<PAGE>
                                                                   EXHIBIT 10.99
                                 ROFO AGREEMENT


        This ROFO AGREEMENT (this "Agreement") is made as of the 23rd day of
December, 2002 by and among AEW Capital Management, L.P., a Delaware limited
partnership ("AEW"), Sunrise Assisted Living, Inc. ("SALI") Sunrise Assisted
Living Investments, Inc. ("SALII"), Sunrise Assisted Living Management, Inc., a
Virginia corporation ("SALMI") and Sunrise Development, Inc., a Virginia
corporation ("SDI").

                                    RECITALS

        A.      AEW is a member of Seaport Senior Housing Management, LLC
("Seaport") and has an interest in Federal Street Management, LLC ("Federal
Street").


        B.      Seaport is a member of AEW Senior Housing Company, LLC, which,
in turn, is a member with SALII in AL One Investments, LLC and AL U.S.
Development, LLC.

        C.      Federal Street is a member of Federal Street Operating, LLC,
which, in turn, is a member with SALII in Metropolitan Senior Housing, LLC.

        D.      AEW and Sunrise have determined that it is to their mutual
benefit for AEW to have a first opportunity with respect to the development of
Sunrise Development Properties, subject to and upon the terms and conditions
herein set forth.

                                    AGREEMENT

         NOW, THEREFORE, in consideration of the foregoing and the mutual
promises and covenants herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, AEW
and Sunrise hereby agree as follows:

1.       DEFINITIONS.

         1.1.     CERTAIN DEFINITIONS. The following terms shall have the
meanings indicated or referred to below, inclusive of their singular and plural
forms, except where the context requires otherwise.

         "AL U.S. Development Venture Agreement" means that certain Limited
Liability Company Agreement of even date herewith between AEW Senior Housing,
LLC and SALII.

         "Entity" means any general partnership, limited partnership,
corporation, limited liability company, limited liability partnership, joint
venture, trust, business trust, cooperative or association or other comparable
business entity.

         "Notice of Opportunity" means a notice given by Sunrise to AEW with
respect to any Sunrise Development Property pursuant to Section 2 hereof.

         "Person" means any individual or Entity, and the heirs, executors,
administrators, legal representatives, successors and assigns of such Person
where the context so permits.


<PAGE>


         "Preliminary Information" shall mean, with respect to any prospective
Sunrise Development Property, the information and items listed on Exhibit A
attached hereto and incorporated herein.

         "Qualified Sunrise Development Property" shall mean a Sunrise
Development Property which satisfies all of the criteria set forth Exhibit B
attached hereto, as determined by AEW in its reasonable judgment.

         "Related Party" shall mean with respect to any Person, (i) any Person
who directly or indirectly through one or more intermediaries controls, is
controlled by, or is under common control with such Person, or (ii) any Person
in which such Person has a twenty-five percent (25%) or more beneficial interest
or as to which such Person serves as a trustee or general partner or in a
similar fiduciary capacity. A Person shall be deemed to control a Person if it
owns, directly or indirectly, at least twenty-five percent (25%) of the
ownership interest in such Person or otherwise has the power to direct the
management, operations or business of such Person. The term "beneficial owner"
is to be determined in accordance with Rule 13d- promulgated by the SEC under
the Securities Exchange Act of 1934. Notwithstanding the foregoing or any other
provision hereof to the contrary, SALI, SALII, SALMI and SDI shall be deemed to
be Related Parties.

         "Right of First Opportunity" is defined in Section 2 below.

         "ROFO Period" shall mean the period commencing on the date hereof and
expiring on December 31, 2005, subject to the provisions of Section 2(f) below.

         "ROFO Review Period" is defined in Section 2(b) below.

         "Senior Housing Facilities" means assisted living facilities ("ALFs"),
independent living facilities ("ILFs"), dementia care facilities ("DCFs") and
other similar health care related businesses principally providing residential
facilities and related services therein for elderly and disabled persons.

         "Sunrise" shall mean for purposes of this Agreement SALI, SALII, SALMI,
SDI and their respective Related Parties.

         "Sunrise Development Property" shall mean a Senior Housing Facility
under development or proposed to be developed by Sunrise in the United States of
America.

         "Third Party" means any Person who is not a Member or a Related Party
to any Member.

         "Transfer" means to sell, transfer, convey or assign any applicable
property or interest therein, including, without limitation, by means of any
deed or ground lease or to contribute all or any portion of any such property or
interest therein to a joint venture for the purpose of development of such
Property.

         1.2.     OTHER DEFINITIONS. All initially capitalized terms used and
not otherwise defined herein shall have the meanings given to such terms in the
AL U.S. Development Venture Agreement.



