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                             GUARANTY OF COMPLETION



                                     made by


                       BROOKDALE LIVING COMMUNITIES, INC.


                                  as guarantor,


                                   in favor of


                           BATTERY PARK CITY AUTHORITY






                        Effective as of February 28, 1999




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<PAGE>


                             GUARANTY OF COMPLETION


                  This GUARANTY OF COMPLETION (this "Guaranty"), effective as of
February  28,  1999,  made by  BROOKDALE  LIVING  COMMUNITIES,  INC., a Delaware
corporation  ("Guarantor"),  in favor of  BATTERY  PARK CITY  AUTHORITY,  a body
corporate and politic  constituting a public benefit corporation of the State of
New York (together with its successors and assigns, "BPCA").

                                R E C I T A L S:

                  A.  Pursuant  to that  certain  Ground  Lease  (undated)  (the
"Lease") by and between  Brookdale Living  Communities of New York-BPC,  Inc., a
Delaware  corporation  and  wholly  owned  subsidiary  of  Guarantor,  as lessee
("Operator"),  and BPCA,  as lessor,  BPCA has agreed to lease the land commonly
known as 455 North End Avenue,  New York,  New York (the  "Land") to Operator or
its permitted  assignee subject to the satisfaction of the conditions  contained
in that certain  Agreement  Regarding  Lease and Escrow dated July 14, 1998 (the
"Original  Escrow  Agreement")by  and among BPCA,  Operator and  Windels,  Marx,
Davies & Ives, as escrowee,  as amended by those certain letter agreements dated
as of September 30, 1998,  December 29, 1998, and February 28, 1999 (as amended,
the "Escrow Agreement").

   
                  B. As a condition to BPCA's allowing Operator to construct the
Buildings  (as  defined  in the  Lease)  on the  Land  prior to  satisfying  the
condition  contained in Section 3(ii)(w) of the Original Escrow Agreement,  BPCA
is requiring that Guarantor execute and deliver to BPCA this Guaranty.

                  NOW,  THEREFORE,  in  consideration  of the premises set forth
herein and as an inducement for and in consideration of the agreement of BPCA to
allow  Operator to construct the  Buildings on the Land prior to satisfying  the
condition  contained  in Section  3(ii)(w)  of the  Original  Escrow  Agreement,
Guarantor hereby agrees and covenants to BPCA as follows:
    

                  1.   Definitions.

                       (a)   All  capitalized  terms used and not defined herein
shall have the respective meanings given such terms in the Lease.

                       (b) The term "including" means including without
limitation.

                       (c) "Guaranty Termination Date" means the earlier of:
(i) the date on which  Substantial  Completion of the Buildings has occurred and
all costs, expenses and liabilities incurred in connection therewith (including,
without  limitation,  for labor,  materials and services) have been paid in full
(except  to the  extent  to be paid for from  retainage),  or (ii) the date upon
which Guarantor has satisfied the condition contained in Section 3(ii)(w) of the
Escrow Agreement,  or (iii) the date on which BPCA draws on the Pre-Lease Letter
of Credit (as such term is defined in that certain letter agreement, dated as of
February 28, 1999, between BPCA and Operator).

<PAGE>

                  2.   Guaranty.

                       (a)   Subject  to  the  terms  and  conditions  contained
herein, Guarantor hereby irrevocably,  absolutely and unconditionally guarantees
to BPCA the  completion  of the  Buildings by Operator in  accordance  with that
certain  letter  agreement,  dated as of February  28,  1999,  between  BPCA and
Operator.  The obligations  which are the subject of the guaranty referred to in
this Section 2(a) are  hereinafter  collectively  referred to as the "Guarantied
Obligations".

