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                                                                   EXHIBIT 10.31

                                    GUARANTY

      THIS GUARANTY (this "GUARANTY") is executed as of March 30, 2005 by
BROOKDALE LIVING COMMUNITIES, INC., a Delaware corporation ("GUARANTOR"), in
favor of the "Agent" (the "AGENT") and the "Lenders" (the "LENDERS") under that
certain Loan Agreement of even date herewith among Borrower, Agent and Lenders
(as the same from time to time may be supplemented, modified, amended or
restated, herein called the "LOAN AGREEMENT"). The Loan Agreement provides for a
loan from Lenders to Borrower in the aggregate amount of $182,000,000, subject
to the terms and conditions set forth therein, and is a "Guaranty" as defined
therein. Reference is made to the Loan Agreement for the meanings assigned to
capitalized terms used and not defined herein.

      1. Inducement. Guarantor has an ownership or other interest in AH Battery
Park Owner, LLC, an Ohio limited liability company, KG Missouri-CC Owner, LLC, a
Delaware limited liability company, AH Illinois Owner LLC, a Delaware limited
liability company, AH North Carolina Owner LLC, a Delaware limited liability
company, and AH Ohio-Columbus Owner, LLC, a Delaware limited liability company
(collectively, "BORROWER") and an interest in the success of the Facilities, and
Lenders' agreement to make the Loan is of substantial benefit to Guarantor.

      2. Guaranteed Obligations. Guarantor absolutely, unconditionally and
irrevocably guarantees and agrees, subject to the limitations set forth below:
(a) to pay to Agent, at the address designated in the Note (as hereinafter
defined) for payment thereof or as such address may be changed as provided in
the Loan Agreement, all indebtedness of Borrower to Lenders under the promissory
notes listed on Schedule 1 attached hereto, each dated of even date herewith,
and all amendments, modifications, renewals and extensions of and substitutions
for said promissory notes (said promissory notes and all amendments,
modifications, renewals and extensions thereof and all substitutions therefor
herein called the "NOTE"), together with all accrued but unpaid interest thereon
(all such indebtedness hereinafter called the "INDEBTEDNESS"); (b) to perform
fully and promptly when due all of the covenants, agreements and other
obligations undertaken by Borrower in the Loan Documents, including without
limitation, the Loan Agreement and the Environmental Indemnity Agreement of even
date herewith executed by Borrower in favor of Agent and the Indemnified Parties
described therein (such covenants, agreements and other obligations hereinafter
called the "OBLIGATIONS"); and (c) to pay any and all costs, attorneys' fees and
expenses incurred or expended by Agent in collecting amounts due under this
Guaranty and the other Loan Documents or in enforcing any right granted
hereunder or thereunder (the "COLLECTION COSTS").

      3. Limited Liability.

            (a) Notwithstanding the foregoing, but subject to the provisions of
      Sections 4 and 5 of this Guaranty, the liability of Guarantor for (i)
      payment of the Indebtedness is limited to 50% of the Principal Amount plus
      all accrued but unpaid interest on the Principal Amount, and (ii) the
      Obligations are limited to payment and performance of the Recourse Amounts
      (as hereinafter defined).

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            (b) Notwithstanding the foregoing, but subject to the provisions of
      Sections 4 and 5 of this Guaranty, in the event that the initial (i.e.,
      occurring at the end of 12 months) Notes Resize occurs and the Debt
      Coverage Ratio - Actual for the Notes is equal to or greater than 1:30 to
      1:00 for a six (6) consecutive month period and provided no Event of
      Default exists (i) the liability of Guarantor for payment of the
      Indebtedness shall be limited to 25% of the Principal Amount plus all
      accrued but unpaid interest on the Principal Amount, and (ii) the
      liability of Guarantor for the Obligations shall be limited to payment and
      performance of the Recourse Amounts.

            (c) In the event the Guarantor's liability is not reduced as
      provided in 3(b) above because of a failure to satisfy the Debt Coverage
      Ratio - Actual, but subsequent to such Notes Resize, the Debt Coverage
      Ratio - Actual for the Notes is equal to or greater than 1:30 to 1:00 for
      a six (6) consecutive month period, notwithstanding the foregoing, but
      subject to the provisions of Sections 4 and 5 of this Guaranty, provided
      no Event of Default exists, (i) the liability of Guarantor for payment of
      the Indebtedness shall be limited to 25% of the Principal Amount plus all
      accrued but unpaid interest on the Principal Amount, and (ii) the
      liability of Guarantor for the Obligations shall be limited to payment and
      performance of the Recourse Amounts.