                                      -2-
<PAGE>


2.       RIGHT OF FIRST OPPORTUNITY.

         During the ROFO Period, Sunrise shall not Transfer or enter into any
agreement to Transfer, and shall not permit any of its Related Parties to
Transfer or enter into any agreement to Transfer, any Sunrise Development
Property (or any direct or indirect beneficial interest therein [excluding sales
of shares in SALI so long as same is publicly traded on a nationally recognized
exchange]) unless Sunrise shall have provided an opportunity (a "Right of First
Opportunity") to AEW to acquire and develop the Sunrise Development Property as
herein provided. Sunrise is under no obligation to Transfer any Sunrise
Development Property to any Third Party or to AEW, and may develop properties
for its own account if Sunrise so desires (it being expressly agreed, however,
that development of a Sunrise Development Property for Sunrise's "own account"
shall be deemed to mean that the Sunrise Development Property is owned by SALI
or SALII or by an Entity in which SALI or SALII owns all of the ownership
interests). If Sunrise (or its Related Parties) desires to Transfer a Sunrise
Development Property, however, then it shall do so upon the following terms and
conditions:

                  (a)      Before Sunrise Transfers any Sunrise Development
Property during the ROFO Period, Sunrise shall give a Notice of Opportunity to
AEW which shall (i) describe the Sunrise Development Property; (ii) set forth
costs incurred to date in connection with the acquisition, development,
construction and lease-up of the Sunrise Development Property; (iii) set forth a
development budget in form and scope consistent with the "Development Budgets"
used in the AL U.S. Development Venture Agreement (a "Proposed Development
Budget"); (iv) estimate the projected net operating income for the applicable
Sunrise Development Property upon Stabilization thereof; (v) attach a summary of
the Preliminary Information concerning the applicable Sunrise Development
Property in Sunrise's possession or control; and (vi) set forth the terms and
conditions under which Sunrise would be willing to accept investment by a Third
Party in such Sunrise Development Property (the "ROFO Terms and Conditions").
AEW shall have twenty-one (21) days after delivery of the Notice of Opportunity
(the "ROFO Review Period") to review the information (complete copies of which
shall be made available at Sunrise's main office) and to accept the Right of
First Opportunity upon the ROFO Terms and Conditions by notice given to Sunrise
within the ROFO Review Period.

                  (b)      If AEW elects to accept any Right of First
Opportunity by notice given to Sunrise within the applicable ROFO Review Period,
then, within 90 days after the date of notice of such acceptance from the AEW
Member (the date of any such notice of acceptance being referred to as a "ROFO
Acceptance Date"), Sunrise shall Transfer the Sunrise Development Property upon
the ROFO Terms and Conditions to AEW or a joint venture with AEW or its investor
clients, as the case may be, subject to the provisions of Section 2(d) below.

                  (c)      If AEW fails to give notice of its acceptance of any
Right of First Opportunity to Sunrise prior to the expiration of any applicable
ROFO Review Period, then AEW shall be deemed to have waived its Right of First
Opportunity with respect to the Sunrise Development Property, subject to the
provisions of Section 2(d) below.



                                      -3-
<PAGE>

                  (d)      If:

                  (i)      AEW accepts any Right of First Opportunity but the
                           parties are not negotiating in good faith to enter
                           into mutually satisfactory documents effectuating the
                           Transfer ("Transfer Documents") as of the date which
                           is thirty (30) days after the Acceptance Date; or

                  (ii)     AEW accepts any Right of First Opportunity but the
                           parties fail to enter into the Transfer Documents
                           within ninety (90) days after the Acceptance Date; or

                  (iii)    AEW waives or is deemed to have waived any Right of
                           First Opportunity with respect to any Sunrise
                           Development Property pursuant to Section 1(c) above;

then, in any such case, Sunrise shall have the right to Transfer the applicable
Sunrise Development Property to any Third Party at any time without regard to
the provisions of Section 2(a) above, and AEW shall have no further obligations
with respect thereto; provided, however, that, if, after the expiration of the
thirty (30) day period under clause (i) above, the expiration of the ninety (90)
day period under clause (ii) above or the date of waiver or deemed waiver of any
Right of First Opportunity under clause (iii) above, as the case may be, Sunrise
receives any offer from any Third Party which it desires to accept, or makes an
offer to any Third Party, with respect to the Transfer of such Sunrise
Development Property upon terms and conditions that are materially more
favorable to the proposed transferee than the ROFO Terms and Conditions, then
Sunrise shall not Transfer the Sunrise Development Property without again
offering to Transfer the Sunrise Development Property to AEW in accordance with
the provisions of Section 2(a) above (notwithstanding whether the ROFO Period
has expired), except that the ROFO Terms and Conditions shall be the revised to
match the terms and conditions offered to (or by) the Third Party (it being
understood and agreed that the provisions of this Section 2(d) shall also apply
with respect to each such subsequent opportunity notwithstanding whether the
ROFO Period has expired).

