<PAGE>
                                                                 Exhibit 10.43.1

                                  MASTER LEASE

                                     BETWEEN

                     JER/NHP SENIOR LIVING ACQUISITION, LLC,
                      A DELAWARE LIMITED LIABILITY COMPANY;

                       JER/NHP SENIOR LIVING TEXAS, L.P.,
                          A TEXAS LIMITED PARTNERSHIP;

                      JER/NHP SENIOR LIVING WISCONSIN, LLC,
                    A DELAWARE LIMITED LIABILITY COMPANY; AND

                       JER/NHP SENIOR LIVING KANSAS, INC.,
                              A KANSAS CORPORATION

                           COLLECTIVELY AS "LANDLORD"

                                       AND

                               ALS LEASING, INC.,
                           A DELAWARE CORPORATION; AND

                        ASSISTED LIVING PROPERTIES, INC.,
                              A KANSAS CORPORATION

                            COLLECTIVELY AS "TENANT"


                              DATED: APRIL 9, 2002
<PAGE>
<TABLE>
<S>                                                                          <C>
1.   Term.....................................................................2

2.   Rent.....................................................................2

     2.1       Initial Term Minimum Rent......................................2

     2.2       Landlord's Investment; Rent Adjustments........................3

     2.3       Renewal Term Minimum Rent......................................3

     2.4       Rent Caps and Floors...........................................4

     2.5       Manlius Rent...................................................4

     2.6       Payment Terms..................................................6

     2.7       Absolute Net Lease.............................................6

3.   Late Charges.............................................................6

4.   Security Deposit; Collateral for Lease Obligations.......................6

5.   Taxes and Other Charges..................................................7

     5.1       Tenant's Obligation............................................7

     5.2       Protests.......................................................8

     5.3       Tax Impound and Escrow.........................................8

6.   Insurance................................................................9

     6.1       Requirements...................................................9

     6.2       Exceptions to Insurance Requirements..........................11

     6.3       Reimbursement of Landlord's Insurance Costs...................11

     6.4       Determination of Commercial Reasonableness....................11

7.   Use, Regulatory Compliance and Preservation of Business.................12

     7.1       Permitted Use; Qualified Care.................................12

     7.2       Regulatory Compliance.........................................12

     7.3       Preservation of Business......................................13

     7.4       Coverage Ratio................................................13

8.   Acceptance, Maintenance, Upgrade, Alteration and Environmental..........14

     8.1       Acceptance "AS IS"; No Liens..................................14

     8.2       Tenant's Maintenance Obligations..............................14

     8.3       Upgrade Expenditures..........................................14

     8.4       Alterations by Tenant.........................................15

     8.5       Hazardous Materials...........................................16

9.   Tenant Property and Security Interest...................................16

     9.1       Tenant Property...............................................16
</TABLE>

                                      -i-
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<TABLE>
<S>                                                                          <C>
     9.2       Landlord's Security Interest and Financing Statements.........17

10.  Financial, Management and Regulatory Reports............................18

11.  Representations and Warranties..........................................18

     11.1      By Landlord...................................................18

     11.2      By Tenant.....................................................18

12.  Events of Default.......................................................20

     12.1      Occurrence....................................................21

13.  Remedies................................................................22

     13.1      General.......................................................22

     13.2      Tenant Repurchase/Receivership................................23

     13.3      Remedies Cumulative; No Waiver................................23

     13.4      Performance of Tenant's Obligations...........................24

14.  Provisions on Termination...............................................24

     14.1      Surrender of Possession.......................................24

     14.2      Removal of Tenant Personal Property...........................24

     14.3      Management of Premises........................................25

     14.4      Holding Over..................................................25

     14.5      Survival......................................................25

15.  Certain Landlord Rights.................................................25

     15.1      Entry and Examination of Records..............................25

     15.2      Grant Liens; Change in Zoning.................................26

     15.3      Subordination, Attornment and Nondisturbance..................26

     15.4      Estoppel Certificates.........................................26

     15.5      Conveyance Release............................................26

16.  Assignment and Subletting...............................................26

17.  Damage by Fire or Other Casualty........................................27

18.  Condemnation............................................................28

19.  Indemnification.........................................................28

20.  Attorneys Fees; Disputes................................................28

21.  Notices.................................................................29

22.  Miscellaneous...........................................................30

23.  Wisconsin Purchase Facilities...........................................31

     23.1      Tenant Purchase Option........................................31
</TABLE>

                                      -ii-
<PAGE>
<TABLE>
<S>                                                                          <C>
     23.2      Landlord Disposition Rights...................................32

     23.3      Adjustment to Landlord's Investment...........................32

24.  Quiet Enjoyment.........................................................32

25.  Landlord Maintenance Obligation.........................................32

     25.1      Maintenance Contractors.......................................32

     25.2      Request for Service...........................................32

     25.3      Costs and Expenses............................................33

     25.4      Report on Activities..........................................33

     25.5      Transition....................................................33

26.  Advisory Fee............................................................33
</TABLE>

EXHIBITS AND SCHEDULES:

EXHIBIT A      LEGAL DESCRIPTIONS

EXHIBIT B      LANDLORD PERSONAL PROPERTY

EXHIBIT C      FAIR MARKET VALUE

EXHIBIT D      PERMITTED EXCEPTIONS

EXHIBIT E      CERTAIN DEFINITIONS

EXHIBIT F      FINANCIAL, MANAGEMENT AND REGULATORY REPORTS

SCHEDULE 1A    LANDLORD ENTITIES

SCHEDULE 1B    TENANT ENTITIES

SCHEDULE 2     FACILITY INFORMATION: BUSINESS, BEDS, TRADENAMES, ETC.

SCHEDULE 3     EXCEPTIONS TO INSURANCE REQUIREMENTS

SCHEDULE 4     EXISTING FACILITIES EXEMPT FROM RADIUS RESTRICTION

SCHEDULE 5     EXCEPTIONS TO TENANT'S REPRESENTATIONS AND WARRANTIES

SCHEDULE 6     INITIAL CAPITAL EXPENDITURE ITEMS

SCHEDULE 7     WISCONSIN PURCHASE FACILITIES

SCHEDULE 8     MANLIUS FINANCING DOCUMENTS

                                      -iii-
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<PAGE>

                                  MASTER LEASE
                                (MEDITRUST POOL)

      This "MASTER LEASE" is entered into effective as of April 9, 2002 (the
"EFFECTIVE DATE") among the ENTITIES LISTED ON SCHEDULE 1A (collectively,
"LANDLORD"), and ALS LEASING, INC., a Delaware corporation ("ALS LEASING"), and
ASSISTED LIVING PROPERTIES, INC., a Kansas corporation ("ALP" and, collectively
with ALS Leasing, "TENANT"), for the respective real properties and improvements
thereon (collectively, the "FACILITIES") as set forth on Schedules 1A and 1B and
as legally described on Exhibit A and the "LANDLORD PERSONAL PROPERTY"
associated therewith as described in Exhibit B or as may be acquired after the
Effective Date (collectively, the "PREMISES"), each used as a licensed
healthcare facility of the type described on Schedule 2 (individually as so
utilized, and collectively, the "BUSINESS"). Landlord and Tenant have also
concurrently entered into a LETTER OF CREDIT AGREEMENT (the "LC AGREEMENT")
pursuant to which Tenant shall provide certain collateral to Landlord for the
performance of its obligations under this Master Lease. Pursuant to its
concurrent GUARANTY OF MASTER LEASE AND LETTER OF CREDIT AGREEMENT (the
"GUARANTY"), Alterra Healthcare Corporation, a Delaware corporation
("GUARANTOR"), has guaranteed Tenant's obligations hereunder. In consideration
of the mutual covenants, conditions and agreements set forth herein, Landlord
hereby leases the Premises to Tenant for the Term upon the terms and conditions
provided below. Certain capitalized terms used in this Master Lease are defined
on Exhibit E.

                    RECOGNITION OF INDIVISIBLE MASTER LEASE;
                      IRREVOCABLE WAIVER OF CERTAIN RIGHTS

      Tenant and Guarantor each acknowledge and agree that this Master Lease
constitutes a single, indivisible lease of the entire Premises, and the Premises
constitutes a single economic unit. The Minimum Rent, other Rent payable
hereunder and all other provisions contained herein have been negotiated and
agreed upon based on the intent to lease the entirety of the Premises as a
single and inseparable transaction, and such Minimum Rent, other Rent and other
provisions would have been materially different had the parties intended to
enter into separate leases or a divisible lease. Any Event of Default under this
Master Lease shall constitute an Event of Default as to the entire Premises.

      Tenant and Guarantor each further acknowledge and agree that Landlord is
entering into this Master Lease as an accommodation to Tenant and Guarantor.
Each of the entities comprising Tenant and Guarantor, in order to induce
Landlord to enter into this Master Lease, to the extent permitted by law:

      A. Agrees, acknowledges and is forever estopped from asserting to the
contrary that the statements set forth in the preceding paragraphs of this
Section are true, correct and complete;

      B. Agrees, acknowledges and is forever estopped from asserting to the
contrary that this Master Lease is a new and de novo lease, separate and
distinct from any other lease between any of the entities comprising Tenant and
any of the entities comprising Landlord that may have existed prior to the date
hereof;


                                      -1-
<PAGE>
      C. Agrees, acknowledges and is forever estopped from asserting to the
contrary that this Master Lease is a single lease pursuant to which the
collective Premises are demised as a whole to Tenant;

      D. Agrees, acknowledges and is forever estopped from asserting to the
contrary that if, notwithstanding the provisions of this Section, this Master
Lease were to be determined or found to be in any proceeding, action or
arbitration under state or federal bankruptcy, insolvency, debtor-relief or
other applicable laws to constitute multiple leases demising multiple
properties, such multiple leases could not, by the debtor, trustee, or any other
party, be selectively or individually assumed, rejected or assigned;

      E. Forever knowingly waives and relinquishes any and all rights under or
benefits of the provisions of the Federal Bankruptcy Code Section 365 (11 U.S.C.
Section 365), or any successor or replacement thereof or any analogous state
law, to selectively or individually assume, reject or assign the multiple leases
comprising this Master Lease following a determination or finding in the nature
of that described in the foregoing Section D.

      1. TERM. The "TERM" of this Master Lease is the Initial Term plus all
Renewal Terms, and a "LEASE YEAR" is the twelve (12) month period commencing on
January 1st of each year of the Term. The "INITIAL TERM" commences on April 10,
2002 and ends on December 31, 2020, and may be extended for two (2) separate
"RENEWAL TERMS" of ten (10) years each if: (A) not more than thirty (30) days
before or after the date that is fifteen (15) months prior to the end of the
then current Term, Tenant delivers to Landlord written notice (a "RENT
DETERMINATION NOTICE") that Tenant desires to determine the applicable Minimum
Rent for a subsequent Renewal Term pursuant to the provisions of Section 2.3
below for the purpose of evaluating whether Tenant desires to exercise its right
to extend the then current Term for one (1) Renewal Term, (B) on or prior to the
date that is twelve (12) months prior to the end of the then current Term,
Tenant delivers to Landlord written notice (a "RENEWAL NOTICE"), which shall be
irrevocable by Tenant, stating that it desires to exercise its right to extend
this Master Lease for one (1) Renewal Term; (C) there is no Event of Default on
the date Landlord receives the Rent Determination Notice (the "EXERCISE DATE"),
the date Landlord receives the Renewal Notice or on the last day of the then
current Term; and (D) the Minimum Rent for the Renewal Term is determined
pursuant to Section 2.3 on or before the date that is twelve (12) months prior
to the end of the then current Term.

      2. RENT. During the Term, Tenant shall pay Landlord "RENT" consisting of
"MINIMUM RENT" determined as provided in this Section 2 and such other sums as
may be described in this Master Lease as Rent. The monthly Minimum Rent for any
month that begins or ends on other than the first or last day of a calendar
month, and the annual Minimum Rent for any Lease Year that begins on other than
the fist day of a Lease Year, shall be prorated based on actual days elapsed.

            2.1 INITIAL TERM MINIMUM RENT. During the Initial Term, "MINIMUM
RENT" per Lease Year is equal to Landlord's Investment (as defined below)
multiplied by the Initial Term Applicable Rate. The "INITIAL TERM APPLICABLE
RATE" for each Lease Year (or portion thereof) shall be (A) the Initial Term
Base Rate (as defined below) for the portion of the Lease Year from the
Effective Date to December 31, 2002, (B) the Initial Term Base Rate plus


                                      -2-
<PAGE>
the CPI Increase (as defined below), not to exceed 30/100ths of one percent
(.30%), for the first (1st) Lease Year, (C) the Initial Term Applicable Rate in
effect in the immediately preceding Lease Year plus the CPI Increase, not to
exceed 30/100ths of one percent (.30%), for the second (2nd) through the fourth
(4th) Lease Years, and (D) the Initial Term Applicable Rate in effect in the
immediately preceding Lease Year plus the CPI Increase, not to exceed 25/100ths
of one percent (.25%), for the fifth (5th) Lease Year and each Lease Year
thereafter during the Initial Term. The "INITIAL TERM BASE RATE" shall be equal
to eleven and one-half percent (11.5%). The "CPI INCREASE" shall be calculated
annually by comparing the CPI (as defined below) in effect on the first calendar
day of the immediately preceding Lease Year (or calendar year with respect to
the first (1st) full Lease Year) to the first calendar day of the then current
Lease Year and multiplying by three (3). The "CPI" shall mean the Consumer Price
Index for All Urban Wage Earners and Clerical Workers, United States Average,
Subgroup "All Items" (1982 - 1984 = 100), as published by the United States
Department of Labor, Bureau of Labor Statistics, or similar index if the same
becomes unavailable

            2.2 LANDLORD'S INVESTMENT; RENT ADJUSTMENTS.

            (A) "LANDLORD'S INVESTMENT" in the Premises, shall mean NINETY-SIX
MILLION FOUR HUNDRED FORTY-FOUR THOUSAND SEVEN HUNDRED NINETY-TWO DOLLARS
($96,444,792), which includes the outstanding principal amount of the Manlius
Financing on the Effective Date, and includes as of the Effective Date the
amount of ONE MILLION FIVE HUNDRED SIXTY-SEVEN THOUSAND TWO HUNDRED TWENTY-TWO
DOLLARS ($1,567,222) representing the sums payable pursuant to Section 26, plus,
as of the date of such funding, the amount of TWO MILLION DOLLARS ($2,000,000)
which may be funded by Landlord into the CapEx Reserve or otherwise made
available to Tenant pursuant to Section 8.3, plus any amount for Alterations
advanced by Landlord pursuant to Section 8.4, plus any amount elected to be
added by Landlord pursuant to Section 13.4, plus any other amount that, in
accordance with any other term of provision of this Master Lease, is to be added
to Landlord's Investment, and minus any net award paid to Landlord for a Partial
Taking pursuant to Section 18, minus any amounts to be subtracted therefrom as a
result of the sale or other disposition of any of the Wisconsin Facilities
pursuant to Section 23.3, minus any other net capital proceeds received by
Landlord for any portion of the Premises sold or conveyed, including any portion
of the Premises as to which Tenant acquires title pursuant to the operation of
the Put set forth in Section 13.2 or otherwise, as to any portion of the
Premises for which this Master Lease is terminated during the Term in accordance
with its terms, and minus any other amount that, in accordance with any other
term of provision of this Master Lease, is to be subtracted from Landlord's
Investment.

            (B) Concurrently with any increase or decrease in Landlord's
Investment during the Term as described in Section 2.2(a), the Minimum Rent then
due and payable for the balance of the applicable Lease Year and Term shall be
recalculated and reset based on the adjusted Landlord's Investment.

            2.3 RENEWAL TERM MINIMUM RENT. To establish a fair market Minimum
Rent for the Premises during the Renewal Terms, the Minimum Rent for each
Renewal Term shall be reset and expressed as an annual amount equal to the
product of: (A) Landlord's Investment in the Premises on the Exercise Date for
such Renewal Term (provided that, if the "FAIR MARKET VALUE" of the Premises on
such Exercise Date as established pursuant to


                                      -3-
<PAGE>
Exhibit C, is greater than the then Landlord's Investment, such Landlord's
Investment shall be adjusted for purposes of this Master Lease to be equal to
such Fair Market Value), and (B) the Renewal Term Applicable Rate. The "RENEWAL
TERM APPLICABLE RATE" for each Lease Year shall be (I) the Renewal Term Base
Rate for the first (1st) Lease Year of each Renewal Term, and (II) the Renewal
Term Applicable Rate in effect in the immediately preceding Lease Year plus the
CPI Increase, not to exceed 25/100ths of one percent (.25%), for the second
(2nd) Lease Year and each other Lease Year of each Renewal Term. The "RENEWAL
TERM BASE RATE" in each Renewal Term shall be a percentage equal to SIX HUNDRED
TWENTY-NINE (629) basis points over the 10-Year U.S. Treasury Rate in effect on
the applicable Exercise Date.

            2.4 RENT CAPS AND FLOORS.

            (A) Notwithstanding any of the other terms of this Master Lease, in
no event shall the Minimum Rent in the first (1st) Lease Year of any Renewal
Term exceed ONE HUNDRED TWENTY-FIVE PERCENT (125%) of the Minimum Rent due for
the last Lease Year of the Initial Term or preceding Renewal Term, as
applicable.

            (B) Notwithstanding any of the other terms of this Master Lease, in
no event shall the Minimum Rent in the first (1st) Lease Year of any Renewal
term be less than ONE HUNDRED PERCENT (100%) of the Minimum Rent due for the
last Lease Year of the Initial Term or preceding Renewal Term, as applicable.

