EXHIBIT 10.1

                               Advisory Agreement


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                               ADVISORY AGREEMENT


         THIS ADVISORY AGREEMENT, dated as of September 16, 2000, is between CNL
RETIREMENT PROPERTIES, INC., a corporation organized under the laws of the State
of Maryland (the  "Company") and CNL RETIREMENT  CORP., a corporation  organized
under the laws of the State of Florida (the "Advisor").


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                               W I T N E S S E T H
                               -------------------

         WHEREAS,  the Company filed with the Securities and Exchange Commission
a Registration Statement (No. 333-47411) on Form S-11 covering 15,500,000 of its
common shares ("Initial Offering"), par value $.01, to be offered to the public;

         WHEREAS,  the Company filed with the Securities and Exchange Commission
a Registration Statement (No. 333-37480) on Form S-11 covering 15,500,000 of its
common  shares  (the  "2000  Offering"),  par value  $.01,  to be offered to the
public, and the Company may subsequently issue securities other than such Shares
("Securities") or otherwise raise additional capital;

         WHEREAS,   the  Company  intends  to  commence  the  2000  Offering  of
15,500,000 Shares at such time that the Initial Offering of 15,500,000 Shares is
terminated;

         WHEREAS,  the Company  intends to qualify as a REIT (as defined below),
and  to  invest  its  funds  in  investments  permitted  by  the  terms  of  the
Registration  Statement  and  Sections  856  through 860 of the Code (as defined
below);

         WHEREAS, the Company desires to avail itself of the experience, sources
of  information,  advice,  assistance  and certain  facilities  available to the
Advisor  and to have the  Advisor  undertake  the  duties  and  responsibilities
hereinafter  set forth,  on behalf of, and  subject to the  supervision,  of the
Board of Directors of the Company all as provided herein; and

         WHEREAS,  the Advisor is willing to undertake to render such  services,
subject  to the  supervision  of the  Board  of  Directors,  on  the  terms  and
conditions hereinafter set forth;

         NOW,  THEREFORE,  in  consideration  of the foregoing and of the mutual
covenants and agreements contained herein, the parties hereto agree as follows:

         (1) Definitions. As used in this Advisory  Agreement (the "Agreement"),
the following terms have the definitions hereinafter indicated:

         Acquisition Expenses. Any and all expenses incurred by the Company, the
Advisor,  or any  Affiliate  of  either  in  connection  with the  selection  or
acquisition of any Property or the making of any Mortgage  Loan,  whether or not
acquired,  including,  without limitation,  legal fees and expenses,  travel and
communications expenses,  costs of appraisals,  nonrefundable option payments on
property not acquired, accounting fees and expenses, and title insurance.

         Acquisition  Fees.  Any and all  fees  and  commissions,  exclusive  of
Acquisition Expenses, paid by any person or entity to any other person or entity
(including any fees or commissions paid by or to any Affiliate of the Company or
the Advisor) in  connection  with making or  investing in Mortgage  Loans or the
purchase,   development  or  construction  of  a  Property,  including,  without
limitation, real estate commissions,  acquisition fees, finder's fees, selection
fees,  Development  Fees,   Construction  Fees,  nonrecurring  management  fees,
consulting fees, loan fees,  points,  the Secured Equipment Lease Servicing Fee,
or any  other  fees or  commissions  of a  similar  nature.  Excluded  shall  be
development  fees  and  construction  fees  paid to any  person  or  entity  not
affiliated  with the  Advisor  in  connection  with the actual  development  and
construction of any Property.

         Advisor.  CNL Retirement  Corp., a Florida  corporation,  any successor
advisor to the Company, or any person or entity to which CNL Retirement Corp. or
any successor advisor subcontracts substantially all of its functions.

         Affiliate   or   Affiliated.   As  to  any   individual,   corporation,
partnership,  trust or other  association  (other than the Excess Shares Trust),
(i)  any  Person  or  entity   directly  or  indirectly   through  one  or  more
intermediaries controlling,  controlled by, or under common control with another
person or entity;  (ii) any Person or entity,  directly or indirectly  owning or
controlling  ten percent (10%) or more of the outstanding  voting  securities of
another Person or entity;  (iii) any officer,  director,  partner, or trustee of
such  Person or  entity;  (iv) any  Person  ten  percent  (10%) or more of whose
outstanding voting securities are directly or indirectly owned,  controlled,  or
held, with power to vote, by such other Person;  and (v) if such other Person or
entity is an officer,  director,  partner, or trustee of a Person or entity, the
Person or entity for which such Person or entity acts in any such capacity.

         Appraised Value. Value according to an appraisal made by an Independent
Appraiser.

         Articles of Incorporation. The Articles of Incorporation of the Company
under Title 2 of the Corporations and Associations Article of the Annotated Code
of Maryland, as amended from time to time.

         Asset  Management  Fee.  The fee payable to the Advisor for  day-to-day
professional  management  services  in  connection  with  the  Company  and  its
investments in Properties and Mortgage Loans pursuant to this Agreement.

         Assets.  Properties,  Mortgage  Loans  and  Secured  Equipment  Leases,
collectively.

         Average Invested  Assets.  For a specified  period,  the average of the
aggregate  book  value  of the  assets  of the  Company  invested,  directly  or
indirectly,  in equity  interests  in and loans  secured by real  estate  before
reserves  for  depreciation  or bad debts or other  similar  non-cash  reserves,
computed by taking the  average of such  values at the end of each month  during
such period.

         Board of Directors or Board. The persons holding such office, as of any
particular time,  under the Articles of  Incorporation  of the Company,  whether
they be the Directors named therein or additional or successor Directors.

         Bylaws. The bylaws of the Company,  as the same are in effect from time
to time.

         Cause.  With  respect  to the  termination  of this  Agreement,  fraud,
criminal conduct, willful misconduct or willful or negligent breach of fiduciary
duty by the Advisor,  breach of this  Agreement,  a default by the Sponsor under
the guarantee by the Sponsor to the Company or the bankruptcy of the Sponsor.

         Change of Control.  A change of control of the Company of such a nature
that would be required to be reported in response to the disclosure requirements
of Schedule 14A of Regulation 14A promulgated under the Securities  Exchange Act
of 1934, as amended,  as enacted and in force on the date hereof (the  "Exchange
Act"),   whether  or  not  the  Company  is  then  subject  to  such   reporting
requirements;  provided,  however, that, without limitation, a change of control
shall be deemed to have  occurred  if: (i) any  "person"  (within the meaning of
Section 13(d) of the Exchange Act) is or becomes the "beneficial owner" (as that
term is defined in Rule 13d-3, as enacted and in force on the date hereof, under
the Exchange Act) of securities of the Company  representing 8.5% or more of the
combined voting power of the Company's  securities then outstanding;  (ii) there
occurs a merger,  consolidation or other  reorganization of the Company which is
not  approved by the Board of  Directors  of the  Company;  (iii) there occurs a
sale, exchange, transfer or other disposition of substantially all of the assets
of the Company to another entity, which disposition is not approved by the Board
of Directors of the Company; or (iv) there occurs a contested proxy solicitation
of the Stockholders of the Company that results in the contesting party electing
candidates  to a  majority  of the  Board of  Directors'  positions  next up for
election.

         Code.  Internal  Revenue Code of 1986, as amended from time to time, or
any successor statute thereto. Reference to any provision of the Code shall mean
such  provision as in effect from time to time, as the same may be amended,  and
any successor provision thereto, as interpreted by any applicable regulations as
in effect from time to time.

         Company. CNL Retirement Properties, Inc., a corporation organized under
the laws of the State of Maryland.

         Company Property.  Any and all property,  real,  personal or otherwise,
tangible or intangible,  including  Mortgage Loans and Secured Equipment Leases,
which is  transferred or conveyed to the Company  (including all rents,  income,
profits and gains therefrom),  and which is owned or held by, or for the account
of, the Company.

         Competitive  Real  Estate  Commission.   A  real  estate  or  brokerage
commission for the purchase or sale of property which is reasonable,  customary,
and  competitive in light of the size,  type, and location of the property.  The
total  of all  real  estate  commissions  paid  by the  Company  to all  Persons
(including  the  Subordinated   Disposition  Fee  payable  to  the  Advisor)  in
connection  with any Sale of one or more of the Company's  Properties  shall not
exceed  the  lesser of (i) a  Competitive  Real  Estate  Commission  or (ii) six
percent of the gross sales price of the Property or Properties.