                  (e)      All Pursuit Costs incurred by AEW with respect to any
Sunrise Development Property for which a Notice of Opportunity is given by
Sunrise shall be paid by AEW, unless AEW shall exercise its right to purchase
and develop same as set forth herein and actually closes thereon, in which case
such Pursuit Costs shall be joint venture expenses.

                  (f)      Notwithstanding the foregoing or any provision
thereof to the contrary, if AEW shall waive or be deemed to have waived its
Right of First Opportunity with respect to four (4) or more Qualified Sunrise
Development Properties under Section 2(c) above, then Sunrise shall thereafter
have no further obligation to present any Right of First Opportunity to AEW with
respect to any Sunrise Development Property.

                  (g)      The rights of AEW under this Section shall be subject
to the prior rights granted to third parties set forth on Exhibit C attached
hereto and incorporated herein. Sunrise hereby agrees that it shall not modify,
amend or extend any of such prior rights without the prior written consent of
AEW, which may be given or withheld in its sole discretion.


                                      -4-
<PAGE>

3.       REPRESENTATIONS AND WARRANTIES OF SALI.

                  (a)      SALI is a corporation, duly organized and validly
         existing under the laws of the State of Delaware, and to the extent
         necessary, duly qualified to do business in each of the states in which
         a Property is located, with the full power and authority and legal
         right to carry on its business in the manner and in the locations in
         which such business has been and is now being conducted by it, to
         execute and deliver this Agreement and to perform its obligations
         hereunder.

                  (b)      No consent of any third party is required as a
         condition to the entering into this Agreement by SALI other than such
         consent as has been previously obtained.

                  (c)      The execution and delivery of this Agreement has been
         duly authorized by SALI and this Agreement constitutes the valid and
         binding obligation and agreement of SALI, enforceable in accordance
         with its terms (subject to the effect of bankruptcy, insolvency or
         creditor's rights generally, and to limitations imposed by general
         principles of equity).

                  (d)      Neither the execution and delivery of this Agreement,
         nor compliance with the terms and provisions thereof, will result in
         any breach of the terms, conditions or provisions of, or conflict with
         or constitute a default under, or result in the creation of any lien,
         charge or encumbrance upon any Property or the assets of SALI, pursuant
         to the terms of, any indenture, mortgage, deed of trust, note, evidence
         of indebtedness, agreement or other instrument to which SALI or any
         Related Party may be party or by which it or they or any of its or
         their properties or assets may be bound, or violate any provision of
         law, or any applicable order, writ, injunction, judgment or decree of
         any court, or any order or other public regulation of any governmental
         commission, bureau or administrative agency.

                  (e)      Except as in each instance previously disclosed to
         AEW in writing, there are no judgments presently outstanding and
         unsatisfied against SALI or any of its assets and neither SALI nor any
         of its assets is involved in any litigation at law or in equity, or in
         any proceeding before any court, or by or before any governmental or
         administrative agency, which judgment, litigation or proceeding could
         reasonably be anticipated to have a material adverse effect on SALI,
         any of its Related Parties or any Property, and no such material
         judgment, litigation or proceeding is, to the best of SALI's knowledge,
         threatened against SALI or any of its assets, and to the best of SALI's
         knowledge, no investigation looking toward such a proceeding has begun
         or is contemplated.

                  (f)      No order, permission, consent, approval, license,
         authorization, registration or validation of, or filing with, or
         exemption by, any governmental agency, commission, board or public
         authority is required to authorize, or is required in connection with
         the execution, delivery and performance by SALI of this Agreement or
         the taking of any action thereby contemplated, which has not been
         obtained, other than any such order, permission, consent, approval,
         license, authorization, registration or validation of, or filing with,
         or exemption by, any governmental agency, commission,



                                      -5-
<PAGE>


         board or public authority required in connection with the ownership or
         operation of the Properties.

4.       REPRESENTATIONS AND WARRANTIES OF SDI.

                  (a)      SDI is a corporation, duly organized and validly
         existing under the laws of the State of Virginia, and to the extent
         necessary, duly qualified to do business in each of the states in which
         a Property is located, with the full power and authority and legal
         right to carry on its business in the manner and in the locations in
         which such business has been and is now being conducted by it, to
         execute and deliver this Agreement and to perform its obligations
         hereunder.

                  (b)      No consent of any third party is required as a
         condition to the entering into this Agreement by SDI other than such
         consent as has been previously obtained.

