|UNITED STATES
					
					SECURITIES AND EXCHANGE COMMISSION
					
					Washington, D.C. 20549
					
					FORM 10-K
					________________________________
|--------------------------------------------------------------------------------------------------------------------------------------------------------

[MARK ONE]

|x                                                                                                                                                                                                                                                                                                                                                                                                                                      | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
						1934
					
					For the Fiscal Year Ended December 31, 2001                                              
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|OR                                                                                                                                                                                                                                                                                                                                                                                                                                    
|[ ]                                                                                                                                                                                                                                                                                                                                                                                                                                    | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
						ACT OF 1934 [NO FEE REQUIRED]                                                                               
|For the transition period from _________ to ________
						Commission file number 1-12000
						
						_______________________________________                                                                                                                                                                                                                                                                                        
|Alterra Healthcare Corporation                                                                                                                                                                                                                                                                                                                                                                                                        
|(Exact name of Registrant as specified in its charter)                                                                                                                                                                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                                                                                                                                                                                                                       |                                                                                                                                                                                                
|                                                                                                                                                                                                                                                                                                                                                                                                                                       | Delaware                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                                                                                                                                       | (State of Incorporation)
							
							10000 Innovation Drive
							
							Milwaukee, WI
							(Address of principal executive offices)                                                    
|                                                                                                                                                                                                                                                                                                                                                                                                                                       |                                                                                                                                                                                                
|Registrant's telephone number, including area code (414) 918-5000
							_________________________
							Securities registered pursuant to Section 12(b) of the American Stock Exchange
							Act:                                                                                                                                                                                                                                  
|                                                                                                                                                                                                                                                                                                                                                                                                                                       |                                                                                                                                                                                                
|                                                                                                                                                                                                                                                                                                                                                                                                                                       | Title of each class
							
							Common Stock, par value $.01
							
							5.25% Convertible Subordinated Debenture due 2002
							
							Series A Junior Preferred Stock Purchase Rights
|                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Securities registered pursuant to Section 12(g) of the Act:
							
							NONE
							
							(Title of class)                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Indicate by check mark whether the Registrant: (1) has filed all reports
						required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
						1934 during the preceding 12 months (or for such shorter period that the
						Registrant was required to file such reports), and (2) has been subject to such
						filing requirements for the past 90 days. Yes       
						 x           No       
						 _____
|                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
						of Regulation S-K is not contained herein, and will not be contained, to the
						best of Registrant's knowledge, in definitive proxy or information statements
						incorporated by reference in Part III of this Form 10-K or any amendment to
						this Form 10-K.
						TM                                                                 
|                                                                                                                                                                                                                                                                                                                                                                                                                                      
|The aggregate market value of the voting stock held by non-affiliates of the
							Registrant was $3,110,684 as of March 29, 2002. The number of outstanding
							shares of the Registrant's Common Stock was 22,219,168 shares as of March 29,
							2002.                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                                                                                                                                      

---

The statements in this annual report on Form 10-K relating to matters that are
					not historical facts, including, but not limited to, statements found in Item
					1. "Business" and Item 7.  "e; Management's Discussion and Analysis of
					Financial Condition and Results of Operations" are forward-looking statements
					that are subject to risks and uncertainties that could cause actual results to
					differ materially from expectations. These include, without limitation, those
					set forth under "Item 1. Business - Factors Affecting Future Results and
					Regarding Forward-Looking Statements." These and other risks are set forth in
					the reports filed by us with the Securities and Exchange Commission.

PART I

References in this report to "Alterra" refer to Alterra Healthcare Corporation
				and references to the "Company," "us" or "we" refer to Alterra and its
				subsidiaries.

ITEM 1.         BUSINESS

Overview

We are a national assisted living company operating assisted living residences
				and providing assisted living services in 26 states. Our growth in recent years
				and recent restructuring activities has had a significant impact on our results
				of operations and are important factors in explaining the changes in our
				results between 2001 and 2000. As of December 31, 2001 and 2000, we operated or
				managed 430 and 474 residences with aggregate capacity of approximately 20,182
				and 22,100 residents, respectively. As of December 31, 2001, 47 of our
				residences were operated in joint venture arrangements with third parties.
				During 2001, we generated operating revenue of $508.8 million and realized
				income from operations of $17.9 million and pretax loss of $110.5 million, both
				prior to loss on disposal of assets.

Our statements in this annual report relating to matters that are not
				historical facts are forward-looking statements based on our management's
				belief and assumptions based upon currently available information. Although we
				believe that the expectations reflected in these forward-looking statements are
				reasonable, we are unable to provide assurances that our expectations will
				prove to be correct. Forward-looking statements involve a number of risks and
				uncertainties including, but not limited to, uncertainty regarding the
				consequences of our restructuring, risks associated with continuing defaults
				under loan, lease and subordinated debenture obligations, risks associated with
				the continuing shortfall in our liquidity and the implementation of our
				restructuring plan, risks associated with the disposition of assets and
				termination of leases, substantial debt and operating lease payment obligations
				and current and pending maturities, risks associated with liability claims and
				insurance, competition, governmental regulation and other uncertainties
				outlined in our reports filed with the Securities and Exchange Commission.
				Should one or more of these risks materialize (or the consequences of one or
				more of these risks worsen) or should our underlying assumptions prove
				incorrect, our actual results of operation and our financial position in the
				future could differ materially from those forecasted or expected. We do not
				assume any duty to publicly update these forward-looking statements.

Recent Developments

Throughout 2000 and 2001 we sought to implement several strategic initiatives
				designed to strengthen our balance sheet and to enable management to focus on
				stabilizing and enhancing our core business operations. The principal
				components of these strategic initiatives included (i) discontinuing our
				development activity; (ii) a reduction in our utilization of and reliance upon
				the use of joint venture arrangements; (iii) de-leveraging our balance sheet;
				and (iv) focusing our activities on improving the Company's cash flow. To
				implement these strategic initiatives and to address our short and long-term
				liquidity and capital needs, we completed an equity-linked investment in the
				Company of $203 million during the second and third quarters of 2000 (the
				"Equity Transaction"). At the time of the Equity Transaction, we believed that
				the net proceeds of that transaction, together with other anticipated financing
				transactions, would provide sufficient cash resources for us to complete our
				remaining construction activities and to cover operating cash deficits until we
				achieved positive operating cash flow.

In the second half of 2000, however, two issues emerged that have had a
				materially adverse impact on our liquidity. First, costs associated with
				operating our residences, labor and liability insurance costs in particular,
				increased in the second half of 2000. Second, due both to a generally
				unfavorable financing market for assisted living residences and the declining
				credit fundamentals at both the residence and corporate level, we were unable
				to complete our anticipated financing transactions in 2000 and 2001. These
				financing transactions were originally projected to yield cash proceeds that
				would have been used to fund a portion of our overall cash requirements.
				Virtually all of the net cash proceeds of the Equity Transaction were used to
				fund our operating cash flow deficits and construction costs for our remaining
				unopened residences.

---

By February 2001, our overall cash position had declined to a level which we
				believed to be insufficient to operate the Company. As we began 2001 our
				operations produced approximately $7.0 million per month of cash flow before
				monthly secured debt service and lease payments, and our monthly secured debt
				service and lease payments totaled approximately $12.0 million. In addition, we
				faced significant debt maturities in 2001 and 2002.

In February 2001 we retained financial advisors and special reorganization
				counsel to assist us in evaluating alternatives to restore the financial
				viability of our business. To conserve cash and protect the financial integrity
				of our operations, beginning in March 2001, we have elected not to make $10.4
				million of scheduled debt service and lease payments, of which $6.6 million
				remained unpaid as of December 31, 2001. As a result, we continue to be in
				default under many of our major loan and lease facilities. In March 2001, we
				obtained a $7.5 million bridge loan to fund current operations from certain
				principal stock and debenture holders.

We believe that our operating cash flow has improved and will continue to
				improve due to cost and overhead reductions that we implemented and increases
				in monthly rents that we charge to our residents which were effective in 2001
				and that we are implementing in 2002. Nevertheless, we believe that our
				operations will not produce sufficient cash flow to satisfy all of our existing
				obligations. Accordingly, we are seeking to negotiate restructurings of many of
				our principal secured debt and lease obligations and, upon completing these
				negotiations, will seek to restructure our principal unsecured debt
				obligations, comprised primarily of our outstanding convertible debentures. As
				we seek to complete our restructuring activities, it is our intention to
				maintain sufficient cash resources such that we can protect our operation by
				funding our on-going obligations to our employees, suppliers and other trade
				creditors on a timely basis.

Restructuring Activities

In March of 2001 we began to implement a restructuring plan, the principal
				objectives of which are:

          To create a cash flow positive base of
							operation by (i) disposing of under-performing and non-strategic assets, and
							(ii) allowing retained residences the opportunity to stabilize (generate
							sufficient cash flow to fund operations, capital spending and other cash
							requirements);

          To eliminate pending defaults and
							restructure the Company's senior financing instruments (secured debt
							arrangements and leases);

          To reduce the leverage on the Company's
							operating assets;

          To protect the Company's operations during
							the pendency of our restructuring by shielding our employees, residents and
							vendors from any adverse consequences of the restructuring; and

          To the extent practicable, to seek to
							restore value to the Company's junior capital constituencies.

The principal components of our restructuring plan ("Restructuring Plan") are
				the disposition of selected assets and the restructuring of our capital
				structure, including our "senior capital" constituencies comprised principally
				by our secured indebtedness and leases (operating, capital and synthetic), our
				"junior capital" constituencies comprised principally by our convertible
				pay-in-kind (PIK) debentures, our other convertible subordinated debentures and
				our equity capitalization, and our remaining joint venture relationships.
				Discussions with various senior capital structure constituencies commenced in
				the spring of 2001 and are ongoing. While several binding restructuring
				arrangements have been executed, negotiations with respect to the majority of
				our secured debt and lease arrangements have not been concluded. Negotiations
				with junior capital structure constituencies have not commenced, as these
				negotiations are dependent upon the outcome of our negotiations with senior
				capital structure constituencies and the fact that, pursuant to the
				subordination provisions governing our convertible subordinated debentures, we
				are limited in our ability to restructure the convertible subordinated
				debentures until we have cured pending defaults related to our secured
				indebtedness. Given that significant restructuring discussions and negotiations
				are still to be concluded, we expect that we may be making modifications to the
				Restructuring Plan to address issues that arise during the course of these
				negotiations.

Portfolio Rationalization
					
					.
				
				The Restructuring Plan calls for the disposition of a substantial number of
				our residences (collectively, the "Disposition Assets") that we have determined
				to be non-strategic for one of a variety of reasons, including the geographic
				location of certain of these residences. The disposition of the residences
				included in the Disposition Assets are expected to be accomplished primarily by
				actively working with the lenders and lessors to identify new operators and
				selling assets through an organized sales process.

---

Beginning in April 2001, we started to market the Disposition Assets. Potential
				buyers, brokers and lenders were provided various information related to the
				Disposition Assets and confidentiality agreements have been executed with a
				number of interested parties. We recognized a pre-tax loss of $189.2 million
				during 2001 (in addition to the $22.5 million pre-tax loss recognized in 2000)
				to reflect the Disposition Assets at the lower of carrying value or estimated
				fair value less costs to sell and to write off the carrying value of assets
				associated with terminated residence leases. In addition, we are discussing a
				number of alternatives with our lenders and lessors to address any potential
				cash shortfalls that may result from the dispositions. A condition to our
				disposing of the Disposition Assets will be obtaining the consent of the
				applicable lender or lessor and, in certain cases, the consent of the
				applicable joint venture partner. As of December 31, 2001, 59 residences
				representing 2,774 resident capacity have either been sold or transferred to a
				new lessee. In addition, we sold 10 land parcels. As of December 31, 2001,
				approximately $150.5 million is reserved for losses relating to future asset
				sales or lease terminations.

Restructuring of Our Senior Indebtedness and Leases
					
					.
				
				In addition to active efforts to effect the sale or other disposition of the
				Disposition Assets, we have commenced discussions with many of our secured
				lenders and lessors to restructure certain of our debt and lease obligations.

The Company has a complex senior capital structure, comprised of at least 15
				significant multi-residence secured credit facilities and five significant
				portfolios of operating residences that are leased from real estate investment
				trusts (REITs). Many of our secured credit facilities are structured to
				incorporate various so-called "bankruptcy-remote" features (i.e., structures
				designed to improve the applicable lender's rights and leverage in the event of
				a bankruptcy of the parent company, Alterra), including structuring the credit
				facility such that the fee owner of the mortgaged residences and the borrower
				under the credit facility is a newly formed subsidiary of Alterra whose sole
				activity is to own and operate the residences financed under that credit
				facility. The structure of certain of these credit facilities serves to limit
				the Company's ability to restructure these facilities through a bankruptcy,
				making it generally preferable for the Company to negotiate consensual
				restructurings with each group of lenders providing secured financing to the
				Company.

The Company commenced negotiations with its secured lenders and lessors during
				2001. Each separate negotiation is unique and is based on the characteristics
				of the underlying credit facility, including the credit facility's collateral,
				terms and structure. Accordingly, our restructuring needs and objectives vary
				from one credit facility to the next. Depending on the particular credit
				facility, we are attempting to reset maturities, address any deficiencies,
				reset covenants, obtain waivers of default interest and penalties, and secure
				consent from the lenders and lessors for sales of residences included in their
				collateral or lease portfolio.

Secured Lender Negotiations.
				
				Management is actively seeking to restructure secured loan facilities that, in
				management's view, would generate significant deficiency claims (i.e., claims
				in excess of the value of the applicable mortgage portfolio) in the event the
				applicable lenders sought to call the loan and foreclose on their collateral.
				Management believes that four credit facilities representing $314.4 million in
				aggregate financing (secured by mortgages on 73 residences with a capacity of
				4,261 beds) appear to represent significant potential deficiency claims in the
				range of $110 million to $180 million. In these negotiations, we are seeking to
				obtain a release of these potential deficiency claims against the Company in
				exchange for our agreement to cooperate with the applicable lenders to
				facilitate an orderly transition of ownership (and, in certain cases,
				management) of the mortgaged residences to the lenders or their designees
				(through deed-in-lieu of foreclosure transactions or so-called friendly
				foreclosures). In transitioning ownership of the mortgaged residences to the
				lenders, we are offering to provide interim or long-term management services to
				the lenders with respect to the mortgaged residences. As of March 2002, we have
				executed one definitive agreement of this type with one lender group with
				regard to a credit facility representing $50.5 million of financing secured by
				14 residences with an aggregate capacity of 618 beds and are in active
				negotiations with the lenders of the other three "impaired" credit facilities.

In addition to these impaired credit facilities, we are also seeking to
				negotiate amendments and modifications with the applicable lenders with respect
				to our other principal secured credit facilities in order to, depending on the
				specific case, reset covenants, obtain consent to sell certain mortgaged
				residences, secure waivers of prior defaults and, in certain cases, to extend
				scheduled maturities. These credit facilities represent $434.9 million of
				financing secured by an aggregate of 146 residences with a capacity of 6,483
				beds. Discussions with certain (but not all) of these lenders have commenced,
				but none have yet resulted in definitive binding restructuring agreements.

REIT Lessor Negotiations
				
				. We currently have five multi-residence portfolios leased from various REITs.
				These portfolios include an aggregate of 204 residences with a capacity of
				8,928 beds. During 2001 we completed the restructuring of two of our leased
				portfolios (aggregate of 53 residences with 2,064 beds). These restructurings
				included the amendment of certain lease covenants and terms and, in one lease
				facility, the conversion of 42 individual leases into a single master lease.
				The cash rent due under one lease facility was modified through the application
				of various deposits held by the landlord to satisfy a portion of the cash rent
				obligation in the early years of the restructured master lease.

---

Restructuring negotiations are currently underway with the other three REIT
				lessors. In these restructuring negotiations, we are seeking to extend lease
				terms, revise covenants as necessary, secure approval for asset sales, and
				obtain additional funding for capital expenditures. In consideration for these
				modifications, the applicable REIT lessors are generally requesting that we
				convert individual leases into multi-residence master leases.

Restructuring of Junior Capital Structure
					
					.
				
				As of December 31, 2001, the Company's junior capital structure is comprised
				of approximately $395.2 million of unsecured debt and equity capitalization
				comprised of $5.5 million aggregate principal amount of 9.75% Series A
				Cumulative Convertible Preferred Stock due May 30, 2007 (the "Series A Stock")
				and 22.2 million shares of Common Stock. The principal components of the
				Company's unsecured indebtedness as of December 31, 2001 (amounts exclude
				accrued but unpaid interest) include:

(i)         $10 million aggregate principal face
					amount of 9.0% promissory notes due in December 2006, issued in connection with
					the restructuring of certain joint venture arrangements (the "Unsecured Notes");

(ii)         $197.9 million aggregate principal amount
					of 9.75% pay-in-kind convertible debentures due May 30, 2007, (the "PIK
					Debentures") issued in three separate series in the Equity Transaction;

(iii)         $112.0 million aggregate principal
					amount of 5.25% convertible subordinated debentures due December 15, 2002 (the
					"5.25% Debentures");

(iv)         $40.4 million aggregate principal amount
					of 7.00% convertible subordinated debentures due June 1, 2004 (the "7.00%
					Debentures"); and

(v)         $34.9 million aggregate principal amount
					of 6.75% convertible subordinated debentures due June 30, 2006 (the "6.75%
					Debentures").

The outstanding 5.25% Debentures, 7.00% Debentures and 6.75% Debentures
				(collectively, the "Original Debentures") are subordinated to all other "senior
				indebtedness" of the Company (as defined in the applicable indenture governing
				such debentures), and the PIK Debentures are subordinated to all "senior
				indebtedness" of the Company (as defined in the applicable indentures governing
				such debentures), other than the Original Debentures. Although defined somewhat
				differently in the several indentures governing the Original Debentures and the
				PIK Debentures (collectively, the "Subordinated Debentures"), "senior
				indebtedness" is defined to generally include indebtedness for borrowed money
				and other similar obligations of Alterra (other than the other series of
				Original Debentures).

All of our Subordinated Debentures are currently in default due to our failure
				to make coupon payments on the Original Debentures and due to cross default
				provisions triggered by payment defaults on our secured debt.

As a result of several notices of default received by the Company with respect
				to secured indebtedness that by its terms may be accelerated by the applicable
				lenders, neither we nor the applicable indenture trustees for the Subordinated
				Debentures are permitted by the subordination provisions of the indentures
				governing the respective Subordinated Debentures to make any payment or
				distribution on account of the Subordinated Debentures (other than the payment
				of PIK coupons on the PIK Debentures). As a result, we did not make cash
				interest payments on the Original Debentures in July 2001 and January 2002 of
				$5.5 million and $5.8 million, respectively. In the event that the Company is
				dissolved, liquidated or reorganized, all amounts due in payment of the
				Company's "senior indebtedness" must be paid or provided for before any payment
				may be made on account of the Subordinated Debentures. Accordingly, unless and
				until we are able to restructure our "senior indebtedness" obligations
				(including, without limitation, our several secured credit facilities) and
				resolve all pending defaults related to this indebtedness, we will not be
				permitted to make any interest or other payments to the holders of the
				Subordinated Debentures (other than the payment of PIK coupons on the PIK
				Debentures) or to restructure the Subordinated Debentures.

To the extent that the Company is not able to restructure its capital structure
				and is forced to liquidate, applicable principals of corporate law
				(specifically, the liquidation priority of debt over equity and the priority of
				preferred stock over common stock) and the subordination provisions governing
				the Subordinated Debentures would dictate that:

- All of our obligations relating to our secured and unsecured loans, including
						the Unsecured Notes and any deficiency claims relating to our secured loan
						facilities, would be required to be paid in full before any liquidation
						proceeds are distributed to the holders of our Subordinated Debentures;
- All obligations relating to the PIK Debentures would be required to be paid in
						full before any liquidation proceeds are distributed to the holders of our
						Original Debentures;
- All obligations relating to the Original Debentures, as well as all other
						indebtedness of the Company, would be required to be paid in full before any
						liquidation proceeds are distributed to the holders of our Series A Stock and
						Common Stock; and
- All liquidation preferences related to our outstanding Series A Stock
						(approximately $5.7 million as of December 31, 2001) would be required to be
						paid in full before any liquidation proceeds are distributed to the holders of
						our Common Stock.

In seeking to restructure our junior capital structure, the relative rights in
			liquidation of our various junior capital constituencies will be a significant
			factor in determining the extent to which the claims and interests of these
			various constituencies will need to be modified or exchanged as the Company is
			restructured.

In light of the subordination provisions governing the Subordinated Debentures,
			we are currently prohibited from restructuring the Subordinated Debentures, the
			largest component of our junior capital structure. If we are able to
			successfully complete the restructuring of our secured credit facilities, we
			anticipate that we will seek to exchange an equity or equity-linked security of
			the Company for all or a portion of the outstanding Subordinated Debentures.
			The extent to which all of the Subordinated Debentures will be permitted to
			participate in this exchange offer, and the value and rights associated with
			this new equity or equity-linked security to be offered to the holders of the
			PIK Debentures and Original Debentures, respectively, will be contingent upon
			the value of the restructured Alterra and will be impacted by the subordination
			provision operative with respect to the various series of Subordinated
			Debentures.

We may seek to effect a restructuring of certain of the Subordinated Debentures
			by an exchange offer to the holders of such debentures. However, to
			successfully restructure the Subordinated Debentures we will need the consent
			of substantially all of the holders of these debentures to the terms of our
			exchange offer. In the alternative, the Company may seek to restructure certain
			components of its junior capital structure (most likely the Subordinated
			Debentures and the Company's equity capitalization) by reorganizing the Company
			pursuant to a filing of a largely pre-arranged restructuring plan under Chapter
			11 of the United States Bankruptcy Code ("Chapter 11"). In a case commenced
			under Chapter 11, the Company can successfully restructure without the need of
			obtaining the active consent of substantially all of the holders of the
			Subordinated Debentures because Chapter 11 provides specific voting
			requirements and other mechanisms for completing a restructuring under court
			supervision.

Given the uncertainty as to the outcome of our many ongoing restructuring
			negotiations with senior capital structure constituencies, and given the impact
			of operative subordination provisions and corporate law doctrines governing the
			relative rights of holders of debt and equity interests in the Company, it is
			very difficult for us to predict what value, if any, various junior capital
			structure constituencies will receive in the restructured Alterra. While it is
			management's intention, to the extent practicable, to seek to restore value to
			our junior capital structure, no assurances may be given as to what value, if
			any, various junior capital structure constituencies will have in the
			restructured Company. See "Business - Factors Affecting Future Results and
			Regarding Forward Looking Statements - Uncertainty Regarding Consequences of
			Restructuring."

Joint Venture Arrangements
				
				.
			
			The Restructuring Plan calls for us to seek to acquire joint venture interests
			in certain of our residences in order to simplify our capital structure. In
			many cases, our acquisition of these joint venture interests (or termination of
			the applicable joint venture's interest in our residences) is necessary for us
			to satisfy restructuring requirements established by our senior lenders and
			lessors.

During 2001 we negotiated a series of agreements that resulted in the
			discontinuation of joint venture arrangements with respect to 42 residences.
			Specifically, in October 2001, we negotiated the buyout by the Company of joint
			venture partner interests in 15 residences in connection with a modification
			and settlement agreement with one investor group. Pursuant to this agreement,
			we issued $500,000 of promissory notes and modified certain terms of the joint
			venture arrangement relating to the remaining ten joint venture residences. In
			December 2001, we also terminated our joint venture with Pioneer Development
			Company by exchanging ownership interests in 12 joint venture entities jointly
			owned with this group, resulting in the Company and Pioneer each acquiring sole
			ownership in six of these residences. Also in December 2001, we terminated our
			joint venture with Manor Care, Inc. relating to 13 residences in connection
			with consummating a global settlement of various pending litigations and
			arbitration proceedings between the Company and Manor Care and its affiliates.
			See "Management's Discussion and Analysis of Financial Condition and Results of
			Operations - Liquidity and Capital Resources."

---

We are engaged in buy-out negotiations with investor groups who currently have
			joint venture interests in 47 residences in the aggregate. No assurance may be
			given as to whether these negotiations will result in an agreement as to the
			Company acquiring 100% of these joint venture entities. If these negotiations
			fail, the Company's ability to restructure certain of its senior capital
			financing facilities may be adversely affected. If lenders or lessors providing
			financing to the Company with respect to residences operated by joint ventures
			seek to foreclose on their mortgages or to terminate their leases, and as a
			result joint venture entities have their right to operate such residences
			impaired, Alterra may be forced to defend damage claims asserted by certain of
			its joint venture partners.

Efforts to Secure New Equity.
				

			
			As we continue to restructure the Company, we may find it necessary to seek new
			equity investment in the Company to be funded upon completion of the
			restructuring in order to achieve financial stability, fund certain deferred
			expenditures and fund certain non-recurring costs of the restructuring. This
			investment would likely be contingent on a successful restructuring of the
			Company and, accordingly, would not be funded until negotiations, settlements
			and restructurings with our lenders, lessors, Subordinated Debenture and equity
			holders and joint venture partners have concluded. Any additional equity
			investment in the Company, if it can be arranged, may significantly dilute the
			equity interests of all parties holding (or receiving in the restructuring)
			equity or equity-linked securities in the restructured Alterra.

Assisted Living Services

We offer a full range of assisted living services based upon individual
			resident needs. Prior to admission, residents are assessed by our staff to
			determine the appropriate level of personal care and service required.
			Subsequently, individual service agreements are developed by residence staff in
			conjunction with the residents, their families and their physicians. These
			plans are periodically reviewed, typically at six-month intervals, or when a
			change in medical or cognitive status occurs.

Frail-Elderly Services
				
			
			. We offer residents 24-hour assistance with activities of daily living
			("ADLs"), ongoing health assessments, organized social activities, three meals
			a day plus snacks, housekeeping and personal laundry services. All residents
			are assessed at admission to determine the level of personal care and service
			required and placed in a care level ranging from basic care to different levels
			of advanced personal care. In addition, in some locations we offer our
			residents exercise programs and programs designed to address issues associated
			with early stages of Alzheimer's and other forms of dementia as more fully
			described below.

Basic Care
					
					. At this level residents are provided with a variety of services, including
					24-hour assistance with ADLs, ongoing health assessments, three meals per day
					and snacks, coordination of special diets planned by a registered dietitian,
					assistance with coordination of physician care, social and recreational
					activities, housekeeping and personal laundry services.

Additional Care
					
					. We also offer higher levels of personal care services to residents who
					require more frequent or intensive physical assistance or increased personal
					care and supervision due to cognitive impairments. We refer to this care as
					"YourCare." Pricing for YourCare is determined using a proprietary assessment
					tool which determines additional services provided above basic care. Charges
					are based on market rates and the cost of additional personal care required,
					typically staffing. Rates charged for these services are added to the rate
					charged for basic personal care and depend upon the level and frequency of
					personal care required and staffing needs. Residents requiring the highest
					personal care level are typically very physically frail or experiencing early
					stages of Alzheimer's disease or other dementia. Physically frail residents may
					require medication management, assistance with various ADLs, two-person
					transfer from a wheelchair or incontinence care. Residents with cognitive
					impairment may require frequent staff interaction and intervention due to
					confusion.

RISE (Restoring Independence, Strength and Energy).
					
					Some
					Wynwood
					residences also offer RISE, a one-on-one exercise program designed to help
					residents regain their independence and become healthier and stronger by
					improving flexibility, balance, strength and endurance. The program is targeted
					to residents with health concerns related to Parkinson's disease, strokes,
					osteoarthritis, osteoporosis, congestive heart disease, hip fractures and other
					limitations in ambulation and mobility. Monthly rates for the program range
					from $50 to $275 depending on the frequency and duration of sessions.

ESP (Extended Support Program).
					
					ESP, also offered at some
					Wynwood
					residences, is a program designed to provide additional structure and personal
					attention to residents with early stages of dementia. Scheduled group
					recreational activities and social events help residents build self-esteem and
					decrease anxiety related to confusion and disorientation. The ESP program has
					been successful in retaining residents who, due to their dementia, might
					otherwise need to relocate to a more supportive environment. The monthly
					program rates range from $150 to $550.

---

Personal care and supportive services are offered in different residence models
			which incorporate our philosophy of preserving residents' privacy, encouraging
			choice and fostering independence in a home-like setting.

- Wynwood
					
					. These multi-story residences are designed to serve primarily upper income
					frail-elderly individuals in metropolitan and suburban markets. The
					Wynwood
					residences typically range in size from 37,500 to 45,000 square feet and
					accommodate 60 to 78 residents. To achieve a more residential environment in
					these large buildings, each wing or "neighborhood" in the residence contains
					design elements scaled to a single-family home and includes a living room,
					dining room, patio or enclosed porch, laundry room and personal care area, as
					well as a caregiver work station. Average monthly rates charged per resident
					range from approximately $1,800 to $4,000, depending on the apartment type,
					level of services required, resident activity and the geographic location of
					the residence. The average monthly rate in
					Wynwood
					residences during the fourth quarter of 2001 was approximately $2,800.
- Sterling House
					
					. These apartment-style residences are generally located in select suburban
					communities and in small or medium-sized towns with populations of 10,000 or
					more persons. These residences range in size from 20,000 to 30,000 square feet
					and usually contain from 33 to 50 private apartments, offering residents a
					choice of studio, one-bedroom and one-bedroom deluxe apartments. These
					apartments typically include a bedroom area, private bath, living area,
					individual temperature control and kitchenettes and range in size from 320 to
					420 square feet. Common space is dispersed throughout the building and is
					residentially scaled. Average monthly rates charged per resident range from
					approximately $1,600 to $3,600, depending on the apartment type, level of
					services required, resident acuity and the geographic location of the
					residence. The average monthly rate in
					Sterling House
					residences during the fourth quarter of 2001 was approximately $2,500.
- Villas.
					
					These private apartment-style residences are designed to serve upper-income
					independent individuals in metropolitan and suburban markets. The
					Villas
					residences typically range in size from 45,000 to 65,000 square feet and
					contain 63 to 218 private apartments. These apartments typically include a
					bedroom area, private bath, living/dining area, and kitchenettes and range in
					size from 280 to 700 square feet. The
					Villas
					offer a secure building with comfortable common areas and pleasant outdoor
					surroundings. Average monthly rates charged per resident range from
					approximately $1,300 to $2,000, depending on the apartment type, level of
					services required, and geographic location of the residence. The average
					monthly rate in
					Villas
					residences during the fourth quarter of 2001 was approximately $1,900.

Alzheimer's Dementia Services
				
			
			. We believe we are one of the leading providers of care to residents with
			cognitive impairments, including Alzheimer's and other dementias, in our
			free-standing
			Clare Bridge
			and
			Clare Bridge Cottage
			residences. Our programs provide the attention, personal care and services
			needed to help cognitively impaired residents maintain a higher quality of
			life. Specialized services include assistance with ADLs, behavior management
			and an activities program, the goal of which is to provide a normalized
			environment that supports residents' remaining functional abilities. Whenever
			possible, residents participate in all facets of daily life at the residence,
			such as assisting with meals, laundry and housekeeping.

Our specially designed, free-standing dementia residence models serve the
			programmatic needs of individuals with Alzheimer's disease and other dementias.
			Our dementia model residents typically require higher levels of personal care
			and services as a result of their progressive decline in cognitive abilities,
			including impaired memory, thinking and behavior. These residents require
			increased supervision because they are typically highly confused, wander prone
			and incontinent.

- Clare Bridge
					
					. Our
					Clare Bridge
					dementia residence model ranges in size from 20,500 to 28,000 square feet, is
					a single-story residence accommodating 38 to 52 residents, and is primarily
					located in metropolitan and suburban markets. We seek to create a "home-like"
					setting that addresses the resident's cognitive limitations using internal
					neighborhoods consisting of rooms which are scaled to the size typically found
					in an upper-income, single-family home with the same level of furniture,
					fixtures and carpeting. Key features specific to the needs of
					Clare Bridge
					residents generally include indoor wandering paths, a simulated "town-square"
					area, secure outdoor spaces with raised gardening beds, directional aids to
					assist in "wayfinding" such as signs, color-coded neighborhoods and memory
					boxes with the resident's photograph outside of their unit, and specifically
					designed furniture suitable for incontinent residents. Average monthly rates
					charged per resident range from approximately $2,000 to $5,000, depending on
					the apartment type, level of services required, resident activity, and
					geographic location of the residence. The average monthly rate in
					Clare Bridge
					residences during the fourth quarter of 2001 was approximately $3,700.
- Clare Bridge Cottage.
					
					During 1998 we introduced dementia residence models focused on smaller to
					medium-sized markets where income levels would not support a more upscale
					Clare Bridge
					model. These residences range from 20 to 40 residents and offer services
					similar to the
					Clare Bridge
					. These buildings resemble the
					Sterling House
					architectural styles with enhancements for wandering paths, security and other
					features associated with
					Clare Bridge
					. Average monthly rates charged per resident range from approximately $2,400 to
					$4,000 for services, depending on the apartment type, level of services
					required, resident activity, and geographic location of the residence. The
					average monthly rate in
					Clare Bridge Cottage
					residences during the fourth quarter of 2001 was approximately $2,600.

---

Access to Specialized Medical Services
				
			
			. In addition to our care and supportive services, we assist our residents with
			the coordination of access to medical services from third parties, including
			home health care, rehabilitation therapy, pharmacy services and hospice care.
			These providers are often reimbursed directly by the resident or a third party
			payor, such as Medicare. In the future, we may elect to provide these services
			directly using our own employees or through contracts or joint venture
			agreements with other providers.

Joint Ventures

Historically, we formed strategic alliances and joint ventures with established
			real estate development and financial partners. These alliances and joint
			ventures enabled us to develop and construct additional residences while
			reducing our investment and the associated risk. Although we discontinued
			developing and financing new residences utilizing joint venture and other
			off-balance sheet ownership structures beginning in 2000, we continue to have
			47 residences that were operated in these types of arrangements as of December
			31, 2001.

During 2001 we negotiated a series of agreements that resulted in the
			discontinuation of joint venture arrangements with respect to 42 residences.
			Specifically, in October 2001, we negotiated the buyout by the Company of joint
			venture partner interests in 15 residences in connection with a modification
			and settlement agreement with one investor group. In December 2001, we also
			terminated our joint venture with Pioneer Development Company by exchanging
			ownership interests in 12 joint venture entities jointly owned with this group,
			resulting in the Company and Pioneer each acquiring sole ownership in six of
			these residences. Also in December 2001, we terminated our joint venture with
			Manor Care, Inc. relating to 13 residences in connection with consummating a
			global settlement of various pending litigation and arbitration proceedings
			between the Company and Manor Care and its affiliates. See "Management's
			Discussion and Analysis of Financial Condition and Results of Operations -
			Liquidity and Capital Resources."

We continue to be a party to various other joint venture arrangements
			established between 1995 and 1999, pursuant to which we and other third party
			partners jointly developed, constructed and are operating Alterra-branded
			assisted living residences. Generally, the Company and our joint venture
			partner formed and capitalized a limited partnership or a limited liability
			company that either acquired a fee interest or a leasehold interest in an
			assisted living residence under development by us. Our percentage equity
			interests in these joint venture entities varies from joint venture to joint
			venture, ranging from 9.8% minority interests to 60.0% majority interests.
			These joint venture entities typically retain us as manager pursuant to a
			market rate management agreement. Under certain of these arrangements, we have
			agreed to fund during a three-year period, the operating deficit requirements
			of the applicable joint venture once the available equity and debt financing is
			fully utilized. Pursuant to the operative agreements, we have the right to
			acquire (call option) the joint venture partner's equity interest in the joint
			venture entity at a price based upon an agreed upon return on investment or
			fair market value to the joint venture partner. Similarly, after a specified
			waiting period, the joint venture partner has the right to require us to
			purchase (put option) the partner's equity interest in the joint venture entity
			at a price based upon the appraised fair market value of the residence operated
			by the joint venture entity. In certain circumstances, the purchase price
			payable upon an exercise of the put option is based upon a fair market value
			determination based on an assumption that the applicable residence has achieved
			and is maintaining stabilized occupancy. Any losses from the operation of
			residences owned or leased by these joint venture structures are generally
			allocated on a basis consistent with the respective partner's interest in
			overall cash distributions and the economic substance of the joint venture
			arrangement, which may result in losses being disproportionately allocated to
			the joint venture partners to the extent of their invested capital. We intend
			to seek to negotiate with the applicable joint venture partners a conclusion of
			these remaining arrangements as a part of the Restructuring Plan.

Government Regulation

Healthcare is an area of extensive and frequent regulatory change. The assisted
			living industry is relatively new and, accordingly, the manner and extent to
			which it is regulated at the federal and state levels is evolving.

Our assisted living residences are subject to regulation and licensing by state
			and local health and social service agencies and other regulatory authorities.
			In some states in which we operate, the term "assisted living" may have a
			statutory definition limited to a particular type of program or population.
			Some of our assisted living residences may fall into other licensing categories
			or may be independent apartments where services are provided by a licensed home
			healthcare agency. Although regulatory requirements vary from state to state,
			these requirements generally address, among other things: personnel education,
			training and records; staffing levels; facility services, including
			administration and assistance with self-administration of medication, and
			limited nursing services; physical residence specification; furnishing of
			residence units; food and housekeeping services; emergency evacuation plans;
			and residence rights and responsibilities. New Jersey and Kentucky also require
			each assisted living residence to obtain a Certificate of Need ("CON") prior to
			its opening. Our residences are also subject to various state or local building
			codes and other ordinances, including safety codes. We anticipate that the
			states which are establishing regulatory frameworks for assisted living
			residences will require licensing of assisted living residences and will
			establish varying requirements with respect to this licensing.

---

We have obtained all required licenses for each of our residences. Each of our
			licenses must be renewed annually or biannually.

Like other healthcare facilities, assisted living residences are subject to
			periodic survey or inspection by governmental authorities. From time to time in
			the ordinary course of business, government agencies issue deficiency reports
			and impose remedial action. We review these reports and remedial actions and
			seek to take appropriate corrective action. Although most inspection
			deficiencies are resolved through a plan of correction, the reviewing agency
			typically is authorized to take action against a licensed facility where
			deficiencies are noted in the inspection process. Action may include imposition
			of fines, imposition of a provisional or conditional license, or suspension or
			revocation of a license or other sanctions. Any failure by us to comply with
			applicable requirements could have a material adverse effect on our business,
			financial condition and results of operations.

We are currently a defendant in a criminal negligence action involving one of
			our residents. It is possible that if convicted of a crime, the Company's
			ability to obtain and renew certain of our licenses and to participate in
			certain government payor programs could be materially and adversely affected.

Federal and state anti-remuneration laws, such as the Medicare/Medicaid
			anti-kickback law, govern some financial arrangements among healthcare
			providers and others who may be in a position to refer or recommend patients to
			providers. These laws prohibit, among other things, direct and indirect
			payments that are intended to induce the referral of patients to, the arranging
			for services by, or the recommending of, a particular provider of healthcare
			items or services. The Medicare/Medicaid anti-kickback law has been broadly
			interpreted to apply to contractual relationships between healthcare providers
			and sources of patient referral. State anti-remuneration laws vary from state
			to state. Violation of these laws can result in loss of licensure, civil and
			criminal penalties, and exclusion of healthcare providers or suppliers from
			participation in (i.e., furnishing covered items or services to beneficiaries)
			the Medicare and Medicaid programs. Although we receive only a minor portion of
			our total revenues from Medicaid waiver programs and are otherwise not a
			Medicare or Medicaid provider or supplier, we may be subject to these laws
			because (i) applicable state laws typically apply regardless of whether
			Medicare or Medicaid payments are at issue and, in certain cases, (ii) some of
			our assisted living residences maintain contracts with healthcare providers and
			practitioners, including pharmacies, home health organizations and hospices,
			through which the healthcare providers make their healthcare products or
			services (some of which may be covered by Medicare or Medicaid) available to
			our residents. There can be no assurance that these laws will be interpreted in
			a manner consistent with our practices.

