<PAGE>   1
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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                ----------------

                                    FORM 10-K

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

                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000

                         COMMISSION FILE NUMBER: 0-26468
                                ----------------

                    AMERICAN RETIREMENT VILLAS PROPERTIES II
                        A CALIFORNIA LIMITED PARTNERSHIP
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

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<S>                                                                                       <C>
                               CALIFORNIA                                                              33-0278155
             (STATE OR OTHER JURISDICTION OF INCORPORATION                                (I.R.S. EMPLOYER IDENTIFICATION NO.)
                            OR ORGANIZATION)
</TABLE>

<TABLE>
<S>                                                                                                    <C>
                     245 FISCHER AVENUE, SUITE D-1                                                       92626
                         COSTA MESA, CALIFORNIA                                                        (ZIP CODE)
                (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
</TABLE>

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

       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (714) 751-7400

           SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

                                 TITLE OF CLASS
                          UNITS OF LIMITED PARTNERSHIP

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

        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 [ ]

        Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. Yes [X] No [ ]

        The aggregate market value of the voting units held by non-affiliates of
registrant, computed by reference to the price at which units were sold, was
$16,696,569 (for purposes of calculating the preceding amount only, all
directors, executive officers and unitholders holding 5% or greater of the
registrant's units are assumed to be affiliates). The number of Units
outstanding as of March 17, 2001 was 35,020.

================================================================================


<PAGE>   2





                    AMERICAN RETIREMENT VILLAS PROPERTIES II
                        A CALIFORNIA LIMITED PARTNERSHIP

                       INDEX TO ANNUAL REPORT ON FORM 10-K
                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000



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                                                                                                 PAGE
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<S>              <C>                                                                             <C>
    PART I

Item 1:          Business...................................................................       3
Item 2:          Properties................................................................        8
Item 3:          Legal Proceedings.........................................................        9
Item 4:          Submission of Matters to a Vote of Unit Holders...........................        9

    PART II

Item 5:          Market for Our Common Equity and
                 Related Unit Holder Matters...............................................       10
Item 6:          Selected Financial Data...................................................       10
Item 7:          Management's Discussion and Analysis of
                 Financial Condition and Results of Operations.............................       10
Item 7a:         Quantitative and Qualitative Disclosures About Market Risk................       13
Item 8:          Financial Statements and Supplementary Data...............................       14
Item 9:          Changes in and Disagreements with Accountants on
                 Accounting and Financial Disclosure.......................................       14

   PART III

Item 10:         Our Directors and Executive Officers......................................       15
Item 11:         Executive Compensation..................................................         16
Item 12:         Security Ownership of Certain Beneficial Owners
                 and Management............................................................       17
Item 13:         Certain Relationships and Related Transactions............................       17

    PART IV

Item 14:         Exhibits, Financial Statement Schedules,
                 and Reports on Form 8-K...................................................       18
</TABLE>


                                       2
<PAGE>   3

                                     PART I

ITEM 1. BUSINESS

OVERVIEW

     American Retirement Villas Properties II ("ARVP II") operates ten assisted
living communities ("ALCs") in the state of California, nine of which we own and
one of which we lease. On March 2, 1999, we obtained financing for the purchase
of and, through a wholly owned subsidiary, purchased four previously leased ALCs
for approximately $14.3 million. In our ALCs we house and provide personal care
and support services to senior residents in facilities containing an aggregate
of 923 units. For the twelve months ended December 31, 2000 and 1999, ARVP II's
ALCs had a total average occupancy of approximately 89%.

     ARVP II was founded in February 1988 as a California limited partnership to
develop, finance, acquire, and operate senior housing, inclusive of ALCs. The
general partner of ARVP II as of December 31, 2000 is ARV Assisted Living, Inc.,
("ARVAL" or "General Partner"), which serves as Managing General Partner, Gary
L. Davidson, John A. Booty, John S. Jason, and Tony Rota (collectively known as
the "Special Limited Partners"). As of March 2001, Messrs. Davidson, Booty,
Jason and Rota became limited partners of ARVPII.

     On May 16, 1996, ARVAL tendered for the limited partnership units in ARVP
II, at a net cash price of $720 per unit. Prior to the tender offer ARVAL owned
110 units. At the close of the tender offer on June 21, 1996, holders of
approximately 15,524 units tendered their units representing approximately 44%
of all outstanding units. On July 26, 1996, ARVAL initiated a second tender
offer to purchase up to 3,715 additional limited partnership units at a net cash
price of $720 per unit less second quarter distributions. At the close of the
second tender offer on August 23, 1996, holders of approximately 2,164 units
tendered their units representing approximately 6.2% of all units. During 1997,
ARVAL acquired 525 additional limited partnership units at a net cash price of
approximately $720 per unit. As of December 31, 2000, ARVAL owns 18,323 units or
approximately 52.3% of the limited partnership units. As such, ARVAL has a
controlling interest in the Partnership.

THE ASSISTED LIVING MARKET

     Assisted Living. Assisted living is a stage in the elder care continuum,
midway between home-based care for lower acuity residents and the more acute
level of care provided by skilled nursing facilities and acute care hospitals.
Assisted living represents a combination of housing, personalized support
services, and health care designed to respond to the individual needs of the
senior population who need help in activities of daily living, but do not need
the medical care provided in a skilled nursing facility.

     We believe our assisted living business benefits from significant trends
affecting the long-term care industry. The first is an increase in the demand
for elder care resulting from the continued aging of the U.S. population, with
the average age of our residents falling within the fastest growing segment of
the U.S. population. While increasing numbers of Americans are living longer and
healthier lives, many gradually require increasing assistance with activities of
daily living, and are not able to continue to age in place at home. The second
trend is the effort to contain health care costs by the government, private
insurers and managed care organizations by limiting lengths of stay, services,
and reimbursement to patients in acute care hospitals and skilled nursing
facilities. Assisted living offers a cost-effective, long-term care alternative
while preserving a more independent lifestyle for seniors who do not need the
broader array of medical services that acute care hospitals and skilled nursing
facilities are required to provide. Other trends include increases in the
financial net worth of the elderly population, the number of individuals living
alone, and the number of women who work outside the home who are less able to
care for their elderly relatives. We believe these trends will result in a
growing demand for assisted living services and communities to fill the gap
between aging at home and aging in more expensive skilled nursing facilities.

     Aging Population. The primary consumers of long-term health care services
are persons over the age of 65. This group represents one of the fastest growing
segments of the population. According to U.S. Bureau of the Census data, the
segment of the population over 65 years of age is currently 13% of the total
population, or 35 million people. That number is projected to grow to 20% of the
total population, or 70 million people, by the year 2030. Additionally, the
number of people aged 85 and older, which comprises the largest percentage of
residents at long-term care facilities, is currently 4.4 million and is
projected to increase to 8.9 million by the year 2030.


                                       3
<PAGE>   4

     We believe that growth in the assisted living industry is being driven by
several factors. Advances in the medical and nutrition fields have increased
life expectancy, resulting in larger numbers of elderly people. Greater numbers
of women in the labor force have reduced the supply of caregivers. Historically,
unpaid women (mostly daughters or daughters-in-law) represented a large portion
of the caregivers for the non-institutionalized elderly. The population of
individuals living alone has increased significantly since 1960, largely as a
result of an aging population in which women outlive men by an average of 6.8
years, rising divorce rates, and an increase in the number of unmarried
individuals.

     Limitation on the Supply of Long-Term Care Facilities. The majority of
states in the U.S. have enacted Certificate of Need or similar legislation,
which generally limits the construction of skilled nursing facilities and the
addition of beds or services in existing skilled nursing facilities. High
construction costs, limitations on government reimbursement for the full cost of
construction, and start-up expenses also constrain growth in the supply of such
facilities. Such legislation benefits the assisted living industry by limiting
the supply of skilled nursing beds for the elderly. Cost factors are placing
pressure on skilled nursing facilities to shift their focus toward higher acuity
care, which enables them to charge more. This contributes to a shortage of lower
acuity care, increasing the pool of potential assisted living residents.

     While Certificates of Need generally are not required for ALCs, except in a
few states, most states do require assisted living providers to license their
communities and comply with various regulations regarding building requirements
and operating procedures and regulations. States typically impose additional
requirements on ALCs over and above the standard congregate care requirements.
Further, the limited pool of experienced assisted living staff and management,
as well as the costs and start-up expenses to construct an ALC, provide an
additional barrier to entry into the assisted living business.

     Cost Containment Pressures of Health Reform. In response to rapidly rising
health care costs, both government and private pay sources have adopted cost
containment measures that encourage reduced lengths of stay in hospitals and
skilled nursing facilities. The federal government has acted to curtail
increases in health care costs under Medicare by limiting acute care hospital
and skilled nursing facility reimbursement to pre-established fixed amounts.
Private insurers have also begun to limit reimbursement for medical services in
general to predetermined "reasonable" charges. Managed care organizations, such
as health maintenance organizations ("HMOs") and preferred provider
organizations ("PPOs") are reducing hospitalization costs by negotiating
discounted rates for hospital services and by monitoring and decreasing
hospitalization. We anticipate that both HMOs and PPOs increasingly may direct
patients away from higher cost nursing care facilities into less expensive ALCs.

     These cost containment measures have produced a "push-down" effect. As the
number of patients being "pushed down" from acute care hospitals to skilled
nursing facilities increases, the demand for residential options such as ALCs to
serve patients who historically have been served by skilled nursing facilities
will also increase. In addition, skilled nursing facility operators are
continuing to focus on improving occupancy and expanding services (and fees) to
subacute patients requiring very high levels of nursing care. As the acuity
level of skilled nursing facility patients rises, the supply of nursing facility
beds will be filled by patients with higher acuity needs who pay higher fees.
This will provide opportunities for assisted living communities to increase
their occupancy and services to residents requiring lower levels of care than
patients in skilled nursing facilities generally receive.

OUR ASSISTED LIVING SERVICES

     We provide services and care that are designed to meet the individual needs
of our residents. The services provided are designed to enhance both the
physical and mental wellbeing of seniors in each of our ALCs by promoting their
independence and dignity in a home-like setting. Our assisted living program
includes the following:

-    Personalized Care Plan. The focus of our strategy is to meet the specific
     needs of each resident. We customize our services beginning with the
     admissions process when the ALC's management staff, the resident, the
     resident's family, and the resident's physician discuss the resident's
     needs and develop a "personalized" care plan. If recommended by the
     resident's physician, additional health care or medical services may be
     provided at the community by a third party home health care agency or other
     medical provider. The care plan is reviewed and modified on a regular
     basis.


                                       4
<PAGE>   5

-    Basic Service and Care Package. The basic service and care package at our
     ALCs generally includes:

     -    meals in a communal, "home-like" setting;

     -    housekeeping;

     -    linen and laundry service;

     -    social and recreational programs;

     -    utilities; and

     -    transportation in a van or minibus.

          Other care services can be provided under the basic package based upon
     the individual's personalized health care plan. Our policy is to charge
     base rents that are competitive with similar ALCs in the local market.

-    Additional Services. Our assisted living services program offers additional
     levels of care beyond what is offered in the basic package. The level of
     care a resident receives is determined through an assessment of a
     resident's physical and mental health which is conducted by the community's
     assisted living director, with input from other staff members. The
     six-tiered rate structure is based on a point system. We assign points to
     the various care tasks required by the resident, based on the amount of
     staff time and expertise needed to accomplish the tasks. The point scale
     and pricing are part of the admissions agreement between the community, the
     resident and the resident's family. The community performs reassessments
     after the initial 30 days and periodically throughout the resident's stay
     to ensure that the level of care we provide corresponds to changes in a
     resident's condition. The types of services included in the assessment
     point calculation are:

     -    Medication management;

     -    Assistance with dressing and grooming;

     -    Assistance with showering;

     -    Assistance with continence;

     -    Escort services;

     -    Status checks related to a recent hospitalization, illness, history of
          falls;

     -    Help with psychosocial needs, such as memory deficit;

     -    Special nutritional needs and assistance with eating.

     In addition to the above services, we provide other levels of assistance to
residents at selected ALCs in order to meet individual needs, such as assistance
with diabetic care and monitoring, catheter, colostomy and ileosotomy care,
minor wound care needs and light to moderate transferring needs. Specially
trained staff provide personalized care and specialized activity programs and
medical directors oversee the medication regimens.