                  (c)      The execution and delivery of this Agreement has been
         duly authorized by SDI and this Agreement constitutes the valid and
         binding obligation and agreement of SDI, enforceable in accordance with
         its terms (subject to the effect of bankruptcy, insolvency or
         creditor's rights generally, and to limitations imposed by general
         principles of equity).

                  (d)      Neither the execution and delivery of this Agreement,
         nor compliance with the terms and provisions thereof, will result in
         any breach of the terms, conditions or provisions of, or conflict with
         or constitute a default under, or result in the creation of any lien,
         charge or encumbrance upon any Property or the assets of SDI pursuant
         to the terms of, any indenture, mortgage, deed of trust, note, evidence
         of indebtedness, agreement or other instrument to which SDI or any
         Related Party may be party or by which it or they or any of its or
         their properties or assets may be bound, or violate any provision of
         law, or any applicable order, writ, injunction, judgment or decree of
         any court, or any order or other public regulation of any governmental
         commission, bureau or administrative agency.

                  (e)      Except as in each instance previously disclosed to
         the AEW Member in writing, there are no judgments presently outstanding
         and unsatisfied against SDI or any of its assets and neither SDI nor
         any of its assets is involved in any litigation at law or in equity, or
         in any proceeding before any court, or by or before any governmental or
         administrative agency, which judgment, litigation or proceeding could
         reasonably be anticipated to have a material adverse effect on SDI, any
         of its Related Parties or any Property, and no such material judgment,
         litigation or proceeding is, to the best of SDI's knowledge, threatened
         against SDI or any of its assets, and to the best of SDI's knowledge,
         no investigation looking toward such a proceeding has begun or is
         contemplated.

                  (f)      No order, permission, consent, approval, license,
         authorization, registration or validation of, or filing with, or
         exemption by, any governmental agency, commission, board or public
         authority is required to authorize, or is required in connection with
         the execution, delivery and performance by SDI of this Agreement or the



                                      -6-
<PAGE>

         taking of any action thereby contemplated, which has not been obtained,
         other than any such order, permission, consent, approval, license,
         authorization, registration or validation of, or filing with, or
         exemption by, any governmental agency, commission, board or public
         authority required in connection with the ownership or operation of the
         Properties.

5.       REPRESENTATIONS AND WARRANTIES OF SALII.


                  (a)      SALII is a corporation, duly organized and validly
         existing under the laws of the State of Virginia, and to the extent
         necessary, duly qualified to do business in each of the states in which
         a Property is located, with the full power and authority and legal
         right to carry on its business in the manner and in the locations in
         which such business has been and is now being conducted by it, to
         execute and deliver this Agreement and to perform its obligations
         hereunder.

                  (b)      No consent of any third party is required as a
         condition to the entering into this Agreement by SALII other than such
         consent as has been previously obtained.

                  (c)      The execution and delivery of this Agreement has been
         duly authorized by SALII and this Agreement constitutes the valid and
         binding obligation and agreement of SALII, enforceable in accordance
         with its terms (subject to the effect of bankruptcy, insolvency or
         creditor's rights generally, and to limitations imposed by general
         principles of equity).

                  (d)      Neither the execution and delivery of this Agreement,
         nor compliance with the terms and provisions thereof, will result in
         any breach of the terms, conditions or provisions of, or conflict with
         or constitute a default under, or result in the creation of any lien,
         charge or encumbrance upon any Property or the assets of SALII pursuant
         to the terms of, any indenture, mortgage, deed of trust, note, evidence
         of indebtedness, agreement or other instrument to which SALII or any
         Related Party may be party or by which it or they or any of its or
         their properties or assets may be bound, or violate any provision of
         law, or any applicable order, writ, injunction, judgment or decree of
         any court, or any order or other public regulation of any governmental
         commission, bureau or administrative agency.

                  (e)      Except as in each instance previously disclosed to
         the AEW Member in writing, there are no judgments presently outstanding
         and unsatisfied against SALII or any of its assets and neither SALII
         nor any of its assets is involved in any litigation at law or in
         equity, or in any proceeding before any court, or by or before any
         governmental or administrative agency, which judgment, litigation or
         proceeding could reasonably be anticipated to have a material adverse
         effect on SALII, any of its Related Parties or any Property, and no
         such material judgment, litigation or proceeding is, to the best of
         SALII's knowledge, threatened against SALII or any of its assets, and
         to the best of SALII's knowledge, no investigation looking toward such
         a proceeding has begun or is contemplated.



                                      -7-
<PAGE>


                  (f)      No order, permission, consent, approval, license,
         authorization, registration or validation of, or filing with, or
         exemption by, any governmental agency, commission, board or public
         authority is required to authorize, or is required in connection with
         the execution, delivery and performance by SALII of this Agreement or
         the taking of any action thereby contemplated, which has not been
         obtained, other than any such order, permission, consent, approval,
         license, authorization, registration or validation of, or filing with,
         or exemption by, any governmental agency, commission, board or public
         authority required in connection with the ownership or operation of the
         Properties.