In order to comply with the terms of the revenue bonds used to finance nine of
			our residences, we are required to lease a minimum of 20% of the apartments in
			each of the nine residences to low or moderate income persons as defined
			pursuant to the Internal Revenue Code of 1986, as amended.

We are subject to the Fair Labor Standards Act which governs matters including
			minimum wage, overtime and other working conditions. A portion of our personnel
			is paid at rates related to the federal minimum wage and, accordingly,
			increases in the minimum wage will result in an increase in our labor costs.

We are not aware of any non-compliance by the Company with applicable
			regulatory requirements that would have a material adverse effect on our
			financial condition or results of operations.

Competition

The long-term care industry is highly competitive and, given the relatively low
			barriers to entry and continuing healthcare costs containment pressures, we
			expect that the assisted living segment of the industry will become
			increasingly competitive in the future. We compete with other providers of
			elderly residential care on the basis of the breadth and quality of our
			services, the quality of our residences and, with respect to private pay
			patients or residents, price. We also compete with other providers of long-term
			care in the acquisition and development of additional residences. Our current
			and potential competitors include national, regional and local operators of
			long-term care residences, extended care centers, assisted/independent living
			centers, retirement communities, home health agencies and similar providers,
			many of which have significantly greater financial and other resources than we
			have. In addition, we compete with a number of tax-exempt nonprofit
			organizations which can finance capital expenditures on a tax-exempt basis or
			receive charitable contributions unavailable to us and which are generally
			exempt from income tax. While our competitive position varies from market to
			market, we believe that we compete favorably in substantially all of the
			markets in which we operate based on key competitive factors such as the
			breadth and quality of services offered, residence quality, recruitment and
			retention of qualified healthcare personnel, and reputation among local
			referral sources.

---

Trademarks

Sterling House®, Crossings®, WovenHearts®, Wynwood®, Clare
				Bridge®, and Clare Bridge Cottage®
			
			are registered service marks of ours and we claim service mark protection in
			the marks
			Alternative Living Services
				SM
				, Clare Bridge
				SM
			and
			Alterra
				SM
				.

Employees

At December 31, 2001, we employed approximately 7,900 full-time employees and
			
			3,400 part-time employees. None of our employees are represented by a
			collective bargaining group.

Factors Affecting Future Results and Regarding Forward-Looking Statements

Our business, results of operations and financial condition are subject to many
			risks, including those set forth below. Through its Restructuring Plan, the
			Company is seeking to materially restructure many of its principal senior and
			junior credit instruments, the result of which restructurings are expected to
			have a material impact on the value attributable to and the rights of the
			holders of the Company's equity and equity-linked securities, including the
			Common Stock and the several series of outstanding Subordinated Debentures. In
			addition, the following important factors, among others, could cause our actual
			results to differ materially from those expressed in our forward-looking
			statements in this report and presented elsewhere by us from time to time. When
			used in this report, the words "believes," "anticipates" and similar
			expressions are intended to identify forward-looking statements. Readers are
			cautioned not to place undue reliance on these forward-looking statements,
			which speak only as of the date of this report. We undertake no obligation to
			publicly release the results of any revisions to these forward-looking
			statements that may be made to reflect events or circumstances after the date
			of this report or to reflect the occurrence of unanticipated events. The
			following discussion highlights some of these risks and others are discussed in
			other sections of this Form 10-K or in other documents filed by us with the
			Securities and Exchange Commission.

Uncertainty Regarding Consequences of Restructuring
				
				.
			
			While it is management's intention, to the extent practicable, to seek to
			restore value to the various constituencies comprising our junior capital
			structure, in light of uncertainty as to the outcome of restructuring
			negotiations with our secured lenders and lessors and the impact of
			subordination provisions governing our Subordinated Debentures and corporate
			law doctrines relating to the relative rights of holders of debt and equity
			interests in the Company, no assurances may be given as to the value, if any,
			various junior capital structure constituencies will have in the restructured
			Company. Similarly, as our Restructuring Plan is largely dependent upon our
			ability to negotiate consensual restructuring arrangements with our principal
			lenders and lessors, no assurances may be given as to whether we will be able
			to restructure the Company and, if not, the extent to which various capital
			structure constituencies, including the holders of our Subordinated Debentures
			and our Common Stock, will be entitled to a distribution of any value in
			consideration of their interest in the Company.

Risks Associated with Continuing Defaults under Loan, Lease and Subordinated
					Debenture Obligations.
				
			
			We did not make loan and lease payments to many of our secured lenders and
			lessors during 2001 and are now in default with respect to these obligations.
			Any payment default or other default with respect to outstanding obligations
			could cause the lender to foreclose upon the residences securing the
			indebtedness or, in the case of a lease, to terminate the lease, with a
			consequent loss of income and asset value to us. Management believes that,
			despite the pendency of these defaults, during the near term the majority of
			these secured lenders and lessors will continue to participate in restructuring
			discussions with us. No assurances may be given, however, that this will be the
			case. In fact, one of our lessors has terminated our leases for 11 residences
			and other lenders and lessors have begun to exercise various remedies. See
			"Management's Discussion and Analysis of Financial Condition and Results of
			Operations - Liquidity and Capital Resources." As many of our principal credit,
			lease and other financing facilities are cross-defaulted to a material default
			occurring under other credit, lease or financing facilities, our continuing
			payment defaults under certain of our credit facilities has resulted in our
			being in default under many other loan and lease facilities. A component of our
			Restructuring Plan is seeking to secure waivers of these cross-defaults from
			the applicable lenders and lessors.

---

In addition, the Company's convertible debentures include subordination
			provisions that prohibit payments to the debenture holders (other than
			payment-in-kind coupon payments) after the occurrence of a payment default on
			the Company's senior indebtedness. As such, the Company is currently prohibited
			from making interest and principal payments related to its Subordinated
			Debentures until such time that no payment-related defaults exist related to
			its senior indebtedness. As a result of failing to make these payments due to
			the governing subordination provisions, the Company is in default of its
			outstanding Subordinated Debentures.

Risks Associated with Continuing Shortfall in Liquidity and Implementation of
					Restructuring Plan.
				
			
			As a result of on-going operating losses and significant current or upcoming
			debt maturities, we expect that our projected cash needs during 2002 will
			exceed our projected identified cash resources. In light of our current
			financial condition and ongoing restructuring activities and the difficult
			financing and operating environment for healthcare service companies generally,
			our access to additional capital is significantly reduced. If we are unable to
			successfully implement our Restructuring Plan we will not have sufficient
			liquidity to make our scheduled debt and lease payments and will not be in a
			position to continue to operate as a going concern. See "Substantial Debt and
			Operating Lease Payment Obligations; Current and Pending Maturities," and
			"Management's Discussion and Analysis and Results of Operations -- Liquidity
			and Capital Resources."

Risks Associated with the Disposition of Assets and Termination of Leases.
				
			
			A key component of our Restructuring Plan relates to the disposition of a
			number of residences that are owned or leased by the Company. This disposition
			strategy involves a number of risks and uncertainties. Availability of
			financing for assisted living properties is currently limited due to
			substantial reductions in lending activity by traditional financing sources
			including commercial banks, other secured lenders and REITs. As such, potential
			purchasers of Company residences may be limited in their ability to obtain
			necessary financing which may affect both the price at which Company assets may
			be sold and the ability of potential purchasers to execute transactions. In
			addition, the residences that the Company intends to sell or otherwise dispose
			of generally are in lease-up or have historically operated at a loss. Both the
			availability of financing and number of potential purchasers tend to be more
			limited for residences that have historically operated at a loss. In addition,
			many operating companies within the assisted living sector have encountered
			financial and operating difficulties similar to those experienced by the
			Company. This may limit the universe of potential purchasers as those other
			assisted living companies may be financially or operationally incapable of
			effecting acquisition transactions or may be attempting to sell or otherwise
			dispose of assets from their own portfolios. Finally, with respect to a number
			of residences included in our Disposition Assets, we are not free to sell or
			dispose of the residence without the consent of the applicable lender or lessor
			and, in certain cases, the consent of our joint venture partners.

Substantial Debt and Operating Lease Payment Obligations; Current and Pending
					Maturities.
				
			
			We had lease expense of $69.4 million and $82.4 million for the years ended
			December 31, 2001 and 2000, respectively. Our total indebtedness as of December
			31, 2001 was $1.2 billion, and our net interest expense was $77.9 million and
			$62.6 million for the years ended December 31, 2001 and 2000, respectively.
			Approximately $1.1 billion of our total indebtedness matures before December
			31, 2002, or is in default as of December 31, 2001.

Historically, we have not had sufficient earnings to cover fixed charges.
			Earnings were insufficient to cover fixed charges by $94.0 million and $71.7
			million in 2001 and 2000, respectively, prior to non-recurring charges, the
			loss on disposal and other one-time adjustments. Even if we are able to
			substantially restructure our credit and lease obligations, given the
			significant leverage employed in financing our operations there can be no
			assurance that we will generate sufficient cash flow to meet our future
			obligations.

---

Joint Ventures and Related Mandatory Purchase Obligations.
				
			
			As of December 31, 2001, 47 of our operating residences were jointly owned or
			operated with venture partners. While we typically receive a fee for managing
			residences developed through joint ventures, we share with our joint venture
			partners any profits or losses realized from the operation or sale of these
			residences and, in certain cases, have agreed to fund operating deficits
			arising after all available equity and debt financing is utilized. We are
			obligated under our joint venture arrangements to purchase the equity interests
			of our joint venture partners upon the election of the joint venture partners
			at a price based on the appraised value of the residence operated by the
			applicable joint venture. As a result of these provisions, we might become
			obligated to acquire additional interests in residences developed through joint
			ventures on terms or at times that would otherwise not be acceptable to us,
			including times during which we may not have adequate liquidity to fund
			acquisitions. In addition, we are currently seeking to negotiate the buy-out of
			joint venture interests held by third parties in the majority of our remaining
			joint venture residences. If we are not able to negotiate the buy-out of these
			joint venture interests, our ability to restructure certain of our secured debt
			and lease facilities may be adversely affected. To the extent that loan and
			lease arrangements financing joint venture residences are not restructured, the
			exercise of foreclosure, lease termination and other remedies by lenders and
			lessors will result in the forfeiture of such joint ventures' investment in our
			residences. In these circumstances, we believe it may be possible that the
			Company may be forced to defend damage claims asserted by certain of its joint
			venture partners.

Liability and Insurance.
				
			
			The provision of personal and healthcare services entails an inherent risk of
			liability. In recent years, participants in the long-term care industry have
			become subject to an increasing number of lawsuits alleging malpractice or
			related legal theories, including criminal prosecutions, many of which involved
			large claims and resulted in the incurrence of significant defense costs. In
			addition, compared to more institutional long-term care facilities, assisted
			living residences (especially dementia care residences) of the type we operate
			offer residents a greater degree of independence in their daily lives. This
			increased level of independence, however, may subject the resident and us to
			risks that would be reduced in more institutionalized settings. We currently
			maintain liability insurance intended to cover these claims in an amount that
			our current financial circumstance permits. There can be no assurance that
			claims in excess of this insurance or claims not covered by insurance, such as
			claims for punitive damages, will not be successfully asserted. A successful
			claim against us not covered by, or in excess of, our insurance could have a
			material adverse effect upon our financial condition and results of operations.
			Claims against us, regardless of their merit or eventual outcome, including
			pending criminal proceedings against the Company, may also have a material
			adverse effect upon our ability to attract or retain residents, to retain
			applicable licenses, or to expand our business, and may require us to devote
			substantial time to matters unrelated to day-to-day operations. In addition,
			insurance policies must be renewed annually. There can be no assurance that we
			will be able to obtain liability insurance in the future or that, if insurance
			is available, it will be available on acceptable economic terms or with
			coverages we or our lenders and lessors require, in light of our current
			financial circumstance.

Risk of Possible American Stock Exchange Delisting
				
				.
			
			Our Common Stock currently is listed on the American Stock Exchange ("AMEX")
			under the symbol "ALI." Our 5.25% Debentures currently are listed on AMEX under
			the symbol "ALI5L02." AMEX has notified us that we have fallen below certain of
			AMEX's continued listing guidelines and that it is reviewing our listing
			eligibility. In particular, we have incurred losses from continued operations
			for three of the past four fiscal years, have a stockholders' equity of less
			than $4.0 million and the price per share of our Common Stock as quoted on AMEX
			recently has been below the minimum bid price of $1.00 per share. We have
			provided AMEX with additional information and have been involved in ongoing
			discussions with AMEX in connection with its review of our listing eligibility.
			While AMEX has decided not to delist us at this time, they will continue to
			review our listing status.

If AMEX were to delist our securities, it is possible that the securities would
			continue to trade on the over-the-counter market. However, the extent of the
			public market for the securities and the availability of quotations would
			depend upon such factors as the aggregate market value of each class of
			securities, the interest in maintaining a market in such securities on the part
			of securities firms and other factors. There can be no assurance that any
			public market for our securities will exist in the event that our securities
			are delisted. In addition, if we fail to maintain the trading status of our
			Common Stock on a national trading exchange or system, the interest rate on the
			PIK Debentures will increase from 9.75% to 12.25% and the dividend accrual rate
			on our Series A Stock will increase from 9.75% to 12.25%.

Residence Management, Staffing and Labor Costs.
				
			
			We compete with other providers of assisted living services and long-term care
			with respect to attracting and retaining personnel. We are dependent upon our
			ability to attract and retain management personnel responsible for the
			day-to-day operations of each of our residences. Any inability of ours to
			attract or retain qualified residence management personnel could have a
			material adverse effect on our financial condition or results of operations. In
			addition, a possible shortage of nurses or trained personnel may require us to
			enhance our wage and benefits package in order to compete in the hiring and
			retention of personnel. We are also dependent upon the available labor pool of
			semi-skilled and unskilled employees in each of the markets in which we
			operate. There can be no assurance that our labor costs will not increase, or
			that, if they do increase, they can be matched by corresponding increases in
			rates charged to residents. Any significant failure by us to attract and retain
			qualified management and staff personnel, to control our labor costs, or to
			pass on any increased labor costs to residents through rate increases would
			have a material adverse effect on our business, operating results and financial
			condition. In the event that the Company determines that it must seek to
			accomplish its Restructuring Plan through a court-supervised reorganization, we
			expect that the foregoing labor-related risks may be enhanced.

Competition.
				
			
			The long-term care industry is highly competitive and, given the relatively low
			barriers to entry and continuing healthcare cost containment pressures, we
			expect that the assisted living segment will become increasingly competitive in
			the future. We compete with other companies providing assisted living services
			as well as numerous other companies providing similar service and care
			alternatives, such as home health care agencies, congregate care facilities,
			retirement communities and skilled nursing facilities. As assisted living
			residences receive increased market awareness and the number of states which
			include assisted living services in their Medicaid programs increases,
			competition will increase from new market entrants, many of whom may have
			substantially greater financial resources than we have. There can be no
			assurance that increased competition will not adversely affect our ability to
			attract or retain residents or maintain our existing rate structures. Some of
			our present and potential competitors have, or may have access to, greater
			financial resources than those available to us. Consequently, there can be no
			assurance that we will not encounter increased competition in the future which
			could limit our ability to attract and retain residents, to maintain or
			increase resident service fees or to expand our business and could have a
			material adverse effect on our business, operating results and financial
			condition. We are not able to accurately predict the effect that the healthcare
			industry trend towards managed care will have on the assisted living
			marketplace. Managed care, an arrangement whereby service and care providers
			agree to sell specifically defined services to one or more public or private
			payors (frequently not the end user or resident) subject to a predefined system
			in an effort to achieve more efficiency with respect to utilization and cost,
			is not currently a significant factor in the assisted living marketplace.
			However, managed care plans sponsored by insurance companies or HMOs may in the
			future be a factor in the assisted living marketplace. There can be no
			assurance that we will not encounter increased competition or be subject to
			other competitive pressures that could affect our business, operating results
			or financial condition as a result of managed care. In the event that the
			Company determines that it must seek to accomplish its Restructuring Plan
			through a court-supervised reorganization, we expect that the foregoing
			competitive risks could pose an even greater challenge for the Company.

---

Government Regulation.
				
			
			Healthcare is an area of extensive and frequent regulatory change. The
			assisted living industry is relatively new, and, accordingly, the manner and
			extent to which it is regulated at the federal and state levels is evolving.
			Changes in the laws or new interpretations of existing laws may have a
			significant impact on our methods and costs of doing business. We are, and will
			continue to be, subject to varying degrees of regulation and licensing by
			health or social service agencies and other regulatory authorities in the
			various states and localities where we operate or intend to operate. We and our
			activities are subject to zoning, health and other state and local government
			laws and regulations. Zoning variances or use permits are often required for
			construction. Severely restrictive regulations could impair our ability to open
			additional residences at desired locations or could result in costly delays.
			Several of our residences have been financed by revenue bonds. In order to
			continue to qualify for favorable tax treatment of the interest payable on
			these bonds, the financed residences must comply with federal income tax
			requirements, principally pertaining to the maximum income level of a specified
			portion of the residents. Failure to satisfy these requirements constitutes an
			event of default under the bonds, thereby accelerating their maturity. Our
			success will depend in part upon our ability to satisfy applicable regulations
			and requirements and to procure and maintain required licenses in rapidly
			changing regulatory environments. Any failure to satisfy applicable regulations
			or to procure or maintain a required license could have a material adverse
			effect on our business, operating results and financial condition.

Our operations could also be adversely affected by, among other things,
			regulatory developments such as revisions in building code requirements for
			assisted living residences, mandatory increases in the scope and quality of
			care to be offered to residents, and revisions in licensing and certification
			standards. There can be no assurance that federal, state or local laws or
			regulations will not be imposed or expanded based on evolving regulatory
			interpretations or based on new statutory or regulatory provisions which
			adversely impact our business, financial condition, results of operations or
			prospects. Our residence operations are also subject to health and other state
			and local government regulations.

We are currently a defendant in a criminal negligence action involving one of
			our residents. It is possible that if convicted of a crime, the Company's
			ability to obtain and renew certain of our licenses and to participate in
			certain government payor programs could be materially and adversely affected.

We intend to review and, in appropriate circumstances, pursue opportunities for
			development and expansion into new products and services. These new products
			and services may include home health care, rehabilitation and pharmacy
			services, among others. The federal and state regulation of these additional
			products and services may be more extensive than that related to our assisted
			living operations. We have not in the past engaged in significant activities
			outside of our core assisted living business. As we expand into new products
			and services, we will be subject to additional federal, state and local laws
			and regulations. Non-compliance with these laws and regulations could have a
			material adverse effect on our business, financial condition, results of
			operations or prospects.

Dependence on Attracting Seniors with Sufficient Resources to Pay.
				
			
			We currently rely and, for the foreseeable future, we expect to rely, primarily
			on the ability of our residents to pay for services from their own and their
			families' financial resources. Generally, only elderly adults with income or
			assets meeting or exceeding the comparable median in the region where our
			assisted living residences are located can afford the fees for these
			residences. Inflation or other circumstances which adversely affect the ability
			of residents and potential residents to pay for assisted living services could
			have an adverse effect on us. In the event that we encounter difficulty in
			attracting seniors with adequate resources to pay for our services, we would be
			adversely affected. In the event that the Company determines that it must seek
			to accomplish its Restructuring Plan through a court-supervised reorganization,
			we expect that the foregoing risks could pose an even greater challenge for the
			Company.

---

Environmental Liability Risks Associated with Real Property.
				
			
			Under various federal, state and local environmental laws, ordinances and
			regulations, a current or previous owner or operator of real estate may be
			required to investigate and clean up hazardous or toxic substances or petroleum
			product releases at these properties, and may be held liable to a governmental
			entity or to third parties for property damage and for investigation and
			cleanup costs incurred by these parties in connection with the contamination.
			These laws typically impose clean up responsibility and liability without
			regard to whether the owner knew of or caused the presence of contaminants, and
			liability under these laws has been interpreted to be joint and several unless
			the harm is divisible and there is a reasonable basis for allocation or
			responsibility. The costs of investigation, remediation or removal of these
			substances may be substantial, and the presence of these substances, or the
			failure to properly remediate these properties, may adversely affect the
			owner's ability to sell or lease the property or to borrow using the property
			as collateral. In addition, some environmental laws create a lien on the
			contaminated site in favor of the government for damages and costs it incurs in
			connection with the contamination. Persons who arrange for the disposal or
			treatment of hazardous or toxic substances also may be liable for the costs of
			removal or remediation of these substances at the disposal or treatment
			facility, whether or not the facility is owned or operated by this person.
			Finally, the owner of a site may be subject to common law claims by third
			parties based on damages and costs resulting from environmental contamination
			emanating from a site. In connection with our acquisition and financing of new
			residences, we typically secure an environmental assessment of the applicable
			residence. There can be no assurance, however, that environmental assessments
			would detect all environmental contamination which may give rise to material
			environmental liabilities. We believe that our respective residences are in
			compliance in all material respects with all applicable environmental laws. We
			have not been notified by any governmental authority, or are otherwise aware of
			any material non-compliance, liability or claim relating to hazardous toxic
			substances or petroleum products in connection with any of the residences we
			currently operate.

Anti-Takeover Provisions.
				
			
			Our Restated Certificate of Incorporation authorizes the issuance of 5,000,000
			shares of preferred stock and 100,000,000 shares of Common Stock. Subject to
			the rules of the American Stock Exchange ("AMEX") upon which our Common Stock
			is listed, our Board of Directors have the power to issue any or all of the
			authorized and unissued shares without stockholder approval, and the preferred
			shares can be issued with rights, preferences and limitations as may be
			determined by our Board. The rights of the holders of our Common Stock will be
			subject to, and may be adversely affected by, the rights of any holders of
			preferred stock that may be issued in the future. We are obligated to issue
			additional shares of Common Stock or, in certain cases, preferred stock, upon
			the exercise of conversion or other rights under various outstanding warrants,
			convertible debentures and convertible preferred stock described in
			"Management's Discussion and Analysis of Financial Condition and Results of
			Operations -- Liquidity and Capital Resources."

Authorized and unissued preferred stock and common stock, while providing
			desirable flexibility in connection with possible acquisitions and other
			corporate purposes, could delay, discourage, hinder or preclude an unsolicited
			acquisition of the Company, could make it less likely that stockholders receive
			a premium for their shares as a result of any attempt and could adversely
			affect the market price of and the voting and other rights of the holders of
			outstanding shares of Common Stock. As a Delaware corporation, we are subject
			to Section 203 of the Delaware General Corporation Law (the "DGCL") which, in
			general, prevents an "interested stockholder" (defined generally as a person
			owning 15% or more of the corporation's outstanding voting stock) from engaging
			in a "business combination" (as defined in Section 203) for three years
			following the date a person became an interested stockholder unless specific
			conditions are satisfied. In addition, the indenture relating to our
			approximately $112.0 million aggregate principal amount outstanding 5.25%
			Convertible Subordinated Debentures provides that, upon a "change of control"
			(as defined in that indenture), the holders of those debentures would have the
			right to require us to repurchase those debentures at 101% of their face value.

On December 10, 1998, we entered into a Rights Agreement with American Stock
			Transfer & Trust Company, as Rights Agent, pursuant to which we declared
			and paid a dividend of one preferred share purchase right (a "Right") for each
			outstanding share of our Common Stock. Each Right entitles the registered
			holder to purchase from us one one-hundredth of a share of Series A Junior
			Participating Preferred Stock, $.01 par value per share (the "Preferred
			Shares"), at a price of $130.00 per one one-hundredth of a Preferred Share. The
			Rights have anti-takeover effects, and they will cause substantial dilution to
			a person or group that attempts to acquire us without conditioning the offer on
			redemption of the Rights or on substantially all of the Rights also being
			acquired. The Rights should not interfere with any merger or other business
			combination approved by our Board since the Rights may be redeemed by us in
			accordance with the Rights Agreement.

---



ITEM 2.

PROPERTIES

The table below shows, by state, the number and the associated capacity of the
		residences that we own, lease, hold equity interest in or manage on behalf of
		third parties, as of December 31, 2001.



Operating Residences



|         |  | Owned (1)  |  | Leased (2)  |  | Unconsolidated (3) |  | Managed (4) |  | Total     
|-------- |  | ---------- |  | ----------- |  | ------------------ |  | ----------- |  | ----------
|Location |  | No
						. |  | Cap
						. |  | No
						.         |  | Cap
						. |  | No
						.
|AZ       |  | 10         |  | 563         |  | 1                  |  | 52          |  | --        
|CA       |  | 9          |  | 754         |  | 1                  |  | 240         |  | 2         
|CO       |  | 8          |  | 444         |  | 12                 |  | 725         |  | --        
|CT       |  | --         |  | --          |  | --                 |  | --          |  | --        
|FL       |  | 28         |  | 1,629       |  | 22                 |  | 922         |  | 7         
|GA       |  | 5          |  | 317         |  | --                 |  | --          |  | --        
|ID       |  | 1          |  | 70          |  | 2                  |  | 158         |  | --        
|IN       |  | 7          |  | 298         |  | 1                  |  | 36          |  | 9         
|KS       |  | 17         |  | 584         |  | 8                  |  | 265         |  | 3         
|KY       |  | 2          |  | 78          |  | --                 |  | --          |  | --        
|MI       |  | 18         |  | 550         |  | 12                 |  | 542         |  | --        
|MN       |  | 12         |  | 396         |  | 6                  |  | 178         |  | --        
|NC       |  | 8          |  | 376         |  | 11                 |  | 524         |  | 2         
|NJ       |  | 9          |  | 594         |  | 2                  |  | 52          |  | 2         
|NV       |  | 2          |  | 108         |  | 3                  |  | 208         |  | --        
|NY       |  | 15         |  | 892         |  | 1                  |  | 80          |  | --        
|OH       |  | 8          |  | 379         |  | 16                 |  | 658         |  | 2         
|OK       |  | --         |  | --          |  | 27                 |  | 944         |  | 1         
|OR       |  | 3          |  | 220         |  | 7                  |  | 538         |  | 3         
|PA       |  | 13         |  | 595         |  | 1                  |  | 48          |  | --        
|SC       |  | 5          |  | 204         |  | 8                  |  | 330         |  | 1         
|TN       |  | 3          |  | 132         |  | 3                  |  | 124         |  | 1         
|TX       |  | 3          |  | 147         |  | 25                 |  | 957         |  | --        
|VA       |  | 1          |  | 56          |  | --                 |  | --          |  | --        
|WA       |  | 3          |  | 156         |  | 4                  |  | 388         |  | 3         
|WI       |  | 11         |  | 330         |  | 13                 |  | 338         |  | 1         
|TOTAL    |  | 201        |  | 9,872       |  | 186                |  | 8,307       |  | 37        



1. Owned residences are those that are wholly or majority owned by us.
2. Leased residences are those that we operate and lease from a third party.
3. Unconsolidated residences are those residences managed by us, but operated by
			an entity in which we own a minority equity interest.
4. Managed residences are those residences that we manage under management
			arrangements but in which we do not possess an ownership interest or possess a
			de minimus
			ownership position.

Of our 430 operating residences, 75% are five years old or less and 95% are ten
		years old or less. The number of residences that we own, lease, or manage has
		decreased subsequent to December 31, 2000, due to recent asset sales and lease
		terminations. See "Restructuring Activities - Portfolio Rationalization" above.

---

|ITEM 3. | LEGAL PROCEEDINGS
|------- | -----------------

From time to time, we are involved in various legal proceedings relating to
		claims arising in the ordinary course of our business. Neither we nor any of
		our subsidiaries is a party to any legal proceeding, the outcome of which,
		individually or in the aggregate, is expected to have a material adverse affect
		on our financial condition or results of operations, with the possible
		exception of the matters described below.

We elected not to fund certain debt service and lease payment obligations due
		during 2001 without the consent of the applicable lender or lessor. Through
		additional payments, prepayments associated with asset sales and application of
		escrowed amounts, as of December 31, 2001, we had $6.6 million of delinquent
		outstanding scheduled debt service to lenders or lessors who hold mortgages on,
		or from whom we lease, 82 residences in the aggregate (3,316 resident
		capacity). We have received a written notice of acceleration from lenders with
		respect to indebtedness aggregating $210.2 million. In addition, indebtedness
		of approximately $58.4 million has fully matured and is past due. Many of our
		other credit and lease facilities are in technical default as a result of these
		payment defaults associated with other loan and lease facilities, but several
		of these lenders and lessors have executed limited in time waivers. We are also
		in default under various financial and other covenants contained in certain of
		our credit and lease arrangements. We have received written notices of default
		from most of these lenders or lessors, three lessors have terminated leases for
		17 residences (940 resident capacity) and other lenders have elected to apply
		deposits and reserve funds of ours held by such lenders against the past due
		payments. Five lenders have activated or are in the process of activating "cash
		traps" of bank accounts relating to the operation of residences mortgaged to
		such lenders, either pursuant to arrangements set forth in the applicable loan
		documents or as subsequently negotiated with the Company. One of our lenders
		has commenced litigation in state court in Milwaukee, Wisconsin, seeking the
		appointment of a receiver for the 20 residences that serve as collateral for
		the $51.7 million of remaining mortgage financing provided by this lender. As a
		result of a negotiated forbearance agreement, the receivership action has been
		stayed temporarily by this lender as restructuring discussions are underway. We
		are also in litigation with a former lessor with respect to their damage claim
		associated with the early termination of their 11 residence lease portfolio.

The Company's Subordinated Debentures include subordination provisions that
		prohibit the Company from making interest payments to the debenture holders
		(other than payment-in-kind coupon payments) after the occurrence of payment
		defaults on the Company's senior indebtedness. As such, we defaulted in making
		coupon payments on our 5.25%, 6.75% and 7.00% Debentures aggregating
		approximately $5.5 million and $5.8 million in July 2001 and January 2002,
		respectively.

We are seeking to address all of our pending defaults of our senior and junior
		capital structure obligations through our Restructuring Plan. However, our
		Restructuring Plan is largely dependent upon our ability to negotiate
		consensual modifications and waivers with our various capital structure
		constituents. Absent an agreed upon resolution with these third parties, our
		lenders, lessors, and debenture holders may begin exercising remedies under
		their applicable financing agreements that could substantially hinder or
		disrupt our efforts to restructure the Company and result in a liquidation of
		the Company.

As noted above, the Company is a defendant in a criminal negligence action
		involving one of the Company's residences. It is possible that if convicted of
		a crime, the Company's ability to obtain and renew certain of its licenses and
		to participate in certain government payor programs could be materially and
		adversely affected.



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

We did not submit any matters to a vote of security holders during the fourth
		quarter of our fiscal year ended December 31, 2001.

---

PART II

|ITEM 5. | MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SHAREHOLDER MATTERS
|------- | ------------------------------------------------------------------------

Our Common Stock is listed and traded on the American Stock Exchange (AMEX)
		under the symbol "ALI." The Common Stock has been listed on the AMEX since
		August 6, 1996, the date of our initial public offering. The number of holders
		of record of the Common Stock as of March 26, 2002, was approximately 310.

The following table sets forth, for the periods indicated, the high and low
		closing prices for the Common Stock as reported on AMEX.

|               |  |  | High   |  |  | Low   
|-------------- |  |  | ------ |  |  | ------
|2001:          |  |  |        |  |  |       
|First Quarter  |  |  | $2.188 |  |  | $0.500
|Second Quarter |  |  | 0.600  |  |  | 0.180 
|Third Quarter  |  |  | 0.360  |  |  | 0.120 
|Fourth Quarter |  |  | 0.230  |  |  | 0.080 
|               |  |  |        |  |  |       
|2000:          |  |  |        |  |  |       
|First Quarter  |  |  | $8.250 |  |  | $4.000
|Second Quarter |  |  | 4.000  |  |  | 1.688 
|Third Quarter  |  |  | 2.500  |  |  | 1.938 
|Fourth Quarter |  |  | 3.188  |  |  | 0.875 
|               |  |  |        |  |  |       

We have never paid or declared cash dividends and currently intend to retain
		any future earnings for the operation and expansion of our business. Due to the
		absence of legal capital under applicable Delaware law, we have not declared or
		paid pay-in-kind dividends on our outstanding Series A Stock since January
		2001. In light of pending defaults under various of our loan, lease, and
		debenture obligations, we are contractually prohibited from paying dividends on
		our outstanding capital stock until such time as such defaults are cured or
		waived. Any determination to pay cash dividends in the future will be at the
		discretion of the Board of Directors and will be dependent on our financial
		condition, results of operations, contractual restrictions, capital
		requirements, business prospects, restrictive debt covenants and other factors
		as the Board of Directors deems relevant.

---

|ITEM 6. | SELECTED CONSOLIDATED FINANCIAL DATA
|------- | ------------------------------------

The selected consolidated historical financial data presented below for each of
		the five years ended December 31, 2001 has been derived from our audited
		consolidated financial statements appearing elsewhere in this report. The
		selected consolidated financial data presented below should be read in
		conjunction with "Management's Discussion and Analysis of Financial Condition
		and Results of Operations" and the Consolidated Financial Statements and notes
		thereto included in this report (in thousands, except per share data).



|                                                                                                                                                                                                            |   | Years Ended December 31, |  
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | ------------------------ | -
|                                                                                                                                                                                                            |   | 2001                     |  
|Statements of Operations Data :                                                                                                                                                                             |   |                          |  
|Revenue:                                                                                                                                                                                                    |   |                          |  
|Operating revenue                                                                                                                                                                                           | $ | 508,822                  |  
|Operating expenses:                                                                                                                                                                                         |   |                          |  
|Residence operations                                                                                                                                                                                        |   | 351,707                  |  
|Lease expense                                                                                                                                                                                               |   | 69,445                   |  
|Lease income                                                                                                                                                                                                |   | (21,336                  | )
|General and administrative                                                                                                                                                                                  |   | 48,881                   |  
|Loss on disposal                                                                                                                                                                                            |   | 189,287                  |  
|Depreciation and amortization                                                                                                                                                                               |   | 42,198                   |  
|Non-recurring charge                                                                                                                                                                                        |   | --                       |  
|Total operating expenses                                                                                                                                                                                    |   | 680,182                  |  
|Operating (loss) income                                                                                                                                                                                     |   | (171,360                 | )
|Other (expense) income:                                                                                                                                                                                     |   |                          |  
|Interest expense, net                                                                                                                                                                                       |   | (77,882                  | )
|Amortization of financing costs                                                                                                                                                                             |   | (9,786                   | )
|Convertible debt paid in kind interest ("PIK")                                                                                                                                                              |   | (24,303                  | )
|Equity in losses of unconsolidated affiliates                                                                                                                                                               |   | (16,902                  | )
|Minority interest in profits/losses of
							
							consolidated subsidiaries                                                                                                                             |   | 426                      |  
|Total other (expense) income, net                                                                                                                                                                           |   | (128,447                 | )
|(Loss) income before income taxes, extraordinary
						
						   item and cumulative effect                                                                                                                 |   | (299,807                 | )
|                                                                                                                                                                                                            |   |                          |  
|Income tax benefit (expense)                                                                                                                                                                                |   | (120                     | )
|(Loss) income before extraordinary item and cumulative effect of a change in
						accounting principle                                                                                                     |   | (299,927                 | )
|Extraordinary item - gain from early retirement of financing agreements                                                                                                                                     |   | --                       |  
|Cumulative effect of a change in accounting principle                                                                                                                                                       |   | --                       |  
|Net (loss) income                                                                                                                                                                                           | $ | (299,927                 | )
|                                                                                                                                                                                                            |   |                          |  
|Basic (loss) income per common share:                                                                                                                                                                       |   |                          |  
|(Loss) income before extraordinary item (1), and a change in accounting
							principle                                                                                                                    | $ | (13.52                   | )
|Extraordinary item (1)                                                                                                                                                                                      |   | --                       |  
|Change in accounting principle                                                                                                                                                                              |   | --                       |  
|Basic (loss) income per common share (1)                                                                                                                                                                    | $ | (13.52                   | )
|Diluted (loss) income per common share:                                                                                                                                                                     |   |                          |  
|(Loss) income before extraordinary item (1), and a change in
							accounting principle                                                                                                                    | $ | (13.52                   | )
|Extraordinary item (1)                                                                                                                                                                                      |   | --                       |  
|(Loss) income before extraordinary item (1), and a change in
							accounting principle                                                                                                                    | $ | (13.52                   | )
|Diluted (loss) income per common share (1)                                                                                                                                                                  | $ | (13.52                   | )
|                                                                                                                                                                                                            |   |                          |  
|Weighted average common shares outstanding (1):                                                                                                                                                             |   |                          |  
|Basic                                                                                                                                                                                                       |   | 22,192                   |  
|Diluted                                                                                                                                                                                                     |   | 22,192                   |  
|(1) Basic and diluted share amounts are the same for 1997 and 1999-2001 since
								potentially issuable shares related to stock options and convertible debt would
								have an anti-dilutive effect.

---





|                                      |   | 2001       |   |   | 2000      |   |   | 1999      |  |   | 1998    |  |   | 1997    | 
|------------------------------------- | - | ---------- | - | - | --------- | - | - | --------- |  | - | ------- |  | - | ------- | 
|Balance Sheet Data:                   |   |            |   |   |           |   |   |           |  |   |         |  |   |         | 
|Cash and cash equivalents             | $ | 19,966     |   | $ | 23,688    |   | $ | 18,728    |  | $ | 40,621  |  | $ | 79,838  | 
|Short-term investments                |   | --         |   |   | --        |   |   | --        |  |   | --      |  |   | 90,000  | 
|Working capital (deficit)             |   | (1,060,745 | ) |   | (129,226  | ) |   | 5,452     |  |   | 28,305  |  |   | 129,528 | 
|Total assets                          |   | 1,038,200  |   |   | 1,227,765 |   |   | 1,061,397 |  |   | 777,810 |  |   | 553,552 | 
|Current installment of long-term debt |   | 1,117,705  |   |   | 313,718   |   |   | 9,945     |  |   | 4,376   |  |   | 2,677   | 
|Long-term obligations                 |   | 88,241     |   |   | 803,848   |   |   | 791,672   |  |   | 515,584 |  |   | 318,069 | 
|Stockholders' (deficit) equity        | $ | (266,926   | ) | $ | 32,859    |   | $ | 150,643   |  | $ | 177,112 |  | $ | 143,897 | 



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

Overview

We are a national assisted living company operating assisted living residences
			and providing assisted living services in 26 states. Our growth in recent years
			and ongoing restructuring activities have had a significant impact on our
			results of operations and are an important factor in explaining the changes in
			our results between 2001 and 2000. As of December 31, 2001 and 2000, we
			operated or managed 430 and 474 residences with aggregate capacity of
			approximately 20,200 and 22,100 residents, respectively. During 2001 we
			generated operating revenue of $508.8 million and realized income from
			operations of $17.9 million and a pretax loss of $110.5 million, both prior to
			loss on disposal of assets.

In light of pending payment and covenant defaults under many of our senior
			credit facilities and all of our outstanding series of convertible debentures,
			we are seeking to implement a Restructuring Plan that contemplates the
			disposition of a significant portion of our residences and the restructuring of
			our secured indebtedness, leases (operating, capital and synthetic),
			convertible debentures, joint venture arrangements and equity capitalization.
			The pending Restructuring Plan, and recent developments impacting our liquidity
			and operating results, are summarized under the caption "Business -
			Restructuring Activities," which is incorporated in this Item 7 by this
			reference.