     In addition to the base rent, we typically charge between $375 and $1,700
per month plus an additional charge for higher levels of assisted living
services. Fee levels vary from community to community and we may charge
additional fees for other specialized assisted living services. We expect that
an increasing number of residents will use additional levels of services as they
age in our ALCs. Our internal growth plan is focused on increasing revenue by
continuing to improve our ability to provide residents with these services.

     On a same community basis the average monthly revenue per occupied unit for
both the basic service package and the assisted living services increased to
$2,132 from $2,066 for the year ended December 31, 2000 and 1999, respectively.
There can be no assurance that any ALC will be substantially occupied at assumed
rates at any time. In addition, we may only be able to lease up our ALCs to full
occupancy at rates below those assumed. If operating expenses increase, local
market conditions may limit the extent to which we may increase rates. Because
we must provide advance notice of rate increases, generally at least 30 days,
increases may lag behind increases in operating expenses.

     Wellness Program. We have implemented a Wellness Program for residents of
our communities designed to identify and respond to changes in a resident's
health or condition. Together with the resident and the resident's family and
physician, as appropriate, we design a solution to fit that resident's
particular needs. We monitor the physical and mental wellbeing of our residents,
usually at meals and other activities, and informally as the staff performs
services around the facility. Through the Wellness Program we work with:

     -    home health care agencies to provide services the community cannot
          provide;

     -    physical and occupational therapists to provide services to residents
          in need of such therapy; and

     -    long-term care pharmacies to facilitate cost-effective and reliable
          ordering and distribution of medications.


                                       5
<PAGE>   6

     We arrange for these services to be provided to residents as needed in
consultation with their physicians and families. At the present time, all our
ALCs have a comprehensive Wellness Program.

FACTORS AFFECTING FUTURE RESULTS AND FORWARD-LOOKING STATEMENTS

     Our business, results of operations and financial condition are subject to
     many risks, including those set forth below. Certain statements contained
     in this report, including without limitation statements containing the
     words "believes," "anticipates," "expects," and words of similar import,
     constitute "forward-looking statements" within the meaning of the Private
     Securities Litigation Reform Act of 1995. Such forward-looking statements
     involve known and unknown risks, uncertainties and other factors which may
     cause the actual results, performance or achievements of the Company, or
     industry results, to be materially different from any future results,
     performance or achievements expressed or implied by such forward-looking
     statements. We have made forward-looking statements in this report
     concerning, among other things, the impact of future acquisitions and
     developments, if any, and the level of future capital expenditures. These
     statements are only predictions, however; actual events or results may
     differ materially as a result of risks we face. These risks include, but
     are not limited to, those items discussed below. Certain of these factors
     are discussed in more detail elsewhere in this report, including without
     limitation under the captions "Business" and "Management's Discussion and
     Analysis of Financial Condition and Results of Operations." Given these
     uncertainties, we caution readers not to place undue reliance on such
     forward-looking statements, which speak only as of the date of this report.
     We disclaim any obligation to update any such factors or to publicly
     announce the result of any revisions to any of the forward-looking
     statements contained here to reflect future events or developments.

    We have experienced growth through the development and acquisition of ALCs
    and by acquiring property for the development of new ALCs. Certain risks are
    inherent with the execution of the development and acquisition of ALCs.
    These risks include, but are not limited to:

     -    our ability to access capital necessary for operations, acquisition
          and development;

     -    dependence on the availability of adequate capital;

     -    governmental regulation;

     -    competition; and

     -    risks common to the assisted living industry.

DEPENDENCE ON THE AVAILABILITY OF ADEQUATE CAPITAL

We depend heavily on our ability to obtain adequate capital to fund our
acquisitions and development. Our estimated capital needs for acquisitions and
development over the next 12 months are $0.9 million. As of December 31, 2000,
we had $2.2 million in cash and cash equivalents. This means we have cash and
cash equivalents to meet our estimated capital needs for acquisitions and
development for the next 12 months. If, however our acquisition costs and
development expenses exceed our projections, we may have to obtain significant
additional financing. There is no assurance that we will be able to obtain the
financing on a timely basis, if at all. If we are unable to obtain the required
financing on a timely basis we may not be able to execute our business plan.

COMPETITION

     The health care industry is highly competitive and we expect that the
assisted living business, in particular, will become more competitive in the
future. Sources of competition include:

     -    family members providing care at home;

     -    numerous local, regional and national providers of assisted living and
          long-term care whose facilities and services range from home-based
          health care to skilled nursing facilities; and

     -    acute care hospitals.

     In addition, we believe that as assisted living receives increased
attention among the public and insurance companies, new competitors focused on
assisted living will enter the market, including hospitality companies expanding
into the market. Some of our competitors operate on a not-for-profit basis or as
charitable organizations, while others have, or are capable of obtaining,
greater financial resources than those available to us.


                                       6
<PAGE>   7


     We also expect to face increased competition for the acquisition and
development of ALCs. Some of our present and potential competitors are
significantly larger or have, or may obtain, greater financial resources than we
have. These forces could limit our ability to attract residents, attract
qualified personnel, expand our business, or increase the cost of future
acquisitions, each of which could have a material adverse effect on our
financial condition, results of operations and prospects.

GOVERNMENT REGULATION

     Assisted Living. Health care is subject to extensive regulation and
frequent regulatory change. Currently, no federal rules explicitly define or
regulate assisted living. However, we are and will continue to be subject to
varying degrees of regulation and licensing by health or social service agencies
and other regulatory authorities in California and localities where we operate
or intend to operate. Changes in, or the adoption of, such laws and regulations,
or new interpretations of existing laws and regulations, could have a
significant effect on methods and costs of doing business, and on reimbursement
levels from governmental and other payers. In addition, the President and
Congress have proposed in the past, and may propose in future, health care
reforms that could impose additional regulations on us or limit the amounts that
we may charge for our services. We cannot assess the ultimate timing and impact
that any pending or future health care reform proposals may have on the assisted
living, home health care, skilled nursing or health care industry in general. No
assurance can be given that any such reform will not have a material adverse
effect on the business, financial condition or our results of operations.

     SSI Payments. A portion of our revenue comes from residents who receive SSI
payments. Revenue from these residents is generally lower than the amounts we
receive from our other residents and could be subject to payment delay.
Approximately 3% of our residents are SSI residents. We cannot assure that our
percentage of revenue received from SSI will not increase, or that the amounts
paid by SSI programs will not be further limited. In addition, if we were to
become a provider of services under the Medicaid program, we would be subject to
Medicaid regulations designed to limit fraud and abuse. Violations of these
regulations could result in civil and criminal penalties and exclusion from
participation in the Medicaid program.

RISKS COMMON TO OUR ASSISTED LIVING OPERATIONS

     Staffing and Labor Costs. We compete with other providers of assisted
living and senior housing to attract and retain qualified personnel. We also
rely on the available labor pool of employees, and unemployment rates are low in
many areas where we operate. We make a genuine effort to remain competitive with
other companies in our industry. Therefore, if it is necessary for us to
increase pay and/or enhance benefits to maintain our competitive status in our
industry, our labor costs could rise. We cannot provide assurance that if our
labor costs do increase, they can be matched by corresponding increases in
rental or assisted living revenue.

     Obtaining Residents and Maintaining Rates. For the year ended December 31,
2000, our ALCs had an average combined occupancy rate of 89%. Occupancy may drop
in our ALCs, primarily due to:

     -    changes in the health of residents;

     -    increased competition from other assisted living providers,
          particularly those offering newer ALCs;

     -    the reassessment of residents' physical and cognitive state and
          changes in management and staffing.

     We cannot assure that, at any time, any ALC will be substantially occupied
at assumed rents. In addition, we may only achieve lease-up and full occupancy
at rental rates below those assumed. If operating expenses increase, local
rental market conditions may limit the extent to which we may increase prices.
The implementation of rate increases for residents of new acquisitions may lag
behind increases in operating expenses. In addition, if we fail to generate
sufficient revenue, we may be unable to meet minimum rent obligations under our
long-term operating lease and to make interest and principal payments on our
indebtedness.

     General Real Estate Risks. The performance of our ALCs is influenced by
factors affecting real estate investments, including the general economic
climate. Other real estate risks include:

     -    an oversupply of, or a reduction in demand for, ALCs in a particular
          market;

     -    the attractiveness of properties to residents;

     -    zoning, rent control, environmental quality regulations or other
          regulatory restrictions;

     -    competition from other forms of housing;


     -    our ability to provide adequate maintenance and insurance;

     -    our ability to control operating costs, including maintenance,
          insurance premiums and real estate taxes.

                                       7
<PAGE>   8

     Real estate investments are also affected by such factors as applicable
laws, including tax laws, interest rates and the availability of financing. Real
estate investments are relatively illiquid and, therefore, limit our ability to
vary our portfolio promptly in response to changes in economic or other
conditions. If we fail to operate our ALCs effectively, it may have a material
adverse effect on our business, financial condition and operating results.

     Possible Environmental Liabilities. Under various federal, state and local
environmental laws, ordinances and regulations, a current or previous owner or
operator of real property may be held liable for the costs of the removal or
remediation of certain hazardous or toxic substances. These include, without
limitation, asbestos-containing materials which could be located on, in or under
such property. Such laws and regulations often impose liability whether or not
the owner or operator knows of, or is responsible for, the presence of the
hazardous or toxic substances. When we acquire land for development or existing
facilities, we typically obtain environmental reports on the properties as part
of our due diligence in order to lessen our risk of exposure. Nonetheless, the
costs of any required remediation or removal of these substances could be
substantial. The owner's liability is generally not limited under such laws and
regulations and could exceed the value of the property and the aggregate assets
of the owner or operator. The presence of these substances or failure to
remediate such substances properly may also adversely affect the owner's ability
to sell or rent the property or to borrow using the property as collateral.
Under these laws and regulations, an owner, operator, or any entity that
arranges for the disposal of hazardous or toxic substances at a disposal site
may also be liable for the costs of any required remediation or removal of the
hazardous or toxic substances at the disposal site. When entering into leases
with health care REITs and other landlords of facilities, we typically enter
into environmental indemnity agreements in which we agree to indemnify the
landlord against all risk of environmental liability, both during the term of
the lease and beyond. In connection with the ownership or operation of our
properties or those of our Affiliated Partnerships, we could be liable for these
costs, as well as certain other costs, including governmental fines and injuries
to persons or properties.

     Restrictions Imposed by Laws Benefiting Disabled Persons. Under the
Americans with Disabilities Act of 1990, all places of public accommodation are
required to meet certain federal requirements related to access and use by
disabled persons. A number of additional federal, state and local laws exist
that also may require us to modify existing and planned properties to allow
disabled persons to access the properties. We believe that our properties are
either substantially in compliance with present requirements or are exempt from
them. However, if required changes cost more than anticipated, or must be made
sooner than anticipated, we would incur additional costs. Further legislation
may impose additional burdens or restrictions related to access by disabled
persons, and the costs of compliance could be substantial.

     Geographic Concentration. All of our ALCs are located in California. The
market value of these ALCs and the income generated from properties could be
negatively affected by changes in local and regional economic conditions,
specific laws and the regulatory environment in California, and by acts of
nature. We cannot provide assurance that such geographic concentration will not
have an adverse impact on our business, financial condition, operating results
and prospects.

     Insurance. We believe that we maintain adequate insurance policies, based
on the nature and risks of our business, historical experience and industry
standards. Our business entails an inherent risk of liability. In recent years,
we and other assisted living providers have become subject to an increasing
number of lawsuits alleging negligence or related legal theories, which may
involve large claims and significant legal costs. From time to time we are
subject to such suits because of the nature of our business. We cannot assure
that claims will not arise that exceed our insurance coverage or are not covered
by it. A successful claim against us that is not covered by, or is in excess of
our insurance, could have a material adverse effect on our financial condition,
operating results or liquidity. Claims against us, regardless of their merit or
eventual outcome, may also have a material adverse effect on our ability to
attract residents or expand our business and would consume considerable
management time. We must review our insurance policies annually and can provide
no assurance that we will be able to continue to obtain liability insurance
coverage in the future or that it will be available on acceptable terms.

 ITEM 2. PROPERTIES

     The following table sets forth, as of December 31, 2000, the location, the
date on which operations commenced, number of units, and our interest in our
ALCs.