            2.5 MANLIUS RENT.

            (A) Tenant acknowledges that, in connection with Landlord's
acquisition of the Manlius Facility, Tenant has requested that Landlord assume
the Manlius Financing. In consideration thereof, and as additional Rent payable
hereunder, Tenant shall pay as and when due and prior to any delinquency and
without incurring or causing the accrual of any penalty, late charge or default
interest in connection therewith, the Manlius Debt Service. Tenant shall pay the
Manlius Debt Service to the entities, and in the manner, required by the Manlius
Financing Documents. Without limitation of any other provision contained in this
Master Lease or in any of the Manlius Financing Documents, Tenant further
covenants and agrees to fully perform and discharge, at the times and in the
manner required thereunder, all of the undertakings, obligations and
responsibilities of the borrower under the Manlius Financing Documents,
including all reporting, regulatory, indemnity, environmental and maintenance
(subject to Landlord's obligations, if any, under Section 25) requirements. At
no cost or expense to itself, Landlord will reasonably cooperate with Tenant to
fulfill any reporting or similar requirements under the Manlius Financing
Documents that could not reasonably be performed by Tenant in the absence of
such cooperation and will perform all obligations under the Manlius Financing
Documents that could only be performed by Landlord, which are limited to (I) the
requirement that Landlord remain in good standing and not dissolve its existence
and (II) the requirement that Landlord not willfully cause any default under the
Manlius Financing Documents. The amounts actually paid by Tenant and received by
the appropriate payee during any calendar month for Manlius Debt Service
(excluding any penalty, late charge or default interest) shall be credited
against the amount of Minimum Rent payable by Tenant in such month, provided
that (Y) no Event of Default is then continuing, and (Z) the amount of such
credit shall not, in any event, exceed Landlord's yield under this Master Lease
on the principal


                                      -4-
<PAGE>
amount of the Manlius Financing assumed by Landlord. Without in any way limiting
Tenant's obligations to make such payments in accordance with this Section 2.5,
if at any time any payment of Manlius Debt Service is not paid when due, Tenant
shall provide immediate written notice to Landlord of such nonpayment. Tenant
shall from time to time upon reasonable advance request of Landlord provide to
Landlord evidence of payments of Manlius Debt Service or otherwise made in
connection with the Manlius Financing.

            (B) Except to the extent provided to the contrary in the immediately
succeeding sentence, Landlord will pay to the Persons entitled thereto the
outstanding principal amount of the Manlius Financing at the scheduled maturity
thereof, provided that Tenant shall remain responsible for and shall pay when
due all other amounts constituting Manlius Debt Service or otherwise owed in
connection with the Manlius Financing and which are to be paid at such scheduled
maturity. Notwithstanding the foregoing, in the event that the maturity of the
Manlius Financing is accelerated due to a default by Tenant or any Affiliate of
Tenant thereunder or for any other reason except a default by Landlord in
connection with such maturity or otherwise under the Manlius Financing
Documents, Tenant shall be responsible for and shall pay the outstanding
principal amount of the Manlius Financing when due, and all other amounts
constituting Manlius Debt Service or otherwise owed in connection with the
Manlius Financing and which are to be paid at such time. In the event that
Landlord willfully causes or creates any default under the Manlius Financing
Documents resulting in any acceleration thereunder or any penalty, late charge
or default interest, Landlord shall be responsible for and shall pay all
amounts, costs and expenses due under the Manlius Financing Documents on account
of such default, including without limitation all penalties, late charges,
default interest, principal, interest and increased Taxes.

            (C) During the continuance of any Event of Default or any default or
breach by Tenant or any Affiliate of Tenant under the Manlius Financing
Documents after expiration of any period expressly provided for notice, cure or
both, Landlord may (I) in Landlord's sole and absolute discretion, require
Tenant to pay, in whole or in part, all outstanding principal of and other
amounts then due on or in connection with the Manlius Financing, or (II) in its
sole and absolute discretion, but shall be under no obligation to Tenant to, (A)
prepay, in whole or in part, all outstanding principal of and other amounts then
due on or in connection with the Manlius Financing, or (B) make any payment of,
or due on or in connection with, the Manlius Debt Service. Any amount paid by
Landlord pursuant to Section 2.5(c)(ii) shall be treated in accordance with
Section 13.4. Landlord agrees that, except during the continuance of any Event
of Default or any default or breach by Tenant or any Affiliate of Tenant under
the Manlius Financing Documents after expiration of any period expressly
provided for notice, cure or both, it shall not prepay, nor shall it require
Tenant to prepay before scheduled maturity, in whole or in part, the outstanding
principal amount of the Manlius Financing.

            (D) Notwithstanding any other provision of this Section 2.5, in no
event shall Tenant be entitled to a credit against any payment of Minimum Rent
for any payment made by Landlord on or toward the Manlius Financing. In the
event that Landlord receives notice that any payment required by Tenant of
Manlius Debt Service or otherwise on or in connection with the Manlius Financing
was not in fact made as and when required under this Section 2.5, any credit
against Minimum Rent taken on account thereof shall be immediately revoked and
Minimum Rent in the amount of such credit shall be immediately due and payable.


                                      -5-
<PAGE>
            (E) At all times during the Term that the Agency Lease remains in
force and effect, this Master Lease shall be deemed to be a sublease of the
Manlius Facility by Landlord to Tenant subject to the Agency Lease. Concurrently
with any termination of the Agency Lease during the Term, this Master Lease
shall become a prime lease of the Manlius Facility by Landlord to Tenant.

            2.6 PAYMENT TERMS. All Rent and other payments to Landlord shall be
paid by WIRE TRANSFER ONLY. Minimum Rent and all amounts to be paid concurrently
therewith shall be paid in advance in equal monthly installments on or before
the first (1st) business day of each calendar month (or, with respect to the
first such payment due hereunder, on the Effective Date).

            2.7 ABSOLUTE NET LEASE. All Rent payments shall be absolutely net to
Landlord, free of any and all Taxes, Other Charges, and operating or other
expenses of any kind whatsoever, all of which shall be paid by Tenant. Tenant
shall continue to perform its obligations under this Master Lease even if Tenant
claims that it has been damaged by Landlord. Thus, Tenant shall at all times
remain obligated under this Master Lease without any right of set-off,
counterclaim, abatement, deduction, reduction or defense of any kind; provided,
however, that the foregoing shall not preclude (A) Tenant from bringing a
separate action against Landlord for breach of its obligations under Section 24,
or (B) Tenant receiving a credit against Minimum Rent due in any month for
payments made on the Manlius Debt Service pursuant to Section 2.5(a). Tenant's
sole right to recover damages against Landlord under this Master Lease shall be
to prove such damages in a separate action.

      3. LATE CHARGES. The late payment of Rent or other amounts due will cause
Landlord to lose the use of such money and incur administrative and other
expenses not contemplated under this Master Lease. While the exact amount of the
foregoing is extremely difficult to ascertain, the parties agree that as a
reasonable estimate of fair compensation to Landlord, if any Rent or other
amount is not paid (A) on the due date for such payment (without consideration
of any grace period that may be applicable in connection therewith), then Tenant
shall thereafter pay to Landlord on demand a LATE CHARGE equal to FIVE PERCENT
(5%) of such delinquent amounts, and (B) within ten (10) days after the due date
for such payment, such unpaid amount shall ACCRUE INTEREST from such date at the
"AGREED RATE" of FIVE PERCENT (5%) PLUS THE PRIME RATE of interest then charged
by Wells Fargo Bank, N.A., San Francisco, CA.

      4. SECURITY DEPOSIT; COLLATERAL FOR LEASE OBLIGATIONS.

            4.1 Tenant shall maintain with Landlord cash securing Tenant's
faithful performance of its obligations under this Master Lease (the "SECURITY
DEPOSIT"), Letters of Credit (as defined in the LC Agreement) as partial
collateral for the Master Lease obligations or a combination thereof
(collectively, the "SECURITY DEPOSIT AND COLLATERAL"). Each Letter of Credit
shall be in the form set forth in, and shall otherwise be in compliance with the
terms of, the LC Agreement. Neither Letters of Credit, nor any proceeds from any
draw on any Letter of Credit, shall constitute a security deposit or any part of
the Security Deposit hereunder. The amount of the Security Deposit and the
aggregate undrawn face amounts of all Letters of Credit comprising the Security
Deposit and Collateral shall at all times during the Term be equal to, in the
aggregate, TWO MILLION SEVEN HUNDRED THIRTY THOUSAND DOLLARS ($2,730,000), as
may be increased from time to time pursuant to Section 7.1(c), (the "SECURITY
DEPOSIT AND COLLATERAL


                                      -6-
<PAGE>
AMOUNT"). Landlord shall hold the Security Deposit in a separate,
interest-bearing account and all interest earned thereon shall be added to and
become a part of the CapEx Reserve (as defined below).

            4.2 Landlord may apply the Security Deposit and Collateral (cash
from the Security Deposit and proceeds of any draw on a Letter of Credit), in
whole or in part, against any Event of Default, as otherwise permitted in any
Letter Credit or may use such amounts for any other purpose allowed under
applicable law. If Landlord so applies all or any portion of the Security
Deposit and Collateral, Tenant shall, subject to the provisions of Section 4.3,
within five (5) days of such application by Landlord and without the requirement
of notice or demand by Landlord, deposit cash or post additional Letters of
Credit such that the total amount of cash and undrawn face amounts of Letters of
Credit comprising the Security Deposit and Collateral is equal to the Security
Deposit and Collateral Amount.

            4.3 On or before the date (the "REPLACEMENT DATE"), as reasonably
determined by Landlord and Tenant, that Letters of Credit become available to
Tenant on commercially reasonable terms, Tenant shall have replaced the Security
Deposit with Letters of Credit such that, on and after the Replacement Date, the
Security Deposit and Collateral shall be represented entirely by Letters of
Credit. Upon Landlord's receipt of any Letter of Credit provided by Tenant in
exchange for a portion of the Security Deposit pursuant to this Section 4.3,
Landlord shall promptly return to Tenant cash from the Security Deposit in the
amount of the undrawn face amount of the such Letter of Credit. In the absence
of Landlord's prior written approval, which may be granted, withheld or
conditioned in Landlord's sole and absolute discretion, the portion of the
Security Deposit and Collateral represented by Letters of Credit prior to the
Replacement Date shall not be decreased.

            4.4 As additional collateral for the faithful performance by Tenant
of this Master Lease, Guarantor has executed and delivered that certain Stock
Pledge Agreement (the "STOCK PLEDGE") dated as of the Effective Date pursuant to
which Guarantor has pledged the capital stock of Tenant to Landlord. The value
of, and dividends or other amounts paid on or in connection with the capital
stock held by Landlord pursuant to the Stock Pledge, shall not be a part of
Security Deposit and Collateral, nor considered in the calculation of the
Security Deposit and Collateral Amount.

      5. TAXES AND OTHER CHARGES.

            5.1 TENANT'S OBLIGATION. At the end of the Term, all Taxes and Other
Charges shall be prorated. Landlord shall promptly forward to Tenant copies of
all bills and payment receipts for Taxes or Other Charges received by it.
Subject to Landlord's obligations to make payments from the Tax Escrow to the
extent provided in Section 5.3(a), Tenant shall be responsible for paying and
discharging (including the filing of all required returns), not later than
fourteen (14) days prior to delinquency or imposition of any fine, penalty,
interest or other cost ("PENALTY"), (A) "TAXES", consisting of any property
(real and personal) and other taxes and assessments levied or assessed with
respect to this Master Lease or any portion of the Premises during or prior to
the Term or any amounts due under payment in lieu of taxes or impact fee
agreements or similar arrangements (excluding any income tax of Landlord and any
intangible, mortgage or transfer tax or stamps for its transfer of any interest
in any portion of the Premises to


                                      -7-
<PAGE>
any Person other than Tenant or any of its Affiliates), and (B) "OTHER CHARGES",
consisting of any utilities and other costs and expenses of the Business or any
portion of the Premises and all other charges, obligations or deposits assessed
against any portion of the Premises during or prior to the Term. Unless paid
from the Tax Escrow (as defined below) pursuant to Section 5.3, Tenant may pay
the foregoing in permitted installments (whether or not interest accrues on the
unpaid balance) not later than fourteen (14) days prior to the date when due and
before any Penalty. If Tenant fails to pay as and when due any Tax or Other
Charge, or any Penalty that may be assessed notwithstanding the foregoing
provisions of this Section 5.1, and if thereafter Landlord (in its sole and
absolute discretion) pays such Tax, Other Charge or Penalty with funds other
than those in the Tax Escrow, then, upon its receipt of Landlord's written
notice of payment, Tenant shall pay Landlord an amount equal to any such Tax,
Other Charge or Penalty for which Tenant is liable under this Master Lease.
Tenant shall, prior to the Effective Date, pay all Taxes and Other Charges that
are delinquent as of the day immediately prior to the Effective Date.
Notwithstanding the foregoing provisions of this Section 5.1, Landlord shall
remain named as the landowner and Tax payor on all real property Tax records
concerning the Premises.

            5.2 PROTESTS. Each party has the right, but not the obligation, in
good faith to protest or contest (a "PROTEST") in whole or in part (A) the
amount or payment of any Taxes or Other Charges and (B) the existence, amount or
validity of any Lien (as defined in Section 8.1) by appropriate proceedings
sufficient to prevent its collection or other realization and the sale,
forfeiture or loss of any portion of the Premises or Rent to satisfy it (so long
as it provides Landlord with reasonable security to assure the foregoing). If
Tenant elects to pursue a Protest, Tenant shall diligently prosecute such
Protest at its sole cost and expense and pay such Taxes, Other Charges or Lien
before the imposition of any Penalty. Landlord will cooperate fully in any
Protest that involves an amount assessed against it.

            5.3 TAX IMPOUND AND ESCROW.

            (A) Commencing with the first (1st) business day of the seventh
(7th) full calendar month after the Effective Date, Tenant shall include with
each Minimum Rent payment a deposit of ONE-TWELFTH (1/12TH) of the amount
required to discharge the annual amount of real property Taxes secured by a Lien
encumbering any portion of the Premises as and when they become due. The
deposits shall be held in escrow (the "TAX ESCROW") in a separate,
interest-bearing account, which interest shall be added to and become a part of
the Tax Escrow. The deposits in the Tax Escrow shall not be held by Landlord in
trust or as an agent of Tenant, and Tenant acknowledges that the impounding of
such funds in the Tax Escrow shall constitute a true escrow, and that Tenant has
no, and hereby waives any, interest in or right or title to any funds escrowed
pursuant to this Section 5.3, whether legal, equitable, beneficial or otherwise.
Provided that the Tax Escrow then contains sufficient funds for payment of the
applicable obligations, the amounts in the Tax Escrow shall be applied by
Landlord directly to the payment of the related obligations in a timely fashion
and prior to the imposition of any Penalty. If any Penalty results from
Landlord's failure to timely make any such payment, such Penalty shall be borne
by Landlord. Without limitation upon Landlord's rights under Section 13.4, if at
any time within thirty (30) days prior to the due date of the applicable Taxes
the deposits shall be insufficient for the payment of such Taxes in full, Tenant
shall within ten (10) days after demand by Landlord deposit the deficiency with
Landlord. If deposits are in excess of the actual obligation, the required
monthly deposits for the ensuing Lease Year shall be reduced


                                      -8-
<PAGE>
proportionately and any such excess at the end of the final Lease Year shall be
refunded to Tenant within thirty calendar (30) days. Tenant shall forward to
Landlord or its designee all Tax bills, bond and assessment statements as soon
as they are received. If Landlord transfers this Master Lease, it shall transfer
all such deposits to the transferee, and Landlord shall thereafter have no
liability of any kind with respect thereto.

            (B) Notwithstanding anything to the contrary set forth in Section
5.3(a), Tenant shall deposit the amount of ONE HUNDRED THREE THOUSAND DOLLARS
($103,000) per month into the Tax Escrow with the payments of Minimum Rent due
for the first six (6) months of Term, such that the balance of the Tax Escrow
shall equal at least SIX HUNDRED EIGHTEEN THOUSAND DOLLARS ($618,000) after such
six (6) month period. Thereafter, Tenant shall commence depositing into the Tax
Escrow the amounts described in Section 5.3(a) with the payment of Minimum Rent
due for the seventh (7th) month of the Term. If any Tax or Other Charge is due
during the first six (6) months of the Term, Tenant shall pay such amount
directly to the Person entitled to receive the same as described in Section 5.1,
and Landlord shall have no obligation to pay the same from the Tax Escrow.

