PAYMENT GUARANTY
                                ----------------

         This PAYMENT  GUARANTY (this  "Guaranty"),  dated as of the 24th day of
August,   1999,  made  by  BROOKDALE  LIVING   COMMUNITIES,   INC.,  a  Delaware
corporation,  having  offices at 77 West  Wacker  Drive,  Suite  4400,  Chicago,
Illinois 60601  ("Guarantor"),  for the benefit of KEY CORPORATE CAPITAL INC., a
Michigan  corporation  , having  administrative  offices at 127  Public  Square,
Cleveland, Ohio 44114-1306 ("KCCI"), as the Agent (the "Agent") for the Lenders,
including  KCCI,  who are or  hereafter  become  parties  to the Loan  Agreement
(hereinafter  defined),  each of which, including KCCI, is hereafter referred to
as a "Lender" or the "Lenders".

         All  capitalized  terms appearing and not defined herein shall have the
same meanings  ascribed to them in the Building Loan Agreement  and/or Soft Cost
Loan Agreement, as may be amended from time to time, each of even date herewith,
(together  the "Loan  Agreement"),  among AH Battery  Park  Owner,  LLC, an Ohio
limited liability company  (the"Borrower"),  the Lenders named therein,  and the
Agent.

                              W I T N E S S E T H:

         WHEREAS,  the  Borrower is the  actual,  beneficial  and record  ground
lessee of a certain tract of land consisting of approximately .449 acres located
in the  Borough of  Manhattan,  City and State of New York,  known by the street
address 455 North End Avenue,  New York,  New York,  which is more  particularly
described in Exhibit A attached hereto (the "Land");

         WHEREAS,  the Borrower has  requested the Lenders to make loan advances
(collectively,  the  "Loan") to it in the  aggregate  principal  amount of up to
FORTY  NINE  MILLION  ONE  HUNDRED  TWENTY  FIVE  THOUSAND  AND  00/100  DOLLARS
($49,125,000.00)  (the "Maximum Loan Amount"),  to be used to finance Hard Costs
and Soft Costs of the Borrower's  construction of the Improvements  described in
the Loan Agreement, which include an independent  living/assisted living complex
to be known as The Hallmark at Battery Park City  containing  approximately  218
units  and  approximately  219,615  square  feet of floor  area (as said term is
defined  in the  Zoning  Resolution  of the City of New York) to be built on the
Land in accordance with the Building Loan Agreement,  and in compliance with the
Plans and all Requirements;

         WHEREAS,  the Loan will be advanced by the Lenders to the Borrower upon
the  Borrower's  compliance  with,  and  subject to, the terms,  conditions  and
limitations of the Loan Agreement;

         WHEREAS,  the Loan will be evidenced by the Notes and secured by, among
other things, the Mortgage;

         WHEREAS, the Guarantor is an Affiliate of the developer of the Project,
Brookdale Living Communities of New York - BPC, Inc. (the "Developer"), and both
Developer and Guarantor will derive a substantial benefit from the making of the
Loan;

         WHEREAS,  to induce the  Lenders to make the Loan  pursuant to the Loan
Agreement,  to accept the Notes and to cause the Agent to accept  the  Mortgage,
the Borrower  has agreed to procure and deliver this  Guaranty to be executed by
the Guarantor and to be binding upon the Guarantor and its respective successors
and assigns;

         WHEREAS,  the Lenders are  unwilling  to extend  credit to the Borrower
unless this  Guaranty is executed by the  Guarantor  and delivered to the Agent;
and


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         WHEREAS,  it is a condition to the  obligations  of the Lenders to make
the Loan to the Borrower  pursuant to the Loan  Agreement  that this Guaranty is
executed by the Guarantor and delivered to the Agent;

         NOW, THEREFORE,  in consideration of the Loan to the Borrower, in order
to induce the Lenders  and the Agent to execute and deliver the Loan  Agreement,
the Lenders to accept the Notes,  and the Agent to accept the Mortgage,  and for
other good and valuable  consideration,  the receipt and sufficiency of which is
hereby acknowledged,  Guarantor,  for itself, its successors and assigns, hereby
covenants  and  agrees  with the  Agent,  for the  benefit  of the Agent and the
Lenders, and their respective successors and assigns, as follows:

         1.     Definitions.  For purposes of this Guaranty  only, the following
                definitions shall apply:

         "Budget"  shall mean shall mean the budget  delivered to,  approved and
initialed  by Agent on or before the  Closing  Date,  as same may be amended (or
line items reallocated) in accordance with the Loan Agreement.

         "Completion"  shall  mean  and be  deemed  to have  occurred  upon  the
occurrence of all of the following:  (i) the Improvements comprising the Project
shall be fully  paid  and  100%  complete  in  accordance  with the  Plans,  all
Requirements  and the  requirements  of the Ground  Lease,  all as determined by
Agent and  Agent's  Architect  in  accordance  with the  procedure  set forth in
Section 2B.2 of the Loan Agreement;  (ii) all on-site and off-site improvements,
including,  without limitation,  all utility services and fixtures and equipment
required for access to and operation of the Improvements shall be 100% complete;
(iii) a temporary certificate of occupancy for the full use and occupancy of the
entire  Premises (and provided that Borrower shall proceed as  expeditiously  as
possible to secure the final  Certificate of Occupancy,  in any event within two
(2)  years  of  issuance  of the  temporary  certificate  of  occupancy)  or its
equivalent issued by the applicable  governmental authority for the Improvements
comprising the Project,  and all other reasonable  evidence that the City of New
York and/or the Battery Park City Authority have  acknowledged the completion of
all work  required  by it to meet all legal  requirements  and the  requirements
under the Ground Lease, as applicable, including, without limitation, all zoning
and building  requirements;  (iv) all Permits and Licenses, if any, required for
the operation of the Project as an  independent  living/assisted  living complex
under  all  applicable  legal  requirements  have  been  issued;  (v) all of the
requirements  set forth in Section 6.4 of the Building  Loan  Agreement  for the
final disbursement of Hard Costs shall have been satisfied;  (vi) the opening of
the Project shall have been scheduled to occur within thirty (30) days.