6.       REPRESENTATIONS AND WARRANTIES OF SALMI.

                  (a)      SALMI is a corporation, duly organized and validly
         existing under the laws of the State of Virginia, and to the extent
         necessary, duly qualified to do business in each of the states in which
         a Property is located, with the full power and authority and legal
         right to carry on its business in the manner and in the locations in
         which such business has been and is now being conducted by it, to
         execute and deliver this Agreement and to perform its obligations
         hereunder.

                  (b)      No consent of any third party is required as a
         condition to the entering into this Agreement by SALMI other than such
         consent as has been previously obtained.

                  (c)      The execution and delivery of this Agreement has been
         duly authorized by SALMI and this Agreement constitutes the valid and
         binding obligation and agreement of SALMI, enforceable in accordance
         with its terms (subject to the effect of bankruptcy, insolvency or
         creditor's rights generally, and to limitations imposed by general
         principles of equity).

                  (d)      Neither the execution and delivery of this Agreement,
         nor compliance with the terms and provisions thereof, will result in
         any breach of the terms, conditions or provisions of, or conflict with
         or constitute a default under, or result in the creation of any lien,
         charge or encumbrance upon any Property or the assets of SALMI pursuant
         to the terms of, any indenture, mortgage, deed of trust, note, evidence
         of indebtedness, agreement or other instrument to which SALMI or any
         Related Party may be party or by which it or they or any of its or
         their properties or assets may be bound, or violate any provision of
         law, or any applicable order, writ, injunction, judgment or decree of
         any court, or any order or other public regulation of any governmental
         commission, bureau or administrative agency.

                  (e)      Except as in each instance previously disclosed to
         the AEW Member in writing, there are no judgments presently outstanding
         and unsatisfied against SALMI or any of its assets and neither SALMI
         nor any of its assets is involved in any litigation at law or in
         equity, or in any proceeding before any court, or by or before any
         governmental or administrative agency, which judgment, litigation or
         proceeding could reasonably be anticipated to have a material adverse
         effect on SALMI, any of its Related Parties or any Property, and no
         such material judgment, litigation or proceeding is, to the best of
         SALMI's knowledge, threatened against SALMI or any of its assets, and
         to the best of



                                      -8-
<PAGE>

         SALMI's knowledge, no investigation looking toward such a proceeding
         has begun or is contemplated.

                  (f)      No order, permission, consent, approval, license,
         authorization, registration or validation of, or filing with, or
         exemption by, any governmental agency, commission, board or public
         authority is required to authorize, or is required in connection with
         the execution, delivery and performance by SALMI of this Agreement or
         the taking of any action thereby contemplated, which has not been
         obtained, other than any such order, permission, consent, approval,
         license, authorization, registration or validation of, or filing with,
         or exemption by, any governmental agency, commission, board or public
         authority required in connection with the ownership or operation of the
         Properties.

7.       REPRESENTATIONS AND WARRANTIES OF AEW.

                  (a)      AEW is a limited partnership duly organized and
         validly existing under the laws of the State of Delaware, with full
         power and authority and legal right to carry on its business in the
         manner and in the locations in which such business has been and is now
         being conducted by it, to execute and deliver this Agreement and to
         perform its obligations hereunder.

                  (b)      No consent of any third party is required as a
         condition to the entering into of this Agreement by AEW other than such
         consent as has been previously obtained.

                  (c)      The execution and delivery of this Agreement has been
         duly authorized by AEW and this Agreement constitutes the valid and
         binding obligation and agreement of AEW, enforceable in accordance with
         its terms (subject to the effect of bankruptcy, insolvency or
         creditor's rights generally, and to limitations imposed by general
         principals of equity).

                  (d)      Neither the execution and delivery of this Agreement,
         nor compliance with the terms and provisions hereof, will result in any
         breach of the terms, conditions or provisions of, or conflict with or
         constitute a default under, or result in the creation of any lien,
         charge or encumbrance upon the property or assets of AEW pursuant to
         the terms of any indenture, mortgage, deed of trust, note, evidence of
         indebtedness, agreement or other instrument to which AEW or any Related
         Party may be party or by which it or they or any of its or their
         properties or assets may be bound, or violate any provision of law, or
         any applicable order, writ, injunction, judgment or decree of any
         court, or any order or other public regulation of any governmental
         commission, bureau or administrative agency.