            (d) The term "RECOURSE AMOUNTS" as used herein means:

                  (i) the amount by which any rents, issues or profits of any of
            the Facilities which are collected by or on behalf of Borrower
            during the continuance of an Event of Default are not applied to the
            normal operating expenses of the Facilities and/or any payments due
            under the Loan Documents;

                  (ii) any amount owed to Bank Parties under the Environmental
            Indemnity Agreement;

                  (iii) the Collection Costs;

                  (iv) the amount of insurance and/or condemnation proceeds
            which are received by or on behalf of Borrower and which are not
            delivered to Agent or otherwise applied as required under the terms
            of the Loan Documents;

                  (v) any damages, loss, liability, costs or expenses (including
            attorneys' fees) incurred or expended by Bank Parties resulting from
            the failure of Borrower to keep the Facilities insured as required
            by the provisions of the Loan Documents;

                  (vi) any damages, loss, liability, costs or expenses
            (including attorneys' fees) incurred or expended by Bank Parties as
            a result or on account of (A) any waste of the Facilities, or (B)
            any breach of any provision of the Loan Documents regarding the
            existence of mechanics' or materialmen's liens against the
            Facilities;

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                  (vii) upon the foreclosure of the lien of the Security
            Instrument, damages resulting from the failure of Borrower or its
            successor as grantor under the Security Instrument to deliver or
            surrender to the purchaser of the Facilities, at or immediately
            following such foreclosure, any of the real and personal property
            covered by the Security Instrument or any other Loan Document;

                  (viii) the amount of any ad valorem taxes, payments in lieu of
            ad valorem taxes or ground rent concerning the Facilities which are
            not paid as required under the terms of the Loan Documents (reduced
            by any ad valorem tax escrow held by Agent);

                  (ix) any damages, loss, liability, costs or expenses
            (including attorneys' fees) incurred or expended by Bank Parties
            resulting from the failure of the Borrower to comply with the terms
            of the Single Purpose Entity Provisions in the Loan Agreement;

                  (x) any damages, loss, liability, costs or expenses (including
            attorneys' fees) incurred or expended by Bank Parties resulting in
            the event the Facilities (or any part thereof) becomes an asset, or
            any Borrower (or its member) becomes a "debtor", in an involuntary
            bankruptcy or insolvency proceeding which is not dismissed within 90
            days of filing; provided, however, this subsection shall not apply
            if an involuntary bankruptcy is filed by Agent or Lenders;

                  (xi) any damages, loss, liability, costs or expenses
            (including attorneys' fees) incurred or expended by Bank Parties
            from an Event of Default under Section 8.1(j) of the Loan Agreement
            resulting from an involuntary lien (i.e., tax lien, mechanics or
            materialman's lien); and

                  (xii) if any Event of Default exists as a result of a
            termination of the Interest Rate Protection Agreement, the amount of
            any Termination Proceeds received by or on behalf of Guarantor or
            Borrower in connection with such termination which are not delivered
            to Agent.

      4. Liability After Foreclosure Events. In the event of foreclosure by
Agent on the Facilities pursuant to the terms of the Security Instrument or
acceptance by Agent of a deed-in-lieu of foreclosure from Borrower (hereinafter
called a "DEED-IN-LIEU OF FORECLOSURE") (it being agreed that Agent shall be
under no duty or obligation to foreclose on the Facilities under the Security
Instrument or accept a Deed-in-Lieu of Foreclosure), the liability of Guarantor
for payment of the Principal Amount after such foreclosure sale or acceptance of
such Deed-in-Lieu of Foreclosure shall be the lesser of (i) the unpaid Principal
Amount after such foreclosure sale or acceptance of such Deed-in-Lieu of
Foreclosure or (ii) that portion of the Principal Amount for which Guarantor was
liable prior to the foreclosure sale or acceptance of such Deed-in-Lieu of
Foreclosure, it being the intention that the application of proceeds of any such
foreclosure sale (or the credit against the indebtedness in connection with the
acceptance of a Deed-in-Lieu of Foreclosure) shall be in such a manner so as not
to extinguish or reduce the liability of Guarantor under this Guaranty until all
of the amounts due under the Loan Documents for which Guarantor

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is not liable have been paid in full. Guarantor shall also be liable for all
accrued but unpaid interest on the Principal Amount and the payment and
performance of the Recourse Amounts.

