTY, INCLUDING, WITHOUT LIMITATION, THE WATER, SOIL AND
GEOLOGY, (B) THE INCOME TO BE DERIVED FROM THE PROPERTY BY PURCHASER AFTER
CLOSING, (C) THE SUITABILITY OF THE PROPERTY FOR ANY AND ALL ACTIVITIES AND
USES WHICH PURCHASER MAY CONDUCT THEREON, (D) THE COMPLIANCE OF OR BY THE
PROPERTY OR ITS OPERATION WITH ANY LAWS, RULES, ORDINANCES OR REGULATIONS OF
ANY APPLICABLE GOVERNMENTAL AUTHORITY OR BODY, INCLUDING, WITHOUT LIMITATION,
THE AMERICANS WITH DISABILITIES ACT AND ANY RULES AND REGULATIONS PROMULGATED
THEREUNDER OR IN CONNECTION THEREWITH, (E) THE HABITABILITY, MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE OF THE PROPERTY, OR (F) ANY OTHER MATTER WITH
RESPECT TO THE PROPERTY, AND SPECIFICALLY THAT SELLER HAS NOT MADE, DOES NOT
MAKE AND SPECIFICALLY DISCLAIMS ANY REPRESENTATIONS REGARDING SOLID WASTE, AS
DEFINED BY THE U.S. ENVIRONMENTAL PROTECTION AGENCY REGULATIONS AT 40 C.F.R.,
PART 261, OR THE DISPOSAL OR EXISTENCE, IN OR ON THE PROPERTY, OF ANY HAZARDOUS
SUBSTANCE, AS DEFINED BY THE COMPREHENSIVE ENVIRONMENTAL RESPONSE COMPENSATION
AND LIABILITY ACT OF 1980, AS AMENDED, AND APPLICABLE STATE LAWS, AND
REGULATIONS PROMULGATED THEREUNDER. PURCHASER FURTHER ACKNOWLEDGES AND AGREES
THAT HAVING BEEN GIVEN THE OPPORTUNITY TO INSPECT THE PROPERTY, PURCHASER IS
RELYING SOLELY ON ITS OWN INVESTIGATIONS OF THE PROPERTY AND NOT ON ANY
INFORMATION PROVIDED OR TO BE PROVIDED BY SELLER. PURCHASER FURTHER
ACKNOWLEDGES AND AGREES THAT ANY INFORMATION PROVIDED TO OR TO BE PROVIDED WITH
RESPECT TO THE PROPERTY WAS OBTAINED FROM A VARIETY OF SOURCES AND THAT SELLER
HAS NOT MADE ANY INDEPENDENT INVESTIGATION OR VERIFICATION OF SUCH INFORMATION.
PURCHASER FURTHER ACKNOWLEDGES AND AGREES THAT THE SALE OF THE PROPERTY AS
PROVIDED FOR HEREIN IS MADE ON AN "AS IS, WHERE IS" CONDITION AND BASIS "WITH
ALL FAULTS."

7.2 Representations, Warranties and Covenants of Seller. Seller
represents and warrants to, and covenants with, Purchaser, as of the date of
this Agreement, to Seller's actual knowledge, as follows:

(a) Legal and Beneficial Title. Seller is, and at
Closing will be, the sole person holding good and indefeasible fee simple title
to the Property, free and clear of all liens and encumbrances except the
Permitted Title Exceptions.

(b) Organization and Authority. Seller has been duly
organized and is validly existing as an Arizona corporation, in good standing
in the State of Arizona. Seller has the full right and authority and has
obtained any and all consents required therefor to enter into this Agreement,
consummate or cause to be consummated the sale

PURCHASE AND SALE AGREEMENT PAGE 7
<PAGE> 8
and make or cause to be made transfers and assignments contemplated herein.
The persons signing this Agreement on behalf of Seller are authorized to do so.
This Agreement and all of the documents to be delivered by Seller at the
Closing have been authorized and properly executed and will constitute the
valid and binding obligations of Seller.

(c) Conflicts. There is no agreement to which Seller is
a party or, to Seller's knowledge, binding on Seller which is in conflict with
this Agreement.

(d) Contractors and Suppliers. All contractors,
subcontractors, suppliers, architects, engineers, and other who have performed
services, labor, or supplied material in connection with Seller's acquisition,
development, ownership, and management of the Property have been paid in full
and all liens arising therefrom (or claims which with the passage of time or
notice or both, could mature into liens) have been satisfied and released.

(e) Pending Actions. There is no action or proceeding
pending or, to Seller's knowledge, threatened against the Property or which
challenges or impairs Seller's ability to execute, deliver or perform this
Agreement.

(f) Rent Roll. Seller represents and warrants that,
except as described in the Rent Roll and Service Contracts there are no Leases
affecting the Property and no person, other than tenants under the Leases and
subject to the Permitted Title Exceptions, has any right of possession of the
Property; no presently effective rent concessions have been given to any
tenants; no rent has been paid in advance by any tenants respecting a period
subsequent to the Closing (except for the month in which the Closing occurs) no
tenants have any claim against Seller for any security deposit or other
deposits, other than pursuant to the terms of its Lease with respect to sums
specified as security deposits in the Rent Roll; no tenants have any option or
right of first refusal to extend or renew their Lease or rent additional space;
and there are no leasing or other commissions due, nor will any become due, in
connection with any Lease, any renewal or extension of any Lease. To Seller's
knowledge, no tenants have asserted nor are there any defense or offsets to
rent accruing after the Closing Date. To Seller's knowledge, except as
specifically set forth in the Rent Roll no default or breach exists on the part
of any tenant. Seller has not received any notice of any default or breach on
the part of the landlord under any Lease, nor, to the best of Seller's
knowledge, does there exist any such default or breach on the part of the
landlord. No understanding or agreement with any party exists as to payment of
any leasing commissions or fees regarding future leases or as to procuring of
tenants for the Property. All information set forth in the Rent Roll is true,
correct, and complete in all material respects.

(g) Financial Statements. At least thirty (30) days
prior to Closing, Seller shall provide Purchaser with current financial
statements of the Property.

PURCHASE AND SALE AGREEMENT PAGE 8
<PAGE> 9
(h) Service Contracts. There are no management,
service, supply equipment rental, and similar agreements affecting the Property
other than the Service Contracts. The list of Service Contracts is true,
correct and complete. Neither Seller nor, to Seller's knowledge, any other
party is in default with respect to any of its obligations or liabilities
pertaining to the Service Contracts.

(i) Operating Statements. Attached hereto as Exhibit I
is the most recent monthly Operating Statement which shows all items of income
and expense (operating and capital) incurred in connection with Seller's
ownership, operation, and management of the Property for the periods indicated
and are true, correct, and complete in all material respects.

(j) Insurance. The insurance policies listed and
described at Exhibit J are presently in force, and all such policies or their
equivalent will be maintained in force until Closing. Seller will not reduce
the coverage under, or cancel, any existing policy without Purchaser's prior,
written consent, which shall not be unreasonably withheld. Purchaser, at
Closing, shall obtain its own insurance coverage.

(k) Notice of Violations. Seller has received no written
notice that either the Property or the use thereof violates any laws, rules and
regulations of any Agency that has not been resolved to the satisfaction of the
issuer of the notice.

(l) Zoning, Applicable Laws Governing Operation and
Restrictions. Seller has received no written notice or similar citation that
the Property and its current use and operation does not comply with current
applicable laws, regulations, ordinances, building codes, and rules of all
applicable municipal, local, state, and federal jurisdictions, including,
without limitation, zoning ordinances, building codes, and laws governing
access for handicapped persons, and with restrictions, covenants, or similar
agreements affecting the Property. Except as may have been previously approved
by the applicable Agency, Seller has not entered into and has no knowledge
(without inquiry or investigation) of any agreement with any governmental
official, agency, or body or with any other person or entity with respect to
any modification, variance, or exception regarding such laws, ordinances,
regulations, codes, restrictions, covenants, or agreements.

(m) Maintenance of Property Until Closing.

(i) Seller, at its expense, will maintain the
Property in its current condition until Closing excepting only ordinary wear
and tear and damage or loss thereto covered by insurance.

(ii) Until Closing, Seller shall continue the
operation of the Property in the normal and usual manner, will not remove any
fixtures, furnishings, equipment or personalty subject to this Agreement,
except for repair or replacement, and the Property

PURCHASE AND SALE AGREEMENT PAGE 9
<PAGE> 10
will be managed, operated, maintained, repaired and redecorated in the ordinary
course of business and in such manner as to maintain the Property completed in
all material respects as of the date hereof in no less satisfactory condition
than the same exists as of such date.

(iii) All vacant rental units shall be in "market
ready" rentable condition as of the date of Closing; provided, however, Seller
and Purchaser acknowledge that rental units that are vacated within five (5)
business days prior to the date of Closing will be in varying conditions of
make-ready for leasing, as is ordinary in Seller's course of business. As to
any units which are vacant on or before five (5) days prior to Closing that are
not in "market-ready" rentable condition as of the date of the Closing,
Purchaser and Seller understand and agree that Purchaser shall be entitled to
credit against the Purchase Price at Closing an amount equal to the amount
agreed upon at Closing by Purchaser and Seller as being required to put in
"market-ready" rentable condition any units that are not in such condition as
of the date of the Closing. As to units vacated less than five (5) days prior
to Closing, Purchaser shall have no entitlement to credit against the Purchase
Price at Closing with respect to the amounts necessary to put any such units in
"market-ready" condition; provided, however, that as to such units, Seller
shall follow its standard, ordinary course of business practices with respect
to returning such units to "market ready" condition notwithstanding the
pendency of this Agreement and the imminence of Closing. For purposes of this
Agreement, the term "market-ready" shall mean units which are in good condition
and repair in accordance with the standards employed by Seller in its normal
course of business, painted, carpets cleaned, with all appliances present and
in good working order and repair. Purchaser shall have the right to reinspect
the Property during the period commencing not earlier than five (5) days prior
to the Closing and ending on the Closing solely for purposes of verifying the
maintenance of the Property in accordance with Subparagraphs 7(m)(i) and (ii).

PURCHASE AND SALE AGREEMENT PAGE 10
<PAGE> 11
(n) Utilities. To Seller's actual knowledge, all water,
sewer, gas, electric, telephone, drainage facilities, and all other utilities
required by law for the operation of the Property as an apartment complex
(collectively "offset utilities") are installed to the boundary of the
Property, are connected with valid permits, are in proper working order and are
adequate to serve the Property in Seller's reasonable judgment. To Seller's
actual knowledge all licenses, permits, easements, and rights-of-way required
from all government authorities having jurisdiction over the Property or from
private parties to make use of the offsite utilities in connection with the
operation of the Property and to ensure vehicular and pedestrian ingress and
egress to the Property are in existence and constitute legal, valid, and
binding obligations on such governmental authorities or private parties.

(o) Real Estate Taxes and Assessments. To Seller's
knowledge, all impact fees or other assessments, fees or charges, however
denominated, which may constitute a lien or charge on the Property or which
have been assessed or charged as a result of any permit, license or approval
obtained for the Property has been paid in full, and to Seller's knowledge
there is not presently pending any such assessment, fees or charges of any
nature with respect to the Property or any part thereof, nor has Seller
received any notice of any such assessments, fees or charges being
contemplated.

(p) Fair Housing Act. There are no pending or, to
Seller's knowledge, threatened actions in connection with the Fair Housing Act
(42 U.S.C. Section 360 et seq, as amended) against Seller, its agents, or
employees or with respect to the Property.

(q) Hazardous Materials. To the best of Seller's
knowledge, Seller is not aware of any noncompliance with or violation of
Environmental Laws related to the Property or the presence or release of
Hazardous Materials on or from the Property except as disclosed in any
environmental reports in Seller's possession which have been delivered to
Purchaser within the period provided for Purchaser's inspection in Paragraph
2(h). The term "Environmental Laws" shall include, without limitation, the
Clean Air Act, 42 U.S.C. Section 7401 et seq.; the Clean Water Act, 33 U.S.C.
Section 1251 et seq., and the Water Quality Act of Section 7401 et seq.; the
Clean Water Act, 33 U.S.C. Section 1251 et seq., and the Water Quality Act of
1987; the Federal Insecticide, Fungicide, and Rodenticide Act ("FIFRA"), 7
U.S.C. Section 136 et seq.; the Marine Protection, Research, and Sanctuaries
Act, 33 U.S.C. Section 1401 et seq.; the National Environmental Policy Act, 42
U.S.C., Section 4321 et seq.; the Noise Control Act, 42 U.S.C. Section 4901
et seq.; the Occupational Safety and Health Act, 29 U.S.C. Section 651 et
seq.; the Resource Conservation and Recovery Act ("RCRA") 42 U.S.C. Section
6901 et seq., as amended by the Hazardous and Solid Waste Amendments of 1984;
the Safe Drinking Water Act, 42 U.S.C. Section 300f et seq.; the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C.
Section 9601 et seq., as amended by the Superfund Amendments and
Reauthorization Act, and the Emergency Planning and Community Right-to-Know
Act; the Toxic Substance Control Act ("TSCA"), 15 U.S.C. Section 2601 et seq.;
and the Atomic Energy Act, 42 U.S.C. Section 2011 et seq., all as may have
been

PURCHASE AND SALE AGREEMENT PAGE 11
<PAGE> 12
amended as of the date of this Agreement, together with their implementing
regulations and guidelines as of the date of this Agreement. The term
"Environmental Laws" shall also include all state, regional, county, municipal
and other local laws, regulations, and ordinances that are equivalent or
similar to the federal laws recited above or that purports to regulate
Hazardous Materials. The term "Hazardous Materials" shall include, without
limitation, any hazardous substance, pollutant, or contaminant regulated under
CERCLA; oil and petroleum products and natural gas, natural gas liquids,
liquedifed natural gas, and synthetic gas usable for fuel; pesticides regulated
under FIFRA; asbestos, polychlorinated biphenyls, and other substances
regulated under TSCA; source material, special nuclear material, and by-
product materials regulated under the Atomic Energy Act; and industrial process
and pollution control wastes to the extent regulated under applicable
Environmental Laws.

(r) Withholding Obligation. Seller's sale of the
Property is not subject to any Federal, state or local withholding obligation
of Purchaser under the tax laws applicable to Seller or the Property.

(s) Condemnation. No condemnation proceedings relating
to the Property are pending or, to Seller's knowledge, threatened with regard
to the Property.

(t) Insurer Notices. Seller has not received any written
notice from any insurance company or board of fire underwriters of any defects
or any inadequacies in, on, or about the Property, or any part or component
thereof which would adversely affect the insurability of the Property of cause
an increase in the premiums for the Property which have not been cured or
repaired to the satisfaction of the party issuing the notice.

(u) Seller's Affidavit at Closing. The representations,
warranties and covenants of the Seller contained in this Agreement or in any
document delivered to Purchaser pursuant to the terms of this Agreement
(whether in this Paragraph 7 or elsewhere) (i) shall be true and correct in all
material respects and not in default at the time of Closing, just as though
they were made at such time, and Seller shall deliver to Purchaser, at Closing,
an Affidavit to that effect, and (ii) in the event of a breach of such
representations, warranties or covenants prior to or at Closing, Purchaser
shall have the right to make a claim hereunder against Seller for a period of
one (1) year after the date as of which such Affidavit was delivered to
Purchaser.

As used in this paragraph 7, the phrase "actual knowledge" shall mean,
refer and be limited to the actual knowledge of Mr. Eric Bolton, Executive Vice
President of Mid-America Apartment Communities, Inc., on the date hereof, which
does not include constructive knowledge.

PURCHASE AND SALE AGREEMENT PAGE 12
<PAGE> 13
7.3 Purchaser's Representation and Warranties. As a material
inducement to Seller to execute this Agreement and consummate this transaction,
Purchaser represents and warrants to Seller that:

(a) Organization and Authority. Purchaser has been duly
organized and is validly existing as a Maryland corporation and qualified to do
business in Arizona. Purchaser has the full right and authority and has
obtained any and all consents required therefor to enter into this Agreement,
consummate or cause to be consummated the sale and make or cause to be made
transfers and assignments contemplated herein. The persons signing this
Agreement on behalf of Purchaser are authorized to do so. This Agreement and
all of the documents to be delivered by Purchaser at the Closing have been
authorized and properly executed and will constitute the valid and binding
obligations of Purchaser.

(b) Conflicts. There is no agreement to which Purchaser
is a party or to Purchaser's knowledge binding on Purchaser which is in
conflict with this Agreement.

(c) Return of Due Diligence Materials to Seller. In the
event that Purchaser terminates or causes a termination of this Agreement,
Purchaser shall deliver to Seller all copies of due diligence materials
furnished by Seller to Purchaser and copies of all reports prepared for
Purchaser with respect to the Property. In no event shall this paragraph be
construed to require Purchaser to deliver to Seller any internal work product
of Purchaser or originals of any reports; provided, however, Purchaser agrees
to maintain the confidentiality of such materials as provided in this
Agreement.

7.4 Bond Obligations. Seller and Purchaser covenant to cooperate
fully with each other in connection with the assumption by Purchaser of the
Bond Obligations.