                       (b)   Subject  to  the  terms  and  conditions  contained
herein, Guarantor hereby irrevocably,  absolutely and unconditionally guarantees
to BPCA that Operator shall,  in accordance  with the terms of the Lease,  fully
and punctually pay and discharge (i) any and all costs, expenses and liabilities
for or incurred in connection with the Guarantied  Obligations;  (ii) all claims
and demands for labor,  materials  and services  used or incurred in  connection
with the Guarantied  Obligations which are or may become due and payable, or, if
unpaid,  are or may become liens on the Premises or any part thereof;  and (iii)
any  liens  in  favor  of any and all  Persons  furnishing  materials,  labor or
services for or in  connection  with the  Guarantied  Obligations  such that the
Premises  shall be and remain free and clear of any and all liens other than the
Title Matters,  subject, however, to Operator's rights, if any, set forth in the
Lease with regard to the contesting of liens and obtaining a Mortgage.

                       (c)   If  Operator   does  not  perform  the   Guarantied
Obligations  as provided in paragraphs  (a) and (b) of this Section 2, then upon
receipt of a written demand from BPCA:

                             (i)   Guarantor  shall,  upon  receipt of a written
demand by BPCA,  promptly  perform and complete the  Guarantied  Obligations  or
cause the Guarantied  Obligations  to be performed and completed,  in accordance
with the requirements of that certain letter agreement, dated as of February 28,
1999, between BPCA and Operator; and

                             (ii)  if Guarantor  fails to perform the Guarantied
Obligations  in  accordance  with this  Guaranty,  then, to the extent that BPCA
shall (A) cause any Guarantied  Obligations to be performed,  (B) pay any costs,
expenses or liabilities in connection  with the Guarantied  Obligations,  or (c)
cause any lien,  claim or demand to be  released  or paid or  bonded,  Guarantor
shall,  upon  demand by BPCA,  reimburse  BPCA for all sums paid and all  costs,
expenses or liabilities incurred by BPCA in connection therewith.  All such sums
shall be payable by Guarantor to BPCA on demand.

                       (d)   Notwithstanding  anything to the contrary contained
herein or in any other  document,  and subject to the provisions of Section 4(i)
below,  all of  Guarantor's  obligations  under  this  Guaranty  (including  the
Guarantied  Obligations  hereunder) shall terminate on the Guaranty  Termination
Date,  provided  that  Guarantor's  obligations  under clauses (ii) and (iii) of
Section 2(b) above relating to labor, materials and services provided, furnished
or performed at or to the Premises  shall  continue  with respect to any claims,
demands  and liens  referred to therein,  whether  asserted  before or after the
Guaranty Termination Date.

<PAGE>

                       (e)   Notwithstanding  anything to the contrary contained
herein, BPCA shall be free to elect any remedy contemplated by the provisions of
the Escrow  Agreement  without  regard to any other rights or remedies set forth
herein.

                  3. Representations and Warranties. Guarantor hereby represents
and warrants to BPCA as follows (which  representations  and warranties shall be
given as of the date hereof and shall survive the execution and delivery of this
Guaranty):

                       (a)   Organization, Authority and Execution. Guarantor is
a corporation  duly organized,  validly  existing and in good standing under the
laws of the State of Delaware,  and has all necessary power and authority to own
its properties and to conduct its business as presently conducted or proposed to
be  conducted  and to  enter  into  and  perform  this  Guaranty  and all  other
agreements  and  instruments to be executed by it in connection  herewith.  This
Guaranty has been duly executed and delivered by Guarantor.

                       (b)   Enforceability.  This Guaranty constitutes a legal,
valid and binding  obligation of  Guarantor,  enforceable  against  Guarantor in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally.

                       (c)   No   Violation.   The   execution,   delivery   and
performance by Guarantor of the Guarantied  Obligations has been duly authorized
by all necessary  action,  and do not and will not violate any law,  regulation,
order,  writ,  injunction or decree of any court or governmental body, agency or
other  instrumentality  applicable to Guarantor in effect on the date hereof, or
result  in a  breach  of any of the  terms,  conditions  or  provisions  of,  or
constitute  a default  under,  or result in the  creation or  imposition  of any
mortgage,  lien,  charge or encumbrance of any nature whatsoever upon any of the
assets  of  Guarantor  pursuant  to the  terms  of  Guarantor's  certificate  of
incorporation or by-laws, or any mortgage, indenture, agreement or instrument to
which Guarantor is a party or by which it or any of its properties is bound.

