<PAGE>   1

                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-K/A
                                 Amendment No. 1

(Mark One)

[X]      Amendment to Annual Report pursuant to Section 13 or 15(d) of the
         Securities Exchange Act of 1934 for the fiscal year ended
         December 31, 2000

                                       OR

[ ]      Transition Report pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934 for the transition period from
                         to                .
         ----------------  ----------------

                         COMMISSION FILE NUMBER 1-11999

                         ALTERRA HEALTHCARE CORPORATION
             (Exact Name of Registrant as Specified in its Charter)

                DELAWARE                              39-1771281
        (State of Incorporation)          (I.R.S. Employer Identification No.)

        10000 INNOVATION DRIVE
              MILWAUKEE, WI                             53226
(Address of Principal Executive Offices)              (Zip Code)

                                 (414) 918-5000
                         (Registrant's Telephone Number)

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

TITLE OF EACH CLASS                        NAME OF EXCHANGE ON WHICH REGISTERED

Common Stock, Par Value
    $.01 Per Share                                American Stock Exchange
5.25% Convertible Subordinated
    Debenture Due 2002                            American Stock Exchange
Series A Junior Preferred Stock
    Purchase Rights                               American Stock Exchange


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

                                      NONE

         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
amendments to this Form 10-K. [ ]

         The aggregate market value of the voting stock held by non-affiliates
of the Registrant was $12,143,968 as of March 23, 2001. The number of
outstanding shares of the Registrant's Common Stock was 22,109,810 shares as of
March 23, 2001.


<PAGE>   2

                                EXPLANATORY NOTE

         This Report on Form 10-K/A amends and restates in their entirety the
following Items of the Annual Report on Form 10-K of Alterra Healthcare
Corporation (the "Company") for the fiscal year ended December 31, 2000 (the
"2000 Form 10-K").

         Items 10, 11, 12 and 13 of the 2000 Form 10-K have been amended to
provide information which was to be incorporated by reference to the Company's
proxy statement to be filed with the Securities and Exchange Commission in
connection with the 2001 Annual Meeting of Stockholders.


                                       2

<PAGE>   3

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

<TABLE>
<CAPTION>
            NAME                                  AGE                                 POSITION
            ----                                  ---                                 --------
<S>                                               <C>             <C>
Timothy J. Buchanan                               47              Director

Gene E. Burleson                                  60              Director

William E. Colson                                 59              Director

Robert Haveman                                    53              Director

William F. Lasky                                  46              Vice Chairman

William G. Petty, Jr.                             55              Director

Natalie K. Townsend                               40              Director

Jerry L. Tubergen                                 47              Chairman of the Board

Steven L. Vick                                    42              Chief Operating Officer, President and Director

Anthony R. Geonnotti, Jr.                         42              Senior Vice President

Mark W. Ohlendorf                                 41              Senior Vice President, Chief Financial Officer,
                                                                  Treasurer and Secretary
</TABLE>

         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 with Steven Vick in 1991 until
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 health care
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 health care 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. 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.

         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 F. LASKY has served as a director of the Company since 1993.
Mr. Lasky has served as Vice Chairman of the Company since November 2000. Mr.
Lasky served as Chief Executive Officer of the Company from April 1996 to
November 2000 and served as President of the Company from December 1993 to
October 1997 and from August 1998 to November 2000. Mr. Lasky is a member of the
National Governing Board and a former Chairman of The Assisted Living Federation
of America and is a licensed nursing home administrator.


                                       3

<PAGE>   4

         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 health care 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.

         STEVEN L. VICK has served as the President of the Company since January
2001 and as the Chief Operating Officer and a director of the Company since
October 1997. He served as the President and a director of Sterling since he
co-founded Sterling with Mr. Buchanan in 1991 until subsequent to Sterling's
merger with the Company in October 1997. Mr. Vick previously practiced as a
certified public accountant specializing in health care consulting.

         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.