8. Closing and Conditions to Closing.

(a) The Closing Generally. The Closing shall occur at
10:00 a.m. on the date which is fifteen (15) days following the expiration of
the Feasibility Period, at the offices of the Title Insurer, or at such other
time and place as to which the parties hereafter may agree upon in writing. At
Closing, the Purchase Price shall be delivered to Seller in the manner provided
at Paragraph 5, and possession of, and title to, the Property shall be
delivered and conveyed to Purchaser in the manner provided herein, together
with all other documents to be delivered by Seller to Purchaser hereunder.

(b) Documents Delivered By Seller at Closing. At the
Closing, Seller shall deliver, or shall cause to be delivered, to Purchaser the
conveyance, assignment and other documents described below:

PURCHASE AND SALE AGREEMENT PAGE 13
<PAGE> 14
(i) Special Warranty Deed. A special warranty
deed, duly executed and acknowledged, conveying to Purchaser good and
indefeasible fee simple title to the Land and Improvements free and clear of
all liens and encumbrances, except the Permitted Title Exceptions.

(ii) Bill of Sale and Assignment. A bill of sale,
duly executed and acknowledged, with special warranties of title, subject only
to the Permitted Title Exceptions, conveying to Purchaser (A) the Included
Personal Property, (B) Seller's interest, if any, in and to all assignable
Service Contracts, together with copies of the originals of each of said
contracts, (C) all existing warranties on the Improvements, including, but not
limited to, roofs, foundations, plumbing, heating, air conditioning, and
electrical, if any, (D) Seller's right, title and interest, if any, in and to
the name "Laguna Point Apartments" and other applicable trade names or
trademarks used by Seller in connection with the Property, and (E) Seller's
right, title and interest in any and all licenses, permits, approvals and other
intangible property or rights relating to the Property, if any, together with
appropriate endorsements or such other instruments as may be necessary to
transfer title to Seller's interest in the Included Personal Property.

(iii) Assignment of Tenant Leases. A transfer and
assignment of all of Seller's right, title and interest in and to the Tenant
Leases, together with all rents, other income and deposits paid or payable
thereunder, subject to the Permitted Title Exceptions, together with delivery
of all Tenant Leases and information pertinent thereto.

(iv) Affidavit of Seller. An affidavit of Seller,
pursuant to Subparagraph 7(u) to the effect that the representations and
warranties of Seller pursuant to Paragraph 7 continue to be true and correct in
all material respects and that all of Seller's covenants (not otherwise waived
by Purchaser) have been performed as of the date of Closing.

(v) Opinion of Seller's Counsel. Seller, at its
sole cost and expense, shall deliver or shall cause to be delivered an opinion
of counsel to Seller, in form and content reasonably satisfactory to Purchaser,
regarding the due authorization, execution and delivery by Seller of this
Agreement and the closing documents executed by Seller.

(vi) Bond Documents. Seller, at its sole cost and
expense, shall deliver or shall cause to be delivered to Purchaser the
documents required by the issuer of the Bonds to consummate the assumption by
Purchaser of the Bond Obligations, except those documents as may be required to
be delivered by Purchaser.

(c) Conditions Precedent to Purchaser's Obligations.
Purchaser shall not be obligated to consummate the transfer of title to the
Property hereunder unless and until:

PURCHASE AND SALE AGREEMENT PAGE 14
<PAGE> 15
(i) Closing Documents. Seller has delivered (A)
to the Title Insurer the closing documents described herein and any other
documents approved by Seller and required by the Title Insurer in order to
insure Purchaser's good and indefeasible fee simple title to the Property free
and clear of all liens and encumbrances, except the Permitted Title Exceptions,
and (B) to Purchaser all other instruments required pursuant to the terms of
this Agreement.

(ii) No Uncured Breach. There has been no uncured
breach by Seller of any of the agreements, representations, warranties or
covenants contained in Paragraph 7.

(iii) Title Vested in Seller. Good and marketable
title to the Property has been shown to be vested in Seller in accordance with
and subject to the matters stated in Paragraph 6(a).

(iv) Bond Obligations. Seller shall have taken
all actions required of it in order to obtain the consent of the appropriate
parties, including, but not limited to the issuer of the Bonds, to the
assumption by Purchaser of the Bond Obligations.

(v) Inspections. Prior to the expiration of the
Feasibility Period, Purchaser shall have received at its sole cost and expense
various reports, satisfactory to Purchaser in its sole discretion, of
inspections of the Property (including without limitation structural,
mechanical, environmental, cathodic and financial). Not later than the
Effective Date, Purchaser shall have received the items listed in Schedule I
attached hereto to the extent in Seller's possession. Seller shall make the
Property and all reports, books and records and agreements relating to the
construction, ownership, management and operation of the Property available to
the Purchaser and its agents at the Property or offices of Seller throughout
the Feasibility Period. If the results of the inspections are unsatisfactory
to Purchaser, or for any reason whatsoever, in its sole and absolute
discretion, Purchaser, at its election, may terminate this Agreement by giving
written notice to Seller at any time prior to 5:00 P.M., C.D.T., on or before
the last day of the Feasibility Period, whereupon the Title Insurer immediately
shall return the Earnest Money Deposit to Purchaser, this Agreement
automatically shall terminate, and neither party shall have any further
obligation to the other. In the absence of such notice by such date, the
inspections shall be deemed to have been approved by Purchaser. Purchaser
covenants that Purchaser shall repair any damage caused by Purchaser or its
agents in connection with Purchaser's inspections hereunder.

(vi) Waiver by Purchaser. Purchaser, at any time
at or prior to Closing, may waive any one or more of the preceding requirements
by written notice to Seller to that effect.

PURCHASE AND SALE AGREEMENT PAGE 15
<PAGE> 16
(vii) Closing Costs. The premiums or cost for the
abstracting, title examination fees, Commitment, Survey, and Owner Policy, the
recording costs for the special warranty deed described in Subparagraph 8(b)(i)
hereof and the recording costs for any other of the Closing documents necessary
to convey good and marketable fee simple title to the Property to Purchaser in
accordance with this Agreement, any and all sales and transfer taxes,
documentary stamps and any and all costs and expenses relating to the Bonds
(including, but not limited to, transfer and trustee fees) shall be borne by
Seller. Purchaser and Seller each shall pay their respective attorneys' fees
and expenses and fifty-percent of the escrow fees (if any). All other costs
and expenses in connection with the transaction contemplated by this Agreement,
unless otherwise expressly set forth herein to the contrary, shall be allocated
pursuant to custom in the state constituting the situs of the Property and on
similar real estate transactions.

9. Prorations and Adjustments.

(a) Items Prorated. All prorations and adjustments shall
be made and determined as of the Proration Date with Seller receiving all
income and paying all expenses attributable to periods up to and including the
Proration Date, and Purchaser receiving all income and paying all expenses
attributable to periods after the Proration Date as follows:

(i) Rents. Collected rents shall be prorated.
Seller shall not receive any proration credit for rents accrued and delinquent
for months prior to the Proration Date, and all rentals received after such
date shall be applied, first, to current and, then, delinquent obligations, the
latter of which shall be paid to Seller; provided, however, nothing herein
shall operate to require Purchaser to expend any sums or institute a lawsuit to
recover such amounts. Seller shall not be charged for uncollected rent for the
month within which the Proration Date shall occur, it being the intent of the
parties to prorate only the rents that have been collected at such date. Any
delinquent rents for periods prior to the Proration Date and a prorated portion
of rents for the month uncollected as of the Proration Date which are collected
by Purchaser and which are not necessary to bring a tenant current as described
above shall be forwarded to Seller promptly upon receipt.

(ii) Prepaid Rents and Security and Other
Deposits. Prepaid rents and security and other tenant deposits (including but
not limited to pet deposits and key deposits), if any, under assigned leases
shall be paid to Purchaser by Seller at Closing. Purchaser shall assume full
liability therefor and hold Seller harmless with respect to all such deposits.

PURCHASE AND SALE AGREEMENT PAGE 16
<PAGE> 17
(iv) Property Taxes. Taxes assessed upon the
Property for calendar year 1996 shall be prorated based on the assumption that
the rate for calendar year 1996 to be applied to the most current assessment of
the Property will be the same as calendar year 1995. Taxes prorated at Closing
shall be reprorated between the parties promptly upon the receipt of the 1996
real estate tax bill.

(v) Utilities. Utility charges shall not be
prorated but, rather, instructions shall be given to the utility companies by
Seller (with a duplicate copy of such instruction being provided concurrently
to Purchaser) to read the meters on the date of Closing and to issue separate
statements thereafter. In the event that any provider of utilities shall
refuse to issue separate statements in the manner aforesaid, applicable utility
charges shall be adjusted in the manner of rents.

(vi) Other Adjustments. Such other items as are
adjusted pursuant to custom in the state constituting the situs of the Property
and on similar real estate transactions.

(vii) Delivery by Seller of Documents and Supplies.
Seller, at Closing, shall assign and deliver to Purchaser all original leases,
deposits, supplies, contracts, and other items as to which proration is to be
made. Seller also shall deliver to Purchaser all Plans and Specifications
relating to the Property and all such other documents, books, records, and keys
which relate to the operation, maintenance or management of the Property.
Seller also shall deliver to Purchaser its current supply of printed leasing
brochures, floor plans and other advertising literature with respect to the
Property (except if the same contains Seller's, or Seller's agent's, logo).
Prior to the Closing Date, Seller will continue to provide such information as
may be required by Purchaser's accountants to perform, at Purchaser's expense,
a complete audit of the Property for the twelve (12) month period ended
December 31, 1995, as well as 1996 year-to-date information, and subsequent to
the Closing Date, cooperate with Purchaser with respect to audits for the
twelve (12) month period ending December 31, 1996.

10. Material Damage.

(a) Procedure. If, prior to Closing, the Property shall
be destroyed or sustain Material Damage as a result of fire or other casualty,
then, at Purchaser's option exercised in the manner provided hereunder, the
following shall occur:

(i) At the option of Purchaser, this Agreement
shall become null and void and the Earnest Money Deposit shall be returned to
Purchaser, provided that Purchaser gives notice of such election at or prior to
Closing, but in any event within ten (10) days following receipt by Purchaser
of notice of the occurrence of any such event; or

PURCHASE AND SALE AGREEMENT PAGE 17
<PAGE> 18
(ii) If all other conditions precedent to
Purchaser's obligation to close have been satisfied, the purchase and sale
transaction shall close with a reduction in the cash portion of the purchase
price equal to the amount of the applicable insurance deductible, and
concurrently with such closing, Seller and any other named insured shall assign
to Purchaser, in form satisfactory to Purchaser, all claims arising under any
policy of insurance covering such casualty, and Seller shall have no further
liability to Purchaser with respect to such damage.

If the parties shall fail to agree on the amount of the cost of such
restoration, either party may terminate this Agreement by giving written notice
to the other prior to Closing and, in such event, the Purchaser shall have the
right to the return of the Earnest Money Deposit, and neither party shall have
any further obligations to the other.

(b) Damage Other Than Material Damage. In the event of
any damage to the Property other than Material Damage, the purchase and sale
transaction shall close in accordance with and subject to the conditions of
Subparagraph 10(a)(ii). If the cost to restore the Property to its condition
before the casualty, as mutually agreed by Seller and Purchaser is not more
than $150,000 and is uninsured, the cash portion of the purchase price shall be
reduced by the cost to restore thus determined.

12. Brokerage and Consultants.

(a) Representation of Seller. Seller represents and
warrants that, except for Andrew Tate of Hendricks & Partners ("Broker"), it
has neither employed, retained, nor consulted any broker, consultant, agent or
finder in carrying on the negotiations relative to this Agreement or the
purchase and sale referred to herein, and Seller shall indemnify and hold
Purchaser harmless from and against any and all claims, demands, causes of
action, debts, liabilities, judgments and damages (including costs and
reasonable attorneys' fees) which may be asserted or recovered against it on
account of any brokerage fee, consulting fee, commission or other compensation
claimed by, through or under Seller. Seller further represents and warrants
that Broker will be paid by Seller pursuant to a separate written agreement.

PURCHASE AND SALE AGREEMENT PAGE 18
<PAGE> 19
and all claims, demands, actions, causes of action, debts, liabilities,
judgments and damages (including costs and reasonable attorneys' fees) which
may be asserted or recovered against it on account of any brokerage fee,
consulting fee, commission or other compensation arising by reason of the
breach of this representation and warranty.

(c) Advice as to Title. Purchaser acknowledges that, at
the time of execution of this Agreement, Broker advised Purchaser by this
writing that Purchaser should have the abstract covering the Property examined
by an attorney of Purchaser's own selection or that Purchaser should be
furnished with or should obtain a policy of title insurance.

13. Indemnification.

(a) Indemnification of Purchaser. Seller hereby agrees
to indemnify, defend and hold harmless the Purchaser and any other holder of
record title to the Property pursuant to Paragraph 21, their officers,
directors, general partners, agents and employees and their respective heirs,
executors, administrators, successors and assigns, from and against any and all
indebtedness or other liability arising out of ownership or operation of the
Property prior to Closing, including, but not limited to, any and all claims,
liabilities, damages, penalties and losses, costs or expenses (including court
costs and reasonable attorneys' fees) incurred, resulting from or in any way
arising out of any act or omission of Seller, its agents and employees, in
respect of the operation of the Property prior to Closing, any injury to
persons or damage to property happening or occurring in, on or about the
Property, claimed by, through or under Seller. Seller further agrees, upon
notice and request from Purchaser, to contest or settle any such demand, claim,
suit or action against which Seller has hereinabove agreed to indemnify and
hold Purchaser harmless, and to settle or defend any action that may be brought
in connection with any such demand, claim, suit or action or with respect to
which Seller has hereinabove agreed to indemnify and hold Purchaser harmless
and to bear all costs and expenses of such contest and defense, provided,
however, that Seller shall have no obligation hereunder to indemnify or hold
Purchaser harmless from and against any claim, liability, damage, penalty or
loss, cost or expense incurred by Purchaser incident to, resulting from or in
any way arising out of any act or omission of Purchaser, its agent or
employees, it being understood and agreed, however, that the employees engaged
in the operation of the Property prior to Closing are and shall be construed to
be, for purposes of this provision, the employees of Seller and the acts and
omissions of said employees shall in no way be attributable to Purchaser for
the purposes of this provision.

(b) Indemnification of Seller. Purchaser agrees to
indemnify, defend and hold harmless the Seller its officers, directors, general
partners, agents and employees and their respective heirs, executors,
administrators, successors and assigns, from and against any and all
indebtedness or other liability arising out of ownership or operation of the
Property after the Closing or in connection with Purchaser's inspections
hereunder,

PURCHASE AND SALE AGREEMENT PAGE 19
<PAGE> 20
including, but not limited to, any and all claims, liabilities, damages,
penalties and losses, costs or expenses (including court costs and reasonable
attorneys' fees) incurred, resulting from or in any way arising out of any act
or omission of Purchaser, its agents and employees, in respect of the operation
of the Property after the Closing, any injury to persons or damage to property
happening or occurring in, on or about the Property and claimed by, through or
under Seller. Purchaser further agrees, upon notice and request from Seller,
to contest any such demand, claim, suit or action against which Purchaser has
hereinabove agreed to indemnify and hold Seller harmless, and to defend any
action that may be brought in connection with any such demand, claim, suit or
action or with respect to which Purchaser has hereinabove agreed to indemnify
and hold Seller harmless and to bear all costs and expenses of such contest and
defense, provided, however, that Purchaser shall have no obligation hereunder
to indemnify or hold Seller harmless from and against any claim, liability,
damage, penalty or loss, cost or expense incurred by Seller incident to,
resulting from or in any way arising out of any act or omission of Seller its
agent or employees.

(c) Indemnification Procedure. To the extent of any
claims against Seller or Purchaser predicated upon facts which could reasonably
be interpreted as giving rise to potential liability of Seller or Purchaser
under this Paragraph 13, the party against whom such claim is asserted shall
promptly give notice thereof to the other party hereto. Notice of any such
claim must be delivered to the indemnifying party within one (1) year following
the Closing Date. Thereupon, such other party shall have the option of
retaining counsel of its choice to defend both it and the remaining party in
respect of such claim and to control, in a manner reasonable in light of
applicable circumstances, the course and ultimate disposition of such claim. In
the event that a party to this Agreement shall elect to exercise the option
provided in the preceding sentence, the party electing such option, by reason
thereof, shall be deemed to have agreed to pay all reasonable costs and
expenses of defending against such claim and any liability of the party against
whom such claim was asserted on account thereof. Without regard to whether any
party hereto shall exercise such option, Seller and Purchaser and their counsel
shall consult with one another concerning such claim and with due regard to
both the mutual and the independent interests of Seller and Purchaser therein.

14. Notice to Tenants. Purchaser and Seller agree to provide
notices to the tenants of the Property in accordance with Arizona law.