<TABLE>
<CAPTION>
                                                               OPERATIONS
         COMMUNITY                      LOCATION                COMMENCED        UNITS    INTEREST
         ---------                      --------               -----------      -------   --------
<S>                                   <C>                      <C>              <C>       <C>
Retirement Inn of Burlingame          Burlingame, CA               1989             67    Fee-Owned
Retirement Inn of Campbell            Campbell, CA                 1989             71    Fee-Owned
Covina Villa                          Covina, CA                   1988             63    Fee-Owned,  subject to ground lease
                                                                                          through July 1, 2037
</TABLE>


                                       8
<PAGE>   9

<TABLE>
<S>                                   <C>                      <C>              <C>       <C>
Retirement Inn of Daly City           Daly City, CA                1989             94    Fee-Owned
Retirement Inn of Fremont             Fremont, CA                  1989             69    Fee-Owned
Retirement Inn of Fullerton           Fullerton, CA                1989             67    Fee-Owned
Montego Heights Lodge                 Walnut Creek, CA             1989            162    Fee-Owned
Retirement Inn of Sunnyvale           Sunnyvale, CA                1989            123    Fee-Owned
Valley View Lodge                     Walnut Creek, CA             1989            124    Fee-Owned
Inn at Willow Glen                    San Jose, CA                 1989             83    Leased, lease termination of November 22,
                                                                                          2007 with an additional 10 year option
</TABLE>


     On March 2, 1999, we purchased our landlords' fee interests in the
Retirement Inn of Burlingame, Retirement Inn of Campbell, Retirement Inn of
Fremont and Retirement Inn of Sunnyvale.

ITEM 3. LEGAL PROCEEDINGS

      On June 15, 1999, we, along with five other California limited
partnerships of which ARVAL is the managing general partner, including American
Retirement Villas Properties III, Casa Bonita Fullerton, Ltd., Collwood Knolls,
L.P., and San Gabriel Retirement Villa, L.P. (collectively, the "ARV
Partnerships") - filed an action in the Superior Court for the State of
California, County of Orange, seeking a declaratory judgment and damages for
breach of contract, promissory estoppel, fraud and negligent misrepresentation
against PRN Mortgage Capital, L.L.C. and Red Mountain Funding, L.L.C.
("Defendants"). Defendants filed a counter-claim for amounts allegedly due under
loan commitments between Defendants and the ARV Partnerships. In July 2000, the
ARV Partnerships settled the dispute with the Defendants. We have received and
recorded all amounts due as a result of the settlement. We do not believe the
terms of the settlement are material to our operations. We are from time to time
subject to lawsuits and other matters in the normal course of business. While we
cannot predict the results with certainty, we do not believe that any liability
from any such lawsuits or other matters will have a material effect on our
financial position, results of operations, or liquidity.



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

     No matters were submitted to Unitholders during the fiscal year.


                                       9
<PAGE>   10

                                     PART II

ITEM 5. MARKET FOR OUR COMMON EQUITY AND RELATED UNITHOLDER MATTERS

     There is no established public trading market for our securities. As noted
in Item 1, ARVAL, our Managing General Partner, tendered for our limited
partnership units in May 1996 and July 1996. During 1997, ARVAL acquired 525
additional units at a net cash price of approximately $720 per unit. As of March
20, 2001, ARVAL owned 18,323 limited Partnership units or approximately 52.3% of
outstanding limited partner units.

     As of March 20, 2000, there were approximately 1,728 Unit Holders of record
owning 35,019.88 units. For the years ended December 31, 2000, 1999, and 1998,
we made limited partner distributions of $2.12 per unit, $502.32 per unit, and
$53.63 per unit, respectively. The return of capital for the years ended
December 31, 2000, 1999, and 1998 was $2.12 per unit, $461.33 per unit, and
$2.38 per unit, respectively. There were distributions of earnings for the years
ended December 31, 2000, 1999, and 1998 of $0.00 per unit, $40.99 per unit, and
$51.25 per unit, respectively.

ITEM 6. SELECTED FINANCIAL DATA

     The following table presents selected financial data for each of our last
five fiscal years. Certain of this financial data has been derived from our
audited financial statements included elsewhere in this Form 10-K and should be
read in conjunction with those financial statements and accompanying notes and
with "Management's Discussion and Analysis of Financial Condition and Results of
Operations" at Item 7. This table is not covered by the Independent Auditors'
Report.

<TABLE>
<CAPTION>
                                       2000           1999           1998          1997          1996
                                     --------       --------       --------      --------      --------
                                                            (IN THOUSANDS EXCEPT UNIT DATA)
<S>                                  <C>            <C>            <C>           <C>           <C>
Revenue                              $ 21,316       $ 20,876       $ 19,599      $ 19,044      $ 17,834

Net income (loss)                        (687)         1,435          1,813         2,878         1,576

Net income (loss)
   (per limited partner unit)          (19.42)         40.99          51.25         81.35         44.55
Total assets                           39,556         38,543         21,836        21,929        20,801
Partners' capital (deficit)            (3,656)        (2,895)        13,439        13,523        12,245
Notes payable                          41,226         39,545          6,170         6,403         6,562
Per limited partner unit:
Distributions of earnings                0.00          40.99          51.25         45.24         44.55
Distributions -- return of
   Capital                               2.12         461.33           2.38            --         16.22
Total distributions (per
   limited partner unit)                 2.12         502.32          53.63         45.24         60.77
</TABLE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

LIQUIDITY

     On a long-term basis, our liquidity is sustained primarily from cash flow
provided by operating activities. During 2000, net cash provided by operating
activities was approximately $0.1 million compared to net cash provided by
operating activities of approximately $3.7 million and $2.5 million for 1999 and
1998, respectively.

    Given the age of the ALCs (ages range from 13 to 25 years with an average
age of 21.5 years), our Managing General Partner has continued our refurbishment
program put in place to repair, maintain and physically improve our ALCs. We
expect to fund repairs and improvement primarily from our operating cash flow.
As a result of the planned renovations, our Managing General Partner believes
that distributions of cash flow from operations to the Partners will either be
reduced or eliminated in the near term. Our General Partners expect that the
cash to be generated from operations of our communities will be adequate to pay
operating expenses, make necessary capital improvements and make required
principal reductions of loans.

     During 2000, net cash used in investing activities was $1.1 million
compared to $16.1 million and $1.3 million for 1999 and 1998, respectively. The
decrease from 1999 to 2000 was a primarily a result of the 1999 purchase of our
landlords' interests in four previously leased assisted living communities and
capital expenditures required to qualify for the refinancing. In addition,
investing activities included property improvements and the purchase of
furniture, fixtures and equipment.



                                       10
<PAGE>   11

     During 2000, net cash provided by financing activities was $1.1 million
compared to $13.5 million in 1999 and net cash used in financing activities of
$2.1 million for 1998. The principal components for 2000 were:

     -    Refinancing of the 4 owned properties, as part of the $29.8 million
          proceeds from notes payable offset by

     -    principal repayments of $28.1 million for loans; and

     -    loan fees of $0.5 million.

     Our General Partner's Board of Directors approved the refinancing of 8
owned ALCs in March 2000. Four of the refinancings were completed by December
31, 2000, the refinancing of the remaining four communities was completed or
existing loans were extended to 2002 subsequent to the end of 2000. We choose to
refinance to:

     -    take advantage of lower fixed interest rates available at the time;
          and

     -    extend maturities to 35 years

      On June 28, 1999, we had previously obtained financing on the same eight
owned communities in an aggregate principal amount of $39.2 million at a rate of
interest of 9.15% with a maturity date of June 28, 2001 through a loan agreement
with Banc One. As part of the loan requirements, we created a wholly-owned
subsidiary Retirement Inns II, LLC as the special purpose entity. The loan was
for 24 months and was secured by the various properties; in addition, our
General Partner, was a guarantor on the loan for fraud, material
misrepresentation and certain covenants. The $39.2 million of mortgage loans
were due June 2001. As described in more detail in the preceding paragraph, four
of the loans were refinanced at or prior to December 31, 2000 with 35-year loans
at between 8.00% to 8.03% Subsequent to December 31, 2000 three additional loans
have been refinanced and one loan's maturity has been extended to January 2002.

      Due to a failed financing in 1998, in October 1998 we paid a lender
approximately $1.3 million of fees for an interest rate lock and $0.1 million
for loan commitment and other fees. The lender terminated the loan commitment
and underlying interest rate lock in October 1998 due to adverse market
conditions. The lender returned $0.3 million of the interest rate lock fees in
January 1999 and $0.2 million in June 2000 as full and final settlement. We
included the amounts paid and received in interest expense in the accompanying
consolidated statements of operations for the years ended December 31, 2000,
1999 and 1998.

     Our General Partner is not aware of any trends, other than national
economic conditions, which have had or which may be reasonably expected to have
a material favorable or unfavorable impact on revenues or income from our
operations or sale of properties. Our General Partner believe that if the
inflation rate increases, they will be able to recover subsequent increases in
operating expenses from higher rental and assisted living rates. We have notes
payable of approximately $41.2 million as of December 31, 2000.

CAPITAL RESOURCES

     During 2000, we continued our refurbishment program in order to repair,
maintain and physically improve the ten ALCs. These refurbishments were funded
with cash flow from operations and cash on hand. We expect to continue the
refurbishment program and expect that the funds for these improvements should be
available from operations or cash on hand or other financing alternatives. Our
estimated capital needs for acquisitions and development over the next 12 months
are $0.9 million. Other than as disclosed above, there are no known material
trends, favorable or unfavorable, in our capital resources, and there is no
expected change in the mix of such resources.

RESULTS OF OPERATIONS

THE YEAR ENDED DECEMBER 31, 2000 AS COMPARED TO THE YEAR ENDED DECEMBER 31, 1999

<TABLE>
<CAPTION>
(DOLLARS IN MILLIONS)                                                                        Increase/
                                                                   2000          1999        (decrease)
                                                                  -------       -------      ----------
<S>                                                               <C>           <C>          <C>
Revenue:
  Assisted living community revenue ........................      $  20.9       $  20.4           2.5%
  Interest and other revenue ...............................          0.4           0.5         (13.7)%
                                                                  -------       -------       -------
          Total revenue ....................................         21.3          20.9           2.1%
                                                                  -------       -------       -------
Costs and expenses:
                                                                     13.9          12.8           9.2%
  Assisted living operating expenses
  General and administrative ...............................          0.6           1.0         (36.3)%
  Communities rent .........................................          0.4           0.6         (36.7)%
  Depreciation and amortization ............................          2.3           1.8          27.5%
  Property taxes ...........................................          0.7           0.6          16.6%
</TABLE>


                                       11
<PAGE>   12

<TABLE>
<S>                                                               <C>           <C>          <C>
  Advertising ..............................................          0.4           0.2          66.1%
  Interest .................................................          3.4           2.5          36.6%
                                                                  -------       -------       -------
          Total costs and expenses .........................         21.7          19.5          11.5%
                                                                  -------       -------       -------
Income (loss) before income tax and extraordinary item .....         (0.4)          1.4        (125.6)%
Extraordinary loss from write-off of loan fees due to
refinancing, net of income tax .............................         (0.3)           --         100.0%
                                                                  -------       -------       -------
          Net income (loss) ................................      $  (0.7)      $   1.4        (147.9)%
                                                                  =======       =======       =======
</TABLE>

     The increase of $0.5 million, or 2.5% in assisted living community revenue
is primarily attributable to:

          -    the increase in average rate per occupied unit to $2,132 for the
               year ended December 31, 2000 as compared with $2,066 for the year
               ended December 31, 1999, partially offset by;

          -    the decrease in assisted living penetration to 53.6% for the year
               ended December 31, 2000 compared with 56.8% for the year ended
               December 31, 1999.

     The increase in assisted living operating expenses of $1.1 million, or 9.2%
is primarily attributable to CPI resulting in:

          -    increased wages of staff ;

          -    increased payroll costs including incentive programs; insurance
               and worker's compensation; and

          -    normal operating expense increases.

     The decrease in general and administrative costs of $0.4 million, or 36.3%
is primarily attributable to:

          -    a reduction of administration fees paid to our managing general
               partner; and

          -    a reduction of expenses, that were previously allocated to G&A
               due to cost-cutting efforts.