         Construction  Fee. A fee or other  remuneration for acting as a general
contractor and/or construction manager to construct improvements,  supervise and
coordinate projects or provide major repairs or rehabilitation on a Property.



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         Contract  Purchase Price.  The amount actually paid or allocated (as of
the date of purchase) to the purchase, development,  construction or improvement
of property, exclusive of Acquisition Fees and Acquisition Expenses.

         Contract Sales Price. The total  consideration  received by the Company
for the sale of Company Property.

         Development Fee. A fee for such activities as negotiating and approving
plans and undertaking to assist in obtaining zoning and necessary  variances and
necessary  financing  for a specific  Property,  either  initially or at a later
date.

         Director.  A member of the Board of Directors of the Company.

         Distributions.  Any  distributions  of money or other  property  by the
Company to owners of Equity Shares,  including distributions that may constitute
a return of capital for federal income tax purposes.

         Equipment.  The  furniture,  fixtures and equipment used at Health Care
Facilities by operators of Health Care Facilities.

         Equity  Interest.  The stock of or other  interests  in, or warrants or
other rights to purchase the stock of or other interests in, any entity that has
borrowed  money from the Company or that is a tenant of the Company or that is a
parent or controlling Person of any such borrower or tenant.

         Equity  Shares.  Transferable  shares  of  beneficial  interest  of the
Company of any class or series, including common shares or preferred shares.

         Good Reason. With respect to the termination of this Agreement, (i) any
failure to obtain a satisfactory  agreement from any successor to the Company to
assume and agree to perform the Company's  obligations under this Agreement;  or
(ii) any  material  breach of this  Agreement  of any nature  whatsoever  by the
Company.

         Gross Proceeds. The aggregate purchase price of all Shares sold for the
account of the Company  through the Initial  Offering or the 2000  Offering,  as
applicable,  without deduction for Selling  Commissions,  volume discounts,  the
marketing support and due diligence expense  reimbursement fee or Organizational
and Offering Expenses. For the purpose of computing Gross Proceeds, the purchase
price  of any  Share  for  which  reduced  Selling  Commissions  are paid to the
Managing  Dealer or a Soliciting  Dealer  (where net proceeds to the Company are
not reduced) shall be deemed to be $10.00.

         Health Care  Facilities.  Facilities  at which health care services are
provided, including, but not limited to, congregate living, assisted living, and
skilled nursing facilities, continuing care retirement communities and life care
communities, and medical office buildings and walk-in clinics.



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         Independent   Appraiser.  A  qualified  appraiser  of  real  estate  as
determined by the Board. Membership in a nationally recognized appraisal society
such as the  American  Institute  of Real Estate  Appraisers  ("M.A.I.")  or the
Society of Real Estate Appraisers  ("S.R.E.A.") shall be conclusive  evidence of
such qualification.

         Independent  Director.  A  Director  who is not and within the last two
years has not been directly or indirectly  associated with the Advisor by virtue
of  (i)  ownership  of an  interest  in the  Advisor  or  its  Affiliates,  (ii)
employment  by the  Advisor or its  Affiliates,  (iii)  service as an officer or
director of the Advisor or its Affiliates,  (iv) performance of services,  other
than as a  Director,  for the  Company,  (v) service as a director or trustee of
more than three real estate  investment  trusts advised by the Advisor,  or (vi)
maintenance of a material business or professional relationship with the Advisor
or any of its Affiliates. A business or professional  relationship is considered
material  if the gross  revenue  derived by the  Director  from the  Advisor and
Affiliates  exceeds 5% of either the  Director's  annual  gross  revenue  during
either of the last two years or the  Director's net worth on a fair market value
basis.  An  indirect   relationship  shall  include  circumstances  in  which  a
Director's  spouse,  parents,  children,  siblings,  mothers- or fathers-in-law,
sons- or  daughters-in-law,  or  brothers-  or  sisters-in-law  are or have been
associated with the Advisor, any of its Affiliates, or the Company.

         Independent  Expert.  A person or entity  with no  material  current or
prior  business or personal  relationship  with the Advisor or the Directors and
who is engaged to a  substantial  extent in the business of  rendering  opinions
regarding the value of assets of the type held by the Company.

         Initial Offering.  The initial public offering of Shares.

         Invested Capital. The amount calculated by multiplying the total number
of Shares  purchased by stockholders by the issue price,  reduced by the portion
of any  Distribution  that is  attributable  to Net  Sales  Proceeds  and by any
amounts paid by the Company to repurchase  Shares pursuant to the Company's plan
for redemption of Shares.

         Joint Ventures.  The joint venture or general partnership  arrangements
in which the Company is a co-venturer or general  partner which are  established
to acquire Properties.

         Line  of  Credit.  A  line  of  credit  initially  in an  amount  up to
$45,000,000,  the proceeds of which will be used to acquire  Properties and make
Mortgage Loans and Secured Equipment Leases.

         Listing.  The  listing  of the  Shares  of the  Company  on a  national
securities exchange or over-the-counter market.

         Managing Dealer. CNL Securities Corp., an Affiliate of the Advisor,  or
such entity selected by the Board of Directors to act as the managing dealer for
the Initial Offering and the 2000 Offering.  CNL Securities Corp. is a member of
the National Association of Securities Dealers, Inc.

         Mortgage Loans. In connection with mortgage  financing  provided by the
Company,  the notes or other evidence of indebtedness  or obligations  which are
secured or collateralized by real estate owned by the borrower.



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         Net  Income.  For any period,  the total  revenues  applicable  to such
period, less the total expenses applicable to such period excluding additions to
reserves  for  depreciation,  bad  debts or  other  similar  non-cash  reserves;
provided,  however,  Net Income for  purposes  of  calculating  total  allowable
Operating  Expenses (as defined  herein) shall exclude the gain from the sale of
the Company's assets.

         Net Sales  Proceeds.  In the case of a transaction  described in clause
(i)(A) of the definition of Sale, the proceeds of any such  transaction less the
amount of all real estate commissions and closing costs paid by the Company.  In
the case of a  transaction  described in clause (i)(B) of such  definition,  Net
Sales Proceeds means the proceeds of any such transaction less the amount of any
legal and other selling expenses  incurred in connection with such  transaction.
In the case of a transaction described in clause (i)(C) of such definition,  Net
Sales Proceeds means the proceeds of any such transaction  actually  distributed
to the Company from the Joint Venture. In the case of a transaction or series of
transactions  described in clause (i)(D) of the  definition  of Sale,  Net Sales
Proceeds  means the  proceeds  of any such  transaction  less the  amount of all
commissions and closing costs paid by the Company.  In the case of a transaction
described in clause (ii) of the definition of Sale, Net Sales Proceeds means the
proceeds  of such  transaction  or  series  of  transactions  less  all  amounts
generated  thereby  and  reinvested  in one or more  Properties  within 180 days
thereafter  and less the amount of any real estate  commissions,  closing costs,
and legal and other selling expenses  incurred by or allocated to the Company in
connection with such transaction or series of  transactions.  Net Sales Proceeds
shall  also  include,  in the case of any lease of a  Property  consisting  of a
building only,  any Mortgage Loan or any Secured  Equipment  Lease,  any amounts
from  tenants,  borrowers  or  lessees  that  the  Company  determines,  in  its
discretion,  to be  economically  equivalent  to proceeds  of a Sale.  Net Sales
Proceeds shall not include, as determined by the Company in its sole discretion,
any amounts  reinvested in one or more  Properties,  Mortgage  Loans, or Secured
Equipment Leases, to repay outstanding indebtedness, or to establish reserves.