      6. INSURANCE.

            6.1 REQUIREMENTS. All insurance provided for in this Master Lease
shall (I) be maintained under valid and enforceable policies issued by insurers
licensed and approved to do business in the state(s) where the applicable
Facility or portion of the Premises is located and having general policyholders
and financial ratings of not less than "A-" and "X", respectively, in the then
current Best's Insurance Report, and a claims paying ability rating from S&P of
at least AA and the equivalent rating of at least one other rating agency,
unless in either case Landlord agrees in the exercise of its reasonable judgment
that the required insurance would not be available to Tenant on commercially
reasonable terms from insurers with such ratings, (II) name Landlord as an
additional insured and, for the casualty policy referenced in this Section 6.1,
as the owner and loss payable beneficiary, (III) be on an "occurrence" basis,
or, to the extent such insurance is not available at commercially reasonable
rates in Landlord's reasonable judgment, on a "claims-made" basis, (IV) cover
all of Tenant's operations at the applicable Facility or portion of the
Premises, (V) provide that the policy may not be canceled except upon not less
than thirty (30) days prior written notice to Landlord, unless Landlord shall
agree, in its reasonable judgment, that insurance is not available to Tenant on
such terms at commercially reasonable rates, and (VI) be primary and provide
that any insurance with respect to any portion of the Premises maintained by
Landlord is excess and noncontributing with Tenant's insurance. The parties
hereby waive as to each other all rights of subrogation which any insurance
carrier, or either of them, may have by reason of any provision in any policy
issued to them, provided such waiver does not thereby invalidate such policy.
Original policies or satisfactory insurer certificates evidencing the existence
of the insurance required by this Master Lease and showing the interest of
Landlord shall be provided to it prior to the commencement of the Term or, for a
renewal policy, not less than ten (10) days prior to the expiration date of the
policy being renewed. If Landlord is provided with a certificate, it may demand
that Tenant provide a complete copy of the related policy within ten (10) days.
Landlord shall review each such policy or certificate and, within a reasonable
time following its receipt thereof, notify Tenant in writing whether the
insurance evidenced by such policy or certificate complies with the requirements
of this Master Lease. During the Term, Tenant shall


                                      -9-
<PAGE>
maintain the following insurance and any claims thereunder shall be adjudicated
by and at the expense of it or its insurance carrier:

            FIRE AND EXTENDED COVERAGE with respect to each Facility against
loss or damage from all causes under standard "all risk" property insurance
coverage with an agreed amount endorsement (such that the insurance carrier has
accepted the amount of coverage and has agreed that there will be no
co-insurance penalty), without exclusion for fire, lightning, windstorm,
explosion, smoke damage, vehicle damage, sprinkler leakage, flood, vandalism,
earthquake, malicious mischief or any other risks normally covered under an
extended coverage endorsement, in amounts that are not less than the actual
replacement value of such Facility and all Tenant Personal Property associated
therewith (including the cost of compliance with changes in zoning and building
codes and other laws and regulations, demolition and debris removal and
increased cost of construction);

            COMMERCIAL GENERAL PUBLIC LIABILITY COVERAGE with respect to each
Facility (including products liability and broad form coverage) against claims
for bodily injury, death or property damage occurring on, in or about such
Facility, affording the parties protection of not less than Five Million Dollars
($5,000,000) for bodily injury or death to any one person, not less than Ten
Million Dollars ($10,000,000) for any one accident, and not less than One
Million Dollars ($1,000,000) for property damage;

            PROFESSIONAL LIABILITY COVERAGE with respect to each Facility for
damages for injury, death, loss of service or otherwise on account of
professional services rendered or which should have been rendered, in a minimum
amount of Five Million Dollars ($5,000,000) per claim and Ten Million Dollars
($10,000,000) in the aggregate;

            WORKER'S COMPENSATION COVERAGE with respect to each Facility for
injuries sustained by Tenant's employees in the course of their employment and
otherwise consistent with all applicable legal requirements;

            BOILER AND PRESSURE VESSEL COVERAGE with respect to each Facility on
any fixtures or equipment which are capable of bursting or exploding, in an
amount not less than Five Million Dollars ($5,000,000) for resulting damage to
property, bodily injury or death and with an endorsement for boiler business
interruption insurance;

            BUSINESS INTERRUPTION AND EXTRA EXPENSE COVERAGE with respect to
each Facility for loss of rental value for a period not less than one (1) year,
provided that, so long as Tenant continues to pay all Rent and other amounts due
hereunder and no other Event of Default exists, Tenant shall be entitled to
receive all proceeds of such business interruption insurance; and

            DEDUCTIBLES/SELF-INSURED RETENTIONS for the above policies shall not
be greater than Fifty Thousand Dollars ($50,000), and Landlord shall have the
right at any time to require a lower such amount or set higher policy limits, to
the extent commercially available and reasonable and customary for similar
properties. At such times and only so long as policies of insurance with
deductibles or self-insured retentions not greater than FIFTY THOUSAND DOLLARS
($50,000) are generally not available to operators of assisted living facilities
owned by


                                      -10-
<PAGE>
institutional landlords and similar to the Facilities at commercially reasonable
rates, as jointly determined by Landlord and Tenant in their respective
reasonable judgment, the deductibles or self-insured retentions on the policies
of insurance required hereunder may be in such greater amount, as jointly
determined by Landlord and Tenant in their respective reasonable judgment, that
would result in the applicable policies being available at commercially
reasonable rates, not to exceed TWO HUNDRED FIFTY THOUSAND DOLLARS ($250,000).

            6.2 EXCEPTIONS TO INSURANCE REQUIREMENTS. Tenant has advised
Landlord that, to the extent described on Schedule 3, it is not in compliance as
of the Effective Date with the requirements set forth in Section 6.1. Tenant
nonetheless represents and warrants to Landlord that the policies of insurance
(including the deductible or self-insured retention provisions thereof) and risk
management programs that Tenant has in effect as of the Effective Date are, and
as may be in effect at any time during the Term will be, consistent with custom,
practice and prudent management standards in the business and industry in which
Tenant is engaged. As and when insurance meeting the requirements set forth in
Section 6.1 becomes generally available to operators of assisted living
facilities owned by institutional landlords and similar to the Facilities at
commercially reasonable rates, as jointly determined by Landlord and Tenant in
their respective reasonable judgment, Tenant shall purchase and maintain such
insurance. Tenant's non-compliance with the requirements of Section 6.1 shall
not give rise to an Event of Default so long as (I) no other Event of Default
then exists, (II) such non-compliance is limited to the matters described on
Schedule 3, (III) the representations and warranties set forth in this Section
6.2 remain true, correct and complete in all respects, and (IV) Tenant is in
compliance with the other covenants contained in this Section 6.2 and Section
6.3.

            6.3 REIMBURSEMENT OF LANDLORD'S INSURANCE COSTS. During any Lease
Year or portion thereof in which Tenant is not in compliance with the provisions
of Section 6.1 (without consideration of the effect of Section 6.2), Tenant
shall reimburse Landlord, within ten (10) days of Landlord's demand therefor,
for the costs of the premiums of the general liability and environmental
insurance policies maintained by Landlord, or contributions to self-insurance in
lieu thereof, in connection with the Premises, which amount shall not exceed in
any Lease Year the amount of TWO HUNDRED THOUSAND DOLLARS ($200,000) (as
adjusted at the end of each Lease Year for increases since the Effective Date in
the CPI). Tenant shall have no right to receive any proceeds or other benefits
from any such insurance. For purposes of this Section 6.3, Tenant shall not be
in compliance with Section 6.1 (without consideration of the effect of Section
6.2) at any such time that any insurance required hereunder is provided to
Tenant by or through the "captive" insurance company described on Schedule 3, or
any other similar captive insurance company.

            6.4 DETERMINATION OF COMMERCIAL REASONABLENESS. In the event that
Landlord and Tenant are unable to agree on any matter in this Section 6
requiring a determination of commercial reasonableness, such determination shall
be made by a reputable insurance company, consultant or expert (an "INSURANCE
ARBITRATOR") with experience in the assisted living insurance industry as
identified by Landlord in the exercise of its reasonable judgment. As a
condition to a determination of commercial reasonableness with respect to any
particular matter, the Insurance Arbitrator shall be capable of providing,
procuring or identifying particular policies or coverages that would be
available to Tenant and would satisfy the requirement in issue. The
determinations made by any such experts shall be binding on Landlord


                                      -11-
<PAGE>
and Tenant for purposes of this Section 6, and the costs, fees and expenses of
the same shall be borne by Tenant.

      7. USE, REGULATORY COMPLIANCE AND PRESERVATION OF BUSINESS.

            7.1 PERMITTED USE; QUALIFIED CARE.

            (A) Tenant shall continuously use and occupy each Facility during
the Term as a licensed facility engaged in the respective Business described on
Schedule 2 with not less than the applicable number of beds or living units
shown on Schedule 2 (with respect to each Facility, the "REQUIRED BED COUNT"),
and for ancillary services relating thereto, but for no other purpose.
Notwithstanding the foregoing, Tenant may permit at any one time the number of
beds or living units, as applicable, at no more than twenty (20) individual
Facilities (and not in the aggregate) to be one (1) bed or unit less than the
Required Bed Count in such Facilities.

            (B) Tenant shall not allow the average occupancy for any trailing
three (3) month period (I) to be less than forty percent (40%) of the applicable
number of beds or living units, as applicable, shown on Schedule 2, for more
than four (4) individual Facilities at any time that the Coverage Ratio for the
immediately preceding calendar quarter was less than 1.4:1.0, or (II) to be less
than sixty-five percent (65%) of the applicable number of beds or living units,
as applicable, shown on Schedule 2, for all Facilities on an aggregate basis.

            (C) Provided that the Coverage Ratio for the immediately preceding
calendar quarter was at least 1.20:1.00, in the event that of any non-compliance
with the requirements of Section 7.1(b)(i), or in the event of any Loss of
Licensure (as defined below) affecting any Facility, no Event of Default shall
arise if, within five (5) days of Landlord's receipt of notice of such
non-compliance or Loss of Licensure, as applicable, Tenant increases the
Security Deposit and Collateral then held by Landlord by an amount equal to TWO
HUNDRED THOUSAND DOLLARS ($200,000) for each additional Facility with
non-complying average occupancy and for each Facility subject to a Loss of
Licensure, as applicable, which amounts shall be held by Landlord pursuant to
Section 4 until Tenant has achieved compliance with the requirements of Section
7.1(b)(i) for two (2) consecutive trailing three (3) month periods or has
completely remedied the Loss of Licensure, as applicable. Tenant's right under
this Section 7.1(c) to cure or prevent any Event of Default from arising for
non-compliance with the requirements of Section 7.1(b)(i) or for any Loss of
Licensure shall terminate at such time as Tenant has exercised such right with
respect to Facilities containing in the aggregate three hundred fifty (350) or
more beds or living units, as applicable.

            7.2 REGULATORY COMPLIANCE . Tenant, each Facility and the other
portions of the Premises shall comply in all material respects with all
licensing and other laws and all CC&R's and other use or maintenance
requirements applicable to the Business conducted thereon and, to the extent
Tenant elects to participate in the same or as may be required by law to serve
its resident population, all Medicare, Medicaid and other third-party payor
certification requirements, including timely filing properly completed cost and
other required reports, timely paying all expenses shown thereon, and ensuring
that, to the extent Tenant has elected to participate in the same or as required
by law to serve its respective resident population, each Facility continues to
be fully certified for participation in Medicare and Medicaid throughout the


                                      -12-
<PAGE>
Term and when each such Facility is returned to Landlord, all without any
suspension, revocation, decertification or other material limitation other than
those suspensions, revocations, decertifications or other material limitations
under which Tenant was operating immediately prior to the end of the Term.
Further, Tenant shall not commit any act or omission that would in any way
violate any certificate of occupancy affecting the any Facility, result in
closure of the Business conducted at any Facility or result in the sale or
transfer of all or any portion of any related certificate of need, bed rights or
other similar certificate or license. During the Term, all inspection fees,
costs and charges associated with a change of such licensure or certification
("CHANGE OF LICENSURE COSTS") shall be borne solely by Tenant. Notwithstanding
the foregoing, except in the event that the Term has been terminated as a result
of an Event of Default, Tenant shall not be responsible for any Change of
Licensure Costs that would be ordinarily incurred by a new operator of any
Facility under usual custom and practice in the applicable Business (e.g.,
application fees for licensure, costs of training personnel, legal costs in
connection with the same), provided, however, that Tenant shall be required to
effect any repairs to or modifications or Alterations of any Facility as may be
necessary for a prospective new operator to obtain such licenses as may be
required to operate the same consistent with Tenant's prior operation and
otherwise in material compliance with all applicable laws. In all events, Tenant
shall cooperate in good faith, at no out-of-pocket expense to itself, with the
efforts of any prospective new operator of any Facility to obtain licensure.

            7.3 PRESERVATION OF BUSINESS. Tenant acknowledges that a fair return
to Landlord on and protection of its investment in the Premises is dependent, in
part, on Tenant's dedication to the Business and the concentration on each
Facility of similar businesses of Tenant and its Affiliates in the geographical
area of such Facility. Tenant further acknowledges that the diversion of
residents or patient care activities from any Facility to other facilities owned
or operated by Tenant or its Affiliates at any time during the Term will have a
material adverse affect on the value and utility of such Facility. Therefore,
Tenant agrees that during the Term and for a period of one (1) year thereafter,
neither Tenant nor any of its Affiliates shall, without the prior written
consent of Landlord: (I) operate, own, participate in or otherwise receive
revenues from any other business providing services similar to those of the
Business of any Facility within an eight (8) mile radius of such Facility,
provided, however, that Tenant and its Affiliates may continue to operate, own,
manage, participate in or otherwise receive revenues from any of the facilities
listed on Schedule 4 (each an "EXEMPT FACILITY") so long as, after the date
hereof, no aspects of the operations or management of any Exempt Facility are
changed in any manner that results in such Exempt Facility becoming more
competitive with any Facility, provided, however that routine maintenance and
capital expenditures in the ordinary course of business and minor variations in
the number of beds or living units, as applicable, in such other facilities
shall not be deemed to violate the foregoing, (II) except as is necessary to
provide residents or patients with an alternative level of care, recommend or
solicit the removal or transfer of any resident or patient from any Facility to
any other nursing, health care, senior housing or retirement housing facility or
divert actual or potential residents, patients or care activities of the
Business conducted at any Facility to any other facilities owned or operated by
Tenant or its Affiliates or from which they receive any type of referral fees or
other compensation for transfers, or (III) employ for other businesses any
management or supervisory personnel working on or in connection with any portion
of the Business or any Facility.


                                      -13-
<PAGE>
            7.4 COVERAGE RATIO. Tenant shall not permit the ratio (the "COVERAGE
RATIO") of (I) Portfolio EBITDARM to (II) Portfolio Rent Expense to be less that
1.2:1.0 for any fiscal quarter.

      8.    ACCEPTANCE, MAINTENANCE, UPGRADE, ALTERATION AND ENVIRONMENTAL.

            8.1 ACCEPTANCE "AS IS"; NO LIENS. Tenant acknowledges it has leased,
occupied and conducted operations at each Facility under the Meditrust Lease
Documents, that it is presently engaged in operations like the Business
conducted at each Facility in the state where such Facility is located and has
expertise in such industry and, in deciding to enter into this Master Lease, has
not relied on any representations or warranties, express or implied, of any kind
from Landlord. Tenant has examined the condition of title to and thoroughly
investigated the Premises, has selected the Premises to its own specifications,
has concluded that no improvements or modifications to them are required in
order to conduct the Business, and accepts them on an "AS IS" basis and assumes
all responsibility and cost for the correction of any observed or unobserved
deficiencies or violations. Notwithstanding its right to Protest set forth in
Section 5.2, Tenant shall not cause or permit any lien, encumbrance, levy or
attachment (a "LIEN"), except a Permitted Tenant Property Lien (as defined
below) and except as otherwise may be expressly permitted under this Master
Lease, to be placed or assessed against any portion of the Premises or the
operation thereof for any reason.

            8.2 TENANT'S MAINTENANCE OBLIGATIONS. Tenant shall (A) keep and
maintain the Premises in good appearance, repair and condition and maintain
proper housekeeping, (B) promptly make all repairs (interior and exterior,
structural and nonstructural, ordinary and extraordinary, foreseen and
unforeseen) necessary to keep each Facility in good and lawful order and
condition and in substantial compliance with all applicable requirements and
laws relating to the Business conducted thereon, including if Tenant has elected
to participate therein of if otherwise applicable certification for
participation in Medicare and Medicaid, and (C) keep and maintain all Landlord
and Tenant Personal Property in good condition, ordinary wear and tear excepted,
and repair and replace such property consistent with prudent industry practice.