15. Payments.

(a) General. All payments to be made under this
Agreement shall be made by the wire transfer of immediately available funds.
Notwithstanding any provision to the contrary, whether express or implied, the
payment required under Paragraph 5 hereof with respect to the Earnest Money
Deposit only shall be deemed made to Seller by payment thereof to the Title
Insurer, as escrow agent for Seller and Purchaser, to be held

PURCHASE AND SALE AGREEMENT PAGE 20
<PAGE> 21
by the Title Insurer in escrow until the earlier of (i) the Closing (or such
later date in respect to which explicit provision is herein made), (ii) such
time as Purchaser shall be entitled to a refund thereof or (iii) such time as
Seller shall be entitled to demand the same as liquidated damages in accordance
with subparagraph 16(a). At whichever of such times first occurs, the Title
Insurer shall pay such amounts to the party then entitled thereto. Except in
connection with a Closing, the Title Insurer shall not pay such funds to either
party unless both (A) the party claiming to be entitled thereto gives notice of
such entitlement to the Title Insurer and to the other party, including an
affidavit containing the facts on which such claim is based, and (B) the other
party does not, within fifteen (15) days of such notice, give notice to the
Title Insurer that the claim of the first party is disputed. If the Title
Insurer receives notice within such fifteen (15) day period that the claim of
entitlement is disputed, the Title Insurer shall continue to hold such amounts
in escrow and shall not pay such amounts to either party until such dispute is
finally resolved by written agreement signed by both parties or by final
unappealable judgment of a court of law, and when such dispute is finally
resolved, the Title Insurer then shall pay such amounts to the party or parties
entitled thereto pursuant to such final resolution.

(b) Deposits to Account of Title Insurer. Unless and
until the Title Insurer shall advise Purchaser and Seller to the contrary in
writing, it is represented and acknowledged that deposits to the account of
Title Insurer made hereunder by Seller and/or Purchaser shall be made as
follows:

Account Owner:

Account Name:

Account Number:

Depository:

ABA Routing No.:

Telephone Advice:

16. Default and Remedies.

(a) Remedies of Seller. In the event that all conditions
to Purchaser's obligation to close have been satisfied and Purchaser fails to
close its purchase of the Property hereunder, the Earnest Money Deposit shall
be paid to Seller and retained by it as liquidated damages as Seller's sole and
exclusive remedy hereunder. The parties acknowledge that Seller's damages
occasioned by Purchaser's default hereunder

PURCHASE AND SALE AGREEMENT PAGE 21
<PAGE> 22
would be difficult to ascertain, but agree that the amount of the Earnest Money
Deposit represents a reasonable estimate of Seller's damages.

(b) Remedies of Purchaser. In the event that all
conditions to Seller's obligation to close have been satisfied and Seller fails
to close its sale of the Property hereunder, Purchaser, at its sole discretion,
either may (i) specifically enforce this Agreement and the sale and purchase
provided for herein according to its terms by suit filed within ninety (90)
days, or (ii) terminate this Agreement, whereupon the Earnest Money Deposit
shall be returned in full to Purchaser.

(c) Rightful Termination by Purchaser. In the event that
the conditions precedent to Purchaser's obligation to close are not satisfied
and Purchaser terminates this Agreement pursuant to the terms hereof, the
Earnest Money Deposit shall be returned in full to Purchaser as its sole
remedy, and the parties shall have no further liability to one another.

(d) Expense of Default. In the event either party hereto
is required to employ an attorney because of the default of the other party,
then the defaulting party shall pay to the nondefaulting party court costs and
a reasonable attorney's fee incurred in the enforcement of this Agreement.

17. Notices. All notices and other communications hereunder shall
be effective as to any party only if, concurrent with notice to such party,
notice shall be given to such party's counsel. All notices shall be in writing
and shall be deemed to have been duly given, in the case of facsimile
transmission, the date of transmission, and, in the case of transmission via a
commercial air courier service or the United States Postal Service, the latter
being registered or certified mail, return receipt requested, first class,
postage prepaid, upon the date of receipt (unless simultaneous facsimile
notification is transmitted, then upon the date of such facsimile
transmission), as follows:

Notice as to Seller:

America First Arizona REIT, Inc.
c/o Mid-America Apartment Communities, Inc.
6584 Poplar Avenue, Suite 340
Memphis, Tennessee 38138
Attn: Mr. George E. Cates
Fax: (901) 682-6667

Notice to Seller's Counsel:

Apperson, Crump, Duzane & Maxwell, P.L.C.
1755 Kirby Parkway, Suite 100

PURCHASE AND SALE AGREEMENT PAGE 22
<PAGE> 23
Memphis, Tennessee 38120-4376
Attn: John B. Maxwell, Jr., Esq.
Fax: (901) 757-1296

Notice as to Purchaser:

Walden Residential Properties, Inc.
5400 LBJ Freeway
One Lincoln Centre
Suite 400
Dallas, Texas 75240
Attention: Mr. Marshall B. Edwards
Fax: 214/788-1550

Notice to Purchaser's Counsel:

Munsch Hardt Kopf Harr & Dinan
4000 Fountain Place
1445 Ross Avenue
Dallas, Texas 75202
Attention: Robin K. Minick
Fax: 214/855-7584

18. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED, ENFORCED
AND GOVERNED IN ALL RESPECTS BY THE LAWS OF THE STATE CONSTITUTING THE SITUS OF
THE PROPERTY. THE INITIAL DRAFT OF THIS AGREEMENT WAS PREPARED BY PURCHASER
ONLY AS A MATTER OF CONVENIENCE AND SHALL NOT BE CONSTRUED FOR OR AGAINST
EITHER PARTY ON THAT ACCOUNT.

19. Binding Effect. This Agreement and the exhibits attached
hereto shall be binding upon, and shall inure to the benefit of, the parties
hereto, their successors and assigns.

20. Entire Agreement. This Agreement and the exhibits attached
hereto shall constitute the entire contract between the parties and supersedes
all prior and contemporaneous agreements, representations and undertakings of
the parties regarding the subject matter of this Agreement. This Agreement may
not be modified except by a writing, one or more counterparts of which is
signed by all parties to this Agreement.

21. Vesting of Title to Property. Seller and Purchaser agree that
title to the Property will be vested at Closing in such other entity as
Purchaser may direct by written notice to Seller given not later than ten (10)
business days prior to Closing. For purposes

PURCHASE AND SALE AGREEMENT PAGE 23
<PAGE> 24
of this Agreement, "Purchaser" shall mean Purchaser and its successors and
assigns. In no event shall Walden Residential Properties, Inc. be released
from liability hereunder as a result of such assignment.

22. Waiver. No inspection by Purchaser of the Property or of any
item delivered by Seller to Purchaser as provided in this Agreement shall
constitute a waiver of any representation, warranty or covenant made by Seller
hereunder. The waiver by a party hereto of any term, covenant, agreement or
condition herein contained shall not be deemed to be a waiver of any subsequent
breach or failure of condition as to the same or any other term, covenant,
agreement or condition herein contained, nor shall any custom or practice which
may arise between the parties in the administration of the terms hereof be
construed as a waiver of or in such a manner as to lessen the rights of any
party to insist upon the performance by the other parties in strict accordance
with such terms.

23. Time of the Essence. The time for performance of the
obligations of the parties hereunder is of the essence in this Agreement.

24. Survival of Agreement. The obligation of any parties to
this Agreement, including any performance specified or anticipated to occur
following the Closing and all indemnities, to that extent shall survive the
Closing.

25. Headings. The subject headings of paragraphs and
subparagraphs of this Agreement are included for purposes of convenience only
and shall not affect the construction or interpretation of any of its
provisions.

26. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.

27. General.

(a) Time for Performance of Certain Obligations. At
Purchaser's option, this Agreement shall be null and void unless one copy
hereof, executed by Purchaser and Seller, together with the Earnest Money
Deposit, shall have been delivered to Title Insurer within four (4) business
days following the date of execution hereof by Purchaser.

(b) This Agreement and all documents, agreements,
understandings, and arrangements relating to this transaction have been
executed by the undersigned in his/her capacity as an officer or director of
Purchaser which has been formed as a Maryland corporation pursuant to the
Articles of Incorporation of Purchaser, and not individually, and neither the
directors, officers or stockholders of Purchaser shall be bound or have any
personal liability hereunder or thereunder. Seller shall look solely to the
assets of Purchaser for satisfaction of any liability of the Purchaser in
respect of this Agreement and

PURCHASE AND SALE AGREEMENT PAGE 24
<PAGE> 25
all documents, agreements, understandings and arrangements relating to the
transaction contemplated by this Agreement and will not seek recourse or
commence any action against any of the directors, officers or stockholders of
Purchaser or any of their personal assets for the performance or payment of any
obligation hereunder or thereunder. The foregoing shall also apply to any
future documents, agreements, understandings, arrangements and transactions
between the parties hereto.

(c) This Agreement and all documents, agreements,
understandings, and arrangements relating to this transaction have been
executed by the undersigned in his/her capacity as an officer or director of
Seller, and not individually, and neither the directors, officers or
stockholders of Seller shall be bound or have any personal liability hereunder
or thereunder. Purchaser shall look solely to the assets of Seller for
satisfaction of any liability of the Seller in respect of this Agreement and
all documents, agreements, understandings and arrangements relating to the
transaction contemplated by this Agreement and will not seek recourse or
commence any action against any of the directors, officers or stockholders of
Seller or any of their personal assets for the performance or payment of any
obligation hereunder or thereunder. The foregoing shall also apply to any
future documents, agreements, understandings, arrangements and transactions
between the parties hereto.

28. Exchange.

(a) By Purchaser. Purchaser desires to exchange, for other
property of like kind and qualifying use within the meaning of Section 1031 of
the Internal Revenue Code of 1986, as amended and the Regulations promulgated
thereunder, fee title in the Property. Purchaser expressly reserves the right
to assign its rights, but not its obligations, hereunder to a Qualified
Intermediary as provided in Reg. Section 1.1031(k)-1(g)(4) on or before the
Closing Date. Seller agrees to cooperate fully in connection with the
foregoing.

(b) By Seller. Seller desires to exchange, for other property of
like kind and qualifying use within the meaning of Section 1031 of the Internal
Revenue Code of 1986, as amended and the Regulations promulgated thereunder,
the proceeds of sale of the Property. Seller expressly reserves the right to
assign its rights, but not its obligations, hereunder to a Qualified
Intermediary as provided in Reg. Section 1.1031(k)-1(g)(4) on or before the
Closing Date. Purchaser agrees to cooperate fully in connection with the
foregoing.

PURCHASE AND SALE AGREEMENT PAGE 25
<PAGE> 26
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed on the day and in the year entered below, effective as above written.

PURCHASER:

WALDEN RESIDENTIAL PROPERTIES, INC.,
a Maryland corporation

By:
----------------------------------
Marshall B. Edwards
Executive Vice President

Date Executed by Purchaser:
---------------

SELLER:

AMERICA FIRST ARIZONA REIT, INC.,
an Arizona corporation

By:
----------------------------------
Name:
-----------------------------
Title:
----------------------------

Date Executed by Seller:
------------------

PURCHASE AND SALE AGREEMENT PAGE 26
<PAGE> 27
The undersigned, constituting the Title Insurer, hereby agrees to
accept in escrow the moneys provided for in the above Agreement to be paid into
escrow and to hold and apply the same as provided in said Agreement.

TRANSNATION TITLE COMPANY
in its separate capacity and
as agent for Commonwealth Land
Title Insurance Company

By:
-------------------------------------
Authorized Agent

Date executed by Title Insurer:
----------

PURCHASE AND SALE AGREEMENT PAGE 27
<PAGE> 28
SCHEDULE I

ITEMS TO BE DELIVERED OR MADE AVAILABLE TO PURCHASER

1. Seller's most current owner's title insurance policy and a copy of all
title reports and documents in Seller's possession.

2. A list and a copy of all Service Contracts, all documents pertaining
to any leased Personalty, and all warranties, guaranties and bonds relating to
the Property, or any part thereof.

3. A complete, itemized and detailed inventory of the Personalty to be
conveyed by Seller to Purchaser at the Closing.

4. A copy of (i) all income and expense statements for the Property, for
the year-to-date and for the most recently completed prior year (prepared on a
monthly basis), and annual operating statements for the two (2) most recent
fiscal years, certified by Seller or audited (when available) as having been
prepared in accordance with generally accepted accounting principles (except to
the extent prepared on a cash basis), (ii) operating budgets for the Property
for the current calendar year and the upcoming calendar year, (iii) a capital
expenditure budget for the Property for the current calendar year, and the
upcoming calendar year, and (iv) such other information as may be required by
Purchaser's accountants to perform a complete audit of the Property for the
twelve (12) month period ended December 31, 1995, and year-to-date 1996.

5. A copy of all ad valorem and other property tax statements (including
personal property tax statements) relating to the Property for the current tax
year, and the immediately preceding two (2) tax years, including copies of any
assessments or statements for the current or forthcoming year, including a
summary of any contested tax assessments relating to the Property for the
preceding two (2) years, and the results thereof.

6. A copy of (i) a resident rent roll for the Improvements, showing
actual occupancies, rentals, delinquencies, defaults, security deposits,
assigned parking spaces (if any), free rent, rent concessions, resident
incentives, lease terms, unit numbers, unit types, and unit amenities, (ii) a
current schedule of rental rates for each type of unit within the Improvements,
and (iii) such other pertinent information regarding the resident leases and
rental units as is reasonably available to Seller, including, without
limitation a schedule of the appliances and amenities included in each type of
rental unit.

7. A copy of all site plans, surveys, soil and substrata reports and
studies, engineering plans and studies, environmental reports or studies,
architectural renderings, plans and

SCH 1.1
<PAGE> 29
specifications, construction contracts (with all applicable change orders),
floor plans, landscape plans, utility schemes and other similar plans, diagrams
of studies, if any, relating to the Property.

8. If available, a copy of the architect's certificate rendered at or
after the completion of construction of the Improvements stating that the
Improvements were constructed substantially in accordance with the plans and
specifications delivered to Purchaser hereunder.

9. A copy of all reports made by engineers, architects or others, if any,
relating to any structural problems or other defects with respect to any part
of the Property.

10. A copy of all certificates of occupancy for the Improvements, and a
letter from the City of Dallas dated no earlier than the Effective Date stating
that the Property complies fully with all applicable zoning ordinances and the
operation of the improvements as an apartment complex is a permitted use under
such ordinances, together with a copy of such ordinances.

11. A copy of all swimming pool permits, boiler permits and other licenses
and permits for the Property required by law and issued by any governmental
authority having jurisdiction over the Property or Seller.

12. A list of all employees currently employed in the operation of the
Property, setting forth his/her name, address, telephone number, position,
salary, benefits, bonuses, leasing commissions, other incentives, apartment
allowance (if applicable) and tenure with the Property.

13. A schedule outlining, and invoices, contracts and/or work orders
pertaining to, any (i) carpet replacement, window replacement, and appliance
replacement over the past two (2) years relating to the Improvements, (ii) any
other capital expenditures over the past two (2) years at the Property, showing
the nature of the work, expense, date and unit or common area where the work
was done, and (iii) regular maintenance and repair at the Property over the
past twelve (12) months.

14. A copy of the standard form of resident lease, leasing application,
security and pet deposit documents, rules and regulations, leasing brochures,
occupancy checklist, current marketing/leasing plans and business plans for the
Property, other standard forms and documents currently used in connection with
the leasing and marketing of the Property, and a profile of existing resident
base, including data on age, income, sex, household structure, occupation,
etc., to the extent such information is available to Seller.

SCH 1.1
<PAGE> 30
15. A list of all utility deposits or bonds for the Property and a copy of
all utility bills for the Property for the previous twelve (12) months,
excluding individually metered resident utility bills; and letter from each of
the utility providers stating that the utilities are available to the Property.

16. A summary of any approvals, requirements or prerequisites (if any)
imposed by any current lender having a security interest in the Property (or
any portion thereof) as a condition to the execution of this Agreement by
Seller or as a condition to the Closing as contemplated by this Agreement.

17. Copies of any documents related to any loans affecting the property
including, promissory notes, deeds of trust, guarantee agreements, appraisals
and other such documents pertaining to any such loans.

18. Copies of and/or access throughout the Feasibility Period to all
resident files.

19. Copies of any pertinent litigation of safety related issues with
respect to the Property.

20. Such other books, records, leasing files, contracts, agreements and
information relating to the property that are in Seller's possession or are
readily available to Seller and as may be required by Purchaser's accountants
to perform a complete audit of the Property for the twelve (12) month period
ended December 31, 1995.

SCH 1.1
<PAGE> 31
SCHEDULE 2.

EXISTING BOND INDEBTEDNESS

Borrower: America First Arizona REIT, Inc.
- --------

Issuer: The Industrial Development Authority of County of Maricopa
- ------

Trustee: First Tier Bank, National Association, Lincoln, Nebraska
- -------

Underwriter: Alex Brown & Sons, Inc.
- -----------

Original Loan Amount: $7,900,000
- --------------------

Current Balance: $7,680,000
- ---------------

Payment Schedule:
- ----------------

<TABLE>
<CAPTION>
Total
Year Principal Interest Debt Service
---- --------- -------- ------------
<S> <C> <C> <C>
1996 $145,000.00 $503,310.00 $648,310.00

1997 $155,000.00 $494,608.00 $649,608.00

1998 $165,000.00 $485,315.00 $650,315.00

1999 $175,000.00 $475,433.00 $650,433.00

2000 $185,000.00 $464,960.00 $649,960.00

2001 $195,000.00 $453,898.00 $648,898.00

2002 $205,000.00 $442,245.00 $647,245.00

2003 $220,000.00 $429,855.00 $649,855.00

2004 $230,000.00 $416,718.00 $646,718.00

2005 $245,000.00 $402,650.00 $647,650.00
</TABLE>

and continues to the year 2019, when the loan has been fully
amortized.