         Operating Expenses.  All costs and expenses incurred by the Company, as
determined under generally accepted accounting principles,  which in any way are
related to the  operation of the Company or to Company  business,  including (a)
advisory fees, (b) the Soliciting Dealer Servicing Fee, (c) the Asset Management
Fee,  (d)  the  Performance  Fee and (e) the  Subordinated  Incentive  Fee,  but
excluding  (i) the  expenses  of  raising  capital  such as  Organizational  and
Offering Expenses, legal, audit, accounting,  underwriting,  brokerage, listing,
registration,  and other fees, printing and other such expenses and tax incurred
in  connection  with the  issuance,  distribution,  transfer,  registration  and
Listing of the Shares,  (ii)  interest  payments,  (iii)  taxes,  (iv)  non-cash
expenditures such as depreciation,  amortization and bad loan reserves,  (v) the
Advisor's  subordinated  10% share of Net Sales Proceeds,  and (vi)  Acquisition
Fees and Acquisition Expenses,  real estate commissions on the sale of property,
and other expenses connected with the acquisition,  and ownership of real estate
interests,  mortgage loans or other property (such as the costs of  foreclosure,
insurance  premiums,  legal  services,  maintenance,  repair and  improvement of
property).

         Organizational and Offering  Expenses.  Any and all costs and expenses,
other than Selling Commissions, the Soliciting Dealer Warrants or the Soliciting
Dealer Servicing Fee, and the 0.5% marketing  support and due diligence  expense
reimbursement  fee  incurred by the  Company,  the Advisor or any  Affiliate  of
either in connection with the formation, qualification and registration of


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the Company and the marketing and  distribution  of Shares,  including,  without
limitation,  the  following:   legal,  accounting  and  escrow  fees;  printing,
amending,  supplementing,  mailing and distributing costs; filing,  registration
and  qualification  fees and  taxes;  telegraph  and  telephone  costs;  and all
advertising and marketing expenses,  including the costs related to investor and
broker-dealer sales meetings.

         Performance  Fee.  The fee payable to the Advisor upon  termination  of
this Agreement under certain circumstances if certain performance standards have
been met and the Subordinated Incentive Fee has not been paid.

         Permanent  Financing.  The financing (i) to acquire Assets, (ii) to pay
the Secured  Equipment  Lease  Servicing  Fee, (iii) to pay a fee of 4.5% of any
Permanent  Financing,  excluding  amounts to fund Secured  Equipment  Leases, as
Acquisition  Fees,  and (iv) to  refinance  outstanding  amounts  on the Line of
Credit.

         Person.  An  individual,   corporation,   partnership,   estate,  trust
(including a trust  qualified under Section 401(a) or 501(c)(17) of the Code), a
portion of a trust  permanently set aside for or to be used  exclusively for the
purposes  described  in  Section  642(c)  of  the  Code,  association,   private
foundation within the meaning of Section 509(a) of the Code, joint stock company
or other  entity,  or any  government  or any  agency or  political  subdivision
thereof,  and also includes a group as that term is used for purposes of Section
13(d)(3) of the  Exchange  Act,  but does not include  (i) an  underwriter  that
participates  in a public  offering of Equity  Shares for a period of sixty (60)
days following the initial purchase by such underwriter of such Equity Shares in
such public  offering,  or (ii) CNL Retirement  Corp.,  during the period ending
December 31, 1998,  provided that the foregoing  exclusions  shall apply only if
the ownership of such Equity Shares by an underwriter  or CNL  Retirement  Corp.
would not  cause the  Company  to fail to  qualify  as a REIT by reason of being
"closely  held"  within the meaning of Section  856(a) of the Code or  otherwise
cause the Company to fail to qualify as a REIT.

         Property  or  Properties.  (i)  The  real  properties,   including  the
buildings  located  thereon,  or (ii) the real  properties  only,  or (iii)  the
buildings  only,  which are acquired by the Company,  either directly or through
joint venture arrangements or other partnerships.

         Prospectus.  "Prospectus"  means  the same as that term as  defined  in
Section 2(10) of the Securities Act of 1933, including a preliminary Prospectus,
an  offering  circular  as  described  in  Rule  256 of the  General  Rules  and
Regulations  under the  Securities  Act of 1933 or, in the case of an intrastate
offering,  any  document by whatever  name  known,  utilized  for the purpose of
offering and selling securities to the public.

         Real Estate Asset Value.  The amount  actually paid or allocated to the
purchase,  development,  construction or improvement of a Property, exclusive of
Acquisition Fees and Acquisition Expenses.

         Registration  Statement.  The Registration Statement (No. 333-47411) on
Form S-11  registering  the  Shares to be sold in the  Initial  Offering  or the
Registration Statement (No. 333-37480) on Form S-11 registering the Shares to be
sold in the 2000 Offering, as applicable.

         REIT. A "real estate  investment  trust" under Sections 856 through 860
of the Code.

         Sale or Sales.  (i) Any transaction or series of transactions  whereby:
(A) the Company sells, grants, transfers, conveys, or relinquishes its ownership
of any  Property  or  portion  thereof,  including  the  lease  of any  Property
consisting  of the building  only,  and  including any event with respect to any
Property  which  gives rise to a  significant  amount of  insurance  proceeds or
condemnation  awards;  (B) the Company sells,  grants,  transfers,  conveys,  or
relinquishes  its ownership of all or  substantially  all of the interest of the
Company in any Joint  Venture in which it is a co-venturer  or partner;  (C) any
Joint Venture in which the Company as a co-venturer  or partner  sells,  grants,
transfers,  conveys,  or  relinquishes  its ownership of any Property or portion
thereof,  including  any event with respect to any Property  which gives rise to
insurance  claims or  condemnation  awards;  or (D) the Company  sells,  grants,
conveys or relinquishes  its interest in any Mortgage Loan or Secured  Equipment
Lease or portion thereof,  including any event with respect to any Mortgage Loan
or Secured Equipment Lease which gives rise to a significant amount of insurance
proceeds or similar awards,  but (ii) not including any transaction or series of
transactions  specified in clause (i)(A),  (i)(B),  or (i)(C) above in which the
proceeds of such  transaction or series of transactions are reinvested in one or
more Properties within 180 days thereafter.

         Secured Equipment Leases. The Equipment financing made available by the
Company to  operators  of Health Care  Facilities  pursuant to which the Company
will finance, through loans or direct financing leases, the Equipment.

         Secured  Equipment  Lease Servicing Fee. The fee payable to the Advisor
by the Company out of the proceeds of the Line of Credit or Permanent  Financing
for negotiating  Secured  Equipment Leases and supervising the Secured Equipment
Lease program equal to 2% of the purchase price of the Equipment subject to each
Secured Equipment Lease and paid upon entering into such lease or loan.

         Securities.  Any Equity Shares,  Excess Shares, as such term is defined
in the Company's  Articles of  Incorporation,  any other stock,  shares or other
evidences of equity or beneficial or other interests, voting trust certificates,
bonds,  debentures,  notes  or  other  evidences  of  indebtedness,  secured  or
unsecured, convertible, subordinated or otherwise, or in general any instruments
commonly  known as  "securities"  or any  certificates  of  interest,  shares or
participations  in,  temporary  or  interim   certificates  for,  receipts  for,
guarantees  of, or  warrants,  options or rights to  subscribe  to,  purchase or
acquire, any of the foregoing.

         Shares.  The common shares of the Company.

         Soliciting  Dealers.  Broker-dealers  who are  members of the  National
Association of Securities  Dealers,  Inc., or that are exempt from broker-dealer
registration,  and who, in either case,  have executed  participating  broker or
other agreements with the Managing Dealer to sell Shares.

         Soliciting  Dealer  Servicing  Fee.  An annual fee of .20% of  Invested
Capital  (calculated  using Shares sold in the 2000  Offering) on December 31 of
each year,  commencing in the year following the year in which the 2000 Offering
terminates,  payable to the Managing Dealer,  which in turn may reallow all or a
portion  of  such  fee to the  Soliciting  Dealers  whose  clients  hold  Shares
purchased in the 2000 Offering on such date.