      5. Full Liability. Notwithstanding anything to the contrary contained
herein, Guarantor shall have full personal liability for payment and performance
of the Indebtedness and the Obligations if:

            (a) there shall be an Event of Default under Section 8.1(i) of the
      Loan Agreement; or

            (b) there shall be an Event of Default under Section 8.1(j) of the
      Loan Agreement resulting from a voluntary lien placed by or at the
      direction of Borrower on a Facility (e.g., financing lien); or

            (c) there shall be any fraud or intentional misrepresentation by
      Borrower or any partner, member or joint venture of Borrower or any
      Guarantor in connection with the Facilities, the Loan Documents or any
      aspect of the Loan; or

            (d) the Facilities (or any part thereof) becomes an asset, or any
      Borrower (or its member) becomes a "debtor", in a voluntary bankruptcy or
      insolvency proceeding which is not dismissed within 90 days of filing.

      6. Waivers. Guarantor expressly waives presentment for payment, demand,
notice of demand and of dishonor and nonpayment of the Indebtedness, notice of
intention to accelerate the maturity of the Indebtedness or any part thereof,
notice of acceleration of the maturity of the Indebtedness or any part thereof,
notice of disposition of collateral, the defense of impairment of collateral,
the right to a commercially reasonable sale of collateral, protest and notice of
protest, diligence in collecting, and the bringing of suit against any other
party. Agent shall be under no obligation to notify Guarantor of its acceptance
hereof or of any advances made or credit extended on the faith hereof or the
failure of Borrower to pay any of the Indebtedness as it matures or any default
in the performance of any of the Obligations, or to use diligence in preserving
the liability of any person on the Indebtedness or the Obligations or in
bringing suit to enforce collection of the Indebtedness or performance of the
Obligations. Guarantor waives all defenses given to sureties or guarantors at
law or in equity other than the actual payment of the Indebtedness and
performance of the Obligations and all defenses based upon questions as to the
validity, legality or enforceability of the Indebtedness and/or the Obligations
and agrees that Guarantor shall be primarily liable hereunder.

      7. No Impairment of Guaranty. Agent, without authorization from or notice
to Guarantor and without impairing, modifying, changing, releasing, limiting or
affecting the liability of Guarantor hereunder, may from time to time at its
discretion and with or without valuable consideration, alter, compromise,
accelerate, renew, extend or change the time or manner for the payment of any or
all of the Indebtedness, increase or reduce the rate of interest thereon, take
and surrender security, exchange security by way of substitution, or in any way
it deems necessary take, accept, withdraw, subordinate, alter, amend, modify or
eliminate security, add or release or discharge endorsers, guarantors, or other
obligors, make changes of any sort whatever in the terms of payment of the
Indebtedness, in the Obligations or in the manner of

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doing business with Borrower, or settle or compromise with Borrower or any other
person or persons liable on the Indebtedness or the Obligations on such terms as
it may see fit, and may apply all moneys received from the Borrower or others,
or from any security held (whether held under a security instrument or not), in
such manner upon the Indebtedness (whether then due or not) as it may determine
to be in its best interest, without in any way being required to marshal
securities or assets or to apply all or any part of such moneys upon any
particular part of the Indebtedness. It is specifically agreed that Bank Parties
are not required to retain, hold, protect, exercise due care with respect
thereto, perfect security interests in or otherwise assure or safeguard any
security for the Indebtedness; no failure by Bank Parties to do any of the
foregoing and no exercise or nonexercise by Bank Parties of any other right or
remedy of Bank Parties shall in any way affect any of Guarantor's obligations
hereunder or any security furnished by Guarantor or give Guarantor any recourse
against Bank Parties.