Critical Accounting Policies

In response to the Securities and Exchange Commission's Release Numbers
			33-8040,
			Cautionary Advice Regarding Disclosure About Critical Accounting Policies,
			and 33-8056,
			Commission Statement about Management's Discussion and Analysis of Financial
				Condition and Results of Operations,
			we have identified the following critical accounting policies that affect our
			more significant judgments and estimates used in the preparation of our
			consolidated financial statements. The preparation of our consolidated
			financial statements in conformity with accounting principles generally
			accepted in the United States of America requires us to make estimates and
			judgments that affect the reported amounts of assets and liabilities, revenues
			and expenses, and related disclosures of contingent assets and liabilities.

On an ongoing basis, we evaluate our estimates, including those related to
			revenue recognition and the allowance for doubtful accounts receivable and
			asset impairment. We state these accounting policies in the notes to our
			consolidated financial statements and at relevant sections in this discussion
			and analysis. Our estimates are based on information that is currently
			available to us and on various other assumptions that we believe are reasonable
			under the circumstances. Actual results could vary from those estimates and
			those estimates could be different under different assumptions or conditions.

Principles of Consolidation

The consolidated financial statements include the accounts of the Alterra
			Healthcare Corporation and its majority-owned subsidiaries. Results of
			operations of the majority-owned subsidiaries are included from the date of
			acquisition. All significant inter-company balances and transactions with such
			subsidiaries have been eliminated in the consolidation. Investments in other
			affiliated companies in which we have a minority ownership position are
			accounted for on the equity method.

---

Included in the consolidated financial statements are the accounts of certain
			wholly owned subsidiaries that have been formed as "special purpose entities"
			(SPEs) in accordance with the requirements of certain of our lenders. Mortgage
			lenders imposing SPE requirements typically require that, in connection with
			providing mortgage financing with respect to a pool of residences, the
			residences actually be owned by one or more SPEs, which become the borrower or
			borrowers under the mortgage financing arrangement. Although lender
			requirements with respect to such SPEs vary, a SPE may be required to maintain
			separate corporation records and books of account, not commingle its assets
			with those of the parent company, have a separate board of directors from the
			parent company (including at least one individual board member who is
			independent of the parent company), maintain arm's length relationships with
			the parent company, not guarantee or become obligated for the debts of any
			other entity, including the parent company, or hold its credit as being
			available to satisfy the obligations of others and not pledge its assets for
			the benefit of any other entity, including the parent company. Given the
			separate corporate existence of certain of these SPEs and the fact that the
			assets of each SPE are subject to the prior claims of the individual creditors
			of the SPE, neither the creditors nor stockholders of the Company (or of any
			other of its subsidiaries) have any right to the assets of these SPEs except
			indirectly by virtue of its (or the subsidiary's) equity interest in such SPEs.

Revenue Recognition

Resident service fee revenue, which is recorded when services are rendered,
		consists primarily of resident service fees that are reported at net realizable
		amounts.

We must make estimates of the uncollectibility of our accounts receivable
		related deferred rent and other revenue or income. We specifically analyze
		accounts receivable and historical bad debts when evaluating the adequacy of
		the allowance for doubtful accounts receivable. These estimates have a direct
		impact on our net income, because a higher bad debt allowance would result in
		lower net income. The Securities and Exchange Commission's Staff Accounting
		Bulletin (SAB) No. 101,
		Revenue Recognition
		, provides guidance on the application of generally accepted accounting
		principles to selected revenue recognition issues. We believe that our revenue
		recognition policy is appropriate and in accordance with generally accepted
		accounting principles and SAB No. 101.

Long-Lived Assets

Property and equipment are stated at cost, net of accumulated depreciation.
		Property and equipment under capital leases are stated at the present value of
		minimum lease payments. Depreciation is computed over the estimated lives of
		the assets using the straight-line method. Buildings and improvements are
		depreciated over 20 to 40 years, and furniture, fixtures, and equipment are
		depreciated over three to seven years. Maintenance and repairs are expensed as
		incurred.

Goodwill represents the costs of acquired net assets in excess of their fair
		market values. Amortization of goodwill is computed using the straight-line
		method over the expected periods to be benefited, generally 40 years. We
		periodically evaluate goodwill for impairment based upon expectations of
		undiscounted cash flows in relation to the net capital investment in the entity.

We apply Statement of Financial Accounting Standards (SFAS) No. 121,
		Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
			Be Disposed Of
		, to recognize and measure impairment of long-lived assets. We review each
		long-lived asset for impairment whenever events or circumstances indicate that
		the carrying value of a real estate investment may not be recoverable. The
		review of recoverability is based on an estimate of the future undiscounted
		cash flows, excluding interest charges, expected to result from the real estate
		investment's use and eventual disposition. These cash flows consider factors
		such as expected future operating income, trends and prospects, as well as the
		effects of leasing demand, competition and other factors. If impairment exists
		due to the inability to recover the carrying value of a real estate investment,
		an impairment loss is recorded to the extent that the carrying value exceeds
		estimated fair market value.

Assets held for sale are carried at the lower of carrying amount or fair value,
		less costs to sell. Depreciation and amortization are suspended during the
		period held for sale. We are required to make subjective assessments as to
		whether there are impairments in the value of our real estate properties. These
		assessments have a direct impact on our net income, because taking an
		impairment loss results in an immediate negative adjustment to net income.

The Company is seeking to negotiate restructurings of several of its principal
		secured debt and lease obligations and, upon completing these negotiations,
		will seek to restructure its principal unsecured debt obligations, comprised
		primarily of the outstanding convertible debentures. Furthermore, at December
		31, 2001, the Company was in violation of certain debt covenants. The
		consolidated financial statements do not include any adjustments to reflect the
		possible future effects on the recoverability and classification of assets or
		the amounts and classification of liabilities that may result from the outcome
		of this uncertainty.

---

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred
		tax assets and liabilities are recognized for the expected future tax
		consequences attributable to temporary differences between the financial
		statement carrying amounts of existing assets and liabilities and their
		respective tax bases. Deferred tax assets and liabilities are measured using
		enacted tax rates expected to apply to taxable income in the years in which
		those temporary differences are expected to be recovered or settled. The effect
		on deferred tax assets and liabilities of a change in tax rates is recognized
		in income in the period that includes the enactment date.

Year Ended December 31, 2001 Compared to the Year Ended December 31, 2000

Residence Service Fees.
		
		Residence service fees for the year ended December 31, 2001 were $502.7 million
		representing an increase of $49.8 million, or 11.0%, from the $452.9 million
		for the comparable 2000 period. This increase resulted primarily from rate
		increases instituted during the past 12 months. Average rates were $2,879 and
		$2,571 as of December 31, 2001 and 2000, respectively. Company-wide occupancy
		was 81.5% and 84.9% as of December 31, 2001 and 2000, respectively.

Other Revenues.
		
		Other revenues for the year ended December 31, 2001 were $6.2 million, a
		decrease of $7.4 million over the $13.6 million of other revenue for the year
		ended December 31, 2000. The decrease is attributable to reduced development
		and franchise activity and a reduction in management fees on residences which
		were either managed for third parties or for entities in which we held a
		minority ownership position. Management fees include charges for transitional
		services to recruit and train staff, initial and recurring fees for use of our
		name and branding, initial and recurring fees for use of our methodologies,
		services for assisting with finance processing, and ongoing management services
		provided to operate the residence.

Residence Operating Expenses
		
		. Residence operating expenses for the year ended December 31, 2001 increased
		to $351.7 million from $313.5 million in the year ended December 31, 2000.
		Operating expenses as a percentage of resident service fees for the year ended
		December 31, 2001 and 2000 were 70.0% and 69.2%, respectively. This percentage
		increase resulted primarily from increases in labor and employee benefit
		related costs due to increased competition for personnel, an increase in
		insurance costs, and increases in utility costs.

Lease Expense
		
		. Lease expense for the year ended December 31, 2001 was $69.4 million,
		compared to $82.4 million in the comparable period in 2000. This decrease is
		the result of the termination of 20 residence leases and a change during the
		second quarter of 2001 in the accounting for two synthetic leases (includes the
		financing of $174.4 million on 26 residences representing 2,159 beds and the
		corporate office building) where the synthetic lessor no longer bears economic
		risk and, as a result, these previously unconsolidated synthetic lease SPEs are
		now consolidated.

Lease Income
		
		. We earned $21.3 million of lease income for year ended December 31, 2001,
		compared
		
		to $28.2 million for the comparable period in 2000, on residences owned or
		leased by us and leased or subleased to unconsolidated joint ventures. This
		decrease in lease income occurred due to a reduction in the number of
		unconsolidated joint ventures from 84 to 47 as of December 31, 2000 and 2001,
		respectively. Lease payment obligations of the unconsolidated joint venture
		entities are generally equivalent to the debt service payable by us on the
		leased residences, and thereby offset our costs associated with obtaining and
		maintaining financing for such residences
		.

General and Administrative Expense
		
		. For the year ended December 31, 2001, general and administrative expenses
		were $42.4 million prior to $6.5 million of restructuring costs, compared to
		$45.3 million before $5.1 million of non-recurring expenses for the comparable
		2000 period, representing a decrease of general and administrative expense as a
		percentage of operating revenue from 9.7% in 2000 to 8.3% in 2001. The $6.5
		million of restructuring costs represents fees and other costs associated with
		the retention of restructuring professionals and associated activities. The
		$5.1 million of non-recurring expenses in 2000 consisted of $3.3 million
		related to employee severance costs and the termination of several internal
		software development and systems projects associated with our corporate
		downsizing and a $1.8 million bad debt expense related to a management fee note
		which was deemed to be uncollectible due to the acquisition of the related
		residences in the second quarter of 2000.

Loss on Disposal
		
		. During the year ended December 31, 2001, the Company's Board of Directors
		adopted a plan to dispose of 82 residences representing 130 beds. During the
		second quarter of 2001, the Company recognized a pre-tax loss of $163.5 million
		(net of $3.6 million gain on sale) to reflect the Disposition Assets at the
		lower of carrying value or estimated fair value less costs to sell and to write
		off the carrying value of assets associated with terminated residence leases.
		As of December 31, 2001, 59 residences and ten land parcels have either been
		sold or transferred to a new lessee. The Company recognized an additional
		pre-tax loss of $25.8 million upon sale or transfer of these assets. As of
		December 31, 2001, approximately $150.5 million is reserved for losses relating
		to future asset sales or lease terminations.

---

During the year ended December 31, 2000, the Company's Board of Directors
		adopted a plan to dispose of 67 residences with aggregate capacity of 2,377
		residents and 33 parcels of land. In accordance with SFAS 121, "Accounting for
		Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed Of," we
		recorded a loss on disposal on 31 of the 67 residences where we estimated net
		sales proceeds using undiscounted cash flows, net of disposal costs, were less
		than the book value by $22.2 million net of subsequent gains.

Depreciation and Amortization
		
		. Depreciation and amortization for the year ended December 31, 2001 was $42.2
		million, representing an increase of $6.0 million, or 16.6%, from the $36.2
		million of depreciation and amortization for the comparable 2000 period. This
		increase is the result of a change during the second quarter in the accounting
		for two synthetic leases (relating to 26 residences and the corporate office
		building) where the synthetic lessor no longer bears economic risk and, as a
		result, these previously unconsolidated synthetic lease SPEs are now
		consolidated.

Non-recurring Charge
		
		. A non-recurring charge of $4.2 million was recorded in the fourth quarter of
		2000 relating to severance of various general and administrative positions of
		$1.1 million, the termination of a management contract of $2.0 million and the
		discontinuance of our pharmacy joint venture of $1.1 million. No similar charge
		was recorded in 2001.

Interest Expense, Net
		
		. Interest expense, net of interest income, was $73.1 million for the year
		ended December 31, 2001, prior to $4.8 million of bank penalties compared to
		$61.2 million of interest expense prior to $1.4 million of bank amendment fees
		for 2000. Gross interest expense (before interest capitalization and interest
		income) for the 2001 period was $73.2 million prior to the bank penalties
		compared to $71.1 million for the 2000 period, an increase of $2.1 million. We
		capitalized $1.9 million of interest expense in the 2001 period compared to
		$4.0 million in the 2000 period. This decrease in capitalized interest is a
		result of our decision to reduce development and construction activity in 2001.
		Our average construction in progress balance was $16.3 million during the
		twelve months ended December 31, 2001, compared to $65.1 million in the 2000
		period. Interest income for the 2001 period was $2.0 million as compared to
		$5.9 million for the 2000 period. This decrease was due primarily to lower
		restricted cash balances in place in 2001 related primarily to lease financing
		transactions.

Amortization of Financing Costs.
		
		Amortization of financing costs for the year ended December 31, 2001 was $9.8
		million, representing an increase of $1.2 million from the $8.6 million of
		amortized financing costs for the comparable 2000 period. This increase
		resulted primarily from recognizing a full year of amortization associated with
		the PIK Debentures during 2001 versus four months of amortization in the prior
		year.

PIK Interest, Net
		
		. "Pay-In-Kind" (PIK) interest for the year ended December 31, 2001 includes
		$24.3 million of interest expense on the various PIK Debentures which were
		issued in May and August 2000. This is an increase of $11.8 million from the
		$12.5 million of PIK interest expense for the year ended December 31, 2000.
		This increase resulted primarily from recognizing a full year of interest
		expense in 2001 versus a partial year in 2000.

Equity in Losses of Unconsolidated Affiliates.
		
		Equity in losses of unconsolidated affiliates for the twelve months ended
		December 31, 2001, was $16.9 million, representing an increase of $2.1 million
		from $14.8 million of losses for the comparable 2000 period. Our joint venture
		partners have not made substantial capital contributions to a number of joint
		ventures for several quarters. Therefore, we have absorbed the losses of those
		unconsolidated joint ventures in excess of capital contributed by the joint
		venture partner. The increase in equity in losses of unconsolidated affiliates
		was also impacted by a slower lease-up of residences which are held in
		unconsolidated joint ventures.

Minority Interest in Profits/Losses of Consolidated Subsidiaries.
		
		Minority interest in profits of consolidated subsidiaries for the year ended
		December 31, 2001 was $426,000, representing a decrease of $838,000 from $1.3
		million for the comparable period in 2000. The decrease was primarily
		attributable to the decrease in the number of residences that were owned by us
		in consolidated joint venture arrangements resulting from the joint venture
		settlements completed during 2001.

Extraordinary Item
		
		. During the year ended December 31, 2000, we recorded a gain on the early
		extinguishment of debt of $8.5 million (net of tax) relating to our retirement
		of $41.4 million of convertible debt related to the Equity Transaction. EITF
		96-19, "Debtor's Accounting for a Modification or Exchange of Debt
		Instruments," requires recognition of a gain or loss by the debtor for early
		extinguishment of debt.

Income Taxes.
		
		For the period ended December 31, 2001, we recorded a current state and local
		income tax provision of $120,000. The income tax expense for the period ended
		December 31, 2001 reflects the treatment of PIK interest as non-deductible
		interest. We do not currently anticipate that the interest expense which we
		will incur in the future related to the PIK debentures will be deductible for
		income tax purposes.

---

As of December 31, 2001, we do not have a deferred tax asset. In accordance
		with Statement of Financial Accounting Standards No. 109, we are required to
		continuously evaluate the recoverability of deferred tax assets based on the
		criteria that it is "more likely than not" that the deferred taxes will be
		recoverable through future taxable income. This evaluation is made based on our
		internal projections which are routinely updated to reflect more recent
		operating trends. Based on our current financial projections, we are uncertain
		that we will recover these net deferred tax assets through future taxable
		income. In addition, the utilization of the $299.3 million Net Operating Loss
		"NOL" carryforward could be subject to limitations based on the change of
		control provisions in the Internal Revenue Code. Accordingly, we have
		established a valuation allowance against the entire net deferred tax assets.

Year Ended December 31, 2000 Compared To the Year Ended December 31, 1999

Residence Service Fees.
		
		Residence service fees for year ended December 31, 2000 were $452.9 million
		representing an increase of $103.1 million, or 29.5%, from the $349.8 million
		for the comparable 1999 period. Substantially all of this increase resulted
		from occupancy growth at certain of our recently opened residences and the
		addition of newly constructed residences and from residences we acquired. We
		operated or managed 474 and 450 residences at December 31, 2000 and 1999,
		respectively.

Other Revenues.
		
		Other revenues for the year ended December 31, 2000 were $13.6 million, a
		decrease of $12.8 million over the $26.4 million of other revenue for the year
		ended December 31, 1999. The decrease is attributable to reduced development
		activity which resulted in lower development fees and management fees on
		residences which were either managed for third parties or for entities in which
		we held a minority ownership position. In addition, during the second quarter
		of 2000, we purchased 49 residences which we previously either managed for
		third parties or for entities in which we held minority ownership positions.
		Management fees include charges for transitional services to recruit and train
		staff, initial and recurring fees for use of our name and branding, initial and
		recurring fees for use of our methodologies, services for assisting with
		finance processing, and ongoing management services provided to operate the
		residence.

Residence Operating Expenses
		
		. Residence operating expenses for the year ended December 31, 2000 increased
		to $313.5 million from $224.2 million in the year ended December 31, 1999 due
		to the increased number of residences operated during the 2000 period.
		Operating expenses as a percentage of resident service fees for the year ended
		December 31, 2000 and 1999 were 69.2% and 64.1%, respectively. This percentage
		increase resulted primarily from increases in labor and employee benefit
		related costs due to increased competition for personnel and increases in
		liability insurance costs that resulted from the most recent liability
		insurance policy renewal on July 1, 2000. The increase in marginal expenses was
		also impacted by a slower lease-up of residences in some areas of the country.

Lease Expense
		
		. Lease expense for the year ended December 31, 2000 was $82.4 million,
		compared to $69.4 million in the comparable period in 1999. This increase was
		primarily attributable to the incurrence of a full year of lease expense in
		2000 related to leases entered into in 1999.

Lease Income
		
		. We earned $28.2 million of lease income for year ended December 31, 2000,
		compared
		
		to $25.5 million for the comparable period in 1999, on residences owned or
		leased by us and leased or subleased to unconsolidated joint ventures. Lease
		payment obligations of the unconsolidated joint venture entities are generally
		equivalent to the debt service payable by us on the leased residences, and
		thereby offset our costs associated with obtaining and maintaining financing
		for such residences
		.

General and Administrative Expense
		
		. For the year ended December 31, 2000, general and administrative expenses
		were $45.3 million prior to $5.1 million of non-recurring expenses, compared to
		$42.6 million before a $2.3 million write-off for failed acquisitions,
		corporate downsizing, and corporate office relocation costs for the comparable
		1999 period, representing a decrease to 9.7% of operating revenue in 2000 from
		11.3% in 1999. The $5.1 million of non-recurring expenses consist of $3.3
		million related to employee severance costs and the termination of several
		internal software development and systems projects associated with our
		corporate downsizing and a $1.8 million bad debt expense related to a
		management fee note which was deemed to be uncollectible due to the acquisition
		of the related residences in the second quarter.

Loss on Disposal
		
		. During the year ended December 31, 2000, the Company's Board of Directors
		adopted a plan to dispose of 67 residences with aggregate capacity of 2,377
		residents and 33 parcels of land. In accordance with SFAS 121, "Accounting for
		Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed Of," we
		recorded a loss on disposal on 31 of the 67 residences where we estimated net
		sales proceeds using undiscounted cash flows, net of disposal costs, are less
		than the book value by $22.2 million net of subsequent gains.

---

Depreciation and Amortization
		
		. Depreciation and amortization for the year ended December 31, 2000 was $36.2
		million, representing an increase of $15.0 million, or 70.9%, from the $21.2
		million of depreciation and amortization for the comparable 1999 period. This
		increase resulted primarily from depreciation of fixed assets on the larger
		number of new residences that were owned by us during the year ended December
		31, 2000, versus the comparable period in 1999. In addition, we acquired 19
		residences with a capacity for 944 residents in December 1999 and January 2000
		which were previously leased by us from a healthcare REIT and have therefore
		incurred depreciation on these assets.

Non-recurring Charge
		
		. A non-recurring charge of $4.2 million was recorded in the fourth quarter of
		2000 relating to severance of various general and administrative positions of
		$1.1 million, the termination of a management contract of $2.0 million and the
		discontinuance of our pharmacy joint venture of $1.1 million, representing a
		decrease of $43.1 million, compared to a non-recurring charge of $47.3 million
		in 1999 to exit development activities.

Interest Expense, Net
		
		. Interest expense, net of interest income, was $61.2 million for the year
		ended December 31, 2000, prior to $1.4 million of bank amendment fees compared
		to $32.3 million of net interest expense for 1999. Gross interest expense
		(before interest capitalization and interest income) for the 2000 period was
		$71.1 million prior to the amendment fees paid compared to $47.6 million for
		the 1999 period, an increase of $23.4 million. This increase is primarily
		attributable to an increase in the amount of mortgage financing used in 2000 as
		compared to 1999. The 2000 period also includes fees paid related to amending
		bank agreements. We capitalized $4.0 million of interest expense in the 2000
		period compared to $10.3 million in the 1999 period. This decrease in
		capitalized interest is a result of our decision to reduce development and
		construction activity in 2000. Our average construction in progress balance was
		$65.1 million during the twelve months ended December 31, 2000, compared to
		$117.8 million in the 1999 period. Interest income for the 2000 period was $5.9
		million as compared to $5.1 million for the 1999 period. This increase was due
		to interest on additional restricted cash balances in place in 2000 related
		primarily to lease financing transactions.

Amortization of Financing Costs.
		
		Amortization of financing costs for the year ended December 31, 2000 was $8.6
		million, representing an increase of $4.9 million from the $3.7 million of
		amortized financing costs for the comparable 1999 period. This increase
		resulted primarily from amortization of financing costs on the larger number of
		residences that were owned by us during the year ended December 31, 2000,
		versus the comparable period in 1999. In addition, we completed the Equity
		Transaction totaling $203.0 million in 2000 and have begun to amortize the
		$15.2 million of related costs.

PIK Interest, Net
		
		. PIK interest for the year ended December 31, 2000 includes $12.5 million of
		interest expense on the various PIK Debentures which were issued in May and
		August 2000. We had no similar PIK interest expense for the 1999 period.

Equity in Losses of Unconsolidated Affiliates.
		
		Equity in losses of unconsolidated affiliates for the twelve months ended
		December 31, 2000, was $14.8 million, representing an increase of $13.4 million
		from $1.4 million of losses for the comparable 1999 period. In the fourth
		quarter of 1999, we began reducing our reliance on joint venture arrangements.
		As such, our joint venture partners have not made substantial capital
		contributions to a number of joint ventures for several quarters. Therefore, we
		have absorbed the losses of those unconsolidated joint ventures in excess of
		capital contributed by the joint venture partner. The increase in equity in
		losses of unconsolidated affiliates was also impacted by a slower lease-up of
		residences that are held in unconsolidated joint ventures.

Minority Interest in Losses of Consolidated Subsidiaries.
		
		Minority interest in losses of consolidated subsidiaries for the year ended
		December 31, 2000 was $1.3 million, representing a decrease of $2.7 million
		from $4.0 million for the comparable period in 1999. The decrease was primarily
		attributable to the maturity in the residences that were owned by us in
		consolidated joint venture arrangements during the 2000 period. Throughout
		2000, we had an average of 23 residences held in consolidated joint venture
		relationships compared to an average of 19 residences in consolidated joint
		venture relationships during the year ended December 31, 1999.

Extraordinary Item
		
		. During the year ended December 31, 2000, we recorded a gain on the early
		extinguishment of debt of $8.5 million (net of tax) relating to our retirement
		of $41.4 million of convertible debt related to the Equity Transaction. EITF
		96-19, "Debtor's Accounting for a Modification or Exchange of Debt
		Instruments," requires recognition of a gain or loss by the debtor for early
		extinguishment of debt.

Cumulative Effect of Change in Accounting Principle.
		
		During the first quarter of 1999 we incurred a cumulative effect of a change
		in accounting principle of $3.8 million relating to the adoption of Statement
		of Position 98-5, which requires that costs of start-up activities and
		organization costs be expensed as incurred.

---

Income Taxes.
		
		For the period ended December 31, 2000, we recorded a current state income tax
		provision of $573,000 and a deferred tax provision of $14.1 million resulting
		in a total income tax provision of $14.7 million before the effect of the
		extraordinary item. The income tax expense for the period ended December 31,
		2000 reflects the treatment of PIK interest as non-deductible interest. We do
		not currently anticipate that the interest expense which we will incur in the
		future related to the PIK debentures will be deductible for income tax
		purposes. During the period ended December 31, 1999, we recorded a current
		income tax benefit of $345,000 and recognized a $14.4 million deferred asset
		resulting in a current income tax benefit of $14.7 million before the
		cumulative effect of the change in accounting principle of $3.8 million.

As of December 31, 2000, our deferred tax asset was reduced to zero. In
		accordance with Statement of Financial Accounting Standards No. 109, we are
		required to continuously evaluate the recoverability of deferred tax assets
		based on the criteria that it is "more likely than not" that the deferred taxes
		will be recoverable through future taxable income. This evaluation is made
		based on our internal projections that are routinely updated to reflect more
		recent operating trends. Based on our current financial projections, we are
		uncertain that we will recover these net deferred tax assets through future
		taxable income. In addition, the utilization of the $131.3 million Net
		Operating Loss "NOL" carryforward could be subject to limitations based on the
		change of control provisions in the Internal Revenue Code. Accordingly, we have
		established a valuation allowance against the entire net deferred tax assets.



Liquidity and Capital Resources

At December 31, 2001, we had $20.0 million in unrestricted cash and cash
		equivalents and a $1.1 billion working capital deficit compared to unrestricted
		cash and cash equivalents of $23.7 million and $129.2 million of working
		capital at December 31, 2000.

For the year ended December 31, 2001, the operating cash flow was $9.7 million compared to a cash flow deficit of $28.6 million for the year ended
		December 31, 2000.

During 2000 we obtained approximately $127.4 million of new conventional debt
		financing. Approximately $30.0 million of this financing was used to repay
		bridge financing and $30.0 million was used to repurchase 19 residences from a
		REIT lessor. The remaining conventional financing was used to fund construction
		of our remaining unopened residences.

During 2001 we completed seven sale/leaseback transactions with one of our
		major REITs for an aggregate purchase price of $26.5 million. The proceeds of
		these refinancings were used principally to retire mortgage and accrued
		interest obligations. We also negotiated extensions of loan maturities of
		between one to four years with respect to approximately $72.3 million of our
		secured debt during 2001.

On May 30, 2000, we completed the first closing of the Equity Transaction
		pursuant to which we issued $173.0 million of convertible debentures and
		convertible preferred shares to investors. The securities issued include: (i)
		$168.0 million of Series A, Series B and Series C PIK Debentures with an
		original conversion price of $4.00 per share ($400 per share of Series B stock
		for the Series B PIK Debentures), and a 9.75% semi-annual PIK coupon and a
		seven year maturity; and (ii) $5.0 million of Series A Stock with an original
		conversion price of $4.00 per share and a 9.75% semi-annual cumulative PIK
		dividend and a mandatory redemption in seven years. The Series A and Series C
		PIK Debentures and Series A Stock are convertible at any time at the respective
		holder's option into shares of Common Stock of the Company. The Series B PIK
		Debentures are convertible at any time at the respective holder's option into
		non-voting Series B preferred shares having rights (other than voting rights)
		substantially similar to the Company's Common Stock. The effective conversion
		price for these securities has been reduced from $4.00 to $2.68 per share as of
		December 31, 2001, pursuant to the anti-dilution provisions of these
		securities. See "Certain Relationships and Related Transactions." The Company
		may call the debentures and the Series A Stock at any time after May 30, 2003,
		if the Company's Common Stock trades at an average price of at least $8.00 per
		share for the preceding 30 trading day period. On August 10, 2000, we issued an
		additional $29.9 million of Series B PIK Debentures resulting in an aggregate
		transaction amount of $203.0 million. With the payment of the PIK coupons and
		accrued but undeclared dividends through December 31, 2001, we now have $229.5
		million of convertible PIK Debentures and $5.5 million of Series A Stock
		outstanding (includes $591,000 of accrued but undeclared PIK dividends).

We used the proceeds from this transaction, net of $15.2 million of transaction
		costs, to: (i) repay $48.3 million of bridge loans previously funded by an
		affiliated group who participated as investors in the Equity Transaction, (ii)
		retire outstanding convertible debt with a book basis of $41.4 million in
		exchange for $26.9 million in new Series C PIK Debentures, (iii) acquire equity
		interests in 14 residences (618 resident capacity) previously managed by the
		Company for $21.0 million, (iv) acquire a 60% ownership interest in the
		operations of 26 residences (2,159 resident capacity) for $14.7 million, (v)
		repay $5.0 million of short-term borrowings under a bank line-of-credit, and
		(vi) provide funds for working capital and other corporate purposes, including
		funding construction of our remaining unopened residences.

---

In an effort to retain sufficient cash to fund operations of all our residences
		and address our short-term liquidity needs, in March 2001 we obtained a $7.5
		million bridge loan provided by certain of our principal stock and convertible
		debenture holders (the "Bridge Loan") and elected not to fund certain of our
		debt service and lease payment obligations. As a result, we are currently in
		default under many of our credit and sale/leaseback facilities.

As an inducement to make the Bridge Loan, we issued the bridge lenders stock
		purchase warrants to purchase an aggregate of 60,000 shares of a newly
		designated Series B-1 class of our preferred stock having rights and terms
		substantially similar to our Series B preferred stock issuable upon conversion
		of our Series B PIK Debentures. Like our Series B preferred stock, each share
		of the new preferred stock has rights, other than voting rights, substantially
		similar to 100 shares of Common Stock of the Company. Accordingly, 60,000
		shares of the new preferred stock represent six million Common Stock equivalent
		shares. The five-year warrants are exercisable at a price of $75 per share for
		20,000 shares of the new preferred stock, $100 per share for 20,000 shares of
		the new preferred stock and $125 per share for 20,000 shares of the new
		preferred stock.

The $7.5 million Bridge Loan had an initial six-month term, is secured by first
		mortgages on several residences, and bears interest at an escalating interest
		rate, commencing at 10% per annum. At our election, the Bridge Loan was
		extended by an additional six months whereupon the Bridge Loan became
		convertible into convertible subordinated debentures of the Company having
		rights and terms substantially similar to our Series B PIK Debentures, but
		having a conversion price equal to $75 per share of Series B-1 preferred stock
		(a Common Stock equivalent price of $0.75 per share). The bridge lenders also
		are entitled to participate in any transaction involving the issuance by the
		Company of equity or equity-linked securities during the term of the Bridge
		Loan.

As a result of the Bridge Loan becoming convertible into convertible
		subordinated debentures and our issuance of a stock purchase warrant in
		connection with the Bridge Loan, the effective conversion price for the PIK
		Debentures and the Series A Stock has decreased from $4.00 to $2.68 per share
		of Common Stock for the Series A and Series C PIK Debentures and the Series A
		Stock and from $400 to $268 per share of Series B stock for the Series B PIK
		Debentures (the actual conversion price for the Series A and C PIK Debentures
		and the Series A Stock remains at $4.00 per share and for the Series B PIK
		Debentures remains at $400 per share; however, upon conversion of these
		convertible securities the holder thereof will also receive shares of Series
		B-1 preferred stock, in addition to Common Stock or Series B preferred stock,
		as applicable, in such amounts as to provide such holder an equity interest in
		the Company as though the conversion price for the Series A and C PIK
		Debentures and Series A Stock on the one hand, and the Series B PIK Debentures
		on the other hand, were decreased to $2.68 and $268 per share, respectively).

Historically, we financed our operations and growth through a combination of
		various forms of real estate financing (mortgage, synthetic lease and
		sale/leaseback financing), capital contributions from joint venture partners
		and the sale of our securities (Common Stock, preferred stock and Subordinated
		Debentures) and, to a lesser extent, cash from operations. At December 31,
		2001, we had $1.2 billion of outstanding debt principally consisting of $416.8
		million of subordinated Debentures having a weighted average interest rate of
		8.02%, $109.2 million of fixed rate debt having a weighted average interest
		rate of 7.46%, capitalized and financing lease obligations of $208.6 million
		having a weighted average interest rate of 10.14%, $451.5 million of variable
		rate debt having a weighted average interest rate of 6.44%, and $14.4 million
		and $10.8 million of notes payable and short-term borrowings, respectively.
		Through December 31, 2001, we have also entered into approximately $611.3
		million of sale/leaseback financings.

Our principal credit and financing agreements, including our Subordinated
		Debentures and our synthetic lease agreements, include cross-default provisions
		that provide that a material default under our other credit facilities
		constitutes a default under that credit or financing agreement. Accordingly,
		any material default arising under one of our credit or financing agreements
		could result (and, as discussed below, has resulted) in many of our other major
		credit and financing arrangements being in default. In addition, our principal
		credit and financing agreements include various financial covenants and other
		restrictions, including: (i) fixed charge coverage requirements, typically
		measured on a trailing four quarter basis and which generally increase over the
		term of the applicable credit agreement; (ii) maximum leverage ratios which
		limit our aggregate senior indebtedness to total capitalization; (iii) various
		minimum net worth or tangible net worth requirements; (iv) in some cases,
		property specific debt service coverage requirements and similar financial
		covenants of the type referenced above applicable to individual properties or
		to the pool of residences financed by the applicable lender; and (v) the
		maintenance of operating and other reserves for the benefit of the residences
		serving as collateral for the applicable lender. We are currently not in
		compliance with certain of these covenants, although we have negotiated limited
		in time waivers with certain lenders and lessors. Additionally, under some of
		our credit and sale/leaseback facilities we are required to secure lender or
		lessor consent prior to engaging in mergers, business combinations or change in
		control transactions.

---

We elected not to fund $10.4 million of debt service and lease payment
		obligations due in 2001 without the consent of the applicable lender or lessor.
		Through additional payments, prepayments associated with asset sales and
		application of escrowed amounts, as of December 31, 2001, we had $6.6 million
		of delinquent outstanding scheduled debt service to lenders or lessors who hold
		mortgages on, or from whom we lease 82 residences in the aggregate (3,316
		resident capacity). We have received a written notice of acceleration from
		lenders with respect to indebtedness aggregating $210.2 million. In addition,
		indebtedness of approximately $58.4 million has fully matured during 2001 and
		is past due. Many of our other credit and lease facilities are in technical
		default as a result of these payment defaults associated with other loan and
		lease facilities, but several of these lenders and lessors have executed
		limited in time waivers. We have received written notices of default from most
		of these lenders or lessors, three lessors have terminated leases for 17
		residences (940 resident capacity) and other lenders have elected to apply
		deposits and reserve funds of ours held by such lenders against the past due
		payments. Five lenders have activated or are in the process of activating "cash
		traps" of bank accounts relating to the operation of residences mortgaged to
		such lenders, either pursuant to arrangements set forth in the applicable loan
		documents or as negotiated with the Company. One of our lenders has commenced
		litigation in state court in Milwaukee, Wisconsin, seeking the appointment of a
		receiver for the 20 residences that serve as collateral for the $51.7 million
		of remaining mortgage financing provided by this lender. As a result of a
		negotiated forbearance agreement, the receivership action has been stayed by
		this lender as restructuring discussions are underway. We are also in
		litigation with a former lessor with respect to their damage claim associated
		with the early termination of their 11 residence lease portfolio.

Our operations will require significant additional capital resources in the
		future in order to fund: (i) the professional fees and other related costs
		associated with our Restructuring Plan; (ii) our ongoing debt service and lease
		obligations, including maturities of our long-term debt and refinancing of
		short term debt; and (iii) our obligation to finance the operations of our
		remaining joint ventures. Additionally, growth in residence operating cash flow
		has been slower than projected as a result of (i) increased operating costs,
		including labor, utilities and liability insurance and, (ii) to a lesser
		extent, slower fill rates in our pre-stabilized residences and reduction in
		occupancy levels in certain of our stabilized residences. As a result of
		ongoing operating losses and these upcoming capital needs, we expect that our
		projected cash needs during 2002 will exceed our projected identified cash
		resources. To satisfy these cash shortfalls and to preserve the integrity of
		our operations, we are pursuing a Restructuring Plan which seeks, among other
		things, to dispose of a significant number of our residences which operate with
		cash shortfalls and to defer some of our debt service obligations until those
		disposition and negotiated restructurings of our principal debt and lease
		obligations can occur. See "Business - Restructuring Activities".

Management is actively seeking to restructure secured loan facilities that, in
		management's view, would generate significant deficiency claims (i.e., claims
		in excess of the value of the applicable mortgage portfolio) in the event the
		applicable lenders sought to call the loan and foreclose on their collateral.
		Management believes that four credit facilities representing $314.4 million in
		aggregate financing (secured by mortgages on 73 residences with a capacity of
		4,261 beds) appear to represent significant potential deficiency claims in the
		range of $110 million to $180 million. In these negotiations, we are seeking to
		obtain a release of these potential deficiency claims against the Company in
		exchange for our agreement to cooperate with the applicable lenders to
		facilitate an orderly transition of ownership (and, in certain cases,
		management) of the mortgaged residences to the lenders or their designees
		(through deed-in-lieu of foreclosure transactions or so-called friendly
		foreclosures). In transitioning ownership of the mortgaged residences to the
		lenders, we are offering to provide interim or long-term management services to
		the lenders with respect to the mortgaged residences. As of March 2002, we have
		executed one definitive agreement of this type with one lender group with
		regard to a credit facility representing $50.5 million of financing secured by
		14 residences with an aggregate capacity of 618 beds, and are in active
		negotiations with the lenders of the other three "impaired" credit facilities.
		See Note 18 to the Consolidated Financial Statements.

In addition to these impaired credit facilities, we are also seeking to
		negotiate amendments and modifications with the applicable lenders with respect
		to our other principal secured credit facilities in order to, depending on the
		specific case, reset covenants, obtain consent to sell certain mortgaged
		residences, secure waivers of prior defaults and, in certain cases, to extend
		scheduled maturities. These credit facilities represent $434.9 million of
		financing secured by an aggregate of 146 residences with a capacity of 6,483
		beds. Discussions with certain (but not all) of these lenders have commenced,
		but none have yet resulted in definitive binding restructuring agreements.

We currently have five multi-residence portfolios leased from various REITs.
		These portfolios include an aggregate of 204 residences with a capacity of
		8,928 beds. During 2001 we completed the restructuring of two of our leased
		portfolios (aggregate of 53 residences with 2,064 beds). These restructurings
		included the amendment of certain lease covenants and terms and, in one lease
		facility, the conversion of 42 individual leases into a single master lease.
		The cash rent due under one lease facility was modified through the application
		of various deposits held by the landlord to satisfy a portion of the cash rent
		obligation in the early years of the restructured master lease.

---

Restructuring negotiations are currently underway with the other three REIT
		lessors. In these restructuring negotiations, we are seeking to extend lease
		terms, revise covenants as necessary, secure approval for asset sales, and
		obtain additional funding for capital expenditures. In consideration for these
		modifications, the applicable REIT lessors are generally requesting that we
		convert individual leases into multi-residence master leases.

