FIFTH AMENDMENT TO LOAN AGREEMENT AND DOCUMENTS


         THIS FIFTH  AMENDMENT  TO LOAN  AGREEMENT  AND  DOCUMENTS,  dated as of
December 21, 1998 (this  "Amendment"),  is entered into by and between BROOKDALE
LIVING COMMUNITIES,  INC., a Delaware corporation (the "Borrower"),  and LaSALLE
NATIONAL BANK, a national banking association (the "Bank").

                                   WITNESSETH

         WHEREAS,  Borrower has previously  executed and delivered to the Bank a
certain  Note dated April 27,  1998 in the  original  principal  amount of up to
Fifteen  Million Dollars  ($15,000,000.00)  (the "Original  Note")  evidencing a
certain loan (the "Loan") set forth more fully in and governed by a certain Loan
Agreement  of that same date to which  the Bank is also a party  (the  "Original
Loan Agreement");

         WHEREAS,  the Loan was subsequently  modified and amended by Borrower's
execution and delivery to the Bank of a certain  Amended and Restated Note dated
July 16, 1998 increasing the principal amount of the Loan by $10,000,000.00,  on
an interim basis only, from  $15,000,000.00 to $25,000,000.00  (the "Amended and
Restated Note") and a certain First Amendment to Loan Agreement and Documents of
that same date to which the Bank is also a party (the  "First  Amendment")  that
(a) increased the principal  amount of the Loan on an interim basis as aforesaid
and (b)  permitted  a portion of the Loan to be  reserved  for the  issuance  of
standby  Letters of Credit by the Bank to and for the benefit of  municipalities
and other  governmental  units in connection with projects developed by Borrower
from time to time as set forth more fully therein;

         WHEREAS,  the Loan was subsequently  modified and amended by Borrower's
execution  and  delivery  to the  Bank of a  certain  Second  Amendment  to Loan
Agreement and Documents dated October 14, 1998 to which the Bank is also a party
(the  "Second  Amendment")  wherein  (a) the Bank  consented  to the  Borrower's
proposed issuance of a convertible  subordinated and unsecured note to OZ Master
Fund, Ltd. in the principal amount of Ten Million Dollars ($10,000,000.00),  (b)
the Bank  permitted  the Borrower to guarantee  financing  from other  financial
institutions  to certain  Subsidiaries  of Borrower in  connection  with certain
development  projects  located in New York,  New York (Battery Park City),  Glen
Ellyn,  Illinois  and  Raleigh,  North  Carolina,  which  projects  were  to  be
originally  financed  by  Nomura  Asset  Capital  Corporation,  (c) the Event of
Default set forth in Section  7.01(O) of the Loan  Agreement  was  modified  and
restructured,  and (d) the  Interim  Maturity  Date was  extended to November 3,
1998;

         WHEREAS,  the Loan was subsequently  modified and amended by Borrower's
execution  and  delivery  to the  Bank  of a  certain  Third  Amendment  to Loan
Agreement and Documents dated October 20, 1998 to which the Bank is also a party
(the "Third  Amendment")  wherein (a) the Maximum  Revolving Loan Commitment was
frozen at  $24,953,750.00,  (b) the  "Interim  Maturity  Date" was  extended  to
November 3, 1998,  (c) it was agreed that, on the Interim  Maturity Date (x) the
outstanding  principal balance of the Loan was to be reduced to  $10,000,000.00,
and (y) the principal  amount of the Loan and Maximum  Revolving Loan Commitment
were  to  be  decreased  from   $25,000,000.00   to  an  amount  not  to  exceed
$10,000,000.00,  (d) the Interim Interest Rate and the Revised Default Rate were
adjusted,  and (e)  certain  additional  changes to the Maximum  Revolving  Loan
Commitment  were mandated based upon the Stock Price of the Company from time to
time,  all of the  foregoing as set forth more fully in and subject to the terms
and conditions of the Third Amendment;



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         WHEREAS,  the Loan was subsequently  modified and amended by Borrower's
execution  and  delivery  to the  Bank of a  certain  Fourth  Amendment  to Loan
Agreement and Documents dated November 3, 1998 to which the Bank is also a party
(the "Fourth Amendment") wherein (a) the "Interim Maturity Date" was extended to
a date  certain  which was the first to occur of (x) the earlier of November 30,
1998, or (y) the date on which Borrower closed on the "Offering," and (b) it was
agreed that, on the Interim Maturity Date (x) the outstanding  principal balance
of the Loan was to be reduced to zero  ($0.00)  provided  that the  Offering had
closed,  (y) the outstanding  principal balance of the Loan was to be reduced to
$10,000,000.00  regardless  of whether  the  Offering  had  closed,  and (z) the
principal  amount of the Loan and Maximum  Revolving Loan  Commitment were to be
decreased  from  $25,000,000.00  to  an  amount  not  to  exceed  $10,000,000.00
regardless of whether the Offering had closed, all of the foregoing as set forth
more fully in and subject to the terms and  conditions  of the Fourth  Amendment
(the  Original Loan  Agreement,  as amended by the First  Amendment,  the Second
Amendment,  the Third Amendment,  and the Fourth Amendment is herein referred to
as the "Loan Agreement");

         WHEREAS,  subject  to the  terms  and  conditions  of  this  Amendment,
Borrower has requested the Bank to increase the principal amount of the Loan and
of the Maximum Revolving Loan Commitment by $5,000,000.00 from $10,000,000.00 to
$15,000,000.00,  to which the Bank is willing to agree  subject to the terms and
conditions set forth herein;

         NOW,  THEREFORE,  in consideration  of the premises,  the covenants and
agreements  herein  contained,  and other good and valuable  consideration,  the
receipt and  sufficiency  of which are hereby  acknowledged,  the parties hereby
agree as follows:

         1.  Incorporation  of Recitals.  The above and  foregoing  recitals are
incorporated into and made a part of this Amendment.  All capitalized terms used
herein,  if not  otherwise  specifically  defined,  shall have the  meanings and
definitions  prescribed  in the Loan  Agreement  and the  Documents  referred to
therein.