SCH 1.1
<PAGE> 32
EXHIBIT A

LEGAL DESCRIPTION OF LAND

Laguna Point Apartments
Mesa, Arizona
<PAGE> 33
EXHIBIT B

SURVEY

Laguna Point Apartments
Mesa, Arizona
<PAGE> 34
EXHIBIT C

SURVEYOR'S CERTIFICATE

Laguna Point Apartments
Mesa, Arizona
<PAGE> 35
EXHIBIT D

PLANS AND SPECIFICATIONS

Laguna Point Apartments
Mesa, Arizona

[Intentionally Omitted]
<PAGE> 36
EXHIBIT E

INCLUDED PERSONAL PROPERTY

Laguna Point Apartments
Mesa, Arizona
<PAGE> 37
EXHIBIT F

EXCLUDED PERSONAL PROPERTY

Laguna Point Apartments
Mesa, Arizona
<PAGE> 38
EXHIBIT G

RENT ROLL

Laguna Point Apartments
Mesa, Arizona
<PAGE> 39
EXHIBIT H

INTENTIONALLY DELETED
<PAGE> 40
EXHIBIT I

STATEMENTS OF INCOME AND EXPENSE

Laguna Point Apartments
Mesa, Arizona
<PAGE> 41
EXHIBIT J

SCHEDULE OF INSURANCE

Laguna Point Apartments
Mesa, Arizona
<PAGE> 42
EXHIBIT K

SCHEDULE OF SERVICE CONTRACTS

Laguna Point Apartments
Mesa, Arizona
<PAGE> 43
EXHIBIT L

[Intentionally Omitted]
<PAGE> 44
EXHIBIT M

CLOSING DOCUMENTS

Laguna Point Apartments
Mesa, Arizona
<PAGE> 45
EXHIBIT N

STANDARD TENANT LEASE

Laguna Point Apartments
Mesa, Arizona

<PAGE> 1

EXHIBIT 10.4

ASSIGNMENT AND ASSUMPTION AGREEMENT

THE INDUSTRIAL DEVELOPMENT AUTHORITY
OF THE COUNTY OF MARICOPA
MULTIFAMILY HOUSING REVENUE
REFUNDING BONDS (LAGUNA POINT APARTMENTS PROJECT)
SERIES 1994

THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Agreement") is entered
into as of June 4, 1996, among AMERICA FIRST ARIZONA REIT, INC., an Arizona
corporation ("Seller"), WALDEN AZ CORPORATION, a Delaware corporation
("Purchaser"), THE INDUSTRIAL DEVELOPMENT AUTHORITY OF THE COUNTY OF MARICOPA
("Issuer"), and FIRST BANK NATIONAL ASSOCIATION, as Trustee ("Trustee").

WHEREAS, the Seller is the current owner of that multifamily housing
project located in Maricopa County, Arizona and known as "Laguna Point
Apartments" as described on Exhibit A hereto (the "Project"), which Project was
refinanced with the proceeds of the above-captioned bonds (the "Bonds") issued
pursuant to an Indenture of Trust (the "Indenture") dated as of July 1, 1994
between the Issuer and FirsTier Bank, National Association, Lincoln, Nebraska,
as trustee (now succeeded-in-interest by the Trustee); and

WHEREAS, in connection with the issuance of the Bonds, the Seller
executed and delivered the following documents (the "Seller Documents"): that
Loan Agreement dated as of July 1, 1994 between the Seller and the Issuer; that
Deed of Trust, Security Agreement, Assignment of Leases and Rents and Fixture
Financing Statement dated as of July 14, 1994 (the "Deed of Trust") among the
Seller, as borrower, the Trustee, as beneficiary and secured party, and Lawyers
Title of Arizona, Inc., as mortgage trustee, recorded as document number
94-0539195 in the Official Records of the Maricopa County Recorder; that
Assignment of Rents and Leases dated as of July 14, 1994 (the "Assignment") in
favor of the Trustee, as assignee, recorded as document number 94-0539196 in
the Official Records of the Maricopa County Recorder; that Promissory Note
dated July 14, 1994 (the "Note") in favor of the Issuer; that Land Use
Restriction Agreement dated as of July 14, 1994 (the "Restriction Agreement")
among the Issuer, the Seller and the Trustee; and that Indemnity Trust
Agreement dated as of July 1, 1994 (the "Indemnity Trust Agreement") among the
Seller, the Issuer and the Trustee;

WHEREAS, the Purchaser has agreed to purchase all of the Seller's
right, title and interest in the Project pursuant to that Purchase and Sale
Agreement dated April 12, 1996 (the "Purchase Agreement"); and

WHEREAS, the Project will not be pledged to the payment of any debt
other than the Bonds as a result of such purchase of the Project; and

WHEREAS, the Purchase Agreement requires that the Purchaser assume all
rights, powers, duties and obligations of the Seller under the Seller Documents
(the "Obligations"); and
<PAGE> 2
WHEREAS, Seller has agreed to transfer to Purchaser all of Seller's
right, title and interest in and to the Project, subject to the lien of the
Deed of Trust, and the Issuer has consented to such transfer, provided that the
Purchaser assumes all Obligations;

NOW, THEREFORE, in consideration of the mutual agreements herein
contained and other valuable consideration, and subject to the condition that
the execution of this Assumption Agreement will not impair the existing lien of
the Deed of Trust, or the priority thereof, it is HEREBY AGREED AS FOLLOWS:

1. ASSIGNMENT. The Seller hereby unconditionally assigns to
Purchaser all of its right, title and interest in the Seller Documents,
including all claims that the Seller may have in the future arising from such
documents. Nothing contained herein, and nothing done pursuant hereto, shall
affect the lien of the Deed of Trust and/or the priority thereof or release or
affect the liability of any person or entity now or hereafter liable or under
the Seller Documents except as expressly set forth in Section 4 below.

2. ASSUMPTION. Purchaser hereby unconditionally assumes, covenants,
promises and agrees that it shall (a) pay the Note at the time and in the
manner as provided therein, (b) subject to Section 4 below, perform each and
all of the Obligations, at the time and in the manner as provided in the Seller
Documents and (c) be bound by each and all of the terms and provisions of the
Seller Documents, in each case, to the same effect as if Purchaser had itself
executed and delivered each such document.

3. COMPLIANCE WITH TAX COVENANTS. The Purchaser hereby specifically
covenants to be bound by all provisions, covenants, restrictions, reservations,
charges and easements contained in the Restriction Agreement and Loan
Agreement. The Purchaser also covenants that it will not take any action,
permit any action or omit to take any action which would adversely affect the
exclusion of interest on the Bonds from gross income for federal income tax
purposes.

4. RELEASE. Seller's liability with respect to the Obligations is
hereby terminated provided, however, that Seller's liability to the Issuer and
Trustee accruing prior to the execution and delivery of this Assumption
Agreement (which liability Purchaser does not assume) shall survive the
execution and delivery of this Assumption Agreement and the transfer to
Purchaser of the Project.

5. CONTINUING EFFECT. Except for the release of Seller set forth in
Section 4, nothing herein shall be construed to constitute a waiver,
modification or release of any of the terms, covenants, provisions or
conditions, or of any default which may now or hereafter exist, under any of
the Seller Documents.

2
<PAGE> 3
IN WITNESS WHEREOF, this Assumption Agreement has been executed by the
parties hereto as of the day and year first hereinabove written.

AMERICA FIRST ARIZONA REIT, INC.,
an Arizona corporation, as Seller

By
---------------------------------
Its
--------------------------------

WALDEN AZ CORPORATION, a Delaware
corporation, as Purchaser

By
---------------------------------
Its
--------------------------------

THE INDUSTRIAL DEVELOPMENT
AUTHORITY OF THE COUNTY OF
MARICOPA, as Issuer

By
---------------------------------
Its
--------------------------------

FIRST BANK NATIONAL
ASSOCIATION, as Trustee

By
---------------------------------
Its
--------------------------------

<PAGE> 1
EXHIBIT 10.5

PURCHASE AND SALE AGREEMENT
(Costa del Sol Apartments)

This PURCHASE AND SALE AGREEMENT ("Agreement") is entered into as of
the ________ day of April, 1996.

1. Parties. The parties to this Agreement are as follows:

Walden Residential Properties, Inc., a Maryland corporation,
maintaining its principal office at One Lincoln Center, 5400 LBJ Freeway, Suite
400, Dallas, Texas 75240.

IBEX Costa del Sol Corp., maintaining offices at c/o IBEX Capital
Group, 2333 Ponce de Leon Boulevard, Suite 650, Coral Gables, Florida 33134.

2. Definitions. As used in this Agreement, the following terms
shall have the meanings hereinafter set forth in this Paragraph:

(a) Additional Earnest Money: An amount equal to $50,000
in cash, together with all earnings (if any) thereon.

(b) Agencies: All governmental agencies having
jurisdiction over the construction, zoning and operation of the Property.

(c) Applicable Environmental Laws: Any and all applicable
laws pertaining to health or the environment, including, without limitation,
the Superfund Reauthorization and Amendments Act of 1986 ("SARA"), the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980
("CERCLA"), the Resource Conservation and Recovery Act of 1976 ("RCRA"), the
Texas Water Code, the Texas Solid Waste Disposal Act, and the Texas Toxic
Substances Control Act ("TSCA"), as well as any and all other laws, ordinances,
rules and/or regulations created or imposed by any governmental authority
having jurisdiction with respect to the Property, whether local, state or
federal, pertaining to environmental regulation, contamination, cleanup or
disclosure, as now existing and/or as hereafter amended.

(d) Appurtenant Interests: All of the Seller's interest
in and to the appurtenances to the Land and in and to all streets, alley and
other public ways adjacent thereto.

(e) Closing: The consummation of the transfer of title
to the Property as contemplated hereunder and payment of the consideration
thereof in the manner provided at Paragraph 8 hereof.

(f) Current Rent Roll: The current schedule attached
hereto as Exhibit
<PAGE> 2
G, dated not more than thirty (30) days prior to the Effective Date, setting
forth, as of the date hereof, the Tenant Leases.

(g) Earnest Money Deposit: The Initial Deposit together
with the Additional Earnest Money.

(h) Effective Date: The date upon which this Agreement,
executed by both Purchaser and Seller, shall have been delivered to Title
Insurer together with the Initial Deposit.

(i) Excluded Personal Property: The tangible personal
property listed at Exhibit F hereto.

(j) Existing Indebtedness: All indebtedness currently
outstanding and secured by, or related to, the Property, all as more
particularly described on Schedule IV attached hereto and incorporated herein
by reference for all purposes.

(k) Existing Lender(s): Whether one or more, the
holder(s) of the Existing Indebtedness.

(l) Existing Lender Estoppel Letter(s): Whether one or
more, the executed letters obtained from the Existing Lender(s) in form and
content reasonably acceptable to Purchaser, including verification of the
absence of defaults under the Existing Indebtedness, the amount required to be
paid at Closing (including penalties and interest), and that the Existing
Lender will accept such payment in full satisfaction of the Existing
Indebtedness.

(m) Feasibility Period: The period commencing with the
delivery to Purchaser of the documents and other items listed in Schedule I
attached hereto and incorporated herein by reference, and ending on the
forty-fifth (45th) day thereafter.

(n) Hazardous Materials: Any toxic materials, hazardous
waste or hazardous substance as these terms are defined in the Applicable
Environmental Laws.

(o) Improvements: All of the buildings, fixtures and
improvements located on the Land, together with all mechanical systems,
fixtures and equipment, electrical systems, fixtures and equipment, plumbing
fixtures, systems and equipment, heating fixtures, systems and equipment and
air conditioning fixtures, systems and equipment installed in, belonging to or
constructed as components of the Improvements.

(p) Included Personal Property: All tangible personal
property listed at Exhibit E hereto, together with, for each apartment unit
comprising the Improvements, whether or not thus listed, all existing (or
replacements thereof as required under the terms

PURCHASE AND SALE AGREEMENT PAGE 2
<PAGE> 3
of this Agreement) carpeting, window coverings, ranges, ovens, dishwashers,
ceiling fan(s), bookshelves, range hoods, refrigerators, heating units, air
conditioning units, sinks and garbage disposals, and washers and dryers, the
same to be in the same condition at Closing as existed at the expiration of the
Feasibility Period, normal wear and tear excepted or as otherwise provided
under the terms of this Agreement, and all other furniture, fixtures,
equipment, machinery, supplies and other tangible personal property and all
leases of tangible personal property located on the Land and Improvements and
belonging to the Seller and used in the normal operation and maintenance of the
Land and Improvements.

(q) Initial Deposit: An amount equal to $50,000 in cash,
to be delivered by Purchaser to Title Company on or before the Effective Date,
together with all earnings (if any) thereon.

(r) Land: The land more particularly described at
Exhibit A.

(s) Intentionally Deleted.

(t) Material Damage: Damage to the Property of a nature
such that the cost of restoring the Improvements located on Property to its
condition prior to the fire or other casualty, as mutually agreed by the Seller
and Purchaser or as otherwise determined in accordance with this Agreement,
(but in full compliance with all then applicable building, health, zoning, and
similar laws, ordinances, and regulations) will exceed an amount equal to two
percent (2%) of the Purchase Price, whether or not such damage is covered by
insurance.

(u) Other Properties. The parcels of real property more
commonly known as the Villas of St. Moritz Apartments and the Summer Oaks
Apartments pursuant to the Purchase and Sale Agreements of even date with this
Agreement executed by and between Purchaser, as purchaser, and certain
affiliates of Seller, as sellers, all as more particularly described in
Schedule III attached hereto and incorporated herein by reference.

(v) Owner Policy: An Owner Policy of Title Insurance
issued by the Title Insurer in the standard form promulgated by the Texas State
Board of Insurance, as modified pursuant to Paragraph 6(d) hereof.

(w) Permitted Title Exceptions: Any items to which
Purchaser does not object within the time period provided in Paragraph 6(c)
hereof or which Purchaser approves as otherwise provided in this Agreement.

(x) Plans and Specifications: The plans and
specifications, if any, with respect to the Property.

PURCHASE AND SALE AGREEMENT PAGE 3
<PAGE> 4
(y) Property: The parcel of real property to be
purchased and sold pursuant to this Agreement and comprised of the Land,
Improvements, Included Personal Property, Appurtenant Interests, Tenant Leases
and all other property described in Paragraph 4 hereof.

(z) Proration Date: 12:01 a.m., Central Daylight Time, on
the date immediately preceding the date of Closing or such other date as shall
be specified in Paragraph 9 hereof.

(aa) Purchase Price: The total consideration to be paid
by Purchaser for the Property as set forth in Paragraph 5 hereof.

(bb) Purchaser: Walden Residential Properties, Inc., a
Maryland corporation, together with any designee thereof described in Paragraph
21 hereof.

(cc) Rent Roll: Collectively, the Current Rent Roll and
the Revised Rent Roll, or either of them as of the context may required.

(dd) Revised Rent Roll: A revision of the Current Rent
Roll dated not earlier than five (5) days prior to Closing.

(ee) Seller: IBEX Costa del Sol Corp.

(ff) Seller's Knowledge, Seller's Actual Knowledge, to the
Best of Seller's Knowledge. The current, actual knowledge of Jose F. Rosado,
Elmer Tague and Deborah Bruckner, without independent inquiry or investigation.

(gg) Service Contracts: All service or maintenance
contracts relating to the Property as described at Exhibit K hereto.

(hh) Street Rents: The rents for space in the Property
being offered to the public as of the date of this Agreement.

(ii) Intentionally Deleted

PURCHASE AND SALE AGREEMENT PAGE 4
<PAGE> 5
of circle for arc and chord distance and bearing of all curving sides or
boundaries of the Land, (D) establishes a single perimeter description, and (E)
references all abutting or encroaching streets, roadways and fence lines,
including a statement of width, (ii) noting, by plat, the size and location of
all Improvements and other physical conditions affecting the Property, (iii)
noting, by plat, the size and location of all abutting or encroaching streets,
roadways and fence lines, (iv) noting, by plat, the size and location of all
encroachments or protrusions, (v) noting, by plat, the size, location and
recording data of all easements, ditches, rights-of-way, setback lines, curb
cuts and similar matters, (vi) locating any portion of the Land or Improvements
determined to be flood prone or within the 100-year flood plain under the Flood
Disaster Protection Act of 1973 or otherwise determined to be flood prone or
within the flood plain by the Federal Emergency Management Agency, the United
States Army Corps of Engineers, a unit or department of the United States, the
engineer preparing the Survey, or any other state or federal agency, (vii)
certifying the number of acres of land in the Land, both as to total acreage
and as to net acreage, (viii) certified by the surveyor as conforming to the
current Texas Surveyor's Association Standards and Specifications for a
Category 1A Condition II Survey, (ix) being dated or recertified as of a date
not earlier than the Effective Date, and (x) containing a certificate
substantially in the form attached hereto as Exhibit C.

(kk) Tenant Leases: The lease agreements relating to the
Land and Improvements and existing at Closing.