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         Sponsor. Any Person directly or indirectly  instrumental in organizing,
wholly  or in part,  the  Company  or any  Person  who will  control,  manage or
participate in the management of the Company,  and any Affiliate of such Person.
Not included is any Person whose only  relationship  with the Company is that of
an independent  property manager of Company assets,  and whose only compensation
is as  such.  Sponsor  does  not  include  independent  third  parties  such  as
attorneys,   accountants,  and  underwriters  whose  only  compensation  is  for
professional services. A Person may also be deemed a Sponsor of the Company by:

         a.       taking the initiative,  directly or indirectly, in founding or
                  organizing  the business or enterprise of the Company,  either
                  alone or in conjunction with one or more other Persons;

         b.       receiving   a  material   participation   in  the  Company  in
                  connection  with the founding or organizing of the business of
                  the Company, in consideration of services or property, or both
                  services and property;

         c.       having a substantial number of relationships and contacts with
                  the Company;

         d.       possessing significant rights to control Company properties;

         e.       receiving fees for providing services to the Company which are
                  paid on a basis that is not customary in the industry; or

         f.       providing  goods or  services  to the Company on a basis which
                  was not negotiated at arms length with the Company.

         Stockholders.  The registered holders of the Company's Equity Shares.

         Stockholders' 8% Return.  As of each date, an aggregate amount equal to
an 8% cumulative, noncompounded, annual return on Invested Capital.

         Subordinated  Disposition  Fee.  The  Subordinated  Disposition  Fee as
defined in Paragraph 9(c).

         Subordinated  Incentive  Fee.  The fee  payable  to the  Advisor  under
certain circumstances if the Shares are listed on a national securities exchange
or over-the-counter market.

         Termination Date.  The date of termination of the Agreement.

         Total  Proceeds.  The Gross  Proceeds plus loan proceeds from Permanent
Financing and amounts  outstanding on the Line of Credit, if any, at the time of
Listing, but excluding loan proceeds used to finance Secured Equipment Leases.

         Total Property  Cost.  With regard to any Company  Property,  an amount
equal to the sum of the  Real  Estate  Asset  Value  of such  Property  plus the
Acquisition Fees paid in connection with such Property.



<PAGE>


         2%/25%  Guidelines.  The requirement  pursuant to the guidelines of the
North American Securities Administrators Association, Inc. that, in any 12 month
period,  total Operating  Expenses not exceed the greater of 2% of the Company's
Average  Invested Assets during such 12 month period or 25% of the Company's Net
Income over the same 12 month period.

         2000 Offering.  The 2000 public offering of 15,500,000 Shares that will
commence upon completion of the Initial Offering.

         Valuation.  An  estimate  of  value of the  assets  of the  Company  as
determined by an Independent Expert.

         (2)  Appointment.  The Company hereby  appoints the Advisor to serve as
its advisor on the terms and  conditions  set forth in this  Agreement,  and the
Advisor hereby accepts such appointment.

         (3)  Duties of the  Advisor.  The  Advisor  undertakes  to use its best
efforts to present to the  Company  potential  investment  opportunities  and to
provide  a  continuing  and  suitable  investment  program  consistent  with the
investment objectives and policies of the Company as determined and adopted from
time to time by the Directors.  In performance of this  undertaking,  subject to
the  supervision  of the Directors  and  consistent  with the  provisions of the
Registration Statement, Articles of Incorporation and Bylaws of the Company, the
Advisor shall, either directly or by engaging an Affiliate:

                  (a)      serve  as  the  Company's  investment  and  financial
                           advisor  and  provide   research   and  economic  and
                           statistical  data in  connection  with the  Company's
                           assets and investment policies;

                  (b)      provide  the  daily  management  of the  Company  and
                           perform  and  supervise  the  various  administrative
                           functions  reasonably necessary for the management of
                           the Company;

                  (c)      investigate,  select,  and, on behalf of the Company,
                           engage and conduct  business with such Persons as the
                           Advisor deems necessary to the proper  performance of
                           its obligations hereunder,  including but not limited
                           to consultants, accountants, correspondents, lenders,
                           technical advisors, attorneys, brokers, underwriters,
                           corporate fiduciaries,  escrow agents,  depositaries,
                           custodians,   agents   for   collection,    insurers,
                           insurance  agents,   banks,   builders,   developers,
                           property owners,  mortgagors,  and any and all agents
                           for any of the foregoing, including Affiliates of the
                           Advisor,  and  Persons  acting in any other  capacity
                           deemed by the Advisor  necessary or desirable for the
                           performance   of  any  of  the  foregoing   services,
                           including but not limited to entering into  contracts
                           in the name of the Company with any of the foregoing;



<PAGE>


                  (d)      consult  with  the  officers  and  Directors  of  the
                           Company and assist the  Directors in the  formulation
                           and   implementation   of  the  Company's   financial
                           policies,  and, as  necessary,  furnish the Directors
                           with advice and  recommendations  with respect to the
                           making of investments  consistent with the investment
                           objectives   and  policies  of  the  Company  and  in
                           connection   with  any  borrowings   proposed  to  be
                           undertaken by the Company;

                  (e)      subject to the  provisions of  Paragraphs  3(g) and 4
                           hereof,  (i)  locate,  analyze  and select  potential
                           investments   in   Properties,   Mortgage  Loans  and
                           potential lessees of Secured  Equipment Leases,  (ii)
                           structure and  negotiate the terms and  conditions of
                           transactions   pursuant   to  which   investment   in
                           Properties  and  Mortgage  Loans  will  be  made  and
                           Secured  Equipment  Leases  will  be  offered  by the
                           Company;  (iii) make  investments  in Properties  and
                           Mortgage  Loans  and  enter  into  Secured  Equipment
                           Leases on behalf of the  Company in  compliance  with
                           the   investment   objectives  and  policies  of  the
                           Company;  (iv) arrange for financing and  refinancing
                           and  make  other  changes  in the  asset  or  capital
                           structure  of, and dispose of,  reinvest the proceeds
                           from  the  sale  of,  or  otherwise   deal  with  the
                           investments in, Property,  Mortgage Loans and Secured
                           Equipment  Leases;  and (v)  enter  into  leases  and
                           service  contracts  for Company  Property and, to the
                           extent  necessary,   perform  all  other  operational
                           functions for the maintenance and  administration  of
                           such Company Property;

                  (f)      provide the Directors with periodic reports regarding
                           prospective investments in Properties, Mortgage Loans
                           and  prospective  lessees  or  borrowers  of  Secured
                           Equipment Leases;

                  (g)      obtain the prior approval of the Directors (including
                           a majority of all Independent  Directors) for any and
                           all investments in Properties, Mortgage Loans, and in
                           connection  with the  offering  of Secured  Equipment
                           Leases;

                  (h)      negotiate  on behalf  of the  Company  with  banks or
                           lenders  for  loans  to be  made to the  Company  and
                           negotiate  on behalf of the Company  with  investment
                           banking firms and broker-dealers or negotiate private
                           sales of Shares and  Securities  or obtain  loans for
                           the  Company,  but in no  event in such a way so that
                           the  Advisor  shall be  acting  as  broker-dealer  or
                           underwriter; and provided, further, that any fees and
                           costs  payable  to  third  parties  incurred  by  the
                           Advisor in connection with the foregoing shall be the
                           responsibility of the Company;

                  (i)      obtain  reports (which may be prepared by the Advisor
                           or its Affiliates), where appropriate, concerning the
                           value of investments or  contemplated  investments of
                           the Company in  Properties,  Mortgage  Loans,  and/or
                           Secured Equipment Leases;



<PAGE>


                  (j)      from  time  to  time,  or  at  any  time   reasonably
                           requested  by  the  Directors,  make  reports  to the
                           Directors  of  its  performance  of  services  to the
                           Company under this Agreement;

                  (k)      provide  the   Company   with  all   necessary   cash
                           management services;

                  (l)      do all  things  necessary  to assure  its  ability to
                           render the services described in this Agreement;

                  (m)      deliver  to or  maintain  on  behalf  of the  Company
                           copies of all appraisals  obtained in connection with
                           the investments in Properties and Mortgage Loans;

                  (n)      notify   the   Board   of   all   proposed   material
                           transactions before they are completed; and

                  (o)      administer  the Secured  Equipment  Lease  program on
                           behalf of the Company.

         (4)      Authority of Advisor.