                  (e)      There are no judgments presently outstanding and
         unsatisfied against AEW or any of its assets and neither AEW nor any of
         its assets is involved in any litigation at law or in equity, or in any
         proceeding before any court, or by or before any governmental or
         administrative agency, which judgment, litigation or proceeding could
         reasonably be anticipated to have a material adverse effect on AEW or
         any of its Related Parties or any Property and no such material
         judgment, litigation or proceeding is, to the



                                      -9-
<PAGE>

         best of the AEW's knowledge, threatened against AEW or any of its
         assets, and to the best of AEW's knowledge, no investigation looking
         toward such a proceeding has begun or is contemplated.

                  (f)      No order, permission, consent, approval, license,
         authorization, registration or validation of, or filing with, or
         exemption by, any governmental agency, commission, board or public
         authority is required to authorize, or is required in connection with
         the execution, delivery and performance by AEW of this Agreement or the
         taking of any action thereby contemplated, which has not been obtained,
         other than any such order, permission, consent, approval, license,
         authorization, registration or validation of, or filing with, or
         exemption by, any governmental agency, commission, board or public
         authority required in connection with the ownership or operation of the
         Properties.

8.       MISCELLANEOUS.

         8.1.     NOTICES.

                  (a)      Any and all notices, demands, consents, approvals,
         offers, elections and other communications required or permitted under
         this Agreement (collectively, "notices") shall be deemed adequately
         given if in writing and the same shall be delivered either in hand or
         by mail or Federal Express or similar expedited commercial carrier,
         addressed to the recipient of the notice, postpaid and registered or
         certified with return receipt requested (if by mail), or with all
         freight charges prepaid (if by Federal Express or similar carrier).

                  (b)      All notices required or permitted to be sent
         hereunder shall be deemed to have been given for all purposes of this
         Agreement upon the date of acknowledged receipt and in all other cases,
         upon the date of receipt or refusal, except that whenever under this
         Agreement a notice is either received on a day which is not a Business
         Day or is required to be delivered on or before a specific day which is
         not a Business Day, the day of receipt or required delivery shall
         automatically be extended to the next Business Day.

                  (c)      All such notices shall be addressed:

         If to Sunrise, to:

                  Sunrise Assisted Living Management, Inc.
                  7902 Westpark Drive
                  McLean, Virginia 22102
                  Attention:  Legal Department
                  Telecopier:  703-744-1885



                                      -10-
<PAGE>

         with a copy to:

                  Watt, Tieder, Hoffar & Fitzgerald, L.L.P.
                  7929 Westpark Drive, Suite 400
                  McLean, Virginia 22102
                  Attention: Wayne G. Tatusko, Esq.
                  Telecopier:  703-356-5388

         If to AEW, to:

                  AEW Capital Management, L.P.
                  World Trade Center East
                  Two Seaport Lane
                  Boston, MA 02210-2021
                  Attention: Asset Manager - AEW Senior Housing Company, LLC
                  Telecopier: 617-261-9555

         with a copy to:

                  AEW Capital Management, L.P.
                  World Trade Center East
                  Two Seaport Lane
                  Boston, MA 02210-2021
                  Attention: General Counsel
                  Telecopier No.:  617-261-9555

         with a copy to:

                  Hale and Dorr LLP
                  60 State Street
                  Boston, Massachusetts 02109
                  Attention: Joseph J. Christian, Esq.
                  Telecopier: 617-526-5000

                  (d)      By notice given as herein provided, the parties
         hereto and their respective successors and assigns shall have the right
         from time to time and at any time during the term of this Agreement to
         change their respective addresses effective upon receipt by the other
         parties of such notice and each shall have the right to specify as its
         address any other address within the United States of America or to add
         one or two more parties to whom a copy of a notice must be given.

         8.2.     AMENDMENTS. This Agreement may be amended only with the
written approval of all of the Parties hereto.


         8.3.     INTERPRETATION. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Virginia without
regard to the principles of conflicts of law. Any dispute arising in connection
with this Agreement shall be resolved in a court of competent jurisdiction, and
each party hereby submits to the jurisdiction of that court. EACH PARTY HEREBY
WAIVES ITS RIGHT TO TRIAL BY JURY IN CONNECTION WITH ANY DISPUTE BETWEEN



                                      -11-
<PAGE>


ANY OF THE PARTIES TO THIS AGREEMENT ARISING OUT OF THIS AGREEMENT OR THE RIGHTS
OR OBLIGATIONS OF THE PARTIES HEREUNDER. The titles of the Articles and Sections
in this Agreement are for convenience only and shall not be considered in
construing this Agreement. Pronouns used herein shall be construed to refer to
the masculine, feminine, neuter, singular and plural as the identity of the
individual or entity referred to may require. No provision of this Agreement
shall be interpreted as bestowing any rights whatsoever upon any third party
other than the Subsidiaries. A cross-reference to another section shall be
deemed to be to such section of this Agreement, unless explicitly stated
otherwise.