As of December 31, 2001, we have the following series of redeemable preferred
		stock and Subordinated Debentures outstanding:

| | $5.5 million aggregate principal amount of 9.75% Series A cumulative
					convertible preferred shares due May 30, 2007. The holders of these convertible
					preferred shares are entitled to cumulative pay-in-kind (PIK) dividends at the
					rate of 9.75% per annum, payable semi-annually in the form of additional shares
					of Series A Stock on January 1 and July 1 of each year commencing on January 1,
					2001. The Company did not declare the July 1, 2001 and January 1, 2002,
					dividend on the Series A Stock due to the Company's financial condition at
					these dates. The holders of the convertible preferred shares may convert at any
					time into shares of Common Stock of the Company. The effective conversion price
					is $2.68 per share (as of December 31, 2001). The Series A Stock is redeemable
					at our option commencing on May 30, 2003, if the Company's Common Stock trades
					at an average price of at least $8.00 per share for the preceding 30 trading
					day period. As of December 31, 2001, the $5.5 million aggregate principal
					balance includes $591,000 of undeclared and unpaid PIK dividends relating to
					the dividend payment dates of July 1, 2001 and January 1, 2002.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | $42.5 million aggregate principal amount of 9.75% Series A PIK Debentures due
					May 30, 2007 (the "Series A Debentures"). These convertible debentures bear PIK
					interest at 9.75% per annum payable semi-annually in the form of Series B PIK
					Debentures on January 1 and July 1 of each year commencing on January 1, 2001.
					The effective conversion price is $2.68 per share (as of December 31, 2001).
					The Series A Debentures are redeemable at our option commencing on May 30,
					2003, if the Company's Common Stock trades at an average price of at least
					$8.00 per share for the preceding 30 trading day period. The holders of the
					Series A Debentures may convert at any time into shares of Common Stock of the
					Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | $137.2 million aggregate principal amount of 9.75% Series B PIK Debentures due
					May 30, 2007 (the "Series B Debentures"). These convertible debentures bear PIK
					interest at 9.75% per annum payable semi-annually in the form of Series B PIK
					Debentures on January 1 and July 1 of each year, commencing with January 1,
					2001. The effective conversion price is $268 per share (as of December 31,
					2001). The Series B Debentures are redeemable at our option commencing on May
					30, 2003, if the Company's Common Stock trades at an average price of at least
					$8.00 per share for the preceding 30 trading day period. The holders of the
					Series B Debentures may convert at any time into non-voting Series B preferred
					shares, each share of which has rights (other than voting rights) substantially
					similar to 100 shares of Common Stock of the Company.                                                                                                                                                                                                                                                                                                                                           
| | $49.8 million aggregate principal amount of 9.75% Series C PIK Debentures due
					May 30, 2007 (the "Series C Debentures"). These convertible debentures bear PIK
					interest at 9.75% per annum payable semi-annually in the form of Series C
					Debentures on January 1 and July 1 of each year, commencing with January 1,
					2001. The effective conversion price is $2.68 per share (as of December 31,
					2001). The Series C Debentures are redeemable at our option commencing on May
					30, 2003, if the Company's Common Stock trades at an average price of at least
					$8.00 per share for the preceding 30 trading day period. The holders of the
					Series C Debentures may convert at any time into shares of Common Stock of the
					Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | $112.0 million aggregate principal amount of 5.25% convertible subordinated
					debentures due December 15, 2002. These convertible debentures bear interest at
					5.25% per annum payable semi-annually on June 15 and December 15 of each year.
					The conversion price is $28.75, which is equivalent to a conversion ratio of
					34.8 shares of Common Stock per $1,000 in principal amount of the 5.25%
					Debentures. The 5.25% Debentures are redeemable at our option at specified
					premiums. The holders of the 5.25% Debentures may require us to repurchase the
					5.25% Debentures at 101% of face value upon a change of control, as defined in
					the 5.25% Debentures.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | $40.4 million aggregate principal amount of 7.00% convertible subordinated
					debentures due June 1, 2004. These convertible debentures bear interest at
					7.00% per annum payable semi-annually on June 1 and December 1 of each year.
					The conversion price is $20.25, which is equivalent to a conversion ratio of
					49.4 shares of Common Stock per $1,000 in principal amount of the 7%
					Debentures. The 7% Debentures are redeemable at our option at specified
					premiums.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | $34.9 million aggregate principal amount 6.75% convertible subordinated
					debentures due June 30, 2006. These convertible debentures bear interest at
					6.75% per annum payable semi-annually on June 30 and December 30 of each year.
					The conversion price is $20.38, which is equivalent to a conversion ratio of
					49.3 shares of Common Stock per $1,000 principal amount of the 6.75%
					Debentures. The 6.75% Debentures are redeemable at our option at specified
					premiums.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

---



The outstanding Original Debentures, comprised of the 5.25% Debentures, 7.00%
		Debentures and 6.75% Debentures, are subordinated to all other "senior
		indebtedness" of the Company (as defined in the applicable indenture governing
		such debentures), and the PIK Debentures are subordinated to all "senior
		indebtedness" of the Company (as defined in the applicable indentures governing
		such debentures), other than the Original Debentures. Although defined somewhat
		differently in the several indentures governing the Original Debentures and the
		PIK Debentures (collectively, the "Subordinated Debentures"), "senior
		indebtedness" is defined to generally include indebtedness for borrowed money
		and other similar obligations of Alterra (other than the other series of
		Original Debentures).

As a result of several notices of default received by the Company with respect
		to secured indebtedness that by its terms may be accelerated by the applicable
		lenders, neither we nor the applicable indenture trustees for the Subordinated
		Debentures are permitted by the subordination provisions of the indentures
		governing the respective Subordinated Debentures to make any payment or
		distribution on account of the Subordinated Debentures (other than the payment
		of PIK coupons on the PIK Debentures). As a result, we did not make cash
		interest payments on the Original Debentures in June 2001 and January 2002 of
		$5.5 million and $5.8 million, respectively. In the event that the Company is
		dissolved, liquidated or reorganized, all amounts due in payment of the
		Company's "senior indebtedness" must be paid or provided for before any payment
		may be made on account of the Subordinated Debentures. Accordingly, unless and
		until we are able to restructure our "senior indebtedness" obligations
		(including, without limitation, our several secured credit facilities) and
		resolve all pending defaults related to this indebtedness, we will not be
		permitted to make any interest or other payments to the holders of the
		Subordinated Debentures (other than the payment of PIK coupons on the PIK
		Debentures) or to restructure the Subordinated Debentures.

As of December 31, 2001, our current portion of long-term debt and short-term
		notes payable totaled $1.1 billion. These current maturities include $700.9
		million of debt and lease obligations, $416.8 million of PIK Debentures and
		other Subordinated Debentures that are in default or pursuant to cross-default
		provisions may be declared in default and may be accelerated at the lender's
		election, and $25.2 million of short-term notes payable and borrowings. In 2002
		our scheduled debt maturities include $150.8 million of secured debt and our
		5.25% Debentures, which have an outstanding balance of $112.0 million at
		December 31, 2001 and mature in December 2002.

We are obligated under our existing joint venture arrangements to purchase the
		equity interests of our joint venture partners at fair market value upon the
		election of our partners (the "Put"). We may also exercise options to purchase
		these same joint venture interests either at uncapped fair market value in the
		case of certain joint venture arrangements (the "FMV Call") or at an agreed
		upon return on investment in the case of other arrangements (the "Formula
		Call"). For joint ventures with the FMV Call, we estimate that the amount
		required as of December 31, 2001 to acquire these joint venture interests would
		have been approximately $1.0 million. With respect to joint ventures that
		include Formula Calls, we estimate that the call price as of December 31, 2001
		would have totaled approximately $49.0 million. However, we believe that the
		fair market value of these residences, in the aggregate, should the Put be
		exercised, is substantially less.

During 2001 we negotiated a series of arrangements that resulted in the
		discontinuation of joint venture arrangements with respect to 42 residences.
		Specifically, in October 2001 we negotiated the buyout by the Company of joint
		venture partner interests in 15 residences in connection with a modification
		and settlement agreement with one investor group. Pursuant to this agreement,
		we issued $700,000 of promissory notes and modified certain terms of the joint
		venture arrangement relating to the remaining ten joint venture residences. In
		December 2001 we also terminated our joint venture with Pioneer Development
		Company by exchanging ownership interests in 12 joint venture entities jointly
		owned with this group, resulting in the Company and Pioneer each acquiring sole
		ownership in six of these residences. Also in December 2001, we terminated our
		joint venture with Manor Care, Inc. relating to 13 residences in connection
		with consummating a global settlement of various pending litigations and
		arbitration proceedings between the Company and Manor Care and its affiliates.
		Pursuant to this settlement, the Company was released under its debt guaranty
		of a $57.7 million revolving line of credit established for this joint venture.
		The Company issued $12 million of notes in connection with this settlement and
		release transaction.

To address our long-term liquidity and capital needs, including our upcoming
		debt maturities, we intend to (i) continue our negotiations with our lenders,
		lessors, joint venture partners, and to seek to implement the Restructuring
		Plan (ii) continue to implement operating initiatives focused on overall rate
		and occupancy improvement and overhead reductions, (iii) dispose of
		under-performing and non-strategic residences in order to reduce associated
		financing costs, operating expenses and to generate cash, and (iv) seek to
		identify additional equity or equity-linked capital to be funded contingent
		upon the substantial completion of our restructuring. As our Restructuring Plan
		is largely dependent upon our ability to implement negotiated consensual
		restructuring arrangements with our various capital structure constituencies,
		no assurances may be given as to whether we will be able to restructure the
		Company or to restore value to various of our capital structure constituencies.

---

Impact of Inflation

To date, inflation has not had a significant impact on us. Inflation could,
		however, affect our results of operations due to our dependence on our senior
		resident population who rely on liquid assets and relatively fixed incomes to
		pay for our services. As a result, we may not be able to increase residence
		service fees to account fully for increased operating expenses. In structuring
		our fees we attempt to anticipate inflation levels, but there can be no
		assurance that we will be able to anticipate fully or otherwise respond to any
		future inflationary pressures.



|Item 7A. | Quantitative and Qualitative Disclosures About Market Risk
|-------- | ----------------------------------------------------------

Market risk represents the risk of changes in value of a financial instrument,
		derivative or non-derivative, caused by fluctuations in interest rates, foreign
		exchange rates and equity prices. Changes in these factors cause fluctuations
		in our earnings and cash flows.

We performed a sensitivity analysis that presents the hypothetical change in
		fair value of those financial instruments held by us at December 31, 2001 which
		are sensitive to changes in interest rates. Market risk is estimated as the
		potential change in fair value resulting from an immediate hypothetical
		one-percentage point parallel shift in the yield curve. The fair value of the
		debt included in the analysis is $451.5 million. Although not expected, a
		one-percentage point change in the interest rates would have caused our annual
		interest expense to change by approximately $4.5 million. Accordingly, a
		significant increase in London Inter Bank Offered Rate ("LIBOR") could have a
		material adverse effect on our earnings.



Although a majority of the debt and lease payment obligations we have as of or
		during the twelve months ended December 31, 2001 are not subject to floating
		interest rates, indebtedness that we may incur in the future may bear interest
		at a floating rate.

We do not presently use financial derivative instruments to manage our interest
		costs. We do not use foreign currency exchange rate forward contracts or
		commodity contracts and do not have foreign currency exposure as of December
		31, 2001.





|ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|------- | -------------------------------------------

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

|                                                 |                                                                                              | Page 
|------------------------------------------------ | -------------------------------------------------------------------------------------------- | -----
|Alterra Healthcare Corporation and Subsidiaries: |                                                                                             
|                                                 |                                                                                              |      
|                                                 | Independent Auditors' Report                                                                 | 31   
|                                                 |                                                                                              |      
|                                                 | Consolidated Balance Sheets as of December 31, 2001 and 2000                                 | 32   
|                                                 |                                                                                              |      
|                                                 | Consolidated Statements of Operations for Years Ended December 31, 2001, 2000
					and 1999  | 33   
|                                                 |                                                                                              |      
|                                                 | Consolidated Statements of Changes in Stockholders' Equity for Years Ended
					December 31, |      
|                                                 | 2001, 2000 and 1999                                                                          | 34   
|                                                 |                                                                                              |      
|                                                 | Consolidated Statements of Cash Flows for Years Ended December 31, 2001, 2000
					and 1999  | 35   
|                                                 |                                                                                              |      
|                                                 | Notes to Consolidated Financial Statements                                                   | 36-52

---





INDEPENDENT AUDITORS' REPORT



The Board of Directors
		
		Alterra Healthcare Corporation

We have audited the accompanying consolidated balance sheets of Alterra
		Healthcare Corporation and subsidiaries (the Company) as of December 31, 2001
		and 2000, and the related consolidated statements of operations, changes in
		stockholders' equity (deficit) and cash flows for each of the years in the
		three-year period ended December 31, 2001. These consolidated financial
		statements are the responsibility of the Company's management. Our
		responsibility is to express an opinion on these consolidated financial
		statements based on the results of our audits.

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

In our opinion, the consolidated financial statements referred to above present
		fairly, in all material respects, the consolidated financial position of the
		Company as of December 31, 2001 and 2000, and the results of its operations and
		its cash flows for each of the years in the three-year period ended December
		31, 2001, in conformity with accounting principles generally accepted in the
		United States of America.

The accompanying consolidated financial statements have been prepared assuming
		that the Company will continue as a going concern. As discussed in Note 1 to
		the consolidated financial statements, the Company has suffered recurring
		losses from operations and was in violation of certain debt covenants and cross
		covenants as of December 31, 2001. As a result of the covenant violations and
		cross covenant violations, the Company is in default on the related debt.
		Additionally, the Company did not make certain scheduled loan principal and
		lease payments beginning in March of 2001. These conditions raise substantial
		doubt about the Company's ability to continue as a going concern. Management's
		plans in regard to these matters are also described in Note 1. The consolidated
		financial statements do not include any adjustments that might result from the
		outcome of these uncertainties.



KPMG LLP

Chicago, Illinois
		
		March 29, 2002

---

ALTERRA HEALTHCARE CORPORATION AND SUBSIDIARIES
	
				CONSOLIDATED BALANCE SHEETS
		

		December 31, 2001 and 2000
		

		(In thousands except share data)



|                                                                                                                                                                                                                                                                              |   | 2001          |   |   | 2000      |  
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | ------------- | - | - | --------- | -
|ASSETS                                                                                                                                                                                                                                                                        |   |               |   |   |           |  
|Current assets:                                                                                                                                                                                                                                                               |   |               |   |   |           |  
|Cash and cash equivalents                                                                                                                                                                                                                                                     | $ | 19,996        |   | $ | 23,688    |  
|Accounts receivable, net                                                                                                                                                                                                                                                      |   | 10,539        |   |   | 11,782    |  
|Notes receivable, net                                                                                                                                                                                                                                                         |   | 500           |   |   | 4,963     |  
|Assets held for sale                                                                                                                                                                                                                                                          |   | 88,166        |   |   | 154,775   |  
|Other current assets                                                                                                                                                                                                                                                          |   | 31,346        |   |   | 56,832    |  
|Total current assets                                                                                                                                                                                                                                                          |   | 150,547       |   |   | 252,040   |  
|Property and equipment, net                                                                                                                                                                                                                                                   |   | 727,416       |   |   | 786,439   |  
|Restricted cash and investments                                                                                                                                                                                                                                               |   | 3,312         |   |   | 21,507    |  
|Goodwill, net                                                                                                                                                                                                                                                                 |   | 104,915       |   |   | 115,717   |  
|Other assets                                                                                                                                                                                                                                                                  |   | 52,010        |   |   | 52,062    |  
|Total assets                                                                                                                                                                                                                                                                  | $ | 1,038,200     |   | $ | 1,227,765 |  
|                                                                                                                                                                                                                                                                              |   |               |   |   |           |  
|                                                                                                                                                                                                                                                                              |   |               |   |   |           |  
|LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)                                                                                                                                                                                                                                |   |               |   |   |           |  
|Current liabilities:                                                                                                                                                                                                                                                          |   |               |   |   |           |  
|Current installments of long-term obligations, including
						convertible debt                                                                                                                                                                                               | $ | 977,651       |   | $ | 214,890   |  
|Current debt maturities on assets held for sale                                                                                                                                                                                                                               |   | 140,054       |   |   | 98,828    |  
|Short-term notes payable                                                                                                                                                                                                                                                      |   | 10,753        |   |   | 9,986     |  
|Accounts payable - trade                                                                                                                                                                                                                                                      |   | 4,450         |   |   | 10,805    |  
|Accounts payable - construction                                                                                                                                                                                                                                               |   | --            |   |   | 1,049     |  
|Accrued expenses                                                                                                                                                                                                                                                              |   | 62,336        |   |   | 42,778    |  
|Deferred rent and refundable deposits                                                                                                                                                                                                                                         |   | 16,048        |   |   | 2,930     |  
|Total current liabilities                                                                                                                                                                                                                                                     |   | 1,211,292     |   |   | 381,266   |  
|Long-term obligations, less current installments                                                                                                                                                                                                                              |   | 82,752        |   |   | 403,036   |  
|Convertible debt                                                                                                                                                                                                                                                              |   | --            |   |   | 395,914   |  
|Deferred gain on sale and other                                                                                                                                                                                                                                               |   | 5,593         |   |   | 5,286     |  
|Minority interest                                                                                                                                                                                                                                                             |   | --            |   |   | 4,506     |  
|Redeemable preferred stock                                                                                                                                                                                                                                                    |   | 5,489         |   |   | 4,898     |  
|Stockholders' equity (deficit):                                                                                                                                                                                                                                               |   |               |   |   |           |  
|Preferred stock, 2,500,000 shares authorized; 1,550,000 and 1,250,000 of which
					have been designated at December 31, 2001 and 2000, respectively, none of which
					are outstanding                                                                                      |   | --            |   |   | --        |  
|Common stock, $.01 par value; 100,000,000 shares authorized; of which
					22,111,671 and 22,219,168 were issued and outstanding, respectively, on
					December 31, 2001, and 22,111,671 and 22,109,810 were issued and outstanding,
					respectively, on December 31, 2000 |   | 221           |   |   | 221       |  
|Treasury stock, $.01 par value; 11,639 shares in 2001 and 2000                                                                                                                                                                                                                |   | (163          | ) |   | (163      | )
|Additional paid-in capital                                                                                                                                                                                                                                                    |   | 179,526       |   |   | 179,384   |  
|Accumulated deficit                                                                                                                                                                                                                                                           |   | (
				446,510 | ) |   | (146,583  | )
|Total stockholders' equity (deficit)                                                                                                                                                                                                                                          |   | (266,926      | ) |   | 32,859    |  
|Total liabilities and stockholders' equity (deficit)                                                                                                                                                                                                                          | $ | 1,038,200     |   | $ | 1,227,765 |  
|                                                                                                                                                                                                                                                                              |   |               |   |   |           |  
|See accompanying notes to consolidated financial statements.                                                                                                                                                                                                                 

---



ALTERRA HEALTHCARE CORPORATION AND SUBSIDIARIES
	

	CONSOLIDATED STATEMENTS OF OPERATIONS
	
	Years ended December 31, 2001, 2000 and 1999
	


	(In thousands, except per share data)



|                                                                                                                |   | 2001     |   |   | 2000     |   |   | 1999    |  
|--------------------------------------------------------------------------------------------------------------- | - | -------- | - | - | -------- | - | - | ------- | -
|Revenue:                                                                                                        |   |          |   |   |          |   |   |         |  
|Resident service fees                                                                                           | $ | 502,670  |   | $ | 452,880  |   | $ | 349,770 |  
|Other                                                                                                           |   | 6,152    |   |   | 13,615   |   |   | 26,411  |  
|Operating revenue                                                                                               |   | 508,822  |   |   | 466,495  |   |   | 376,181 |  
|                                                                                                                |   |          |   |   |          |   |   |         |  
|Operating expenses (income):                                                                                    |   |          |   |   |          |   |   |         |  
|Residence operations                                                                                            |   | 351,707  |   |   | 313,514  |   |   | 224,213 |  
|Lease expense                                                                                                   |   | 69,445   |   |   | 82,352   |   |   | 69,375  |  
|Lease income                                                                                                    |   | (21,336  | ) |   | (28,222  | ) |   | (25,507 | )
|General and administrative                                                                                      |   | 48,881   |   |   | 50,360   |   |   | 44,898  |  
|Loss on disposal                                                                                                |   | 189,287  |   |   | 22,515   |   |   | --      |  
|Depreciation and amortization                                                                                   |   | 42,198   |   |   | 36,210   |   |   | 21,178  |  
|Non-recurring charge                                                                                            |   | --       |   |   | 4,232    |   |   | 47,280  |  
|Total operating expenses                                                                                        |   | 680,182  |   |   | 480,961  |   |   | 381,437 |  
|Operating loss                                                                                                  |   | (171,360 | ) |   | (14,466  | ) |   | (5,256  | )
|                                                                                                                |   |          |   |   |          |   |   |         |  
|Other (expense) income:                                                                                         |   |          |   |   |          |   |   |         |  
|Interest expense, net                                                                                           |   | (77,882  | ) |   | (62,628  | ) |   | (32,259 | )
|Amortization of financing costs                                                                                 |   | (9,786   | ) |   | (8,595   | ) |   | (3,679  | )
|Convertible debt paid in kind ("PIK") interest                                                                  |   | (24,303  | ) |   | (12,483  | ) |   | --      |  
|Equity in losses of unconsolidated affiliates                                                                   |   | (16,902  | ) |   | (14,762  | ) |   | (1,462  | )
|Minority interest in profits of consolidated subsidiaries                                                       |   | 426      |   |   | 1,264    |   |   | 4,018   |  
|Total other expense, net                                                                                        |   | (128,447 | ) |   | (97,204  | ) |   | (33,382 | )
|                                                                                                                |   |          |   |   |          |   |   |         |  
|Loss before income taxes, extraordinary gain and the cumulative effect of a
					change in accounting principle |   | (299,807 | ) |   | (111,670 | ) |   | (38,638 | )
|                                                                                                                |   |          |   |   |          |   |   |         |  
|Income tax (expense) benefit                                                                                    |   | (120     | ) |   | (14,672  | ) |   | 14,669  |  
|                                                                                                                |   |          |   |   |          |   |   |         |  
|Loss before extraordinary gain and cumulative effect of a change in accounting
					principle                   | $ | (299,927 | ) | $ | (126,342 | ) | $ | (23,969 | )
|                                                                                                                |   |          |   |   |          |   |   |         |  
|Extraordinary gain on early extinguishment of debt (net of $5,232 tax expense)                                  |   | --       |   |   | 8,536    |   |   | --      |  
|                                                                                                                |   |          |   |   |          |   |   |         |  
|Cumulative effect of change in accounting principle (net of $2,509 tax benefit)                                 |   | --       |   |   | --       |   |   | (3,837  | )
|                                                                                                                |   |          |   |   |          |   |   |         |  
|Net loss                                                                                                        | $ | (299,927 | ) | $ | (117,806 | ) | $ | (27,806 | )
|                                                                                                                |   |          |   |   |          |   |   |         |  
|Basic loss per common share:                                                                                    |   |          |   |   |          |   |   |         |  
|Loss before extraordinary item , and a change in accounting principle                                           | $ | (13.52   | ) | $ | (5.71    | ) | $ | (1.09   | )
|Extraordinary item                                                                                              |   | --       |   |   | 0.39     |   |   | --      |  
|Change in accounting principle                                                                                  |   | --       |   |   | --       |   |   | (0.17   | )
|Basic loss per common share                                                                                     | $ | (13.52   | ) | $ | (5.33    | ) | $ | (1.26   | )
|                                                                                                                |   |          |   |   |          |   |   |         |  
|Diluted loss per common share:                                                                                  |   |          |   |   |          |   |   |         |  
|Loss before extraordinary item , and a change in accounting principle                                           | $ | (13.52   | ) | $ | (5.71    | ) | $ | (1.09   | )
|Extraordinary item                                                                                              |   | --       |   |   | 0.39     |   |   | --      |  
|Change in accounting principle                                                                                  |   | --       |   |   | --       |   |   | (0.17   | )
|Diluted loss per common share                                                                                   | $ | (13.52   | ) | $ | (5.33    | ) | $ | (1.26   | )
|Weighted average common shares outstanding:                                                                     |   |          |   |   |          |   |   |         |  
|Basic                                                                                                           |   | 22,192   |   |   | 22,108   |   |   | 22,088  |  
|Diluted                                                                                                         |   | 22,192   |   |   | 22,108   |   |   | 22,088  |  
|See accompanying notes to consolidated financial statements.                                                   

---

ALTERRA HEALTHCARE CORPORATION AND SUBSIDIARIES




|                                       | Common Stock,
				

					Treasury Stock
		

				And Additional
		

					Paid-In Capital |  
|-------------------------------------- | --------------------------------------------------------------------------------------- | -
|                                       | Shares 
 Outstanding                                                                    |  
|                                       |                                                                                         |  
|Balances at December 31, 1998          | 22,019                                                                                  | $
|                                       |                                                                                         |  
|Shares issued - options exercised      | 81                                                                                      |  
|Net loss                               | --                                                                                      |  
|Balances at December 31, 1999          | 22,100                                                                                  | $
|                                       |                                                                                         |  
|Shares issued - options exercised      | 10                                                                                      |  
|Net loss                               | --                                                                                      |  
|Balances at December 31, 2000          | 22,110                                                                                  | $
|                                       |                                                                                         |  
|Shares issued - restricted stock grant | 109                                                                                     |  
|Net loss                               | --                                                                                      |  
|Balances at December 31, 2001          | 22,219                                                                                  | $









See accompanying notes to consolidated financial statements.

---



ALTERRA HEALTHCARE CORPORATION AND SUBSIDIARIES
	

	CONSOLIDATED STATEMENTS OF CASH FLOWS
	


	Years ended December 31, 2001, 2000 and 1999
	


	(In thousands)



|                                                                                             |   | 2001     |   |   | 2000     |   |   | 1999     |  
|-------------------------------------------------------------------------------------------- | - | -------- | - | - | -------- | - | - | -------- | -
|Cash flows from operating activities:                                                        |   |          |   |   |          |   |   |          |  
|Net loss                                                                                     | $ | (299,927 | ) | $ | (117,806 | ) | $ | (27,806  | )
|Adjustment to reconcile net loss to net cash (used in) provided by operating
				activities: |   |          |   |   |          |   |   |          |  
|Depreciation and amortization                                                                |   | 42,198   |   |   | 36,210   |   |   | 21,178   |  
|PIK interest                                                                                 |   | 24,303   |   |   | 12,483   |   |   | --       |  
|Amortization of deferred financing costs                                                     |   | 9,786    |   |   | 8,595    |   |   | 3,679    |  
|Extraordinary gain on extinguishment of debt                                                 |   | --       |   |   | (13,768  | ) |   | --       |  
|Loss on disposal                                                                             |   | 189,287  |   |   | 22,515   |   |   | --       |  
|Deferred income taxes                                                                        |   | 120      |   |   | 19,904   |   |   | (16,732  | )
|Equity in net loss from investments in unconsolidated affiliates                             |   | 16,902   |   |   | 14,762   |   |   | 1,442    |  
|Minority interest in losses of consolidated subsidiaries                                     |   | (426     | ) |   | (1,264   | ) |   | (4,018   | )
|(Decrease) increase in net resident receivable                                               |   | 350      |   |   | (4,633   | ) |   | (3,106   | )
|Decrease in pre-opening costs                                                                |   | --       |   |   | --       |   |   | 7,856    |  
|Decrease (increase) in income tax receivable                                                 |   | 42       |   |   | 5,438    |   |   | (5,557   | )
|Decrease (increase) in other current assets                                                  |   | 7,176    |   |   | (12,912  | ) |   | (7,569   | )
|(Decrease) increase in accounts payable                                                      |   | (12,723  | ) |   | (231     | ) |   | 1,082    |  
|Increase in accrued expenses and deferred rent                                               |   | 4,161    |   |   | 8,653    |   |   | 10,011   |  
|Increase in past due interest and late fees                                                  |   | 17,900   |   |   | --       |   |   | --       |  
|(Decrease) increase in accrued development reserve costs                                     |   | (1,147   | ) |   | (11,555  | ) |   | 13,348   |  
|Changes in other assets and liabilities, net                                                 |   | 11,683   |   |   | 5,018    |   |   | 11,550   |  
|Net cash (used in) provided by operating activities                                          |   | 9,685    |   |   | (28,591  | ) |   | 5,358    |  
|                                                                                             |   |          |   |   |          |   |   |          |  
|Cash flows (used in) from investing activities:                                              |   |          |   |   |          |   |   |          |  
|Payments for property, equipment and project development costs                               |   | (23,932  | ) |   | (86,092  | ) |   | (181,794 | )
|Net proceeds from sale of property and equipment                                             |   | 73,926   |   |   | 2,217    |   |   | 18,263   |  
|Decrease (increase) in notes receivable, net of reserve                                      |   | 4,463    |   |   | (9,349   | ) |   | (21,544  | )
|Acquisitions of facilities, net of cash                                                      |   | --       |   |   | (20,896  | ) |   | (21,806  | )
|Changes in investments in and advances to unconsolidated affiliates                          |   | 100      |   |   | (4,126   | ) |   | --       |  
|Purchase of limited partnership interests                                                    |   | (782     | ) |   | (35,742  | ) |   | (64,355  | )
|Increase in long-term investments                                                            |   | --       |   |   | --       |   |   | (23,821  | )
|Net cash provided by (used in) investing activities                                          |   | 53,863   |   |   | (153,988 | ) |   | (295,057 | )
|                                                                                             |   |          |   |   |          |   |   |          |  
|Cash flows from financing activities:                                                        |   |          |   |   |          |   |   |          |  
|Proceeds (repayments) of short-term borrowings                                               |   | 767      |   |   | (19,228  | ) |   | (1,130   | )
|Repayments of long-term obligations                                                          |   | (99,050  | ) |   | (106,980 | ) |   | (78,258  | )
|Proceeds from issuance of debt                                                               |   | 5,491    |   |   | 127,432  |   |   | 273,049  |  
|Proceeds from issuance of convertible debt                                                   |   | --       |   |   | 197,926  |   |   | --       |  
|Payments for financing costs                                                                 |   | (1,068   | ) |   | (18,427  | ) |   | (8,550   | )
|Proceeds from sale/leaseback transactions                                                    |   | 26,458   |   |   | --       |   |   | 78,387   |  
|Issuance of preferred stock, common stock and other capital contributions                    |   | 142      |   |   | 4,568    |   |   | 797      |  
|Contributions by minority partners and minority stockholders                                 |   | 20       |   |   | 2,248    |   |   | 3,511    |  
|Net cash provided by financing activities                                                    |   | (67,240  | ) |   | 187,539  |   |   | 267,806  |  
|                                                                                             |   |          |   |   |          |   |   |          |  
|Net (decrease) increase in cash and cash equivalents                                         |   | (3,692   | ) |   | 4,960    |   |   | (21,893  | )
|                                                                                             |   |          |   |   |          |   |   |          |  
|Cash and cash equivalents:                                                                   |   |          |   |   |          |   |   |          |  
|Beginning of year                                                                            |   | 23,688   |   |   | 18,728   |   |   | 40,621   |  
|End of year                                                                                  | $ | 19,996   |   | $ | 23,688   |   | $ | 18,728   |  
|                                                                                             |   |          |   |   |          |   |   |          |  
|Supplemental disclosure of cash flow information:                                            |   |          |   |   |          |   |   |          |  
|Cash paid for interest, net of amounts capitalized                                           | $ | 89,887   |   | $ | 79,898   |   | $ | 46,523   |  
|Cash (refunded) paid during year for income taxes                                            | $ | (50      | ) | $ | (4,596   | ) | $ | 1,424    |  
|Debt assumed                                                                                 | $ | --       |   | $ | 48,887   |   | $ | --       |  
|                                                                                             |   |          |   |   |          |   |   |          |  
|Non cash items:                                                                              |   |          |   |   |          |   |   |          |  
|Synthetic lease assets consolidated                                                          | $ | 112,236  |   | $ | --       |   | $ | --       |  
|Synthetic lease debt consolidation                                                           | $ | 119,726  |   | $ | --       |   | $ | --       |  
|Notes issued in exchange for joint venture interests                                         | $ | 14,565   | 1 | $ | --       |   | $ | --       |  

See accompanying notes to consolidated financial statements.

---

ALTERRA HEALTHCARE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2001, 2000 and 1999



1.         Nature of Business and Summary of
			Significant Accounting Policies

1. Business
2. Going Concern
3. Principles of Consolidation
4. Use of Estimates
5. Recent Accounting Pronouncements
6. Cash Equivalents
7. Fair Value of Financial Instruments and Concentration of Credit Risk
8. Long-Lived Assets
9. Assets Held For Sale
10. Deferred Financing Costs
11. Revenue
12. Income Taxes
13. Net Loss Per Common Share
14. Reclassifications

Certain reclassifications have been made to the 2000 and 1999 financial
			statements to conform with the 2001 presentation.

1. Acquisitions and Joint Venture Activity

The Company completed the following acquisitions during 2000:

- Fourteen assisted living residences located in several states were purchased in
	May 2000 for $20.9 million net of acquired cash, and in the purchase the
	Company assumed $48.9 million in debt and recorded goodwill of $6.2 million.

The Company completed the following joint venture settlements during 2001:

- In October 2001 the Company closed on the buyout of joint venture partner
	interests in 15 residences with an aggregate capacity of 643 residents in
	connection with a modification and settlement agreement with one investor
	group. The Company issued a $700,000 note in consideration for the acquired
	interests and amended the terms of its joint venture arrangement with respect
	to the ten residences still operated in a joint venture with this investor
	group.
- In December 2001 the Company terminated its joint venture with Pioneer
	Development Company by exchanging ownership interests in 12 joint venture (556
	resident capacity) entities jointly owned with this group, resulting in the
	Company and Pioneer each acquiring sole ownership in six of these residences.
	The Company received $1.6 million in cash and a $500,000 note for a net payment
	related to its joint venture interests.
- In December 2001 the Company terminated its joint venture with Manor Care, Inc.
	relating to 13 residences in connection with consummating a global settlement
	of various pending litigations and arbitration proceedings between the Company
	and Manor Care and its affiliates. In addition, the Company was released of its
	joint debt guarantee associated with a $57.7 million revolving line of credit.
	The Company issued $12.0 million in notes in exchange for the release of its
	debt guarantee, the termination of the joint venture interests, and the
	settlement of all pending litigation and arbitration proceedings with Manor
	Care.

---

1. Notes Receivable
2. Assets Held for Sale and Other Current Assets

1. Assets Held for Sale
2. Other Current Assets

Other current assets are comprised of the following at December 31 (in
				thousands):



|                           |   | 2001   |  |   | 2000   | 
|-------------------------- | - | ------ |  | - | ------ | 
|                           |   |        |  |   |        | 
|Restricted cash            | $ | 12,920 |  | $ | 27,598 | 
|Supply inventory           |   | 10,157 |  |   | 12,115 | 
|Prepaid expenses           |   | 5,479  |  |   | 4,713  | 
|Other current assets       |   | 2,790  |  |   | 12,406 | 
|Total other current assets | $ | 31,346 |  | $ | 56,832 | 

5.         Property and Equipment

A summary of property and equipment at
		December 31 follows (in thousands):



|                                     |   | 2001    |   |   | 2000    |  
|------------------------------------ | - | ------- | - | - | ------- | -
|Land and improvements                | $ | 65,660  |   | $ | 82,218  |  
|Buildings and leasehold improvements |   | 659,955 |   |   | 632,690 |  
|Furniture, fixtures, and equipment   |   | 88,271  |   |   | 94,109  |  
|Construction in progress             |   | --      |   |   | 41,850  |  
|Total property and equipment         |   | 813,886 |   |   | 850,867 |  
|Less accumulated depreciation        |   | (86,470 | ) |   | (64,428 | )
|Property and equipment, net          | $ | 727,416 |   | $ | 786,439 |  

At December 31, 2001 and 2000, property and equipment includes $205.7 million
		and $63.4 million, respectively, of buildings and improvements held under
		capital and financing leases. The related accumulated amortization totaled
		$10.0 million and $2.2 million at December 31, 2001 and 2000, respectively.

Interest is capitalized in connection with the construction of residences and
		is amortized over the estimated useful lives of the residences. Interest
		capitalized in 2001, 2000 and 1999 was approximately $1.9 million, $3.9 million
		and $10.3 million, respectively.

In preparation for FASB 142, the Company reclassified to goodwill approximately
		$93.8 million and $105.4 million of net intangible building and leasehold
		interests as of December 31, 2001 and 2000, respectively.

1. Unconsolidated Affiliates and Managed Residences

The Company manages certain residences operated by joint ventures, primarily in
		the start-up or lease-up phases of operations, in which it either has no
		ownership or a minority ownership position, typically less than 10%.
		Historically, the Company has subsequently elected to purchase or acquire the
		remaining ownership interest in a majority of these residences, at which point
		the residences are included in consolidated operating results. As of December
		31, 2001, the Company owned minority interests in entities owning or leasing
		(and also managed) 42 residences and managed six other residences. As of
		December 31, 2000, the Company owned minority equity interests in entities
		owning or leasing (and also managed) 71 residences and managed four other
		residences. Included in other assets of the Company's balance sheet are net
		advances from affiliates of $1.6 million as of December 31, 2001.

---

The results of operations of these unconsolidated and managed residences for
2001, 2000 and 1999 are as follows (in thousands):



|                             |   | 2001    |   |   | 2000    |   |   | 1999    |  
|---------------------------- | - | ------- | - | - | ------- | - | - | ------- | -
|Residence service fees       | $ | 77,874  |   | $ | 86,147  |   | $ | 58,409  |  
|Residence operation expenses |   | 58,514  |   |   | 76,577  |   |   | 65,374  |  
|Residence profit (loss)      |   | 19,360  |   |   | 9,570   |   |   | (6,965  | )
|Management fee expense       |   | 4,869   |   |   | 11,309  |   |   | 23,919  |  
|Financing expense            |   | 30,758  |   |   | 43,692  |   |   | 31,965  |  
|Loss before tax              | $ | (16,267 | ) | $ | (45,431 | ) | $ | (62,848 | )
|                             |   |         |   |   |         |   |   |         |  

Financing expense on these residences includes $21.3 million and $28.2 million
		of lease and mortgage expense in 2001 and 2000, respectively, which represents
		lease income to the Company from these residences. The Company retains
		ownership in the underlying assets and then leases the assets to the
		unconsolidated and managed affiliates.

1. Restricted Cash and Investments

Restricted cash and investments consist of debt service reserves with interest
		rates ranging from 4.8% to 6.8% and maturities ranging from one to twelve
		months.