                  (a)  Pursuant to the terms of this  Agreement  (including  the
restrictions  included in this  Paragraph 4 and in Paragraph  7), and subject to
the continuing  and exclusive  authority of the Directors over the management of
the Company,  the Directors  hereby delegate to the Advisor the authority to (1)
locate, analyze and select investment opportunities, (2) structure the terms and
conditions  of  transactions  pursuant  to  which  investments  will  be made or
acquired for the Company, (3) acquire Properties,  make Mortgage Loans and offer
Secured  Equipment  Leases in  compliance  with the  investment  objectives  and
policies of the  Company,  (4) arrange for  financing or  refinancing  Property,
Mortgage Loans and Secured Equipment  Leases,  (5) enter into leases and service
contracts for the Company's  Property,  and perform  other  property  management
services, (6) oversee non-affiliated  property managers and other non-affiliated
Persons who perform services for the Company;  and (7) undertake  accounting and
other record-keeping functions at the Property level.

                  (b)   Notwithstanding   the   foregoing,   any  investment  in
Properties  or  Mortgage  Loans;  or  extension  of a Secured  Equipment  Lease,
including any  acquisition  of Property by the Company (as well as any financing
acquired by the Company in connection with such  acquisition),  will require the
prior  approval  of the  Directors  (including  a  majority  of the  Independent
Directors).

                  (c) If a  transaction  requires  approval  by the  Independent
Directors,  the Advisor will deliver to the Independent  Directors all documents
required by them to properly  evaluate the proposed  investment in the Property,
Mortgage Loan or Secured Equipment Lease.

         The prior  approval of a majority of the  Independent  Directors  and a
majority of the Directors not otherwise  interested in the  transaction  will be
required for each transaction with the Advisor or its Affiliates.



<PAGE>


         The  Directors  may,  at any time  upon the  giving  of  notice  to the
Advisor, modify or revoke the authority set forth in this Paragraph 4. If and to
the extent the Directors so modify or revoke the authority contained herein, the
Advisor  shall  henceforth  submit  to the  Directors  for prior  approval  such
proposed  transactions  involving  investments in Property as thereafter require
prior approval, provided, however, that such modification or revocation shall be
effective  upon receipt by the Advisor and shall not be applicable to investment
transactions to which the Advisor has committed the Company prior to the date of
receipt by the Advisor of such notification.

         (5) Bank  Accounts.  The Advisor may establish and maintain one or more
bank  accounts  in its own name for the account of the Company or in the name of
the Company and may collect and deposit into any such  account or accounts,  and
disburse from any such account or accounts,  any money on behalf of the Company,
under such terms and  conditions as the Directors may approve,  provided that no
funds shall be commingled  with the funds of the Advisor;  and the Advisor shall
from  time to time  render  appropriate  accountings  of  such  collections  and
payments to the Directors and to the auditors of the Company.

         (6) Records;  Access. The Advisor shall maintain appropriate records of
all its activities  hereunder and make such records  available for inspection by
the Directors and by counsel,  auditors and authorized agents of the Company, at
any time or from time to time during normal business hours. The Advisor shall at
all reasonable times have access to the books and records of the Company.

         (7)  Limitations on Activities.  Anything else in this Agreement to the
contrary  notwithstanding,  the  Advisor  shall  refrain  from taking any action
which, in its sole judgment made in good faith,  would (a) adversely  affect the
status of the Company as a REIT, (b) subject the Company to regulation under the
Investment  Company Act of 1940,  or (c) violate any law,  rule,  regulation  or
statement of policy of any governmental body or agency having  jurisdiction over
the Company, its Equity Shares or its Securities,  or otherwise not be permitted
by the Articles of Incorporation or Bylaws of the Company, except if such action
shall be  ordered  by the  Directors,  in which case the  Advisor  shall  notify
promptly the Directors of the Advisor's judgment of the potential impact of such
action and shall  refrain  from  taking such  action  until it receives  further
clarification  or  instructions  from the  Directors.  In such event the Advisor
shall have no liability for acting in accordance with the specific  instructions
of the  Directors so given.  Notwithstanding  the  foregoing,  the Advisor,  its
directors, officers, employees and stockholders, and stockholders, directors and
officers of the  Advisor's  Affiliates  shall not be liable to the Company or to
the  Directors  or  Stockholders  for any act or  omission by the  Advisor,  its
directors, officers or employees, or stockholders,  directors or officers of the
Advisor's  Affiliates  except  as  provided  in  Paragraphs  19 and  20 of  this
Agreement.

         (8) Relationship with Directors.  Directors,  officers and employees of
the  Advisor  or an  Affiliate  of the  Advisor or any  corporate  parents of an
Affiliate,  or directors,  officers or stockholders of any director,  officer or
corporate  parent of an Affiliate may serve as a Director and as officers of the
Company,  except  that no  director,  officer or  employee of the Advisor or its
Affiliates  who also is a Director or officer of the Company  shall  receive any
compensation  from the Company  for serving as a Director or officer  other than
reasonable  reimbursement  for travel and related expenses incurred in attending
meetings of the Directors.



<PAGE>


         (9)      Fees.

                  (a) Asset Management Fee. The Company shall pay to the Advisor
as  compensation  for  the  advisory  services  rendered  to the  Company  under
Paragraph 3 above a monthly fee in an amount equal to one-twelfth of .60% of the
Company's Real Estate Asset Value and the  outstanding  principal  amount of the
Mortgage  Loans (the "Asset  Management  Fee"),  as of the end of the  preceding
month.  Specifically,  Real Estate Asset Value equals the amount invested in the
Properties  wholly owned by the Company,  determined on the basis of cost, plus,
in the case of Properties owned by any Joint Venture or partnership in which the
Company is a co-venturer or partner,  the portion of the cost of such Properties
paid by the  Company,  exclusive of  Acquisition  Fees and  Expenses.  The Asset
Management  Fee shall be payable  monthly on the last day of such month,  or the
first  business day following the last day of such month.  The Asset  Management
Fee, which will not exceed fees which are  competitive  for similar  services in
the same geographic area, may or may not be taken, in whole or in part as to any
year,  in the sole  discretion  of the Advisor.  All or any portion of the Asset
Management  Fee not  taken  as to any  fiscal  year  shall be  deferred  without
interest  and may be  taken  in such  other  fiscal  year as the  Advisor  shall
determine.

                  (b) Acquisition  Fees. The Company shall pay the Advisor a fee
in the amount of 4.5% of Total Proceeds as Acquisition  Fees.  Acquisition  Fees
shall be reduced to the extent  that,  and,  if  necessary  to limit,  the total
compensation  paid to all persons involved in the acquisition of any Property to
the amount customarily charged in arm's-length  transactions by other persons or
entities  rendering  similar  services as an ongoing public activity in the same
geographical  location and for comparable  types of Properties and to the extent
that other acquisition fees,  finder's fees, real estate  commissions,  or other
similar  fees or  commissions  are paid by any  person  in  connection  with the
transaction.  The total of all  Acquisition  Fees and any  Acquisition  Expenses
shall be limited in accordance with the Articles of Incorporation.

                  (c)  Subordinated  Disposition  Fee.  If  the  Advisor  or  an
Affiliate  provides a  substantial  amount of the services (as  determined  by a
majority of the  Independent  Directors) in  connection  with the Sale of one or
more  Properties,  the  Advisor or an  Affiliate  shall  receive a  Subordinated
Disposition Fee equal to the lesser of (i) one-half of a Competitive Real Estate
Commission  or (ii) 3% of the sales price of such  Property or  Properties.  The
Subordinated  Disposition  Fee will be paid only if  Stockholders  have received
total  Distributions  in an amount equal to the sum of their aggregate  Invested
Capital  and  their  aggregate  Stockholders'  8%  Return.  To the  extent  that
Subordinated Disposition Fees are not paid by the Company on a current basis due
to the  foregoing  limitation,  the unpaid fees will be accrued and paid at such
time as the  subordination  conditions  have been  satisfied.  The  Subordinated
Disposition  Fee may be paid in  addition  to real  estate  commissions  paid to
non-Affiliates,  provided  that the total real  estate  commissions  paid to all
Persons by the Company  shall not exceed an amount equal to the lesser of (i) 6%
of the Contract  Sales Price of a Property or (ii) the  Competitive  Real Estate
Commission.  In the event this Agreement is terminated prior to such time as the
Stockholders  have received  total  Distributions  in an amount equal to 100% of
Invested  Capital plus an amount  sufficient to pay the  Stockholders' 8% Return
through the  Termination  Date, an appraisal of the Properties then owned by the
Company  shall  be  made  and the  Subordinated  Disposition  Fee on  Properties
previously  sold will be deemed earned if the Appraised  Value of the Properties
then  owned  by the  Company  plus  total  Distributions  received  prior to the
Termination  Date equals 100% of Invested  Capital plus an amount  sufficient to
pay the Stockholders' 8% Return through the Termination  Date. Upon Listing,  if
the Advisor has accrued  but not been paid such  Subordinated  Disposition  Fee,
then for purposes of determining whether the subordination  conditions have been
satisfied,  Stockholders  will be deemed to have received a Distribution  in the
amount  equal to the product of the total number of Shares  outstanding  and the
average  closing  price of the Shares  over a period,  beginning  180 days after
Listing, of 30 days during which the Shares are traded.