                       (d)   No  Litigation.  There  are no  actions,  suits  or
proceedings  at law or at equity,  pending or, to  Guarantor's  best  knowledge,
threatened  against or  affecting  Guarantor  or which  involve the  validity or
enforceability  of this Guaranty or with respect to which an adverse decision is
reasonably  likely  which  would  materially   adversely  affect  the  financial
condition  of  Guarantor  or the  ability of  Guarantor  to  perform  any of the
Guarantied Obligations.  Guarantor is not in default beyond any applicable grace
or cure period with respect to any order, writ, injunction,  decree or demand of
any Governmental Authority which would materially adversely affect the financial
condition  of  Guarantor  or the  ability of  Guarantor  to  perform  any of its
obligations under this Guaranty.

                       (e)   Consents.  All  consents,   approvals,   orders  or
authorizations   of,  or  registrations,   declarations  or  filings  with,  all
Governmental  Authorities  that  are  required  in  connection  with  the  valid
execution,  delivery and  performance  by Guarantor of this  Guaranty  have been
obtained or will be obtained when required.

<PAGE>

                  4. Unconditional Character of Obligations of Guarantor.

                       (a)   Subject to Section 2(d) above,  the  obligations of
Guarantor  hereunder  shall be  irrevocable,  absolute and  unconditional.  This
Guaranty is a guaranty of performance and not a guaranty of collection.

                       (b)   The Guarantied Obligations,  and the rights of BPCA
to enforce the same by proceedings,  whether by action at law, suit in equity or
otherwise, shall not be in any way affected by any of the following:

                             (i)   any  insolvency,   bankruptcy,   liquidation,
reorganization,    readjustment,    composition,   dissolution,    receivership,
conservatorship,  winding up or other similar proceeding  involving or affecting
Operator or Guarantor;

                             (ii)  the  sale,  transfer  or  conveyance  of  the
Premises or any interest therein to any Person,  whether now or hereafter having
or acquiring an interest in the Premises or any interest  therein and whether or
not  pursuant to any  foreclosure,  trustee sale or similar  proceeding  against
Operator, or the Premises or any interest therein;

                             (iii) the release of Operator from the  performance
or observance of any of the agreements, covenants, terms or conditions contained
in the Lease or the Escrow Agreement by operation of law or otherwise; or

                             (iv) any remedy elected by BPCA under the terms of
the Escrow Agreement.

                       (c)   Except as otherwise  specifically  provided in this
Guaranty,  Guarantor hereby expressly and irrevocably  waives all defenses in an
action  brought by BPCA  arising  hereunder to enforce  this  Guaranty  based on
claims of  waiver,  release,  surrender,  alteration,  compromise  or  equitable
discharge.

                       (d)   BPCA may deal  with  Operator,  and  affiliates  of
Operator in the same manner and as freely as if this  Guaranty did not exist and
shall be entitled,  among other  things,  to grant  Operator or any other Person
such extension or extensions of time to perform any act or acts as may be deemed
advisable  by BPCA,  at any time and  from  time to time,  without  terminating,
affecting  or  impairing  the  validity  of  this  Guaranty  or  the  Guarantied
Obligations.

                       (e)   No compromise, alteration, amendment, modification,
extension,   indulgence,  renewal,  release  or  other  change  of,  or  waiver,
suspension, consent, compromise, delay, omission, failure to act, forbearance or
other action with respect to, any liability or obligation  under or with respect
to, or of any of the terms,  covenants or conditions  of, the Lease shall in any
way alter,  impair or affect any of the Guarantied  Obligations or BPCA's rights
hereunder,  and  Guarantor  agrees that if any  provisions  in Article 11 of the
Lease  relating to the  construction  of the  Buildings are modified with BPCA's
consent, the Guarantied Obligations shall automatically be deemed modified

<PAGE>

to include  such  modifications  without the  necessity  of notice to  Guarantor
except as may otherwise be required under the Lease.