     The decrease in communities rent of $0.2 million, or 36.7% is primarily due
to the purchase, during March 1999, of four previously leased communities.

     The increase in depreciation and amortization of $0.5 million, or 27.5% is
primarily attributable to:

          -    increase in amortization of loan fees related to the refinancing
               in June 1999 of the eight owned properties; and

          -    the purchase of four previously leased communities, in March of
               1999.

      The increase in property taxes of $0.1 million, or 16.6% is primarily due
to higher property valuations.

     The increase in advertising expenses or $0.2 million, or 66.1% is primarily
due to more aggressive advertising due to increased competition in the Assisted
Living market.

     The increase in interest expense of $0.9 million, or 36.6% is primarily
attributable to:

          -    the acquisition in March 1999 of four ALCs previously leased; and

          -    the refinancing in June 1999 of eight owned properties: partially
               offset by

          -    a recovery of $228,000 of interest rate lock and commitment fees
               incurred in connection with the failed refinancing of certain
               notes payable in 1998.

      The extraordinary loss or $0.3 million is the result of the write off of
loans fees due to the refinancing of four properties in December of 2000.



THE YEAR ENDED DECEMBER 31, 1999 AS COMPARED TO THE YEAR ENDED DECEMBER 31, 1998

<TABLE>
<CAPTION>
(DOLLARS IN MILLIONS)                                                     Increase/
                                                 1999         1998        (decrease)
                                                -------      -------      ----------
<S>                                             <C>          <C>          <C>
Revenue:
  Assisted living community revenue ......      $  20.4      $  19.1           7.1%
  Interest and other revenue .............          0.5          0.5         (15.9)%
                                                -------      -------       -------
          Total revenue                            20.9         19.6           6.5%
                                                -------      -------       -------
Costs and expenses:
  Assisted living operating expenses .....         12.8         12.0           6.5%
  General and administrative .............          1.0          1.1         (10.2)%
  Communities rent .......................          0.6          1.2         (52.6)%
  Depreciation and amortization ..........          1.8          1.1          62.2%
  Property taxes .........................          0.6          0.5          15.4%
</TABLE>


                                       12
<PAGE>   13

<TABLE>
<S>                                             <C>          <C>          <C>
  Advertising ............................          0.2          0.2           8.1%
  Interest ...............................          2.5          1.7          50.8%
                                                -------      -------       -------
          Total costs and expenses .......         19.5         17.8           9.3%
                                                -------      -------       -------
          Net income .....................      $   1.4      $   1.8         (20.8)%
                                                =======      =======       =======
</TABLE>

     The increase in assisted living community revenue of $1.3 million, or 7.1%
is primarily attributable to:

          -    the increase in assisted living penetration to 56.8% for the year
               ended December 31, 1999 compared with 53.4% for the year ended
               December 31, 1998; and

          -    the increase in average rate per occupied unit to $2,066 for the
               year ended December 31, 1999 as compared with $1,921 the year
               ended December 31, 1998;

     The   increase in assisted living operating expenses of $0.8 million, or
           6.5% is primarily attributable to:

          -    staffing requirements related to increased assisted living
               services provided;

          -    increased wages of staff; and

          -    normal operating expense increases.

     The decrease in general and administrative costs of $0.1 million, or 10.2%
is primarily due to cost-cutting efforts.

     The decrease in communities rent of $0.6 million, or 52.6% is primarily due
     to the purchase, during March 1999, of four previously leased communities.

     The increase in depreciation and amortization of $0.7 million, or 62.2% is
     primarily due to the four previously leased communities that now are owned
     which resulted in depreciation and amortization expense.

     The increase in interest expense of $0.8 million, or 50.8% is primarily
     related to the loans for the purchase of the four previously leased
     communities, in March of 1999, and to the refinancing on June 28, 1999 of
     the eight owned properties partially offset by the loan fees charged to
     interest expense in 1998.




FUTURE CASH DISTRIBUTIONS

     Our General Partner believes that our ability to make cash distributions to
limited partners depends on factors such as (i) our ability to rent the
available units and maintain high occupancies and rates; (ii) our ability to
control both operating and administrative expenses; (iii) our ability to
maintain adequate working capital; (iv) the absence of any losses from uninsured
property damage or future litigation; (v) our ability to generate proceeds from
the sales of properties and (vi) our ability to renew the final existing lease
under favorable terms.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     We are exposed to market risks related to fluctuations in the interest
rates on our fixed rate notes payable. With respect to our fixed rate notes
payable, changes in the interest rates affect the fair market value of the notes
payable, but not our earnings or cash flows. We do not have an obligation to
prepay fixed rate debt prior to maturity, and as a result, interest rate risk
and changes in fair market value should not have a significant impact on the
fixed rate debt until the earlier of maturity and any required refinancing of
such debt. We do not currently have any variable interest rate debt and,
therefore, are not subject to interest rate risk associated with variable
interest rate debt. Currently, we do not utilize interest rate swaps.

     Less than 1% of our total assets and total contract revenues as of and for
the periods ended December 31, 2000 and 1999 were denominated in currencies
other than the U.S. Dollar; accordingly, we believe that we have no material
exposure to foreign currency exchange risk. This materiality assessment is based
on the assumption that the foreign currency exchange rates could change
unfavorably by 10%. We have no foreign currency exchange contracts.

                                       13
<PAGE>   14

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The Financial Statements and the Report of Independent Auditors are listed at
Item 14 and are included beginning on Page F-1.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

     None.


                                       14
<PAGE>   15

                                    PART III

ITEM 10. OUR DIRECTORS AND EXECUTIVE OFFICERS

     As an entity, we have no directors or executive officers. Our sole and
managing general partner is ARVAL. As managing general partner, ARVAL is
responsible for all management decisions

SPECIAL LIMITED PARTNERS

JOHN A. BOOTY, age 62, one of ARVAL's founders, retired in September 1996 after
serving as president since the date of ARVAL's inception in 1985. Since his
retirement he has served as a consultant to ARVAL and most recently as a
Director until September 1999. He also served as interim president of ARVAL from
October 1997 to January 1998 and as interim chief executive officer from October
1997 to December 1997.

GARY L. DAVIDSON, age 66, an attorney and one of ARVAL's founders, previously
practiced law in Orange County. During his professional career, he has been
active in numerous business and professional sports ventures. In 1979, he
co-founded the predecessor to ARVAL. In October 1997, Mr. Davidson resigned as
Chief Executive Officer, Director and Chairman of the Board of ARVAL.

JOHN S. JASON, age 65, was associated with KPMG LLP for 6 years. In 1979, he
co-founded the predecessor to ARVAL. In February 1993, Mr. Jason retired from
his positions as a Director and as Executive Vice President of ARVAL.

TONY ROTA, age 72, is a licensed real estate broker, and has been active in real
estate investments since 1958. In 1979, he co-founded the predecessor to ARVAL.
In November 1992, Mr. Rota retired from his positions as a Director and as Vice
President of ARVAL.

The following table sets forth certain information regarding the executive
officers and directors of our General Partner

<TABLE>
<CAPTION>
Name                                      Age                         Title
----                                      ---                         -----
<S>                                       <C>                         <C>
Douglas M. Pasquale                       46                          Chairman of the Board and Chief Executive Officer
Abdo H. Khoury                            51                          President and Chief Financial Officer
Maurice J. Dewald                         60                          Director
David P. Collins                          63                          Director
John A. Moore                             39                          Director
Jeffrey D. Koblentz                       33                          Director
</TABLE>


EXECUTIVE OFFICERS OF ARV ASSISTED LIVING, INC. ("ARVAL")


DOUGLAS M. PASQUALE, age 46, joined ARVAL as chief operating officer on June 1,
1998, and was named a Director in October 1998 and chairman in December of 1999.
Prior to joining ARVAL, Mr. Pasquale was employed for 12 years by Richfield
Hospitality Services, Inc., and Regal Hotels International-North America, a
leading hotel ownership and hotel management company based in Englewood,
Colorado. He served as its president and chief executive officer from 1996 to
1998 and as chief financial officer from 1994 to 1996.

ABDO H. KHOURY, age 51, was appointed senior vice president and chief financial
officer of ARVAL on March 30, 1999. On January 1, 2001 Mr. Khoury was promoted
to President and retained the position of chief financial officer of ARVAL.
Previously he had served ARVAL as vice president, asset strategy and treasury,
since January 1999, and as president of the Apartment Division since coming to
ARVAL in May 1997. Mr. Khoury's prior background includes more than 25 years in
accounting and real estate. He was a principal with Financial Performance Group
in Newport Beach, CA, from 1991 to 1997.

DIRECTORS OF ARVAL

For a description of Mr. Pasquale, please see above.



                                       15
<PAGE>   16

MAURICE J. DEWALD, age 60, is chairman and chief executive officer of Verity
Financial Group, Inc., a firm he founded in 1992. He currently is a director of
Tenet Healthcare Corporation, Dai-Ichi Kangyo Bank of California and Monarch
Funds.

DAVID P. COLLINS, age 63, has served ARVAL in several capacities since 1981. He
is a past president of ARV Assisted Living International, Inc., a wholly-owned
subsidiary of ARVAL. From 1985 to January 1998, Mr. Collins was a senior vice
president of ARVAL, responsible for investor relations and for capital formation
for ARVAL and affiliated entities. Mr. Collins currently serves as a director of
ARVAL.

JOHN A. MOORE, age 39, is a Principal of Lazard Freres Real Estate Investors
L.L.C. and its Chief Financial Officer. He joined Lazard in 1998 from World
Financial Properties, where he has served as an Executive Vice President and
Chief Financial Officer from 1996. Previously, he worked with Olympia and York
as Senior Vice President, Finance. Mr. Moore joined Olympia and York in 1988.

JEFFREY D. KOBLENTZ, age 33, is a Vice President of Lazard Freres Real Estate
Investors L.L.C. He joined Lazard in 1998 from Arthur Andersen LLP, where he was
a Manager in the Real Estate Services Group. Mr. Koblentz joined Arthur Andersen
in 1992.


ITEM 11. EXECUTIVE COMPENSATION

As an entity, we have no officers or directors. We are managed by our General
Partner. We compensate our General Partner as set forth in the table below.
Please note that during the fiscal year 2000 the Special Limited Partners were
general partners of ARVP II and, as such, were entitled to compensation set
forth below.



<TABLE>
<S>                                      <C>
Acquisition Fees
(ARV Assisted Living, Inc.)              A property acquisition fee of 2% of Gross Offering Proceeds (as defined in the
                                         ARVP II, Partnership Agreement) to be paid for services in connection with the
                                         selection and purchase of Projects and related negotiations. In addition, a
                                         development, processing and renovation fee of 5.5% of Gross Offering Proceeds to
                                         be paid for services in connection with negotiations for or the renovation or
                                         improvement of existing ALCs and the development, processing or construction of
                                         Projects we have developed. There were no property acquisition fees, or,
                                         development, processing and renovation fees for the years ended December 31,
                                         2000, 1999 and 1998.

Rent-Up and Staff Training Fees
(ARV Assisted Living, Inc.)              Rent-up and staff training fees of 4.5% of the Gross Offering Proceeds allocated to
                                         each specific acquired or developed Project. Such fees will be paid for services in
                                         connection with the opening and initial operations of the Projects including, without
                                         limitation, design and implementation of the advertising,  direct solicitation and
                                         other campaigns to attract residents and the initial hiring and training of managers,
                                         food service specialists, activities directors and other personnel employed in the
                                         individual communities. There were no rent-up and staff training fees for the years
                                         ended December 31, 2000, 1999 and 1998.

Property Management Fees
(ARV Assisted Living, Inc.)              A property management fee of 5% of gross revenue is paid for managerial services
                                         including general supervision, hiring of onsite management personnel employed by
                                         ARVAL, renting of units,  installation and provision of food service, maintenance,
                                         and other operations. For the years ended December 31, 2000, 1999, and 1998, the
                                         property management fee amounted to $1,056,000, $1,037,000, and $974,000,
                                         respectively.

Partnership Management Fees
(ARV Assisted Living, Inc.)              A partnership management fee of 10% of cash flow before distributions is paid
                                         for implementing our business plan and supervising and managing our affairs
                                         including general administration and coordination of legal, audit, tax, and
                                         insurance
</TABLE>


                                       16
<PAGE>   17

<TABLE>
<S>                                      <C>
                                         matters. For the years ended December 31, 2000, 1999, and 1998, our
                                         partnership management fee amounted to $246,000, $348,000, and $333,000,
                                         respectively.