         (d) Subordinated Share of Net Sales Proceeds. The Subordinated Share of
Net Sales  Proceeds shall be payable to the Advisor in an amount equal to 10% of
Net  Sales  Proceeds  from  Sales of  assets of the  Company  payable  after the
Stockholders have received  Distributions  equal to the sum of the Stockholders'
8% Return and 100% of Invested Capital. Following Listing, no Subordinated Share
of Net Sales Proceeds will be paid to the Advisor.

         (e) Subordinated Incentive Fee. Upon Listing, the Advisor shall be paid
the Subordinated  Incentive Fee in an amount equal to 10% of the amount by which
(i) the market  value of the  Company,  measured by taking the  average  closing
price or average of bid and asked price, as the case may be, over a period of 30
days during  which the Shares are traded,  with such period  beginning  180 days
after  Listing  (the  "Market  Value"),  plus the  total  Distributions  paid to
Stockholders  from the Company's  inception  until the date of Listing,  exceeds
(ii) the sum of (A) 100% of  Invested  Capital  and (B) the total  Distributions
required to be paid to the  Stockholders  in order to pay the  Stockholders'  8%
Return from  inception  through  the date the Market  Value is  determined.  The
Company shall have the option to pay such fee in the form of cash, Securities, a
promissory note or any combination of the foregoing.  The Subordinated Incentive
Fee will be  reduced  by the  amount of any prior  payment  to the  Advisor of a
deferred,  subordinated  share of Net Sales Proceeds from Sales of assets of the
Company.

         (f) Secured Equipment Lease Servicing Fee. The Company shall pay to the
Advisor out of the  Proceeds  of the Line of Credit or  Permanent  Financing  as
compensation  for  negotiating  its  respective  Secured  Equipment  Leases  and
supervising  the  Secured  Equipment  Lease  program  a fee  equal  to 2% of the
purchase  price of the Equipment  subject to each Secured  Equipment  Lease upon
entering into such lease or loan.

         (g) Loans from  Affiliates.  If any loans are made to the Company by an
Affiliate of the Advisor,  the maximum amount of interest that may be charged by
such  Affiliate  shall be the lesser of (i) 1% above the prime rate of  interest
charged  from time to time by The Bank of New York and (ii) the rate that  would
be charged to the Company by unrelated lending  institutions on comparable loans
for the same  purpose.  The terms of any such loans  shall be no less  favorable
than the terms available between  non-Affiliated  Persons for similar commercial
loans.

         (h) Changes to Fee Structure.  In the event of Listing, the Company and
the  Advisor  shall  negotiate  in  good  faith  to  establish  a fee  structure
appropriate for a perpetual-life entity. A majority of the Independent Directors
must approve the new fee structure negotiated with the Advisor. In negotiating a
new fee structure,  the Independent  Directors shall consider all of the factors
they  deem  relevant,  including,  but not  limited  to:  (i) the  amount of the
advisory fee in relation to the asset value,  composition and  profitability  of
the  Company's  portfolio;  (ii)  the  success  of  the  Advisor  in  generating
opportunities  that meet the  investment  objectives  of the Company;  (iii) the
rates  charged to other  REITs and to  investors  other  than REITs by  Advisors
performing the


<PAGE>


same or similar services;  (iv) additional  revenues realized by the Advisor and
its  Affiliates  through their  relationship  with the Company,  including  loan
administration,  underwriting  or broker  commissions,  servicing,  engineering,
inspection  and other fees,  whether paid by the REIT or by others with whom the
REIT does business;  (v) the quality and extent of service and advice  furnished
by the Advisor;  (vi) the  performance of the investment  portfolio of the REIT,
including  income,  conversion  or  appreciation  of  capital,  and  number  and
frequency  of  problem  investments;  and (vii)  the  quality  of the  Property,
Mortgage  Loan  and  Secured   Equipment  Lease  portfolio  of  the  Company  in
relationship  to the  investments  generated by the Advisor for its own account.
The new fee structure  can be no more  favorable to the Advisor than the current
fee structure.

         (10)     Expenses.

                  (a)  In  addition  to the  compensation  paid  to the  Advisor
pursuant to Paragraph 9 hereof,  the Company shall pay directly or reimburse the
Advisor for all of the  expenses  paid or incurred by the Advisor in  connection
with the  services  it  provides  to the  Company  pursuant  to this  Agreement,
including, but not limited to:

                      (i) the Company's Organizational and Offering Expenses;

                      (ii) Acquisition  Expenses incurred in connection with the
selection and  acquisition of Properties for goods and services  provided by the
Advisor at the lesser of the actual cost or 90% of the competitive  rate charged
by  unaffiliated  persons  providing  similar  goods  and  services  in the same
geographic location;

                      (iii) the actual  cost of goods and  services  used by the
Company and obtained from entities not affiliated  with the Advisor,  other than
Acquisition  Expenses,  including  brokerage  fees paid in  connection  with the
purchase and sale of securities;

                      (iv)   interest  and  other  costs  for  borrowed   money,
including discounts, points and other similar fees;

                      (v) taxes and  assessments on income or Property and taxes
as an expense of doing business;

                      (vi)  costs   associated   with   insurance   required  in
connection with the business of the Company or by the Directors;

                      (vii) expenses of managing and operating  Properties owned
by  the  Company,   whether  payable  to  an  Affiliate  of  the  Company  or  a
non-affiliated Person;

                      (viii) all  expenses in  connection  with  payments to the
Directors and meetings of the Directors and Stockholders;

                      (ix) expenses associated with Listing or with the issuance
and distribution of Shares and Securities, such as selling commissions and fees,
advertising expenses, taxes, legal and accounting fees, Listing and registration
fees, and other Organization and Offering Expenses;

                      (x) expenses  connected with payments of  Distributions in
cash  or  otherwise  made  or  caused  to  be  made  by  the  Directors  to  the
Stockholders;

                      (xi)   expenses   of   organizing,   revising,   amending,
converting,   modifying,   or  terminating   the  Company  or  the  Articles  of
Incorporation;

                      (xii)   expenses  of   maintaining   communications   with
Stockholders,  including the cost of preparation,  printing,  and mailing annual
reports  and other  Stockholder  reports,  proxy  statements  and other  reports
required by governmental entities;

                      (xiii)  expenses  related  to  negotiating  and  servicing
Mortgage Loans and Secured Equipment Leases;

                      (xiv)  expenses   related  to  negotiating  and  servicing
Secured Equipment Leases and administering the Secured Equipment Lease program;

                      (xv) administrative  service expenses (including personnel
costs;  provided,  however,  that no  reimbursement  shall be made for  costs of
personnel to the extent that such personnel perform services in transactions for
which the Advisor receives a separate fee at the lesser of actual cost or 90% of
the competitive rate charged by unaffiliated persons providing similar goods and
services in the same geographic location); and

                      (xvi)         audit, accounting and legal fees.

                  (b) Expenses  incurred by the Advisor on behalf of the Company
and  payable  pursuant to this  Paragraph  10 shall be  reimbursed  no less than
monthly to the Advisor.  The Advisor shall prepare a statement  documenting  the
expenses of the Company during each quarter, and shall deliver such statement to
the Company within 45 days after the end of each quarter.

         (11) Other Services.  Should the Directors  request that the Advisor or
any director,  officer or employee thereof render services for the Company other
than set forth in Paragraph 3, such services shall be separately  compensated at
such rates and in such amounts as are agreed by the Advisor and the  Independent
Directors of the Company,  subject to the limitations  contained in the Articles
of  Incorporation,  and shall not be deemed to be services pursuant to the terms
of this Agreement.

