Exhibit 10.4

MEMORANDUM OF UNDERSTANDING

THIS MEMORANDUM OF UNDERSTANDING (this "Agreement") is entered into as of October 7, 2002 (the "Effective Date") among ALTERRA HEALTHCARE CORPORATION, a Delaware corporation ("Guarantor"), ALS LEASING, INC., a Delaware corporation ("Tenant"), and JER/NHP SENIOR LIVING ACQUISITION, LLC, a Delaware limited liability company ("Landlord").

R E C I T A L S

A.     Landlord and Tenant have entered into that certain Master Lease dated as of even date herewith (the "Lease") pursuant to which Tenant shall lease from Landlord the Premises as described therein.  Initially capitalized terms used but not otherwise defined in this Agreement shall have the meanings given to them in the Lease.

B.     Pursuant to its separate Guaranty of Master Lease and Letter of Credit Agreement of even date herewith (the "Guaranty"), Guarantor has unconditionally guarantied to Landlord, among other things, the performance by Tenant under the Lease.

C.     It is presently contemplated by Guarantor and Tenant that Guarantor (but not Tenant) may file a voluntary petition for protection under Chapter 11 of the United States Bankruptcy Code (the "Bankruptcy Code").  Tenant and Guarantor have requested that Landlord forbear from exercising certain remedies available to it upon a bankruptcy filing by or against Guarantor under the Lease and Guaranty.

D.     Guarantor, Tenant and Landlord desire to set forth certain mutual understandings and agreements concerning Guarantor's potential filing under the Bankruptcy Code, and the effect of the same under the Lease and Guaranty.

A G R E E M E N T

NOW, THEREFORE, in consideration of the foregoing Recitals (which by this reference are incorporated herein), and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties agree as follows:

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THIS AGREEMENT DOES NOT CONSTITUTE (A) A FORBEARANCE FOR ANY ACT OF BANKRUPTCY OR SIMILAR ACT BY TENANT, OR (B) A CONSENT BY LANDLORD TO ANY PLAN OF REORGANIZATION IN BANKRUPTCY OF GUARANTOR, INCLUDING ONE THAT IS A CONFORMING PLAN, WHICH CONSENT COULD BE SET FORTH ONLY IN A MORE DEFINITIVE LOCK-UP AGREEMENT.

[Signatures begin on next page.]

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IN WITNESS WHEREOF, this Agreement has been executed by Tenant, Guarantor and Landlord as of the date first written above.

"TENANT"

ALS LEASING, INC.,
a Delaware corporation

By:/s/ Kristin A. Ferge
Name:  Kristin A. Ferge
Title:    Vice President

Witness:/s/ Joyce Hansen          Witness:/s/ Lawanna Zenobia



"GUARANTOR"

ALTERRA HEALTHCARE CORPORATION,
a Delaware corporation

By:/s/ Kristin A. Ferge
Name:  Kristin A. Ferge
Title:    Vice President

Witness:/s/ Joyce Hansen          Witness:/s/ Lawanna Zenobia

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"LANDLORD"

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

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

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

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

Witness:Mark L. Desmond          Witness:Denise Munoz

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