1. Other Assets

Other assets are comprised of the following
		at December 31 (in thousands):



|                              |   | 2001   |  |   | 2000  
|----------------------------- | - | ------ |  | - | ------
|Deferred financing costs, net | $ | 35,081 |  | $ | 35,286
|Lease security deposits       |   | 7,266  |  |   | 10,630
|Deposits and other            |   | 9,663  |  |   | 6,146 
|Total other assets            | $ | 52,010 |  | $ | 52,062

---





1. Long-term Debt, Capital Leases, Redeemable Preferred Stock, and Financing
		Obligations

Long-term debt, capital leases, and financing obligations consist of the
		following at December 31 (in thousands):





|                                                                                                                           |   | 2001      |  |   | 2000     
|-------------------------------------------------------------------------------------------------------------------------- | - | --------- |  | - | ---------
|5.25% convertible subordinated debentures due December 15, 2002, callable by
				the Company on or after December 31, 2000 | $ | 112,043   |  | $ | 112,043  
|                                                                                                                           |   |           |  |   |          
|7.00% convertible subordinated debentures due June 1, 2004, callable by the
				Company on or after June 15, 2000          |   | 40,355    |  |   | 40,355   
|                                                                                                                           |   |           |  |   |          
|6.75% convertible subordinated debentures due June 30, 2006, callable by the
				Company on or after July 15, 2000         |   | 34,850    |  |   | 34,850   
|                                                                                                                           |   |           |  |   |          
|9.75% Series A convertible debentures due May 31, 2007, callable by the Company
				on or after May 31, 2003               |   | 42,500    |  |   | 42,500   
|                                                                                                                           |   |           |  |   |          
|9.75% Series B convertible debentures due May 31, 2007, callable by the Company
				on or after May 31, 2003               |   | 137,221   |  |   | 121,019  
|                                                                                                                           |   |           |  |   |          
|9.75% Series C convertible debentures due May 31, 2007, callable by the Company
				on or after May 31, 2003               |   | 49,795    |  |   | 45,147   
|                                                                                                                           |   |           |  |   |          
|Total convertible debt                                                                                                     | $ | 416,764   |  | $ | 395,914  
|                                                                                                                           |   |           |  |   |          
|Mortgages payable, due from 2004 through 2037; weighted average interest rate
				of 7.10%                                 | $ | 27,535    |  | $ | 538,677  
|                                                                                                                           |   |           |  |   |          
|Capital and financing lease obligation payable through 2016; weighted average
				interest rate of 11.32%                  |   | 37,140    |  |   | 10,682   
|                                                                                                                           |   |           |  |   |          
|Serial and term revenue bonds maturing serially from 2000 through 2013;
				interest rates ranging from 4.00% to 9.50%     |   | 3,645     |  |   | 6,290    
|                                                                                                                           |   |           |  |   |          
|Notes payable through 2007; weighted average interest rate of 8.83%                                                        |   | 14,432    |  |   | --       
|                                                                                                                           |   |           |  |   |          
|Capital leases, financing obligations and mortgage payable in default and
					subject to acceleration                     |   | 700,941   |  |   | 161,106  
|Total long-term obligations                                                                                                |   | 1,200,457 |  |   | 1,112,668
|Less current installments                                                                                                  |   | 1,117,705 |  |   | 313,718  
|Total long-term obligations, less current installments                                                                     | $ | 82,752    |  | $ | 798,950  



As of December 31, 2001 and 2000, the Company was in violation of its fixed
		charge covenant with several of its credit facilities. In addition, in order to
		conserve its liquidity, the Company did not make certain 2001 debt service and
		lease payments. As the Company's principal credit, lease and other financing
		facilities are cross-defaulted to a material default occurring under other
		credit, lease or financing facilities, a payment default by the Company under
		one such facility results in the Company being in default under other such
		facilities. As a result of these defaults, two previously unconsolidated
		synthetic lease SPEs were consolidated during the second quarter of 2001.
		Obligations in the amount of $700.9 million are currently classified as current
		liabilities because the applicable lenders have the right to accelerate their
		loans due to the existence of a default.

The mortgages payable are secured through security agreements and guarantees by
		the Company. In addition, certain security agreements require the Company to
		maintain collateral and debt reserve funds. These funds are recorded as
		restricted cash and long-term investments.

At December 31, 2000, the Company has outstanding $3.4 million of mortgage
		notes payable that were assumed in conjunction with non-cash acquisition
		activities in 1999.

---

In December 1999 the Company entered into a bridge loan arrangement with an
		affiliated group (the "Bridge Lender") in connection with the Company's
		repurchase of 19 Alterra residences then leased from a healthcare REIT (the
		"REIT Residences"). Pursuant to this arrangement, the Company borrowed $14.0
		million (the "Tranche A Loan") for working capital purposes and $30.0 million
		("Tranche B Loan") as bridge financing for its initial purchase of seven REIT
		Residences in December 1999. The Tranche A Loan had a term of up to 12 months
		and bore interest at an initial annual rate of 8% for the first three months,
		9% for the next three months and increasing thereafter by 0.5% per month. The
		Tranche A Loan was secured by mortgages on certain land and a stock pledge of a
		subsidiary corporation (the "Holding Subsidiary") formed to serve as the
		holding company for the subsidiary formed to acquire the REIT Residences. The
		Tranche B Loan had a term of up to six months, bore interest at an annual rate
		of 10% for the first three months and at a rate escalating by 0.5% per month
		thereafter. The Tranche B Loan was secured by mortgages on the seven REIT
		Residences acquired with the proceeds from the Tranche B Loan.

In February 2000 the Company acquired the remaining 12 REIT Residences. In
		connection therewith, the Company obtained $60.0 million of mortgage financing
		from one of its bank lenders and utilized $30.0 million of the proceeds to
		purchase the 12 REIT Residences and $30.0 million to repay the Tranche B Loan.
		The Tranche A Loan was repaid in conjunction with the 2000 Equity-Linked
		Transaction described below.

On May 31, 2000, the Company completed a financing transaction in which it
		issued $173.0 million of convertible debentures and convertible preferred
		shares to several investors, including affiliates of the Company. The
		securities issued were initially convertible at $4.00 per share, bear a 9.75%
		semi-annual payment-in-kind ("PIK") coupon or dividend and have a seven year
		maturity. The Company may call the securities at any time after three years if
		the trading price of the Company's Common Stock averages at least $8.00 for the
		preceding 30 trading days. This initial closing contemplated that the Company
		had the option to issue up to an additional $29.9 million of these debentures
		within 180 days following the May 31, 2000 closing. The Company recorded a gain
		on the early extinguishment of debt of $8.5 million related to its retirement
		of $41.4 million of convertible debt in the initial closing. On August 10,
		2000, the Company exercised its option to issue the additional $29.9 million of
		securities, thereby increasing the overall financing transaction to a total of
		$203.0 million (the May 31, 2000 and August 10, 2000 closings are referred to
		together as the "2000 Equity-Linked Transaction"). The securities issued in
		this transaction include the following:

Series A Stock.
		
		1,250,000 shares of the Series A Stock were sold for the stated value, $4.00
		per share, representing aggregate proceeds of $5 million. The holders of the
		Series A Stock are entitled to cumulative PIK dividends at the rate of 9.75% of
		the stated value, payable semiannually on January 1 and July 1 of each year
		commencing on January 1, 2001. If at any time the Company's Common Stock is not
		listed or admitted to trading on a national exchange, the dividend rate
		increases to 12.25%. The Series A Stock ranks senior to the Company's Common
		Stock with respect to dividend rights and rights on liquidation, winding up or
		dissolution. Specifically, no dividend or distribution may be made to the
		holders of the Common Stock, and no Common Stock may be repurchased or redeemed
		by the Company, unless all accrued and unpaid dividends on shares of Series A
		Stock have been paid. The Series A Stock is entitled to receive, in the event
		of liquidation of the Company, an amount in cash equal to the stated value of
		the Series A Stock for each share outstanding, plus an amount in cash equal to
		the accrued but unpaid dividends thereon to the date of liquidation, before any
		payment may be made to the holders of the Common Stock. The Series A Stock is
		redeemable at the Company's option commencing on May 31, 2003, if the Company's
		Common Stock trades at an average price of at least $8.00 per share for the
		preceding 30 trading day period. The then outstanding shares of Series A Stock
		must be redeemed by the Company at stated value, plus all accrued but unpaid
		dividends, upon the earlier of (i) May 31, 2007 or (ii) the date of redemption
		by the Company of the Series A and B convertible pay-in-kind debentures. The
		holders of the convertible preferred shares may convert at any time into shares
		of Common Stock of the Company. The effective conversion price is $2.68 per
		share as of December 31, 2001. The holders of the Series A Stock are entitled
		to vote on all matters voted on by the holders of Common Stock, other than the
		election of directors. However, the holders of the Series A Stock are also
		entitled to elect, as a class, four of nine members of the Company's Board of
		Directors. As of December 31, 2001, the $5.5 million principal balance includes
		$591,000 of accrued but undeclared PIK dividends relating to the dividend
		payment dates of July 1, 2001 and January 1, 2002.

Series A Debentures.
		
		The $42.5 million original aggregate principal amount of 9.75% Series A
		convertible pay-in-kind debentures due May 31, 2007 bear PIK interest at 9.75%
		per annum payable semi-annually in the form of additional Series B debentures
		on January 1 and July 1 of each year, commencing on January 1, 2001. The Series
		A convertible debentures are redeemable at the Company's option commencing on
		May 31, 2003, if the Company's Common Stock trades at an average price of at
		least $8.00 per share for the preceding 30 trading day period. The holders of
		the Series A convertible debentures may convert at any time into shares of
		Common Stock of the Company, at the initial conversion price of $4.00 per share
		(effective conversion price of $2.68 per share at December 31, 2001, due to the
		operation of applicable anti-dilution provisions).

---

Series B Debentures.
		
		The $112.6 million original aggregate principal amount of 9.75% Series B
		convertible pay-in-kind debentures due May 31, 2007 bear PIK interest at 9.75%
		per annum payable semi-annually in the form of additional Series B debentures
		on January 1 and July 1 of each year, commencing January 1, 2001. The Series B
		convertible debentures are redeemable at the Company's option commencing on May
		31, 2003, if the Company's Common Stock trades at an average price of at least
		$8.00 per share for the preceding 30 trading day period. The holders of the
		Series B convertible debentures may convert at any time, at an initial
		conversion price of $400.00 per share (effective conversion price of $268 per
		share at December 31, 2001, due to the operation of applicable anti-dilution
		provisions), into non-voting Series B preferred shares, each share of which has
		rights (other than voting rights) substantially similar to 100 shares of Common
		Stock of the Company.

Series C Debentures.
		
		The $42.8 million original aggregate principal amount of 9.75% Series C
		convertible pay-in-kind debentures due May 31, 2007 bear PIK interest at 9.75%
		per annum payable semi-annually in the form of additional Series C debentures
		on January 1 and July 1 of each year, commencing on January 1, 2001. The Series
		C convertible debentures are redeemable at the Company's option commencing on
		May 31, 2003, if the Company's Common Stock trades at an average price of at
		least $8.00 per share for the preceding 30 trading day period. The holders of
		the Series C convertible debentures may convert at any time into shares of the
		Common Stock of the Company, at the initial conversion price of $4.00 per share
		(effective conversion price of $2.68 per share at December 31, 2001, due to the
		operation of applicable anti-dilution provisions).

Principal payments on long-term debt, capital leases, and financing obligations
		for the next five years and thereafter are as follows (in thousands):





|2002                                                            | $1,117,705 | 
|--------------------------------------------------------------- | ---------- | 
|2003                                                            | 617        | 
|2004                                                            | 32,568     | 
|2005                                                            | 379        | 
|2006                                                            | 14,317     | 
|Thereafter                                                      | 34,871     | 
|Total long-term debt, capital leases, and financing obligations | $1,200,457 | 



Included in the 2002 principal payment obligation is $58.4 million of 2001
		indebtedness that has matured and is past due as of December 31, 2001.

10.         Short-term Notes Payable

In March 2001, the Company obtained a $7.5 million Bridge Loan that has a
		six-month term and is secured by first mortgages on several residences and
		bears interest at an escalating interest rate, commencing at 10% per annum. At
		the Company's election, the Bridge Loan was extended by an additional six
		months whereupon the Bridge Loan became convertible into convertible
		subordinated debentures of the Company having rights and terms substantially
		similar to the Series B 9.75% pay-in-kind convertible debentures, but having a
		conversion price equal to $75 per share of Series B preferred stock (a Common
		Stock equivalent price of $0.75 per share). The bridge lenders also are
		entitled to participate in any transaction involving the issuance by the
		Company of equity or equity-linked securities during the term of the Bridge
		Loan. As of December 31, 2001, the outstanding Bridge Loan had a balance of $6
		million.

In addition, as of December 31, 2001, short-term notes payable consist of a
		$4.9 million line of credit bearing interest at 5.75%.

As of December 31, 2000, short-term notes payable consist of a $9.9 million
		line of credit bearing interest at the then current prime rate.

---

11.         Accrued Expenses

Accrued expenses are comprised of the
		following at December 31 (in thousands):





|                                                        |   | 2001   |   | 2000  
|------------------------------------------------------- | - | ------ | - | ------
|Accrued salaries and wages                              | $ | 10,190 | $ | 10,808
|Accrued interest                                        |   | 21,744 |   | 6,604 
|General liability deductible reserve                    |   | 9,526  |   | 800   
|Accrued property taxes                                  |   | 7,859  |   | 6,593 
|Accrued vacation                                        |   | 5,813  |   | 5,599 
|Accrued charges related to exiting development activity |   | --     |   | 1,147 
|Other                                                   |   | 7,204  |   | 11,227
|Total accrued expenses                                  | $ | 62,336 | $ | 42,778



During 2001 the Company implemented a self-insurance program related to
		liability coverage. The reserve as of December 31, 2001, is based on actuarial
		estimates of the magnitude of the expected losses.

During the fourth quarter of 2000, management implemented operating initiatives
		focused on overall rate and occupancy improvement and overhead reductions. As a
		consequence of this decision, the Company recorded one time nonrecurring,
		pretax charges of $4.2 million. This included $1.1 million of severance of
		various general and administrative positions, $1.1 million to discontinue our
		pharmacy joint venture, and $2.0 million to terminate a management agreement.
		As of December 31, 2001, the Company has paid $4.2 million and the reserve has
		been eliminated.

12.         
		Stockholders' Equity



13.         
Stock Option Plan



At December 31, 2001, 850,977 shares were available for grant under the 1995
		Plan. The per share weighted-average exercise price of stock options granted
		during 2001 and 2000 were $1.31 and $3.83 on the date of grant using the Black
		Scholes option-pricing model with the following weighted-average assumption:
		expected dividend yield 0.0%, risk-free interest rate of 5.0%, expected
		volatility of 50% for 2001 and 2000 grants and an expected life of seven years.

In conjunction with the 1997 merger of the Company and Sterling House
		Corporation, Sterling stock options that were outstanding were exchanged for
		options to purchase the Company's Common Stock, adjusted for the exchange ratio
		operative in the merger. Under the terms of the Sterling House Corporation 1995
		Incentive Stock Option Plan, all options became vested and immediately
		exercisable as a result of the Sterling merger.

---





|            |  | Net Loss  |   |  | Net Loss
				Per Share |  
|----------- |  | --------- | - |  | ---------------------- | -
|            |  | 2001      |   |  | 2000                   |  
|As reported |  | $(299,927 | ) |  | $(117,806              | )
|Pro forma   |  | $(300,250 | ) |  | $(117,953              | )



Stock option activity during the periods
		indicated is as follows:

|                             | Number ofShares |   |   | Wtd.Avg
Exercise Price
|---------------------------- | --------------- | - | - | ----------------------
|Balance at December 31, 1999 | 1,596,038       |   | $ | 14.20                 
|Granted                      | 121,656         |   |   | 5.69                  
|Exercised                    | (9,778          | ) |   | 0.09                  
|Forfeited                    | (742,729        | ) |   | 14.06                 
|Balance at December 31, 2000 | 965,187         |   | $ | 12.65                 
|Granted                      | 1,000,000       |   |   | 1.31                  
|Exercised                    | --              |   |   | 0.00                  
|Forfeited                    | 267,170         |   |   | 14.06                 
|Balance at December 31, 2001 | 1,698,017       |   |   | $ 5.75                
|                             |                 |   |   |                       

Stock options outstanding at December 31, 2001 are as follows:



|  | Range of
					
					exercise
					prices |  | Number		
					Outstanding
					12/31/01 |  | Average
					
					Remaining
					
					Contractual
					Life |  |       | Wtd.-Avg.
					
					Exercise
					Price |  | Number
					
					Exercisable
					at 12/31/01 |  |   | Wtd.-Avg.
					
					Exercise
					Price
|- | ---------------------------------------- |  | --------------------------------------- |  | ------------------------------------------------------------- |  | ----- | ---------------------------------------- |  | ---------------------------------------------- |  | - | ----------------------------------------
|$ | 0.09 - 1.40                              |  | 1,001,229                               |  | 7.0                                                           |  | $1.31 |                                          |  | 1,229                                          |  | $ | 0.09                                    
|$ | 1.40 - 8.69                              |  | 367,041                                 |  | 5.2                                                           |  | 5.88  |                                          |  | 318,465                                        |  |   | 5.91                                    
|$ | 8.70 - 17.94                             |  | 55,807                                  |  | 5.4                                                           |  | 15.66 |                                          |  | 55,807                                         |  |   | 15.66                                   
|$ | 17.95 - 20.81                            |  | 247,644                                 |  | 7.0                                                           |  | 18.81 |                                          |  | 192,043                                        |  |   | 18.81                                   
|$ | 20.82 - 29.56                            |  | 26,296                                  |  | 6.3                                                           |  | 29.34 |                                          |  | 21,528                                         |  |   | 29.29                                   
|  | Total:                                   |  | 1,698,017                               |  | 6.2                                                           |  | $5.75 |                                          |  | 589,072                                        |  | $ | 11.88                                   



14.         Income Taxes

The components of the provision for income taxes for the years ended December
		31 are as follows (in thousands):



|                              |   | 2001 |  |   | 2000   |  |   | 1999    |  
|----------------------------- | - | ---- |  | - | ------ |  | - | ------- | -
|Income tax expense (benefit): |   |      |  |   |        |  |   |         |  
|Current:                      |   |      |  |   |        |  |   |         |  
|Federal                       | $ | --   |  | $ | --     |  | $ | (410    | )
|State                         |   | 120  |  |   | 573    |  |   | 65      |  
|Total current                 |   | 120  |  |   | 573    |  |   | (345    | )
|                              |   |      |  |   |        |  |   |         |  
|Deferred:                     |   |      |  |   |        |  |   |         |  
|Federal                       |   | --   |  |   | 12,797 |  |   | (12,831 | )
|State                         |   | --   |  |   | 1,302  |  |   | (1,493  | )
|Total deferred                |   | --   |  |   | 14,099 |  |   | (14,324 | )
|Total                         | $ | 120  |  | $ | 14,672 |  | $ | (14,669 | )

---





Deferred tax assets and liabilities consist
		of the following at December 31 (in thousands):



|                                                |   | 2001          |   |   | 2000    |  
|----------------------------------------------- | - | ------------- | - | - | ------- | -
|Deferred tax assets:                            |   |               |   |   |         |  
|Net operating loss carryforwards                | $ | 116,712       |   | $ | 51,227  |  
|Development write-off                           |   | 7,990         |   |   | 6,503   |  
|Deferred gain sale/leaseback                    |   | 2,337         |   |   | 2,550   |  
|Building reserve                                |   | 58,649        |   |   | 8,830   |  
|Accrued expenses                                |   | 8,348         |   |   | 3,669   |  
|Investment in consolidated affiliates           |   | 1,017         |   |   | 1,076   |  
|Other                                           |   | 1,096         |   |   | 729     |  
|Total deferred tax assets                       |   | 196,149       |   |   | 74,584  |  
|Less valuation allowance                        |   | (
				161,447 | ) |   | (53,042 | )
|Deferred tax assets, net of valuation allowance | $ | 34,702        |   | $ | 21,542  |  
|                                                |   |               |   |   |         |  
|Deferred tax liabilities:                       |   |               |   |   |         |  
|Acquisition basis                               |   | 1,715         |   |   | 1,715   |  
|Depreciation                                    |   | 32,987        |   |   | 19,827  |  
|Deferred tax liabilities                        | $ | 34,702        |   | $ | 21,542  |  



|                    | 2001   |  | 2000    |  | 1999 
|------------------- | ------ |  | ------- |  | -----
|Statutory rate      | 35.0%  |  | 35.0%   |  | 35.0%
|State taxes, net    | 4.0%   |  | 4.0%    |  | 2.3  
|Valuation allowance | (36.1) |  | (47.5)  |  | --   
|PIK interest        | (2.8)  |  | (3.9)   |  | --   
|Other               | (0.1)  |  | (0.7)   |  | 0.7  
|                    | 0.0%   |  | (13.1)% |  | 38.0%

The Company has approximately $299.3 million of tax net operating loss
		carryforwards at December 31, 2001. Any unused net operating loss carryforwards
		will expire commencing in the year 2007 through 2021. The utilization of net
		operating loss carryforwards may be further limited as to future use due to the
		change in control provisions in the Internal Revenue Code. In addition, the
		Company has alternative minimum tax credit carryforwards of approximately
		$136,000 which are available to reduce future federal regular income taxes, if
		any, over an indefinite period.

15.         Disclosures About Fair Value of Financial
	Instruments















---







The carrying amount of mortgage notes payable approximates fair value because
		the stated interest rates approximate fair value.

The fair value of the Company's convertible debentures is estimated based on
		quoted market prices. At December 31, 2001, the Company's convertible
		debentures had a book value of $187.3 million. At December 31, 2001, there is
		not a meaningful market for these bonds and based on quoted market prices, the
		fair value of these convertible securities was estimated to be 10% to 15% of
		the par value.

16.         Commitments and Contingencies

The Company has entered into sale/leaseback agreements with certain REITs as a
		source of financing the development, construction, and to a lesser extent,
		acquisitions of assisted living residences. Under such agreements, the Company
		typically sells to the REIT one or more residences at a negotiated value and
		simultaneous with such sale, the Company enters into a lease agreement for such
		residences. The initial terms of the leases vary from ten to 15 years and
		include aggregate renewal options ranging from 15 to 30 years. The Company is
		responsible for all operating costs, including repairs, property taxes, and
		insurance. The annual minimum lease payments are based upon a percentage of the
		negotiated sales value of each residence. The residences sold in sale/leaseback
		transactions typically are sold for an amount equal to or less than their fair
		market value. The leases are accounted for as operating leases with any
		applicable gain or loss realized in the initial sales transaction being
		deferred and amortized into income in proportion to rental expense over the
		initial term of the lease.

Effective July 1, 2001, the Company concluded the restructuring of one of its
		leased portfolios which includes 42 residences with an aggregate capacity of
		1,640. The restructuring includes the amendment of certain lease covenants and
		terms and the conversion of 42 individual leases into a single master lease,
		which is accounted for as an operating lease. The master lease is for an
		initial term of sixteen years and includes one fifteen year renewal option.

Subsequent to the formation of the master lease effective July 1, 2001, the
		Company added an additional seven residences to the master lease. Due to the
		inclusion of a purchase option in each of the subsequent lease agreements,
		these leases have been accounted for as financing leases.

The Company is required by certain REITs to obtain a letter of credit as
		collateral for leased residences. Outstanding letters of credit at December 31,
		2001 and 2000 were $3.8 million.

In addition to leased residences, the Company leases certain office space and
		equipment under noncancelable operating leases that expire at various times
		through 2017. Rental expense on all such operating leases, including
		residences, for the years ended December 31, 2001, 2000, and 1999 was $69.5
		million, $82.4 million and $69.4 million, respectively.

Future minimum lease payments for the next five years and thereafter under
		noncancelable leases at December 31, 2001, are as follows (in thousands):



|                                                    |  | Capital |  |   | Operating
|--------------------------------------------------- |  | ------- |  | - | ---------
|2002                                                |  | $ 4,045 |  |   | $63,558  
|2003                                                |  | 4,095   |  |   | 65,107   
|2004                                                |  | 14,602  |  |   | 66,622   
|2005                                                |  | 2,836   |  |   | 68,188   
|2006                                                |  | 2,836   |  |   | 69,881   
|Thereafter                                          |  | 54,821  |  |   | 251,450  
|Total minimum lease payment                         |  | 83,235  |  | $ | $584,806 
|Less amount representing interest                   |  | 46,095  |  |   |          
|Future minimum capital and financing lease payments |  | 37,140  |  |   |          
|Less current portion                                |  | --      |  |   |          
|Long-term capital lease obligations                 |  | $37,140 |  |   |          

---

As of December 31, 2001 and 2000, the Company was in violation of its fixed
		charge covenants with several of its credit facilities. In addition, in order
		to conserve its liquidity, the Company did not make certain 2001 debt service
		and lease payments. As the Company's principal credit, lease and other
		financing facilities are cross-defaulted to a material default occurring under
		other credit, lease or financing facilities, a payment default by the Company
		under one such facility results in the Company being in default under other
		such facilities. Obligations in the amount of $700.9 million are currently
		classified as current liabilities because the applicable lenders have the right
		to accelerate their loans due to the existence of a pending default.

The Company has an option under most of its joint venture arrangements to
		purchase the equity interests of its joint venture partners based upon agreed
		upon terms and conditions (call option). If the Company elects not to exercise
		this option, the joint venture partner can require the Company to buy out the
		joint venture partner's equity interest at the current fair market value (put
		option). Based on a number of assumptions, including assumptions as to the time
		at which such options will be exercised and the fair market value of such
		residences at the date such options are exercised, the Company estimates that
		it may require approximately $10.0 million to $15.0 million to satisfy these
		purchase obligations during 2002.

From time to time, the Company is involved in various legal proceedings
		relating to claims arising in the ordinary course of its business. Neither the
		Company nor its subsidiaries is a party to any legal proceeding, the outcome of
		which, individually or in the aggregate, is expected to have a material adverse
		affect on the Company's financial condition or results of operations, with the
		possible exception of the following matters.

The Company elected not to fund certain debt service and lease payment
		obligations due during 2001 without the consent of the applicable lender or
		lessor. Through additional payments, prepayments associated with asset sales
		and application of escrowed amounts, as of December 31, 2001, the Company had
		$6.6 million of delinquent outstanding scheduled debt service to lenders or
		lessors who hold mortgages on, or from whom the Company leases, 82 residences
		in the aggregate (3,316 resident capacity). The Company has received a written
		notice of acceleration from lenders with respect to indebtedness aggregating
		$210.2 million. In addition, indebtedness of approximately $58.4 million has
		fully matured and is past due. Many of our other credit and lease facilities
		are in technical default as a result of these payment defaults associated with
		other loan and lease facilities, but several of these lenders and lessors have
		executed limited in time waivers. The Company is also in default under various
		financial and other covenants contained in certain credit and lease
		arrangements. The Company has received written notices of default from most of
		these lenders or lessors, three lessors have terminated leases for 17
		residences (940 resident capacity) and other lenders have elected to apply
		deposits and reserve funds held by such lenders against the past due payments.
		Five lenders have activated or are in the process of activating "cash traps" of
		bank accounts relating to the operation of residences mortgaged to such
		lenders, either pursuant to arrangements set forth in the applicable loan
		documents or as subsequently negotiated with the Company. One lender has
		commenced litigation in state court in Milwaukee, Wisconsin, seeking the
		appointment of a receiver for the 20 residences that serve as collateral for
		the $51.7 million of remaining mortgage financing provided by this lender. As a
		result of a negotiated forbearance agreement, the receivership action has been
		stayed temporarily by this lender as restructuring discussions are underway.
		The Company is also in litigation with a former lessor with respect to their
		damage claim associated with the early termination of their 11 residence lease
		portfolio.

The Company's convertible debentures include subordination provisions that
		prohibit the Company from making interest payments to the debenture holders
		(other than payment-in-kind coupon payments) after the occurrence of payment
		defaults on the Company's senior indebtedness. As such, the Company defaulted
		in making coupon payments on its 5.25%, 6.75% and 7.00% convertible
		subordinated debentures aggregating approximately $5.5 million and $5.8 million
		in July 2001 and January 2002, respectively.

The Company is seeking to address all of its pending defaults of its senior and
		junior capital structure obligations through the Restructuring Plan. However,
		the Restructuring Plan is largely dependent upon the Company's ability to
		negotiate consensual modifications and waivers with its various capital
		structure constituents. Absent an agreed upon resolution with these third
		parties, the Company's lenders, lessors, and debenture holders may begin
		exercising remedies under their applicable financing agreements that could
		substantially hinder or disrupt the Company's efforts to restructure and result
		in a liquidation of the Company.

The Company is also a defendant in a criminal negligence action involving one
		of the Company's residences. It is possible that if convicted of a crime, the
		Company's ability to obtain and renew certain of its licenses and to
		participate in certain government payor programs could be materially and
		adversely affected.



---

1. Earnings Per Common Share
2. Subsequent Events

Effective March 6, 2002, the Company entered into a settlement agreement with
		the lenders with respect to defaulted indebtedness aggregating approximately
		$50.5 million (plus $4.5 million of accrued and unpaid interest and late fees
		and approximately $4.0 million due under an interest rate cap agreement that was terminated March 2001). under a
		credit facility secured by mortgages on 14 residences. The settlement is
		structured to immediately shift the economics of ownership and control over the
		disposition of the mortgaged residences to the lenders. In exchange, the
		Company receives the lenders' binding commitment to execute and deliver a
		waiver of any deficiency claims (including accrued interest and obligations related to the terminated interest rate cap agreement) and release of the Company's guaranty with
		respect to this indebtedness upon satisfaction of certain conditions.
		Management has estimated the prospective deficiency claim related to this
		credit facility at between $23 to $34 million. Until March 31, 2003, or such
		earlier time as the lenders sell a residence or replace the Company as manager,
		the Company is obligated to manage the residences for a management fee equal to
		six percent of facility revenue through June 30, 2002 and seven percent
		thereafter. Any net operating income from the residences is paid to the lenders
		as debt service.

Effective March 20, 2002, the Company closed on a refinancing of three
		properties (resident capacity of 137) included in the settlement mentioned
		above. These assets were financed in a sale/leaseback transaction and will be
		accounted for as a financing. The aggregate sales price was $11.8 million.

As of March 29, 2002, six additional residences (258 resident capacity) were
		either sold or leases were terminated. The sale or lease termination of these
		assets resulted in the retirement of approximately $16.6 million of debt and
		lease obligations.





---

Quarterly Financial Summary
	
	(Unaudited)
	
	(In thousands, except per share data)



|                         |   | 12/31   |   |   | 9/30    |   |   | 6/30     |   |   | 3/31    |  
|------------------------ | - | ------- | - | - | ------- | - | - | -------- | - | - | ------- | -
|2001                     |   |         |   |   |         |   |   |          |   |   |         |  
|Operating revenues       | $ | 127,492 |   | $ | 126,100 |   | $ | 126,927  |   | $ | 128,303 |  
|Operating income (loss)  |   | 2,143   |   |   | (8,480  | ) |   | (158,025 | ) |   | (6,998  | )
|Net loss                 |   | (27,271 | ) |   | (42,804 | ) |   | (192,230 | ) |   | (37,622 | )
|Basic (loss) per share   | $ | (1.23   | ) | $ | (1.94   | ) | $ | (8.69    | ) | $ | (1.70   | )
|Diluted (loss) per share | $ | (1.23   | ) | $ | (1.94   | ) | $ | (8.69    | ) | $ | (1.70   | )
|                         |   |         |   |   |         |   |   |          |   |   |         |  
|2000                     |   |         |   |   |         |   |   |          |   |   |         |  
|Operating revenues       | $ | 125,317 |   | $ | 122,583 |   | $ | 112,039  |   | $ | 106,556 |  
|Operating (loss) income  |   | (17,284 | ) |   | 2,026   |   |   | (9,415   | ) |   | 10,207  |  
|Net loss                 |   | (82,760 | ) |   | (16,696 | ) |   | (13,032  | ) |   | (5,318  | )
|Basic loss per share     | $ | (3.74   | ) | $ | (0.76   | ) | $ | (0.59    | ) | $ | (0.24   | )
|Diluted loss per share   | $ | (3.74   | ) | $ | (0.76   | ) | $ | (0.59    | ) | $ | (0.24   | )





PART III



|ITEM 10. | DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
|-------- | --------------------------------------------------



|Name                      | Age | Position                                                                   
|------------------------- | --- | ---------------------------------------------------------------------------
|                          |     |                                                                            
|Timothy J. Buchanan       | 48  | Director                                                                   
|                          |     |                                                                            
|Gene E. Burleson          | 61  | Director                                                                   
|                          |     |                                                                            
|William E. Colson         | 60  | Director                                                                   
|                          |     |                                                                            
|Ronald G. Geary           | 54  | Director                                                                   
|                          |     |                                                                            
|Robert Haveman            | 54  | Director                                                                   
|                          |     |                                                                            
|William G. Petty, Jr.     | 56  | Director                                                                   
|                          |     |                                                                            
|Natalie K. Townsend       | 41  | Director                                                                   
|                          |     |                                                                            
|Jerry L. Tubergen         | 48  | Chairman of the Board and Director                                         
|                          |     |                                                                            
|Patrick F. Kennedy        | 50  | Chief Executive Officer and President                                      
|                          |     |                                                                            
|Chet H. Bradeen           | 57  | Senior Vice President of Operations                                        
|                          |     |                                                                            
|Anthony R. Geonnotti, Jr. | 43  | Senior Vice President of Corporate Development                             
|                          |     |                                                                            
|Mark W. Ohlendorf         | 42  | Senior Vice President, Chief Financial Officer,
				Treasurer and Secretary
|                          |     |                                                                            
|Andrea L. Peck            | 50  | Senior Vice President of Employee Services                                 



---

Timothy J. Buchanan
		
	
	, a private investor, has served as a director of the Company since 1997. Mr.
	Buchanan served as the President of the Company from October 1997 to August
	1998 and served as the Vice Chairman of the Board of the Company from August
	1998 to May 2000. Mr. Buchanan served as the Chairman of the Board, Chief
	Executive Officer, and a director of Sterling House Corporation ("Sterling")
	since he co-founded Sterling in 1991 through Sterling's merger with the Company
	in October 1997.

Gene E. Burleson
		

	
	has served as a director of the Company since 1995. Mr. Burleson has served as
	Chairman of the Board of Mariner Post-Acute Network, Inc. ("Mariner"), a
	diversified provider of long-term and specialty healthcare services, since
	February 2000. Mr. Burleson served as the Chief Executive Officer and a
	director of Vitalink Pharmacy Services, Inc. from February 1997 to August 1997.
	He served as Chairman of the Board of GranCare, Inc. ("GranCare"), a provider
	of long-term and specialty healthcare services, from January 1994 to November
	1997 and as Chief Executive Officer of GranCare from December 1990 to February
	1997. Mr. Burleson also currently serves on the Board of Directors of
	Mariner, Deckers Outdoor Corporation, a specialty shoe manufacturer, and THCG,
	Inc., a specialty investment banking firm.

William E. Colson
	
	has served as a director of the Company since 2000. Mr. Colson is a founder of
	Holiday Retirement Corp., a major operator of independent living retirement
	facilities, and has been its President and Chief Operating Officer since 1987
	and its Chief Executive Officer since September 1999. Mr. Colson also serves as
	President and Managing General Partner of Colson & Colson Construction Co.,
	which develops and constructs retirement communities and multi-family projects,
	since 1963. Mr. Colson also serves as a member of the Executive Board of the
	American Seniors Housing Association.

Ronald G. Geary
	
	has served as a director of the Company since May of 2001. Mr. Geary has served
	as a director and President of ResCare, Inc., a provider of residential,
	training, educational and support services to populations with special needs,
	since 1990 and as Chief Executive Officer since 1993. He was elected Chairman
	of the Board of ResCare in June 1998. Mr. Geary also serves as a director of
	Ventas, Inc., a real estate investment trust.

Robert Haveman
		

	
	has served as a director of the Company since 1995 and served as Vice Chairman
	of the Board of the Company from May 2000 to November 2000 and as President of
	the Company from November 2000 to January 2001. Mr. Haveman has served as
	Treasurer of EDP Management Corp., a privately-held investment management firm,
	since April 1997. Mr. Haveman served as the Secretary/Treasurer of the Prince
	Corporation, an automotive interior trim manufacturer, from 1987 to 1997.

William G. Petty, Jr.
		
	
	has served as a director of the Company since 1993, served as Chairman of the
	Board of the Company from December 1993 to May 2000 and served as Chief
	Executive Officer of the Company from December 1993 to April 1996. He has
	served as a Managing Director of Beecken, Petty & Company, the general
	partner of a private healthcare investment fund, since September 1996. Mr.
	Petty served as the Vice Chairman of GranCare from July 1995 to November 1997.
	Mr. Petty also currently serves on the Board of Directors of Mariner.

Natalie K. Townsend
	
	has served as a director of the Company since 2000. Ms. Townsend has
	served as President of TD Capital Group, the Merchant Banking Division of The
	Toronto-Dominion Bank, and Vice-Chair of TD Securities, Inc., the Investment
	Banking Division of The Toronto-Dominion Bank, since 1999. She served as
	managing director of TD Capital Group from 1995 to 1999.

Jerry L. Tubergen
		

	
	has served as Chairman of the Board of the Company since May 2000 and has
	served as a director of the Company since 1995. He has served as President and
	Chief Executive Officer of RDV Corporation, a private investment and financial
	management firm, since its formation in 1991. Mr. Tubergen also currently
	serves on the Board of Directors of the Orlando Magic, Ltd., an NBA franchise,
	and Genmar Holdings, Inc., a manufacturer and marketer of motorized pleasure
	boats.

Patrick F. Kennedy
	
	has served as Chief Executive Officer of the Company since November of 2001 and
	President of the Company since January of 2002. Since 1995, Mr. Kennedy has
	served as Senior Vice President and as a director of Holiday Retirement Corp.,
	a major operator of independent living retirement facilities.

Chet H. Bradeen
	
	has served as Senior Vice President of the Company since July 2001. Prior to
	joining the Company, Mr. Bradeen served as Chief Executive Officer of Sun
	Healthcare Asia Pacific, the Asian division of a large long-term care company,
	from 1998 to 2001. From 1995 to 1998, Mr. Bradeen served as Chief Executive
	Officer of Sun Healthcare UK.

---

Anthony R. Geonnotti, Jr.
		
	
	has served as Senior Vice President of the Company since April 2000. From
	February 1999 to April 2000, Mr. Geonnotti served as Vice President of
	Construction and Development. Previously, Mr. Geonnotti served as Divisional
	Vice President of Development from September 1996 to February 1999.

Mark W. Ohlendorf
		
	
	has served as Senior Vice President of the Company since October 1997, as
	Chief Financial Officer and Treasurer since November 1999 and as Secretary
	since July 2000. He served as the Chief Financial Officer of Sterling from
	April 1997 to October 1997. Mr. Ohlendorf served as Vice President, Chief
	Financial Officer and Treasurer of Vitas Healthcare Corporation from December
	1990 to April 1997. Mr. Ohlendorf is a Certified Public Accountant.

Andrea L. Peck
	
	has served as Senior Vice President of the Company since May 2001. From
	September 2000 to May 2001, Ms. Peck served the Company as Vice President of
	Employee Services. Prior to joining the Company, Ms. Peck served as Senior Vice
	President of Human Resources - Europe for Gorillapark.com, a technology
	investment management firm, from June to September 2000 and as Senior Vice
	President of Human Resources for Royal & Sun Alliance Corp., a property and
	casualty insurance company, from November 1993 to June 2000.



There are no family relationships among any of the executive officers or
	directors of the Company. Upon the Company's issuance of 1,250,000 shares of
	Series A Stock on May 31, 2000, the holders of the Series A Stock were given
	the right to elect four directors to the Company's Board of Directors. On
	October 10, 2000, Ms. Natalie K. Townsend and Messrs. William E. Colson,
	Robert Haveman and Jerry L. Tubergen were elected as Series A Directors of the
	Company by the holders of the Series A Stock to serve until the Company's next
	annual meeting of stockholders. No other arrangement or understanding exists
	between any director or director nominee and any other person pursuant to which
	he or she was or is to be selected as a director or director nominee of the
	Company.



Section 16(A) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
	directors, executive officers, and persons who own beneficially more than 10%
	of a registered class of the Company's equity securities, to file with the SEC
	initial reports of ownership and reports of changes in ownership of such
	securities of the Company. Directors, executive officers and greater than 10%
	stockholders are required by SEC regulations to furnish the Company with copies
	of all Section 16(a) reports they file.

To the Company's knowledge, based solely on its review of the copies of such
	reports furnished to the Company and representations that no other reports were
	required, all Section 16(a) filing requirements applicable to its directors,
	executive officers and greater than 10% beneficial owners were complied with
	during 2001.