         8.4.     COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original.


         8.5.     ATTORNEY'S FEES. If any party seeks to enforce such party's
rights under this Agreement by legal proceedings or otherwise the non-prevailing
party shall be responsible for all costs and expenses in connection therewith,
including without limitation, reasonable attorneys' fees and witness fees. In
this Section, "non-prevailing party" shall not be meant to refer to a party who
initiates or accepts a settlement offer with regards to such legal proceeding.

         8.6.     SEVERABILITY. If any provision of this Agreement is determined
to be unenforceable for any reason, it shall be adjusted rather than voided, if
possible, to achieve the intent of the parties. In any event, all other
provisions shall be deemed valid and enforceable to the greatest possible
extent.

         8.7.     BINDING ON SUCCESSORS. The rights and obligations of the
parties under this Agreement shall inure to the benefit of and bind their
respective heirs, successors and assigns.

         8.8.     CONFIDENTIALITY. Both parties hereto agree to maintain the
confidentiality of the financial terms and conditions of this Agreement and to
maintain the confidentiality of (a) any financial information provided by one
party to the other, and (b) all information contained in any plans,
specifications, manuals, forms, contracts, books, records, computer discs and
similar materials containing information, invoices and other documents received
or maintained by the AEW Member pursuant to this Agreement, other than
information that is available from public sources. Either party may, however,
disclose any of such information to its agents, directors, officers, employees,
advisors, attorneys, affiliates or representatives who require such information
for the purpose of performing or assisting in the performance of its obligations
or services hereunder, and to investors or lenders or proposed investors or
lenders, provided that in all such cases such parties shall be informed of the
confidential nature of such information. Either party hereto may also disclose
any such information (x) to the extent required by law, regulation (including
SEC regulations) or court order provided that such party shall have first, to
the extent reasonably practicable, advised the other of the requirement to
disclose such information and shall have afforded the other an opportunity to
dispute such requirement and seek relief therefrom by legal process, (y) in
connection with any suit, action, arbitration or other proceedings between the
parties hereto or their respective Related Parties, or (z) to the extent
required in connection with the preparation or filing of any tax returns or
other filings required by any applicable law. Any press releases or other public
announcements concerning the AEW Member, the Venture or the arrangement between
the parties shall be mutually approved by both parties in their reasonable
discretion.



                                      -12-
<PAGE>

         8.9.     TIME IS OF THE ESSENCE. Time is of the essence with respect to
all time or notice deadlines set forth herein; provided, however, this provision
shall not affect the rights of any defaulting party hereunder to cure such
default within the time periods (if any) explicitly set forth herein, if and as
so permitted pursuant to the terms of this Agreement.




                      [This Space Intentionally Left Blank]



                                      -13-
<PAGE>



EXECUTED as a sealed instrument as of the date first above written.


                               AEW CAPITAL MANAGEMENT, L.P.,
                               a Delaware limited partnership

                               By:      AEW Capital Management, Inc.,
                                        its General Manager

                                           By:  /s/ Christopher A. Kazantis
                                                ---------------------------
                                           Name:   Christopher A. Kazantis
                                                   -----------------------
                                           Title: Vice President
                                                  --------------

                               SUNRISE ASSISTED LIVING MANAGEMENT, INC.,
                               a Virginia corporation

                               By: /s/ Daniel B. Gorham
                                   --------------------
                               Name:  Daniel B. Gorham
                                      ----------------
                               Title:  Vice President
                                       --------------
                               SUNRISE DEVELOPMENT, INC., a
                               Virginia corporation

                               By: /s/Daniel B. Gorham
                                   --------------------
                               Name:  Daniel B. Gorham
                                      -----------------
                               Title: Vice President
                                       --------------

                                SUNRISE ASSISTED LIVING, INC.,
                                a Delaware corporation

                                By: /s/ Christian B.A. Slavin
                                    -------------------------
                                Name:  Christian B.A. Slavin
                                       ---------------------
                                Title: Executive Vice President
                                       ------------------------

                                SUNRISE ASSISTED LIVING INVESTMENTS, INC.,
                                a Virginia corporation

                                By: /s/Daniel B. Gorham
                                    -------------------
                                Name: Daniel B. Gorham
                                      ----------------
                                Title:  Vice President
                                        --------------





                                      -14-
<PAGE>
                                    EXHIBITS


<TABLE>
<CAPTION>
              Exhibit                       Description
              -------                       -----------
<S>                                       <C>
                 A                          Preliminary Information

                 B                          Criteria for Qualified Sunrise
                                            Development Properties

                 C                          Prior Rights
</TABLE>




                                      -15-
<PAGE>


                                    EXHIBIT A

                             PRELIMINARY INFORMATION


         General.