            8.3   UPGRADE EXPENDITURES.

            (A) Tenant shall include with each Minimum Rent payment, starting
with the twenty-fifth (25th) month of the Term, a deposit to be added to a
reserve (the "CAPEX RESERVE") equal to one-twelfth (1/12th) of the amount equal
to (I) TWO HUNDRED FIFTY DOLLARS ($250) (as adjusted at the end of each Lease
Year for increases since the Effective Date in the CPI, the "CAPEX AMOUNT"),
multiplied by (II) the aggregate number of living units or beds, as applicable,
in all of the Facilities on the date such payment is due. This reserve shall
bear interest, which shall be added to and become a part thereof. Landlord shall
not be deemed to hold the same in trust or as an agent for Tenant. Tenant
acknowledges that the impounding of such funds in the CapEx Reserve shall
constitute a true escrow, and that Tenant has no, and hereby waives any,
interest in or right or title to any funds escrowed pursuant to this Section
8.3, whether legal, equitable, beneficial or otherwise. From time to time, but
not more often than once in any calendar month and provided that no Event of
Default is then continuing, Landlord will pay to Tenant amounts from the CapEx
Reserve to reimburse Tenant for Upgrade Expenditures made by Tenant during the
prior rolling thirty-six (36) month period during the


                                      -14-
<PAGE>
Term (or portion thereof), as reasonably determined by Landlord based on
evidence of such expenditures submitted by Tenant (which shall be in
substantially the same form utilized by Nationwide Health Properties and Tenant
(or their respective affiliates) for such purposes); provided that such amount
shall not exceed with respect to any individual Facility in any rolling
thirty-six (36) month period during the Term, three (3) times the CapEx Amount
multiplied by the average number of living units or beds, as applicable, in such
Facility over such period. Landlord shall make the reimbursements to Tenant
required hereunder within twenty-one (21) days after satisfaction of all
conditions to such reimbursement. Upon reasonable advance request, Landlord may
require Tenant to procure mechanic's lien waivers, in form and substance
reasonably satisfactory to Landlord, in connection with any Upgrade Expenditures
in excess of ONE THOUSAND DOLLARS ($1,000). "UPGRADE EXPENDITURES" means
expenditures in commercially reasonable amounts to Persons not affiliated with
Tenant for (I) upgrades or improvements to each Facility that have the effect of
maintaining or improving its competitive position in its respective marketplace,
including new or replacement wallpaper, tiles, window coverings, lighting
fixtures, painting, upgraded landscaping, carpeting, architectural adornments,
common area amenities and the like, but excluding capital improvements or
repairs (including repairs or replacements of the roof, structural elements of
the walls, parking area or the electrical, plumbing, HVAC or other mechanical or
structural systems), and (II) other improvements to each Facility as reasonably
approved by Landlord, which shall include those matters, if any, that Landlord
has approved in writing as of the Effective Date based on descriptions and
budgets that Tenant has provided prior thereto. Any amount remaining in the
CapEx Reserve at the expiration of the Term or earlier termination of this
Master Lease shall be retained by Landlord as additional or supplemental Rent
hereunder.

            (B) Upon Landlord receiving the proceeds of both tranches of the
mortgage loan to be made in connection with Landlord's acquisition of the
Premises (collectively, the "ACQUISITION LOAN"), Landlord shall fund TWO MILLION
DOLLARS ($2,000,000) (the "INITIAL CAPEX FUNDING") into the CapEx Reserve to be
used in accordance with this Section 8.3(b). However, in the event that the
Acquisition Loan is not funded on or before the date that is forty-five (45)
days after the Effective Date, in lieu of the initial funding of the CapEx
Reserve, Landlord shall make available to Tenant funds in the amount of TWO
MILLION DOLLARS ($2,000,000), which shall constitute the Initial CapEx Funding,
and shall be used by Tenant for the purposes described herein. The Initial CapEx
Funding shall made available to Tenant pursuant to the procedures described in
Section 8.3(b) for purposes of reimbursing Tenant for expenses incurred only in
connection with the capital expenditures described on Schedule 6 (the "INITIAL
CAPEX ITEMS"). Landlord and Tenant acknowledge that the schedule attached as
Schedule 6 as of the Effective Date is preliminary in nature and that Tenant may
replace the same with a final schedule in form and substance reasonably
acceptable to Landlord within forty-five (45) days after the Effective Date. Any
portion of the Initial CapEx Funding remaining unused at the end of the
twenty-fourth (24th) month of the Term shall be returned to Landlord and
thereafter become unavailable to Tenant for the purposes described in this
Section 8.3(b). Landlord's Investment shall be concurrently reduced by any
amount so returned to Landlord, and Landlord shall promptly refund to Tenant the
amount of Minimum Rent paid by Tenant in connection with such returned amount.

            8.4 ALTERATIONS BY TENANT. Tenant may alter, improve, exchange,
replace, modify or expand (collectively, including any work performed in
connection with any Upgrade


                                      -15-
<PAGE>
Expenditure, "ALTERATIONS") the Facilities, equipment or appliances in the
Premises from time to time as it may determine is desirable for the continuing
and proper use and maintenance of the Premises; provided, that any Alterations
(except for the Initial CapEx Items) in excess of SEVEN HUNDRED FIFTY DOLLARS
($750) per bed or living unit, as applicable, with respect to any individual
Facility in any rolling twelve (12) month period shall require Landlord's prior
written consent; provided further, that any Alterations to the Premises must
satisfy the requirements set forth in Sections 4(4).02 and .03 of Revenue
Procedure 75-21, 1975-1 C.B. 715, as modified by Revenue Procedure 79-48, 1979-2
C.B. 529. All Alterations shall immediately become a part of the Premises and
the property of Landlord subject to this Master Lease, and except to the extent
that Landlord in its sole and absolute discretion agrees to fund them following
Tenant's written request therefor, the cost of all Alterations or other
purchases, whether undertaken as an on-going licensing, Medicare, Medicaid or
other regulatory requirement, or otherwise shall be borne solely by Tenant. Any
amounts so funded by Landlord shall (I) concurrently with such funding be added
to Landlord's Investment, and (II) shall not, unless expressly agreed by
Landlord to the contrary, in its sole and absolute discretion, constitute
Upgrade Expenditures. All Alterations shall be done in a good and workmanlike
manner in compliance with all applicable laws and the insurance required under
this Master Lease. Notwithstanding the foregoing, any equipment acquired by
Tenant at Tenant's sole cost and expense that expands the services provided to
the residents of any Facility, rather than replaces existing equipment at such
Facility, or replaces existing Tenant Personal Property, or is otherwise
permitted under Section 9.2, and that does not constitute a fixture (under the
real property law of the State in which such Facility is located), shall
constitute Tenant Personal Property subject to the security interest granted to
Landlord in Section 9.2. So long as there is no continuing Event of Default,
Tenant may remove at any time and dispose of the equipment described in the
preceding sentence free and clear of an security interest of Landlord. Tenant
further agrees to (X) periodically, but not less than once per fiscal quarter,
provide Landlord with information regarding all Alterations and general
maintenance activities that Tenant has engaged in or intends to engage in during
the succeeding fiscal quarter with respect to the Premises, and (Y) make
appropriate officers available periodically for consultation with
representatives of Landlord with respect to matters relating to ongoing
Alterations to, and the general maintenance of, the Premises.

            8.5 HAZARDOUS MATERIALS. Tenant's use of the Premises (I) shall
comply with all Hazardous Materials Laws, (II) shall not result in any Hazardous
Materials Claims and (III) shall not involve any Environmental Activities. If
(X) any Environmental Activities occur, (Y) if Landlord or Tenant receive any
notice of any Hazardous Materials Claims, or (Z) if Tenant's use of any portion
of the Premises results in any violation of any Hazardous Materials Law, or
Landlord has a reasonable belief that any of the foregoing has occurred, then
Tenant shall promptly obtain all permits and approvals necessary to remedy any
such actual or suspected problem through the removal of Hazardous Materials or
otherwise, and upon Landlord's approval of the remediation plan, remedy any such
problem to the satisfaction of Landlord and all applicable governmental
authorities, in accordance with all Hazardous Materials Laws and good business
practices. Tenant shall immediately advise Landlord in writing of (A) any
Environmental Activities, (B) any violation of any Hazardous Materials Laws; (C)
any Hazardous Materials Claims against Tenant or any portion of the Premises;
(D) any remedial action taken by Tenant in response to any Hazardous Materials
Claims or any Hazardous Materials on, under or about any portion of the Premises
in violation of any Hazardous Materials Laws; (E) Tenant's discovery of any
occurrence or condition on or in the vicinity of any portion of the Premises
that


                                      -16-
<PAGE>
materially increase the risk that any portion of the Premises is or will be
exposed to Hazardous Materials; and (F) all communications to or from Tenant,
any governmental authority or any other Person relating to Hazardous Materials
Laws or Hazardous Materials Claims with respect to any portion of the Premises,
including copies thereof. Notwithstanding any other provision of this Master
Lease, if any Hazardous Materials are discovered on, under or about any portion
of the Premises, or any violation of any Hazardous Materials Law or any
Hazardous Materials Claim occurs, the Term shall be automatically extended and
this Master Lease shall remain in full force and effect until the earlier to
occur of the completion of all remedial action or monitoring, as approved by
Landlord, in accordance with all Hazardous Materials Laws, or the date specified
in a written notice from Landlord to Tenant terminating this Master Lease (which
date may be subsequent to the date upon which the Term was to have expired).
Landlord shall have the right, at Tenant's sole cost and expense (including,
without limitation, Landlord's reasonable attorneys' fees and costs) and with
counsel chosen by Landlord, to join, participate in and direct, as a party if it
so elects, any legal proceedings or actions initiated in connection with any
Hazardous Materials Claims.

      9. TENANT PROPERTY AND SECURITY INTEREST; LANDLORD PERSONAL PROPERTY.

            9.1 TENANT PROPERTY. Tenant shall obtain, install, maintain and
update all items of furniture, fixtures, supplies and equipment not included as
Landlord Personal Property as shall be necessary or reasonably appropriate to
operate each Facility in compliance with this Master Lease "TENANT PERSONAL
PROPERTY" and with "TENANT INTANGIBLE PROPERTY", "TENANT PROPERTY"). "TENANT
INTANGIBLE PROPERTY" means all the following at any time owned by Tenant in
connection with its use of any portion of the Premises: Medicare, Medicaid and
other accounts and proceeds thereof; rents, profits, income or revenue derived
from such operation or use; all documents, chattel paper, instruments, contract
rights (including contracts with residents, employees and third-party payors),
deposit accounts, general intangibles and choses in action; refunds of any Taxes
or Other Charges; licenses and permits necessary or desirable for Tenant's use
of any portion of the Premises, including any applicable certificate of need or
other similar certificate, and the exclusive right to transfer, move or apply
for the foregoing and manage the Business conducted at any portion of the
Premises (including the right to apply for permission to reduce the licensed bed
complement, take any of the licensed beds out of service or move the beds to a
different location); and the right to use, at no cost, expense or royalty, for
up to three (3) years following the termination of this Master Lease for any
reason other than the expiration of the then Term or the default by Landlord,
the names "Clare Bridge," "Wynwood" and "Sterling House" and all reasonable
variations and replacements or substitutions thereof.

            9.2   LANDLORD'S SECURITY INTEREST AND FINANCING STATEMENTS.

            (A) The parties intend that if Tenant defaults under this Master
Lease, Landlord will control the Tenant Personal Property and the Tenant
Intangible Property (to the extent assignable in accordance with applicable law
and with the applicable terms and provisions thereof) so that Landlord or its
designee can operate or re-let each Facility and associated personal property
intact for use as a licensed facility engaged in the applicable Business.
Therefore, to implement the intention of the parties, and for the purpose of
securing the payment and performance of Tenant's obligations under this Master
Lease, Tenant, as debtor, hereby grants to Landlord, as secured party, a
security interest in and an express contractual Lien upon,


                                      -17-
<PAGE>
all of Tenant's right, title and interest in and to the Tenant Personal Property
and the Tenant Intangible Property (to the extent assignable in accordance with
applicable law and with the applicable terms and provisions thereof) and any and
all products and proceeds thereof, in which Tenant now owns or leases or
hereafter acquires an interest or right, but expressly excluding Excluded Tenant
Property except to the extent provided to the contrary in Section 9.2(b). This
Master Lease constitutes a security agreement covering all such Tenant Personal
Property and Tenant Intangible Property (to the extent assignable in accordance
with applicable law), and Tenant shall keep such Tenant Property free and clear
of all Liens other than Liens in favor of Landlord and, with respect to Excluded
Tenant Property (as defined below) only, Permitted Tenant Property Liens (as
defined below). This security interest and agreement shall survive the
termination of this Master Lease resulting from an Event of Default. Tenant
shall pay all filing and reasonable record search fees and other costs for such
additional security agreements, financing statements, fixture filings and other
documents as Landlord may reasonably require to perfect or continue the
perfection of its security interest.

            (B) Subject to the other provisions of this Section 9.2, Tenant may
obtain, install and maintain and update Excluded Tenant Property, and may grant
security interests and other Liens ("PERMITTED TENANT PROPERTY LIENS") in any
Excluded Tenant Property to Persons other than Landlord. "EXCLUDED TENANT
PROPERTY" shall mean personal property for each Facility the aggregate value of
which does not exceed the lesser of ONE HUNDRED TWENTY FIVE THOUSAND DOLLARS
($125,000) or THREE THOUSAND DOLLARS ($3,000) per bed or living unit, as
applicable, in such Facility, and which shall be strictly limited to: buses,
vans and other vehicles; photocopy machines, fax machines and personal
computers; and employee cell phones and pagers.

            9.3 LANDLORD PERSONAL PROPERTY. Landlord and Tenant acknowledge
that, as of the Effective Date, the Premises does not include any Landlord
Personal Property. In the event that Landlord, in its sole and absolute
discretion, funds the acquisition of any personal property by Tenant after the
Effective Date, all such personal property shall be considered Landlord Personal
Property.

      10. FINANCIAL, MANAGEMENT AND REGULATORY REPORTS. Tenant shall provide
Landlord (and, upon Landlord's prior request, to any lender of Landlord) with
the reports listed in Exhibit F at the time described therein and such other
information about it or the operations of the Premises and Business as Landlord
may reasonably request from time to time. All financial information provided
shall be prepared in accordance with generally accepted accounting principles
consistently applied. If Tenant or any Guarantor becomes subject to any
reporting requirements of the Securities and Exchange Commission during the
Term, it shall concurrently deliver to Landlord such reports as are delivered
pursuant to applicable securities laws. Tenant acknowledges that the failure to
furnish Landlord with any of the statements required by this Section 10 will
cause Landlord to incur costs and expenses not contemplated under this Master
Lease; therefore, if Tenant fails to furnish Landlord with any of the materials
as and when required under this Section 10, Tenant shall pay to Landlord upon
demand the sum of Five Hundred Dollars ($500.00) for each such failure.


                                      -18-
<PAGE>
      11.   REPRESENTATIONS AND WARRANTIES.

            11.1 BY LANDLORD. Landlord represents and warrants to Tenant that:

            (A) this Master Lease and all other documents executed or to be
executed by Landlord in connection herewith have been duly authorized and shall
be binding upon Landlord;

            (B) each entity comprising Landlord is duly formed, validly existing
and in good standing under the laws of the State of its formation and is duly
authorized and qualified to perform this Master Lease within the state(s) where
any portion of the Premises is located; and

            (C) neither this Master Lease nor any other document executed or to
be executed in connection herewith violates the terms of any other agreement of
any entity comprising Landlord.

            11.2 BY TENANT. Tenant represents and warrants to Landlord that:

            (A) this Master Lease and all other documents executed or to be
executed by Tenant in connection herewith have been duly authorized and shall be
binding upon Tenant;

            (B) each entity comprising Tenant is duly formed, validly existing
and in good standing under the laws of the State of its formation and one or
both of such entities is duly authorized and qualified to perform this Master
Lease within the State(s) where any portion of the Premises is located;

            (C) neither this Master Lease nor any other document executed or to
be executed by Tenant or Guarantor in connection herewith violates the terms of
any other agreement of any entity comprising Tenant;

            (D) all documents, plans, surveys and other data or information,
including financial data and information, prepared by or on behalf of Tenant and
provided by or on behalf of Tenant to Landlord in connection with the
transactions contemplated in this Master Lease, including Schedule 2, are true,
correct and complete in all material respects and disclose all material facts
with no material omissions with respect thereto;

            (E) Tenant holds good and marketable title to, and the entire right,
title, and interest in, the Tenant Property, free and clear of any and all
leases, Liens, encumbrances, or other liabilities, except, with respect to the
Excluded Tenant Property only, the Permitted Tenant Property Liens and as
otherwise permitted under Section 9.2;

            (F) there are no Liens encumbering title to any of the Facilities
arising by, through or under Tenant;

            (G) each Facility has available to its boundaries adequate
utilities, including without limitation, adequate water supply, storm and
sanitary sewage facilities, telephone, gas, electricity and fire protection, as
is required for the operation of such Facility as contemplated under this Master
Lease;


                                      -19-
<PAGE>
            (H) except to the extent set forth to the contrary on Schedule 5, to
the best of Tenant's knowledge, the improvements at each Facility and each
portion thereof (I) have been constructed in a good and workmanlike manner, free
from material defects and in material compliance with all applicable laws, and
(II) are in good condition and repair, free from material defects and in
material compliance with all applicable laws and CC&R's;

            (I) except to the extent set forth to the contrary on Schedule 5, to
the best of Tenant's knowledge, each Facility is properly zoned for its current
use and intended use hereunder, and the real property comprising each Facility
and the operation and use thereof, including all boundary line adjustments to
such real property, materially comply with all applicable laws including laws
concerning the subdivision of real property;

            (J) except to the extent set forth to the contrary on Schedule 5, to
the best of Tenant's knowledge, there are not now, and have not been during
Tenant's occupancy of the Premises under the Meditrust Lease Documents, (I) any
Hazardous Materials installed or stored in or otherwise present or existing at,
on, in or under any Facility, (II) any Environmental Activities, (III) any
Hazardous Materials Claims, and (IV) any violation of any Hazardous Materials
Law affecting any Facility;

            (K) except to the extent set forth to the contrary on Schedule 5, to
the best of Tenant's knowledge, there are no soil conditions adversely affecting
any Facility;

            (L) except to the extent set forth to the contrary on Schedule 5,
Tenant has received no notice and to the best of its knowledge has no knowledge
that (I) any government agency or any employee or official thereof considers
that the conduct of the Business at any Facility, or the operation or use of any
Facility for its current use, has failed or will fail to materially comply with
any applicable law, (II) any investigation has been commenced or is contemplated
respecting any such possible or actual failure of the Business conducted at any
Facility, or the operation or use of any Facility for its current use, to
materially comply with any applicable law, other than routine deficiencies noted
in connection with licensing surveys and inspections, each of which is or shall
promptly be addressed in an appropriate plan of correction in accordance with
applicable law, and (III) there are any unsatisfied requests for repairs,
restorations or alterations with regard to the any Facility from any person,
entity or authority, including, any lender, insurance carrier or governmental
authority, other than routine deficiencies noted in connection with licensing
surveys and inspections, each of which is or shall promptly be addressed in an
appropriate plan of correction in accordance with applicable law;

            (M) except to the extent set forth to the contrary on Schedule 5,
there are no material actions, suits or proceedings pending or threatened before
or by any judicial, administrative or union body, any arbiter or any
governmental authority, against or affecting Tenant, or any Facility or any
portion thereof or the transactions contemplated by, or the enforceability of,
this Master Lease, and there are no existing or, to the best of Tenant's
knowledge, proposed or threatened eminent domain or similar proceedings which
would affect title or access to any Facility in any manner whatsoever;

            (N) Tenant or Guarantor has obtained and holds all consents,
approvals, licenses, permits and other permissions related to leasing the
Facilities from Landlord, operating


                                      -20-
<PAGE>
the Facilities as contemplated under this Master Lease and conducting the
Business thereon and the other the matters and transactions contemplated herein
as are required of Tenant or Guarantor under any applicable law;

            (O) except to the extent set forth to the contrary on Schedule 5,
immediately prior to the Effective Date (I) there were no existing breaches of
or defaults or events of default under any Meditrust Lease Document by any
entity comprising Tenant or, to the best of Tenant's knowledge, by any entity
comprising Meditrust Landlord, and (II) all rent, taxes, expenses and other
charges owed by any Tenant under any Meditrust Lease Document to Meditrust
Landlord or any other Person have been paid or otherwise satisfied;

            (P) (I) the Manlius Financing Documents constitute all of the
documents, instruments and agreements evidencing, securing or setting forth the
terms and provisions of the indebtedness secured by the Manlius Facility, and
(II) the outstanding principal balance of the Manlius Financing after
application of the April 1, 2002 payment due thereon is EIGHT HUNDRED
FIFTY-SEVEN THOUSAND ONE HUNDRED NINETY-FOUR AND 99/100 DOLLARS ($857,194.99).