(ll) Title Commitment: A Commitment for Title Insurance
issued by the Title Insurer in the standard form promulgated by the Texas State
Board of Insurance.

(mm) Title Insurer: Chicago Title Insurance Company, or
other title insurance company acceptable to Purchaser in its sole discretion,
acting through its agent, Safeco Land Title of Dallas, 1201 Elm Street, Suite
5220, Dallas, Texas 75270, Attn: L. Lamar Tims.

3. Agreement of Purchase and Sale. Subject to the terms and
conditions thereof and for the consideration of One Hundred and No/100 Dollars
($100.00) paid to Seller by Purchaser on the Effective Date, the receipt and
sufficiency of which hereby is acknowledged and which sum is nonrefundable to
Purchaser and in no event shall be applied against the Purchase Price and for
the Purchase Price set forth at Paragraph 5, Purchaser hereby agrees to
purchase, and Seller hereby agrees to sell, the Property, all as more
particularly described at Schedule III attached hereto and incorporated herein
by reference.

PURCHASE AND SALE AGREEMENT PAGE 5
<PAGE> 6
warranties covering the Included Personal Property and the Improvements, (B)
the trademarks or tradenames set forth on Schedule III attached hereto and
incorporated herein by reference for all purposes; (C) the Service Contracts
(to the extent assignable and not terminated as provided elsewhere in this
Agreement) and (D) all licenses, permits, approvals and other intangible
property rights relating to the Property.

5. Purchase Price.

(a) Purchase Price. Subject to the adjustments provided
in subparagraphs (b) and (c) below and elsewhere in this Agreement, the
Purchase Price shall be SEVEN MILLION TWO HUNDRED FIFTY THOUSAND AND NO/100
DOLLARS ($7,250,000), payable as follows:

(i) Earnest Money Deposit. $100,000, payable by
delivery of the Earnest Money Deposit to the Title Insurer in accordance with
this Agreement; and

(ii) Cash at Closing. $7,250,000, payable in cash
at Closing, less (A) the amount of the Existing Indebtedness and (B) any sum
paid Seller at Closing from the Earnest Money Deposit; and

(iii) Intentionally Deleted.

(iv) Intentionally Deleted.

(b) Occupancy Reserve. In the event that this Agreement
is not otherwise terminated previously, the Title Insurer shall withhold from
proceeds to Seller at Closing an amount ("Reserve") equal to difference between
$117,144 ("Guaranteed Revenue") and the actual monthly gross rental for the
Property established by certified rent roll on the date ("Estimation Date")
which is thirty (30) days prior to the Closing Date ("Estimated Revenue")
multiplied by six (6). (e.g., Reserve = [Guaranteed Revenue-Estimated Revenue]
x 6). Purchaser shall deposit the Reserve in an interest-bearing escrow
account ("Reserve Account") held by Title Insurer or such other independent
party as the parties may mutually select for the six (6) month period ("Reserve
Period") following the Closing Date. During the Reserve Period, Purchaser
shall have the right to draw from the Reserve Account on a monthly basis an
amount equal to the shortfall between the Guaranteed Revenue and the actual
rental revenues for the Property for the applicable month pursuant to an Escrow
Agreement in form and content to be agreed upon by the parties with in fifteen
(15) days following the Effective Date. At the expiration of the Reserve
Period, Title Insurer shall deliver to Seller the remaining balance of the
Reserve Account. For purposes of this paragraph, the term "actual monthly
gross rental" shall mean the aggregate of the monthly rental amount established
in the Leases for units which are occupied as reflected on the Rent Roll in
effect on the Estimation Date. Such actual monthly gross rental amount shall
not be reduced by rent abatement occurring prior to or

PURCHASE AND SALE AGREEMENT PAGE 6
<PAGE> 7
in the month of the Closing Date or prepayment of rent under such Leases.

(c) Additional Consideration. In the event that this
Agreement is not terminated previously, if the Estimated Revenue exceeds the
Guaranteed Revenue ("Surplus") as of the Closing Date, Purchaser shall deliver
to Seller at Closing an amount equal to the Surplus multiplied by 12 multiplied
by a factor of 7.5 (e.g., [Surplus x 12] x 7.5) (the "Additional
Consideration"), the product of which shall not exceed $351,360.

6. Evidence of Title.

(a) Title Commitment. Within twenty (20) days from and
after the Effective Date, Seller, at Seller's sole expense, shall order and
deliver, or cause to be delivered, to Purchaser or Purchaser's attorney, a
current Title Commitment from the Title Insurer covering the Property, in the
amount of the Purchase Price covering the Land and Improvements located on the
Property. The Title Commitment shall be issued as of or subsequent to the
Effective Date and shall include good, legible copies of all documents
constituting exceptions to the Seller's title as reflected in the Title
Commitment. The Title Commitment shall reflect good and indefeasible fee
simple title vested in the Seller.

(b) Survey. Within thirty (30) days from the Effective
Date, Seller, at Seller's sole expense, shall order and deliver, or shall cause
to be delivered, to Purchaser or Purchaser's attorney, the Survey of the Land
and Improvements. The Survey shall be sufficient to permit the Title Insurer
to modify the standard printed exception in the Owner Policy pertaining to
discrepancies, conflicts, shortages in area or boundary lines, encroachments,
overlapping of improvements or similar matters, as provided below.

(c) Review. Purchaser shall have through and including
the expiration of the Feasibility Period in which to review the Title
Commitment, Survey and exception documents and to deliver to Seller in writing
such objections as Purchaser may have to anything contained or set forth
therein. Any items to which Purchaser does not object to prior to the
expiration of the Feasibility Period or which Purchaser accepts as otherwise
provided herein shall be Permitted Title Exceptions. Seller may, at its sole
discretion, elect to attempt to cure any of Purchaser's title and survey
objections. If Seller so elects, Seller shall have a period of thirty (30)
days from and after receipt of Purchaser's written objections within which to
attempt to cure same. In the event that Seller fails or refuses to cure such
objections within such thirty (30) day period, Purchaser shall have the right
to terminate this Agreement and receive an immediate return of the Earnest
Money Deposit or proceed to Closing subject to such objections which shall be
deemed waived and shall become Permitted Title Exceptions.

PURCHASE AND SALE AGREEMENT PAGE 7
<PAGE> 8
Policy covering the Property, insuring good and indefeasible fee simple title
to be vested in Purchaser and insuring Purchaser's title to the Property in an
amount equal to the Purchase Price for the Property, subject only to the
Permitted Title Exceptions and the standard printed exceptions, except that:

If Title Insurer is unable or unwilling to provide the Title Policy at
Closing, Purchaser shall accept in lieu thereof an endorsement to the Title
Commitment confirming that all requirements for issuance of the Title Policy in
the form required by this Agreement have been satisfied.

(e) Evidence of Reinsurance. In the event that the
capital and surplus of the Title Insurer, as reflected on its most recent
annual statement, are less than $30,000,000, Seller also shall deliver to
Purchaser at Closing evidence reasonably satisfactory to Purchaser to the
effect that a title insurance company having capital and surplus of more than
said sum has reinsured all liabilities of the Title Insurer under the aforesaid
policies.

(f) Remedies of Purchaser. If Seller is unable to
furnish Purchaser the Title Commitment pursuant to Subparagraph 6(a) or the
Owner Policy in the manner provided at Subparagraph 6(d), then, at Purchaser's
sole discretion, Purchaser may cancel this Agreement and shall have the right
to the return of the Earnest Money Deposit, and the parties shall have no
further obligation to each other, except as is expressly provided in
Subparagraph 16(c). Seller shall have no liability for its inability to
deliver the Title Commitment or Owner Policy.

(g) Uniform Commercial Code Search. Seller also shall
deliver at Closing, at Seller's cost and expense, Uniform Commercial Code
financing statement searches covering Seller and any general partner of Seller
for the state constituting the situs of the Property and the county in which
the Property is located showing that all of the Included Personal Property is
free and clear of all liens and encumbrances other than the

PURCHASE AND SALE AGREEMENT PAGE 8
<PAGE> 9
Permitted Title Exceptions and also shall deliver copies of receipts showing
payment of all taxes levied and payable on the Property.

7. Covenants, Representations and Warranties of Seller. Seller
and Purchaser agree that, except as expressly provided herein, the Property is
being conveyed to Purchaser in "AS IS" condition, without representation or
warranty by Seller. Notwithstanding the foregoing, as an inducement to
Purchaser to enter into and perform this Agreement, Seller represents and
warrants to, and covenants with, Purchaser, as of the date of this Agreement
and thereafter in accordance with Paragraph 7(w) as follows:

(a) Legal and Beneficial Title. Seller is the sole
person holding good and indefeasible fee simple title to the Property, free and
clear of all liens and encumbrances except as set forth in the Title
Commitment.

(b) Due Authorization and Execution and Validity, Binding
Effect and Enforceability. This Agreement has been duly authorized and
executed by Seller and is a valid and binding obligation of, and is
enforceable, in accordance with its terms, against Seller. The documents
delivered to Purchaser at Closing will be duly authorized and executed by
Seller and will be a valid and binding obligation of, and will be enforceable
in accordance with their terms against, Seller.

(c) The Rent Roll. Attached hereto as Exhibit G is the
Current Rent Roll. Not earlier than five (5) days prior to Closing, Seller
shall deliver a Revised Rent Roll to Purchaser, certified by Seller in writing
as true and correct. The Revised Rent Roll shall set forth the following:

(i) the name of each tenant;

(ii) the lease commencement and expiration dates;
the nature of any renewal options;

(iii) the amount of any security deposits;

(iv) a list of vacant apartment units;

(v) the size and type of each vacant unit; and

(vi) the amount and description of any concessions
and any rights of first refusal.

(d) Representations as to Rent Roll. Except as expressly
set forth in the Rent Roll:

PURCHASE AND SALE AGREEMENT PAGE 9
<PAGE> 10
(i) All of the information contained on the Rent
Roll is true, correct and complete as of its date, in all material respects.

(ii) No rent under any Tenant Lease has been, or
prior to Closing will be, prepaid for a period in excess of thirty (30) days.

(iii) No tenant has any right of first refusal or
option with respect to the leasing of any portion of the Property.

(iv) No one, including any tenant, has any option
or right of first refusal to purchase the Property or any part thereof.

(v) To the best of Seller's knowledge, there are
no oral agreements with anyone, including tenants, with respect to the Property
or any portion thereof, except as set forth in a Rent Roll or at Exhibit K.

(vi) All of the present Tenant Leases for rental
space in the Improvements are in writing, on a standard form (which form is
attached hereto as Exhibit N) and, to the best of Seller's knowledge, are (A)
in full force and effect and (B) valid and binding agreements of, and fully
enforceable in accordance with their terms against, the tenants, and (C) duly
executed by all parties.

(vii) The Tenant Leases will not be amended in any
way after the date hereof, other than in the ordinary course of business,
without the prior, written consent of Purchaser, which consent shall not be
unreasonably withheld. Purchaser, unless it otherwise shall advise Seller in
writing within five (5) days following Seller's request for such consent, shall
be deemed to have consented to any such amendment.

(viii) To Seller's knowledge, except as stated in
the Rent Roll, there are no uncured defaults on the part of any party to any of
the Tenant Leases, and Seller is in material compliance with all of lessor's
obligations thereunder.

(ix) None of the rentals due or to become due
under the Tenant Leases will be assigned, encumbered, or subject to any liens
at the Closing other than the Permitted Title Exceptions.

(x) Except as set forth at Exhibit G, at the time
of Closing, all tenants will be paying charges for electricity consumed in
their space, including heating and air conditioning, on an individually metered
basis.

(e) Street Rents. The Street Rents are as follows:

PURCHASE AND SALE AGREEMENT PAGE 10
<PAGE> 11
<TABLE>
<CAPTION>
Unit Type Number Square Feet Monthly Rent
<S> <C> <C> <C>
_____________ __________ ___________ $___________
_____________ __________ ___________ $___________
_____________ __________ ___________ $___________
_____________ __________ ___________ $___________
_____________ __________ ___________ $___________
_____________ __________ ___________ $___________
Total __________ ___________ $___________
</TABLE>

(f) Operating Statements. Attached at Exhibit I is the
most recent monthly statement of income and expense in connection with the
operation and maintenance of the Property. Statements for the preceding
fifteen (15) months shall be made available to Purchaser promptly upon request.
Such statements are unaudited and were prepared on an accrual basis of
accounting by an accountant employed by Seller. Seller agrees to make
available to Purchaser or its representatives, at Seller's office (or to
provide Purchaser with photocopies thereof upon request), all existing
supporting documentation for such statements in Seller's possession or control.

(g) Financial Statements. At least thirty (30) days prior
to Closing, Seller shall provide Purchaser with the then existing most current
audited financial statements of the Property.

(h) Compliance with Applicable Regulations.

(i) To the best of Seller's knowledge, there
exist no commitments or agreements between Seller and any of the Agencies
affecting the Property which have not been fully disclosed to Purchaser in
writing.

(ii) To Seller's knowledge, Seller has received no
notices and is unaware of any facts or conditions which, with notice or lapse
of time, would constitute uncured violations at the Property of any applicable
statute, ordinance or regulation, relating to the Property, its construction,
zoning or any occupancy thereof, nor, to the best of Seller's knowledge, are
there presently pending or threatened against Seller or against the Property
any judgments relating to any of the above matters, any judicial proceedings or
administrative actions or any state of facts which, to the best knowledge of
Seller, with notice or lapse of time, could reasonably be expected to give rise
to any such proceedings or actions.

(iii) To the best of Seller's knowledge, the
Property and Seller are not currently subject to (A) any existing, pending or
threatened investigation or inquiry by any governmental authority or (B) any
remedial obligations, under any Applicable Environmental Laws; and Seller has
not obtained and is not required to obtain, and Seller has no knowledge of any
reason Purchaser will be required to obtain, any permits, licenses, or similar
authorizations to occupy, renovate, operate or use any portion of the

PURCHASE AND SALE AGREEMENT PAGE 11
<PAGE> 12
Property by reason of any Applicable Environmental Laws.

(iv) To the best of Seller's knowledge, no
Hazardous Materials are located on the Property. To the best of Seller's
knowledge, the Property does not contain any underground tanks for the storage
or disposal of Hazardous Materials. Further, to the best of Seller's
knowledge, (A) the Property during Seller's ownership has not been used for the
storage, manufacture or disposal of Hazardous Material, and (B) no written
complaint, order, citation or notice with regard to air emissions, water
discharges, noise emissions and Hazardous Materials, if any, or any other
Applicable Environmental Laws from the Agencies has been issued to and received
by Seller.

(v) If, prior to Closing, (A) Seller has received
any written notices from any of the Agencies, or (B) any legal action has been
instituted and served upon Seller relating to violations at the Property of
zoning, building, fire, rental controls or Applicable Environmental Laws or (C)
any written notice or advice from any current insurer of the Property or any
part thereof, requesting any improvements alterations, additions, corrections
or other work in, on or about the Improvements, whether related to the Property
or to the activities of any occupant thereof is received by Seller, the parties
shall agree in writing on an amount to be delivered to Title Insurer or such
other party agreed upon by Seller and Purchaser in escrow for the cost of
curing or eliminating any such items and the amount as so determined shall be
withheld from the proceeds of sale and shall be paid over to Seller upon
completion by Seller of such items. If the parties shall fail to agree on the
cost of curing or eliminating said items prior to Closing, either party shall
have the right to terminate this Agreement by giving written notice thereof to
the other not later than the date of Closing and, in such event, Purchaser
shall have the right to the return of the Earnest Money Deposit, and neither
party shall have any future obligations to the other, except for Purchaser's
surviving indemnity relating to inspections. The foregoing provision to the
contrary notwithstanding, if the notice is received or the action served within
fifteen (15) days of the Closing, Seller may elect, in its sole and absolute
discretion, to extend the Closing for a period not to exceed thirty (30) days
in order to attempt to cure or eliminate any such matter.

PURCHASE AND SALE AGREEMENT PAGE 12
<PAGE> 13
Insurer or Existing Lender an escrow of funds in an amount and upon conditions
reasonably acceptable to Seller and Purchaser, or (ii) provide a bond in favor
of Purchaser or Title Insurer or Existing Lender in such amounts, upon such
conditions and for such purposes as may be satisfactory to Purchaser, Seller
and Title Insurer or Existing Lender, in either case for the purpose of
providing for such claims and/or inducing the Title Insurer to insure
Purchaser's title to the Property free and clear of such claims.

(j) Insurance. To Seller's knowledge, the insurance
policies listed and described at Exhibit J are presently in force, and all such
policies or their equivalent will be maintained in force until Closing. Seller
will not renew, amend, or reduce the coverage under, or cancel, any existing
policy or procure any new policy without Purchaser's prior, written consent,
which shall not be unreasonably withheld or delayed. Purchaser, at Closing,
shall obtain its own insurance coverage. Seller has received no written
notices from any insurer of the Property or any part thereof requesting any
improvements, alterations, additions, correction or other work in, on or about
the Improvements, whether related to the Property or to the operation of any
occupant thereof, which have not been cured or satisfied.