         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 9.75% Cumulative Convertible Pay-In-Kind Preferred Stock ("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. The Company has agreed to nominate Steven L. Vick to serve as a
director of the Company during the term of his employment by the Company
pursuant to his employment agreement with the Company. Pursuant to his
consulting agreement with the Company, William F. Lasky and the Company have
agreed that Mr. Lasky will serve on the Board of Directors of the Company during
the first six months of his consulting agreement. See Item 11, "Executive
Compensation - Consulting and Employment Agreements." 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 Exchange Act 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 2000, except that Mr. Lasky did not report the disposition
of 65,038 shares of Common Stock in May 2000 by a corporation that he


                                       4

<PAGE>   5

may be deemed to control until he filed a Form 4 on October 14, 2000, and Mr.
Geonnotti did not report his purchase of 1,000 shares of Common Stock in July
2000 until he filed his Form 4 in October 2000.

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, 2000 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").

<TABLE>
<CAPTION>
                                                                                                    LONG-TERM
                                                                                                   COMPENSATION
                                                                                                    AWARDS (1)
                                                                                                    SECURITIES
                                                                                 OTHER ANNUAL        UNDERLYING
    NAME AND PRINCIPAL POSITION         YEAR        SALARY($)    BONUS($)        COMPENSATION        OPTIONS(#)
    ---------------------------         ----        ---------    --------        ------------      -------------
<S>                                     <C>         <C>          <C>             <C>               <C>
Steven L. Vick                          2000        $269,415     $225,000                 --              --
President and Chief Operating           1999         273,367           --                 --          44,757
Officer                                 1998         229,327           --                 --              --

Mark W. Ohlendorf                       2000         278,919      225,000                 --              --
Chief Financial Officer and             1999         221,743           --                 --              --
Senior Vice President                   1998         200,254           --                 --          30,811

Anthony R. Geonnotti, Jr.               2000         169,300       20,183                 --          10,000
Senior Vice President                   1999         112,173       12,107                 --              --
                                        1998         117,101       14,880                 --          15,000

William F. Lasky                        2000         373,543      130,000           $678,071              --
Vice Chairman, Former President         1999         442,920           --                 --         227,027
and Chief Executive Officer             1998         360,469           --                 --              --

G. Faye Godwin (2)                      2000         196,506           --                 --              --
Former Executive Vice President         1999         214,685           --                 --          28,378
                                        1998         182,200           --                 --              --

Paul C. Pebley (3)                      2000         176,998       30,000                 --          24,385
Former Senior Vice President            1999         158,025        9,167                 --              --
                                        1998          64,264           --                 --           7,297
</TABLE>

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

(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. Lasky, all of which, to the extent not exercised
         by November 30, 2000, have expired.
(2)      Ms. Godwin resigned as an executive officer of the Company in March
         2001.
(3)      Mr. Pebley resigned as an executive officer of the Company in April
         2001.


                                       5

<PAGE>   6

OPTIONS GRANTED IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
                                                       SECURITIES       RESTRICTED STOCK         SECURITIES
                                STOCK OPTIONS          UNDERLYING           OPTIONS              UNDERLYING
NAME                              GRANTED($)        OPTIONS/SARS(#)        GRANTED($)          OPTIONS/SARS(#)
----                            -------------       ---------------     ----------------       ---------------
<S>                             <C>                 <C>                 <C>                    <C>
Steven L. Vick                            --                 --                 --                  --

William F. Lasky                          --                 --                 --                  --

Mark W. Ohlendorf                         --                 --                 --                  --

G. Faye Godwin                            --                 --                 --                  --

Paul C. Pebley                    138,750.65             24,385                 --                  --

Anthony R. Geonnotti, Jr           56,900.00             10,000                 --                  --
</TABLE>

2000 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 2000 and the value at
December 31, 2000 of unexercised options held by each such officer.

<TABLE>
<CAPTION>
                                                                     NUMBER OF SECURITIES
                                    NUMBER OF                       UNDERLYING UNEXERCISED            VALUE OF
                                 SHARES ACQUIRED      VALUE           OPTIONS AT 12/31/00            UNEXERCISED
NAME                              ON EXERCISE        REALIZED     EXERCISABLE/UNEXERCISABLE(1)     IN-THE-MONEY(2)
----                             ---------------     --------     ----------------------------     ---------------
<S>                              <C>                 <C>          <C>                              <C>
Steven L. Vick                          --              --                44,378/22,379                   0/0

William F. Lasky                        --              --                     --                          --

Mark W. Ohlendorf                       --              --              133,766/18,194                    0/0

G. Faye Godwin                          --              --                     --                          --

Paul C. Pebley                          --              --                     --

Anthony R. Geonnotti, Jr.               --              --                     --                          --
</TABLE>

(1)      All of the unexercised options held by Messrs. Vick and Ohlendorf, as
         of December 31, 2000, expired on January 15, 2001.