      12.   EVENTS OF DEFAULT.  The occurrence of any of the following
events will constitute an "EVENT OF DEFAULT" on the part of Tenant, and
there shall be no cure period therefor except as otherwise expressly
provided:

            (A) Tenant's failure to pay at or before 3:00 p.m. (California time)
on the second (2nd) business day after the date when due any Rent, Taxes, Other
Charges or other payments required under this Master Lease;

            (B) (I) Subject to the provisions of Section 7.1(c), at any time
that the Coverage Ratio for the immediately preceding calendar quarter was less
than 1.4:1.0, the revocation, suspension or material limitation of any license
required for the operation of any portion of the Business or any portion of the
Premises or, if Tenant has elected to participate therein or if otherwise
required by applicable law, the certification of any portion of the Premises for
provider status under Medicare or Medicaid (together with the events described
in Section 12(c), each a "LOSS OF LICENSURE"); (II) the closure of any portion
of the Business; (III) the sale or transfer of all or any portion of any
certificate of need, bed rights or other similar certificate or license relating
to any portion of the Business or any portion of the Premises; and (IV) the use
of any portion of the Premises other than for a licensed facility engaged in the
applicable Business and for ancillary services relating thereto, (each a
"CATASTROPHIC EVENT OF DEFAULT");

            (C) Subject to the provisions of Section 7.1(c), at any time that
the Coverage Ratio for the immediately preceding calendar quarter was less than
1.4:1.0, any other material suspension, termination or restriction (other than
restrictions of general applicability imposed on the Business or under licenses
necessary to conduct the Business) placed upon Tenant, any portion of the
Premises, any portion of the Business or the ability to admit residents or
patients (e.g., an admissions ban or non-payment for new admissions by Medicare
or Medicaid (provided Tenant has elected to participate therein or the same is
otherwise required by law) resulting from an inspection survey), and such
suspension, termination or restriction continues for more than sixty days (60)
after imposition thereof;


                                      -21-
<PAGE>
            (D) A material default by Tenant or any Guarantor or any Affiliate
of either under (I) the Guaranty, the LC Agreement, the Stock Pledge, (II) any
other lease, agreement or obligation between it and Landlord or any of its
Affiliates which is not cured within any applicable cure period specified
therein, (III) any other lease agreement or obligation between it and Nationwide
Health Properties, Inc. ("NHP") or any of its Affiliates, provided that NHP is
then a member of JER/NHP Senior Housing, LLC, or (IV) under any other obligation
in excess of ONE MILLION DOLLARS ($1,000,000) under any other lease or financing
agreement with any other party and with respect to which such party has
accelerated such obligation or has otherwise exercised any material remedy as a
result of such material default, which material default has not been waived or
cured in accordance with the applicable agreement;

            (E) (I) Any material misstatement or omission of fact in any written
report, notice or communication from Tenant or any Guarantor to Landlord with
respect to Tenant, any Guarantor, the Premises or the Business, or (II) any
representation or warranty made by Tenant in this Master Lease, proves to have
been false, incorrect, misleading or incomplete when made;

            (F)   The failure to perform or comply with (I) the provisions
of Section 6, or (II) the provisions of Section 16;

            (G) (I) Tenant or any Guarantor shall generally not pay its debts as
they become due, or shall admit in writing its inability to pay its debts
generally, or shall make an assignment of all or substantially all of its
property for the benefit of creditors; (II) a receiver, trustee or liquidator
shall be appointed for either of them or any of their property, if within three
(3) business days of such appointment Tenant does not inform Landlord in writing
that they intend to cause such appointment to be discharged or such discharge is
not diligently prosecuted to completion within sixty (60) days after the date of
such appointment; (III) the filing by either of them of a voluntary petition
under any federal bankruptcy or state law to be adjudicated as bankrupt or for
any arrangement or other debtor's relief; or (IV) the involuntary filing of such
a petition against either of them by any other party, unless Tenant within three
(3) business days of such filing informs Landlord in writing of their intent to
cause such petition to be dismissed, such dismissal is diligently prosecuted and
such petition is dismissed within ninety (90) days after filing; or

            (H) The failure to perform or comply with any other provision of
this Master Lease not requiring the payment of money and not set forth in
Sections 12(b)-(g) above unless (I) within three (3) business days of Tenant's
receipt of a notice of default from Landlord, Tenant gives Landlord notice of
its intent to cure such default; and (II) Tenant cures it either (X) within
thirty (30) days after such notice from Landlord or (Y) if such default cannot
with due diligence be so cured because of the nature of the default or delays
beyond the control of Tenant and cure after such period will not have a
materially adverse effect upon any portion of the Premises or any portion of the
Business, then such default shall not constitute an Event of Default if Tenant
uses its best efforts to cure such default by promptly commencing and diligently
pursuing such cure to the completion thereof and cures it within one hundred
twenty (120) days after such notice from Landlord.

      13. REMEDIES. Upon the occurrence of an Event of Default, Landlord may
exercise all rights and remedies under this Master Lease and the laws of the
state(s) where the Premises


                                      -22-
<PAGE>
are located that are available to a lessor of real and personal property in the
event of a default by its lessee, and as to the Tenant Property, all remedies
granted under the laws of such state(s) to a secured party under its Uniform
Commercial Code. Landlord shall have no duty to mitigate damages unless required
by applicable law and shall not be responsible or liable for any failure to
relet any of the Premises or to collect any rent due upon any such reletting.
Tenant shall pay Landlord, immediately upon demand, all expenses incurred by it
in obtaining possession and reletting any of the Premises, including fees,
commissions and costs of attorneys, architects, agents and brokers.

            13.1 GENERAL. Without limiting the foregoing, Landlord shall have
the right (but not the obligation) to do any of the following upon an Event of
Default: (A) sue for the specific performance of any covenant of Tenant as to
which it is in breach; (B) enter upon any portion of the Premises, terminate
this Master Lease, dispossess Tenant from the Premises and/or collect money
damages by reason of Tenant's breach, including the acceleration of all Rent
which would have accrued after such termination and all obligations and
liabilities of Tenant under this Master Lease which survive the termination of
the Term; (C) elect to leave this Master Lease in place and sue for Rent and
other money damages as the same come due; (D) (before or after repossession of
the Premises pursuant to clause (b) above and whether or not this Master Lease
has been terminated) relet any portion of the Premises to such tenant(s), for
such term(s) (which may be greater or less than the remaining balance of the
Term), rent, conditions (which may include concessions or free rent) and uses as
it may determine in its sole discretion and collect and receive any rents
payable by reason of such reletting; and (E) sell any Tenant Property in a
non-judicial foreclosure sale.

            13.2 TENANT REPURCHASE/RECEIVERSHIP. Tenant acknowledges that a
Catastrophic Event of Default will materially and irreparably impair the value
of Landlord's investment in the Premises. Therefore, in addition to its other
rights and remedies, upon a Catastrophic Event of Default Landlord shall have
the right to put the applicable Facility and associated Landlord Personal
Property, if any, to Tenant (the "PUT") and/or, as permitted and provided by
applicable law, petition any appropriate court for the appointment of a receiver
to take possession of the Premises or applicable Facility, to manage the
operation of the Premises or applicable Facility, to collect and disburse all
rents, issues, profits and income generated thereby and to the extent applicable
and possible, to preserve or replace any affected license or provider
certification for the Premises or applicable Facility or to otherwise substitute
the licensee or provider thereof (the "RECEIVERSHIP"). If Landlord exercises the
Put, Tenant shall purchase the applicable portion of the Premises from Landlord
for a cash price equal to the greater of, as attributable to the applicable
portion of the Premises (A) Landlord's Investment plus the product of Landlord's
Investment multiplied by the Initial Term Applicable Rate or Renewal Term
Applicable Rate then in effect, or (B) Fair Market Value on the date of
Landlord's notice of exercise (the "PUT EXERCISE DATE") as established pursuant
to Exhibit C but assuming that such Catastrophic Event of Default did not then
exist, plus all of Landlord's attorneys' fees, costs and expenses incurred in
connection with the Put and the attendant Catastrophic Event. Such purchase
shall be consummated at Tenant's expense within one hundred twenty (120) days of
the Put Exercise Date through an escrow at a national title company selected by
Landlord using the title company's standard sale escrow instructions, without
representations or warranties, any due diligence or other contingencies in favor
of the buyer, and providing that Landlord shall deliver to Tenant title to the
applicable portion of the Premises subject only to the applicable title


                                      -23-
<PAGE>
exceptions shown in Exhibit D (the "PERMITTED EXCEPTIONS"). If Landlord
commences the Receivership, the receiver shall be paid a reasonable fee for its
services and all such fees and other expenses of the Receivership shall be paid
in addition to, and not in limitation of, the Rent otherwise due to Landlord
hereunder. Tenant irrevocably consents to the Receivership upon a Catastrophic
Event of Default and thus stipulates to and agrees not to contest the
appointment of a receiver under such circumstances and for such purposes.
Landlord's right and remedy to obtain a Receivership pursuant to this Section
13.2 shall not prevent, limit or otherwise impair Landlord from seeking or
obtaining the appointment of a receiver upon any Event of Default other than a
Catastrophic Event of Default with respect to all or any portion of the Premises
in accordance with applicable law.

            13.3 REMEDIES CUMULATIVE; NO WAIVER. No right or remedy herein
conferred upon or reserved to Landlord is intended to be exclusive of any other
right or remedy, and each and every right and remedy shall be cumulative and in
addition to any other right or remedy given hereunder or now or hereafter
existing at law or in equity. Any notice or cure period provided herein shall
run concurrently with any provided by applicable law. No failure of Landlord to
insist at any time upon the strict performance of any provision of this Master
Lease or to exercise any option, right, power or remedy contained herein shall
be construed as a waiver, modification or relinquishment thereof as to any
similar or different breach (future or otherwise) by Tenant. Landlord's receipt
of any rent or other sum due hereunder (including any late charge) with
knowledge of any breach shall not be deemed a waiver of such breach, and no
waiver by Landlord of any provision of this Master Lease shall be effective
unless expressed in a writing signed by it.

            13.4 PERFORMANCE OF TENANT'S OBLIGATIONS. If Tenant at any time
shall fail to make any payment or perform any act on its part required to be
made or performed under this Master Lease, after expiration of applicable notice
or cure periods as expressly provided herein, if any, then Landlord may, without
waiving or releasing Tenant from any obligations or default hereunder, make such
payment or perform such act for the account and at the expense of Tenant, and
enter upon any portion of the Premises for the purpose of taking all such action
as may be reasonably necessary. No such entry shall be deemed an eviction of
Tenant. All sums so paid by Landlord and all necessary and incidental costs and
expenses (including reasonable attorneys' fees and expenses) incurred in
connection with the performance of any such act by it, together with interest at
the Agreed Rate from the date of the making of such payment or the incurring of
such costs and expenses, shall at Landlord's option, which may be exercised in
Landlord's sole and absolute discretion, either be payable by Tenant to Landlord
on demand or added to Landlord's Investment.

      14.   PROVISIONS ON TERMINATION.

            14.1 SURRENDER OF POSSESSION. On the expiration of the Term or
earlier termination or cancellation of this Master Lease (the "TERMINATION
DATE"), Tenant shall deliver to Landlord or its designee possession of (A) each
Facility and associated Landlord Personal Property, if any, in a neat and clean
condition and in as good a condition as existed at the date of their possession
and occupancy pursuant to this Master Lease, ordinary wear and tear excepted,
(B) a fully operational Business at each Facility including, at Tenant's sole
cost except to the extent provided to the contrary in Section 7.2, any
Alterations necessitated by, or imposed in


                                      -24-
<PAGE>
connection with, a change of ownership inspection survey for the transfer of
operation of any portion of the Premises to Landlord or its designee, and (C)
provided that Landlord or its designee executes an agreement, in form and
substance reasonably acceptable to such party, confirming its obligation to
maintain such records for a period equal to the longer of (I) the applicable
statute of limitations, or (II) the period required by applicable law, all
patient charts and resident records along with appropriate resident consents if
necessary and copies of all its books and records relating to the Business and
the Premises. Accordingly, Tenant shall not at any time during or after the Term
seek to transfer, surrender, allow to lapse, or grant any security interest or
any other interest in and to the licenses, permits or certifications relating to
any portion of the Business or any portion of the Premises, nor shall Tenant
commit or omit any act that would jeopardize any portion of the Business or any
licensure or certification of any portion of the Premises. Tenant shall
cooperate fully with Landlord or its designee in transferring or obtaining all
necessary licenses and certifications for Landlord or its designee, and Tenant
shall comply with all requests for an orderly transfer of the Business, Facility
licenses, and Medicare and Medicaid certifications and possession at the time of
its surrender of the Premises to Landlord or its designee. Subject to all
applicable laws and to the applicable limitations set forth in Section 14.3,
Tenant hereby assigns, effective upon the Termination Date, all rights to
operate the facility to Landlord or its designee including all required licenses
and permits and all rights to apply for or otherwise obtain them, and all other
nonproprietary Tenant Intangible Property relating to any portion of the
Premises.

            14.2 REMOVAL OF TENANT PERSONAL PROPERTY. Provided that no Event of
Default then exists, in connection with the surrender of the Premises, Tenant
may upon at least five (5) business days prior notice to Landlord remove from
the Premises in a workmanlike manner all Tenant Personal Property, leaving the
Premises in good and presentable condition and appearance, including repair of
any damage caused by such removal; provided that Landlord shall have the right
and option, subject to the approval of any lienholder permitted under Section
9.2, to purchase the Tenant Personal Property (other than the Excluded Tenant
Property) for its then net book value during such five (5) business day notice
period, in which case Tenant shall so convey the Tenant Personal Property (other
than the Excluded Tenant Property) to Landlord by executing a bill of sale in a
form reasonably required by Landlord. If there is any Event of Default then
existing, Tenant will not remove any Tenant Personal Property (including the
Excluded Tenant Personal Property) from the Premises and instead will, on demand
from Landlord, convey it to Landlord for no additional consideration by
executing a bill of sale in a form reasonably required by Landlord. Title to any
Tenant Personal Property which is not removed by Tenant as permitted above upon
the expiration of the Term shall, at Landlord's election, vest in Landlord;
provided, however, that Landlord may remove and store or dispose at Tenant's
expense any or all of such Tenant Personal Property which is not so removed by
Tenant without obligation or accounting to Tenant.

            14.3 MANAGEMENT OF PREMISES. Commencing on the Termination Date,
Landlord or its designee, upon written notice to Tenant, may elect to assume the
responsibilities and obligations for the management and operation of the
Business and Tenant agrees to cooperate fully to accomplish the transfer of such
management and operation without interrupting the operation of the Business.
Tenant agrees that Landlord or its designee may operate the Business under
Tenant's licenses and certifications to the extent allowed under applicable law
pending the issuance of new licenses and certifications to Landlord or its


                                      -25-
<PAGE>
designee. Tenant shall not commit any act or be remiss in the undertaking of any
act that would jeopardize any licensure or certification of any portion of the
Premises, and Tenant shall comply with all requests for an orderly transfer of
any and all facility and other licenses, Medicare and Medicaid certifications to
the extent that Tenant is participating therein and possession of the Premises
at the time of any such surrender.