(k) Pending or Threatened Litigation. There are no
lawsuits or legal proceedings instituted and served upon Seller or, to the best
of Seller's knowledge, threatened, regarding ownership, construction, use or
possession of the Property or any portion thereof.

(l) Inspection of Plans and Specifications, Reports and
Books and Records. The Property and the Plans and Specifications, all reports
(including but not limited to soil tests and construction inspection reports),
the books and records and all Tenant Leases and other documents related thereto
regarding the construction, management and operation of the Property in
Seller's possession or control shall be open to inspection by Purchaser or
Purchaser's agents during regular business hours from and after the Effective
Date, and Seller shall reasonably cooperate with Purchaser or its agents with
respect to the inspection of the Plans and Specifications, all reports, the
books and records, the Tenant Leases, the Property or the construction,
management and operation thereof. Such cooperation shall not be deemed to
include incurring any cost or expense.

(m) Maintenance of Property Until Closing.

(i) Until Closing, the Property will be managed,
operated and maintained, in the ordinary course of business and materially the
same manner in which the Property is currently being managed, operated and
maintained and Seller will not remove any fixtures, furnishings, equipment or
personalty subject to this Agreement, except for repair or replacement. In
addition, from and after the Effective Date, Seller agrees not to lease any
unit in the Property for an amount less than $25.00 below Street Rents.

PURCHASE AND SALE AGREEMENT PAGE 13
<PAGE> 14
(ii) All vacant rental units shall be in
"market-ready" rentable condition as of the date of Closing; provided, however,
Seller and Purchaser acknowledge that rental units that are vacated within five
(5) business days prior to the date of Closing will be in varying conditions of
make-ready for leasing, as is ordinary in Seller's course of business. As to
any vacant units that are not in "market-ready" rentable condition as of the
date of the Closing, Purchaser and Seller understand and agree that Purchaser
shall be entitled to credit against the Purchase Price at Closing an amount
equal to $500.00 per unit which Seller and Purchaser agree is the amount
required to put in "market-ready" rentable condition any units that are not in
such condition as of the date of the Closing. For purposes of this paragraph,
the term "market-ready" shall mean units that are cleaned (including carpets),
painted, in good repair, with all appliances in good-working order. Purchaser
shall have the right to reinspect the Property during the period commencing not
earlier than five (5) days prior to the Closing and ending on the Closing
solely for purposes of verifying the maintenance of the Property in accordance
with the applicable provisions of this Agreement.

(n) Service Contracts.

(i) All Service Contracts are listed in Exhibit
K. Seller will not enter into any other service, operating or management
contracts relative to the Property that cannot be canceled on thirty (30) days'
notice, nor will Seller make, or agree to, prior to Closing, any material
change or modification to the contracts set forth in Exhibit K without the
prior, written consent of Purchaser which shall not be unreasonably withheld.
The agreement concerning the management of the Property currently in effect set
forth at Exhibit K shall be terminated effective on the date of Closing. After
the expiration of the Feasibility Period, provided Purchaser has not terminated
this Agreement and has delivered the Additional Earnest Money, Seller shall,
upon written notice from Purchaser, send termination notices with respect to
such cancelable Service Contracts specified by Purchaser.

(ii) Seller has no employees in connection with
the Property. Any persons who work at the Property (other than pursuant to
Service Contracts) are employees of the Seller's property manager pursuant to a
property management agreement which shall be terminated at Closing. Seller
agrees that benefits or compensation accrued prior to Closing, and due or
claimed to be due either before or after Closing, to employees or former
employees of the property manager shall constitute obligations of the property
manager only, and Seller agrees to indemnify and hold Purchaser harmless from
all such obligations and claims.

(o) Restrictions on Additional Indebtedness. Seller will
not borrow any money or do, or fail to do, any other act or thing which would
cause the Land, the Improvements or any Included Personal Property to become
pledged or otherwise utilized as collateral or in any way stand as security for
any indebtedness or obligation, other than

PURCHASE AND SALE AGREEMENT PAGE 14
<PAGE> 15
as presently existing or in the ordinary course of business.

(p) Closing Not Constituting Breach. To Seller's
knowledge, the consummation of the transaction contemplated herein will not
result in the breach of any provision in any lease or other agreement affecting
the Property.

(q) Access to Property. To Seller's knowledge, Seller
has received no written notices of the existence of any fact or condition which
would result in the termination or restriction of the current access from the
Property to any presently existing highways and roadways adjoining the Property
or to any sewer or other utility serving the Property.

(r) Improvements and Amenities.

(i) Description of Improvements and Amenities. A
description of the improvements and amenities of each Property is more
particularly set forth at Schedule V attached hereto and incorporated herein by
reference for all purposes, which, to Seller's knowledge, is materially
correct.

(ii) Utilities. To Seller's knowledge, utility
systems for the transmission of gas, telephone, electricity, storm and sanitary
services, and water are available at the property lines of the Property.

(s) Seller's Nonforeign Status. Seller is not a "foreign
person" within the meaning of Sections 1445 and 7701 of the Internal Revenue
Code of 1954, as amended; that is, Seller is not a nonresident alien, foreign
corporation, foreign partnership, foreign trust, or foreign estate (as those
terms are defined in the Internal Revenue Code of 1986, as now existing or
hereafter amended).

(t) Taxes and Assessments. All ad valorem taxes and
personal property taxes which are due and payable, together with all special
assessments for improvements to the Property have been paid in full.

(u) Exhibits. To Seller's knowledge, all exhibits
attached hereto are true and correct in all material respects.

PURCHASE AND SALE AGREEMENT PAGE 15
<PAGE> 16
right to make a claim hereunder against Seller for a period of one (1) year
after the date as of which such Affidavit was delivered to Purchaser. The
foregoing provision and any other provision in this Agreement to the contrary
notwithstanding, the failure of any warranty or representation of Seller to be
true and correct due to events which arise between the date hereof and the
Closing Date which is in the ordinary course of business or beyond the
reasonable control of Seller shall not constitute a default or breach by
Seller. Instead, such change of condition, if material, shall constitute a
failure of condition precedent to Purchaser's obligations (a "Failure of
Condition"). For purposes of this provision, "material" shall mean changes
which in the aggregate adversely impact the Property by an amount greater than
one percent (1%) of the Purchase Price. In the event of a change of condition
which is not material, Seller shall be obligated to cure such condition and
shall be afforded a reasonable period of time to do so; or, Purchaser shall be
given a credit against the Purchase Price for the amount necessary to cure the
condition, as mutually agreed by the parties. In the event of a Failure of
Condition, Seller shall have the right, but not the obligation, to remedy such
change; and if Seller elects, in its sole discretion, to attempt to do so, it
shall have a reasonable period of time, but in no event shall such period
extend more than thirty (30) days subsequent to Closing. If Seller fails or
refuses to cure such Failure of Condition, Seller shall reimburse Purchaser for
Purchaser's reasonable out-of-pocket costs and expenses (including attorneys'
fees and expenses) incurred by Purchaser in connection with this Agreement not
to exceed in the aggregate one percent (1%) of the Purchase Price.

(w) Seller's Representatives. Seller represents and
warrants that during the entire period of Seller's ownership of the Property,
IBEX Capital Group ("ICG") has been the asset manager and that IBEX Management
Company Inc. ("IMC") and its assignee, IBEX Management Partners ("IMP"), have
been the property managers of the Property. Seller further warrants and
represents that during the entire period of Seller's ownership of the Property,
Jose F. Rosado has been the President and /or Chief Executive Officer of
Seller, ICG, IMP, and IMC; and that during the entire period of asset and
property management by ICG, IMP and IMC, Elmer Tague has been the Chief
Financial Officer of those entities; and that since February, 1991, Deborah
Bruckner has been a Vice-President of IMP and IMC and the individual primarily
responsible for the day-to-day supervision of management of the Property.

7A. Covenants, Representations and Warranties of Purchaser. As an
inducement to Seller to enter into and perform this Agreement, Purchaser makes
the following covenants, representations and warranties which covenants,
representations and warranties shall be true and correct in all material
respects on the date hereof and on the Closing Date, and shall be a condition
precedent to Seller's obligation to close the transaction contemplated herein:

(a) Organization and Authority. Purchaser is a
corporation duly organized, validly existing and in good standing under the
laws of Maryland, and has all

PURCHASE AND SALE AGREEMENT PAGE 16
<PAGE> 17
requisite power, authority and capacity to execute and enter into this
Agreement; and the transactions contemplated herein by Purchaser have been duly
authorized and approved by all requisite corporate actions, and this Agreement
has been duly executed and delivered on behalf of Purchaser by its duly
authorized officers and constitutes the legal, valid and binding obligations of
Purchaser. Purchaser has no knowledge of any item or provision of this
Agreement which is unenforceable.

(b) No Conflict; Required Filings and Consents.

(i) The execution and delivery of this Agreement
by Purchaser do not and the transactions contemplated by this Agreement will
not (A) conflict with, or result in any violation or breach of any provision of
Purchaser's Charter or Bylaws, (B) result in any violation or breach of, or
constitute (with or without notice or lapse of time, or both) a default (or
give rise to a right of termination, cancellation or acceleration of any
obligation or loss of any benefit) under any note, bond, mortgage, indenture,
lease, contract or other agreement, instrument or obligation to which Purchaser
is a party or by which Purchaser or any of its properties or assets are bound,
or (C) conflict or violate any permit, concession, franchise, license,
judgment, order, decree, statute, law, ordinance, rule or regulation applicable
to Purchaser or any of its properties or assets, except in the case of (B) and
(C) for any such violations, breaches, defaults, terminations, cancellations,
accelerations or conflicts which would not, in the aggregate, have or result in
a material adverse effect on Purchaser or impair the ability of Purchaser to
consummate the transactions contemplated by this Agreement.

(ii) No consent, approval, order or authorization
of, or registration, declaration or filing with, any governmental entity, is
required with respect to Purchaser in connection with the execution and
delivery of this Agreement or the consummation of the transactions contemplated
hereby.

(c) Litigation. There is no action, suit or proceeding,
claim, arbitration or investigation pending or, to the best of Purchaser's
knowledge, threatened against Purchaser which would have a material adverse
effect on Purchaser or impair the ability of Purchaser to consummate the
transactions contemplated by this Agreement.

(d) Compliance with Laws. Purchaser has received no
notice and Purchaser has no knowledge that Purchaser is not in compliance in
all material respects with any applicable laws.

(e) Defaults. Purchaser has received no notice of
material default and, to the best of Purchaser's knowledge, there is no
threatened default or dispute of a material nature under the terms of any
material agreement or contract to which Purchaser is a party.

PURCHASE AND SALE AGREEMENT PAGE 17
<PAGE> 18
(f) Bankruptcy. There are no attachments, executions,
assignments for the benefit of creditors, or voluntary or involuntary
proceedings in bankruptcy, or any other debtor relief laws, contemplated by
Purchaser or pending against Purchaser, or to the best of Purchaser's
knowledge, threatened against Purchaser.

8. Closing and Conditions to Closing.

(a) The Closing Generally. The Closing shall occur at
10:00 a.m. on or before but no later than June 30, 1996; provided, however, at
Seller's option, Closing may occur as early as May 31, 1996; provided, further,
however, that in no event shall the Closing occur prior to ten (10) days
following the expiration of the Feasibility Period without Purchaser's prior
written consent. In the event that Seller elects to exercise such option,
Seller shall give written notice to Purchaser of such election not less than
ten (10) days prior to the earlier Closing Date. The Closing will be held at
the offices of the Title Insurer, or at such other time and place as to which
the parties hereafter may agree upon in writing. At Closing, the Purchase
Price shall be delivered to Seller in the manner provided at Paragraph 5,
together with the documents to be delivered by Purchaser to Seller hereunder,
and possession of, and title to, the Property shall be delivered and conveyed
to Purchaser by Seller in the manner provided herein, together with all other
documents to be delivered by Seller to Purchaser hereunder.

(b) Documents Delivered by Seller at Closing. With
respect to the Property, at the Closing, Seller, at its sole cost and expense,
shall deliver, or shall cause to be delivered, to Purchaser the documents
described below:

(i) Special Warranty Deed. A special warranty
deed, duly executed and acknowledged, conveying to Purchaser good and
indefeasible fee simple title to the Land and Improvements free and clear of
all liens and encumbrances, except the Permitted Title Exceptions, in the form
attached at Exhibit M.

(ii) Bill of Sale and Assignment. A bill of sale,
duly executed and acknowledged, with special warranties of title, subject only
to the Permitted Title Exceptions, conveying to Purchaser (A) the Included
Personal Property, (B) Seller's interest in and to all assignable Service
Contracts which were not terminated as herein provided, together with copies of
the originals of each of said contracts, if in Seller's possession, (C) all
existing warranties, if any, on the Improvements, including, but not limited
to, roofs, foundations, plumbing, heating, air conditioning, and electrical, if
any, (D) Seller's right, title and interest, if any, in and to the name of the
apartment complex set forth on Schedule III attached hereto and (E) Seller's
right, title and interest, if any, in any and all licenses, permits, approvals
and other intangible property or rights relating to the Property, together with
appropriate endorsements or such other instruments as may be necessary to
transfer title to Seller's interest in the Included Personal Property in the
form attached at Exhibit M.

PURCHASE AND SALE AGREEMENT PAGE 18
<PAGE> 19
(iii) Assignment of Tenant Leases. A transfer and
assignment of the Tenant Leases, together with all rents, other income and
deposits paid or payable thereunder, subject to the Permitted Title Exceptions
in the form attached as Exhibit M, together with delivery of all Tenant Leases
and information pertinent thereto.

(iv) Affidavit of Seller. An affidavit of Seller
in the form attached as Exhibit M, pursuant to Subparagraph 7(w) to the effect
that the representations and warranties of Seller pursuant to Paragraph 7
continue to be true and correct in all material respects and that all of
Seller's covenants (not otherwise waived by Purchaser) have been performed as
of the date of Closing.

(v) Owner Policy. Seller, at its sole cost and
expense, also shall deliver or cause to be delivered the Owner Policy.

(c) Conditions Precedent to Purchaser's Obligations.
Purchaser shall not be obligated to consummate the transfer of title to the
Property hereunder unless and until:

(i) Closing Documents. Seller has delivered (A)
to the Title Insurer the closing documents attached at Exhibit M and any other
documents reasonably required by the Title Insurer in order to insure
Purchaser's good and indefeasible fee simple title to the Property free and
clear of all liens and encumbrances, except the Permitted Title Exceptions and
(B) to Purchaser all other instruments required by the terms of this Agreement.

(ii) No Uncured Breach. There has been no uncured
breach by Seller of any of the agreements, representations, warranties or
covenants contained in Paragraph 7, except as may be otherwise expressly
provided in this Agreement.

(iii) Title Vested in Seller. Good and
indefeasible title to the Property has been shown to be vested in Seller
subject only to the Permitted Exceptions.

(iv) Delivery of Plans and Specifications, Reports
and Books and Records. Seller shall have delivered to Purchaser the Plans and
Specifications and all reports and books and records concerning the
construction, management and operation of the Property through the date of
Closing required to be delivered pursuant to this Agreement.

(v) Occupancy. Purchaser's obligations to
consummate the transactions contemplated by this Agreement shall be expressly
conditioned upon the Property achieving as of the date which is thirty (30)
days prior to the Closing Date a monthly gross rental, based on a certified
rent roll, of $104,128. In the event that such occupancy level is not achieved
for the Property, Purchaser shall have the right but not the obligation to
terminate this Agreement and receive an immediate return of the Earnest

PURCHASE AND SALE AGREEMENT PAGE 19
<PAGE> 20
Money, whereupon the parties shall have no further obligations one to the
other.

(vi) Other Properties. The sale to Purchaser of
the Other Properties in accordance with the Purchase and Sale Agreements
governing those transactions shall close simultaneously with the transactions
contemplated by this Agreement.

(vii) Waiver by Purchaser. Purchaser, at any time
at or prior to Closing, may waive any one or more of the preceding requirements
by written notice to Seller to that effect.

(d) Closing Costs. The premiums for the Owner Policy in
accordance with paragraph 6(d), the recording costs for the special warranty
deed described in Subparagraph 8(b)(i) hereof and the recording costs for any
other of the Closing documents necessary to convey good and indefeasible fee
simple title to the Property to Purchaser in accordance with this Agreement,
except as otherwise provided herein, any and all prepayment penalties or
premiums with respect to existing debts secured by the Property which will not
constitute Permitted Exceptions and the costs of obtaining any Estoppel Letter
shall be borne by Seller. The escrow fees, if any, charged by the Title
Company shall be borne equally by Purchaser and Seller. Purchaser and Seller
each shall pay their respective attorneys' fees and expenses. All other costs
and expenses in connection with the transaction contemplated by this Agreement,
unless otherwise expressly set forth herein to the contrary, shall be borne by
Seller and Purchaser in the manner in which such costs and expenses customarily
are allocated between the parties at closings of real property similar to the
situs of the Property, respectively.

(e) Existing Lender Estoppel Letter. Prior to the
expiration of the Feasibility Period, Seller, at its sole cost and expense,
shall deliver or shall cause to be delivered, the Existing Lender Estoppel
Letter.