(2)      Calculated on the basis of the fair market value of the underlying
         securities on December 31, 2000 ($1.00 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 AGREEMENT WITH WILLIAM F. LASKY. In November 2000, the
Company and Mr. Lasky entered into a consulting agreement simultaneously with
Mr. Lasky's resignation as President and Chief Executive Officer of the Company
and his election as Vice Chairman of the Company. Pursuant to the terms of this
consulting agreement, Mr. Lasky has agreed to provide consulting services to the
Company for a one-year period ending in November 2001. Pursuant to the
consulting agreement, the Company paid Mr. Lasky $600,000 in November 2000 in
consideration of the termination of Mr. Lasky's prior employment agreement and
in lieu of payment of certain accrued employment-related obligations of the
Company to Mr. Lasky. During the one-year term of the consulting


                                       6

<PAGE>   7

agreement, the Company has also agreed to pay Mr. Lasky the amount of $38,750
per month and to continue his benefits under the Company's health, life and
long-term disability insurance plans. During the first six months of the
consulting term, the Company has agreed that Mr. Lasky shall continue to serve
on the Company's Board of Directors unless the Chairman of the Board shall
request his resignation. The consulting agreement also provides that Mr. Lasky
will not disclose certain proprietary information belonging to the Company or
otherwise compete with the Company during the one-year term of the consulting
agreement. In connection with the execution of the consulting agreement, the
Company agreed to release a general partnership that is 50% owned and controlled
by Mr. Lasky from certain obligations to pay the Company accrued management fees
and advances, conditioned upon the Company not terminating the consulting
agreement for "good cause" during its one-year term. See Item 13, "Certain
Relationships and Related Transactions."

         From January 1997 to November, 2000, the Company and Mr. Lasky were
parties to an employment agreement. The employment agreement provided that Mr.
Lasky 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 $400,000.
Pursuant to the employment agreement, Mr. Lasky was entitled to receive
incentive bonuses for up to 50% of his base salary payable, at the sole
discretion of the Board, if certain objectives are achieved. The employment
agreement also provided for the granting of stock options and certain other
benefits typical in employment agreements with a senior executive officer.
During the term of his employment by the Company pursuant to this agreement, the
Company agreed to nominate Mr. Lasky to serve as a director of the Company.

         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
serves the Company as Chief Operating 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. Vick. The employment agreement
provides 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, $365,000 in 2002 and $375,000 in 2003. Pursuant to the
agreement, Mr. Vick received an incentive bonus for 2000 in the amount of
$125,000 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. Vick 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. Vick'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. Vick 33,378 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. Vick 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. Vick'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 12 months (unless arising out of his death or
disability, in which event such payments shall be made over an 18 month term).
During the term of his employment by the Company pursuant to this agreement, the
Company has agreed to nominate Mr. Vick to serve as a director of the Company.
Finally, the employment agreement provides that Mr. Vick will not disclose
certain proprietary information belonging to the Company or otherwise compete
with the Company for a period of 12 months following his termination of
employment except for termination by the Company without cause or by Mr. Vick
for "good reason."

         From October 1997 to November 2000, the Company and Mr. Vick were
parties to an employment agreement. Pursuant to this employment agreement, Mr.
Vick serves the Company as Chief Operating Officer. 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
$225,000. Pursuant to the employment agreement, Mr. Vick was entitled to receive
incentive bonuses payable, at the sole discretion of the Board, if certain
objectives are achieved. The employment agreement also provided for the granting
of stock options at the same time and on the same terms as grants to the
Company's other senior executives and certain other benefits typical in
employment agreements with a senior executive officer. 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.

         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


                                       7

<PAGE>   8

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 an incentive bonus for
2000 in the amount of $125,000 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 12 months following his termination of employment except for
termination by the Company without cause or by Mr. Ohlendorf for "good reason."