            14.4 HOLDING OVER. If Tenant shall for any reason remain in
possession of any portion of the Premises after the Termination Date, such
possession shall be a month-to-month tenancy during which time Tenant shall pay
as rental on the first (1st) business day of each month ONE AND ONE-HALF (1 1/2)
TIMES the total of the monthly Minimum Rent payable with respect to the last
Lease Year plus all additional charges accruing during the month and all other
sums, if any, payable by Tenant pursuant to this Master Lease. Nothing contained
herein shall constitute the consent, express or implied, of Landlord to the
holding over of Tenant after the Termination Date, nor shall anything contained
herein be deemed to limit Landlord's remedies.

            14.5 SURVIVAL. All representations, warranties, covenants and other
obligations of Tenant under this Master Lease shall survive the Termination
Date.

      15.   CERTAIN LANDLORD RIGHTS.

            15.1 ENTRY AND EXAMINATION OF RECORDS. Landlord and its
representatives may enter any portion of the Premises at any reasonable time
after reasonable notice to Tenant to inspect the Premises for compliance, to
exhibit the Premises for sale, lease or mortgaging, or for any other reason;
provided that no such notice shall be required in the event of an emergency,
upon an Event of Default or to post notices of non-responsibility under any
mechanic's or materialman's lien law. No such entry shall unreasonably interfere
with residents, patients, patient care or the Business. During normal business
hours, Tenant will permit Landlord and its representatives, inspectors and
consultants to examine all contracts, books and financial and other records
(wherever kept) relating to Tenant's operations at any portion of the Premises.

            15.2 GRANT LIENS; CHANGE IN ZONING. Without the consent of Tenant,
Landlord may from time to time, directly or indirectly, create or otherwise
cause to exist any Lien, title retention agreement, or other encumbrance upon
the Premises, or any portion thereof or interest therein (including this Master
Lease), whether to secure any borrowing or other means of financing or
refinancing or otherwise. Without the consent of Tenant, Landlord may from time
to time directly or indirectly, create or otherwise cause to exist any
restrictive covenant or easement upon the Premises, or accede to a change in the
zoning of any portion of the Premises, so long as such covenant, easement or
change would not have a material adverse effect on the Business or other
activities of Tenant conducted thereon pursuant to the terms of this Master
Lease.

            15.3 SUBORDINATION, ATTORNMENT AND NONDISTURBANCE. Upon the request
of Landlord, Tenant shall subordinate this Master Lease to the Lien of any
encumbrance consented to by Landlord pursuant to Section 15.2. Any such
encumbrance, or an ancillary agreement in connection therewith, shall provide,
subject to customary limitations and exceptions (A) that so long as no Event of
Default shall exist, (I) it is subject to the rights of Tenant under this Master
Lease, and (II) that Tenant's occupancy hereunder, including Tenant's right of
quiet enjoyment


                                      -26-
<PAGE>
provided herein, shall not be disturbed if any Person (a "FORECLOSURE
PURCHASER") takes possession of the applicable portion of the Premises through
foreclosure proceeding or otherwise, and (B) that Tenant shall attorn to any
Foreclosure Purchaser.

            15.4 ESTOPPEL CERTIFICATES. Tenant and Landlord shall, at any time
upon not less than five (5) days prior written request by the other party, have
an authorized representative execute, acknowledge and deliver to the requesting
party or its designee a written statement certifying (A) that this Master Lease,
together with any specified modifications, is in full force and effect, (B) the
dates to which Rent and additional charges have been paid, (C) that no default
by either party exists or specifying any such default and (D) as to such other
matters as the requesting may reasonably request.

            15.5 CONVEYANCE RELEASE. Landlord or any successor owner may sell or
transfer all or any portion of the Premises or assign in whole or in part this
Master Lease in its sole and absolute discretion, which shall in each case
include an assignment and delivery to the purchaser or assignee of all funds
then held in escrow pursuant to this Master Lease (or the allocable portion
thereof), and upon any such sale or transfer, they shall thereupon be released
from all future liabilities and obligations under this Master Lease arising or
accruing from and after the date of such conveyance or other transfer, which
instead shall thereupon be binding upon the new owner.

      16. ASSIGNMENT AND SUBLETTING. Without the prior written consent of
Landlord, which may be withheld or conditioned at its sole discretion, this
Master Lease shall not, nor shall any interest of Tenant herein, be assigned or
encumbered by operation of law, nor shall Tenant voluntarily or involuntarily
assign, mortgage, encumber or hypothecate any interest in this Master Lease or
sublet any portion of the Premises except (I) in the ordinary course of Tenant's
business to residents or occupants of such Facility or their immediate family
members using Tenant's standard form occupancy lease for the State in which the
applicable Facility is located (in the form approved by the regulatory agency
having jurisdiction thereover), and (II) for incidental subleases and occupancy
agreements to providers of incidental services to residents (such as physical
therapists or beauty shops) which (A) do not exceed in the aggregate for any
single Facility more than one hundred (100) square feet within such Facility,
and (B) with respect to any individual sublease or occupancy agreement, does not
exceed one (1) year in duration (including any available renewal or extension
terms). Any of the foregoing acts without such consent shall be void and shall,
at Landlord's sole option, constitute an Event of Default giving rise to
Landlord's right, among other things, to terminate this Master Lease. An
assignment of this Master Lease by Tenant shall be deemed to include: (A)
entering into a management or similar agreement relating to the operation or
control of any portion of the Premises with a Person that is not an Affiliate of
Tenant; (B) any change (voluntary or involuntary, by operation of law or
otherwise, including the transfer, assignment, sale, hypothecation or other
disposition of any equity interest in Tenant) in the Person that ultimately
exert effective Control over the management of the affairs of Tenant as of the
date hereof; provided that an initial public offering of Tenant or a change in
the ownership of Guarantor shall not be deemed to be an assignment of the Master
Lease so long as thereafter less than TWENTY-FIVE PERCENT (25%) of the voting
stock of Tenant or Guarantor, respectively, is held by any Person or related
group that did not have such ownership prior thereto; or (C) the sale or other
transfer of all or any portion of any certificate of need, bed rights or other
similar certificate or


                                      -27-
<PAGE>
license relating to any portion of the Business or any portion of the Premises.
Notwithstanding the foregoing, Tenant may, without Landlord's prior written
consent, assign this Master Lease or sublet the Premises or any portion thereof
to an Affiliate of Tenant or any Guarantor if all of the following are first
satisfied: (W) such Affiliate fully assumes Tenant's obligations hereunder; (X)
Tenant remains fully liable hereunder and any Guarantor remains fully liable
under its guaranty; (Y) the use of the applicable portion of the Premises
remains unchanged; and (Z) Landlord in its reasonable discretion shall have
approved the form and content of all documents for such assignment or sublease
and received an executed counterpart thereof. In no event shall Tenant sublet
any portion of the Premises on any basis such that the rental to be paid by the
sublessee would be based, in whole or in part, on either the income or profits
derived by the business activities of the sublessee, or any other formula, such
that any portion of the sublease rental received by Landlord would fail to
qualify as "rents from real property" within the meaning of Section 856(d) of
the U.S. Internal Revenue Code, or any similar or successor provision thereto.

      17. DAMAGE BY FIRE OR OTHER CASUALTY. Tenant shall promptly notify
Landlord of any damage or destruction of any portion of the Premises and
diligently repair or reconstruct such portion of the Premises to a like or
better condition than existed prior to such damage or destruction. Any net
insurance proceeds payable with respect to the casualty shall be used for the
repair or reconstruction of the applicable portion of the Premises pursuant to
reasonable disbursement controls in favor of Landlord. If such proceeds are
insufficient, Tenant shall provide the required additional funds; if they are
more than sufficient, the surplus shall belong and be paid to Tenant. Tenant
shall not have any right under this Master Lease, and hereby waives all rights
under applicable law, to abate, reduce or offset rent by reason of any damage or
destruction of any portion of the Premises by reason of an insured or uninsured
casualty.

      18. CONDEMNATION. Except as provided to the contrary in this Section 18,
this Master Lease shall not terminate and shall remain in full force and effect
in the event of a taking or condemnation of the Premises, or any portion
thereof, and Tenant hereby waives all rights under applicable law to abate,
reduce or offset rent by reason of such taking. If during the Term all or
substantially all (a "COMPLETE TAKING") or a smaller portion (a "PARTIAL
TAKING") of any Facility is permanently taken or condemned by any competent
public or quasi-public authority, then (A) in the case of a permanent Complete
Taking, Tenant may at its election made within thirty (30) days of the effective
date of such Taking, terminate this Master Lease with respect to such Facility
and the current Rent shall be prorated as of the effective date of such
termination, or (B) in the case of a permanent Partial Taking, the Rent shall be
abated to the same extent as the resulting diminution in Fair Market Value of
the portion of the Premises taken. The award payable upon a Complete Taking
shall be allocated (I) as provided by the taking authority, (II) in the absence
thereof, as agreed by the parties, or (III) failing such agreement within
thirty(30) days after the effective date of such Taking, pursuant to the
appraisal procedure described in Exhibit C. The resulting diminution in Fair
Market Value on the effective date of a Partial Taking shall be as established
pursuant to Exhibit C. Landlord alone shall be entitled to prosecute, litigate,
compromise and settle any condemnation claim, any Complete Taking or any Partial
Taking, and to receive and retain any award for a Partial Taking.

      19. INDEMNIFICATION. Tenant agrees to protect, indemnify, defend and save
harmless Landlord, its directors, officers, shareholders, agents and employees
from and against any and all foreseeable or unforeseeable liability, expense,
loss, cost, deficiency, fine, penalty or damage


                                      -28-
<PAGE>
(including consequential or punitive damages) of any kind or nature, including
reasonable attorneys' fees, from any suits, claims or demands, on account of any
matter or thing, action or failure to act arising out of or in connection with
this Master Lease, the Premises or the operations of Tenant on any portion of
the Premises, including (A) the breach by Tenant of any of its representations,
warranties, covenants or other obligations hereunder, (B) any Protest, (C) all
known and unknown Environmental Activities on any portion of the Premises,
Hazardous Materials Claims or violations by Tenant of a Hazardous Materials Law
with respect to any portion of the Premises, and (D) upon or following the
Termination Date, the correction of all deficiencies of a physical nature
identified by, and any liability assessed or asserted by, any governmental
agency or Medicare or Medicaid providers (but only to the extent Tenant was, or
was required pursuant to applicable law to be, participating in the same as of
the termination date) as a result of or arising out of or in connection with
this Master Lease or the related change of ownership inspection and audit
(including any overpayment to any Medicare, Medicaid or other third-party
payor), except to the extent that Tenant is not responsible therefor pursuant to
Section 7.2. Upon receiving knowledge of any suit, claim or demand asserted by a
third party that Landlord believes is covered by this indemnity, it shall give
Tenant notice of the matter. If Landlord does not elect to defend the matter
with its own counsel at Tenant's expense, Tenant shall then defend Landlord at
Tenant's expense (including Landlord's reasonable attorneys' fees and costs)
with legal counsel satisfactory to Landlord

      20. ATTORNEYS FEES; DISPUTES. If any party brings any action to interpret
or enforce this Master Lease, or for damages for any alleged breach, the
prevailing party shall be entitled to reasonable attorneys' fees and costs as
awarded by the court in addition to all other recovery, damages and costs. EACH
PARTY HEREBY WAIVES ANY RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM BROUGHT BY EITHER PARTY AGAINST THE OTHER IN CONNECTION WITH ANY
MATTER WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS MASTER LEASE,
INCLUDING RELATIONSHIP OF THE PARTIES, TENANT'S USE AND OCCUPANCY OF ANY PORTION
OF THE PREMISES, OR ANY CLAIM OF INJURY OR DAMAGE RELATING TO THE FOREGOING OR
THE ENFORCEMENT OF ANY REMEDY. All disputes arising under or relating to this
Master Lease shall be brought and litigated in the state and/or federal courts
in Orange County, California and all related appellate courts, and Landlord and
Tenant hereby consent to the jurisdiction of such courts.

      21.   NOTICES.  All notices and demands, certificates, requests,
consents, approvals and other similar instruments under this Master Lease
shall be in writing and sent by personal delivery, U. S. certified or
registered mail (return receipt requested, postage prepaid) or FedEx or
similar generally recognized overnight carrier regularly providing proof
of delivery, addressed as follows:

If to Tenant:     c/o Alterra Healthcare Corporation
                  10000 Innovation Drive
                  Milwaukee, Wisconsin 53226
                  Attention: Mark W. Ohlendorf
                  Fax No. (414) 918-5055


                                      -29-
<PAGE>
With a copy to:   Rogers & Hardin LLP
                  2700 International Tower
                  229 Peachtree Street, N.E.
                  Atlanta, Georgia 30303-1601
                  Attention: Miriam J. Dent
                  Fax No. (404) 525-2224

If to Landlord:   Nationwide Health Properties, Inc.
                  610 Newport Center Drive, Suite 1150
                  Newport Beach, California 92660-6429
                  Attention:  President and General Counsel
                  Fax No. (949) 759-6876

And:              JER Partners
                  1650 Tysons Boulevard, Suite 1600
                  McLean, Virginia 22101
                  Attention: Paul A. Froning
                  Facsimile: (703) 714-8060 and
                  Attention: Daniel T. Ward, Esq.
                  Facsimile: (703) 714-8102

With a copy to:   O'Melveny & Myers LLP
                  610 Newport Center Drive, Suite 1700
                  Newport Beach, California 92660-6429
                  Attention:  Steven L. Edwards
                  Fax No. (949) 823-6994

And:              Pircher, Nichols & Meeks
                  1925 Century Park East, Suite 1700
                  Los Angeles, California 90067
                  Attention: Stevens A. Carey, Esq.
                  Facsimile: (310) 201-8922

A party may designate a different address by notice as provided above. Any
notice or other instrument so delivered (whether accepted or refused) shall be
deemed to have been given and received on the date of delivery established by
U.S. Post Office return receipt or the carrier's proof of delivery or, if not so
delivered, on the day received (provided that such notice or instrument shall be
deemed received on the next succeeding business day if received after 5:00 p.m.
(local time)). Delivery to any officer, general partner or principal of a party
shall be deemed delivery to such party. Notice to any one co-Tenant shall be
deemed notice to all co-Tenants.

      22. MISCELLANEOUS. Since each party has been represented by counsel and
this Master Lease has been freely and fairly negotiated, all provisions shall be
interpreted according to their fair meaning and shall not be strictly construed
against any party. While nothing contained in this Master Lease should be deemed
or construed to constitute an extension of credit by Landlord to Tenant, if a
portion of any payment made to Landlord is deemed to violate any applicable laws


                                      -30-
<PAGE>
regarding usury, such portion shall be held by Landlord to pay the future
obligations of Tenant as such obligations arise and if Tenant discharges and
performs all obligations hereunder, such funds will be reimbursed (without
interest) to Tenant on the Termination Date. If any part of this Master Lease
shall be determined to be invalid or unenforceable, the remainder shall
nevertheless continue in full force and effect. Time is of the essence, and
whenever action must be taken (including the giving of notice or the delivery of
documents) hereunder during a certain period of time or by a particular date
that ends or occurs on a Saturday, Sunday or federal holiday, then such period
or date shall be extended until the immediately following business day. Whenever
the words "including", "include" or "includes" are used in this Master Lease,
they shall be interpreted in a non-exclusive manner as though the words "without
limitation" immediately followed. Whenever the words day or days are used in
this Master Lease, they shall mean "calendar day" or "calendar days" unless
expressly provided to the contrary. The titles and headings in this Master Lease
are for convenience of reference only and shall not in any way affect the
meaning or construction of any provision. Unless otherwise expressly provided,
references to any "Section" mean a section of this Master Lease (including all
subsections), to any "Exhibit" or "Schedule" mean an exhibit or schedule
attached hereto, and references to "Medicare" or "Medicaid" include any
successor program. If more than one Person is Tenant hereunder, their liability
and obligations hereunder shall be joint and several. Promptly upon the request
of either party and at its expense, the parties shall prepare, enter into and
record a suitable short form memorandum of this Master Lease. This Master Lease
(A) together with the LC Agreement, the Guaranty, the Stock Pledge, the
Memorandum of Understanding and all other documents or instruments executed as
of the Effective Date in connection therewith, contains the entire agreement of
the parties as to the subject matter hereof and supersedes all prior or
contemporaneous verbal or written agreements or understandings, (B) may be
executed in several counterparts, each of which shall be deemed an original, but
all of which shall constitute one and the same document, (C) may only be amended
by a writing executed by the parties, (D) shall inure to the benefit of and be
binding upon the successors and permitted assigns of the parties, (E) shall be
governed by and construed and enforced in accordance with the internal laws of
the State of California, without regard to the conflict of laws rules thereof,
provided that the law of the State in which each Facility is located (each a
"SITUS STATE") shall govern procedures for enforcing, in the respective Situs
State, provisional and other remedies directly related to such Facility and
related personal property as may be required pursuant to the law of such Situs
State, including without limitation the appointment of a receiver; and, further
provided that the law of the Situs State also applies to the extent, but only to
the extent, necessary to create, perfect and foreclose the security interests
and liens created under this Master Lease, and (F) incorporates by this
reference any Exhibits and Schedules attached hereto.