      8. Events Affecting Borrower. The liability of Guarantor hereunder shall
not be modified, changed, released, limited or impaired in any manner whatsoever
on account of any or all of the following: (a) the incapacity, death,
disability, dissolution or termination of Guarantor, Borrower, Bank Parties or
any other person or entity; (b) the failure by Bank Parties to file or enforce a
claim against the estate (either in administration, bankruptcy or other
proceeding) of Borrower or any other person or entity; (c) recovery from
Borrower or any other person or entity becomes barred by any statute of
limitations or is otherwise prevented; (d) any defenses, set-offs or
counterclaims which may be available to Borrower or any other person or entity;
(e) any transfer or transfers of any of the property covered by the Security
Instrument or any other instrument securing the payment of the Note; (f) any
release of Borrower, any co-guarantor or any other person (other than Guarantor)
primarily or secondarily liable for the payment of the Indebtedness or the
performance of the Obligations or any part thereof; (g) any modifications,
extensions, amendments, consents, releases or waivers with respect to this
Guaranty or any other Loan Document, except in a written amendment to this
Guaranty executed by Guarantor, Lenders and Agent; (h) any failure of Agent to
give any notice to Guarantor of any Event of Default; (i) Guarantor is or
becomes liable for any indebtedness owing by Borrower other than under this
Guaranty; or (j) any impairment, modification, change, release or limitation of
the liability of, or stay of actions or lien enforcement proceedings against,
Borrower, its property, or its estate in bankruptcy resulting from the operation
of any present or future provision of the Federal Bankruptcy Code (hereinafter
called the "BANKRUPTCY CODE") or other similar federal or state statute, or from
the decision of any court.

      9. Subordination. Guarantor expressly subordinates its rights to payment
of any indebtedness owing from Borrower to Guarantor, whether now existing or
arising at any time in the future, to the prior right of Bank Parties to receive
or require payment in full of the Indebtedness and until payment in full of the
Indebtedness (and including interest accruing on the Note after any petition
under the Bankruptcy Code, which post-petition interest Guarantor agrees shall
remain a claim that is prior and superior to any claim of Guarantor
notwithstanding any contrary practice, custom or ruling in proceedings under the
Bankruptcy Code generally), Guarantor agrees not to accept any payment or
satisfaction of any kind of indebtedness of Borrower to Guarantor or any
security for such indebtedness during the continuance of an Event of Default. If
Guarantor should receive any such payment, satisfaction or security for any
indebtedness of Borrower to Guarantor during the continuance of an Event of
Default, Guarantor agrees forthwith to deliver the same to Agent in the form
received, endorsed or assigned as may

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be appropriate for application on account of, or as security for, the
Indebtedness and until so delivered, agrees to hold the same in trust for Bank
Parties.

      10. Waiver of Right of Subrogation. Notwithstanding anything to the
apparent contrary contained herein, Guarantor does not herein expressly or
impliedly waive or release any rights of subrogation that Guarantor may have
against Borrower (except as same are expressly subordinated as provided herein),
rights of contribution that Guarantor may have against any other guarantor of,
or other person secondarily liable for, the payment of the Indebtedness or
performance of the Obligations or rights of reimbursement that Guarantor may
have as against Borrower (except as same may be limited herein).

      11. No Usury. The provisions of Section 9.10 of the Loan Agreement are
incorporated herein by reference.

      12. Representations and Warranties. Guarantor hereby represents and
warrants to Bank Parties as follows:

            (a) Guarantor is solvent, is not bankrupt and has no outstanding
      liens, garnishments, bankruptcies or court actions which could render
      Guarantor insolvent or bankrupt, and there has not been filed by or
      against Guarantor a petition in bankruptcy or a petition or answer seeking
      an assignment for the benefit of creditors, the appointment of a receiver,
      trustee, custodian or liquidator with respect to Guarantor or any
      substantial portion of Guarantor's property, reorganization, arrangement,
      rearrangement, composition, extension, liquidation or dissolution or
      similar relief under the Bankruptcy Code or any state law.

            (b) To the best of Guarantor's knowledge, all reports, financial
      statements and other financial and other data which have been or may
      hereafter be furnished by Guarantor to Bank Parties in connection with
      this Guaranty are or shall be true and correct in all material respects
      and do not and will not omit to state any material fact or circumstance
      necessary to make the statements contained therein not misleading and do
      or shall fairly represent the financial condition of Guarantor as of the
      dates and the results of Guarantor's operations for the periods for which
      the same are furnished, and, to the best of Guarantor's knowledge, no
      material adverse change has occurred since the dates of such reports,
      statements and other data in the financial condition of Guarantor (for the
      purposes of this clause (b) and the preceding clause (a), Guarantor shall
      also include any joint venturer, managing member or general partner of
      Guarantor).

            (c) The execution, delivery and performance of this Guaranty do not
      contravene, result in the breach of or constitute a default under any
      mortgage, deed of trust, lease, promissory note, loan agreement or other
      contract or agreement to which Guarantor is a party or by which Guarantor
      or any of its properties may be bound or affected and do not violate or
      contravene any law, order, decree, rule or regulation to which Guarantor
      is subject.