Sale of Partnership Projects
(General Partners)                       The ARVP II Limited Partnership Agreement permits payment in the form of real
                                         estate commissions to the General Partner or its Affiliates. Any such
                                         compensation shall not exceed 3% of the gross sales price or 50% of the standard
                                         real estate brokerage commission, whichever is less. For the years ended
                                         December 31, 2000, 1999, and 1998, no real estate commissions were paid.

Subordinated Incentive Compensation
(ARV Assisted Living, Inc.)              ARVAL is entitled to receive 15% of the proceeds of sale or refinancing of assets of
                                         the partnership subordinated to a return to the limited partners of Initial Capital
                                         Contributions (as defined in the ARVP II, Partnership Agreement)  plus an 8%-10%
                                         (depending on the timing of the limited partners' investment) per annum cumulative,
                                         but not compounded, return thereon from all sources. For the years ended December
                                         31, 2000, 1999 and 1998, no incentive compensation was earned.

Partnership Interest
(General Partners)                       1% of all items of capital, profit or loss, and liquidating Distributions,
                                         subject to a capital account adjustment, is paid to our General Partners.

Reimbursed Expenses
(General Partners)                       All of our expenses are billed directly to and paid by us.  Our General Partners may
                                         be reimbursed for the actual cost of goods and materials obtained from unaffiliated
                                         entities and used for or by us. Our General Partner is reimbursed for administrative
                                         services necessary to our prudent operation, provided that such reimbursement is at
                                         the lower of its actual cost or the amount that we would be required to pay to
                                         independent parties for comparable administrative services in the same geographic
                                         location. Total reimbursements to ARVAL amounted to $10.3 million, $9.4 million,
                                         and $7.1 million for the years ended December 31, 2000, 1999, and 1998,
                                         respectively.
</TABLE>


See also Footnote 3 of Notes to Financial Statements (Transactions with
Affiliates).

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

<TABLE>
<CAPTION>
                               NAME AND ADDRESS OF        AMOUNT AND NATURE OF     PERCENT OF
    TITLE OF CLASS              BENEFICIAL OWNER          BENEFICIAL OWNERSHIP        CLASS
----------------------     --------------------------   ------------------------   ----------
<S>                        <C>                          <C>                        <C>
   Limited Partnership      ARV Assisted Living, Inc.          18,323 units            52.3%
          Units               245 Fischer Ave., D-1          Direct ownership
                              Costa Mesa, CA 92626
</TABLE>

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Other than the compensation earned by our General Partners, as set out
under Item 11 above, no General Partner or Affiliate receives any direct or
indirect compensation from us. Our General Partner receives a management fee of
5% of Gross Revenues (as defined in the ARVP II Partnership Agreement). Because
these fees are payable without regard to whether particular ALCs are generating
Cash Flow (as defined in the ARVP II Partnership Agreement) or otherwise
benefiting us, a conflict of interest could arise in that it might be to the
advantage of our General Partners that a community be retained or refinanced
rather than sold. On the other hand, an affiliate of our General Partners may
earn a real estate commission on sale of a property, creating an incentive to
sell what might be a profitable property.

     Our General Partner has authority to invest our funds in properties or
entities in which it or any of its affiliates have an interest, provided we
acquire a controlling interest. In any such investment, duplicate property
management or other fees will not be permitted. Our General Partner or any of
its affiliates may, however, purchase property in their own names and
temporarily hold title to facilitate acquisition for us, provided that such
property is purchased by us at cost (including acquisition, closing and carrying
costs). Our General Partners will not commingle our funds with those of any
other person or entity.



                                       17
<PAGE>   18

     Conflicts of interest exist to the extent that ALCs owned or operated
compete, or are in a position to compete for residents, general managers or key
employees with ALCs owned or operated by our General Partners and affiliates in
the same geographic area. Our General Partners seek to reduce any such conflicts
by offering such persons their choice of residence or employment on comparable
terms in any ALC.

     Further conflicts may exist if and to the extent that other affiliated
owners of ALCs seek to refinance or sell at the same time as us. Our General
Partner seeks to reduce any such conflicts by making prospective purchasers
aware of all ALCs available for sale.




                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)  The following documents are filed as a part of this Report:

          -    Independent Auditors' Report;

          -    Balance Sheets - December 31, 2000 and 1999;

          -    Consolidated Statements of Operations - Years Ended December 31,
               2000, 1999, and 1998;

          -    Consolidated Statements of Partners' Capital - Years Ended
               December 31, 2000, 1999 and 1998;

          -    Consolidated Statements of Cash Flows - Years Ended December 31,
               2000, 1999 and 1998;

          -    Notes to Financial Statements; and

          -    Financial Statement Schedule - Schedule III - Real Estate and
               Related Accumulated Depreciation and Amortization - December 31,
               2000.

(b)  Reports on Form 8-K. The Registrant did not file any 8-K reports during the
     last quarter of 2000.

(c)  Exhibits



     A.   EXHIBITS

<TABLE>
<S>                            <C>
     Exhibit 10.1*             Loan Agreement by and between Banc One Capital Funding Corporation and Retirement Inns III, LLC

     Exhibit 10.4*             Loan Agreement by and between Banc One Capital Funding Corporation and Retirement Inns II, LLC(1)

     Exhibit 10.5*             Loan Agreement by and between Banc One Capital Funding Corporation and Retirement Inns II, LLC(1)

     Exhibit 10.6*             Loan Agreement by and between Banc One Capital Funding Corporation and Retirement Inns II, LLC(1)

     Exhibit 10.7*             Loan Agreement by and between Banc One Capital Funding Corporation and Retirement Inns II, LLC(1)

     Exhibit 10.8*             Loan Agreement by and between Banc One Capital Funding Corporation and Retirement Inns II, LLC(1)

     Exhibit 10.9*             Loan Agreement by and between Banc One Capital Funding Corporation and Retirement Inns II, LLC(1)

     Exhibit 10.10*            Loan Agreement by and between Banc One Capital Funding Corporation and Retirement Inns II, LLC(1)

     Exhibit 10.11*            Loan Agreement by and between Banc One Capital Funding Corporation and Retirement Inns II, LLC(1)

     Exhibit 10.12 *           Letter Agreement as to the Loans in the aggregate amount of  $39,703,100 from Banc One Capital
                               Funding Corporation to Retirements Inns II

     Exhibit 10.15*            Note and Agreement as to Retirement Inns II, LLC

     Exhibit 10.75             Deed of Trust Note of ARV Burlingame, L.P. to Red Mortgage Capital, Inc.

     Exhibit 10.76             Allonge #1 to Deed of Trust Note of ARV Burlingame, L.P. to Red Mortgage Capital, Inc.

     Exhibit 10.77             Deed of Trust between ARV Burlingame, L.P. and Fidelity National Title Insurance
</TABLE>



                                       18
<PAGE>   19

<TABLE>
<S>                            <C>
     Exhibit 10.78             Regulatory Agreement for U.S. Department of Housing Multifamily Housing Projects between ARV
                               Burlingame, L.P. and Secretary of Housing and Urban Development

     Exhibit 10.79             Regulatory Agreement Nursing Homes Projects between ARV Burlingame, L.P. and Federal Housing
                               Commissioner

     Exhibit 10.80             Deed of Trust Note of ARV Campbell, L.P. to Red Mortgage Capital, Inc.

     Exhibit 10.81             Allonge #1 to Deed of Trust Note of ARV Campbell, L.P. to Red Mortgage Capital, Inc.

     Exhibit 10.82             Deed of Trust between ARV Campbell, L.P. and Fidelity National Title Insurance

     Exhibit 10.83             Regulatory Agreement for U.S. Department of Housing Multifamily Housing Projects between ARV
                               Campbell, L.P. and Secretary of Housing and Urban Development

     Exhibit 10.84             Regulatory Agreement Nursing Homes Projects between ARV Campbell, L.P. and Federal Housing
                               Commissioner

     Exhibit 10.85             Deed of Trust Note of ARV Sunnyvale, L.P. to Red Mortgage Capital, Inc.

     Exhibit 10.86             Allonge #1 to Deed of Trust Note of ARV Sunnyvale, L.P. to Red Mortgage Capital, Inc.

     Exhibit 10.87             Deed of Trust between ARV Sunnyvale, L.P. and Fidelity National Title Insurance

     Exhibit 10.88             Regulatory Agreement for U.S. Department of Housing Multifamily Housing Projects between ARV
                               Sunnyvale, L.P. and Secretary of Housing and Urban Development

     Exhibit 10.89             Regulatory Agreement Nursing Homes Projects between ARV Sunnyvale, L.P. and Federal Housing
                               Commissioner

     Exhibit 10.90             Deed of Trust Note of ARV Valley View, L.P. to Red Mortgage Capital, Inc.

     Exhibit 10.91             Deed of Trust between ARV Valley View, L.P. and Fidelity National Title Insurance

     Exhibit 10.92             Regulatory Agreement for U.S. Department of Housing Multifamily Housing Projects between ARV
                               Valley View, L.P. and Secretary of Housing and Urban Development

     Exhibit 10.93             Regulatory Agreement Nursing Homes Projects between ARV Valley View, L.P. and Federal Housing
                               Commissioner
</TABLE>


*    Incorporated by reference to 10-Q for June 30, 1999 filed August 2, 1999.


                                       19
<PAGE>   20

                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, we have duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

     AMERICAN RETIREMENT VILLAS PROPERTIES II, A CALIFORNIA LIMITED PARTNERSHIP,
BY THE FOLLOWING PERSONS ON OUR BEHALF.

                                               ARV ASSISTED LIVING, INC.

                                               By: /s/  DOUGLAS M. PASQUALE
                                                   -----------------------------
                                                        Douglas M. Pasquale
                                                        Chief Executive Officer

Date: March 30, 2001

     Pursuant to the requirements of the Securities Act of 1934, as amended,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
              SIGNATURE                                    TITLE                                  DATE
              ---------                                    -----                                  ----
<S>                                         <C>                                              <C>
    /s/    DOUGLAS M. PASQUALE              Chief Executive Officer                          April 2, 2001
---------------------------------------     (Principal Executive Officer)
           Douglas M. Pasquale

    /s/      ABDO H. KHOURY                 President and Chief Financial Officer            April 2, 2001
---------------------------------------     (Principal Financial & Accounting Officer)
             Abdo H. Khoury

    /s/       JOHN A. MOORE                 Director                                         April 2, 2001
---------------------------------------
              John A. Moore

    /s/     DAVID P. COLLINS                Director                                         April 2, 2001
---------------------------------------
            David P. Collins

    /s/     MAURICE J. DEWALD               Director                                         April 2, 2001
---------------------------------------
            Maurice J. DeWald

    /s/     JEFFREY KOBLENTZ                Director                                         April 2, 2001
---------------------------------------
            Jeffery Koblentz
</TABLE>


                                       20
<PAGE>   21

                    AMERICAN RETIREMENT VILLAS PROPERTIES II
                       (A California Limited Partnership)

                            Annual Report - Form 10-K

                        Financial Statements and Schedule

                                Items 8 and 14(a)

                        December 31, 2000, 1999 and 1998

                   (With Independent Auditors' Report Thereon)


                                       21
<PAGE>   22

                    AMERICAN RETIREMENT VILLAS PROPERTIES II
                       (A California Limited Partnership)

                            Annual Report - Form 10-K

                                Items 8 and 14(a)

                   Index to Financial Statements and Schedule


<TABLE>
<CAPTION>
                                                                                                           PAGE
                                                                                                           ----
<S>                                                                                                        <C>
Independent Auditors' Report                                                                                F-1

Consolidated Balance Sheets -- December 31, 2000 and 1999                                                   F-2

Consolidated Statements of Operations-- Years ended December 31, 2000, 1999 and 1998                        F-3

Consolidated Statements of Partners' Capital (Deficit) - Years ended December 31, 2000, 1999 and 1998       F-4

Consolidated Statements of Cash Flows - Years ended December 31, 2000, 1999 and 1998                        F-5

Notes to Consolidated Financial Statements                                                                  F-6

Schedule

Real Estate and Related Accumulated Depreciation and Amortization -
     December 31, 2000                                                                                      Schedule III
</TABLE>

All other schedules are omitted, as the required information is inapplicable or
the information is presented in the financial statements or related notes.