                       (f)   BPCA may  proceed to protect and enforce any or all
of its rights  under this  Guaranty by suit in equity or action at law,  whether
for the specific  performance  of any covenants or agreements  contained in this
Guaranty or  otherwise,  or to take any action  authorized  or  permitted  under
applicable  law, and shall be entitled to require and enforce the performance of
all acts and things  required to be performed  hereunder by Guarantor.  Each and
every remedy of BPCA shall,  to the extent  permitted by law, be cumulative  and
shall be in addition to any other  remedy  given  hereunder  or under the Escrow
Agreement or now or hereafter  existing at law or in equity.  No single exercise
of BPCA's power to bring any action or institute any proceeding  shall be deemed
to exhaust such power,  but such power shall  continue  undiminished  and may be
exercised  from time to time as often as BPCA may elect until the earlier of the
Guaranty  Termination Date or the date that all the Guarantied  Obligations have
been  satisfied.  BPCA shall be under no obligation to take any action and shall
not be liable for any action taken or any failure to take action or any delay in
taking action against Guarantor, Operator, or any other Person or otherwise with
respect to the Guarantied Obligations.

                       (g) No waiver shall be deemed to have been made by BPCA
of any rights  hereunder unless the same shall be in writing and signed by BPCA,
and any such waiver shall be a waiver only with  respect to the specific  matter
involved  and shall in no way impair the  rights of BPCA or the  obligations  of
Guarantor to BPCA in any other respect or at any other time.

                       (h)   At the option of BPCA,  Guarantor  may be joined in
any action or proceeding  commenced by BPCA against  Operator in connection with
or  based  upon the  Guaranteed  Obligations  and  recovery  may be had  against
Guarantor  in  such  action  or  proceeding  or in  any  independent  action  or
proceeding  against Guarantor,  but only to the extent of Guarantor's  liability
hereunder,  without any requirement that BPCA first assert, prosecute or exhaust
any remedy or claim against  Operator or any other  Person,  or any security for
the obligations of Operator, or any other Person.

                       (i) Guarantor agrees that this Guaranty shall continue
to be effective or shall be  reinstated,  as the case may be, if at any time any
payment is made by Operator or Guarantor to BPCA with respect to the  Guaranteed
Obligations  and such payment is rescinded or must otherwise be returned by BPCA
(as  determined  by  BPCA  in  its  reasonable   discretion)   upon  insolvency,
bankruptcy, liquidation, reorganization, readjustment, composition, dissolution,
receivership,  conservatorship, winding up or other similar proceeding involving
or affecting Guarantor, all as though such payment had not been made.

                  5. Entire Agreement/Amendments. This instrument represents the
entire agreement  between the parties with respect to the subject matter hereof.
The terms of this  Guaranty  shall not be waived,  altered,  modified,  amended,
supplemented or terminated in any manner whatsoever except by written instrument
signed by BPCA and Guarantor.

<PAGE>

                   6.  Successors  and Assigns.  This Guaranty  shall be binding
upon Guarantor,  and Guarantor's  successors and assigns, may not be assigned or
delegated by Guarantor and shall inure to the benefit of BPCA and its successors
and assigns.

                   7. Applicable Law and Consent to Jurisdiction.  This Guaranty
was partially  negotiated in the State of New York,  and accepted by BPCA in the
State of New York, which State the parties agree has a substantial  relationship
to the parties and to the underlying  transaction  embodied  hereby,  and in all
respects,  this Guaranty shall be governed by, and construed in accordance with,
the substantive laws of the State of New York. Guarantor  irrevocably (a) agrees
that any suit,  action or other legal  proceeding  arising out of or relating to
this  Guaranty may be brought in a court of record in the City and County of New
York or in the Courts of the United  States of America  located in the  Southern
District of New York, (b) consents to the jurisdiction of each such court in any
such suit,  action or proceeding and (c) waives any objection  which it may have
to the laying of venue of any such  suit,  action or  proceeding  in any of such
courts and any claim that any such suit,  action or proceeding  has been brought
in an inconvenient forum.  Guarantor  irrevocably consents to the service of any
and all process in any such suit,  action or  proceeding by service of copies of
such process to Guarantor at its address provided in Section 10 hereof.  Nothing
in this  Section  7,  however,  shall  affect  the right of BPCA to serve  legal
process  in any other  manner  permitted  by law or affect  the right of BPCA to
bring any suit,  action or  proceeding  against  Guarantor  in the courts of any
other jurisdictions.