---



|ITEM 11. | EXECUTIVE COMPENSATION
|-------- | ----------------------

The following table sets forth the cash and non-cash compensation awarded or
	paid by the Company for services rendered during each of the years in the three
	year period ended December 31, 2001 to its Chief Executive Officer and to its
	other most highly compensated executive officers other than the Chief Executive
	Officer who are required to be included therein ("Named Executives").

|Name and Principal Position                                                        | Year                             |  | Salary($)                                     |  | Bonus($)                                    |    | Other Annual
					Compensation        | Long-Term Compensation
					
						Awards (1)
					
					Securities UnderlyingOptions(#)
|---------------------------------------------------------------------------------- | -------------------------------- |  | --------------------------------------------- |  | ------------------------------------------- | -- | ------------------------------------- | ----------------------------------------------------------------------------------------
|                                                                                   |                                  |  |                                               |  |                                             |    |                                       |                                                                                         
|Patrick F. Kennedy
				Chief Executive Officer and
					
					President (2)        | 2001
				
				2000
				
				1999 |  | ---
				
				---
				
						---               |  | ---
				
					---
				
				---              |    | ---
				
				---
				
				---         | ---
				
					---
				
					---                                                         
|Steven L. Vick
				Former President and
					
					Chief Operating Officer
				(3) | 2001
				
				2000
				
				1999 |  | $362,579
				
				$269,415
				
	$273,367     |  | 150,000
				
				225,000
				
				---       |    | $79,854
				
					---
				
				---    | 500,000
				
							---
				
						44,757                                               
|Chet H. Bradeen
				Senior VP of Operations
				(4)                                | 2001
				
				2000
				
				1999 |  | $109,230
				
						---
				
						---        |  | $55,000
				

				---
				

				---         |    | ---
				
				---
				
					---        | ---
				
				---
				
			---                                                            
|Anthony R. Geonnotti, Jr.
				Senior Vice President                                | 2001
				
				2000
				
				1999 |  | $178,695
				
				$169,300
				
			$112,173   |  | 24,153
				
							20,183
				
						12,107 |    | ---
				
				---
				
					---        | --
				
							10,000
				
							--                                                    
|Andrea L. Peck
				Senior VP of Employee Services                                  | 2001
				
				2000
				
				1999 |  | $251,307
				
			$50,639
				
				---         |  | $17,500
	
				$7,500
		
					---            | -- | --		

			--                           | ---
				

				---
				

				---                                                         
|Mark W. Ohlendorf
				Chief Financial Officer and
					
					Senior Vice President | 2001
				
				2000
				
				1999 |  | $346,291
				
				$278,919
				

				$221,743 |  | $160,000
				

				$225,000
				

				---   |    | $181,776
				

				---
				
						--- | 500,000
				

				---
				

				---                                                     

1. Represents options granted under the Company's Amended and Restated 1995
		Incentive Compensation Plan (the "1995 Plan"). Generally, subject to
		accelerated vesting upon a change in control, one-fourth of the options become
		exercisable on each of the first through fourth anniversaries of the grant
		date, except with respect to (i) options granted to these individuals in 1998
		which became exercisable 50% on the second anniversary of the grant date, 75%
		on the third anniversary of the grant date and 100% on the fourth anniversary
		of the grant date, (ii) options granted to Messrs. Vick and Ohlendorf prior to
		November 1, 2000, the date of their new employment agreements, all of which
		expired to the extent not exercised prior to January 15, 2001, and (iii)
		options granted to Mr. Vick, all of which, to the extent not exercised by
		November 30, 2000 and February 15, 2002, respectively, have expired.
2. Mr. Kennedy was elected to the position of Chief Executive Officer on November
		2, 2001 and the position of President on January 18, 2002. Mr. Kennedy's
		services are provided to the Company pursuant to a Consulting Services
		Agreement between the Company and Holiday Retirement Consulting, LLC. See
		"Executive Compensation - Consulting and Employment Agreements."
3. Mr. Vick resigned as an executive officer and director of the Company as of
		February 15, 2002. The terms of Mr. Vick's separation arrangement with the
		Company are described under the caption "Executive Compensation -- Consulting
		and Employment Agreements."

(4)         Mr. Bradeen joined the Company in June
	2001.

---

2001 Aggregated Option Exercises and Year-end Option Values

The following table sets forth information concerning the value of options
	exercised by the Named Executives during 2001 and the value at December 31,
	2001 of unexercised options held by each such officer.



|Name                      | Number of
						
						Shares Acquired
						On Exercise | Value
						Realized | Number of Securities
						
						Underlying Unexercised Options At 12/31/01
						Exercisable/Unexercisable | Value of
						
						Unexercised
						In-the-Money (1)
|------------------------- | -------------------------------------------------------- | -------------------- | ------------------------------------------------------------------------------------------------------------ | --------------------------------------------------------
|Patrick F. Kennedy        | ---                                                      | ---                  | ---                                                                                                          | ---                                                     
|Steven L. Vick            | ---                                                      | ---                  | --/500,000                                                                                                   | 0/0                                                     
|Mark W. Ohlendorf         | ---                                                      | ---                  | --/500,000                                                                                                   | 0/0                                                     
|Anthony R. Geonnotti, Jr. | ---                                                      | ---                  | 15,692/11,250                                                                                                | 0/0                                                     
|Andrea L. Peck            | ---                                                      | ---                  | ---                                                                                                          | ---                                                     
|Chet H. Bradeen           | ---                                                      | ---                  | ---                                                                                                          | ---                                                     

(1)         Calculated on the basis of the fair market
				value of the underlying securities on December 31, 2001 ($0.11 per share) minus
				the exercise price.



Compensation Committee Interlocks and Insider Participation

The Company's Compensation Committee is comprised of Timothy J. Buchanan,
	Robert Haveman and William G. Petty, Jr. There are no compensation
	committee interlocks.



Consulting and Employment Agreements

Consulting Services Agreement with Holiday Retirement Consulting
		.
	
	In November 2001, the Company entered into a Consulting Services Agreement
	with Holiday Retirement Consulting Services, LLC ("Holiday Consulting"), an
	affiliate of Holiday Retirement Corp. Pursuant to the Consulting Services
	Agreement, Holiday Consulting is providing management and consulting services
	to the Company, including the services of Patrick F. Kennedy, the Company's
	Chief Executive Officer and President, as well as consulting and advisory
	services provided by other Holiday Consulting personnel. The Holiday Consulting
	Services Agreement has a six-month initial term, subject to renewal for an
	additional six months upon the Company's request, and may be terminated by
	either party upon 30 days' notice to the other. Pursuant to this agreement,
	Holiday Consulting is entitled to receive a fee of $60,000 per month together
	with reimbursement of out-of-pocket expenses incurred by Holiday Consulting
	personnel in connection with this agreement. In addition, Holiday Consulting is
	entitled to earn a $1.5 million cash flow success fee if, during the term of
	this agreement, the Company is able to achieve cash flow breakeven for three
	consecutive calendar months (reflecting payment of all scheduled debt service,
	but excluding debt service on the Company's outstanding Subordinated Debentures
	and excluding restructuring charges). Pursuant to the Consulting Services
	Agreement, Holiday Consulting has agreed to refrain, during the twelve month
	period following the termination of this agreement, from disclosing or
	utilizing confidential information of Alterra and from soliciting for
	employment persons employed by Alterra in a managerial position. During 2001,
	$120,000 of consulting fees were paid to Holiday Consulting pursuant to this
	agreement.

---

Employment Agreement with Chet Bradeen
		.
	
	In June 2001, the Company entered into an employment agreement with Chet
	Bradeen with a term that expires upon the earlier of the third anniversary of
	the agreement or termination of employment. Pursuant to the agreement, Mr.
	Bradeen serves as Senior Vice President of Operations of the Company. Pursuant
	to the agreement, Mr. Bradeen is to receive an annual base salary of not less
	than $250,000, to be reviewed annually by the Board of Directors, Chief
	Executive Officer, President or Chief Financial Officer. Mr. Bradeen is also
	entitled to an incentive bonus of up to 50% of his base salary, to be
	determined by the Board of Directors, the Chief Executive Officer, President or
	Chief Operating Officer and, subject to approval by the President and Chief
	Operating Officer, may be granted a retention bonus, to be paid starting in
	December 2001. If Mr. Bradeen's employment is terminated by the Company other
	than for cause or by Mr. Bradeen for "good reason" (as defined in the
	agreement), Mr. Bradeen is entitled to (i) continue to receive payment of
	salary and benefits under this agreement for the remainder of the agreement
	term, but not to exceed twelve months and (ii) receive, within 30 days of such
	termination provided Mr. Bradeen shall then execute a general release for the
	benefit of the Company, 75% of an amount (the "Base Sum") equal to the sum of
	his then current annual salary, any approved but unpaid applicable bonus, the
	premiums for all medical and other insurance coverages and his annual
	automobile allowance. An additional 25% of the Base Sum will be payable at the
	end of the twelve months following his termination. Finally, the employment
	agreement provides that Mr. Bradeen will not disclose certain proprietary
	information belonging to the Company or, in certain circumstances, otherwise
	compete with the Company for a period of twelve months following his
	termination of employment.

Employment Agreement with Steven L. Vick.
		
	
	As of November 1, 2000, the Company entered into an employment agreement with
	Mr. Vick with a term that expires on December 31, 2003. Pursuant to the
	employment agreement, Mr. Vick served the Company as Chief Operating
	Officer until his resignation on February 15, 2002. The employment agreement
	provided that Mr. Vick shall receive a base salary in an amount determined
	by the Board; provided, however, that in no event may such base salary be less
	than $350,000 in 2001. Pursuant to the agreement, Mr. Vick received an
	incentive bonus for 2000 in the amount of $125,000 and was entitled to an
	incentive bonus in future years based on an incentive compensation program
	approved by the Compensation Committee of the Board of Directors. Pursuant to a
	separation agreement between Mr. Vick and the Company setting forth the terms
	of the separation from Alterra, Mr. Vick was awarded an incentive bonus for
	2001 in the amount of $150,000. Pursuant to Mr. Vick's employment agreement,
	Mr. Vick received a non-qualified option grant for 500,000 shares on January 5,
	2001, which options were exercisable at $1.31 per share and which options
	vested over a three-year period, subject to special accelerated vesting in the
	event Mr. Vick's employment was terminated under certain circumstances and full
	vesting in the event of a "change of control" of the Company, as defined in the
	employment agreement. Pursuant to Mr. Vick's separation agreement, all
	outstanding options granted to Mr. Vick were extinguished as of February 15,
	2002. In addition, pursuant to Mr. Vick's employment agreement, the Company
	awarded Mr. Vick 33,378 shares of Common Stock on January 5, 2001, which
	shares were "restricted stock" under the Company's 1995 Plan and, as such, were
	subject to being forfeited to the Company if the executive's employment with
	the Company terminated under certain circumstances prior to the lapsing of such
	restrictions, which occurred over a three-year term (subject to certain
	acceleration provisions). Upon his resignation from the Company, 22,252 of Mr.
	Vick's restricted shares were forfeited in accordance with the terms of the
	restricted stock grant. During the term of his employment by the Company
	pursuant to this agreement, the Company agreed to nominate Mr. Vick to serve as
	a director of the Company. Finally, Mr. Vick's separation agreement provides
	that Mr. Vick will not disclose or use certain proprietary information
	belonging to the Company or solicit customers or certain management employees
	of the Company for a period of twelve months following his termination of
	employment.

---

Employment Agreement with Mark W. Ohlendorf.
		
	
	As of November 1, 2000, the Company entered into an employment agreement with
	Mr. Ohlendorf with a term that expires on December 31, 2003. Pursuant to
	the employment agreement, Mr. Ohlendorf serves the Company as Chief
	Financial Officer. The agreement is automatically renewed for additional
	consecutive one-year terms unless timely notice of non-renewal is given by
	either the Company or Mr. Ohlendorf. The employment agreement provides
	that Mr. Ohlendorf shall receive a base salary in an amount determined by
	the Board; provided, however, that in no event may such base salary be less
	than $325,000 in 2001, $340,000 in 2002 and $350,000 in 2003. Pursuant to the
	agreement, Mr. Ohlendorf received incentive bonuses for 2001 and 2000 in
	the amount of $160,000 and $125,000, respectively, and is entitled to an
	incentive bonus in future years based on an incentive compensation program
	approved by the Compensation Committee of the Board of Directors. Pursuant to
	this employment agreement, Mr. Ohlendorf received a non-qualified option
	grant for 500,000 shares on January 5, 2001, which options are exercisable at
	$1.31 per share and which options vests over a three-year period, subject to
	special accelerated vesting in the event Mr. Ohlendorf's employment is
	terminated under certain circumstances and full vesting in the event of a
	"change of control" of the Company, as defined in the employment agreement. In
	addition, pursuant to the employment agreement, the Company awarded
	Mr. Ohlendorf 75,980 shares of Common Stock on January 5, 2001, which
	shares are "restricted stock" under the Company's 1995 Plan and, as such, are
	subject to being forfeited to the Company if the executive's employment with
	the Company terminates under certain circumstances prior to the lapsing of such
	restrictions, which will occur over a three-year term (subject to certain
	acceleration provisions). Mr. Ohlendorf is entitled to a payment equal to
	36 months of his then current base salary plus annualized bonus pay during the
	contract term in the event of a "change of control" of the Company if his
	employment is thereafter terminated by the Company without "cause" or by him
	for "good reason." Absent a change of control, if Mr. Ohlendorf's
	employment is terminated by the Company "without cause" or by him for "good
	reason," then he is eligible to continue to receive his base salary (together
	with any applicable bonus) and employee benefits for a period of 18 months.
	Finally, the employment agreement provides that Mr. Ohlendorf will not
	disclose certain proprietary information belonging to the Company or otherwise
	compete with the Company for a period of twelve months following his
	termination of employment except for termination by the Company without cause
	or by Mr. Ohlendorf for "good reason."

Employment Agreement with Andrea L. Peck
		
		.
	
	In June 2001, the Company entered into a post-employment compensation
	agreement with Andrea Peck. Pursuant to the agreement, Ms. Peck serves the
	Company as Senior Vice President of Employee Services. The agreement remains in
	effect until the modification of the agreement or until the expiration of the
	term of post-employment payments contemplated by the agreement. The agreement
	provides that Ms. Peck shall receive an annual base salary of not less than
	$210,000, to be reviewed periodically by the Company's Board of Directors,
	Chief Operating Officer or Chief Financial Officer. If Ms. Peck's employment is
	terminated due to a reduction in work force and the Company does not offer her
	another position of comparable employment, the Company agrees to continue to
	pay Ms. Peck's base salary for a 52 week period following termination. Pursuant
	to the agreement, Ms. Peck has agreed not to disclose certain proprietary
	information belonging to the Company or otherwise compete with the Company for
	a period of 52 weeks following her termination of employment.



1995 Incentive Compensation Plan

The 1995 Plan provides key employees (who may also be directors) of the Company
	and its subsidiaries performance incentives and also provides a means of
	encouraging stock ownership in the Company by such persons. Under the 1995
	Plan, key employees of the Company or its affiliates are eligible to receive
	stock options to purchase shares of, and grants of shares of "restricted stock"
	of, the Company's Common Stock. The 1995 Plan currently allows a maximum number
	of shares to be subject to options and restricted stock awards of 2,500,000.
	Options and restricted stock awards are granted under the 1995 Plan on the
	basis of the optionee's contribution to the Company, and no option may exceed a
	term of ten years. Options granted under the 1995 Plan may be either incentive
	stock options or options that do not qualify as incentive stock options. The
	Company's Compensation Committee is authorized to designate the recipients of
	options and restricted stock grants, the dates of grants, the number of shares
	subject to options or grants, the option price, the terms of payment on
	exercise of the options, the vesting and restriction provisions and the time
	during which the options may be exercised. The price of incentive stock options
	granted under the 1995 Plan cannot be less than the fair market value of the
	shares at the time the options are granted.

In addition, in connection with the Sterling merger, the Company assumed
	options to acquire shares of the Common Stock of Sterling (the "Assumed
	Options"), and (as of April 10, 2001) the Assumed Options represented options
	to acquire an aggregate of 48,994 shares of Common Stock.

Including the Assumed Options and non-plan options, as of March 29, 2002,
	options to purchase an aggregate of 1,198,017 shares of Common Stock were
	granted and outstanding at a weighted average exercise price of $7.61 per
	share, of which options to purchase 864,684 shares were exercisable at such
	date.

Compensation of the Board of Directors

Directors of the Company who are not parties to services agreements with the
	Company and are not employees of the Company are entitled to an annual retainer
	of $20,000, payable in January of each year, together with attendance fees of
	$1,000 and $500 per meeting for Board, Audit Committee and Compensation
	Committee meetings attended in person or telephonically, respectively. Prior to
	2001, directors of the Company who were not parties to services agreements with
	the Company and were not employees of the Company were entitled to an annual
	retainer of $12,000, payable in quarterly installments. In lieu of their annual
	retainer for the 36 month period commencing June 1, 1996, each of Messrs.
	Burleson, Haveman, and Tubergen were granted a non-qualified stock option
	pursuant to the 1995 Plan to purchase up to 12,420 shares of the Common Stock
	at an exercise price of $8.69 per share, such options vesting one-third on June
	1, 1997, one-third on June 1, 1998 and one-third on June 1, 1999, and expiring
	on May 8, 2006. In October 1998, each of Messrs. Burleson, Haveman, Petty and
	Tubergen, each of whom were non-employee directors, were granted a
	non-qualified stock option pursuant to the 1995 Plan to purchase 8,000 shares
	of the Common Stock at an exercise price of $19.81 per share, which options
	vest 25% per year on each of the first, second, third and fourth anniversaries
	of the date of grant, subject to accelerated vesting in the event of a change
	in control. Directors are also entitled to reimbursement of reasonable
	out-of-pocket expenses incurred by them in attending meetings of the Board of
	Directors.

---

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

The following table sets forth certain information with respect to the
	beneficial ownership of the Company's Common Stock as of March 15, 2002 by; (i)
	each person known by the Company to own more than 5% of the outstanding shares
	of Common Stock or the Series A Stock: (ii) each of the Company's directors;
	(iii) each of the Company's executive officers included in the Summary
	Compensation Table included elsewhere herein; and (iv) all of the Company's
	directors and executive officers as a group. Except as otherwise noted, the
	person or entity named has sole voting and investment power over the shares
	indicated.



|                                                                         | Shares of CommonStock Beneficially Owned(1) | Series A Stock(2)
|------------------------------------------------------------------------ | ------------------------------------------- | -----------------
|Name                                                                     | Number                                      | Percent          
|Jerry L. Tubergen (3)(4)                                                | 12,868,832                                  | 40.3%            
|Richard M. DeVos, Jr. (3)(4)                                             | 12,715,400                                  | 39.8             
|Robert Haveman (3)(5)                                                   | 10,539,995                                  | 33.0             
|Elsa D. Prince (3)(5)                                                    | 10,437,367                                  | 32.7             
|The Toronto-Dominion Bank (3)(6)                                         | 10,701,000                                  | 32.5             
|HBK Investments L.P. (3)(7)                                              | 10,491,250                                  | 32.1             
|RDVEPCO, L.L.C. (3)(8)                                                   | 9,716,026                                   | 30.4             
|AR Investments, Ltd. (9)                                                 | 2,167,900                                   | 9.8              
|Dimensional Fund Advisors (10)                                           | 1,841,400                                   | 8.3              
|Warburg Pincus Asset Management, Inc. (11)                               | 1,263,100                                   | 5.7              
|Transamerica Corporation and Transamerica Investment Services, Inc. (12) | 1,149,900                                   | 5.2              
|Timothy J. Buchanan (13)                                                | 820,447                                     | 3.7              
|Steven L. Vick (14)                                                     | 713,321                                     | 3.2              
|William E. Colson (15) (16)                                             | 563,346                                     | 2.5              
|Holiday Retirement 2000, LLC (3)(15)                                     | 560,846                                     | 2.5              
|Patrick F. Kennedy (16)                                                 | 269,500                                     | 1.2              
|Mark W. Ohlendorf                                                       | 209,746                                     | *                
|William G. Petty, Jr.(17)                                               | 139,658                                     | *                
|Gene E. Burleson (18)                                                   | 48,167                                      | *                
|Anthony R. Geonnotti, Jr. (19)                                          | 20,032                                      | *                
|Chet H. Bradeen                                                         | 0                                           | *                
|Ronald G. Geary                                                         | 0                                           | *                
|Andrea L. Peck                                                          | 0                                           | *                
|Natalie K. Townsend (20)                                                | 0                                           | *                
|All Executive Officers and Directors as a Group (13 Persons) (21)        | 15,111,573                                  | 42.8             

---



          Director of the Company.

          Executive officer or former executive
			officer of the Company. See Item 10, "Directors and Executive Officers of the
			Registrant."

*         Less than 1%.

(1)         Information as to the beneficial ownership
			of Common Stock has either been furnished to the Company by or on behalf of the
			indicated persons or is taken from reports on file with the Securities and
			Exchange Commission.

(2)         Shares of Series A Stock are convertible
			at any time at the holder's option into shares of the Company's Common Stock.
			Therefore, shares listed in the "Series A Stock" column are included in the
			shares listed in the respective owner's "Common Stock" column.

(3)         On May 31, 2000, Alterra completed a
			financing transaction in which it issued $173 million of convertible debentures
			and convertible preferred shares to certain investors, including RDVEPCO,
			L.L.C., a Michigan limited liability company ("RDVEPCO"), the Elsa D. Prince
			Living Trust (the "Prince Trust"), RDV Manor Care, LLC, a Michigan limited
			liability company ("RDVMC"), Holiday Retirement 2000, LLC, a Washington limited
			liability company ("Holiday"), Group One Investors, L.L.C., a Michigan limited
			liability company ("Group One") and HBK Master Fund L.P., a Cayman Islands
			limited partnership (the "Equity Transaction"). The securities issued in the
			Equity Transaction included: (i) $168 million of the Company's Series A, Series
			B and Series C PIK Debentures due 2007 (collectively, the "Debentures") with an
			original conversion price of $4.00 per share, a 9.75% semi-annual
			payment-in-kind ("PIK") coupon and a seven year maturity and (ii) $5 million of
			shares of the Company's Series A Stock with an original conversion price of
			$4.00 per share, a 9.75% semi-annual, cumulative PIK dividend and a mandatory
			redemption in seven years. The Series A and the Series C Debentures and the
			Series A Stock are convertible at any time at the applicable holder's option
			into shares of Common Stock of the Company. The Series B Debentures are
			convertible at any time at the applicable holder's option into shares of the
			Company's Series B Non-Voting Participating Preferred Stock (the "Series B
			Stock") having rights (other than voting rights) substantially similar to the
			Company's Common Stock. Additional information regarding the Equity Transaction
			is included in Item 13, "Certain Relationships and Related Transactions."

---

As a part of the Equity Transaction, the Company had the option to issue to
			approved parties, and the investors had the option to purchase, up to an
			additional $29.9 million of Series B or C Debentures within 120 days of May 31,
			2000. On August 10, 2000, the Company issued an additional $29.9 million of
			Series B Debentures to The Toronto-Dominion Bank ("Toronto-Dominion") pursuant
			to this option provision. Accordingly, the aggregate transaction amount of the
			Equity Transaction was approximately $203 million.

As further described in the notes below, beneficial ownership information
			reflected in this table includes shares of Common Stock issuable upon the
			conversion of Series A and C Debentures and Series A Stock issued in the Equity
			Transaction. Pursuant to the anti-dilution provisions governing the PIK
			Debentures and the Series A Stock issued in the Equity Transaction, the
			effective conversion price for the PIK Debentures and the Series A Stock has
			decreased from $4.00 to $2.68 per share of Common Stock for the Series A and
			Series C Debentures and from $400 to $268 per share of Series B Stock for the
			Series B Debentures as of December 31, 2001. However, pursuant to these
			anti-dilution provisions, the actual conversion price for the Series A and C
			Debentures and the Series A stock remains at $4.00 per share and for the Series
			B Debentures remains at $400 per share; but upon conversion of these
			convertible securities the holder thereof will now also receive shares of
			Series B-1 Preferred Stock, in addition to Common Stock, in such amounts as to
			provide such holder an equity interest in the Company as though the conversion
			price for the Series A and C Debentures and Series A Stock on the one hand, and
			the Series B Debentures on the other hand, were decreased to $2.68 and $268 per
			share, respectively. As this table reflects beneficial ownership of the
			Company's voting securities (and the Series B-1 Preferred Stock is not a voting
			security of the Company), this table reflects conversion prices for the Series
			A Stock and for the Series A and C Debentures at $4.00 per share.

(4)         Based upon a Schedule 13D filed on June
			12, 2000, as amended December 11, 2000, by RDV ALTCO, L.L.C., a Michigan
			limited liability company, RDV Corporation, a Michigan corporation, Richard M.
			DeVos, Jr., Daniel G. DeVos, Suzanne C. DeVos VanderWeide, Douglas L. DeVos,
			Jerry L. Tubergen, Elisabeth D. DeVos, Helen J. DeVos, The Richard M. and Helen
			J. DeVos Foundation, The Dick and Betsy DeVos Foundation, The Douglas and Maria
			DeVos Foundation, The Jerry L. and Marcia D. Tubergen Foundation, Windquest
			Group, Inc., a Michigan corporation, Buttonwood Capital, Inc., a Michigan
			corporation and RDV Capital Management L.P., a Delaware limited partnership
			(collectively, the "RDV Reporting Persons"), the RDV Reporting Persons may be
			deemed to beneficially own an aggregate of 12,995,576 shares of Common Stock,
			including 12,649,624 shares and 12,778,634 shares reflected as beneficially
			owned by Richard M. DeVos, Jr. and Jerry L. Tubergen, respectively. Based upon
			their Schedule 13D, the RDV Reporting Persons as a group have sole power to
			vote or to direct the vote and sole power to dispose or direct the disposition
			of 3,200,052 shares of Common Stock. Based upon their Schedule 13D, the RDV
			Reporting Persons, as a group may be deemed to beneficially own (i) 1,140,000
			shares of Series A Stock; (ii) $40,722,000 Series A Debentures of the Company;
			(iii) $4,450,000 of the Company's 7.00% convertible subordinated debentures,
			due 2004 (the "7% Debentures"); and (iv) $16,000,000 of the Company's 5.25%
			convertible subordinated debentures, due 2002 (the "5.25% Debentures"), all of
			which are convertible at any time at the holders' option into 1,140,000,
			10,180,500, 219,753 and 556,522 shares of the Company's Common Stock,
			respectively. Assuming conversion of the securities described above, the RDV
			Reporting Persons will have sole voting and dispositive power with respect to
			3,200,052 shares of the Company's Common Stock. Certain shares reported as
			beneficially owned by the RDV Reporting Persons are also reported as
			beneficially owned by RDVEPCO and the Prince Reporting Persons (as defined
			below). For further information regarding the RDV Reporting Persons' beneficial
			ownership of the Company's Common Stock, please see the Schedule 13D referenced
			in this note. The principal business address of Richard M. DeVos, Jr. is 7575
			Fulton Street East, Ada, Michigan 49355. Mr. Tubergen's principal business
			address is 500 Grand Bank Building, 126 Ottawa, N.W. Grand Rapids, Michigan
			49503. In addition, the RDV Reporting Persons, including Richard M. DeVos, Jr.
			and Jerry L. Tubergen, may be deemed to beneficially own 65,776 shares of
			Series A Stock, as issued to RDVEPCO pursuant to a dividend on the Series A
			Stock on January 2, 2001, which is convertible into Common Stock.

(5)         Based upon a Schedule 13D filed on June
			12, 2000, by EDP Assisted Living Properties, L.L.C., a Michigan limited
			liability company, Elsa D. Prince and Robert Haveman (collectively the "Prince
			Reporting Persons"), the Prince Reporting Persons may be deemed to beneficially
			own an aggregate of 10,674,583 shares of Common Stock, including 10,371,591
			shares and 10,452,052 shares reflected as beneficially owned by Elsa D. Prince
			and Robert Haveman, respectively. Based upon their Schedule 13D, the Prince
			Reporting Persons as a group have sole power to vote or to direct the vote and
			sole power to dispose or direct the disposition of 525,523 shares of Common
			Stock. Based upon their Schedule 13D, the Prince Reporting Persons, as a group
			may be deemed to beneficially own (i) 1,140,000 shares of Series A Stock; (ii)
			$34,041,000 Series A Debentures of the Company; and (iii) $6,950,000 of 7.00%
			Debentures, all of which are convertible at any time at the holders' option
			into 1,140,000, 8,510,250, and 343,209 shares of the Company's Common Stock,
			respectively. Assuming conversion of the securities described above, the Prince
			Reporting Persons will have sole voting and dispositive power with respect to
			525,523 shares of the Company's Common Stock. Certain shares reported as
			beneficially owned by the Prince Reporting Persons are also reported as
			beneficially owned by RDVEPCO and the RDV Reporting Persons. For further
			information regarding the Prince Reporting Persons' beneficial ownership of the
			Company's Common Stock, please see the Schedule 13D referenced in this note.
			The Prince Reporting Persons' principal business address is 190 S. River
			Avenue, Suite 300, Holland, Michigan 49423. In addition, the Prince Reporting
			Persons, including Elsa D. Prince and Robert Haveman, may be deemed to
			beneficially own 65,776 shares of Series A Stock, as issued to RDVEPCO pursuant
			to a dividend on the Series A Stock on January 2, 2001, which is convertible
			into Common Stock.

(6)         Pursuant to the Equity Transaction, as of
			August 10, 2000, Toronto-Dominion acquired $29,904,000 of Series B Debentures
			from the Company and $10,000,000 of Series B Debentures from other debenture
			holders. Pursuant to an agreement with the Company, Toronto-Dominion has the
			right to exchange its Series B Debentures for Series C Debentures, which are
			convertible into Common Stock, subject to compliance by Toronto-Dominion and
			its affiliates with applicable laws and regulations that restrict their
			holdings of voting securities. This table reflects Toronto-Dominion's
			beneficial ownership assuming that it exchanges all of its Series B Debentures
			for Series C Debentures and converts all of such Series C Debentures into
			shares of Common Stock. The Company understands, however, that under currently
			applicable regulatory provisions Toronto-Dominion is prohibited from holding in
			excess of five percent of the outstanding Common Stock. The Merchant Banking
			Division of Toronto-Dominion, TD Capital Group, manages Toronto-Dominion's
			investment in the Company. The principal business address of Toronto-Dominion
			and TD Capital Group is P.O. Box 1, TD Tower, Toronto, Ontario M5K 1A2, Canada.

---

(7)         HBK Master Fund L.P. ("HBK Master Fund")
			owns $39,729,000 in face amount of the Series C Debentures of the Company,
			which are convertible into shares of the Company's Common Stock. Assuming
			conversion of such Series C Debentures, HBK Investments L.P. ("Investments")
			(pursuant to Investment Management Agreements among the parties) will have sole
			voting power and sole dispositive power with respect to the 9,932,250 shares of
			the Company's Common Stock issuable to HBK Master Fund. In addition, HBK Master
			Fund owns 1,100 shares of Common Stock and $11,370,000 in face amount of the
			6.75% Debentures of the Company due 2006, which are convertible into shares of
			the Company's Common Stock. Assuming conversion of such 6.75% Debentures,
			Investments (pursuant to Investment Management Agreements among the parties)
			will have sole voting power and sole dispositive power with respect to the
			557,900 shares of the Company's Common Stock issuable to HBK Master Fund.

The principal place of business of HBK Master Fund and Investments is 777 Main
			Street, Suite 2750, Fort Worth, Texas 76102.

(8)         Based upon a Schedule 13D filed by RDVEPCO
			on June 12, 2000, RDVEPCO may be deemed to beneficially own an aggregate of
			9,650,250 shares of Common Stock. RDVEPCO was organized in December 1999 for
			the principal purpose of investing in or engaging in other financial
			transactions with Alterra. The principal business address of RDVEPCO is 500
			Grand Bank Building, 126 Ottawa Avenue, N.W., Grand Rapids, Michigan 49503.
			RDVEPCO is managed by its two members, RDV ALTCO, L.L.C. and EDP Assisted
			Living Properties, L.L.C. For additional information regarding RDV ALTCO,
			L.L.C. and EDP Assisted Living Properties, L.L.C., see notes (3), (4) and (5)
			hereto. Based upon its Schedule 13D, RDVEPCO has sole power to vote or direct
			the vote and sole power to dispose or to direct the disposition of the
			9,650,250 shares of Common Stock. Based upon its Schedule 13D, RDVEPCO owns (i)
			1,140,000 shares of Series A Stock; and (ii) $34,041,000 Series A Debentures of
			the Company, all of which are convertible at any time at RDVEPCO's option into
			1,140,000 and 8,510,250 shares of the Company's Common Stock, respectively. In
			addition, RDVEPCO may be deemed to beneficially own 65,776 shares of Series A
			Stock, as issued pursuant to a dividend on the Series A Stock on January 2,
			2001, which is convertible into Common Stock. Assuming conversion of such
			Series A Stock and Series A Debentures, RDVEPCO will have sole voting and
			dispositive power with respect to 9,716,026 shares of the Company's Common
			Stock. Certain shares reported as beneficially owned by RDVEPCO are also
			reported as beneficially owned by the RDV Reporting Persons and the Prince
			Reporting Persons. For further information regarding RDVEPCO's beneficial
			ownership of the Company's Common Stock, please see the Schedule 13D referenced
			in this note.

(9)         Based upon a Schedule 13D filed on January
			18, 2000, as amended on January 26, 2000 and February 25, 2000, by AR
			Investments Limited, a Cayman Islands corporation ("AR Investments"), RH
			Investments Limited, a Cayman Islands corporation ("RH Investments"), VXM
			Investments Limited, a Cayman Islands corporation ("VXM Investments"), LXB
			Investments Limited, a Cayman Islands corporation ("LXB Investments"), HR
			Investments Limited, a Cayman Islands corporation ("HR Investments"), Barry
			Trust, a Guernsey, Channel Islands trust, Rachel Trust, a Guernsey, Channel
			Islands trust, Vivian Trust, a Guernsey, Channel Islands trust, Lillian Trust,
			a Guernsey, Channel Islands trust, Henry Trust, a Guernsey, Channel Islands
			trust, The Monument Trust Company Limited, a Guernsey, Channel Islands
			corporation, IPC Advisors S.A.R.L., a Luxembourg corporation, LMR Investments
			Limited, a Cayman Islands corporation, The LMR Family Trust, a Cayman Islands
			Trust and Caledonian Bank & Trust Limited, a Cayman Islands corporation
			(collectively, the "Reporting Persons"), AR Investments, RH Investments, VXM
			Investments, LXB Investments, and HR Investments own an aggregate of 2,167,900
			shares of Common Stock. According to the Schedule 13D, each Reporting Person
			may be deemed to be a beneficial owner of all 2,167,900 shares of Common Stock
			held by the Reporting Persons. The Reporting Persons as a group have sole power
			to vote or to direct the vote and sole power to dispose or to direct the
			disposition of the 2,167,900 shares of Common Stock. The principal place of
			business of the Reporting Persons is c/o Unsworth & Associates, Herengracht
			483, 1017 BT, Amsterdam, The Netherlands.

(10)         Based upon its Schedule 13G filed on
			February 2, 2002, Dimensional Fund Advisors Inc. is an investment adviser
			registered under Section 203 of the Investment Advisers Act of 1940. Its
			principal place of business is 1299 Ocean Avenue, 11
			th
			Floor, Santa Monica, CA 90401. Dimensional Fund Advisors Inc. has sole voting
			power with respect to all of the share of the Company's Common Stock held by it.

(11)         Based upon its Schedule 13G filed on
			January 13, 1999, Warburg Pincus Asset Management, Inc. ("Warburg Pincus") is
			an investment adviser registered under Section 203 of the Investment Advisers
			Act of 1940. Its principal place of business is 466 Lexington Avenue, New York,
			New York 10017. Of the total shares of the Company's Common Stock held by
			Warburg Pincus, it has sole voting power with respect to only 1,034,000 of such
			shares.

---

(12)         Based upon their Schedule 13G filed on
			February 16, 1999, as amended January 22, 2000, Transamerica Investment
			Services, Inc. ("TIS") is an investment adviser registered under Section 203 of
			the Investment Advisers Act of 1940 and is a subsidiary of Transamerica
			Corporation ("Transamerica"). Transamerica's principal place of business is 600
			Montgomery Street, San Francisco, California 94111, and TIS' principal place of
			business is 1150 Olive Street, Los Angeles, California 90015. Transamerica may
			be deemed to be the beneficial owner of 1,149,900 shares of the Company's
			Common Stock, of which 125,000 shares are owned directly by Transamerica. The
			remaining 1,024,900 shares of the Company's Common Stock, including 744,500 of
			such shares, are beneficially owned by direct and indirect subsidiaries of
			Transamerica. TIS is deemed to be the beneficial owner of 1,149,000 shares of
			the Company's Common Stock pursuant to separate arrangements whereby TIS acts
			as investment adviser to certain individuals and entities, including two
			insurance company subsidiaries of Transamerica. Each of the individuals and
			entities for which TIS acts as investment adviser has the right to receive or
			the power to direct the receipt of dividends from, or the proceeds from the
			sale of, the securities held or purchased pursuant to such arrangements.

(13)         Mr. Buchanan's beneficial ownership
			includes (i) 154,600 shares owned beneficially by Mr. Buchanan's spouse,
			Meredith Gail Buchanan; (ii) 50,000 shares owned jointly with
			Mr. Buchanan's spouse, Meredith Gail Buchanan; (iii) 22,000 shares held in
			trust for Mr. Buchanan's children for which trusts Mr. Buchanan is
			sole trustee; (iv) 11,000 shares beneficially owned by The Buchanan Family
			Foundation of which Mr. Buchanan is the sole trustee; and (v) 47,540
			shares issuable upon the exercise of options that are exercisable on or within
			60 days of March 15, 2002.

(14)         Mr. Vick's beneficial ownership
			includes (i) 674,495 shares owned jointly with Mr. Vick's spouse, Susan C.
			Vick; (ii) 22,000 shares held in trust for Mr. Vick's children for which
			trusts Mr. Vick is the sole trustee; and (iii) 5,700 shares beneficially
			owned by The Vick Foundation of which Mr. Vick is the sole trustee.

(15)         Includes shares issuable upon conversion
			of securities held by Holiday, a limited liability company organized for the
			principal purpose of participating in the Equity Transaction with Alterra,
			which acquired 110,000 shares of Series A Stock, $1,778,000 of Series A
			Debentures and $3,782,000 of Series B Debentures in the Equity Transaction. The
			principal place of business of Holiday is 3131 Elliott Avenue, Suite 500,
			Seattle, Washington 98121. Holiday is managed by each of William Colson, Norman
			Brenden, and Daniel R. Baty, each of whom may be deemed to beneficially own the
			shares of Common Stock and Series A Stock beneficially owned by Holiday.

(16)         Mr. Kennedy's beneficial ownership
			includes shares issuable upon the conversion of Series C Debentures held by
			Holiday Retirement Consulting, LLC, which is owned by Holiday Retirement Corp.
			and Mr. Kennedy. Mr. Colson is an executive officer, director and shareholder
			of Holiday Retirement Corp., but disclaims beneficial ownership of these shares.

(17)         Mr. Petty's beneficial ownership
			includes options to acquire 96,628 shares exercisable within 60 days of March
			15, 2002.

(18)         Mr. Burleson's beneficial ownership
			includes options to acquire 8,141 shares exercisable within 60 days of March
			15, 2002.

(19)         Mr. Geonnotti's beneficial ownership
			includes options to acquire 18,192 shares exercisable within 60 days of March
			15, 2002.

(20)         Ms. Townsend serves as President of
			TD Capital Group, the Merchant Banking Division of Toronto-Dominion. However,
			Ms. Townsend disclaims beneficial ownership of any shares of the Company's
			capital stock beneficially owned by Toronto-Dominion. See note (6) above with
			respect to shares beneficially owned by Toronto-Dominion.

(21)         Includes options to acquire 348,856
			shares exercisable within 60 days of March 15, 2002.



|ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
|-------- | ----------------------------------------------

In November 2001, the Company entered into a Consulting Services Agreement with
	Holiday Consulting, an affiliate of Holiday Retirement Corp. Pursuant to the
	Consulting Services Agreement, Holiday Consulting is providing management and
	consulting services to the Company, including the services of Patrick F.
	Kennedy, the Company's Chief Executive Officer and President, as well as
	consulting and advisory services provided by other Holiday Consulting
	personnel. The terms of this agreement are summarized under the caption
	"Executive Compensation - Consulting and Employment Agreements." Mr. Kennedy
	and William Colson, a director of Alterra, are each executive officers,
	directors and stockholders of Holiday Retirement Corp. During 2001, $120,000 of
	consulting fees were paid to Holiday pursuant to this agreement.