      23.   WISCONSIN PURCHASE FACILITIES.

            23.1  TENANT PURCHASE OPTION.

            (A) Provided no Event of Default exists on the applicable Call
Exercise Date or the applicable closing date, Tenant shall have the option to
purchase each of the Wisconsin Purchase Facilities by giving Landlord written
notice (a "CALL EXERCISE NOTICE") thereof on a date (the "CALL EXERCISE DATE")
that is at least thirty (30) days but no more than sixty (60) days prior to the
anticipated closing date for the consummation of such purchase. Landlord shall
not unreasonably withhold its consent to the extension or adjustment of the
dates set forth in the


                                      -31-
<PAGE>
preceding sentence upon the prior written request of Tenant. The purchase price
shall be the applicable amount (the "MINIMUM RESIDENCE PRICE") set forth on
Schedule 7. Within ten (10) days of Tenant's delivery of any Call Exercise
Notice, the parties shall sign the standard sale escrow instructions (the "SALE
INSTRUCTIONS") of a national title company (selected by Landlord) that are in
form and substance reasonably satisfactory to Landlord, which Sale Instructions
shall provide (I) for no representations or warranties, due diligence or other
contingencies in favor of Tenant; (II) that Tenant shall deposit FIVE PERCENT
(5%) of the purchase price with the title company, which may be retained by
Landlord as liquidated damages solely for any breach by Tenant of the terms of
this Section 23.1 or the Sale Instructions (and which in no way shall liquidate
or limit Landlord's damages by reason of any other breach of this Master Lease);
(III) that the escrow shall close on the date identified in the applicable Call
Exercise Notice, at which time Tenant shall pay the purchase price in cash and
Landlord shall deliver title to the applicable Wisconsin Purchase Facility,
subject only to the applicable Permitted Exceptions; (IV) that Tenant shall pay
all transaction costs; (V) that Tenant may elect to cause the conveyance of the
applicable Wisconsin Purchase Facility to be made by Landlord to a third party.
If Tenant fails to close the escrow for the purchase of any Wisconsin Purchase
Facility for any reason other than a breach by Landlord, then no Event of
Default shall arise solely as a result of such failure, but the rights granted
to Tenant under this Section 23.1 with respect only to such Wisconsin Purchase
Facility shall automatically terminate and be of no further force or effect.

            (B) Any proceeds received by Tenant from the sale to any third party
of any Wisconsin Purchase Facility, to the extent such proceeds are in excess of
the applicable Minimum Residence Purchase Price and Tenant's reasonable and
customary transaction costs from such sale, shall immediately be paid by Tenant
to Landlord upon Tenant's receipt thereof.

            (C) The purchase option granted to Tenant pursuant to Section
23.1(c) shall automatically terminate and be of no further force or effect with
respect to each Wisconsin Purchase Facility for which Tenant has not then duly
given a Call Exercise Notice on the date that is the earlier of (I) one (1) year
from the Effective Date, or (II) the date that Landlord gives notice of its
exercise of its rights pursuant to Section 23.2 with respect to such Wisconsin
Purchase Facility.

            23.2 LANDLORD DISPOSITION RIGHTS. Upon not less than thirty (30)
days prior written notice to Tenant in each instance, Landlord may terminate
this Master Lease with respect to any Wisconsin Purchase Facility. Upon the
effectiveness of any such termination, the applicable Wisconsin Purchase
Facility shall no longer be a part of the Premises hereunder and Landlord and
Tenant shall be released from their respective obligations with respect thereto,
except to the extent that any such obligation survives the termination of this
Master Lease in accordance with the terms hereof. Alternatively, at Landlord's
request, all or the then remaining Wisconsin Purchase Facilities shall be
removed from this Master Lease and Landlord and Tenant shall enter into a new
lease with respect thereto, which shall be on substantially the same terms as
this Master Lease as applicable to such Wisconsin Purchase Facilities (including
the provisions concerning the purchase option set forth in Section 23.1).

            23.3 ADJUSTMENT TO LANDLORD'S INVESTMENT. Concurrently with the
closing of any sale of any Wisconsin Termination Facility pursuant to Section
23.1, Landlord's Investment shall be reduced by the greater of the applicable
Minimum Residence Price or the actual


                                      -32-
<PAGE>
proceeds received by Landlord from such sale pursuant to Section 23.1(b).
Concurrently with the removal from this Master Lease with respect to any
Wisconsin Termination Facility pursuant to Section 23.2, Landlord's Investment
shall be reduced by the applicable Minimum Residence Price.

      24. QUIET ENJOYMENT. So long as no Event of Default exists, Landlord
covenants and agrees that Tenant shall peaceably and quietly have, hold and
enjoy the Premises for the Term free from claims by, through or under Landlord,
subject to all of the provisions of this Master Lease.

      25. LANDLORD MAINTENANCE OBLIGATION. Effective as of the Effective Date,
and continuing until thirty (30) days after the date Landlord delivers notice to
Tenant of the termination of Landlord's obligations under this Section 25, which
notice may be given at any time in Landlord's sole and absolute discretion,
Landlord shall be responsible for performing, at the expense of Tenant as
described below, the maintenance and repair of the Exterior Portion of each of
the Facilities.

            25.1 MAINTENANCE CONTRACTORS. Landlord shall retain such third party
vendors and contractors (each a "MAINTENANCE CONTRACTOR") as Landlord shall from
time to time deem necessary to perform Landlord's maintenance obligations under
this Section 25. Such Maintenance Contractors shall be identified by Landlord
from a list (each a "MAINTENANCE CONTRACTOR LIST") of proposed vendors and
contractors for each Facility to be mutually agreed upon from time to time by
Landlord and Tenant, which agreement shall not be unreasonably withheld,
conditioned or delayed by Tenant. Landlord shall be free from time to time to
terminate any such Maintenance Contractor and retain a replacement therefor as
identified from the applicable Maintenance Contractor List. Any written contract
to be entered into with respect to the maintenance of the Exterior Portion of
any Facility shall be entered into by and between Landlord and the applicable
Maintenance Contractor.

            25.2 REQUEST FOR SERVICE. Subject to the other terms and provisions
of this Section 25 and other applicable Sections of this Master Lease, Tenant
may contact any Maintenance Contractor to request the service to be performed by
such Maintenance Contractor and shall otherwise be free to deal with each
Maintenance Contractor in connection with the use and operation of the
Facilities and the Business conducted thereon.

            25.3 COSTS AND EXPENSES. All costs, expenses and fees of each
Maintenance Contractor shall be the responsibility of Tenant. Tenant shall use
its best efforts to cause each invoice, statement or other request for payment
from any Maintenance Contractor to be billed in the name of, and sent to,
Landlord with a copy to Tenant for direct payment by Tenant to the applicable
Maintenance Contractor, and Tenant shall provide Landlord with such evidence of
such payment as Landlord may reasonably request.

            25.4 REPORT ON ACTIVITIES. Each quarterly Facility condition report
submitted to Landlord pursuant to Section 10 and Exhibit F of this Master Lease
shall include a reasonably detailed report on the activities of all Maintenance
Contractors at the applicable Facility during the applicable quarter.


                                      -33-
<PAGE>
            25.5 TRANSITION. Landlord and Tenant shall mutually cooperate with
each other to effect an orderly transition of Landlord's obligations under this
Section 25 from Landlord to Tenant upon any election of Landlord to terminate
such obligations.

      26. ADVISORY FEE. On the Effective Date, at Tenant's request, Landlord
shall pay to Tenant the amount of ONE MILLION FIVE HUNDRED THIRTY TWO THOUSAND
SEVEN HUNDRED SEVENTY-EIGHT DOLLARS ($1,532,778) to be paid by Tenant to certain
of its professional advisors for services rendered in connection with this
Master Lease. Provided that no Event of Default or circumstances that with the
giving of notice or passing of time would constitute an Event of Default then
exists, upon the termination of this Master Lease with respect to each Wisconsin
Purchase Facility as a result of Tenant exercising its purchase option therefor
in accordance with Section 23.1(a) or Landlord exercising its disposition rights
in accordance with Section 23.2, Landlord shall pay to Tenant the amount of
ELEVEN THOUSAND FOUR HUNDRED EIGHTY-ONE AND 33/100 DOLLARS ($11,481.33) per
Wisconsin Purchase Facility to be paid by Tenant to certain of its professional
advisors for services rendered in connection with this Master Lease. In the
event that Tenant is not entitled to receive any disbursement of the
above-described advisory fee reimbursement as of the first (1st) anniversary of
the Effective Date, it shall be conclusively deemed as between Landlord and
Tenant that no such further payment is due, and Landlord shall (A) have no
further liability in connection with such payment and (B) reduce the amount of
Landlord's Investment by such amount. The amounts described above, if and when
disbursed to Tenant, shall be utilized by Tenant only for the purposes described
in this Section 26. Landlord assumes, and shall have, no liability or obligation
to any Person other than Tenant for the payment of the sums described in this
Section 26.


                                      -34-
<PAGE>
IN WITNESS WHEREOF, this Master Lease has been executed by Landlord and Tenant
as of the Effective Date.


"TENANT"

ALS LEASING, INC.,
a Delaware corporation



By:     /s/ Mark W. Ohlendeorf
        -------------------------
Name:   Mark W. Ohlendeorf
        -------------------------
Title:  VP
        -------------------------



Witness:  /s/ Sarah Wits                   Witness: /s/ Kristin Ferge
        -------------------------                  -------------------------


ASSISTED LIVING PROPERTIES, INC.,
a Kansas corporation



By:     /s/ Mark W. Ohlendeorf
        -------------------------
Name:   Mark W. Ohlendeorf
        -------------------------
Title:  VP
        -------------------------



Witness:  /s/ Sarah Wits                   Witness: /s/ Kristin Ferge
        -------------------------                  -------------------------

                                      S-1
<PAGE>
"LANDLORD"

JER/NHP SENIOR LIVING ACQUISITION, LLC,
a Delaware limited liability company

By:   JER/NHP SENIOR HOUSING, LLC,
      a Delaware limited liability company,
      its sole member

      By:   NATIONWIDE HEALTH PROPERTIES, INC.,
            a Maryland corporation,
            its managing member



            By:     /s/ Donald D. Bradley
                    -------------------------
            Name:   Donald D. Bradley
            Title:  Senior Vice President & General Counsel



Witness: /s/ Sharina Ross                 Witness:  /s/ Illegible
        -------------------------                  -------------------------



JER/NHP SENIOR LIVING TEXAS, L.P.,
a Texas limited partnership

By:   JER/NHP MANAGEMENT TEXAS, LLC,
      a Texas limited liability company
      its general partner



      By:     /s/ Donald D. Bradley
              -------------------------
      Name:   Donald D. Bradley
      Title:  Manager



Witness: /s/ Sharina Ross                  Witness: /s/ Illegible
        -------------------------                  -------------------------


                                      S-2
<PAGE>
JER/NHP SENIOR LIVING WISCONSIN, LLC,
a Delaware limited liability company

By:   JER/NHP SENIOR HOUSING, LLC,
      a Delaware limited liability company,
      its sole member

      By:   NATIONWIDE HEALTH PROPERTIES, INC.,
            a Maryland corporation,
            its managing member



            By:     /s/ Donald D. Bradley
                    -------------------------
            Name:   Donald D. Bradley
            Title:  Senior Vice President & General Counsel



Witness: /s/ Sharina Ross                  Witness: /s/ Illegible
        -------------------------                  -------------------------


JER/NHP SENIOR LIVING KANSAS, INC.,
a Kansas corporation

By:     /s/ Donald D. Bradley
        -------------------------
Name:   Donald D. Bradley
Title:  Secretary and Treasurer



Witness: /s/ Sharina Ross                  Witness: /s/ Illegible
        -------------------------                  -------------------------



                                      S-3
<PAGE>
                                    EXHIBIT A

                               LEGAL DESCRIPTIONS



                                  See attached;
        includes all improvements thereon and all appurtenances thereto.


                                       A-1
<PAGE>
                                    EXHIBIT B

                           LANDLORD PERSONAL PROPERTY



                           [None as of Effective Date]


                                       B-1
<PAGE>
                                    EXHIBIT C

                                FAIR MARKET VALUE



            "FAIR MARKET VALUE" means the fair market value of the Premises or
applicable portion thereof on a specified date as agreed to by the parties, or
failing such agreement within ten (10) days of such date, as established
pursuant the following appraisal process. Each party shall within ten (10) days
after written demand by the other select one MAI Appraiser to participate in the
determination of Fair Market Value. For all purposes under this Master Lease,
the Fair Market Value shall be the fair market value of the Premises or
applicable portion thereof unencumbered by this Master Lease. Within ten (10)
days of such selection, the MAI Appraisers so selected by the parties shall
select a third (3rd) MAI Appraiser. The three (3) selected MAI Appraisers shall
each determine the Fair Market Value of the Premises or applicable portion
thereof within thirty days of the selection of the third appraiser. To the
extent consistent with sound appraisal practices as then existing at the time of
any such appraisal, and if requested by Landlord, such appraisal shall be made
on a basis consistent with the basis on which the Premises or applicable portion
thereof were appraised at the time of their acquisition by Landlord. Tenant
shall pay the fees and expenses of any MAI Appraiser retained pursuant to this
Exhibit.

            If either party fails to select a MAI Appraiser within the time
period set forth in the foregoing paragraph, the MAI Appraiser selected by the
other party shall alone determine the fair market value of the Premises or
applicable portion thereof in accordance with the provisions of this Exhibit and
the Fair Market Value so determined shall be binding upon the parties. If the
MAI Appraisers selected by the parties are unable to agree upon a third (3rd)
MAI Appraiser within the time period set forth in the foregoing paragraph,
either party shall have the right to apply at Tenant's expense to the presiding
judge of the court of original trial jurisdiction in the county in which the
Premises or applicable portion thereof are located to name the third (3rd) MAI
Appraiser.

            Within five(5) days after completion of the third (3rd) MAI
Appraiser's appraisal, all three (3) MAI Appraisers shall meet and a majority of
the MAI Appraisers shall attempt to determine the fair market value of the
Premises or applicable portion thereof. If a majority are unable to determine
the fair market value at such meeting, the three (3) appraisals shall be added
together and their total divided by three (3). The resulting quotient shall be
the Fair Market Value. If, however, either or both of the low appraisal or the
high appraisal are more than TEN PERCENT (10%) lower or higher than the middle
appraisal, any such lower or higher appraisal shall be disregarded. If only one
(1) appraisal is disregarded, the remaining two (2) appraisals shall be added
together and their total divided by two (2), and the resulting quotient shall be
such Fair Market Value. If both the lower appraisal and higher appraisal are
disregarded as provided herein, the middle appraisal shall be such Fair Market
Value. In any event, the result of the foregoing appraisal process shall be
final and binding.


                                       C-1
<PAGE>
            "MAI APPRAISER" shall mean an appraiser licensed or otherwise
qualified to do business in the state(s) where the Premises or applicable
portion thereof are located and who has substantial experience in performing
appraisals of facilities similar to the Premises or applicable portion thereof
and is certified as a member of the American Institute of Real Estate Appraisers
or certified as a SRPA by the Society of Real Estate Appraisers, or, if such
organizations no longer exist or certify appraisers, such successor organization
or such other organization as is approved by Landlord.


                                      C-2
<PAGE>
                                    EXHIBIT D

                              PERMITTED EXCEPTIONS



1.    The standard printed exceptions, conditions and exclusions from coverage
      contained in the standard coverage owner's title policy then prevailing in
      use at the title company that consummates the sale transaction.

2.    Any matters which an accurate survey of the Premises may show.

3.    Real property taxes and assessments.

4.    Any matters shown as title exceptions in the ALTA Owner's Policy of Title
      Insurance obtained by Landlord in connection with its acquisition of the
      Premises.

5.    Such other matters burdening the Premises which were created with the
      consent or knowledge of Tenant or arising out of Tenant's acts or
      omissions.


                                       D-1
<PAGE>
                                    EXHIBIT E

                               CERTAIN DEFINITIONS



For purposes of this Master Lease, the following terms and words shall have the
specified meanings:

ENVIRONMENTAL DEFINITIONS

      "ENVIRONMENTAL ACTIVITIES" shall mean the use, generation, transportation,
handling, discharge, production, treatment, storage, release or disposal of any
Hazardous Materials at any time to or from any portion of the Premises or
located on or present on or under any portion of the Premises.

      "HAZARDOUS MATERIALS" shall mean (A) any petroleum products and/or
by-products (including any fraction thereof), flammable substances, explosives,
radioactive materials, hazardous or toxic wastes, substances or materials, known
carcinogens or any other materials, contaminants or pollutants which pose a
hazard to any portion of the Premises or to Persons on or about any portion of
the Premises or cause any portion of the Premises to be in violation of any
Hazardous Materials Laws; (B) asbestos in any form which is friable; (C) urea
formaldehyde in foam insulation or any other form; (D) transformers or other
equipment which contain dielectric fluid containing levels of polychlorinated
biphenyls in excess of fifty (50) parts per million or any other more
restrictive standard then prevailing; (E) medical wastes and biohazards; (F)
radon gas; and (G) any other chemical, material or substance, exposure to which
is prohibited, limited or regulated by any governmental authority or may or
could pose a hazard to the health and safety of the occupants of any portion of
the Premises or the owners and/or occupants of property adjacent to or
surrounding any portion of the Premises, including, without limitation, any
materials or substances that are listed in the United States Department of
Transportation Hazardous Materials Table (49 CFR 172.101) as amended from time
to time.

      "HAZARDOUS MATERIALS CLAIMS" shall mean any and all enforcement, clean-up,
removal or other governmental or regulatory actions or orders threatened,
instituted or completed pursuant to any Hazardous Material Laws, together with
all claims made or threatened by any third party against any portion of the
Premises, Landlord or Tenant relating to damage, contribution, cost recovery
compensation, loss or injury resulting from any Hazardous Materials.