                                       22
<PAGE>   23

                          INDEPENDENT AUDITORS' REPORT

ARV Assisted Living, Inc.
     as the General Partner
     of American Retirement Villas Properties II:

We have audited the consolidated financial statements of American Retirement
Villas Properties II, a California limited partnership, and subsidiaries as
listed in the accompanying index. In connection with our audits of the
consolidated financial statements, we have also audited the financial statement
schedule listed in the accompanying index. These consolidated financial
statements and financial statement schedule are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
consolidated financial statements and financial statement schedule based on our
audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated the financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
American Retirement Villas Properties II and subsidiaries as of December 31,
2000 and 1999 and the results of their operations and their cash flows for each
of the years in the three-year period ended December 31, 2000, in conformity
with accounting principles generally accepted in the United States of America.
Also, in our opinion, the related financial statement schedule, when considered
in relation to the basic financial statements taken as a whole, presents fairly,
in all material respects, the information set forth therein.

                                        /s/KPMG LLP

Orange County, California
March 5, 2001


                                      F-1
<PAGE>   24

                    AMERICAN RETIREMENT VILLAS PROPERTIES II
                       (A California Limited Partnership)

                           Consolidated Balance Sheets
                           December 31, 2000 and 1999
                          (In thousands, except units)

                                     ASSETS

<TABLE>
<CAPTION>
                                                                             2000           1999
                                                                           --------       --------
<S>                                                                        <C>            <C>
Properties, at cost:
   Land                                                                    $ 11,453       $ 11,453
   Buildings and improvements, less accumulated depreciation of
     $8,120 and $7,248 in 2000 and 1999, respectively                        20,157         20,662
   Leasehold property and improvements, less accumulated
     depreciation of $1,274 and $1,244 in 2000 and 1999, respectively           222            209
   Furniture, fixtures and equipment, less accumulated
     depreciation of $1,497 and $1,145 in 2000 and 1999, respectively         1,190          1,373
                                                                           --------       --------

         Net properties                                                      33,022         33,697

Cash and cash equivalents                                                     2,177          2,002
Other assets, including impound accounts of $2,974 and $1,112 in
   2000 and 1999, respectively                                                4,357          2,844
                                                                           --------       --------
                                                                           $ 39,556       $ 38,543
                                                                           ========       ========

                   LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)

Liabilities:
   Notes payable                                                           $ 41,226       $ 39,545
   Accounts payable                                                             341            155
   Accrued expenses                                                           1,477          1,426
   Amounts payable to affiliate                                                 143            304
   Distributions payable to Partners                                             25              8
                                                                           --------       --------
         Total liabilities                                                   43,212         41,438
                                                                           --------       --------
Commitments and contingencies

Partners' capital (deficit):
   General partners                                                               1            119
   Special limited partners                                                     111             --
   Limited partners, 35,020 units authorized, issued and outstanding         (3,768)        (3,014)
                                                                           --------       --------
         Total partners' capital (deficit)                                   (3,656)        (2,895)
                                                                           --------       --------
                                                                           $ 39,556       $ 38,543
                                                                           ========       ========
</TABLE>

          See accompanying notes to consolidated financial statements.


                                      F-2
<PAGE>   25

                    AMERICAN RETIREMENT VILLAS PROPERTIES II
                       (A California Limited Partnership)

                      Consolidated Statements of Operations

                  Years ended December 31, 2000, 1999 and 1998

                     (In thousands, except amounts per unit)


<TABLE>
<CAPTION>
                                                                2000           1999          1998
                                                              --------       --------      --------
<S>                                                           <C>            <C>           <C>
Revenues:
   Rent                                                       $ 17,242       $ 16,411      $ 15,400
   Assisted living                                               3,685          4,014         3,663
   Interest                                                        190            141           105
   Other                                                           199            310           431
                                                              --------       --------      --------

         Total revenues                                         21,316         20,876        19,599
                                                              --------       --------      --------

Costs and expenses:
   Rental property operations (including $6,630,
     $6,044, and $5,849 related to affiliates in 2000,
     1999 and 1998, respectively)                               11,293         10,375        10,276
   Assisted living (including $2,628, $2,311 and $1,653          2,654          2,402         1,727
    related to affiliates in 2000, 1999, and 1998,
    respectively)
   General and administrative (including $246, $607,
     and $690 related to affiliates in 2000, 1999 and
     1998, respectively)                                           639          1,004         1,118
   Communities rent                                                357            563         1,187
   Depreciation and amortization                                 2,298          1,802         1,111
   Property taxes                                                  711            610           529
   Advertising                                                     361            217           201
   Interest                                                      3,370          2,468         1,637
                                                              --------       --------      --------
         Total costs and expenses                               21,683         19,441        17,786
                                                              --------       --------      --------
Income (loss) from operations before income tax
expense and extraordinary item                                    (367)         1,435         1,813
Income tax expense                                                  10             --            --
                                                              --------       --------      --------
Income (loss) from operations before extraordinary item           (377)         1,435         1,813
Extraordinary loss from write-off of loan fees due to
refinancing                                                        310             --            --
                                                              --------       --------      --------
         Net income (loss)                                    $   (687)      $  1,435      $  1,813
                                                              ========       ========      ========

Net income (loss) per limited partner unit                    $ (19.42)      $  40.99      $  51.25
                                                              ========       ========      ========
</TABLE>

          See accompanying notes to consolidated financial statements.


                                      F-3
<PAGE>   26

                    AMERICAN RETIREMENT VILLAS PROPERTIES II
                       (A California Limited Partnership)

             Consolidated Statements of Partners' Capital (Deficit)

                  Years ended December 31, 2000, 1999 and 1998

                     (In thousands, except amounts per unit)

<TABLE>
<CAPTION>
                                                                                                TOTAL
                                                                SPECIAL                       PARTNERS'
                                                 GENERAL        LIMITED        LIMITED         CAPITAL
                                                 PARTNERS       PARTNERS       PARTNERS       (DEFICIT)
                                                 --------       --------       --------       ---------
<S>                                              <C>            <C>            <C>            <C>
Balance at December 31, 1997                     $    283                      $ 13,240       $ 13,523

Distribution to partners ($53.63 per limited
  partner unit)                                       (19)                       (1,878)        (1,897)

Net income                                             18                         1,795          1,813
                                                 --------                      --------       --------

Balance at December 31, 1998                          282                        13,157         13,439

Distribution to partners ($502.32 per limited
  partner unit)                                      (177)                      (17,592)       (17,769)

Net income                                             14                         1,421          1,435
                                                 --------                      --------       --------

Balance at December 31, 1999                          119                        (3,014)        (2,895)

Change in status of general partners to
  special limited partners                           (118)       $118

Distribution to partners ($2.12 per limited
  partner unit)                                        --          --               (74)           (74)

Net loss                                                           (7)             (680)          (687)
                                                 --------        ----          --------       ---------
Balance at December 31, 2000                     $      1        $111          $ (3,768)      $ (3,656)
                                                 ========        ====          ========       ========
</TABLE>

          See accompanying notes to consolidated financial statements.


                                      F-4
<PAGE>   27

                    AMERICAN RETIREMENT VILLAS PROPERTIES II
                       (A California Limited Partnership)

                      Consolidated Statements of Cash Flows

                  Years ended December 31, 2000, 1999 and 1998

                                 (In thousands)

<TABLE>
<CAPTION>
                                                                             2000           1999           1998
                                                                           --------       --------       --------
<S>                                                                        <C>            <C>            <C>
Cash flows from operating activities:
   Net income (loss)                                                       $   (687)      $  1,435       $  1,813
   Adjustments to reconcile net income (loss) to net
     cash provided by operating activities:
       Depreciation and amortization                                          2,298          1,802          1,111
     Extraordinary loss from write-off of loan fees due
     to refinancing, net of income tax                                          310             --             --
       Change in assets and liabilities:
        (Increase) decrease in other assets                                  (1,843)           319           (641)
        Increase in accounts payable and
          accrued expenses                                                      236            315             21
        Increase (decrease) in amounts payable to affiliate                    (161)          (149)           176
                                                                           --------       --------       --------

               Net cash provided by operating activities                        153          3,722          2,480
                                                                           --------       --------       --------

Cash flows used in investing activities:
   Capital expenditures                                                      (1,111)        (1,647)        (1,281)
   Purchase of previously leased communities                                     --        (14,692)            --
   Refund of purchase deposit, net                                               (3)           199             --
                                                                           --------       --------       --------
               Net cash used in investing activities                         (1,114)       (16,140)        (1,281)
                                                                           --------       --------       --------

Cash flows from financing activities:
   Principal repayments on notes payable                                    (28,096)       (21,006)          (233)
   Proceeds from notes payable                                               29,778         54,381             --
   Loan fees                                                                   (488)        (1,640)            --
   Distributions paid                                                           (58)       (18,268)        (1,870)
                                                                           --------       --------       --------

               Net cash provided by (used in) financing activities            1,136         13,467         (2,103)
                                                                           --------       --------       --------

               Net increase (decrease) in cash                                  175          1,049           (904)

Cash at beginning of year                                                     2,002            953          1,857
                                                                           --------       --------       --------

Cash at end of year                                                        $  2,177       $  2,002       $    953
                                                                           ========       ========       ========

Supplemental disclosure of cash flow information -
   cash paid during the year for interest                                  $  3,811       $  2,208       $  1,637
                                                                           ========       ========       ========

Supplemental disclosure of noncash financing activities:
   Distributions accrued to partners                                       $     25       $      8       $    450
                                                                           ========       ========       ========
</TABLE>

          See accompanying notes to consolidated financial statements.


                                      F-5
<PAGE>   28

                    AMERICAN RETIREMENT VILLAS PROPERTIES II
                       (A California Limited partnership)

                   Notes to Consolidated Financial Statements

                        December 31, 2000, 1999 and 1998

(1)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     BASIS OF ACCOUNTING

          American Retirement Villas Properties II maintains records on the
     accrual method of accounting for financial reporting and Federal and state
     tax purposes.

     PRINCIPLES OF CONSOLIDATION

          The consolidated financial statements include the accounts of the
     Partnership and its subsidiaries. Subsidiaries, which include limited
     partnerships and limited liability companies in which we have controlling
     interests, have been consolidated into the financial statements. All
     significant intercompany balances and transactions have been eliminated in
     consolidation.


     CARRYING VALUE OF REAL ESTATE

          Property, furniture and equipment are stated at cost less accumulated
     depreciation which is charged to expense on a straight-line basis over the
     estimated useful lives of the assets as follows:

<TABLE>
<S>                                                                 <C>
     Buildings and improvements..............................       27.5 to 35 years
     Leasehold property and improvements.....................          Lease term
     Furniture, fixtures and equipment.......................         3 to 7 years
</TABLE>


          We review our long-lived assets for impairment when events or changes
     in circumstances indicate that the carrying amount of the assets may not be
     recoverable. In reviewing recoverability, we estimate the future cash flows
     expected to result from using the assets and eventually disposing of them.
     If the sum of the expected future cash flows (undiscounted and without
     interest charges) is less than the carrying amount of the asset, an
     impairment loss is recognized based upon the asset's fair value.

     USE OF ESTIMATES

          In the preparation of our financial statements in conformity with
     generally accepted accounting principles, we have made estimates and
     assumptions that affect the following:

          -    reported amounts of assets and liabilities at the date of the
               financial statements;

          -    disclosure of contingent assets and liabilities at the date of
               the financial statements; and

          -    reported amounts of revenues and expenses during the reporting
               period.

          Actual results could differ from those estimates.

     IMPOUND ACCOUNTS

          The U.S. Department of Housing and Urban Development ("HUD") finances
     certain of our properties. HUD holds our funds in impound accounts for
     payment of property taxes, insurance and future property improvements
     (replacement reserves) on these properties. We include these impound
     accounts in other assets.

     LOAN FEES

          We amortize loan fees using the interest method over the term of the
     notes payable and include them in other assets.



                                      F-6
<PAGE>   29

     REVENUE RECOGNITION

          Rent agreements with tenants are on a month-to-month basis. We apply
     advance deposits to the first month's rent. Revenue is recognized in the
     month earned for rent and assisted living services.