            (d) There are no judicial or administrative actions, suits or
      proceedings pending or, to the best of Guarantor's knowledge, threatened
      against or affecting

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      Guarantor or any of its properties or involving the validity,
      enforceability or priority of this Guaranty.

            (e) Guarantor, unless an individual, is duly organized and legally
      existing under the laws of the state of its formation (the foregoing
      representations shall also apply to any corporation, partnership, joint
      venture, limited liability company or limited partnership which is a
      general partner, managing member or a joint venturer of Guarantor).

            (f) This Guaranty constitutes the legal, valid and binding
      obligation of Guarantor enforceable in accordance with its terms except as
      such enforcement may be limited by bankruptcy, insolvency or similar laws
      of general application relating to the enforcement of creditor's rights
      and general principles of equity; the execution and delivery of, and
      performance under, this Guaranty are within Guarantor's powers and have
      been duly authorized by all requisite action and are not in contravention
      of the powers of Guarantor's organizational documents.

            (g) Guarantor's U.S. taxpayer identification number is 20-1348354.

      13. Covenants and Agreements. Guarantor absolutely and unconditionally
covenants and agrees with Bank Parties as follows:

            (a) In the event that Borrower does not pay the Indebtedness or
      perform the Obligations or is unable to do so as a result of any
      liquidation, dissolution, receivership, conservatorship, insolvency,
      bankruptcy, assignment for the benefit of creditors, sale of all or
      substantially all assets, reorganization, arrangement, composition, or
      readjustment of, or other similar proceedings affecting the status,
      composition, identity, existence, assets or obligations of Borrower, or
      the disaffirmance or termination of any of the Indebtedness or Obligations
      in or as a result of any such proceeding, such actions by Borrower shall
      not affect the liability of Guarantor hereunder, which liability is
      subject to the limitations and exculpations set forth in Sections 3-5 of
      this Guaranty.

            (b) If for any reason whatsoever (including but not limited to ultra
      vires, lack of authority, illegality, force majeure, act of God or
      impossibility) the Indebtedness or the Obligations cannot be enforced
      against Borrower, such unenforceability shall in no manner affect the
      liability of Guarantor hereunder and Guarantor shall be liable hereunder,
      subject to the limitations and exculpations set forth in Sections 3-5 of
      this Guaranty, notwithstanding that Borrower may not be liable for such
      Indebtedness or such Obligations and to the same extent as Guarantor would
      have been liable if such Indebtedness or Obligations had been enforceable
      against Borrower.

            (c) Should the status of Borrower change, this Guaranty shall
      continue and also cover the Indebtedness and Obligations of Borrower under
      the new status according to the terms hereof.

            (d) In the event any payment by Borrower to a Bank Party is held to
      constitute a preference under the bankruptcy laws, or if for any other
      reason a Bank Party is required to refund such payment or pay the amount
      thereof to any other party, such

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      payment by Borrower to a Bank Party shall not constitute a release of
      Guarantor from any liability hereunder, but Guarantor, subject to the
      limitations and exculpations set forth in Sections 3-5 of this Guaranty,
      agrees to pay such amount to Agent upon demand and this Guaranty shall
      continue to be effective or shall be reinstated, as the case may be, to
      the extent of any such payment or payments.

            (e) Guarantor shall not have (i) the right to the benefit of, or to
      direct the application of, any security held by Agent, any right to
      enforce any remedy which Agent now has or hereafter may have against
      Borrower, or any right to participate in any security now or hereafter
      held by Agent, or (ii) any defense arising out of the absence, impairment
      or loss of any right of reimbursement or subrogation or other right or
      remedy of Guarantor against Borrower or against any security resulting
      from the exercise or election of any remedies by Agent, or any defense
      arising by reason of any disability or other defense of Borrower or by
      reason of the cessation, from any cause, of the liability of Borrower.

            (f) The payment by Guarantor of any amount pursuant to this Guaranty
      shall not in any way entitle Guarantor to any right, title or interest
      (whether by way of subrogation or otherwise) in and to any of the
      Indebtedness or any proceeds thereof, or any security therefor, unless and
      until the Indebtedness has been fully paid, but when the same has been
      fully paid Guarantor shall be subrogated as to any payments made by it to
      the rights of the Bank Parties as against Borrower and/or any endorsers,
      sureties or other guarantors.