      "HAZARDOUS MATERIALS LAWS" shall mean any laws, ordinances, regulations,
rules, orders, guidelines or policies relating to the environment, health and
safety, Environmental Activities, Hazardous Materials, air and water quality,
waste disposal and other environmental matters.


                                       E-1
<PAGE>
OTHER DEFINITIONS

      "AFFILIATE" shall mean with respect to any Person, any other Person which
Controls, is Controlled by or is under common Control with the first Person.

      "CC&R'S" shall mean covenants, conditions and restrictions or similar use,
maintenance or ownership obligations encumbering or binding upon the real
property comprising any Facility.

      "CONTROL" shall mean, as applied to any Person, the possession, directly
or indirectly, of the power to direct the management and policies of that
Person, whether through ownership, voting control, by contract or otherwise.

      "EXTERIOR PORTION" shall mean, with respect to any Facility, the exterior
structure and roof, parking areas, hardscape and other exterior areas and
landscaping.

      "MANLIUS DEBT SERVICE" shall mean all amounts due and payable under the
Manlius Financing Documents or otherwise in connection with the Manlius
Financing, including interest payments; principal (or amortization) payments;
credit enhancement fees; letter of credit and other credit facility fees; ground
lease payments; deposit, reserve and impound account payments; loan, extension,
prepayment, commitment and other fees; servicing, administration and similar
charges; indenture trustee fees and expenses; and underwriting, bond,
remarketing fees and expenses.

      "MANLIUS FACILITY" means the Facility known as Wynwood of Manlius, located
at 100 Flume Road, Manlius, New York.

      "MANLIUS FINANCING" shall mean the indebtedness evidenced by the Manlius
Financing Documents.

      "MANLIUS FINANCING DOCUMENTS" shall mean the documents described on
Schedule 8.

      "MEDITRUST LANDLORD" shall mean, individually and collectively, La
Quinta Properties, Inc., a Delaware corporation, Meditrust of Kansas,
Inc., a Delaware corporation, T and F Properties, LP, a Delaware limited
partnership, and Meditrust Acquisition Company LLC, a Delaware limited
liability company.

      "MEDITRUST LEASE DOCUMENTS" shall mean all leases and other documents or
agreements evidencing the leasing of the Premises prior to the date hereof by
Tenant from Meditrust Landlord and all documents and agreements securing
Tenant's obligations thereunder or otherwise executed in connection therewith.

      "MEDITRUST PURCHASE AGREEMENT" shall mean that certain Amendment and
Restatement of Purchase and Sale Agreement dated as of April 2, 2002 by and
between La Quinta Properties, Inc. and certain Affiliates thereof, and
Nationwide Health Properties, Inc., a Maryland corporation ("NHP"), as assigned
by NHP to one or more of the entities comprising Landlord.

      "PERSON" shall mean any individual, partnership, association, corporation,
limited liability company or other entity.


                                       E-2
<PAGE>
      "PORTFOLIO EBITDARM" shall mean, for any applicable fiscal quarter, the
net income of Tenant for such quarter to the extent derived from the operation
of the Premises, adjusted to add thereto, to the extent allocable to the
Premises, without duplication, (I) interest expense, (II) income tax expense,
(III) depreciation and amortization expense, (IV) rental expense, and (V)
management fee expenses, in each case determined in conformity with generally
accepted accounting principles, consistently applied.

      "PORTFOLIO RENT EXPENSE" means, for any applicable fiscal quarter, the
amount of Minimum Rent and Manlius Debt Service payable under this Master Lease
in such quarter.


                                       E-3

<PAGE>

                                    EXHIBIT F

                  FINANCIAL, MANAGEMENT AND REGULATORY REPORTS


<TABLE>
<CAPTION>
                              REPORT                                                                       DUE DATE
                              ------                                                                       --------
<S>                                                                                            <C>
MONTHLY FINANCIAL REPORTS CONCERNING THE BUSINESS AT EACH
Facility consisting of:

(1)     a balance sheet;
(2)     a reasonably detailed income statement;
(3)     total patient days;                                                                    Thirty (30) days after the end
(4)     occupancy; and                                                                         of each calendar month
(5)     payor mix.

QUARTERLY FACILITY CONDITION REPORTS

for each Facility in the form attached as Schedule 1 to this                                   Thirty (30) days after the end
Exhibit F together with a rent roll for such Facility in the form                              of each fiscal quarter of
attached as Schedule 2 to this Exhibit F.                                                      Guarantor

QUARTERLY CONSOLIDATED OR COMBINED FINANCIAL STATEMENTS                                        Forty-Five (45) days after the
of Guarantor, which shall include calculations demonstrating                                   end of each of the first three
Tenant's compliance with Section 7.4 as of the end of the                                      quarters of the fiscal year of
applicable quarter.                                                                            Guarantor

ANNUAL CONSOLIDATED OR COMBINED FINANCIAL STATEMENTS
of Guarantor audited by a reputable certified public accounting Ninety (90) days
after the firm, which shall include calculations demonstrating Tenant's fiscal
year end of Guarantor compliance with Section 7.4 as of the end of the fourth
quarter.

REGULATORY REPORTS WITH RESPECT TO EACH FACILITY, as follows:

(1)     all federal, state and local licensing and reimbursement
        certification surveys, inspection and other reports
        received by Tenant as to any portion of the Premises and Five (5)
        business days after any portion of the Business, including state
        department receipt of health licensing surveys;
(2)     Medicare and Medicaid certification surveys; and
(3)     life safety code reports.

REPORTS OF REGULATORY VIOLATIONS,
by written notice of the following:

(1)     any violation of any federal, state or local licensing or
        reimbursement certification statute or regulation,
        including Medicare or Medicaid;
(2)     any suspension, termination or restriction placed upon                                 Two (2) business days after
        Tenant or any portion of the Premises, the operation of                                receipt
        any portion of the Business or the ability to admit
        residents or patients; or
(3)     any violation of any other permit, approval or certification in
        connection with any portion of the Premises or any portion of the
        Business, by any federal, state or local authority, including Medicare
        or Medicaid.

ANNUAL OPERATING BUDGET
covering the operations of each Facility and the Business                                      Thirty (30) days after the
conducted thereon for the forthcoming fiscal year.                                             beginning of each fiscal year
</TABLE>

                                       F-1
<PAGE>
                             SCHEDULE 1 TO EXHIBIT F

                   FORM OF QUARTERLY FACILITY CONDITION REPORT

                       Nationwide Health Properties, Inc.
                       Quarterly Property Condition Report

Property Name: __________________              Unit Capacity: ________________
Location:      __________________              Occupancy(1): _________________
Quarter Ended: __________________              EBITDAR(2):  __________________

This document will provide a quarterly report to Landlord of any Alterations and
general maintenance activities at the above property for both the most recently
completed quarter and planned activities for subsequent quarter. In addition to
the written response, Tenant personnel may be called upon for additional
information.

<TABLE>
<CAPTION>
                       Routine Maint      Major Work       Planned Major Work
                        Performed(3)     Performed(4)     For Next Quarter(5)
                        ------------     ------------     -------------------
<S>                    <C>               <C>              <C>
Lawns                      Y / N         ------------     -------------------
Flower Beds                Y / N         ------------     -------------------
Side Walks                 Y / N         ------------     -------------------
Parking Lots               Y / N         ------------     -------------------
Curbing                    Y / N         ------------     -------------------
Roof                       Y / N         ------------     -------------------
Exterior Walls             Y / N         ------------     -------------------
Windows                    Y / N         ------------     -------------------
HVAC units                 Y / N         ------------     -------------------
Back Up Generators         Y / N         ------------     -------------------
Signage                    Y / N         ------------     -------------------
Other Exterior -1          Y / N         ------------     -------------------
Other Exterior -2          Y / N         ------------     -------------------
Other Exterior -3          Y / N         ------------     -------------------
</TABLE>

In addition to the above, describe any "Alterations" as defined in Section 8 of
the lease that were preformed in the quarter being reported upon or which are
planned for the subsequent quarter.

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

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

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

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

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

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

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

------------------------
(1) Average for the quarter ended
(2) Average for the quarter ended
(3) This work is performed by Landlord approved contactors.
(4) Attach additional pages as may be necessary to fully describe the work.
(5) Attach additional pages as may be necessary to fully describe the work.

                             Schedule 1 to Exhibit F

                                    Page -1-
<PAGE>
                             SCHEDULE 2 TO EXHIBIT F

                      FORM OF QUARTERLY FACILITY RENT ROLL

                                   (ATTACHED)


                             Schedule 2 to Exhibit F

                                    Page -1-
<PAGE>
                                   SCHEDULE 1A

                                LANDLORD ENTITIES

1.       JER/NHP SENIOR LIVING TEXAS, L.P., a Texas limited partnership

         FEE OWNER OF PORTIONS OF PREMISES LOCATED IN THE STATE OF TEXAS

2.       JER/NHP SENIOR LIVING WISCONSIN, LLC, a Delaware limited liability
         company

         FEE OWNER OF PORTIONS OF PREMISES COMPRISING WISCONSIN PURCHASE
         FACILITIES

3.       JER/NHP SENIOR LIVING KANSAS, INC., a Kansas corporation (f/k/a
         Meditrust of Kansas, Inc., a Kansas corporation)

         FEE OWNER OF PORTIONS OF PREMISES LOCATED IN THE STATE OF KANSAS

4.       JER/NHP SENIOR LIVING ACQUISITION, LLC, a Delaware limited liability
         company

         FEE OWNER OF ALL OTHER PORTIONS OF PREMISES NOT DESCRIBED IN NOS. 1-3
         ABOVE

                                 SCHEDULE 1A-1
<PAGE>
                                   SCHEDULE 1B

                                 TENANT ENTITIES

                                   (Attached)

                                 SCHEDULE 1B-1
<PAGE>
                                   SCHEDULE 2

                   FACILITY INFORMATION: BUSINESS, BEDS, ETC.

<TABLE>
<CAPTION>
                                                                                                                             # OF
FACILITY                                                                                                                    BEDS OR
NUMBER     ALTERRA                                                                                   BUSINESS/              LIVING
           CODE       FACILITY                              FACILITY LOCATION                      FACILITY TYPE             UNITS
<S>        <C>        <C>                                   <C>                             <C>                             <C>
  1        0404       Clare Bridge of Fort Myers            13565 American Colony Blvd.     assisted living/memory care         38
                      at the Colony                         Fort Myers, FL
  2        0402       Clare Bridge of Tampa                 1513 West Fletcher Avenue       assisted living/memory care         38
                                                            Tampa, FL
  3        0201       Clare Bridge of Farmington Hills I    27950 Drake Road                assisted living/memory care         28
                                                            Farmington Hills, MI
  4        0201       Clare Bridge of Farmington Hills II   27900 Drake Road                assisted living/memory care         32
                                                            Farmington Hills, MI
  5        0202       Clare Bridge of Utica                 45959 North Pointe Blvd.        assisted living/memory care         36
                                                            Utica, MI
  6        0502       Clare Bridge of Lower Makefield       600 Township Line Road          assisted living/memory care         48
                                                            Yardley, PA
  7        0827       Sterling House of Brown Deer          4015 West Woodale                     assisted living               15
                                                            Brown Deer, WI
  8        0809       Sterling House of Onalaska            949 10th Avenue North                 assisted living               20
                                                            Onalaska, WI
  9        0606       Wynwood of Manlius                    100 Flume Road                        assisted living               80
                                                            Manlius, NY
  10       0804       Sterling House of Plymouth            112 South River Blvd.                 assisted living               15
                                                            Plymouth, WI
  11       0838       Sterling House of Faribault           935 Spring Road                       assisted living               20
                                                            Faribault, MN
  12       0829       Sterling House of Mankato             100 Teton Lane                        assisted living               20
                                                            Mankato, MN
  13       0849       Sterling House of Sauk Rapids         1325 Summit Avenue North              assisted living               20
                                                            Sauk Rapids, MN
  14       0833       Sterling House of Winona              835 East Belleview Street             assisted living               20
                                                            Winona, MN
  15       0826       Sterling House of Manitowoc           5005 Vista Road                       assisted living               20
                                                            Manitowoc, WI
  16       0824       Sterling House of Neenah              2330 Bruce Street                     assisted living               20
                                                            Neenah, WI
  17       0831       Sterling House of Oshkosh             190 Lake Pointe Drive                 assisted living               20
                                                            Oshkosh, WI
  18       0825       Sterling House of Sun Prairie         650 Broadway Drive                    assisted living               20
                                                            Sun Prairie, WI
  19       0837       Sterling House of Willmar             1501 19th Avenue South West           assisted living               20
                                                            Willmar, MN
  20       0836       Sterling House of Middleton           6916 Century Avenue                   assisted living               20
                                                            Middleton, WI
  25       0450       Clare Bridge of Jacksonville          10050 Old Saint Augustine Rd.   assisted living/memory care         38
                                                            Jacksonville, FL
  28       0205       Wynwood of Meridian                   5346 Marsh Road                       assisted living               72
                                                            Meridian, MI  (Haslett)
  29       0446       Sterling House of Ocala               1500 South East 24th Road             assisted living               42
                                                            Ocala, FL
  30       0448       Sterling House of Ormond Beach        240 Interchange Blvd.                 assisted living               42
                                                            Ormond Beach, FL
  31       1135       Sterling House of Marion              308 Barks Road East                   assisted living               43
                                                            Marion, OH
</TABLE>

                                  SCHEDULE 2-1
<PAGE>
<TABLE>
<CAPTION>
                                                                                                                             # OF
FACILITY                                                                                                                    BEDS OR
NUMBER     ALTERRA                                                                                   BUSINESS/              LIVING
           CODE       FACILITY                              FACILITY LOCATION                      FACILITY TYPE             UNITS
<S>        <C>        <C>                                   <C>                             <C>                             <C>
  32       1125       Sterling House of Barberton           487 Austin Drive                      assisted living               42
                                                            Barberton, OH
  33       1129       Sterling House of Englewood           350 Union Road                        assisted living               42
                                                            Englewood, OH
  34       0840       Sterling House of Kenosha             3109 12th Street                      assisted living               20
                                                            Kenosha, WI
  35       0221       Sterling House of Davison             432 East Clark Street                 assisted living               20
                                                            Davison, MI
  36       0222       Clare Bridge of Delta                 7235 Delta Commerce Drive       assisted living/memory care         38
                                                            Delta, MI     (Lansing)
  37       0240       Sterling House of Delta               7323 Delta Commerce Drive             assisted living               20
                                                            Delta, MI     (Lansing)
  38       0218       Clare Bridge of Troy                  4900 Northfield Parkway         assisted living/memory care         52
                                                            Troy, MI
  39       0237       Wynwood of Troy                       4850 Northfield Parkway               assisted living               78
                                                            Troy, MI
  40       0232       Clare Bridge of Grand Blanc           5130 Baldwin Road                     assisted living               52
                                                            Holly, MI
  41       0233       Wynwood of Grand Blanc                5080 Baldwin Road                     assisted living               78
                                                            Holly, MI
  42       1704       Sterling House of Bethany             4101 North Council Road               assisted living               26
                                                            Bethany, OK
  43       1111       Sterling House of Derby               1709 East Walnut Grove                assisted living               26
                                                            Derby, KS
  44       1120       Sterling House of Wellington          500 North Plum Street                 assisted living               26
                                                            Wellington, KS
  45       1703       Sterling House of Bartlesville South  3737 South East Camelot Dr.           assisted living               33
                                                            Bartlesville, OK
  46       1736       Sterling House of Lancaster           2400 West Pleasant Run Rd.            assisted living               37
                                                            Lancaster, TX
  47       1747       Sterling House of Temple              3902 West Adams Avenue                assisted living               42
                                                            Temple, TX
  48       1735       Sterling House of Kerrville           725 Leslie Drive                      assisted living               37
                                                            Kerrville, TX
  49       1745       Sterling House of Whitby              5996 Whitby Road                      assisted living               50
                                                            San Antonio, TX
</TABLE>

                                  SCHEDULE 2-2
<PAGE>
                                   SCHEDULE 3

                      EXCEPTIONS TO INSURANCE REQUIREMENTS


                                  SCHEDULE 3-1
<PAGE>
                                   SCHEDULE 4

               EXISTING FACILITIES EXEMPT FROM RADIUS RESTRICTION


                                  SCHEDULE 4-1
<PAGE>
                                   SCHEDULE 5

              EXCEPTIONS TO TENANT'S REPRESENTATIONS AND WARRANTIES


                                  SCHEDULE 5-1
<PAGE>
                                   SCHEDULE 6

                        INITIAL CAPITAL EXPENDITURE ITEMS


                                  SCHEDULE 6-1
<PAGE>
                                   SCHEDULE 7

                       MINIMUM WISCONSIN RESIDENCE PRICES


<TABLE>
<CAPTION>
                     WISCONSIN PURCHASE FACILITY                        MINIMUM RESIDENCE PRICE
                     ---------------------------                        -----------------------
<S>                                                                     <C>
1.         Sterling House of Brown Deer                                            $530,000
           4015 West Woodale, Brown Deer, WI

2.         Sterling House of Plymouth                                               $730,00
           112 South River Boulevard, Plymouth WI

3.         Sterling House of Manitowoc                                             $830,000
           5005 Vista Road, Manitowoc WI
</TABLE>

                                  SCHEDULE 7-1
<PAGE>
                                   SCHEDULE 8

                           MANLIUS FINANCING DOCUMENTS


                                  SCHEDULE 8-1