         (12) Reimbursement to the Advisor.  The Company shall not reimburse the
Advisor at the end of any fiscal  quarter for  Operating  Expenses  that, in the
four  consecutive  fiscal  quarters then ended (the  "Expense  Year") exceed the
greater  of 2% of Average  Invested  Assets or 25% of Net  Income  (the  "2%/25%
Guidelines")  for such year.  Within 60 days after the end of any fiscal quarter
of the Company for which total  Operating  Expenses  for the Expense Year exceed
the 2%/25%  Guidelines,  the Advisor  shall  reimburse the Company the amount by
which the total  Operating  Expenses paid or incurred by the Company  exceed the
2%/25% Guidelines.  The Company will not reimburse the Advisor or its Affiliates
for  services  for  which  the  Advisor  or  its   Affiliates  are  entitled  to
compensation  in the form of a separate  fee. All figures used in the  foregoing
computation shall be determined in accordance with generally accepted accounting
principles applied on a consistent basis.

         (13) Other  Activities of the Advisor.  Nothing herein  contained shall
prevent  the  Advisor  from  engaging in other  activities,  including,  without
limitation, the rendering of advice to other Persons (including other REITs) and
the management of other programs advised,  sponsored or organized by the Advisor
or its  Affiliates;  nor shall this Agreement limit or restrict the right of any
director,  officer, employee, or stockholder of the Advisor or its Affiliates to
engage in any other  business  or to  render  services  of any kind to any other
partnership,  corporation,  firm, individual,  trust or association. The Advisor
may, with respect to any investment in which the Company is a participant,  also
render  advice and  service to each and every  other  participant  therein.  The
Advisor  shall  report  to the  Directors  the  existence  of any  condition  or
circumstance,  existing or anticipated, of which it has knowledge, which creates
or could create a conflict of interest between the Advisor's  obligations to the
Company  and  its  obligations  to or its  interest  in any  other  partnership,
corporation,  firm,  individual,  trust  or  association.  The  Advisor  or  its
Affiliates shall promptly disclose to the Directors  knowledge of such condition
or circumstance.  If the Sponsor,  Advisor,  Director or Affiliates thereof have
sponsored other  investment  programs with similar  investment  objectives which
have investment funds available at the same time as the Company, it shall be the
duty of the Directors (including the Independent  Directors) to adopt the method
set forth in the Registration  Statement or another  reasonable  method by which
properties are to be allocated to the competing  investment  entities and to use
their best efforts to apply such method fairly to the Company.

         The  Advisor  shall be  required  to use its best  efforts to present a
continuing  and suitable  investment  program to the Company which is consistent
with the  investment  policies and  objectives  of the Company,  but neither the
Advisor nor any Affiliate of the Advisor shall be obligated generally to present
any particular investment  opportunity to the Company even if the opportunity is
of character which, if presented to the Company,  could be taken by the Company.
The Advisor or its  Affiliates  may make such an  investment  in a property only
after  (i) such  investment  has been  offered  to the  Company  and all  public
partnerships  and other  investment  entities  affiliated  with the Company with
funds  available  for such  investment  and (ii) such  investment is found to be
unsuitable  for  investment by the Company,  such  partnerships  and  investment
entities.

         In the event that the Advisor or its  Affiliates  is  presented  with a
potential  investment  which  might  be  made  by the  Company  and  by  another
investment  entity which the Advisor or its Affiliates  advises or manages,  the
Advisor and its  Affiliates  shall  consider  the  investment  portfolio of each
entity,  cash  flow  of  each  entity,  the  effect  of the  acquisition  on the
diversification of each entity's  portfolio,  rental payments during any renewal
period,  the  estimated  income tax effects of the purchase on each entity,  the
policies of each entity relating to leverage, the funds of each entity available
for  investment  and the  length of time such  funds  have  been  available  for
investment.  In the event that an investment opportunity becomes available which
is  suitable  for both the  Company  and a public or  private  entity  which the
Advisor or its  Affiliates  are  Affiliated,  then the entity  which has had the
longest  period of time elapse  since it was offered an  investment  opportunity
will first be offered the investment opportunity.

         (14)  Relationship of Advisor and Company.  The Company and the Advisor
are not  partners  or joint  venturers  with each  other,  and  nothing  in this
Agreement  shall be construed to make them such  partners or joint  venturers or
impose any liability as such on either of them.



<PAGE>


         (15) Term;  Termination of Agreement.  This Agreement shall continue in
force until  September  16, 2001,  subject to an unlimited  number of successive
one-year  renewals  upon mutual  consent of the  parties.  It is the duty of the
Directors to evaluate the  performance of the Advisor  annually  before renewing
the  Agreement,  and each such  agreement  shall have a term of no more than one
year.

         (16) Termination by Either Party. This Agreement may be terminated upon
60 days written notice without Cause or penalty,  by either party (by a majority
of the  Independent  Directors  of the  Company  or a  majority  of the Board of
Directors of the Advisor, as the case may be).

         (17) Assignment to an Affiliate.  This Agreement may be assigned by the
Advisor  to an  Affiliate  with the  approval  of a  majority  of the  Directors
(including a majority of the Independent Directors).  The Advisor may assign any
rights to receive fees or other payments under this Agreement  without obtaining
the  approval  of the  Directors.  This  Agreement  shall not be assigned by the
Company without the consent of the Advisor,  except in the case of an assignment
by the Company to a corporation  or other  organization  which is a successor to
all of the assets,  rights and  obligations  of the Company,  in which case such
successor  organization  shall  be  bound  hereunder  and by the  terms  of said
assignment in the same manner as the Company is bound by this Agreement.

         (18)  Payments to and Duties of Advisor Upon  Termination.  Payments to
the  Advisor  pursuant  to this  Paragraph  (18)  shall be subject to the 2%/25%
Guidelines to the extent applicable.

                  (a) After  the  Termination  Date,  the  Advisor  shall not be
entitled to  compensation  for  further  services  hereunder  except it shall be
entitled to receive from the Company  within 30 days after the effective date of
such termination all unpaid reimbursements of expenses and all earned but unpaid
fees payable to the Advisor prior to termination of this Agreement, exclusive of
disputed items arising out of possible unauthorized transactions.

                  (b) Upon termination, the Advisor shall be entitled to payment
of the  Performance Fee if performance  standards  satisfactory to a majority of
the Board of Directors,  including a majority of the Independent Directors, when
compared  to  (a)  the  performance  of  the  Advisor  in  comparison  with  its
performance  for other  entities,  and (b) the performance of other advisors for
similar  entities,  have been met. If Listing has not occurred,  the Performance
Fee, if any,  shall equal 10% of the amount,  if any, by which (i) the appraised
value of the assets of the Company on the  Termination  Date, less the amount of
all indebtedness  secured by such assets,  plus the total  Distributions paid to
stockholders from the Company's  inception through the Termination Date, exceeds
(ii) Invested  Capital plus an amount equal to the  Stockholders' 8% Return from
inception through the Termination Date. The Advisor shall be entitled to receive
all accrued but unpaid compensation and expense reimbursements in cash within 30
days of the  Termination  Date. All other amounts  payable to the Advisor in the
event of a  termination  shall be evidenced  by a  promissory  note and shall be
payable from time to time.

                  (c) The  Performance  Fee shall be paid in 12 equal  quarterly
installments without interest on the unpaid balance, provided,  however, that no
payment will be made in any quarter in which such payment would  jeopardize  the
Company's  REIT  status,  in which  case any such  payment or  payments  will be
delayed  until the next  quarter  in which  payment  would not  jeopardize  REIT
status.  Notwithstanding the preceding sentence, any amounts which may be deemed
payable at the date the obligation to pay the  Performance Fee is incurred which
relate to the  appreciation  of the  Company's  assets  shall be an amount which
provides compensation to the Advisor only for that portion of the holding period
for the  respective  assets  during which the Advisor  provided  services to the
Company.