         1.       A term sheet identifying and describing the existing or
proposed Senior Housing Facility in general terms, including the ownership,
location, permitting status, construction status, tenant and lease status and
overall condition thereof, and containing the customary information with respect
to the relevant market and the demographics thereof which the Sunrise Member
ordinarily obtains.

         General.  With respect to all proposed Senior Housing Facilities:

         1.       All title insurance policies or other evidence of title,
together with copies of all encumbrances, easements and restrictions and other
matters referenced therein or otherwise affecting the property.

         2.       Draft and final surveys of the Property.

         3.       Site Plans relating to the Property, if available.

         4.       Appraisals relating to the Property, if available.

         5.       Inspection Reports.

         6.       Zoning, building, land use and licensing opinions and
certifications delivered in connection with any prior financing, leasing or
acquisition or otherwise relating to the Property.

         7.       Copies of real estate tax bills and other municipal, county,
state or other assessments for current and three (3) prior years.

         8.       Evidence of availability of all gas, water, electric, sewer
and other utility services.

         9.       All Approvals which have been obtained, including, without
limitation, governmental land use and operating permits, building permits,
licenses, approvals, notices of violation, variances, special permits, site plan
approvals and subdivision approvals.

         10.      Residency agreements, license agreements or similar agreements
for use and occupancy (if any) allowing any lessees or third parties to use or
occupy any portion of the properties, together with all amendments, notices,
estoppel certificates or agreements or documentation regarding security
deposits.

         11.      All available environmental, engineering, archeological and
historical studies and reports on the Property, including, without limitation,
environmental certifications, Phase 1 reports, Phase II reports; reports re: air
quality, asbestos, lead; all logs of borings and testing wells and test results
on the property; drainage reports. Any notices, citations or correspondence



                                      A-1
<PAGE>



to or from the DEP, DEM, local, state or national agencies; and all
environmental opinions on the property.

         12.      All management contracts, service contracts, architectural and
engineering agreements, construction contracts, development agreements or other
agreements regarding design, development, construction, maintenance or operation
of the property.

         15.      Aerial photographs (if available).

         16.      List of all outstanding litigation.

         17.      If applicable, a proposed permitting and development schedule
with respect to any Approvals that have not been obtained;

         18.      Preliminary economic projections (current year and beyond) for
the Property;

         19.      An outline of the principal critical path items anticipated in
connection with the development, construction and lease-up of the Property,
including, without limitation, environmental reviews, approvals and orders of
conditions, if any, that will be required in connection with the Property;
issues concerning zoning, governmental approvals, licensing, operational permits
and the like.

         20.      All other documents, instruments and reports which Seller has
in its possession or control relating to the Property.




                                      A-2
<PAGE>


                                    EXHIBIT B

              CRITERIA FOR QUALIFIED SUNRISE DEVELOPMENT PROPERTIES


         "As used herein, the term "Selection Criteria #1" shall mean that
Qualified Care Giver demand divided by the number of Qualified units in the
primary market area is greater than 14. A Sunrise Development Property is a
Qualified Sunrise Development Property if the Sunrise Development Property
satisfies Selection Criteria #1. If the home fails Selection Criteria Test #1,
then the home may still pass the selection criteria if the combined score of
Qualified Senior demand divided by the number of qualified units in the PMA and
Qualified Care Giver demand divided by the number of qualified units in the PMA
is greater than 18. Qualified Care Giver is based on the number of residents who
are age 45-64 age head of household with income greater than $75,000 in the
Primary Market Area. Qualified Senior is based on the number of residents who
are 75 Plus age head of household with income greater than $25,000 in the
Primary Market Area. Qualified Units are based on those units that are either
opened or in construction and are categorized as a 2B, 2AC, 3B, or 3C utilizing
the Sunrise ranking system in effect on the date hereof and are within the
Primary Market Area.

         Primary Market Area is an area that is within a five mile radius of the
home."




                                      B-1
<PAGE>




                                    EXHIBIT C

                   PRIOR RIGHTS OF THIRD PARTIES WITH RESPECT
                        TO SUNRISE DEVELOPMENT PROPERTIES


1.       Metropolitan Senior Housing - Rights to Properties in Restricted Areas
         (as defined in the Limited Liability Company Agreement for Metropolitan
         Senior Housing, LLC).

2.       Beach Cities Health District - Rights to Properties within five miles
         of the Hermosa Beach, California Facility, or anywhere within the Palos
         Verdes peninsula.

3.       Inova Health Services - Development restrictions in Washington, D.C.
         area.

4.       To the extent any future facility may fall within an existing
         non-compete area granted by Sunrise to another owner, AEW and Sunrise
         acknowledge that the owner entitled to object may request an interest
         in the future facility as a condition to consent.



                                      C-1