                 8.  Section   Headings.   The  headings  of  the  sections  and
paragraphs of this Guaranty have been inserted for convenience of reference only
and  shall in no way  define,  modify,  limit  or  amplify  any of the  terms or
provisions hereof.

                 9.  Severability.  Any provision of this Guaranty  which may be
determined by any competent  authority to be prohibited or  unenforceable in any
jurisdiction  shall,  as to such  jurisdiction,  be ineffective to the extent of
such  prohibition  or  unenforceability   without   invalidating  the  remaining
provisions  hereof,  and  any  such  prohibition  or   unenforceability  in  any
jurisdiction shall not invalidate or render  unenforceable such provision in any
other jurisdiction.  To the extent permitted by applicable law, Guarantor hereby
waives any  provision of law which renders any  provision  hereof  prohibited or
unenforceable in any respect.

                 10.  Notices.  All  notices,   demands,   requests,   consents,
approvals or other  communications  (collectively  called "Notices") required or
permitted to be given  hereunder to BPCA or Guarantor or which are given to BPCA
or Guarantor  with respect to this Guaranty shall be in writing and shall be (a)
sent by United States  registered or certified mail,  return receipt  requested,
postage prepaid,  addressed as set forth below, (b) sent by a national overnight
courier  or  delivery   service  or  (c)   personally   delivered  with  receipt
acknowledged  to such address,  or in either case, to such other  address(es) as
the party in question shall have specified most recently by like Notice.

<PAGE>

                 If to BPCA, to:

                 Battery Park City Authority
                 One Financial Center, 24th Floor
                 New York, New York 10281-1097
                 Attn: President

                 with a copy to:

                 Battery Park City Authority
                 One Financial Center, 24th Floor
                 New York, New York 10281-1097
                 Attn: Carl Jaffee, Esq.


                 If to Guarantor, to:

                 Brookdale Living Communities, Inc.
                 77 West Wacker Drive, Suite 4400
                 Chicago, IL 60601
                 Attention: Darryl W. Copeland, Jr.

                 with a copy to:

                 Brookdale Living Communities, Inc.
                 77 West Wacker Drive, Suite 4400
                 Chicago, IL 60601
                 Attention: Robert J. Rudnik, Esq.


Notices  which are given in the  manner  aforesaid  shall be deemed to have been
given or served for all purposes  hereunder (i) on the date on which such notice
shall have been personally delivered as aforesaid,  (ii) on the date of delivery
by overnight  carrier or mail as evidenced by the return  receipt  therefor,  or
(iii) on the date of failure to deliver by reason of refusal to accept  delivery
or changed address of which no Notice was given.

                 11. Expenses. Guarantor hereby agrees to pay all costs, charges
and expenses,  including,  without  limitation,  reasonable  attorneys' fees and
disbursements,  that  may be  incurred  by  BPCA  in  enforcing  the  covenants,
agreements, obligations and liabilities of Guarantor under this Guaranty.


      [Remainder of page intentionally left blank; signature page follows.]


<PAGE>


                  IN WITNESS WHEREOF, Guarantor has executed this Guaranty as of
the date first above written.

                                      BROOKDALE LIVING COMMUNITIES, INC., 
                                      a Delaware Corporation


                                       By:  /s/ Darryl W. Copeland, Jr.
                                            -------------------------------
                                            Darryl W. Copeland, Jr.
                                            Executive Vice President

<PAGE>

AGREED AND ACKNOWLEDGED:


BATTERY PARK CITY AUTHORITY


By:  /s/ Johnthan Mura
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