            (g) Agent shall not be required to pursue any other remedies before
      invoking the benefits of the guaranties contained herein, and specifically
      it shall not be required to make demand upon or institute suit or
      otherwise pursue its remedies against Borrower or any surety other than
      Guarantor or to proceed against or give credit for any security now or
      hereafter existing for the payment of any of the Indebtedness. Agent may
      maintain an action on this Guaranty without joining Borrower therein and
      without bringing a separate action against Borrower.

            (h) Guarantor shall maintain interest rate protection for the Loan
      under the Interest Rate Protection Agreement to the extent required by the
      Loan Agreement.

      14. Financial Covenants, Statements and Reports.

            (a) Net Worth. Throughout the term of the Loan, Guarantor shall
      maintain a Net Worth of at least $100,000,000 to be measured at the end of
      each calendar quarter. As used in this Section, the term (a) "NET WORTH"
      means an amount equal to, as determined in accordance with GAAP, (i) the
      consolidated assets of Guarantor minus (ii) the total consolidated
      liabilities of Guarantor plus (iii) the deferred gain reflected on
      Guarantor's GAAP balance sheet.

            (b) Minimum Liquidity. Throughout the term of the Loan, Guarantor
      shall maintain Minimum Liquidity of at least $5,000,000 to be measured at
      the end of each calendar quarter. As used in this Section, the term
      "MINIMUM LIQUIDITY" means (a)

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      cash on hand or on deposit in banks, (b) readily marketable securities
      issued by the United States, (c) readily marketable commercial paper rated
      A-1 by Standard & Poor's Corporation (or a similar rating by any similar
      organization that rates commercial paper), (d) certificates of deposit
      issued by commercial banks operating in the United States with maturities
      of one year or less, and (e) funds available to Guarantor under
      Guarantor's available lines of credit, provided (i) Guarantor is not in
      default under such lines of credit and no event shall have occurred which
      with the passage of time or the giving of notice or both would constitute
      a default under such lines of credit, and (ii) Guarantor is allowed to
      unconditionally (except for the submission of administrative draw
      requests) draw upon such available funds.

            (c) Financial Statements. Guarantor will deliver to Agent and
      Monitoring Agent the financial statements of Guarantor as more
      particularly described in the Loan Agreement and within time periods as
      set forth in the Loan Agreement. All financial statements shall be
      delivered to Agent and Monitoring Agent with a certificate in the form of
      Schedule 2 attached hereto and made a part hereof, certified as to
      accuracy by a representative of Guarantor reasonably acceptable to Agent.

      15. Joint and Several Liability. Where two or more persons or entities
have executed this Guaranty, unless the context clearly indicates otherwise, all
references herein to "Guarantor" shall mean the guarantors hereunder or either
or any of them. All of the obligations and liability of said guarantors
hereunder shall be joint and several. Suit may be brought against said
guarantors, jointly and severally, or against any one or more of them, less than
all, without impairing the rights of Bank Parties against the other or others of
said guarantors; and Agent may compound with any one or more of said guarantors
for such sums or sum as it may see fit and/or release such of said guarantors
from all further liability to Bank Parties for such indebtedness without
impairing the right of Bank Parties to demand and collect the balance of such
indebtedness from the other or others of said guarantors not so compounded with
or released; but it is agreed among said guarantors themselves, however, that
such compounding and release shall in nowise impair the rights of said
guarantors as among themselves.

      16. Disputes Among Guarantors. Where two or more persons or entities have
executed this Guaranty, to the extent any dispute exists at anytime between or
among such parties as to any party's right to contribution or otherwise,
Guarantor agrees to indemnify, defend and hold Agent harmless from and against
any loss, damage, claim, demand, cost or other liability (including, without
limitation, reasonable attorneys' fees and costs) Bank Parties may suffer as a
result of such dispute.

      17. Rights Cumulative. The rights of Bank Parties are cumulative and shall
not be exhausted by its exercise of any of its rights hereunder or otherwise
against Guarantor or by any number of successive actions until and unless all
Indebtedness has been paid, all Obligations have been performed and each of the
obligations of Guarantor hereunder has been performed. The existence of this
Guaranty shall not in any way diminish or discharge the rights of Bank Parties
under any prior or future guaranty agreement executed by Guarantor.

      18. Notices. Any notice, request, demand or other communication required
or permitted hereunder shall be given as provided in the Loan Agreement.