---

In the past, the Company has retained a construction management/development
	firm active in the Pennsylvania, New Jersey and Delaware markets to assist the
	Company in developing new residences in these markets. Anthony R. Geonnotti,
	Jr., a Senior Vice President of the Company, is the President of this firm and
	owns approximately 5% of the firm. Mr. Geonnotti's wife owns approximately
	30% of this firm. Development and construction expenditures, including
	construction management fees paid by the Company to this firm during 2001 were
	$1.4 million.

On March 5, 2001, the Company closed on a $7.5 million Bridge Loan provided by
	RDVEPCO, Holiday, HBK Master Fund and Toronto Dominion. The Bridge Loan has a
	six-month term and bears interest at an escalating interest rate, commencing at
	10% per annum for the first three months, 11% per annum for the next three
	months and, if the maturity of the Bridge Loan is extended, escalating by
	one-half of one percent for each month thereafter. The Bridge Loan is secured
	by first mortgages on two residences in construction, three vacant residences
	held for disposition and several parcels of raw land.

At the Company's option, the six-month term of the loan was extended by an
	additional six months whereupon the Bridge Loan became convertible into
	convertible subordinated debentures of the Company having rights and terms
	substantially similar to the Company's Series B Debentures, but having a
	conversion price equal to $75 per share of Series B Stock (a Common Stock
	equivalent price of $0.75 per share). Pursuant to the agreements with the
	bridge lenders, the bridge lenders will be entitled to participate in any
	transaction involving the issuance by the Company of equity or equity-linked
	securities during the term of the Bridge Loan.

As an inducement to make the Bridge Loan, the Company issued the bridge lenders
	warrants to purchase an aggregate of 60,000 shares of a newly designated class
	of the Company's preferred stock, the Series B-1 Non-Voting Participating
	Preferred Stock (the "Series B-1 Preferred Stock"), having rights and terms
	substantially similar to the Company's Series B preferred stock. Like the
	Series B preferred stock, each share of the Series B-1 Preferred Stock
	underlying the warrants has rights, other than voting rights, substantially
	similar to 100 shares of Common Stock of the Company. The five-year warrants
	are exercisable at a price of $75 per share for 20,000 shares of the Series B-1
	Preferred Stock, $100 per share for 20,000 shares of the Series B-1 Preferred
	Stock and $125 per share for 20,000 shares of the Series B-1 Preferred Stock.
	Pursuant to the anti-dilution provisions operative in the $229.5 million of
	outstanding PIK Debentures and Series A Stock originally issued in the Equity
	Transaction, as a result of the issuance of these warrants and the Bridge Loan
	becoming convertible into convertible subordinated debentures due to the
	extension of the term of this Bridge Loan, effective as of December 31, 2001,
	the effective conversion price for these debentures and the Series A Stock
	decreased from $4.00 to $2.68 per share of Common Stock for the Series A and
	Series C Debentures and the Series A Stock and from $400 to $268 per share of
	Series B preferred stock for the Series B Debentures. The actual conversion
	price for the Series A and C Debentures and the Series A stock remains at $4.00
	per share and for the Series B Debentures remains at $400 per share; however,
	upon conversion of these convertible securities the holder thereof will now
	also receive shares of Series B-1 Preferred Stock, in addition to Common Stock,
	in such amounts as to provide such holder an equity interest in the Company as
	though the conversion price for the Series A and C Debentures and Series A
	Stock on the one hand, and the Series B Debentures on the other hand, were
	decreased to $2.68 and $268 per share, respectively.



PART IV

|EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
				FORM 8-K
|-------------------------------------------------------------------



1. The following documents are filed as part of the report:



1. FINANCIAL STATEMENTS. The following financial statements of the
		Registrant and the Report of Independent Public Accountants therein are
		filed as part of this Report on Form 10-K:
2. REPORTS ON FORM 8-K. The Registrant filed no reports with the Securities
	and Exchange Commission on Form 8-K during the quarter ended December 31,
	2001.
3. EXHIBITS. The following exhibits are filed as part of, or incorporated by
	reference into this report on Form 10-K:





|No.    |  | EXHIBIT
							Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|------ |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      
|3.1    |  | Restated Certificate of Incorporation of the Registrant
								(incorporated herein by reference to Exhibit 3.1 to the Registrant's
								Registration Statement on Form S-1, Registration No. 333-04595, filed with
								the Commission on July 30, 1996 (the "Form S-1")).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|3.2    |  | Certificate of Merger, dated May 24, 1996 (incorporated
										herein by reference to Exhibit 3.1 to the Registrant's Registration
										Statement on Form S-3, Registration No. 333-37737, filed with the
										Commission on October 14, 1997 (the "Form S-3")).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|3.3    |  | Certificate of Amendment to the Restated Certificate of
												Incorporation, effective August 9, 1996 (incorporated herein by reference
												to Exhibit 3.2 to the Form S-3).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|3.4    |  | Certificate of Amendment to Restated Certificate of
														Incorporation effective May 26, 1998 (incorporated herein by reference to
														Exhibit 3.1 to the Registrant's Form 10-Q for the period ending June 30,
														1998).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|3.5    |  | Certificate of Designation of the Series A Junior
																	Participating Preferred Stock, dated December 10, 1998 (incorporated by
																	reference to Exhibit A to Exhibit 4.1 to the Registrant's Registration
																	Statement on Form 8-A, filed December 17, 1998).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|3.6    |  | Certificate of Amendment to Restated Certificate of
																			Incorporation, dated May 19, 1999 (incorporated by reference to Exhibit
																			3.6 to the Registrant's 10-K for the period ending December 31, 1999).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|3.7    |  | Certificate of Ownership Merging Sterling House
																					Corporation into the Registrant effective December 31, 1999 (incorporated
																					by reference to Exhibit 3.7 to the Registrant's 10-K for the period ending
																					December 31, 1999).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|3.8    |  | Certificate of Designation of the Series A 9.75%
																							Cumulative Convertible Pay-In-Kind Preferred Stock and the Series B
																							Non-Voting Participating Preferred Stock of the Registrant filed with the
																							Delaware Secretary of State on May 31, 2000 (incorporated by reference to
																							Exhibit 99.4 to the Registrant's Form 8-K filed on June 8, 2000).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|3.9    |  | Certificate of Designation of the Series B-1 Non-voting
																									Participating Preferred Stock of the Registrant filed with the Delaware
																									Secretary of State on March 2, 2001 (incorporated by reference to Exhibit
																									99.4 to the Registrant's Form 8-K filed March 8, 2001).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|3.10   |  | Certificate of Elimination of the Series B-1 Non-Voting
																											Participating Preferred Stock filed with the Delaware Secretary of State
																											on December 20, 2001 (filed herewith).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|3.11   |  | Certificate of Designation of the of the
																													Series B-1 Non-voting Participating Redeemable Preferred Stock of the
																													Registrant filed with the Delaware Secretary of State on December 20, 2001
																													(filed herewith).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|3.12   |  | Amended and Restated Bylaws of the Registrant dated
																															February 13, 2001 (incorporated by reference to Exhibit 3.10 to the
																															Registrant's Form 10-K for the year ended December 31, 2000).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|4.1    |  | Form of Common Stock Certificate (incorporated by
																																	reference to Exhibit 4.2 to the Form S-1).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|4.2    |  | See Articles Four, Six, Seven, Eight, Nine, Ten and
																																			Eleven to the Registrant's Restated Certificate of Incorporation
																																			referenced at Exhibit 3.1 above, the Certificates of Amendment to the
																																			Restated Certificate of Incorporation referenced at Exhibits 3.3 and 3.4
																																			above and the Certificates of Designation referenced at Exhibits 3.5, 3.8,
																																			3.9 and 3.11 above.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|4.3    |  | See Articles 2, 3, 5, 7 and 8 to the Registrant's Amended
																																					and Restated Bylaws referenced at Exhibit 3.12 above.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|4.4    |  | Indenture dated as of May 23, 1996 by and between
																																							Sterling House Corporation ("Sterling") and Fleet National Bank, as
																																							Trustee (incorporated by reference to Exhibit 4.11 to Sterling's
																																							Registration Statement on Form S-3 (Registration No. 333-15329 filed on
																																							November 1, 1996 (the "Sterling S-3")).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|4.5    |  | Form of Registration Rights Agreement dated as of May 17,
																																									1996 by and between Sterling and the initial purchasers of the 6.75%
																																									Convertible Subordinated Debentures due 2006 (incorporated herein by
																																									reference to Exhibit 4.9 to the Sterling S-3).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|4.6    |  | First Supplemental Indenture dated as of October 23, 1997
																																											among the Registrant, Sterling and State Street Bank and Trust Company, as
																																											successor Trustee (incorporated herein by reference to Exhibit 4.9 to the
																																											November S-3).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|4.7    |  | Second Supplemental Indenture dated as of December 31,
																																													1999 among the Registrant and State Street Bank and Trust Company, as
																																													successor trustee to Indenture dated as of May 23, 1996 between Sterling
																																													House Corporation and Fleet National Bank, as Trustee (incorporated by
																																													reference to Exhibit 4.7 to Registrant's Form 10-K for the period ending
																																													December 31, 1999).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|4.8    |  | Indenture dated as of May 21, 1996 by and between the
																																															Registrant and IBJ Schroder Bank & Trust Company, as Trustee
																																															(incorporated by reference to Exhibit 4.1 to the Registrant's Current
																																															Report on Form 8-K filed on May 27, 1997 (the "Form 8-K")).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|4.9    |  | Form of Registration Rights Agreement dated as of May 21,
																																																	1997 by and between the Registrant and the purchasers of the 7%
																																																	Convertible Subordinated Debentures due 2004 (incorporated by reference to
																																																	Exhibit 99.2 to the Registrant's Form 8-K filed on May 27, 1997).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|4.10   |  | Indenture dated as of December 19, 1997 by and between
																																																			the Registrant and United States Trust Company of New York, as Trustee
																																																			(incorporated by reference to Exhibit 1.1 to Registrant's Registration
																																																			Statement on Form 8-A, relating to Registration file number 333-39705,
																																																			filed with the Commission on December 16, 1997 (the "Form 8-A")).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|4.11   |  | Amended and Restated First Supplemental Indenture dated
																																																					as of December 19, 1997 by and between the Registrant and United States
																																																					Trust Company of New York, as Trustee (incorporated by reference to
																																																					Exhibit 4.1 to the Registrant's Form 10-Q for the period ending March 31,
																																																					2000).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4.12   |  | Amended and Restated Second Supplemental Indenture dated
																																																							as of January 2, 1998 by and between the Registrant and United States
																																																							Trust Company of New York, as Trustee (incorporated by reference to
																																																							Exhibit 4.2 to the Registrant's Form 10-Q for the period ending March 31,
																																																							2000).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|4.13   |  | Indenture dated as of May 31, 2000 between the Registrant
																																																									and U.S. Trust Company of Texas, N.A. relating to the Registrant's Series
																																																									A 9.75% Convertible Pay-In-Kind Debentures due 2007, Series B 9.75%
																																																									Convertible Pay-In-Kind Debentures due 2007, and Series C 9.75%
																																																									Convertible Pay-In-Kind Debentures due 2007 (incorporated by reference to
																																																									Exhibit 99.5 to the Registrant's Form 8-K filed on June 8,
																																																									2000).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|4.14   |  | Form of Registration Rights Agreement dated as of May 31,
																																																												2000 by and between the Registrant and the Purchasers named therein in
																																																												connection with the purchase to the Registrant's Series A 9.75%
																																																												Convertible Pay-In-Kind Preferred Stock, Series A 9.75% Convertible
																																																												Pay-In-Kind Debentures, Series B 9.75% Convertible Pay-In-Kind Debentures
																																																												and Series C 9.75% Convertible Pay-In-Kind Debentures (incorporated by
																																																												reference to Exhibit 99.8 to the Registrant's Form 8-K filed on June 8,
																																																												2000).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4.15   |  | Amended and Restated Alternative Living Services, Inc.
																																																														1995 Incentive Compensation Plan (incorporated by reference to Exhibit
																																																														10.10 of the Form S-1). Represents an executive compensation plan or
																																																														arrangement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|4.16   |  | Amendment to the Registrant's 1995 Amended and Restated
																																																																Incentive Compensation Plan

																																																																	(incorporated by reference to Exhibit 3.2 to the Registrant's Form 8-K
																																																																	filed August 14, 1998).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|4.17   |  | Rights Agreement dated as of December 10, 1998 between
																																																																				the Registrant and American Stock Transfer & Trust Company, including
																																																																				the form of Certificate of Designations of Series A Junior Participating
																																																																				Preferred Stock of Alternative Living Services, Inc. (Exhibit A), Form of
																																																																				Rights Certificate (Exhibit B), and Form of Summary of Rights to Purchase
																																																																				Preferred Shares (Exhibit C) (incorporated by reference to Exhibit 4.1 to
																																																																				the Registrant's Registration Statement on Form 8-A, filed with the
																																																																				Commission on December 17, 1998).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|4.18   |  | Amendment to Rights Agreement dated made as of April 26,
																																																																						2000 between the Registrant and American Stock Transfer & Trust
																																																																						Company (incorporated by reference to Exhibit 4.3 to the Registrant's
																																																																						Form10-Q for the period ending March 31, 2000).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|4.19   |  | Amendment to Rights Agreement dated made as of May 31,
																																																																								2000 between the Registrant and American Stock Transfer & Trust
																																																																								Company (incorporated by reference to Exhibit 99.9 to the Registrant's
																																																																								Form 8-K filed June 8, 2000).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|4.20   |  | Form of Warrant Certificate issued by the Registrant on
																																																																										March 5, 2001 to the entities scheduled in Exhibit 99.3 to the
																																																																										Registrant's Form 8-K filed March 8, 2001 (incorporated by reference to
																																																																										Exhibit 99.2 to the Registrant's 8-K filed March 8, 2001).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|4.21   |  | Registration Rights Agreement dated as of March 5, 2001
																																																																												by and between the Registrant and the Purchasers named therein in
																																																																												connection with the purchase of the Registrant's Series B-1 Non-Voting
																																																																												Participating Preferred Stock (incorporated by reference to Exhibit 4.21
																																																																												to the Registrant's Form 10-K for the year ended December 31,
																																																																												2000).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|10.1   |  | Employment Agreement dated as of November 1, 2000 by and
																																																																															between the Registrant and Steven L. Vick (incorporated by reference to
																																																																															Exhibit 10.2 to the Registrant's Form 10-K for the year ended December 31,
																																																																															2000). Represents an executive compensation plan or
																																																																															arrangement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10.2   |  | Consulting Services Agreement dated as of November 1,
																																																																																	2001 by and between the Registrant and Holiday Retirement Consulting
																																																																																	Services LLC (filed herewith).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|10.3   |  | Employment Agreement dated as of November 1, 2000 by and
																																																																																			between the Registrant and Mark W. Ohlendorf (incorporated by reference to
																																																																																			Exhibit 10.3 to the Registrant's Form 10-K for the year ended December 31,
																																																																																			2000). Represents an executive compensation plan or arrangement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10.4   |  | Post-Employment Compensation Agreement dated as of June
																																																																																					13, 2001 by and between the Registrant and Andrea Peck (filed
																																																																																					herewith).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|10.5   |  | Employment Agreement dated as of June 8, 2001 by and
																																																																																							between the Registrant and Chet Bradeen (filed herewith).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|10.6   |  | Exchange and Settlement Agreement by and among Assisted
																																																																																									Living Equities, LLC, Alternative Living Services-New York, Inc. and the
																																																																																									Registrant dated as of May 30, 2001 (certain exhibits to this agreement
																																																																																									have been omitted; the Registrant agrees to furnish supplementally to the
																																																																																									Commission, upon request, a copy of these exhibits) (filed
																																																																																									herewith).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|10.7   |  | Purchase Agreement by and between the Registrant, AHC
																																																																																												Exchange Corporation, AHC Niagara, LLC and Pioneer Acquisition Company
																																																																																												dated as of December 7, 2001 (certain exhibits to this agreement have been
																																																																																												omitted; the Registrant agrees to furnish supplementally to the
																																																																																												Commission, upon request, a copy of these exhibits) (filed herewith).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|10.8   |  | Lease and Security Agreement by and between Nationwide
																																																																																														Health Properties, Inc. and New Crossings International Corporation dated
																																																																																														as of December 15, 1995 (the Atrium) (incorporated by reference to Exhibit
																																																																																														10.35 of the Form S-1).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|10.9   |  | Schedule of Lease and Security Agreements by and between
																																																																																																Nationwide Health Properties, Inc. and New Crossings International
																																																																																																Corporation substantially similar to the Lease and Security Agreement
																																																																																																referenced above (incorporated by reference to Exhibit 10.36 of the Form
																																																																																																S-1).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10.10  |  | Assumption Agreement dated December 18, 1995 by and
																																																																																																		between Crossings International Corporation, New Crossings International
																																																																																																		Corporation, Oregon Housing Agency and National Health Properties, Inc.
																																																																																																		(Albany Residential) (incorporated by reference to Exhibit 10.53 of the
																																																																																																		Form S-1).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|10.11  |  | Schedule of Assumption Agreements substantially similar
																																																																																																				to the Assumption Agreement referenced above (incorporated by reference to
																																																																																																				Exhibit 10.54 of the Form S-1).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|10.12  |  | Lease Approval Agreement dated December 18, 1995 by and
																																																																																																						between National Health Properties, Inc., New Crossings International
																																																																																																						Corporation and Oregon Housing Agency (Albany Residential) (incorporated
																																																																																																						by reference to Exhibit 10.55 of the Form S-1).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10.13  |  | Schedule of Lease Approval Agreements substantially
																																																																																																								similar to Lease Approval Agreements referenced above (incorporated by
																																																																																																								reference to Exhibit 10.56 of the Form S-1).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|10.14  |  | Management Agreement dated August 30, 1990 by and between
																																																																																																										Housing Division, State of Oregon and New Crossing International
																																																																																																										Corporation (Albany Residential) (incorporated by reference to Exhibit
																																																																																																										10.59 of the Form S-1).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|10.15  |  | Facility Lease dated as of December 30, 1996, between
																																																																																																												Meditrust Acquisition Corporation III and ALS Leasing, Inc. ("Form of
																																																																																																												Facility Lease") (incorporated by reference to Exhibit 99.1 to the
																																																																																																												Registrant's Form 8-K dated January 14, 1997).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|10.16  |  | Amended Schedule of Facility Leases which is
																																																																																																														substantially similar to the Form of Facility Lease referenced above
																																																																																																														(incorporated by reference to Exhibit 10.22 to Registrant's Form 10-K for
																																																																																																														the period ending December 31, 1999).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|10.17  |  | Guaranty by the Registrant to Meditrust Acquisition
																																																																																																																Corporation III (incorporated by reference to Exhibit 99.3 to the
																																																																																																																Registrant's Form 8-K dated January 14, 1997).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|10.18  |  | Affiliated Party Subordination Agreement dated December
																																																																																																																		30, 1996, by and among ALS Leasing, Inc., the Registrant, the parties
																																																																																																																		listed on Schedule A thereto, all other Affiliates as defined therein and
																																																																																																																		Meditrust Acquisition Corporation III (incorporated by reference to
																																																																																																																		Exhibit 99.4 to the Registrant's Form 8-K dated January 14, 1997).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.19  |  | Agreement Regarding Related Lease Transactions dated
																																																																																																																				December 30, 1996, by and among ALS Leasing, Inc., the Registrant and
																																																																																																																				Meditrust Acquisition Corporation III (incorporated by reference to
																																																																																																																				Exhibit 99.5 to the Registrant's Form 8-K dated January 14, 1997).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|10.20  |  | Form of Facility Lease dated as of November 21, 1997,
																																																																																																																						between Meditrust Acquisition Corporation III and ALS Leasing, Inc. ("Form
																																																																																																																						of Facility Lease") (incorporated by reference to Exhibit 99.1 to the
																																																																																																																						Registrant's Form 8-K filed December 2, 1997).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|10.21  |  | Amended Schedule of Facility Leases which are
																																																																																																																								substantially similar to the Form of Facility Lease referenced above
																																																																																																																								(filed herewith).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|10.22  |  | Guaranty by the Registrant to Meditrust Acquisition
																																																																																																																										Corporation III (incorporated by reference to Exhibit 99.3 to the
																																																																																																																										Registrant's Form 8-K filed December 2, 1997).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10.23  |  | Affiliated Party Subordination Agreement dated November
																																																																																																																												21, 1997, by and among ALS Leasing, Inc., the Registrant, the parties
																																																																																																																												listed on Schedule A thereto, all other Affiliates as defined therein and
																																																																																																																												Meditrust Acquisition Corporation III (incorporated by reference to
																																																																																																																												Exhibit 99.4 to the Registrant's Form 8-K filed December 2, 1997).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|10.24  |  | Agreement Regarding Related Lease Transactions dated
																																																																																																																														November 21, 1997, by and among ALS Leasing, Inc., the Registrant and
																																																																																																																														Meditrust Acquisition Corporation III (incorporated by reference to
																																																																																																																														Exhibit 99.5 to the Registrant's Form 8-K filed December 2, 1997).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|10.25  |  | Sixth Amendment to Amended and Restated Agreement
																																																																																																																																Regarding Related Lease Transactions, Amended and Restated Environmental
																																																																																																																																Indemnity Agreement and Amended and Restated Affiliated Party
																																																																																																																																Subordination Agreement dated September 4, 1998, by and among ALS Leasing,
																																																																																																																																Inc., the Registrant and Meditrust Acquisition Corporation III
																																																																																																																																(incorporated by reference to Exhibit 10.9 to the Registrant's Form 10-Q
																																																																																																																																for the period ending September 30, 1998).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.26  |  | Seventh Amendment to Amended and Restated Agreement
																																																																																																																																			Regarding Related Lease Transactions, dated September 4, 1998 by and among
																																																																																																																																			ALS Leasing, Inc., the Registrant and Meditrust Acquisition Corporation
																																																																																																																																			III (incorporated by reference to Exhibit 10.10 to the Registrant's Form
																																																																																																																																			10-Q for the period ending September 30, 1998).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|10.27  |  | Eleventh Amendment to Amended and Restated Agreement
																																																																																																																																						Regarding Related Lease Transactions, dated September 4, 1998, by and
																																																																																																																																						among Assisted Living Properties, Inc., Meditrust Company, LLC Meditrust
																																																																																																																																						Of Texas, Inc., Meditrust of Kansas, Inc., Meditrust of Ohio, Inc. and MOC
																																																																																																																																						Health Care Company (incorporated by reference to Exhibit 10.11 to the
																																																																																																																																						Registrant's Form 10-Q for the period ending September 30,
																																																																																																																																						1998).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|10.28  |  | Form of Facility Lease dated as of September 4,1998
																																																																																																																																									between Meditrust Acquisition Corporation III and ALS Leasing, Inc. ("MAC
																																																																																																																																									Form of Facility Lease") (incorporated by reference to Exhibit 10.7 to the
																																																																																																																																									Registrant's Form 10-Q for the period ending September 30,
																																																																																																																																									1998).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|10.29  |  | Amended Schedule of Facility Leases which is
																																																																																																																																												substantially similar to the MAC Form of Facility Lease referenced above
																																																																																																																																												(incorporated by reference to Exhibit 10.35 to Registrant's Form 10-K for
																																																																																																																																												the period ending December 31, 1999).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|10.30  |  | Facility Lease Agreement dated as of April 30, 1997
																																																																																																																																														between Meditrust Acquisition Corporation III and ALS Leasing, Inc. for
																																																																																																																																														property located in Manlius, New York (incorporated by reference to
																																																																																																																																														Exhibit 10.36 to Registrant's Form 10-K for the period ending December 31,
																																																																																																																																														1999).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|10.31  |  | Form of Facility Lease Agreement dated February 20, 1998
																																																																																																																																																between Meditrust of Ohio, Inc. and Assisted Living Properties, Inc. (the
																																																																																																																																																"ALP Facility Leases") (incorporated by reference to Exhibit 10.37 to
																																																																																																																																																Registrant's Form 10-K for the period ending December 31, 1999).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|10.32  |  | Schedule of ALP Facility Leases which are substantially
																																																																																																																																																		similar to the Form of ALP Facility Lease referenced above (incorporated
																																																																																																																																																		by reference to Exhibit 10.38 to Registrant's Form 10-K for the period
																																																																																																																																																		ending December 31, 1999).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10.33  |  | Amendment to Sterling - Meditrust Leases dated as of
																																																																																																																																																				December 23, 1999 among Assisted Living Properties, Inc., Sterling House
																																																																																																																																																				Corporation, the Registrant, ALS Leasing, Inc., Meditrust of Kansas, Inc.,
																																																																																																																																																				New Meditrust Company LC, Meditrust Company LLC, T and F Properties, LP
																																																																																																																																																				and Meditrust Acquisition Company LLC (incorporated by reference to
																																																																																																																																																				Exhibit 10.39 to Registrant's Form 10-K for the period ending December 31,
																																																																																																																																																				1999).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|10.34  |  | Second Omnibus Amendment dated as of January 28, 2000
																																																																																																																																																						among Assisted Living Properties, Inc., the Registrant, ALS Leasing, Inc.,
																																																																																																																																																						Meditrust of Kansas, Inc., New Meditrust Company LC, Meditrust Company
																																																																																																																																																						LLC, T and F Properties, LP and Meditrust Acquisition Company LLC
																																																																																																																																																						(incorporated by reference to Exhibit 10.40 to Registrant's Form 10-K for
																																																																																																																																																						the period ending December 31, 1999).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|10.35  |  | Third Omnibus Amendment dated as of June 29, 2001 by and
																																																																																																																																																								among the Registrant, Assisted Living Properties, Inc., ALS Leasing, Inc.,
																																																																																																																																																								Meditrust of Kansas, Inc., Meditrust Acquisition Company LLC and T and F
																																																																																																																																																								Properties, LP. (incorporated by reference to Exhibit 10.1 to the
																																																																																																																																																								Registrant's Form 10-Q for the period ending June 30, 2001).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|10.36  |  | Guaranty and Suretyship Agreement by the Registrant in
																																																																																																																																																										favor of Nomura Asset Capital Corporation dated March 31, 1998
																																																																																																																																																										(
																																																																																																																																																										incorporated by reference to Exhibit
																																																																																																																																																											10.1 to the Registrant's Form 10-Q for the period ending March 31,
																																																																																																																																																											1998)

																																																																																																																																																												.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10.37  |  | Loan Agreement dated March 31, 1998 by and between
																																																																																																																																																														ALS-Venture I, Inc. and Nomura Asset Capital Corporation
																																																																																																																																																														(incorporated
																																																																																																																																																														by reference to Exhibit
																																																																																																																																																															10.2 to the Registrant's Form 10-Q for the period ending March 31,
																																																																																																																																																															1998)