         From October 1997 to November 2000, the Company and Mr. Ohlendorf were
parties to an employment agreement. The agreement provided 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 $190,000. Pursuant
to the agreement, Mr. Ohlendorf was entitled to receive incentive bonuses
payable, at the sole discretion of the Board, if certain objectives are
achieved. The employment agreement also provided for the granting of certain
stock options and certain other benefits typical in employment agreements with
senior executive officers.

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 April 10,
2001 options to purchase an aggregate of 1,737,831 shares of Common Stock were
granted and outstanding at a weighted average exercise price of $11.84 per
share, of which options to purchase 534,751 shares were exercisable at such
date.

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 April 10, 2001 by: (i)
each person known by the Company to own more than 5% of the outstanding shares
of Common 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


                                       8

<PAGE>   9

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.

<TABLE>
<CAPTION>
                                                                     SHARES OF COMMON
                                                                    STOCK BENEFICIALLY
                                                                         OWNED(1)                 SERIES A STOCK(2)
                             NAME                                  NUMBER        PERCENT        NUMBER        PERCENT
                             ----                                ----------      -------       --------       -------
<S>                                                              <C>             <C>           <C>            <C>
Jerry L. Tubergen (3)(4)+.....................................   12,850,410       40.4%        1,205,776       91.2%

Richard M. DeVos, Jr. (3)(4). ................................   12,715,400       40.0         1,205,776       91.2

Robert Haveman (3)(5)+........................................   10,513,828       33.0         1,205,776       91.2

Elsa D. Prince (3)(5).........................................   10,437,367       32.8         1,205,776       91.2

The Toronto-Dominion Bank (6).................................   10,404,250       32.0

HBK Investments L.P. (8)......................................    9,834,375       30.8

RDVEPCO, L.L.C.(3)(7).........................................    9,716,026       30.5

AR Investments, Ltd.(9).......................................    2,167,900        9.8

Dimensional Fund Advisors(10).................................    1,860,900        8.4

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)+.....................................      811,934        3.7

Steven L. Vick (14)+++........................................      735,573        3.3

Holiday Retirement 2000, LLC (3)(15)..........................      560,846        2.5           116,346        8.8

William F. Lasky +............................................      344,519        1.6

William G. Petty, Jr.(16)+....................................      137,658          *

Mark W. Ohlendorf++............................................      75,980          *

Gene E. Burleson (17)+........................................       48,167          *

Anthony R. Geonnotti, Jr. (18)++..............................       13,782          *

William E. Colson (15)+.......................................        2,500          *

Natalie Townsend (19)+........................................            0          *

All Executive Officers and Directors as a Group
(11 Persons)(20)..............................................   15,190,368       44.5
</TABLE>

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

+        Director of the Company.
++       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.


                                       9

<PAGE>   10

(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 9.75% Convertible
         Pay-In-Kind Debentures due 2007 (collectively, the "Debentures") with a
         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 a 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.

(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 7.0% 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 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


                                       10

<PAGE>   11

         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 7.0% 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 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)      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) and (4) 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 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.

(8)      HBK Master Fund L.P. ("HBK Master Fund") owns $35,096,000 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 8,774,000
         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% convertible subordinated
         debentures of the Company due 2006 (the "6.75% Debentures"), 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.


                                       11

<PAGE>   12

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

(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, 2001, 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, 11th 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) 39,027 shares issuable upon the
         exercise of options that are exercisable on or within 60 days of April
         10, 2001.

(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)     Holiday, a limited liability company organized for the principal
         purpose of participating in the Equity Transaction with Alterra,
         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


                                       12

<PAGE>   13

         Holiday is 3131 Elliott Avenue, Suite 500, Seattle, Washington 98121.
         Holiday is managed by Daniel R. Baty, who may be deemed to beneficially
         own the shares of Common Stock and Series A Stock beneficially owned by
         Holiday. William E. Colson holds member interests in Holiday, but
         disclaims beneficial ownership of these shares.

(16)     Mr. Petty's beneficial ownership includes options to acquire 94,628
         shares exercisable within 60 days of April 10, 2001.

(17)     Mr. Burleson's beneficial ownership includes options to acquire 8,141
         shares exercisable within 60 days of April 10, 2001.

(18)     Mr. Geonnotti's beneficial ownership includes options to acquire 11,942
         shares exercisable within 60 days April 10, 2001.