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      19. APPLICABLE LAW. THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF
GUARANTOR HEREUNDER SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS (WITHOUT GIVING
EFFECT TO TEXAS' PRINCIPLES OF CONFLICTS OF LAW) AND THE LAW OF THE UNITED
STATES APPLICABLE TO TRANSACTIONS IN SUCH STATE

      20. CONSENT TO FORUM. GUARANTOR HEREBY IRREVOCABLY SUBMITS TO THE
NON-EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT SITTING IN DALLAS,
TEXAS (OR ANY COURT OF COMPETENT JURISDICTION IN THE COUNTY WHERE ANY PORTION OF
THE PROPERTY COVERED BY THE SECURITY INSTRUMENT IS LOCATED) OVER ANY SUIT,
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY OR ANY OF THE
LOAN DOCUMENTS, AND GUARANTOR HEREBY AGREES AND CONSENTS THAT, IN ADDITION TO
ANY METHODS OF SERVICE OF PROCESS PROVIDED FOR UNDER APPLICABLE LAW, ALL SERVICE
OF PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY STATE OR FEDERAL COURT
SITTING IN DALLAS, TEXAS (OR ANY COURT OF COMPETENT JURISDICTION IN THE COUNTY
WHERE ANY PORTION OF THE PROPERTY COVERED BY THE SECURITY INSTRUMENT IS LOCATED)
MAY BE MADE BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, DIRECTED
TO GUARANTOR AT THE ADDRESS OF GUARANTOR FOR THE GIVING OF NOTICES HEREUNDER,
AND SERVICE SO MADE SHALL BE COMPLETE FIVE (5) DAYS AFTER THE SAME SHALL HAVE
BEEN SO MAILED.

      21. WAIVER OF JUDICIAL PROCEDURAL MATTERS. GUARANTOR AND AGENT HEREBY
KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT
COUNSEL, EXPRESSLY AND UNCONDITIONALLY WAIVE, IN CONNECTION WITH ANY SUIT,
ACTION OR PROCEEDING IN CONNECTION WITH THIS GUARANTY, ANY AND EVERY RIGHT THEY
MAY HAVE TO A TRIAL BY JURY

      22. Counterparts. This Guaranty may be executed in any number of
counterparts with the same effect as if all parties hereto had signed the same
document. All such counterparts shall be construed together and shall constitute
one instrument, but in making proof hereof it shall only be necessary to produce
one such counterpart.

      23. No Modification. This Guaranty may only be modified, waived, altered
or amended by a written instrument or instruments executed by the party against
which enforcement of said action is asserted. Any alleged modification, waiver,
alteration or amendment which is not so documented shall not be effective as to
any party.

      24. Successors and Assigns; Gender; Unenforceability of Certain
Provisions, Headings. The terms, provisions, covenants and conditions hereof
shall be binding upon Guarantor and the heirs, devisees, representatives,
successors and assigns of Guarantor and shall inure to the benefit of Bank
Parties and all transferees, credit participants, successors, assignees and/or
endorsees of Bank Parties. Within this Guaranty, words of any gender shall be
held and

                                       10
<PAGE>

construed to include any other gender and words in the singular number shall be
held and construed to include the plural, unless the context otherwise requires.
A determination that any provision of this Guaranty is unenforceable or invalid
shall not affect the enforceability or validity of any other provision and any
determination that the application of any provision of this Guaranty to any
person or circumstance is illegal or unenforceable shall not affect the
enforceability or validity of such provision as it may apply to any other
persons or circumstances. The headings in this Guaranty are for convenience only
and will not limit or otherwise affect any of the terms hereof.

      25. USA Patriot Act. Guarantor acknowledges that it has been notified by
Agent that pursuant to the requirements of the USA Patriot Act, the Bank Parties
are required to obtain, verify and record information that identifies Guarantor,
which information includes the name and address of Guarantor and other
information that will allow the Bank Parties to identify Guarantor in accordance
with the USA Patriot Act.

      26. Limitation of Liability. Notwithstanding anything to the contrary
contained herein, Guarantor's officers, directors, employees, members, partners,
managers, shareholders, incorporators or agents (collectively, the "GUARANTOR'S
GROUP") shall have no personal liability for the payment of this Guaranty,
obligation under any Loan document or for the performance or observance of the
covenants, representations and warranties of the Guarantor contained in this
Guaranty and Agent and each Lender agree not to seek any damages or personal
money judgment against the Guarantor's Group for any default under this
Guaranty. Nothing herein contained shall prevent or shall be construed to
prevent Agent or Lenders or any part thereof from exercising and enforcing any
other remedy allowed at law or equity or by any statute.