                  (d) If Listing occurs,  the Performance  Fee, if any,  payable
thereafter  will be as  negotiated  between  the Company  and the  Advisor.  The
Advisor  shall not be  entitled to payment of the  Performance  Fee in the event
this  Agreement is terminated  because of failure of the Company and the Advisor
to establish, pursuant to Paragraph 9(h) hereof, a fee structure appropriate for
a perpetual-life entity at such time, if any, as Listing occurs.

                  (e)      The Advisor shall promptly upon termination:

                           (i) pay over to the Company all money  collected  and
held for the account of the Company pursuant to this Agreement,  after deducting
any accrued  compensation and reimbursement for its expenses to which it is then
entitled;

                           (ii)  deliver  to the  Directors  a full  accounting,
including a statement  showing all  payments  collected by it and a statement of
all  money  held by it,  covering  the  period  following  the  date of the last
accounting furnished to the Directors;

                           (iii) deliver to the Directors all assets,  including
Properties,  Mortgage Loans, and Secured Equipment Leases,  and documents of the
Company then in the custody of the Advisor; and

                           (iv) cooperate with the Company to provide an orderly
management transition.

         (19)  Indemnification  by the Company.  The Company shall indemnify and
hold  harmless  the  Advisor  and its  Affiliates,  including  their  respective
officers, directors, partners and employees, from all liability, claims, damages
or losses  arising in the  performance  of their duties  hereunder,  and related
expenses,  including  reasonable  attorneys' fees, to the extent such liability,
claims,  damages or losses and  related  expenses  are not fully  reimbursed  by
insurance,  subject  to any  limitations  imposed  by the  laws of the  State of
Maryland or the Articles of  Incorporation of the Company.  Notwithstanding  the
foregoing,  the  Advisor  shall not be entitled  to  indemnification  or be held
harmless  pursuant to this  Paragraph  19 for any activity for which the Advisor
shall be  required  to  indemnify  or hold  harmless  the  Company  pursuant  to
Paragraph 20. Any indemnification of the Advisor may be made only out of the net
assets of the Company and not from Stockholders.

         (20)  Indemnification by Advisor.  The Advisor shall indemnify and hold
harmless the Company from contract or other liability, claims, damages, taxes or
losses and related expenses  including  attorneys' fees, to the extent that such
liability,  claims,  damages, taxes or losses and related expenses are not fully
reimbursed  by insurance  and are incurred by reason of the Advisor's bad faith,
fraud, willful misfeasance,  misconduct, negligence or reckless disregard of its
duties,  but the  Advisor  shall not be held  responsible  for any action of the
Board  of   Directors  in  following  or  declining  to  follow  any  advice  or
recommendation given by the Advisor.



<PAGE>


         (21) Notices.  Any notice,  report or other  communication  required or
permitted to be given  hereunder shall be in writing unless some other method of
giving such notice, report or other communication is required by the Articles of
Incorporation,  the Bylaws,  or  accepted by the party to whom it is given,  and
shall  be  given  by  being  delivered  by hand or by  overnight  mail or  other
overnight delivery service to the addresses set forth herein:

To the Directors and to the Company:     CNL Retirement Properties, Inc.
                                         450 South Orange Avenue
                                         Orlando, Florida  32801

To the Advisor:                          CNL Retirement Corp.
                                         450 South Orange Avenue
                                         Orlando, Florida  32801

Either  party may at any time give  notice in  writing  to the other  party of a
change in its address for the purposes of this Paragraph 21.

         (22)  Modification.  This  Agreement  shall not be  changed,  modified,
terminated,  or  discharged,  in whole or in part,  except by an  instrument  in
writing  signed  by both  parties  hereto,  or their  respective  successors  or
assignees.

         (23) Severability.  The provisions of this Agreement are independent of
and severable  from each other,  and no provision  shall be affected or rendered
invalid or  unenforceable by virtue of the fact that for any reason any other or
others of them may be invalid or unenforceable in whole or in part.

         (24) Construction.  The provisions of this Agreement shall be construed
and interpreted in accordance with the laws of the State of Florida.

         (25) Entire Agreement. This Agreement contains the entire agreement and
understanding  among the  parties  hereto  with  respect to the  subject  matter
hereof, and supersedes all prior and contemporaneous agreements, understandings,
inducements and conditions,  express or implied,  oral or written, of any nature
whatsoever  with respect to the subject matter hereof.  The express terms hereof
control  and  supersede  any  course of  performance  and/or  usage of the trade
inconsistent with any of the terms hereof. This Agreement may not be modified or
amended other than by an agreement in writing.

         (26) Indulgences, Not Waivers. Neither the failure nor any delay on the
part of a party to exercise any right,  remedy,  power or  privilege  under this
Agreement  shall  operate as a waiver  thereof,  nor shall any single or partial
exercise of any right,  remedy, power or privilege preclude any other or further
exercise of the same or of any other  right,  remedy,  power or  privilege,  nor
shall any waiver of any right,  remedy,  power or privilege  with respect to any
occurrence  be construed as a waiver of such right,  remedy,  power or privilege
with respect to any other occurrence.  No waiver shall be effective unless it is
in writing and is signed by the party asserted to have granted such waiver.



<PAGE>


         (27)  Gender.  Words used  herein  regardless  of the number and gender
specifically  used,  shall be deemed and  construed to include any other number,
singular or plural, and any other gender, masculine,  feminine or neuter, as the
context requires.

         (28) Titles Not to Affect Interpretation.  The titles of paragraphs and
subparagraphs  contained in this  Agreement are for  convenience  only, and they
neither  form  a  part  of  this  Agreement  nor  are  they  to be  used  in the
construction or interpretation hereof.

         (29) Execution in  Counterparts.  This Agreement may be executed in any
number of  counterparts,  each of which  shall be deemed  to be an  original  as
against  any party  whose  signature  appears  thereon,  and all of which  shall
together  constitute one and the same  instrument.  This Agreement  shall become
binding when one or more  counterparts  hereof,  individually or taken together,
shall  bear  the  signatures  of all  of the  parties  reflected  hereon  as the
signatories.

         (30) Name. CNL Health Care Corp. has a proprietary interest in the name
"CNL." Accordingly, and in recognition of this right, if at any time the Company
ceases to retain CNL  Retirement  Corp.  or an Affiliate  thereof to perform the
services of Advisor,  the Directors of the Company will,  promptly after receipt
of written request from CNL Retirement Corp., cease to conduct business under or
use the name "CNL" or any diminutive  thereof and the Company shall use its best
efforts to change the name of the  Company to a name that does not  contain  the
name "CNL" or any other word or words that might,  in the sole discretion of the
Advisor,  be susceptible of indication of some form of relationship  between the
Company and the Advisor or any Affiliate thereof. Consistent with the foregoing,
it is specifically  recognized that the Advisor or one or more of its Affiliates
has in the past and may in the future  organize,  sponsor or otherwise permit to
exist other  investment  vehicles  (including  vehicles for  investment  in real
estate) and financial and service  organizations having "CNL" as a part of their
name,  all  without the need for any  consent  (and  without the right to object
thereto) by the Company or its Directors.

         (31) Initial  Investment.  The Advisor has  contributed  to the Company
$200,000 in exchange for 20,000 Equity Shares (the  "Initial  Investment").  The
Advisor may not sell these  shares  while the  Advisory  Agreement is in effect,
although the Advisor may transfer such shares to  Affiliates.  The  restrictions
included  above  shall not apply to any  Equity  Shares,  other  than the Equity
Shares acquired through the Initial  Investment,  acquired by the Advisor or its
Affiliates.  The  Advisor  shall not vote any  Equity  Shares  it now  owns,  or
hereafter  acquires,  in any  vote  for the  removal  of  Directors  or any vote
regarding the approval or termination of any contract with the Advisor or any of
its Affiliates.



<PAGE>


         IN WITNESS WHEREOF,  the parties hereto have executed this Agreement as
of the date and year first above written.

                                        CNL RETIREMENT PROPERTIES, INC.

                                        By:  /s/ James M. Seneff, Jr.
                                             -------------------------
                                             Name:  James M. Seneff, Jr.
                                             Its:   Chairman of the Board and
                                                    Chief Executive Officer


                                        CNL RETIREMENT CORP.

                                        By: /s/ Robert A. Bourne
                                        Name: Robert A. Bourne
                                        Its: President