     ADVERTISING COSTS

          Except for yellow page advertising, which is expensed over the period
     benefited on a straight line basis, we expense all advertising costs as
     they are incurred.

     INCOME TAXES

          Under provisions of the Internal Revenue Code and the California
     Revenue and Taxation Code, partnerships are generally not subject to income
     taxes. For tax purposes, any income or losses realized are those of the
     individual partners, not the Partnership.

          We have not requested a ruling from the Internal Revenue Service to
     the effect that we will be treated as a partnership and not an association
     taxable as a corporation for Federal income tax purposes. We have received
     an opinion of counsel as to our tax status prior to the offering of limited
     partnership units, but such opinion is not binding upon the Internal
     Revenue Service.

          Following are our assets and liabilities as determined in accordance
     with generally accepted accounting principles ("GAAP") and for Federal
     income tax reporting purposes at December 31 (in thousands):

<TABLE>
<CAPTION>
                                            2000                                 1999
                                  -------------------------           ------------------------
                                    GAAP              TAX              GAAP              TAX
                                   BASIS            BASIS(1)           BASIS           BASIS(1)
                                  -------           -------           -------          -------
<S>                               <C>               <C>               <C>              <C>
     Total assets                 $39,556           $42,810           $38,543          $43,270
                                  =======           =======           =======          =======
     Total liabilities            $43,212           $46,466           $41,438          $41,438
                                  =======           =======           =======          =======
</TABLE>

          Following are the differences between the financial statement and tax
     return income (in thousands):


<TABLE>
<CAPTION>
                                                               2000          1999          1998
                                                            -------       -------       -------
<S>                                                         <C>           <C>           <C>
     Net income (loss)  per financial statements            $  (687)      $ 1,435       $ 1,813
     Guaranteed payments to partners                          1,302         1,572         1,420
     Depreciation differences on property (1)                  (398)         (157)         (344)
     Amortization differences on intangible assets (1)           36          (262)         (158)
     Other (1)                                                  (69)          174           266
                                                            -------       -------       -------
     Taxable income per Federal tax return(1)               $   184       $ 2,762       $ 2,997
                                                            =======       =======       =======
</TABLE>

     (1) Unaudited

     NET INCOME (LOSS) PER LIMITED PARTNER UNIT

          We based net income (loss) per limited partner unit on the
     weighted-average number of limited partner units outstanding of 35,020 in
     the years ended December 31, 2000, 1999 and 1998.

RECLASSIFICATIONS

     We have reclassified certain prior period amounts to conform to the
December 31, 2000 presentation.


(2)  ORGANIZATION AND PARTNERSHIP AGREEMENT

          We were formed on February 9, 1988 for the purpose of acquiring,
     developing and operating residential retirement communities. Our term is 59
     years and may be dissolved earlier under certain circumstances. Limited
     Partner units (minimum of 2 units per investor for Individual Retirement
     Accounts, KEOGHs and pension plans and 5 units for all other investors)
     were offered for sale to the general public. A maximum number of 35,000
     units were offered at $1,000 per unit and an additional 25 units were
     issued in lieu of commissions. We were initially capitalized by a $1,000
     contribution from a Limited Partner and a $500 contribution from our
     General Partners. We reached our maximum capitalization in October 1989,
     representing a total capital


                                      F-7
<PAGE>   30

     investment of $35,000,000. In June 1990, we repurchased and effectively
     retired 5 units for $4,600 (the balance of unreturned initial
     contributions) from a Limited Partner. Under the Partnership Agreement, the
     maximum liability of the Limited Partners is the amount of their capital
     contributions.

          Our Managing General Partner is ARV Assisted Living, Inc. ("ARVAL"), a
     Delaware corporation, and the individual special limited partners are John
     A. Booty, John S. Jason, Gary L. Davidson and Tony Rota. Our General
     Partner is not required to make capital contributions to the Partnership.

          Profits and losses for financial and income tax reporting purposes
     shall generally be allocated, other than cost recovery deductions (as
     defined in the Partnership Agreement), 0.01% to our General Partner, 0.99%
     to our Special Partners and 99.00% to the Limited Partners. Cost recovery
     deductions for each year are allocated ), 0.01% to our General Partner,
     0.99% to our Special Limited Partners and 99.00% to the Limited Partners
     who are taxable investors.

          Cash available for distribution from operations, which is determined
     at the sole discretion of our General Partner, is to be distributed), 0.01%
     to our General Partner, 0.99% to our Special Limited Partners and 99.00% to
     the Limited Partners.

          Upon any sale, refinancing or other disposition of our real
     properties, distributions are to be made), 0.01% to our General Partner,
     0.99% to our Special Limited Partners and 99.00% to the Limited Partners
     until the Limited Partners have received an amount equal to 100% of their
     capital contributions plus an amount ranging from 8% to 10% (depending upon
     the timing of the Limited Partner's investment) of their capital
     contributions per annum, cumulative but not compounded, from the date of
     each Partner's investment. The cumulative return is to be reduced, but not
     below zero, by the aggregate amount of prior distributions from all
     sources. Thereafter, distributions are to be 15% split between our General
     Partner and Special Limited Partners according to their partnership
     interests and 85% to the Limited Partners, except that after the sale of
     the properties, the proceeds of sale of any last remaining assets we own
     are to be distributed in accordance with positive capital account balances.

(3)  TRANSACTIONS WITH AFFILIATES

          Our properties are managed by ARVAL. For this service we pay a
     property management fee of 5% of gross revenues amounting to $1,056,000,
     $1,037,000, and $974,000, for the years ended December 31, 2000, 1999 and
     1998, respectively. Additionally, we pay a Partnership management fee of
     10% of cash flow before distribution, as defined in the Partnership
     Agreement, amounting to $246,000, $348,000, and $333,000, for the years
     ended December 31, 2000, 1999 and 1998, respectively. Payment of the
     Partnership management fee out of cash flow is subordinated to a quarterly
     noncumulative distribution from each property to the Limited Partners of an
     amount equal to an annualized return, per quarter, of 7.5% of Capital
     Contributions allocated to each property.

          We reimburse ARVAL for certain expenses such as repairs and
     maintenance, supplies, and payroll and retirement benefit expenses they pay
     on our behalf. The total reimbursements to ARVAL are included in rental
     property operations, assisted living and general and administrative
     expenses in the accompanying statements of operations and amounted to $10.3
     million, $9.4 million, and $7.1 million for the years ended December 31,
     2000, 1999 and 1998, respectively.

          Prior to 1995, we paid our Managing General Partner an investment
     advisory fee for services rendered with respect to property acquisitions up
     to a maximum of 2% of the gross offering proceeds. In addition, our
     Managing General Partner was entitled to a development and processing fee
     of a maximum of 5.5% of gross offering proceeds allocated to a particular
     project. Investment advisory and development and processing fees were
     capitalized to properties to the extent that gross offering proceeds were
     allocated to the respective properties acquired.

          Amounts payable to affiliates at December 31, 2000 and 1999 include
     expense reimbursements and accrued property management and partnership
     management fees.


                                      F-8
<PAGE>   31

(4)  PROPERTIES

          The following table sets forth, as of December 31, 2000, the location,
     the date on which operations commenced and number of units in the property.

<TABLE>
<CAPTION>
                                                                     OPERATIONS
            COMMUNITY                         LOCATION                COMMENCED       UNITS
            ---------                       --------------           -----------     -------
<S>                                         <C>                      <C>             <C>
     Retirement Inn of Burlingame           Burlingame, CA              1989            67
     Retirement Inn of Campbell             Campbell, CA                1989            71
     Covina Villa                           Covina, CA                  1988            63
     Retirement Inn of Daly City            Daly City, CA               1989            94
     Retirement Inn of Fremont              Fremont, CA                 1989            69
     Retirement Inn of Fullerton            Fullerton, CA               1989            67
     Montego Heights Lodge                  Walnut Creek, CA            1989           162
     Retirement Inn of Sunnyvale            Sunnyvale, CA               1989           123
     Valley View Lodge                      Walnut Creek, CA            1989           124
     Inn at Willow Glen                     San Jose, CA                1989            83
</TABLE>

(5)  COMMITMENTS AND CONTINGENCIES

     LEASE COMMITMENTS:

     Covina Villa

          In October 1988, we purchased Covina Villa, an existing assisted
     living community in Covina, California. In conjunction with the
     acquisition, we assumed a ground lease, expiring in 2037, covering the land
     on which the community is built. Pledged as collateral for the ground lease
     is a security interest in the community property and in all furniture,
     fixtures and equipment which we place in the community. Rent expense under
     the ground lease for 2000, 1999 and 1998 was $115,000, $115,000, and
     $116,000, respectively.

     Retirement Inns of America

          In April 1989, we acquired the operations of eight existing assisted
     living communities located throughout California from Retirement Inns of
     America, Inc. As part of the purchase agreement, we acquired certain assets
     and assumed certain liabilities relating to the operations of the
     communities. We purchased three of the communities and assumed a tenant's
     position under long-term operating leases for the other five communities.
     On March 2, 1999, we purchased our landlords' fee interests in four of the
     five operating leases. Rent expense under the operating leases for 2000,
     1999, and 1998 was $241,400, $448,000, and $1,071,000, respectively.

          Future minimum lease payments under all ground and community leases,
     which are treated as operating leases, are as follows (in thousands):

<TABLE>
<S>                                                  <C>
             Year ending December 31:
             2001                                    $    279
             2002                                         279
             2003                                         265
             2004                                         279
             2005                                         279
             Thereafter                                 4,219
                                                     --------
                                                     $  5,600
                                                     ========
</TABLE>


                                      F-9
<PAGE>   32

     LITIGATION

          On June 15, 1999, we, along with five other California limited
     partnerships of which ARVAL is the managing general partner, including
     American Retirement Villas Properties III, Casa Bonita Fullerton, Ltd.,
     Collwood Knolls, L.P., and San Gabriel Retirement Villa, L.P.
     (collectively, the "ARV Partnerships") - filed an action in the Superior
     Court for the State of California, County of Orange, seeking a declaratory
     judgment and damages for breach of contract, promissory estoppel, fraud and
     negligent misrepresentation against PRN Mortgage Capital, L.L.C. and Red
     Mountain Funding, L.L.C. ("Defendants"). Defendants filed a counter-claim
     for amounts allegedly due under loan commitments between Defendants and the
     ARV Partnerships. In July 2000, the ARV Partnerships settled the dispute
     with the Defendants. We have received and recorded all amounts due as a
     result of the settlement. We are from time to time subject to lawsuits
     and other matters in the normal course of business. While we cannot predict
     the results with certainty, we do not believe that any liability from any
     such lawsuits or other matters will have a material effect on our financial
     position, results of operations, or liquidity.

(6)  NOTES PAYABLE

          On June 28, 1999, we obtained financing on eight owned communities. As
     part of the loan requirements, we created a wholly owned subsidiary
     Retirement Inns II, LLC. The loan was for 24 months and is secured by the
     various properties; in addition, ARV Assisted Living, our managing general
     partner, is a guarantor on the loan for fraud, material misrepresentation
     and certain covenants. The $39.2 million of mortgage loans were due June
     2001. At December 31, 2000 four of the loans were refinanced with 35-year,
     bearing interest between 8.00% and 8.03%. Subsequent to December 31, 2000
     three additional loans have been refinanced with 35-year loans and one
     loan's maturity has been extended to January 2002.

     At December 31, 2000 and 1999, notes payable included the following (in
thousands):

<TABLE>
<CAPTION>
                                                                   2000         1999
                                                                 -------      -------
<S>                                                              <C>          <C>
     HUD issued notes payable, bearing interest ranging from
        8.00% to 8.03% Monthly principal and interest
        payments of $212; due December 2035;
        collateralized by various properties                     $29,778      $    --

     Notes payable to bank, bearing interest at 9.15%
        Monthly principal and interest payments $99;
        collateralized by various properties                      11,447       39,527

     Various notes payable, bearing interest at rates of
        8.67%, payable in monthly principal and interest
        installments of $1; collateralized by equipment                1           18
                                                                 -------      -------
                                                                 $41,226      $39,545
                                                                 =======      =======
</TABLE>

          The annual principal payments of the notes payable are as follows (in
     thousands):

<TABLE>
<S>                                                                  <C>
     Year ending December 31:
     2001..........................................................  $   224
     2002..........................................................   11,432
     2003..........................................................      139
     2004..........................................................      151
     2005..........................................................      163
     Thereafter....................................................   29,117
                                                                     -------
                                                                     $41,226
                                                                     =======
</TABLE>


     Due to the failed financing in 1998, we paid a lender approximately $1.3
     million of fees for an interest rate lock and $0.1 for loan commitment and
     other fees. The lender terminated the loan commitment and underlying
     interest rate lock in October 1998 due to adverse market conditions. The
     lender returned $0.3 million of the interest rate lock fees in January 1999
     and $0.2 million in June 2000 as full and final settlement. We included the
     amounts paid and received in interest expense in the accompanying
     consolidated statements of operations for the years ended December 31,
     2000, 1999, and 1998.