(19)     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 (5) above with respect
         to shares beneficially owned by Toronto-Dominion.

(20)     Includes options to acquire 194,327 shares exercisable within 60 days
         of April 10, 2001.

ITEM 13  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The Company provided payroll processing and financial statement
preparation services to six assisted living residences in Wisconsin for a
partnership that is 50% owned and controlled by Mr. Lasky, the Company's Vice
Chairman. Pursuant to this arrangement, the Company charged an annual fee of
$10,000. Accrued fees owing to the Company by this partnership for previously
provided management services and operating advances were $715,000 and $763,000
at December 31, 1999 and 2000, respectively. These accrued fees and advances
were conditionally released by the Company in connection with the Company
entering into a consulting agreement with Mr. Lasky in November 2000.

         Until it expired in April 1998, the Company was party to a services
agreement with PK & Co., a limited liability company controlled by William G.
Petty, Jr. and John W. Kneen. Pursuant to the services agreement, PK & Co.
provided management, financial and strategic planning services to the Company on
a fee basis, including without limitation, the services of Mr. Petty as Chairman
of the Board. The Company paid fees of $50,000 to PK & Co. in 1999 and has paid
$200,000 of fees to PK & Co. in 2000 relating to services rendered by PK & Co.
and its affiliates in 1999 and 2000. In the future, the Company intends to
continue to utilize PK & Co. and its affiliates to provide similar services on a
project by project basis.

         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, owns approximately 5% of this firm and
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 2000 were $17.0 million.

         In December 1999, the Company entered into a bridge loan arrangement
with RDVEPCO (the "Bridge Lender"), an investment entity owned and controlled by
certain affiliates of the Company (see notes (2), (3), (4) and (6) to the table
under the caption "Security Ownership of Certain Beneficial Owners and
Management"), in connection with the Company's repurchase of 19 Alterra
residences then leased from a health care 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.


                                       13

<PAGE>   14

         In connection with this bridge loan arrangement, the Bridge Lender was
paid commitment and loan fees aggregating $820,000, acquired a $1.0 million
redeemable, convertible preferred stock interest in the Holding Subsidiary and
was given the right to co-invest in certain future Alterra equity transactions
by converting its Tranche A Loan receivable into an equity investment in
Alterra. The Holding Subsidiary preferred stock acquired by the Bridge Lender
accrued dividends at 8% per annum, was convertible at any time after
December 31, 2000 into common shares of the Holding Subsidiary representing
approximately 35% of the outstanding common stock of the Holding Subsidiary and
could be redeemed by Holding Subsidiary at any time for an amount equal to the
fair market value of the Holding Subsidiary preferred stock at that time
provided that such fair market value shall in no event exceed the sum of (i) its
stated value of $1.0 million, (ii) the accrued and unpaid dividends thereon and
(iii) a redemption premium of $1.5 million if redeemed on or before March 31,
2000, increasing by $300,000 per month thereafter.

         In February 2000, the Company borrowed an additional $20.0 million from
the Bridge Lender by amending and increasing the amount borrowed under its
Tranche A Loan. Upon amending the Tranche A Loan, the interest rate on this loan
increased to 10% per annum. As additional security for the Tranche A Loan, the
Company granted the Bridge Lender mortgages on six residences. Of the $20.0
million additional advance on the Tranche A Bridge Loan, $4.1 million was placed
in escrow to facilitate the funding of the remaining construction costs with
respect to the mortgaged residences. A facility fee of $800,000 was paid to the
Bridge Lender upon the closing of the amended Tranche A Bridge 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. Pursuant to the Equity Transaction, on May 31, 2000, the Company
(i) issued 1,140,000 shares of Series A Stock, $34,041,000 in face amount of
Series A Debentures and $6,617,000 of Series B Debentures to the Bridge Lender
as payment in full of principal and accrued interest on the Tranche A Loan and
(ii) issued $3,137,000 in face amount of Series B Debentures to purchase the
Holding Company preferred stock held by the Bridge Lender based on the
redemption price of such preferred stock.