8A. Purchaser's Documents and Deliveries. As a condition
precedent to Seller's obligations to close the transaction contemplated herein,
at the Closing Purchaser shall deliver the items specified herein and the
following documents and instruments duly executed and acknowledged, in
recordable form, as appropriate:

(a) Cash Portion of Purchase Price. The cash portion of
the Purchase Price in accordance with Paragraph 5(a) hereof.

(b) Intentionally Deleted.

PURCHASE AND SALE AGREEMENT PAGE 20
<PAGE> 21
closing documents required to be executed and delivered on behalf of Purchaser
pursuant to this Agreement.

(d) Organizational Documents. Appropriate certificates
evidencing that Purchaser and all other entities, if any, comprising Purchaser
were legally formed and are currently in good standing and qualified to
transact business in all applicable jurisdictions.

(e) Closing Statement. A Closing Statement in form and
substance reasonably acceptable to Seller and Purchaser.

(f) Assignment of Leases. The acceptance and assumption
contained in the Assignment of Leases, wherein Purchaser accepts and assumes
the obligations of Landlord under the Tenant Leases including all obligations
with respect to any security deposits.

(g) Intentionally Deleted.

(h) Title Insurer Documents. Such documents as may be
reasonably required by the Title Insurer to be executed and delivered by
Purchaser, including without limitation, a Mechanic's Lien Affidavit and
Indemnity, Tax Agreement and Utility Agreement.

(i) Intentionally Deleted.

(j) Intentionally Deleted.

(k) Receipts. Such documents as may be reasonably
required by Seller pursuant to which Purchaser acknowledges receipt of such
documents, items and property as may be delivered to and received by Purchaser
at the Property, including books and records, contracts, plans and
specifications, licenses and permits, keys, and the like.

PURCHASE AND SALE AGREEMENT PAGE 21
<PAGE> 22
provided, however, that in the event the Purchaser Closing Certificate provides
that any of the representations, warranties or covenants are not true and
correct in all material respects on the Closing Date, Seller shall have the
right to terminate this Agreement, whereupon Title Insurer shall immediately
deliver to Purchaser the Earnest Money Deposit (together with any and all
accrued interest thereon), less all costs and expenses incurred by Seller in
connection with this Agreement and the transaction contemplated herein not to
exceed the amount of the Earnest Money Deposit, which shall be delivered to
Seller, and no party hereto shall have any further obligations to the others
except as otherwise expressly provided herein. The obligation of Seller to
close the transaction contemplated by this Agreement is expressly conditioned
upon the representations and warranties of Purchaser being true and correct in
all material respects on the Closing Date and the covenants of Purchaser being
fully satisfied in all material respects on the Closing Date.

(m) Escrow Agreement. The agreement (the "Escrow
Agreement") among Purchaser, Seller and Title Insurer (or other party agreed
upon by Purchaser and Seller) governing the Occupancy Reserve, in accordance
with paragraph 5(b) hereof, in form reasonably acceptable to all parties
thereto.

(n) Tenant Notices. Written notices to all tenants under
Tenant Leases as of the Closing Date notifying the tenants of the change of
ownership of the Property and otherwise complying with applicable law.

(o) Other Documents. All other documents and instruments
which Seller may reasonably request or to which Seller may be reasonably
entitled under any of the other provisions of this Agreement.

(p) Other Properties. The consummation of and
corresponding delivery of all relevant documents to be executed by Purchaser in
connection with the sale to Purchaser of the Other Properties in accordance
with their respective Purchase and Sale Agreements simultaneously with the
transactions contemplated by this Agreement.

9. Prorations and Adjustments.

(a) Items Prorated. All prorations and adjustments shall
be made and determined as of the Proration Date as follows:

PURCHASE AND SALE AGREEMENT PAGE 22
<PAGE> 23
that have been collected at such date. Any delinquent rents for periods prior
to the Proration Date and a prorated portion of rents for the month uncollected
as of the Proration Date which are collected by Purchaser and which are not
necessary to bring a tenant current as described above shall be forwarded to
Seller.

(ii) Prepaid Rents and Security and Other
Deposits. Prepaid rents and security and other tenant deposits (including but
not limited to pet deposits and key deposits), if any, under assigned leases
shall be paid to Purchaser by Seller (or credited against the Purchase Price)
at Closing. Purchaser shall assume full liability therefor and shall indemnify
and hold Seller harmless with respect to all such deposits.

(iii) Service Contracts. Prepaid or unpaid amounts
under those Service Contracts listed in Exhibit K, which shall be assigned to
and assumed by Purchaser at Closing shall be prorated. Notwithstanding the
foregoing, Purchaser shall receive no credit or proration for initial payments
and incentive compensation paid on long- term contracts including but not
limited to laundry contracts and leases.

(iv) Property Taxes. Taxes assessed upon the
Property for calendar year 1996 shall be prorated based on the assumption that
the actual taxes for the entire calendar year 1996 will be the same as calendar
year 1995, which amount Seller and Purchaser agree is a reasonable estimate of
1996 taxes. Taxes prorated at Closing shall be reprorated between the parties
promptly upon the receipt of the 1996 real estate tax bill and proper
adjustments promptly paid.

(v) Deposits With Mortgagees. The amount of any
tax and insurance deposits made by Seller with any Existing Lender shall be
paid to Seller and assigned to Purchaser at Closing.

(vi) Utilities. Utility charges shall not be
prorated but, rather, instructions shall be given to the utility companies by
Seller (with a duplicate copy of such instruction being provided concurrently
to Purchaser) to read the meters on the date of Closing and to issue separate
statements thereafter. If applicable, utility deposits will be credited to
Seller and assigned to Purchaser at Closing. In the event that any provider of
utilities shall refuse to issue separate statements in the manner aforesaid,
applicable utility charges shall be adjusted to the effect that Seller shall
pay utility charges to the Proration Date and Purchaser shall pay utility
charges thereafter.

(vii) Other Adjustments. Such other items as are
adjusted pursuant to custom in the state constituting the situs of the Property
and on similar real estate transactions.

(viii) Delivery by Seller of Documents and Supplies.
Seller, at Closing, shall assign and deliver to Purchaser all original leases,
deposits, supplies,

PURCHASE AND SALE AGREEMENT PAGE 23
<PAGE> 24
contracts, and other items as to which proration is to be made. Seller also
shall deliver to Purchaser all Plans and Specifications, if any, relating to
the Property and all such other documents, books, records, and keys in Seller's
possession which relate to the operation, maintenance or management of the
Property. Seller also shall deliver to Purchaser its current supply, if any,
of printed leasing brochures, floor plans and other advertising literature with
respect to the Property.

10. Material Damage.

(a) Procedure. If, prior to Closing, a Property shall be
destroyed or sustain Material Damage as a result of fire or other casualty,
then, at Purchaser's option exercised in the manner provided hereunder, the
following shall occur with respect to the Property:

(i) This Agreement shall become null and void and
the Earnest Money Deposit shall be returned to Purchaser, provided that
Purchaser gives notice of such election at or prior to Closing, but in any
event within ten (10) days following receipt by Purchaser of notice of the
occurrence of any such event; or

(ii) If all other conditions precedent to
Purchaser's obligation to close have been satisfied, the purchase and sale
transaction shall close with a reduction in the cash portion of the purchase
price equal to the amount of the applicable insurance deductible, and
concurrently with such closing, Seller, Existing Lender and any other named
insured shall assign to Purchaser, in form reasonably satisfactory to
Purchaser, all claims arising under any policy of insurance covering such
casualty, and Seller shall have no further liability to Purchaser with respect
to such damage.

(iii) If the parties shall fail to agree on the
amount of the cost of such restoration, such cost of restoration shall be
determined by the following process: Seller and Purchaser together shall select
three (3) reputable independent third party contractors to submit estimates for
the cost of repair of the damage and shall accept the average of all of the
estimates as the amount of the damage for purposes of this paragraph.

(b) Damage Other Than Material Damage. In the event of
any damage to a Property other than Material Damage, the purchase and sale
transaction shall close in accordance with and subject to the conditions of
Subparagraph 10(a)(ii). If the Property is uninsured, the cash portion of the
Purchase Price shall be reduced by the cost to restore determined in the manner
provided above.

PURCHASE AND SALE AGREEMENT PAGE 24
<PAGE> 25
proceeding) that, if successful, would materially, adversely affect the value
of the Property or materially interfere with the use thereof, Purchaser shall
be entitled to terminate this Agreement upon written notice to Seller prior to
Closing and to a return of the Earnest Money Deposit. As used in this
paragraph, the term "materially" shall mean condemnation proceeds in excess of
an amount equal to two percent (2%) of the Purchase Price.

12. Brokerage and Consultants.

(a) Representation of Seller. Seller represents and
warrants that, except for IBEX Capital Group and Inter Urban Management, Inc.
(collectively, "Brokers"), it has neither employed, retained nor consulted any
broker, consultant, agent or finder in carrying on the negotiations relative to
this Agreement or the purchase and sale referred to herein, and Seller shall
indemnify and hold Purchaser harmless from and against any and all claims,
demands, causes of action, debts, liabilities, judgments and damages (including
costs and reasonable attorneys' fees) which may be asserted or recovered
against it on account of any brokerage fee, consulting fee, commission or other
compensation arising by reason of the breach of this representation and
warranty. Seller further represents and warrants that, except for amounts to
be paid to Brokers under a separate commission agreement between Seller and
Brokers, no amount shall be paid by Seller to any party as a fee or a
commission, or any amount of a similar nature, whatever designated, as a result
of the purchase and sale referred to herein.

(b) Representation of Purchaser. Purchaser represents
and warrants that it has neither employed, retained, nor consulted any broker,
consultant, agent or finder in carrying on the negotiations relative to this
Agreement or the purchase and sale referred to herein, and Purchaser shall
indemnify and hold Seller harmless from and against any and all claims,
demands, actions, causes of action, debts, liabilities, judgments and damages
(including costs and reasonable attorneys' fees) which may be asserted or
recovered against it on account of any brokerage fee, consulting fee,
commission or other compensation arising by reason of the breach of this
representation and warranty. Purchaser further represents and warrants that no
amount shall be paid by any Purchaser to any party as a fee or a commission, or
any amount of a similar nature, whatever designated, as a result of the
purchase and sale referred to herein.

(c) Advice as to Title. Purchaser acknowledges that, at
the time of execution of this Agreement, Seller has advised Purchaser by this
writing that Purchaser should have the abstract covering the Property examined
by an attorney of Purchaser's own selection or that Purchaser should be
furnished with or should obtain a policy of title insurance.

13. Indemnification.

(a) Indemnification of Purchaser. Seller hereby agrees
to indemnify,

PURCHASE AND SALE AGREEMENT PAGE 25
<PAGE> 26
defend and hold harmless the Purchaser and any other holder of record title to
the Property pursuant to Paragraph 21, their officers, directors, general
partners, agents and employees and their respective heirs, executors,
administrators, successors and assigns, from and against any and all liability
arising out of third party claims with respect to the ownership or operation of
the Property prior to Closing, including, but not limited to, any and all
claims, liabilities, damages, penalties and losses, costs or expenses
(including court costs and reasonable attorneys' fees) incurred, resulting from
or in any way arising out of any act or omission of Seller, its agents and
employees, in respect of the operation of the Property prior to Closing, any
injury to persons or damage to property happening or occurring in, on or about
the Property. Seller further agrees, upon notice and request from Purchaser,
to contest any such demand, claim, suit or action against which Seller has
hereinabove agreed to indemnify and hold Purchaser harmless, and to defend any
action that may be brought in connection with any such demand, claim, suit or
action or with respect to which Seller has hereinabove agreed to indemnify and
hold Purchaser harmless and to bear all costs and expenses of such contest and
defense, provided, however, that Seller shall have no obligation hereunder to
indemnify or hold Purchaser harmless from and against any claim, liability,
damage, penalty or loss, cost or expense incurred by Purchaser incident to,
resulting from or in any way arising out of any act or omission of Purchaser,
its agent or employees, it being understood and agreed, however, that the
employees engaged in the operation of the Property prior to Closing are and
shall be construed to be, for purposes of this provision, the employees of
Seller and the acts and omissions of said employees shall in no way be
attributable to Purchaser for the purposes of this provision.

(b) Indemnification of Seller. Subject to Subparagraph
13(a), Purchaser agrees to indemnify, defend and hold Seller, its officers,
directors, general partners, agents and employees and their respective heirs,
executors, administrators, successors and assigns, harmless from and against
any claim, liability, damage, penalty, loss, cost or expense (including court
costs and reasonable attorneys' fees) incurred by Seller incident to, resulting
from or in any way arising out of any act or omission of Purchaser, its agents
or employees, or arising out of, or in any way connected with, Purchaser's
inspections of the Property pursuant to this Agreement and the operation of the
Property from and after Closing and any injury to Persons or damage to property
happening on the Property after Closing; and Purchaser further agrees, upon
notice, and request from Seller, to contest any such demand, claim, suit, or
action against which Purchaser has hereinabove agreed to indemnify and hold
Seller harmless, and to defend any action that may be brought in connection
with any such demand, claim, suit or action or with respect to which Purchaser
has hereinabove agreed to indemnify and hold the Seller harmless and to bear
all costs and expenses of such contest and defense.

PURCHASE AND SALE AGREEMENT PAGE 26
<PAGE> 27
such claim is asserted shall promptly give notice thereof to the other party
hereto. Thereupon, such other party shall have the option of retaining counsel
of its choice to defend both it and the remaining party in respect of such
claim and to control, in a manner reasonable in light of applicable
circumstances, the course and ultimate disposition of such claim. In the event
that a party to this Agreement shall elect to exercise the option provided in
the preceding sentence, the party electing such option, by reason thereof,
shall be deemed to have agreed to pay all reasonable costs and expenses of
defending against such claim and any liability of the party against whom such
claim was asserted on account thereof. Without regard to whether any party
hereto shall exercise such option, Seller and Purchaser and their counsel shall
consult with one another concerning such claim and with due regard to both the
mutual and the independent interests of Seller and Purchaser therein. Any such
claims must be asserted on or before the expiration of two (2) years following
the Closing Date.

(d) No Environmental Indemnity. The scope of the
indemnifications contained in this Paragraph 13 shall not include liability
with respect to environmental claims against either party or the Property.

14. Notice to Tenants. On the date of Closing or at any time
thereafter, upon request by Purchaser, Seller agrees to give notice, said
notice to be in compliance with local law and in form reasonably approved by
Purchaser, to each of the tenants of space located on the Property that Seller
has sold and conveyed the Property to Purchaser and that all future rental
payments due under the terms of the Tenant Leases are to be paid as directed by
Purchaser. On the date of Closing or at any time thereafter, upon request of
Seller, Purchaser agrees to give notice to all tenants that their security
deposit (if any) has been paid over to the Purchaser, and Purchaser has assumed
the liability therefor.

15. Payments.

(a) General. All payments to be made under this
Agreement shall be made by the wire transfer of immediately available funds
pursuant to written wiring instructions from the parties and shall be deemed
paid when written confirmation of receipt has been issued by the receiving bank
and not before.

Account Owner:

Account Name:

PURCHASE AND SALE AGREEMENT PAGE 27
<PAGE> 28
Account Number:

Depository:

ABA Routing No.:

Telephone Advice:

16. Default and Remedies.

(b) Remedies of Purchaser. In the event that all
conditions to Seller's obligation to close have been satisfied and Seller fails
to close the sale of the Property in accordance with its obligations under the
terms and conditions specified hereunder, Purchaser, at its sole discretion,
either may (i) specifically enforce this Agreement and the sale and purchase
provided for herein according to its terms by suit filed within ninety (90)
days, or (ii) terminate this Agreement, whereupon the Earnest Money Deposit
shall be returned in full to Purchaser.

PURCHASE AND SALE AGREEMENT PAGE 28
<PAGE> 29
award, judgment or order entered in any such proceeding shall contain a
specific provision providing for the recovery of attorneys' fees and costs
incurred in enforcing such award or judgment, including, without limitation,
(a) postaward or postjudgment motions, (b) contempt proceedings, (c)
garnishment, levy, and debtor and third party examinations, (d) discovery and
(e) bankruptcy litigation. The "prevailing party," for purposes of this
Agreement, shall be deemed to be that party which obtains substantially the
result sought, whether by dismissal, award or judgment.

17. Notices. All notices and other communications hereunder shall
be effective as to any party only if, concurrent with notice to such party,
notice shall be given to such party's counsel. All notices shall be in writing
and shall be deemed to have been duly given the date deposited with a
commercial air courier service, telecopy or facsimile, or the United States
Postal Service, the latter being registered or certified mail, return receipt
requested, first class, postage prepaid, notice to be effective on the date of
receipt, as follows:

Notice as to Seller:

IBEX Costa del Sol Corp.
c/o IBEX Capital Group
2333 Ponce de Leon Boulevard
Suite 650
Coral Gables, Florida 33134
Attention: Jose F. Rosado
Phone: 305/447-8697
Fax: 305/445-1015

Notice to Seller's Counsel:

Guttman & Del Valle, P.A.
2333 Ponce de Leon Boulevard
Suite 650
Coral Gables, Florida 33134
Attention: Richard Guttman, Esq.
Phone: 305/443-9740
Fax: 305/445-1015

Notice as to Purchaser:

Walden Residential Properties, Inc.
One Lincoln Center
5400 LBJ Freeway, Suite 400
Dallas, Texas 75240

PURCHASE AND SALE AGREEMENT PAGE 29
<PAGE> 30
Attention: Mr. Marshall B. Edwards
Phone: 214/788-0510
Fax: 214/788-1550

Notice to Purchaser's Counsel:

Munsch Hardt Kopf Harr & Dinan
4000 Fountain Place
1445 Ross Avenue
Dallas, Texas 75202
Attention: Robin K. Minick, Esq.
Phone: 214/855-7542
Fax: 214/855-7584

18. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED, ENFORCED
AND GOVERNED IN ALL RESPECTS BY THE LAWS OF THE STATE OF TEXAS. THE INITIAL
DRAFT OF THIS AGREEMENT WAS PREPARED BY PURCHASER ONLY AS A MATTER OF
CONVENIENCE AND SHALL NOT BE CONSTRUED FOR OR AGAINST EITHER PARTY ON THAT
ACCOUNT.