																																																																																																																																																																.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|10.38  |  | Second Amendment to Loan Agreement and Reaffirmation
																																																																																																																																																																		Agreement by and between ALS-Venture I, Inc., Alterra Healthcare
																																																																																																																																																																		Corporation, ALS-Clare Bridge, Inc. and Capmark Services, L.P., as
																																																																																																																																																																		assignee of Nomura Asset Capital Corporation, dated April 7, 2000
																																																																																																																																																																		(incorporated by reference to Exhibit 10.38 to the Registrant's Form 10-K
																																																																																																																																																																		for the year ended December 31, 2000).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|10.39  |  | Guaranty and Suretyship Agreement by the Registrant in
																																																																																																																																																																				favor of Nomura Asset Capital Corporation dated May 26, 1998
																																																																																																																																																																				(incorporated by reference to Exhibit 10.1 to the
																																																																																																																																																																					Registrant's Form 10-Q for the period ending June 30, 1998)
																																																																																																																																																																					.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|10.40  |  | Loan Agreement dated May 26, 1998, by and between
																																																																																																																																																																								ALS-Venture II, Inc. and Nomura Asset Capital Corporation
																																																																																																																																																																								(incorporated by reference to Exhibit 10.2 to the
																																																																																																																																																																									Registrant's Form 10-Q for the period ending June 30,
																																																																																																																																																																									1998).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|10.41  |  | First Amendment to Loan Agreement and Reaffirmation
																																																																																																																																																																												Agreement dated July 30, 1998, by and between The Capital Company of
																																																																																																																																																																												America LLC and ALS Venture II, Inc. (incorporated by reference to Exhibit
																																																																																																																																																																												10.2 to the Registrant's Form 10-Q for the period ending September 30,
																																																																																																																																																																												1998).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|10.42  |  | First Amendment to Loan Agreement and Reaffirmation
																																																																																																																																																																															Agreement dated August 28, 1998, by and between Nomura Asset Capital
																																																																																																																																																																															Company and ALS Venture I, Inc. (incorporated by reference to Exhibit 10.3
																																																																																																																																																																															to the Registrant's Form 10-Q for the period ending September 30,
																																																																																																																																																																															1998).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10.43  |  | Second Amendment to Loan Agreement, First Amendment to
																																																																																																																																																																																		Guaranty and Suretyship Agreement, and Reaffirmation Agreement dated
																																																																																																																																																																																		September 30, 1998, by and between The Capital Company of America LLC and
																																																																																																																																																																																		ALS-Venture II, Inc. (incorporated by reference to Exhibit 10.6 to the
																																																																																																																																																																																		Registrant's Form 10-Q for the period ending September 30,
																																																																																																																																																																																		1998).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10.44  |  | Third Amendment to Loan Agreement and Reaffirmation
																																																																																																																																																																																					Agreement dated November 29, 2000, by and between The Capital Company of
																																																																																																																																																																																					America LLC and ALS-Venture II, Inc. (incorporated by reference to Exhibit
																																																																																																																																																																																					10.44 to the Registrant's Form 10-K for the year ended December 31,
																																																																																																																																																																																					2000).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.45  |  | Amended and Restated Financing and Security Agreement
																																																																																																																																																																																							(Master Agreement) between ALS Holdings, Inc., et al, as Borrower, and
																																																																																																																																																																																							Bank United, as agent, dated as of February 12, 1999 (incorporated by
																																																																																																																																																																																							reference to Exhibit 10.2 to the Registrant's Form 10-Q for the period
																																																																																																																																																																																							ending March 31, 1999).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|10.46  |  | First Amendment to Amended and Restated Financing and
																																																																																																																																																																																									Security Agreement dated as of October 29, 1999 between ALS Holdings,
																																																																																																																																																																																									Inc., ALS Wisconsin Holdings, Inc. and Bank United, individually and as
																																																																																																																																																																																									agent for itself and certain other lenders (incorporated by reference to
																																																																																																																																																																																									Exhibit 10.19 to the Registrant's Form 10-Q for the period ending
																																																																																																																																																																																									September 30, 1999).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10.47  |  | Second Amendment to Amended and Restated Financing and
																																																																																																																																																																																											Security Agreement dated as of May 10, 2000 among ALS Holdings, Inc., ALS
																																																																																																																																																																																											Wisconsin Holdings, Inc. and Bank United (incorporated by reference to
																																																																																																																																																																																											Exhibit 10.3 to the Registrant's Form 10-Q for the period ending June 30,
																																																																																																																																																																																											2000).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|10.48  |  | Third Amendment to Amended and Restated Financing and
																																																																																																																																																																																													Security Agreement dated as of May 10, 2000 among ALS Holdings, Inc., ALS
																																																																																																																																																																																													Wisconsin Holdings, Inc. and Bank United (incorporated by reference to
																																																																																																																																																																																													Exhibit 10.5 to the Registrant's Form 10-Q for the period ending June 30,
																																																																																																																																																																																													2000).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|10.49  |  | Form of Mortgage, Assignment and Security Agreement
																																																																																																																																																																																															between ALS Holdings, Inc., the Registrant and Bank United. (incorporated
																																																																																																																																																																																															by reference to Exhibit 10.53 to the Registrant's Form 10-K for the period
																																																																																																																																																																																															ending December 31, 1998).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10.50  |  | Guaranty of Payment Agreement dated September 28, 1998,
																																																																																																																																																																																																	by the Registrant, for the benefit of Bank United (incorporated by
																																																																																																																																																																																																	reference to Exhibit 10.4 to the Registrant's Form 10-Q for the period
																																																																																																																																																																																																	ending September 30, 1998).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10.51  |  | First Amendment to Guaranty of Payment Agreement dated as
																																																																																																																																																																																																				of October 29, 1999 by and among the Registrant and Bank United
																																																																																																																																																																																																				individually and as agent for itself and certain additional lenders
																																																																																																																																																																																																				(incorporated by reference to Exhibit 10.20 to the Registrant's Form 10-Q
																																																																																																																																																																																																				for the period ending September 30, 1999).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|10.52  |  | Third Amendment to Guaranty of Payment Agreement dated as
																																																																																																																																																																																																						of May 10, 2000 by and among the Registrant and Bank United individually
																																																																																																																																																																																																						and as agent for itself and certain additional lenders (incorporated by
																																																																																																																																																																																																						reference to Exhibit 10.4 to the Registrant's Form 10-Q for the period
																																																																																																																																																																																																						ending June 30, 2000).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10.53  |  | Fourth Amendment to Guaranty of Payment Agreement dated
																																																																																																																																																																																																								as of May 31, 2000 by and among the Registrant and Bank United
																																																																																																																																																																																																								individually and as agent for itself and certain additional lenders
																																																																																																																																																																																																								(incorporated by reference to Exhibit 10.6 to the Registrant's Form 10-Q
																																																																																																																																																																																																								for the period ending June 30, 2000).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|10.54  |  | Additional Borrower Joinder Supplement by and among ALS
																																																																																																																																																																																																										Holdings, Inc., ALS Wisconsin Holdings, Inc., the Registrant and Bank
																																																																																																																																																																																																										United, dated December 10, 1998. (incorporated by reference to Exhibit
																																																																																																																																																																																																										10.55 to the Registrant's Form 10-K for the period ending December 31,
																																																																																																																																																																																																										1998).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|10.55  |  | Forbearance and Collateral Account Agreement dated as of
																																																																																																																																																																																																												November 1, 2001 by and among ALS Holdings, Inc., ALS Wisconsin Holdings,
																																																																																																																																																																																																												Inc., Washington Mutual Bank FA (f/k/a Bank United), Firstar Bank Milwaukee, N.A. and AmSouth
																																																																																																																																																																																																												Bank (filed herewith).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|10.56  |  | Amendment No.1 to Forbearance and Collateral Account
																																																																																																																																																																																																														Agreement made as of December __, 2001 among ALS Holdings, Inc., ALS
																																																																																																																																																																																																														Wisconsin Holdings, Inc., Washington Mutual Bank FA, Firstar Bank
																																																																																																																																																																																																														Milwaukee, N.A. and AmSouth Bank (filed herewith).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10.57  |  | Amended Schedule of Bank United Mortgage, Assignment and
																																																																																																																																																																																																																Security Agreements ("Bank United Mortgage") which are substantially
																																																																																																																																																																																																																similar to the Form of Bank United Mortgage referenced above (filed
																																																																																																																																																																																																																herewith).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|10.58  |  | Credit Agreement between the Registrant and Deutsche Bank
																																																																																																																																																																																																																		AG dated October 6, 1998
																																																																																																																																																																																																																		(incorporated by reference to Exhibit 10.59 to the Registrant's
																																																																																																																																																																																																																			Form 10-K for the period ending December 31, 1998).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|10.59  |  | Master Construction Line of Credit Agreement between the
																																																																																																																																																																																																																						Registrant, Key Corporate Capital, Inc., and the lending institutions
																																																																																																																																																																																																																						named therein, dated October 6, 1998
																																																																																																																																																																																																																						(incorporated by reference to Exhibit 10.60 to the Registrant's
																																																																																																																																																																																																																							Form 10-K for the period ending December 31, 1998).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10.60  |  | Amendment No. 3 to Master Construction Line of Credit
																																																																																																																																																																																																																										Agreement dated as of March 1, 2000 between the Registrant, ALS National,
																																																																																																																																																																																																																										Inc., Key Corporate Capital, Inc., Bank of America and the Lenders named
																																																																																																																																																																																																																										therein (incorporated by reference to Exhibit 10.13 to the Registrant's
																																																																																																																																																																																																																										Form 10-Q for the period ending June 30, 2000).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10.61  |  | Amendment No.4 to Master Construction Line of Credit
																																																																																																																																																																																																																												Agreement dated as of May 25, 2000 between the Registrant, ALS National,
																																																																																																																																																																																																																												Inc., Key Corporate Capital, Inc., Bank of America and the Lenders named
																																																																																																																																																																																																																												therein (incorporated by reference to Exhibit 10.14 to the Registrant's
																																																																																																																																																																																																																												Form 10-Q for the period ending June 30, 2000).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|10.62  |  | Form of Deed of Trust and Security Agreement ("Form of
																																																																																																																																																																																																																														Key/ALS National Mortgage") between ALS National, Inc. and Key Corporate
																																																																																																																																																																																																																														Capital, Inc. dated September 1999 (incorporated by reference to Exhibit
																																																																																																																																																																																																																														10.2 to the Registrant's Form 10-Q for the period ending September 30,
																																																																																																																																																																																																																														1999).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|10.63  |  | Form of Project Promissory Note ("Form of Key/ALS
																																																																																																																																																																																																																																National Note") by ALS National, Inc. to Key Corporate Capital, Inc.
																																																																																																																																																																																																																																(incorporated by reference to Exhibit 10.3 to the Registrant's Form 10-Q
																																																																																																																																																																																																																																for the period ending September 30, 1999).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|10.64  |  | Amended Schedule of Mortgages and Notes which are
																																																																																																																																																																																																																																		substantially similar to the Form of Key/ALS National Mortgages and Notes
																																																																																																																																																																																																																																		referenced above (filed herewith).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|10.65  |  | Master Loan Agreement between ALS West, Inc., the
																																																																																																																																																																																																																																				Registrant and Guaranty Federal Bank, F.S.B., as agent, and the Lenders
																																																																																																																																																																																																																																				named therein, dated as of January 8, 1999 (incorporated by reference to
																																																																																																																																																																																																																																				Exhibit 10.1 to the Registrant's Form 10-Q for the period ending March 31,
																																																																																																																																																																																																																																				1999).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|10.66  |  | Second Modification of Master Loan Agreement dated as of
																																																																																																																																																																																																																																						May 31, 2000 between ALS West, Inc., the Registrant and Guaranty Federal
																																																																																																																																																																																																																																						Bank, F.S.B. (incorporated by reference to Exhibit 10.8 to the
																																																																																																																																																																																																																																						Registrant's Form 10-Q for the period ending June 30, 2000).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|10.67  |  | Schedule of Properties financed under the Guaranty
																																																																																																																																																																																																																																								Federal Bank Master Loan Agreement (filed herewith).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|10.68  |  | Loan Agreement by and between ALS Financing, Inc. and
																																																																																																																																																																																																																																										GMAC Commercial Mortgage Corporation dated July 30, 1998 (incorporated by
																																																																																																																																																																																																																																										reference to Exhibit 10.1 to the Registrant's Form 10-Q for the period
																																																																																																																																																																																																																																										ending September 30, 1998).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10.69  |  | Loan Agreement between ALS Financing II, Inc. and GMAC
																																																																																																																																																																																																																																													Commercial Mortgage Corporation dated as of March 23, 1999 (incorporated
																																																																																																																																																																																																																																													by reference to Exhibit 10.4 to the Registrant's Form 10-Q for the period
																																																																																																																																																																																																																																													ending March 31, 1999).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10.70  |  | Loan Agreement between AHC Purchaser, Inc. and GMAC
																																																																																																																																																																																																																																															Commercial Mortgage Corporation dated as of January 28, 2000 (incorporated
																																																																																																																																																																																																																																															by reference to Exhibit 10.1 to the Registrant's Form 10-Q for the period
																																																																																																																																																																																																																																															ending March 31, 2000).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|10.71  |  | Master Construction Line of Credit Agreement among Third
																																																																																																																																																																																																																																																	Party Investors I, LLC, the lending institutions and co-agents named
																																																																																																																																																																																																																																																	therein and Key Corporate Capital, Inc. as Administrative Agent dated
																																																																																																																																																																																																																																																	August 31, 1999 (exhibits and schedules to this agreement have been
																																																																																																																																																																																																																																																	omitted; the Registrant agrees to furnish supplementally to the
																																																																																																																																																																																																																																																	Commission, upon request, a copy of these exhibits and schedules)
																																																																																																																																																																																																																																																	(incorporated by reference to Exhibit 10.73 to the Registrant's Form 10-K
																																																																																																																																																																																																																																																	for the year ended December 31, 2000).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|10.72  |  | Amendment No. 1 to Master Construction Line of Credit
																																																																																																																																																																																																																																																			among Third Party Investors I, LLC, the lending institutions and co-agents
																																																																																																																																																																																																																																																			named herein and Key Corporate Capital, Inc. as Administrative Agent dated
																																																																																																																																																																																																																																																			March 1, 2000 (exhibits and schedules to this agreement have been omitted;
																																																																																																																																																																																																																																																			the Registrant agrees to furnish supplementally to the Commission, upon
																																																																																																																																																																																																																																																			request, a copy of these exhibits and schedules (incorporated by reference
																																																																																																																																																																																																																																																			to Exhibit 10.74 to the Registrant's Form 10-K for the year ended December
																																																																																																																																																																																																																																																			31, 2000).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|10.73  |  | Amendment No. 2 to Master Construction Line of Credit
																																																																																																																																																																																																																																																					among Third Party Investors I, LLC, the lending institutions and co-agents
																																																																																																																																																																																																																																																					named therein and Key Corporate Capital, Inc. as Administrative Agent
																																																																																																																																																																																																																																																					dated May 25, 2000 (exhibits and schedules to this agreement have been
																																																																																																																																																																																																																																																					omitted; the Registrant agrees to furnish supplementally to the
																																																																																																																																																																																																																																																					Commission, upon request, a copy of these exhibits and schedule)
																																																																																																																																																																																																																																																					(incorporated by reference to Exhibit 10.75 to the Registrant's Form 10-K
																																																																																																																																																																																																																																																					for the year ended December 31, 2000).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|10.74  |  | Guaranty dated August 31, 1999 by the Registrant in favor
																																																																																																																																																																																																																																																							of Key Corporate Capital Inc. as Administrative Agent under the Master
																																																																																																																																																																																																																																																							Construction Line of Credit Agreement among Third Party Investors I,
																																																																																																																																																																																																																																																							L.L.C., as Borrower, and the lending institutions and co-agents named
																																																																																																																																																																																																																																																							therein, and Key Corporate Capital Inc. (incorporated by reference to
																																																																																																																																																																																																																																																							Exhibit 10.11 to the Registrant's Form 10-Q for the period ending
																																																																																																																																																																																																																																																							September 30, 1999).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|10.75  |  | Settlement Agreement dated as of March 6, 2002 by the
																																																																																																																																																																																																																																																									Registrant, Third Party Investors I, LLC and Key Corporate Capital Inc. as
																																																																																																																																																																																																																																																									Administrative Agent (certain exhibits to this agreement have been
																																																																																																																																																																																																																																																									omitted; the Registrant agrees to furnish supplementally to the
																																																																																																																																																																																																																																																									Commission, upon request, a copy of these exhibits) (filed herewith).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|10.76  |  | Purchase Agreement and Agreement to Complete Construction
																																																																																																																																																																																																																																																											dated as of June 14, 1999, by and between Omega Healthcare Investors, Inc.
																																																																																																																																																																																																																																																											and Sterling House Corporation, ALS-Clare Bridge, Inc., and the Registrant
																																																																																																																																																																																																																																																											(incorporated by reference to Exhibit 10.3 to the Registrant's Form 10-Q
																																																																																																																																																																																																																																																											for the period ending June 30, 1999).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|10.77  |  | Master Lease dated as of June 14, 1999, by and between
																																																																																																																																																																																																																																																													Omega Healthcare Investors, Inc. as Lessor and AHC Properties, Inc. as
																																																																																																																																																																																																																																																													Lessee (incorporated by reference to Exhibit 10.4 to the Registrant's Form
																																																																																																																																																																																																																																																													10-Q for the period ending June 30, 1999).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|10.78  |  | Kansas Master Lease dated as of June 14, 1999, by and
																																																																																																																																																																																																																																																															between Omega (Kansas), Inc. as Lessor and AHC Properties, Inc. as Lessee
																																																																																																																																																																																																																																																															(incorporated by reference to Exhibit 10.5 to the Registrant's Form 10-Q
																																																																																																																																																																																																																																																															for the period ending June 30, 1999).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|10.79  |  | Lease Guaranty dated as of June 14, 1999, by the
																																																																																																																																																																																																																																																																	Registrant in favor of Omega Healthcare Investors, Inc. and Omega
																																																																																																																																																																																																																																																																	(Kansas), Inc. (incorporated by reference to Exhibit 10.6 to the
																																																																																																																																																																																																																																																																	Registrant's Form 10-Q for the period ending June 30, 1999).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|10.80  |  | Forbearance Agreement and Amendment to Master Leases
																																																																																																																																																																																																																																																																			dated as of January 31, 2002 by and between the Registrant, AHC
																																																																																																																																																																																																																																																																			Properties, Inc. and Omega Healthcare Investors, Inc. (filed
																																																																																																																																																																																																																																																																			herewith).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|10.81  |  | First Amendment to Security Agreements dated as of
																																																																																																																																																																																																																																																																					January 31, 2002 by and between the Registrant, AHC Properties, Inc.,
																																																																																																																																																																																																																																																																					Omega Healthcare Investors, Inc. and Omega (Kansas), Inc. (filed
																																																																																																																																																																																																																																																																					herewith).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|10.82  |  | Amended and Restated Cross-Default Agreement dated as of
																																																																																																																																																																																																																																																																							January 31, 2002 by and between the Registrant, ALS-Clare Bridge, Inc.,
																																																																																																																																																																																																																																																																							AHC Properties, Inc., Omega Healthcare Investors, Inc. and Omega (Kansas),
																																																																																																																																																																																																																																																																							Inc. (filed herewith).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|10.83  |  | Amended and Restated Master Lease Agreement dated as of
																																																																																																																																																																																																																																																																									July 1, 2001 among Health Care REIT, Inc.; HCRI North Carolina Properties,
																																																																																																																																																																																																																																																																									LLC; HCRI Tennessee Properties, Inc.; HCRI Texas Properties, Ltd. and the
																																																																																																																																																																																																																																																																									Registrant. (incorporated by reference to Exhibit 10.3 to the Registrant's
																																																																																																																																																																																																																																																																									Form 10-Q for the period ending June 30, 2001). (Certain exhibits to this
																																																																																																																																																																																																																																																																									agreement have been omitted; the Registrant agrees to furnish
																																																																																																																																																																																																																																																																									supplementally to the Commission, upon request, a copy of these
																																																																																																																																																																																																																																																																									exhibits.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|10.84  |  | First Amendment to the Amended and Restated Master Lease
																																																																																																																																																																																																																																																																											Agreement dated as of July 16, 2001 among Health Care REIT, Inc.; HCRI
																																																																																																																																																																																																																																																																											North Carolina Properties, LLC; HCRI Tennessee Properties, Inc.; HCRI
																																																																																																																																																																																																																																																																											Texas Properties, Ltd. and the Registrant (incorporated by reference to
																																																																																																																																																																																																																																																																											Exhibit 10.4 to the Registrant's Form 10-Q for the period ending June 30,
																																																																																																																																																																																																																																																																											2001).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|10.85  |  | Second Amendment to the Amended and Restated Master Lease
																																																																																																																																																																																																																																																																													Agreement dated as of December ___, 2001 among Health Care REIT, Inc.,
																																																																																																																																																																																																																																																																													HCRI Indiana Properties, LLC, HCRI North Carolina Properties, LLC, HCRI
																																																																																																																																																																																																																																																																													Tennessee Properties, Inc., HCRI Texas Properties, Ltd., HCRI Wisconsin
																																																																																																																																																																																																																																																																													Properties, LLC and the Registrant (filed herewith).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|10.86  |  | Third Amendment to the Amended and Restated Master Lease
																																																																																																																																																																																																																																																																															Agreement dated as of March __, 2002 among Health Care REIT, Inc., HCRI Indiana
																																																																																																																																																																																																																																																																															Properties, LLC, HCRI North Carolina Properties, LLC, HCRI Tennessee
																																																																																																																																																																																																																																																																															Properties, Inc., HCRI Texas Properties, Ltd., HCRI Wisconsin Properties,
																																																																																																																																																																																																																																																																															LLC and the Registrant (filed herewith).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|10.87  |  | Master Lease Agreement dated as of July 16, 1999 between
																																																																																																																																																																																																																																																																																	Pita General Corporation ("Synthetic Lessor") and AHC Tenant, Inc. ("AHC
																																																																																																																																																																																																																																																																																	Tenant"), a wholly-owned subsidiary of the Registrant (Annex A to this
																																																																																																																																																																																																																																																																																	agreement has been filed as Exhibit A to the Loan Agreement filed as
																																																																																																																																																																																																																																																																																	Exhibit 2.6 to the Registrant's Form 8-K filed August 4, 1999)
																																																																																																																																																																																																																																																																																	(incorporated by reference to Exhibit 2.5 to the Registrant's Form 8-K
																																																																																																																																																																																																																																																																																	filed August 4, 1999).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10.88  |  | Loan Agreement dated as of July 16, 1999 between
																																																																																																																																																																																																																																																																																			Synthetic Lessor, AHC Tenant and Greenwich Capital Financial Products,
																																																																																																																																																																																																																																																																																			Inc. ("Lender"), including the Master Glossary of Definitions included as
																																																																																																																																																																																																																																																																																			Exhibit A thereto (other exhibits and schedules to this agreement, which
																																																																																																																																																																																																																																																																																			are listed and summarized in the table of contents to the agreement, have
																																																																																																																																																																																																																																																																																			been omitted; the Registrant agrees to furnish supplementally to the
																																																																																																																																																																																																																																																																																			Commission, upon request, a copy of these exhibits and schedules)
																																																																																																																																																																																																																																																																																			(incorporated by reference to Exhibit 2.6 to the Registrant's Form 8-K
																																																																																																																																																																																																																																																																																			filed August 4, 1999).                                                                                                                                                                                                                                                                                          
|10.89  |  | Participation Agreement dated as of July 16, 1999 between
																																																																																																																																																																																																																																																																																					AHC Tenant, Synthetic Lessor, Lender, SELCO Service Corporation ("SELCO"),
																																																																																																																																																																																																																																																																																					The First National Bank of Chicago ("FNB"), ZC Specialty Insurance Company
																																																																																																																																																																																																																																																																																					("ZC") and the Registrant (incorporated by reference to Exhibit 2.7 to the
																																																																																																																																																																																																																																																																																					Registrant's Form 8-K filed August 4, 1999).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|10.90  |  | Trust Agreement dated as of July 16, 1999 between FNB,
																																																																																																																																																																																																																																																																																							Lender, ZC, AHC Tenant, Synthetic Lessor, SELCO and the Registrant
																																																																																																																																																																																																																																																																																							(incorporated by reference to Exhibit 2.8 to the Registrant's Form 8-K
																																																																																																																																																																																																																																																																																							filed August 4, 1999).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|10.91  |  | Flow of Funds Agreement dated as of July 16, 1999 between
																																																																																																																																																																																																																																																																																									Synthetic Lessor, Lender, ZC, FNB, AHC Tenant, the Registrant and certain
																																																																																																																																																																																																																																																																																									other parties thereto (incorporated by reference to Exhibit 2.9 to the
																																																																																																																																																																																																																																																																																									Registrant's Form 8-K filed August 4, 1999).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|10.92  |  | Reimbursement Agreement dated as of July 16, 1999 between
																																																																																																																																																																																																																																																																																											ZC, AHC Tenant and Synthetic Lessor (exhibits and schedules to this
																																																																																																																																																																																																																																																																																											agreement, which are listed and summarized in the table of contents to the
																																																																																																																																																																																																																																																																																											agreement, have been omitted; the Registrant agrees to furnish
																																																																																																																																																																																																																																																																																											supplementally to the Commission, upon request, a copy of these exhibits
																																																																																																																																																																																																																																																																																											and schedules) (incorporated by reference to Exhibit 2.10 to the
																																																																																																																																																																																																																																																																																											Registrant's Form 8-K filed August 4, 1999).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10.93  |  | Guaranty dated as of July 16, 1999 executed by the
																																																																																																																																																																																																																																																																																													Registrant (incorporated by reference to Exhibit 2.11 to the Registrant's
																																																																																																																																																																																																																																																																																													Form 8-K filed August 4, 1999).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.94  |  | Promissory Note dated as of July 16, 1999 executed by
																																																																																																																																																																																																																																																																																															Synthetic Lessor (incorporated by reference to Exhibit 2.12 to the
																																																																																																																																																																																																																																																																																															Registrant's Form 8-K filed August 4, 1999).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|10.95  |  | Master Amendment, Confirmation and Acknowledgment
																																																																																																																																																																																																																																																																																																	Agreement dated September 28, 1999 between Pita General Corporation, AHC
																																																																																																																																																																																																																																																																																																	Tenant, Inc., the Registrant, Greenwich Capital Financial Products, Inc.,
																																																																																																																																																																																																																																																																																																	SELCO Service Corporation, The First National Bank of Chicago, ZC
																																																																																																																																																																																																																																																																																																	Specialty Insurance Company, and certain other parties as defined therein
																																																																																																																																																																																																																																																																																																	(incorporated by reference to Exhibit 10.15 to the Registrant's Form 10-Q
																																																																																																																																																																																																																																																																																																	for the period ending June 30, 2000).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.96  |  | Third Master Amendment dated May 31, 2000 between Pita
																																																																																																																																																																																																																																																																																																			General Corporation, AHC Tenant, Inc., the Registrant, Greenwich Capital
																																																																																																																																																																																																																																																																																																			Financial Products, Inc., SELCO Service Corporation, The First National
																																																																																																																																																																																																																																																																																																			Bank of Chicago, ZC Specialty Insurance Company, and certain other parties
																																																																																																																																																																																																																																																																																																			as defined therein, (other exhibits and schedules to this agreement have
																																																																																																																																																																																																																																																																																																			been omitted; the Registrant agrees to furnish supplementally to the
																																																																																																																																																																																																																																																																																																			Commission, upon request, a copy of these exhibits and schedules)
																																																																																																																																																																																																																																																																																																			(incorporated by reference to Exhibit 10.15 to the Registrant's Form 10-Q
																																																																																																																																																																																																																																																																																																			for the period ending June 30, 2000).                                                                                                                                 
|10.97  |  | Fourth Master Amendment dated June 30, 2000 between Pita
																																																																																																																																																																																																																																																																																																					General Corporation, AHC Tenant, Inc., the Registrant, Greenwich Capital
																																																																																																																																																																																																																																																																																																					Financial Products, Inc., SELCO Service Corporation, The First National
																																																																																																																																																																																																																																																																																																					Bank of Chicago, ZC Specialty Insurance Company, and certain other parties
																																																																																																																																																																																																																																																																																																					as defined therein (incorporated by reference to Exhibit 10.100 to the
																																																																																																																																																																																																																																																																																																					Registrant's Form 10-K for the year ended December 31, 2000).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|10.98  |  | Form of Multifamily Mortgage, Assignment of Rents and
																																																																																																																																																																																																																																																																																																							Security Agreement ("Form of Amresco Mortgage") between ALS Kansas, Inc.
																																																																																																																																																																																																																																																																																																							and Amresco Capital, L.P. dated July 16, 1999, including Exhibit B thereto
																																																																																																																																																																																																																																																																																																							(other exhibits to this agreement have been omitted; the Registrant agrees
																																																																																																																																																																																																																																																																																																							to furnish supplementally to the Commission, upon request, a copy of these
																																																																																																																																																																																																																																																																																																							exhibits) (incorporated by reference to Exhibit 10.5 to the Registrant's
																																																																																																																																																																																																																																																																																																							Form 10-Q for the period ending September 30, 1999).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|10.99  |  | Form of Multifamily Note ("Form of Amresco Note") by ALS
																																																																																																																																																																																																																																																																																																									Kansas, Inc. to Amresco Capital, L.P. dated July 16, 1999 (incorporated by
																																																																																																																																																																																																																																																																																																									reference to Exhibit 10.6 to the Registrant's Form 10-Q for the period
																																																																																																																																																																																																																																																																																																									ending September 30, 1999).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|10.100 |  | Schedule of Mortgages and Notes which are substantially
																																																																																																																																																																																																																																																																																																											similar to the Form of Amresco Mortgage and Form of Amresco Note
																																																																																																																																																																																																																																																																																																											referenced above (incorporated by reference to Exhibit 10.7 to the
																																																																																																																																																																																																																																																																																																											Registrant's Form 10-Q for the period ending September 30, 1999).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|10.101 |  | Form of Lease dated July 16, 1999 between LTC Properties,
																																																																																																																																																																																																																																																																																																													Inc. and the Registrant (incorporated by reference to Exhibit 10.113 to
																																																																																																																																																																																																																																																																																																													the Registrant's Form 10-K for the period ending December 31, 1999).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10.102 |  | Schedule of LTC Leases which are substantially similar to
																																																																																																																																																																																																																																																																																																															the Form of LTC Lease referenced above

																																																																																																																																																																																																																																																																																																																(incorporated
																																																																																																																																																																																																																																																																																																																by reference to Exhibit 10.114 to the Registrant's Form 10-K for the
																																																																																																																																																																																																																																																																																																																period ending December 31, 1999).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|10.103 |  | Amendment to Leases dated as of November 30, 1998 between
																																																																																																																																																																																																																																																																																																																		LTC Properties, Inc., Kansas-LTC Corporation, Texas-LTC Limited
																																																																																																																																																																																																																																																																																																																		Partnership, the Registrant and Sterling House Corporation (incorporated
																																																																																																																																																																																																																																																																																																																		by reference to Exhibit 10.115 to the Registrant's Form 10-K for the
																																																																																																																																																																																																																																																																																																																		period ending December 31, 1999).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|10.104 |  | Form of Building Loan Agreement ("Key Loan Agreement")
																																																																																																																																																																																																																																																																																																																				dated as of January 14, 2000 between Key Corporate Capital Inc. and
																																																																																																																																																																																																																																																																																																																				Clinton Brookside Drive, LLC (incorporated by reference to Exhibit 10.116
																																																																																																																																																																																																																																																																																																																				to the Registrant's Form 10-K for the period ending December 31,
																																																																																																																																																																																																																																																																																																																				1999).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|10.105 |  | Form of Amended and Restated Secured Promissory Note
																																																																																																																																																																																																																																																																																																																						("Key Promissory Note") dated December 21, 2001 between Key Corporate
																																																																																																																																																																																																																																																																																																																						Capital Inc. and Clinton Brookside Drive, LLC (filed herewith).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.106 |  | Form of Amended and Restated Guaranty of Payment and
																																																																																																																																																																																																																																																																																																																								Performance dated as of December 21, 2001 from the Registrant to Key
																																																																																																																																																																																																																																																																																																																								Corporate Capital Inc. ("Amended Key Guaranty") (filed herewith).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|10.107 |  | Amended Schedule of Key Loan Agreements, Key Promissory
																																																																																																																																																																																																																																																																																																																										Notes and Amended Key Guaranties which are substantially similar to the
																																																																																																																																																																																																																																																																																																																										forms referenced above (filed herewith).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|10.108 |  | Loan Agreement dated as of March 5, 2001 between the
																																																																																																																																																																																																																																																																																																																												Registrant and RDVEPCO, L.L.C, Holiday Retirement 2000, LLC, The
																																																																																																																																																																																																																																																																																																																												Toronto-Dominion Bank and HBK Master Fund, L.P. (exhibits to this
																																																																																																																																																																																																																																																																																																																												agreement have been omitted; the Registrant agrees to furnish
																																																																																																																																																																																																																																																																																																																												supplementally to the Commission, upon request, a copy of these exhibits)
																																																																																																																																																																																																																																																																																																																												(incorporated by reference to Exhibit 99.1 to the Registrant's Form 8-K
																																																																																																																																																																																																																																																																																																																												filed March 8, 2001).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|10.109 |  | Purchase Agreement dated as of April 26, 2000 between the
																																																																																																																																																																																																																																																																																																																														Registrant and RDVEPCO, L.L.C., Group One Investors, L.L.C. and Holiday
																																																																																																																																																																																																																																																																																																																														Retirement 2000, LLC (schedules to this agreement have been omitted; the
																																																																																																																																																																																																																																																																																																																														Registrant agrees to furnish supplementally to the Commission, upon
																																																																																																																																																																																																																																																																																																																														request, a copy of these schedules) (incorporated by reference to Exhibit
																																																																																																																																																																																																																																																																																																																														99.2 to the Registrant's Form 8-K filed May 4, 2000).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|10.110 |  | First Amendment to Purchase Agreement dated as of May 31,
																																																																																																																																																																																																																																																																																																																																2000 between Registrant and RDVEPCO, L.L.C., Group One Investors, L.L.C.,
																																																																																																																																																																																																																																																																																																																																Holiday Retirement 2000, LLC, the Elsa D. Prince Living Trust and RDV
																																																																																																																																																																																																																																																																																																																																Manor Care, L.L.C. (collectively, the "Purchasers"), excluding Exhibits A,
																																																																																																																																																																																																																																																																																																																																B and C thereto and excluding the schedules to this agreement (the
																																																																																																																																																																																																																																																																																																																																Registrant agrees to furnish supplementally to the Commission, upon
																																																																																																																																																																																																																																																																																																																																request, a copy of these schedules) (incorporated by reference to Exhibit
																																																																																																																																																																																																																																																																																																																																99.2 to the Registrant's Form 8-K dated June 8, 2000).                                                                                                                                                                                                                                                                               
|10.111 |  | Debenture Purchase Agreement dated as of August 10, 2000
																																																																																																																																																																																																																																																																																																																																		by and among the Registrant, RDVEPCO, L.L.C., Group One Investors, L.L.C.,
																																																																																																																																																																																																																																																																																																																																		Holiday Retirement 2000, LLC, the Elsa D. Prince Living Trust, RDV Manor
																																																																																																																																																																																																																																																																																																																																		Care, L.L.C. and Toronto Dominion Investments, Inc. (schedules to this
																																																																																																																																																																																																																																																																																																																																		agreement have been omitted; the Registrant agrees to furnish
																																																																																																																																																																																																																																																																																																																																		supplementally to the Commission, upon request, a copy of these schedules)
																																																																																																																																																																																																																																																																																																																																		(incorporated by reference to Exhibit 10.16 to the Registrant's Form 10-Q
																																																																																																																																																																																																																																																																																																																																		for the period ending June 30, 2000).                                                                                                                                                                                                                                                                                 
|10.112 |  | Section 2.2(a) Purchase Agreement and Assignment dated as
																																																																																																																																																																																																																																																																																																																																				of May 31, 2000 between the Registrant, the Purchasers name therein and
																																																																																																																																																																																																																																																																																																																																				HBK Master Fund L.P. (incorporated by reference to Exhibit 99.7 to the
																																																																																																																																																																																																																																																																																																																																				Registrant's Form 8-K filed on June 8, 2000).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|10.113 |  | Construction Loan and Security Agreement dated as of May
																																																																																																																																																																																																																																																																																																																																						1, 1998 between ALS Clare Bridge, Inc. and Sovereign Bank (the "Sovereign
																																																																																																																																																																																																																																																																																																																																						Bank Loan Agreement") (incorporated by reference to Exhibit 10.124 to the
																																																																																																																																																																																																																																																																																																																																						Registrant's Form 10-K for the period ending December 31, 1999).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|10.114 |  | Form of Open End Mortgage and Security Agreement (the
																																																																																																																																																																																																																																																																																																																																								"Sovereign Mortgage") dated May 1, 1998 between ALS-Clare Bridge, Inc. and
																																																																																																																																																																																																																																																																																																																																								Sovereign Bank (incorporated by reference to Exhibit 10.125 to the
																																																																																																																																																																																																																																																																																																																																								Registrant's Form 10-K for the period ending December 31, 1999).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|10.115 |  | Form of Guaranty and Surety Agreement dated May 1, 1998
																																																																																																																																																																																																																																																																																																																																										between the Registrant and Sovereign Bank (incorporated by reference to
																																																																																																																																																																																																																																																																																																																																										Exhibit 10.126 to the Registrant's Form 10-K for the period ending
																																																																																																																																																																																																																																																																																																																																										December 31, 1999).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|10.116 |  | Amended Schedule of properties mortgaged under the
																																																																																																																																																																																																																																																																																																																																													Sovereign Bank Loan Agreement and mortgages
																																																																																																																																																																																																																																																																																																																																													which are substantially similar to the Sovereign Mortgage
																																																																																																																																																																																																																																																																																																																																														referenced above

																																																																																																																																																																																																																																																																																																																																															(filed herewith)
																																																																																																																																																																																																																																																																																																																																															.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|10.117 |  | Revolving Credit Agreement dated August 19, 1997 between
																																																																																																																																																																																																																																																																																																																																																			the Registrant and Firstar Bank Milwaukee, NA. (incorporated by reference
																																																																																																																																																																																																																																																																																																																																																			to Exhibit 10.128 to the Registrant's Form 10-K for the period ending
																																																																																																																																																																																																																																																																																																																																																			December 31, 1999).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|10.118 |  | Revolving Credit Note dated August 19, 1997 between
																																																																																																																																																																																																																																																																																																																																																						Registrant and Firstar Bank Milwaukee, NA. (incorporated by reference to
																																																																																																																																																																																																																																																																																																																																																						Exhibit 10.129 to the Registrant's Form 10-K for the period ending
																																																																																																																																																																																																																																																																																																																																																						December 31, 1999).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|10.119 |  | Amendment to Revolving Credit Agreement and Revolving
																																																																																																																																																																																																																																																																																																																																																								Credit Note dated February 27, 1999 between Registrant and Firstar Bank
																																																																																																																																																																																																																																																																																																																																																								Milwaukee, NA. (incorporated by reference to Exhibit 10.130 to the
																																																																																																																																																																																																																																																																																																																																																								Registrant's Form 10-K for the period ending December 31, 1999).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|10.120 |  | Second Amendment to Loan Agreement and Related Documents
																																																																																																																																																																																																																																																																																																																																																										dated September 9, 1999 between Registrant and Firstar Bank Milwaukee, NA
																																																																																																																																																																																																																																																																																																																																																										(incorporated by reference to Exhibit 10.131 to the Registrant's Form 10-K
																																																																																																																																																																																																																																																																																																																																																										for the period ending December 31, 1999).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|10.121 |  | Waiver and Amendment No. 3 to Credit Agreement dated
																																																																																																																																																																																																																																																																																																																																																												March 27, 2000 between the Registrant and Firstar Bank Milwaukee, NA
																																																																																																																																																																																																																																																																																																																																																												(incorporated by reference to Exhibit 10.9 to the Registrant's Form 10-Q
																																																																																																																																																																																																																																																																																																																																																												for the period ending June 30, 2000).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|10.122 |  | Amendment No. 5 to Credit Agreement dated May 31, 2000
																																																																																																																																																																																																																																																																																																																																																														between the Registrant and Firstar Bank Milwaukee, NA (incorporated by
																																																																																																																																																																																																																																																																																																																																																														reference to Exhibit 10.10 to the Registrant's Form 10-Q for the period
																																																																																																																																																																																																																																																																																																																																																														ending June 30, 2000).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.123 |  | Amendment No. 8 to Credit Agreement dated as of August
																																																																																																																																																																																																																																																																																																																																																																31, 2000 between the Registrant and Firstar Bank Milwaukee, NA (exhibits
																																																																																																																																																																																																																																																																																																																																																																to this agreement have been omitted; the Registrant agrees to furnish
																																																																																																																																																																																																																																																																																																																																																																supplementally to the Commission, upon request, a copy of these exhibits)
																																																																																																																																																																																																																																																																																																																																																																(incorporated by reference to Exhibit 10.4 to the Registrant's Form 10-Q
																																																																																																																																																																																																																																																																																																																																																																for the period ending September 30, 2000).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|10.124 |  | Form of Deed of Trust ("Mortgage/Deed of Trust") dated
																																																																																																																																																																																																																																																																																																																																																																			August 31, 2000 between the Registrant, First Bank as Lender and Chicago
																																																																																																																																																																																																																																																																																																																																																																			Title Insurance Company as Trustee (incorporated by reference to Exhibit
																																																																																																																																																																																																																																																																																																																																																																			10.5 to the Registrant's Form 10-Q for the period ending September 30,
																																																																																																																																																																																																																																																																																																																																																																			2000).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|10.125 |  | Amended Schedule of Firstar Mortgages and Deeds of Trust
																																																																																																																																																																																																																																																																																																																																																																					which are substantially in the form of Mortgage/Deed of Trust referenced
																																																																																																																																																																																																																																																																																																																																																																					above (filed herewith).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|10.126 |  | Loan Agreement dated as of August 28, 2000 between Heller
																																																																																																																																																																																																																																																																																																																																																																							Healthcare Finance, Inc., as Agent and a Lender; and the other financial
																																																																																																																																																																																																																																																																																																																																																																							institutions who hereafter become parties to the Agreement, as Lenders;
																																																																																																																																																																																																																																																																																																																																																																							and AHC Borrower I, Inc., as Borrower (exhibits and schedules to this
																																																																																																																																																																																																																																																																																																																																																																							agreement have been omitted; the Registrant agrees to furnish
																																																																																																																																																																																																																																																																																																																																																																							supplementally to the Commission, upon request, a copy of these exhibits
																																																																																																																																																																																																																																																																																																																																																																							and schedules) (incorporated by reference to Exhibit 10.1 to the
																																																																																																																																																																																																																																																																																																																																																																							Registrant's Form 10-Q for the period ending September 30, 2000).
|10.127 |  | First Amendment to Loan Agreement dated as of December
																																																																																																																																																																																																																																																																																																																																																																									31, 2000 between Heller Healthcare Finance, Inc. and AHC Borrower I, Inc.
																																																																																																																																																																																																																																																																																																																																																																									(incorporated by reference to Exhibit 10.142 to the Registrant's Form 10-K
																																																																																																																																																																																																																																																																																																																																																																									for the year ended December 31, 2000).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|10.128 |  | Form of Deed of Trust, Assignment of Leases, Rents and
																																																																																																																																																																																																																																																																																																																																																																											Profits, Security Agreement and Financing Statement ("Heller Mortgage/Deed
																																																																																																																																																																																																																																																																																																																																																																											of Trust") dated as of August 28, 2000 between AHC Borrower I, Inc, as
																																																																																																																																																																																																																																																																																																																																																																											Borrower; Joyce J. Gorman, as Trustee, for the benefit of Heller
																																																																																																																																																																																																																																																																																																																																																																											Healthcare Finance, Inc, in its individual capacity and as Agent for
																																																																																																																																																																																																																																																																																																																																																																											Lenders (incorporated by reference to Exhibit 10.2 to the Registrant's
																																																																																																																																																																																																																																																																																																																																																																											Form 10-Q for the period ending September 30, 2000).                                                                                                                                                                                                                                                                                                                                                                                                                               
|10.129 |  | Amended Schedule of Heller Mortgages and Deeds of Trust
																																																																																																																																																																																																																																																																																																																																																																													which are substantially in the form of Heller Mortgage/Deed of Trust
																																																																																																																																																																																																																																																																																																																																																																													referenced above (filed herewith).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|10.130 |  | Office Lease dated December 31, 2001 between the
																																																																																																																																																																																																																																																																																																																																																																															Registrant and Innovation Partners, LLC (filed herewith).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|10.131 |  | Form of Promissory Note dated December 31, 2001 from the
																																																																																																																																																																																																																																																																																																																																																																																	Registrant to the Payees set forth in the schedule attached thereto
																																																																																																																																																																																																																																																																																																																																																																																	(filed herewith).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10.132 |  | Form of Subordinated Promissory Note dated December 31,
																																																																																																																																																																																																																																																																																																																																																																																			2001 from the Registrant to the Payees set forth in the schedule attached
																																																																																																																																																																																																																																																																																																																																																																																			thereto (filed herewith).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|11.1   |  | Statement re: Computation of Per Share
																																																																																																																																																																																																																																																																																																																																																																																					Earnings.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|21.1   |  | Subsidiaries of the Registrant (filed herewith)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|23.1   |  | Consent of KPMG	LLP (filed herewith).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      





1. Schedule of Valuation and Qualifying Accounts

|                                                |             |   | Additions    |   |            |  |              |   |              |  
|----------------------------------------------- | ----------- | - | ------------ | - | ---------- |  | ------------ | - | ------------ | -
|                                                | Balance at  |   | Charged to   |   | Write-offs |  |              |   | Balance at   |  
|                                                | Beginning   |   | Costs and    |   | and        |  | Other        |   | End of       |  
|                                                | of Period   |   | Expenses     |   | Disposals  |  | Changes      |   | Period       |  
|                                                |             |   |              |   |            |  |              |   |              |  
|Allowance for Uncollectible Accounts Receivable |             |   |              |   |            |  |             
|                                                |             |   |              |   |            |  |              |   |              |  
|Year Ended December 31, 1999                    | (501,418    | ) | (2,524,699   | ) | 164,730    |  | ---          |   | (2,861,387   | )
|                                                |             |   |              |   |            |  |              |   |              |  
|Year Ended December 31, 2000                    | (2,861,387  | ) | (2,012,785   | ) | 2,465,267  |  | ---          |   | (2,408,905   | )
|                                                |             |   |              |   |            |  |              |   |              |  
|Year Ended December 31, 2001                    | (2,408,905  | ) | (3,771,337   | ) | 1,651,007  |  | ---          |   | (4,529,235   | )
|                                                |             |   |              |   |            |  |              |   |              |  
|Tax Valuation Allowance                         |             |   |              |   |            |  |              |   |              |  
|                                                |             |   |              |   |            |  |              |   |              |  
|Year Ended December 31, 1999                    | ---         |   | ---          |   | ---        |  | ---          |   | ---          |  
|                                                |             |   |              |   |            |  |              |   |              |  
|Year Ended December 31, 2000                    | ---         |   | ---          |   | ---        |  | (53,042,000  | ) | (53,042,000  | )
|                                                |             |   |              |   |            |  |              |   |              |  
|Year Ended December 31, 2001                    | (53,042,000 | ) | ---          |   | ---        |  | (108,405,000 | ) | (161,447,000 | )
|                                                |             |   |              |   |            |  |              |   |              |  
|Reserve for Loss on Disposal                    |             |   |              |   |            |  |             
|                                                |             |   |              |   |            |  |              |   |              |  
|Year Ended December 31, 1999                    | ---         |   | ---          |   | ---        |  | ---          |   | ---          |  
|                                                |             |   |              |   |            |  |              |   |              |  
|Year Ended December 31, 2000                    | ---         |   | ---          |   | ---        |  | ---          |   | (22,163,468  | )
|                                                |             |   |              |   |            |  |              |   |              |  
|Year Ended December 31, 2001                    | (22,163,468 | ) | (161,247,224 | ) | 32,888,982 |  | ---          |   | (150,521,710 | )
|                                                |             |   |              |   |            |  |              |   |             

---

Independent Auditors' Report







The Board of Directors and Stockholders
Alterra Healthcare Corporation



Under the date of March 29, 2002 we reported on the
consolidated balance sheets of Alterra Healthcare Corporation and subsidiaries
as of December 31, 2001 and 2000, and the related consolidated statements of
operations, stockholders' equity, and cash flows for each of the years in the
three-year period ended December 31, 2001, as contained in the annual report on
Form 10-K for the year 2001. In connection with our audits of the aforementioned
consolidated financial statements, we also audited the related financial
statement schedule in Part IV, Item 14(2) of the annual report on Form 10-K for
the year 2001. This financial statement schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion on this
financial statement schedule based on our audits.



In our opinion, such financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as a
whole, presents fairly, in all material respects, the information set forth
therein.



The audit report on the consolidated financial statements of
Alterra Healthcare Corporation and subsidiaries referred to above contains an
explanatory paragraph that states that the Company has suffered recurring losses
from operations and was in violation of certain debt covenants and cross
covenants as of December

31, 2001. As a results of the covenant violations and cross
covenant violations, the Company is in default of the related debt.
Additionally, the Company did not make certain scheduled loan principal and
lease payments due in March of 2001. These conditions raise substantial doubt
about the Company's ability to continue as a going concern. The consolidated
financial statements do not include any

adjustments that might result from the outcome of these
uncertainties.







KPMG LLP
Chicago, Illinois
March 29, 2002

---

SIGNATURES



Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Milwaukee, State of Wisconsin, on the 29th day of March, 2002.





|ALTERRA HEALTHCARE CORPORATION                                                           
|-----------------------------------------------------------------------------------------
|                                                                                         
|By:         /s/Mark W. Ohlendorf                                                         
|Mark W. Ohlendorf
Senior Vice President, Chief Financial Officer,
Treasurer and Secretary
|                                                                                         



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





|SIGNATURES                |  | TITLE                                  |  | DATE          
|------------------------- |  | -------------------------------------- |  | --------------
|                          |  |                                        |  |               
|                          |  |                                        |  |               
|/s/ Patrick F. Kennedy    |  |                                        |  |               
|Patrick F. Kennedy        |  | President and Chief Executive Officer  |  | March 29, 2002
|                          |  |                                        |  |               
|                          |  |                                        |  |               
|/s/ Mark W. Ohlendorf     |  | Senior Vice President, Chief Financial |  |               
|Mark W. Ohlendorf         |  | Officer, Treasurer and Secretary       |  | March 29, 2002
|                          |  | (Principal Financial Officer)          |  |               
|                          |  |                                        |  |               
|/s/ Kristin A. Ferge      |  | Vice President and Assistant Secretary |  |               
|Kristin A. Ferge          |  | (Principal Accounting Officer)         |  | March 29, 2002
|                          |  |                                        |  |               
|                          |  |                                        |  |               
|Jerry L. Tubergen         |  | Chairman of the Board and Director     |  | March 29, 2002
|                          |  |                                        |  |               
|/s/ Timothy J. Buchanan   |  |                                        |  |               
|Timothy J. Buchanan       |  | Director                               |  | March 29, 2002
|                          |  |                                        |  |               
|/s/ Gene E. Burleson      |  |                                        |  |               
|Gene E. Burleson          |  | Director                               |  | March 29, 2002
|                          |  |                                        |  |               
|/s/ William E. Colson     |  |                                        |  |               
|William E. Colson         |  | Director                               |  | March 29, 2002
|                          |  |                                        |  |               
|/s/ Ronald G. Geary       |  |                                        |  |               
|Ronald G. Geary           |  | Director                               |  | March 29, 2002
|                          |  |                                        |  |               
|/s/ Robert Haveman        |  |                                        |  |               
|Robert Haveman            |  | Director                               |  | March 29, 2002
|                          |  |                                        |  |               
|/s/ William G. Petty, Jr. |  |                                        |  |               
|William G. Petty, Jr.     |  | Director                               |  | March 29, 2002
|                          |  |                                        |  |               
|/s/ Natalie Townsend      |  |                                        |  |               
|Natalie Townsend          |  | Director                               |  | March 29, 2002