         Pursuant to the Equity Transaction consummated on May 31, 2000, the
Company issued Series A Stock and Series A, B and C Debentures to affiliates of
certain directors and principal stockholders and debenture holders of the
Company. See "Security Ownership of Certain Beneficial Owners and Management."
The parties participating in the Equity Transaction consummated on May 31, 2000,
and the consideration paid by such parties for securities issued to them by the
Company, are summarized below:

-        As described above, RDVEPCO acquired shares of Series A Stock and
         Series A and B Debentures in full satisfaction of amounts due RDVEPCO
         pursuant to the Tranche A Loan and in exchange for the Holding Company
         preferred stock.

-        The Company issued $20,896,000 in face amount of Series A and B
         Debentures to Group One, an investment entity formed to develop and own
         a portfolio of 14 assisted living residences managed by the Company. By
         acquiring Group One's equity interest in this portfolio, the Company
         acquired 100% ownership of this 14 residence portfolio. Group One's
         interest in this portfolio was valued at an amount equal to Group One's
         funded equity investment in this portfolio. Upon the subsequent
         liquidation of Group One, RDV Assisted Living, L.L.C., and the Prince
         Trust received $9,110,500 and $4,179,000, respectively, of face amount
         of Series A and B Debentures issued to Group One.

-        The Company issued $9,793,500 and $4,878,000 in face amount of Series B
         debentures to the Prince Trust and RDVMC in exchange for the transfer
         to the Company of their respective equity interests in an investment
         entity formed to invest in joint ventures operating a portfolio of 26
         residences managed by the Company (the "TPI-HCR Joint Venture"). These
         equity interests were valued, for the purpose of this exchange, at an
         amount intended to be equivalent to the allocable proceeds that would
         have been payable to these parties had the Company exercised its call
         option for the TPI-HCR Joint Venture and the investment entity were
         liquidated. This call option provision provided for a return of such
         parties' capital contribution to the TPI-HCR Joint Venture plus a 25%
         compounded annual rate of return.

-        The Company issued $28,096,000 in face amount of Series C Debentures to
         the HBK Master Fund in consideration of the transfer to the Company of
         $31,706,000 in face amount of the Company's 5.25% Debentures due
         December 15, 2002 and $9,645,000 in face amount of the Company's 7.0%
         Debentures due June 1, 2004.


                                       14

<PAGE>   15

-        In consideration of a cash investment by these parties, the Company
         issued (i) 110,000 shares of Series A Stock and $5,560,000 in face
         amount of Series A and B Debentures to Holiday, (ii) $7,000,000 in face
         amount of Series C Debentures to HBK Master Fund and (iii) $48,003,000
         in face amount of Series B Debentures to RDVEPCO.

         In August 2000, the Company issued $29.9 million of Series B Debentures
to Toronto-Dominion in consideration of a $29.9 million cash investment, which
resulted in the Equity Transaction having an aggregate transaction amount of
$203 million. In 2000 the Company paid commitment fees of $2,739,000 and
$261,000 to RDVEPCO and Holiday, respectively, in connection with the Equity
Transaction.

         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 may be extended
by an additional six months whereupon the bridge loan will become 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 the greater of (i) $75 per share of Series B Stock (a
common stock equivalent price of $0.75 per share) and (ii) if during the
original six month term of the bridge loan the Company has sold any shares of
common stock or Series B Stock (or any securities convertible into common stock
or Series B Stock) in a transaction resulting in gross proceeds of in excess of
$5 million, the equivalent price per share of such common stock or Series B
preferred stock (or the conversion price thereof, whichever is applicable).
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 Stock. Like the Series B 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 $213.8 million of outstanding 9-3/4% convertible pay-in-kind
debentures and preferred stock originally issued in the Equity Transaction, upon
the issuance of these warrants the effective conversion price for these
debentures and the Series A Stock decreased from $4.00 to $3.36 per share of
common stock for the Series A and Series C Debentures and from $400 to $336 per
share of Series B 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 $3.36 and $336 per share, respectively.) In the event the bridge loan becomes
convertible or the Company issues equity or equity-linked securities at prices
that are below the adjusted conversion prices for the 9-3/4% convertible
debentures, the effective conversion prices will be reduced further pursuant to
the anti-dilution provisions of these debentures.


                                       15

<PAGE>   16

                                    SIGNATURE

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


                                       ALTERRA HEALTHCARE CORPORATION.



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


Dated: April 30, 2001