19. Binding Effect. This Agreement and the exhibits attached
hereto shall be binding upon, and shall inure to the benefit of, the parties
hereto, their successors and permitted assigns, if any.

21. Vesting of Title to Property. Seller and Purchaser agree that
title to the Property will be conveyed at Closing to such other entity as
Purchaser may direct by written notice to Seller not less than fifteen (15)
days prior to Closing. Notwithstanding the foregoing right of Purchaser to
designate a nominee to take title to the Property, this Agreement shall not be
assignable by Purchaser.

22. Waiver. Except as expressly provided in this Agreement, no
inspection by Purchaser of the Property or of any item delivered by Seller to
Purchaser as provided in this Agreement shall constitute a waiver of any
representation, warranty or covenant made by Seller hereunder. The waiver by a
party hereto of any term, covenant, agreement or condition herein contained
shall not be deemed to be a waiver of any subsequent breach or failure of
condition as to the same or any other term, covenant, agreement or condition
herein contained, nor shall any custom or practice which may arise between the
parties

PURCHASE AND SALE AGREEMENT PAGE 30
<PAGE> 31
in the administration of the terms hereof be construed as a waiver of or in
such a manner as to lessen the rights of any party to insist upon the
performance by the other parties in strict accordance with such terms.

23. Time of the Essence. The time for performance of the
obligations of the parties hereunder is of the essence in this Agreement.

24. Survival of Agreement. Except as set forth in Paragraph 7(w),
the obligation of any parties to this Agreement, including any performance
specified or anticipated to occur following the Closing, to that extent shall
survive the Closing.

26. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.

27. General.

(a) Memorandum of Terms. Neither Seller nor Purchaser
shall record or cause to be recorded in the public records, at any time prior
to Closing this Agreement or any memorandum or other evidence hereof.

(b) Time for Performance of Certain Obligations. At
either party's option, this Agreement shall be null and void unless one copy
hereof, executed by Purchaser and Seller, together with the Initial Deposit,
shall have been delivered to Title Insurer within three (3) business days
following the date of execution hereof by Seller.

(c) Limited Liability of Purchaser's Officers. This
Agreement and all documents, agreements, understandings, and arrangements
relating to this transaction have been executed by the undersigned in his/her
capacity as an officer or director of Purchaser which has been formed as a
Maryland corporation pursuant to the Articles of Incorporation of Purchaser,
and not individually, and neither the directors, officers or stockholders of
Purchaser shall be bound or have any personal liability hereunder or
thereunder. Seller shall look solely to the assets of Purchaser for
satisfaction of any liability of the Purchaser in respect of this Agreement and
all documents, agreements, understandings and arrangements relating to the
transaction contemplated by this Agreement and will not seek recourse or
commence any action against any of the directors, officers or stockholders of
Purchaser or any of their personal assets for the performance or payment of any
obligation hereunder or thereunder. The foregoing shall also apply to any
future documents, agreements, understandings, arrangements and

PURCHASE AND SALE AGREEMENT PAGE 31
<PAGE> 32
transactions between the parties hereto.

(d) Limited Liability of Seller's Officers. This
Agreement and all documents, agreements, understandings, and arrangements
relating to this transaction have been executed by the undersigned in his/her
capacity as an officer or director of Seller, and not individually, and neither
the directors, officers or stockholders of Seller shall be bound or have any
personal liability hereunder or thereunder. Purchaser shall look solely to the
assets of Seller for satisfaction of any liability of the Seller in respect of
this Agreement and all documents, agreements, understandings and arrangements
relating to the transaction contemplated by this Agreement and will not seek
recourse or commence any action against any of the directors, officers or
stockholders of Seller or any of their personal assets for the performance or
payment of any obligation hereunder or thereunder. The foregoing shall also
apply to any future documents, agreements, understandings, arrangements and
transactions between the parties hereto.

(e) No Further Agreements. While this Agreement is in
full force and effect, Seller shall not enter into any other agreement or
Letter of Intent to sell the Property.

(f) Confidentiality. The parties hereto hereby agree
that they will maintain the confidentiality of all information and materials
provided to each other in connection herewith and the terms of the transaction
contemplated hereby, the contents of this Agreement and related documents, if
any, except that Purchaser may disclose material terms which are required to be
disclosed by applicable securities laws or as required by any national
securities exchange on which Purchaser's common stock may be listed and
Purchaser may include a copy of this Agreement and in its filings with the
Securities and Exchange Commission.

28. Processing Services. Commencing with the Effective Date and
ending with the termination or expiration of this Agreement as provided
elsewhere herein, Purchaser shall cause Resident Profiles, Inc. ("RPI") to
process lease applications for the Property based on standards no greater than
those currently used by Seller or otherwise agreed to by Seller at a cost of
$25.00 per application, payable monthly to RPI by the Seller which sums Seller
hereby agrees to pay, regardless of whether the Closing occurs hereunder.

29. DTPA Waiver. To the maximum extent possible under Texas law,
Purchaser hereby waives and relinquishes all provision of the Texas Deceptive
Trade Practices-Consumer Protection Act (Chapter 17, Subchapter E, of the Texas
Business and Commerce Code) in connection with the sales transaction
contemplated by this Agreement. In connection with such waiver, Purchaser
represents and warrants to Seller that: (a) Purchaser is not in a significantly
disparate bargaining position; (b) Purchaser is represented by legal counsel in
connection with the sale contemplated by this Agreement;

PURCHASE AND SALE AGREEMENT PAGE 32
<PAGE> 33
and (c) Purchaser is knowledgeable and experienced in the purchase,
development, operation and ownership of real property, and is fully able to
evaluate the merits and risks of this transaction.

[PURCHASER TO CHECK ONE]

[ ] Purchaser has assets in excess of $5,000,000.00 according to
the most recent financial statement of Purchaser prepared in
accordance with generally accepted accounting principles.

[ ] Purchaser does not have assets in excess of $5,000,000.00
according to the most recent financial statement of Purchaser
prepared in accordance with generally accepted accounting
principles.

30. Date of Performance. In the event the expiration date of any
review period herein specified or the expiration date of any period of time in
which a party hereto is to deliver any item to any other party hereto should be
a legal holiday in the State of Texas or a Saturday or Sunday, such expiration
date shall be extended to the next business day which is not a legal holiday in
the State of Texas or a Saturday or Sunday, and such next business day shall be
considered such expiration date.

31. Invalid Provisions. If any one or more of the provisions of
this Agreement shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision hereof, all of which other provisions
shall remain in full force and effect.

PURCHASE AND SALE AGREEMENT PAGE 33
<PAGE> 34
the expiration of the Feasibility Period. Except as expressly set forth
herein, Seller has not made, does not hereby make, and hereby specifically
disclaims any express or implied representations or warranties whatsoever with
respect to the condition of the Property, including without limitation any
representation or warranty regarding quality of construction, workmanship,
merchantability or fitness for any particular purpose; and Purchaser
acknowledges that Purchaser is entering into this Agreement without relying
upon any such warranty or representation by Seller, its agents or
representatives. Purchaser's failure to terminate this Agreement prior to the
expiration of the Feasibility Period shall conclusively establish that
Purchaser has fully examined and inspected the Property and is satisfied with
the condition thereof.

33. Ratification of Seller's Shareholders. As a condition
precedent to Seller's obligations hereunder, Seller shall have received
ratification of this Agreement by its shareholders on or before May 13, 1996.
In the event that Seller is unable to timely obtain such consent, Seller shall
have the right to terminate this Agreement, the Earnest Money Deposit shall be
returned to Purchaser immediately and the parties shall have no further
obligations one to the other except such indemnities as may be appropriate to
extend beyond the date of termination.

34. Notification of Non-Delivery. In the event that either party
hereto shall become aware of the non- delivery of any item or document required
to be delivered under this Agreement, a breach of a representation, warranty or
covenant set forth herein, or other failure of condition, the party becoming
aware of such event shall give prompt notice to the other party in accordance
with Paragraph 17 hereof.

[The remainder of this page has been intentionally left blank.]

PURCHASE AND SALE AGREEMENT PAGE 34
<PAGE> 35
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed on the day and in the year entered below, effective as above written.

PURCHASER:

WALDEN RESIDENTIAL PROPERTIES, INC.,
a Maryland corporation

By:
-----------------------------------
Marshall B. Edwards
President

Date Executed by Purchaser:
-----------

SELLER:

IBEX COSTA DEL SOL CORP.

By:
-----------------------------------
Name: Jose F. Rosado
Title: President

Date Executed by Seller:
--------------

The undersigned, constituting the Title Insurer, hereby agrees to
accept in escrow the moneys provided for in the above Agreement to be paid into
escrow and to hold and apply the same as provided in said Agreement.

SAFECO LAND TITLE OF DALLAS,
in its separate capacity and
as agent for Chicago Title Insurance Company

By:
-----------------------------------------
Authorized Agent

Date executed by Title Insurer:
-------------

PURCHASE AND SALE AGREEMENT PAGE 35
<PAGE> 36
SCHEDULE I

ITEMS TO BE DELIVERED

1. Seller's most current owner's title insurance policy and a copy of all
title reports and documents in Seller's possession.

2. A list and a copy of all Service Contracts, all documents pertaining
to any leased Personalty, and all warranties, guaranties and bonds relating to
the Property, or any part thereof.

3. A complete, itemized and detailed inventory of the Personalty to be
conveyed by Seller to Purchaser at the Closing.

4. A copy of (i) all income and expense statements for the Property, for
the year to date and for the most recently completed prior year (prepared on a
monthly basis), and annual operating statements for the three (3) most recent
fiscal years, certified by Seller or audited (when available) as having been
prepared in accordance with generally accepted accounting principles (except to
the extent prepared on a cash basis), (ii) operating budgets for the Property
for the current calendar year and the upcoming calendar year, and (iii) a
capital expenditure budget for the Property for the current calendar year and
the upcoming calendar year.

5. A copy of all ad valorem and other property tax statements (including
personal property tax statements) relating to the Property for the current tax
year and the immediately preceding three (3) tax years, including copies of any
assessments or statements for the current or forthcoming year, including a
summary of any contested tax assessments relating to the Property for the
preceding three (3) years, and the results thereof.

6. A copy of (i) a tenant rent roll for the Improvements, showing actual
occupancies, rentals, delinquencies, defaults, security deposits, assigned
parking spaces (if any), free rent, rent concessions, tenant incentives, lease
terms, unit numbers, unit types, and unit amenities, (ii) a current schedule of
rental rates for each type of unit within the Improvements, and (iii) such
other pertinent information regarding the tenant leases and rental units as is
reasonably available to Seller, including, without limitation a schedule of the
appliances and amenities included in each type of rental unit.

7. A copy of all site plans, surveys, soil and substrata reports and
studies, engineering plans and studies, environmental reports or studies,
architectural renderings, plans and specifications, construction contracts
(with all applicable change orders), floor plans, landscape plans, utility
schemes and other similar plans, diagrams of studies, if any, relating to the
Property.

8. A copy of the architect's certificate rendered at or after the
completion of
<PAGE> 37
construction of the Improvements stating that the Improvements were constructed
substantially in accordance with the plans and specifications delivered to
Purchaser hereunder.

9. A copy of all reports made by engineers, architects or others, if any,
relating to any structural problems or other defects with respect to any part
of the Property; and verification that the Property and the Improvements comply
fully with the Fair Housing Act, the Americans with Disabilities Act, and
Article 9102 of the Texas Department of Licensing and Regulation.

10. A copy of all certificates of occupancy for the Improvements, and a
letter from the cities in which the Property is located dated no earlier than
the Effective Date stating that the Property complies fully with all applicable
zoning ordinances and the operation of the Improvements as an apartment complex
is a permitted use under such ordinances, together with a copy of such
ordinances.

14. A copy of the standard form of tenant lease, leasing application,
security and pet deposit documents, rules and regulations, leasing brochures,
occupancy checklist, current marketing/leasing plans and business plans for the
Property, other standard forms and documents currently used in connection with
the leasing and marketing of the Property, and a profile of existing tenant
base, including data on age, income, sex, household structure, occupation,
etc., to the extent such information is available to Seller.

15. A list of all utility deposits or bonds for the Property and a copy of
all utility bills for the Property for the previous twelve (12) months,
excluding individually metered tenant utility bills; and a letter from each of
the utility providers stating that the utilities are available to the Property.

16. A summary of any approvals, requirements or prerequisites (if any)
imposed by any
<PAGE> 38
current lender having a security interest in the Property (or any portion
thereof) as a condition to the execution of this Agreement by Seller or as a
condition to the Closing as contemplated by this Agreement.

17. Copies of and/or access throughout the Feasibility Period to all
resident files.

18. Copies of any pertinent litigation of safety related issues with
respect to the Property.

19. Such other books, records, leasing files, contracts, agreements and
information relating to the Property that is in Seller's possession or are
readily available to Seller.

The chart(s) immediately following this Schedule I reflects the availability
and delivery, if any, of the items set forth in this Schedule I.
<PAGE> 39
SCHEDULE II

SURVEYOR
<PAGE> 40
SCHEDULE III

OTHER PROPERTIES

Villas of St. Moritz Apartments 216 Units San Antonio, Texas

Summer Oaks Apartments 256 Units San Antonio, Texas
<PAGE> 41
SCHEDULE IV

EXISTING INDEBTEDNESS

[TO BE PROVIDED]
<PAGE> 42
SCHEDULE V

DESCRIPTION OF IMPROVEMENTS AND AMENITIES

____ dwelling units located in ________ buildings, consisting of _______
one-bedroom, _________ two-bedroom and ________ three-bedroom units, a
clubhouse, laundry facilities, ________ swimming pool(s), ___________ tennis
court(s) and ____________________________________.
<PAGE> 43
SCHEDULE VI

POTENTIAL RENTS

<TABLE>
<CAPTION>
Gross Potential Potential
Property Potential Rent Rent 80% Rent 90%
- -------- -------------- --------- ---------
<S> <C> <C> <C>
COSTA DEL SOL 130,160 104,128 117,144
VILLAS OF ST. MORITZ 101,440 81,128 91,296
SUMMER OAKS 119,558 95,645 107,600
REMINGTON 84,750 87,800 76,275
TRAILS OF MARY MONT 212,890 170,312 191,601
- ------------------- ------- ------- -------
TOTAL 648,796 519,037 583,916
</TABLE>
<PAGE> 44
EXHIBIT A

LEGAL DESCRIPTIONS OF LAND

[TO BE PROVIDED]
<PAGE> 45
EXHIBIT B

SURVEYS

[TO BE PROVIDED]
<PAGE> 46
EXHIBIT C

SURVEYOR'S CERTIFICATE

[TO BE PROVIDED]
<PAGE> 47
EXHIBIT D

Intentionally Deleted
<PAGE> 48
EXHIBIT E

INCLUDED PERSONAL PROPERTY

[TO BE PROVIDED]
<PAGE> 49
EXHIBIT F

EXCLUDED PERSONAL PROPERTY

[TO BE PROVIDED]
<PAGE> 50
EXHIBIT G

RENT ROLL

[TO BE PROVIDED]
<PAGE> 51
EXHIBIT H

Intentionally Deleted
<PAGE> 52
EXHIBIT I

STATEMENTS OF INCOME AND EXPENSE

[TO BE PROVIDED]
<PAGE> 53
EXHIBIT J

SCHEDULE OF INSURANCE

[TO BE PROVIDED]
<PAGE> 54
EXHIBIT K

SCHEDULE OF SERVICE CONTRACTS

[TO BE PROVIDED]
<PAGE> 55
EXHIBIT L

STANDARD TENANT LEASE

[TO BE PROVIDED]

<PAGE> 1
EXHIBIT 10.6

PURCHASE AND SALE AGREEMENT
(Remington Apartments)

This PURCHASE AND SALE AGREEMENT ("Agreement") is entered into as of
the ________ day of April, 1996.

1. Parties. The parties to this Agreement are as follows:

Walden Residential Properties, Inc., a Maryland corporation,
maintaining its principal office at One Lincoln Center, 5400 LBJ Freeway, Suite
400, Dallas, Texas 75240.

IBEX REMINGTON CORP., maintaining offices at c/o IBEX Capital Group,
2333 Ponce de Leon Boulevard, Suite 650, Coral Gables, Florida 33134.