                                      F-10
<PAGE>   33
(7)  EMPLOYEE BENEFIT PLANS

          Effective January 1, 1997, ARVAL established a savings plan (the
     "Savings Plan") that qualifies as a deferred salary arrangement under
     Section 401(k) of the Internal Revenue Code. Under the Savings Plan,
     participating employees who are at least 21 years of age may defer a
     portion of their pretax earnings, up to the Internal Revenue Service annual
     contribution limit. ARVAL matches 25% of each employee's contributions up
     to a maximum of 6% of the employee's earnings. Employees are eligible to
     enroll at the first enrollment date following the start of their employment
     (July 1 or January 1). ARVAL matches employees' contributions beginning on
     the first enrollment date following one year of service or 1,000 hours of
     service. Our Savings Plan expense was $22,000, $22,000 and $20,000 (as a
     reimbursement to ARVAL) for the years ended December 31, 2000, 1999 and
     1998.

(8)  DISCLOSURES ABOUT THE FAIR VALUE OF FINANCIAL INSTRUMENTS

          The estimated fair values of our financial instruments have been
     determined using available market information and appropriate valuation
     methodologies. However, considerable judgment is necessarily required to
     interpret market data to develop the estimates of fair value. Accordingly,
     the estimates presented herein are not necessarily indicative of the
     amounts that could be realized in a current market exchange. The use of
     different market assumptions or estimation methodologies may have a
     material impact on the estimated fair value amounts.

          The carrying amounts reported in the consolidated balance sheets for
     cash and cash equivalents, fees receivable and other amounts due from
     affiliates and accounts payable, accrued liabilities and accrued interest
     payable approximate fair value due to the short-term nature of these
     instruments.

     NOTES PAYABLE

          For notes payable with variable interest rates, fair value is the
     amount reported as payable in the financial statements. For notes payable
     with fixed rates of interest, fair value is estimated using the rates
     currently offered for bank borrowings with similar terms. As of December
     31, 2000 there were no notes payable with variable interest rates. The fair
     market value of the fixed rate notes is approximately $41.2 million.

(9)  QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

<TABLE>
<CAPTION>
                                                          FOR THE QUARTER ENDED
                                         -------------------------------------------------------
                                         DECEMBER 31    SEPTEMBER 30      JUNE 30       MARCH 31
                                         -----------    ------------      -------       --------
<S>                                      <C>            <C>               <C>           <C>
                                                             (In thousands)
     2000
     Total revenue.....................    $6,357          $5,506          $5,296        $4,157
     Net income (loss).................      (556)            (41)            172          (262)

     1999
     Total revenue.....................    $6,345          $5,324          $5,220        $3,987
     Net income (loss).................         5              74             624           732
</TABLE>

                                      F-11
<PAGE>   34

                                  Schedule III

                    AMERICAN RETIREMENT VILLAS PROPERTIES II
                       (A California Limited Partnership)

        Real Estate and Related Accumulated Depreciation and Amortization

                                December 31, 2000
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                    LEASEHOLD
                                                       BLDGS        PROPERTY         COSTS                         BLDGS
                                                        AND            AND         CAPITALIZED                      AND
                                                      IMPROVE-       IMPROVE-      SUBSEQUENT                    IMPROVE-
DESCRIPTION           ENCUMBRANCES      LAND           MENTS          MENTS      TO ACQUISITION     LAND           MENTS
-----------           ------------     -------        -------       ---------    --------------    -------       --------
<S>                   <C>              <C>            <C>           <C>          <C>               <C>           <C>
Covina Villa            $    --        $    --          1,850        $    --        $   677        $    --        $ 2,527
Retirement Inns:
   Burlingame             3,151             --             --            938          1,751          1,536          1,153
   Campbell               1,790             --             --            814          2,843          2,002          1,655
   Daly City              3,620            500          1,178             --            739            500          1,917
   Fremont                2,801             --             --            567          1,772          1,247          1,092
   Fullerton              1,876            500            982             --            973            500          1,955
   Willow Glen               --             --             --          1,011            485             --             --
   Sunnyvale              8,855             --             --          1,431          5,396          3,765          3,062
   Valley View           11,369          1,000          4,018             --          1,384          1,000          5,402
Montego Heights           7,764            900          7,800             --          1,717            903          9,514
                        -------        -------        -------        -------        -------        -------        -------
                        $41,226        $ 2,900        $15,828        $ 4,761        $17,737        $11,453        $28,277
                        =======        =======        =======        =======        =======        =======        =======
</TABLE>


<TABLE>
<CAPTION>
                    LEASEHOLD
                     PROPERTY                      ACCUMU-         DATE          DEPRE-
                       AND                         MULATED          OF           CIABLE
                     IMPROVE-        TOTAL         DEPRE-         ACQUI-         LIVES
DESCRIPTION           MENTS           (1)          CIATION        SITION         (YEARS)
-----------         ---------       -------        -------        -------        -------
<S>                 <C>             <C>            <C>            <C>            <C>
Covina Villa         $    --        $ 2,527        $ 1,056          10/88           35
Retirement Inns:
   Burlingame             --          2,689             76           4/89          8.5(2)
   Campbell               --          3,657            105           4/89          6.3(2)
   Daly City              --          2,417            744           4/89           35
   Fremont                --          2,339             69           4/89          7.8(2)
   Fullerton              --          2,455            659           4/89           35
   Willow Glen         1,496          1,496          1,274           4/89          8.7(2)
   Sunnyvale              --          6,827            197           4/89          7.0(2)
   Valley View            --          6,402          1,926           4/89           35
Montego Heights           --         10,417          3,288          11/89           35
                     -------        -------        -------
                     $ 1,496        $41,226        $ 9,394
                     =======        =======        =======
</TABLE>


(1)  Aggregate cost for Federal income tax purposes is $35,018 as of December
     31, 2000.

(2)  Leasehold property and improvements are amortized over remaining terms of
     ground leases, which are shorter than the estimated useful lives.



<PAGE>   35

Following is a summary of investment in properties for the years ended December
31, 2000, 1999 and 1998:


<TABLE>
<CAPTION>
                                      2000            1999             1998
                                    --------        --------         --------
<S>                                 <C>             <C>              <C>
Balance at beginning of year        $ 40,816        $ 30,155         $ 29,405
Improvements/construction                410          15,238              750
Transfer NBV to LLCs                      --          (1,613)              --
Disposals                                 --          (2,964)              --
                                    --------        --------         --------
Balance at end of year              $ 41,226        $ 40,816         $ 30,155
                                    ========        ========         ========
</TABLE>

Following is a summary of accumulated depreciation and amortization of
investment in properties for the years ended December 31, 2000, 1999, and 1998:

<TABLE>
<CAPTION>
                                      2000            1999             1998
                                    --------        --------         --------
<S>                                 <C>             <C>              <C>
Balance at beginning of year        $  8,492        $ 12,187         $ 11,513
Transfer NBV to LLCs                      --          (1,613)              --
Disposals                                 --          (2,964)              --
Additions charged to expense             902             882              674
                                    --------        --------         --------
Balance at end of year              $  9,394        $  8,492         $ 12,187
                                    ========        ========         ========
</TABLE>


<PAGE>   36


                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBITS                       DESCRIPTION
--------                       -----------
<S>                            <C>
     Exhibit 10.1*             Loan Agreement by and between Banc One Capital Funding Corporation and Retirement Inns III, LLC

     Exhibit 10.4*             Loan Agreement by and between Banc One Capital Funding Corporation and Retirement Inns II, LLC (1)

     Exhibit 10.5*             Loan Agreement by and between Banc One Capital Funding Corporation and Retirement Inns II, LLC (1)

     Exhibit 10.6*             Loan Agreement by and between Banc One Capital Funding Corporation and Retirement Inns II, LLC (1)

     Exhibit 10.7*             Loan Agreement by and between Banc One Capital Funding Corporation and Retirement Inns II, LLC (1)

     Exhibit 10.8*             Loan Agreement by and between Banc One Capital Funding Corporation and Retirement Inns II, LLC (1)

     Exhibit 10.9*             Loan Agreement by and between Banc One Capital Funding Corporation and Retirement Inns II, LLC (1)

     Exhibit 10.10*            Loan Agreement by and between Banc One Capital Funding Corporation and Retirement Inns II, LLC (1)

     Exhibit 10.11*            Loan Agreement by and between Banc One Capital Funding Corporation and Retirement Inns II, LLC (1)

     Exhibit 10.12 *           Letter Agreement as to the Loans in the aggregate amount of  $39,703,100 from Banc One Capital
                               Funding Corporation to Retirements Inns II

     Exhibit 10.15*            Note and Agreement as to Retirement Inns II, LLC

     HUD loan documents

     Exhibit 10.75             Deed of Trust Note of ARV Burlingame, L.P. to Red Mortgage Capital, Inc.

     Exhibit 10.76             Allonge #1 to Deed of Trust Note of ARV Burlingame, L.P. to Red Mortgage Capital, Inc.

     Exhibit 10.77             Deed of Trust between ARV Burlingame, L.P. and Fidelity National Title Insurance
</TABLE>

<PAGE>   37

<TABLE>
<CAPTION>
EXHIBITS                       DESCRIPTION
--------                       -----------
<S>                            <C>
     Exhibit 10.78             Regulatory Agreement for U.S. Department of Housing Multifamily Housing Projects between ARV
                               Burlingame, L.P. and Secretary of Housing and Urban Development

     Exhibit 10.79             Regulatory Agreement Nursing Homes Projects between ARV Burlingame, L.P. and Federal Housing
                               Commissioner

     Exhibit 10.80             Deed of Trust Note of ARV Campbell, L.P. to Red Mortgage Capital, Inc.

     Exhibit 10.81             Allonge #1 to Deed of Trust Note of ARV Campbell, L.P. to Red Mortgage Capital, Inc.

     Exhibit 10.82             Deed of Trust between ARV Campbell, L.P. and Fidelity National Title Insurance

     Exhibit 10.83             Regulatory Agreement for U.S. Department of Housing Multifamily Housing Projects between ARV
                               Campbell, L.P. and Secretary of Housing and Urban Development

     Exhibit 10.84             Regulatory Agreement Nursing Homes Projects between ARV Campbell, L.P. and Federal Housing
                               Commissioner

     Exhibit 10.85             Deed of Trust Note of ARV Sunnyvale, L.P. to Red Mortgage Capital, Inc.

     Exhibit 10.86             Allonge #1 to Deed of Trust Note of ARV Sunnyvale, L.P. to Red Mortgage Capital, Inc.

     Exhibit 10.87             Deed of Trust between ARV Sunnyvale, L.P. and Fidelity National Title Insurance

     Exhibit 10.88             Regulatory Agreement for U.S. Department of Housing Multifamily Housing Projects between ARV
                               Sunnyvale, L.P. and Secretary of Housing and Urban Development

     Exhibit 10.89             Regulatory Agreement Nursing Homes Projects between ARV Sunnyvale, L.P. and Federal Housing
                               Commissioner

     Exhibit 10.90             Deed of Trust Note of ARV Valley View, L.P. to Red Mortgage Capital, Inc.

     Exhibit 10.91             Deed of Trust between ARV Valley View, L.P. and Fidelity National Title Insurance

     Exhibit 10.92             Regulatory Agreement for U.S. Department of Housing Multifamily Housing Projects between ARV
                               Valley View, L.P. and Secretary of Housing and Urban Development

     Exhibit 10.93             Regulatory Agreement Nursing Homes Projects between ARV Valley View, L.P. and Federal Housing
                               Commissioner
</TABLE>


*    Incorporated by reference