         2. Increased Loan  Commitment.  As of the date of this  Amendment,  the
Loan  Agreement and the  Documents are hereby  amended to increase the principal
amount of the Loan and the Maximum Revolving Loan Commitment from $10,000,000.00
to $15,000,000.00.

         3.  Interest  Rate.  Except as  provided  in  Section  2.03 of the Loan
Agreement,  Loan Advances under the Loan  Commitment  shall bear interest at the
Prime Rate plus one-half of one percent (0.50%) per annum.  The Interim Interest
Rate is no longer applicable and accordingly, all references to Interim Interest
Rate in the Loan Agreement are hereby deleted.

         4.  Execution  Note.   Contemporaneous   with  the  execution  of  this
Agreement,  the Borrower has executed and  delivered  Third Amended and Restated
Note in the principal sum of up to $15,000,000.00 evidencing the Loan as amended
by this  Amendment,  which Third  Amended and  Restated  Note shall  replace and
supersede the Second Amended and Restated Note.

         5. Maturity Date. The definition of Maturity Date in the Loan Agreement
is confirmed  and defined to be April 26, 1999.  All  outstanding  Loan Advances
together  with any  accrued but unpaid  interest  thereon and any other costs or
amounts owed to the Bank hereunder shall be due and paid in full on the Maturity
Date.



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         6.  Default  Rate.  Any  Obligation  of the  Borrower  under  the  Loan
Agreement or any of the other Documents  which is not paid when due,  whether at
stated  maturity,  by acceleration  or otherwise,  shall,  without notice,  bear
interest  payable on demand at the  interest  rate then in effect  with  respect
thereto plus three percent (3%). In addition,  after the occurrence of any other
Event of Default  and  delivery to the  Borrower of the Bank's  notice to charge
post-default  interest,  all  Obligations of the Borrowers  hereunder shall bear
interest at the rate provided for in the immediately preceding sentence.

         7. Reaffirmation. To the extent any term(s) or condition(s) in the Loan
Agreement or any of the  Documents  shall  contradict or be in conflict with the
amended terms of the Loan as set forth  herein,  such terms and  conditions  are
hereby deemed modified and amended accordingly,  upon the effective date hereof,
to  reflect  the terms of the Loan as so amended  herein.  All terms of the Loan
Agreement  and the  Documents,  as amended  hereby,  shall be and remain in full
force and effect and shall constitute the legal, valid,  binding and enforceable
obligations of Borrower to the Bank. As of the date of this Amendment,  Borrower
herein  restates,  ratifies and reaffirms  each and every term and condition set
forth in the Loan  Agreement and the Documents as amended  herein.  There are no
other changes to the Documents, including without limitation the Loan Agreement,
except for the changes specifically set forth herein.

         8. No Waiver. No failure or delay on the part of the Bank in exercising
any right,  power or remedy hereunder or under any other Documents shall operate
as a waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy preclude any other or further  exercise  thereof or the exercise
of any other right,  power or remedy hereunder or under any other Document.  The
remedies  herein  provided and under any other  Document are  cumulative and not
exclusive of any remedies provided by law.

         9.  Certification.  To  further  induce  the  Bank to enter  into  this
Amendment, Borrower represents and warrants to the Bank as follows: (a) Borrower
is empowered to perform all acts and things undertaken and done pursuant to this
Amendment and has taken all corporate or other action necessary to authorize the
execution,  delivery and performance of the of this Amendment;  (b) the officers
of Borrower  executing  this  Amendment  have been duly elected or appointed and
have been fully  authorized to execute the same at the time  executed;  (c) this
Amendment,  when executed and  delivered,  will be the legal,  valid and binding
obligation of Borrower, enforceable against it in accordance with its respective
terms; and (d) Borrower is delivering to the Bank contemporaneously  herewith, a
certificate  of Borrower's  Secretary  certifying as to the  resolutions  of the
Executive  Committee of Borrower's  Board of Directors  approving this Amendment
and the  incumbency  and  signatures  of the  officers of Borrower  signing this
Amendment.

         10.  Absence Of Claim.  To  further  induce the Bank to enter into this
Amendment,  Borrower hereby acknowledges and agrees that, as of the date hereof,
there exists no right of offset, defense,  counterclaim or objection in favor of
Borrower as against the Bank with respect to the Obligations to the Bank.

         11.  Illinois  Law To  Govern.  This  Amendment  and  each  transaction
contemplated  hereunder  shall be deemed to be made under and shall be construed
and interpreted in accordance with the laws of the State of Illinois.

         12.  Binding  Effect.  The terms,  provisions  and  conditions  of this
Amendment  shall be binding  upon and inure to the  benefit  of each  respective
party and their respective legal representatives, successors and assigns.



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         IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized,  as of the date
first above written.

                                       BORROWER:

                                       BROOKDALE LIVING COMMUNITIES, INC.


                                    By:  /s/ Darryl W. Copeland, Jr.  
                                    Print Name:  Darryl W. Copeland, Jr. 
                                    Title:  Executive Vice President


ATTEST:

By:  /s/ Robert J. Rudnik
Print Name:  Robert J. Rudnik
Title:  Secretary


                                       BANK:

                                       LaSALLE NATIONAL BANK


                                    By:  /s/ Ann B. O'Shaughnessy
                                    Print Name:  Ann B. O'Shaughnessy
                                    Title:  Assistant Vice President


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