      IN WITNESS WHEREOF, Guarantor has executed this Guaranty as of the date
first set forth above.

                   REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                             SIGNATURE PAGE FOLLOWS

                                       11
<PAGE>

                           SIGNATURE PAGE OF GUARANTOR
                                   TO GUARANTY

                                BROOKDALE LIVING COMMUNITIES, INC.,
                                a Delaware corporation

                                 By: /s/ R. Stanley Young
                                     ---------------------------------
                                     R. Stanley Young, Executive Vice President,
                                     Chief Financial Officer and Treasurer

The address of Guarantor is:

Brookdale Living Communities, Inc.
330 North Wabash Avenue, Suite 1400
Chicago, Illinois 60611
Attention: R. Stanley Young and Deborah C. Paskin

The Address of Agent is:

Guaranty Bank
8333 Douglas Avenue
Dallas, Texas 75225
Attention: Senior Housing Lending Division

<PAGE>

                                   SCHEDULE 1

                                 Notes Schedule

                                        1
<PAGE>

                                   SCHEDULE 2

                  CERTIFICATE ACCOMPANYING FINANCIAL STATEMENTS
                                   (Guarantor)

      Reference is made to that certain Guaranty dated as of March ___, 2005 (as
from time to time amended, the "GUARANTY") executed by BROOKDALE LIVING
COMMUNITIES, INC., a Delaware corporation, ("GUARANTOR") in favor of the "Agent"
("AGENT") and the "Lenders" (the "LENDERS") more particularly defined in a Loan
Agreement of even date with the Guaranty between Agent, the Borrowers named
therein and the Lenders named therein (the "LOAN AGREEMENT"). Terms which are
defined in this Certificate are used herein with the meanings given them in the
Guaranty.

      This Certificate is furnished pursuant to the Guaranty. Together herewith
the Guarantor is furnishing to Agent Guarantor's financial statements (the
"FINANCIAL STATEMENTS") as at ____________ and for the period then ended (the
"REPORTING DATE"). Guarantor hereby represents, warrants, and acknowledges to
Agent and each Lender that:

            (a) the officer of the Guarantor signing this instrument is the duly
      elected, qualified and acting ____________ of the Guarantor;

            (b) the Financial Statements present fairly and in accordance with
      GAAP the matters contained therein (as to statements to which GAAP
      applies), and are accurate and complete (as to statements to which GAAP
      does not apply);

            (c) on the Reporting Date the Loan Parties (as defined in the Loan
      Agreement) were, and on the date hereof, the Loan Parties are, in full
      compliance with the disclosure requirements of the Guaranty, and no
      Default otherwise existed on the Reporting Date or otherwise exists on the
      date of this instrument *[EXCEPT FOR DEFAULT(s) UNDER SECTION(s)
      ____________ OF THE GUARANTY, WHICH *[IS/ARE] more fully described on a
      schedule attached hereto];

            (d) the following are true and correct calculations regarding the
      financial covenants under the Guaranty:

<TABLE>
<CAPTION>
Financial Covenant           Actual Calculation         Guaranty Requirement
------------------           ------------------         ---------------------
<S>                          <C>                        <C>
Net Worth                                                 At least $5,000,000
Minimum Liquidity                                       At least $100,000,000
</TABLE>

      The officer of the Guarantor signing this instrument hereby certifies that
he/she has reviewed the Loan Documents and the Financial Statements and has
otherwise undertaken such inquiry as is in his/her opinion necessary to enable
him to express an informed opinion with respect to the above representations,
warranties and acknowledgments and, to the best of his/her knowledge, such
representations, warranties, and acknowledgments are true, correct and complete.

<PAGE>

      The liability of Guarantor's officers (including, without limitation, the
undersigned), directors, employees, members, partners, managers, shareholders,
incorporators or agents for the performance and observance of the covenants,
representations and warranties of Guarantor contained this Certificate is
limited in the manner, and subject to the exceptions to such limitation,
described in the Guaranty, reference to which is hereby made for all purposes.

      IN WITNESS WHEREOF, this instrument is executed as of ____________, _____.

                                       BROOKDALE LIVING COMMUNITIES, INC.,
                                       a Delaware corporation

                                       By:   ___________________________________
                                             Name:______________________________
                                             Title:_____________________________