         "Facility  Summary Report" shall mean each facility  summary report for
the Project  required to be submitted by the Borrower to the Agent,  which shall
be in form and substance  satisfactory to Agent,  shall be broken down on a line
item  basis  (including  a line item for  operating  NOI) and shall  include  an
occupancy summary and a profit and loss summary.

         "Guaranty   Obligations"   shall   mean  the   prompt,   absolute   and
unconditional payment in full of:

                (i)      the aggregate  outstanding principal amount of the Loan
                         and the amounts  due to the  Lenders  under the Forward
                         Treasury Lock Agreement,  which principal amount of the
                         Loan shall specifically  include,  without  limitation,
                         any  Advances of the Loan made to fund  interest due on
                         such  Loan,   as  calculated  by  the  Agent  upon  the
                         occurrence of an Event of Default and  acceleration  of
                         the Notes in accordance with the provisions of the Loan
                         Agreement;

                (ii)     all  interest   and  other   charges  on  the  Guaranty
                         Percentage  then in effect  pursuant  to Section  3(a),
                         Section 3(b) or Section 3(c) hereof, as applicable,  of
                         the aggregate  outstanding principal amount of the Loan
                         and  amounts  due  to the  Lenders  under  the  Forward
                         Treasury Lock Agreement,  whether such interest accrues
                         at  the  regular  interest  rate  or  rates  applicable
                         thereto  or at  the  Default  Rate,  and  whether  such
                         interest and other charges accrue prior to or after the
                         Maturity  Date,  late  charges,   prepayment  fees  and
                         premiums, whether such interest accrues before or after
                         the filing of any petition under

                                       2

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                         the  Bankruptcy  Code, as the same shall become due and
                         payable under the Loan Agreement and the Notes, and all
                         fees,  charges  and  expenses  and  other  sums  now or
                         hereafter  due to the  Agent or the  Lenders  under the
                         Notes, the Loan Agreement,  the Mortgage,  or any other
                         Loan Document,  including,  without limitation, any and
                         all reasonable costs and expenses incurred by the Agent
                         or the Lenders in connection  with the  collection  and
                         enforcement  of the Notes,  the  Mortgage  or any other
                         Loan  Document,   including,  without  limitation,  all
                         reasonable attorney's fees and expenses,  investigative
                         costs and all court costs, whether or not suit is filed
                         thereon,  or whether at maturity,  by  acceleration  or
                         otherwise.

         "Guaranty   Percentage"   shall  mean  a  percentage   portion  of  the
aforementioned Guaranty Obligations determined as provided in Section 3.

         "Intermediate  Threshold"  (which  must occur no later than the twelfth
(12th) month  following  Completion to be effective)  shall mean, and shall have
been achieved when:  (i) at least six (6) months have elapsed since  Completion;
(ii)  Agent  reasonably  determining  that not less than 87.5% of the units then
scheduled to be occupied under the Occupancy  Schedule set forth in Exhibit H to
the  Loan  Agreement  are then  occupied  and all  payments  are  being  made in
accordance  with the  terms of  Approved  Leases,  and  (iii)  Agent  reasonably
determining  that the NOI of the  Project on a  cumulative  basis for the period
from Completion through the last day covered by the most recent Facility Summary
Report  submitted by Borrower and approved in writing by Agent,  as set forth in
such  Facility  Summary  Report,  is no less than 87.5% of the projected NOI set
forth in the Budget (or any revised  projected  NOI  approved  by the  Requisite
Lenders in writing for such respective period).

         "Liquid   Assets"  shall  mean  assets  in  the  form  of  cash,   cash
equivalents,  obligations  of (or fully  guarantied as to principal and interest
by) the United  States or any agency or  instrumentality  thereof  (provided the
full  faith  and  credit  of the  United  States  supports  such  obligation  or
guarantee),  certificates  of deposit  issued by a  commercial  bank  having net
assets  of not  less  than  $500,000,000,  securities  listed  and  traded  on a
recognized  stock exchange or traded over the counter and listed in the National
Association of Securities Dealers Automatic Quotations,  liquid debt instruments
that have a readily ascertainable value and are regularly traded in a recognized
financial  market,  or any unused portion of any credit line  maintained  with a
bank which must have an Standard & Poor's rating of "A" or better, none of which
are subject to specific pledge, lien or other encumbrance.

         "Loan  Advances"  shall mean Advances under the Building Loan Agreement
or the Soft Cost Loan Agreement.

         "Loan  Amount"  shall mean FORTY NINE  MILLION ONE HUNDRED  TWENTY FIVE
THOUSAND  AND  00/100  DOLLARS  ($49,125,000.00)  or such  lesser  amount as the
Borrower and the Agent agree upon in writing.

         "NOI" shall mean shall mean  Project  Revenues,  less all  ordinary and
customary  operating  expenses actually incurred and paid by the Borrower (other
than fees due to the Manager as certified by Manager and approved by Agent),  in
connection with the ownership and operation of the Project.

         "Occupancy  Schedule" shall mean occupancy of the Units  comprising the
Project according to the following levels:

         Quarter 2 following Completion:             43.75% of the Units
         Quarter 3 following Completion:             55.13% of the Units
         Quarter 4 following Completion:             65.63% of the Units
         Quarter 5 following Completion:             76.13% of the Units
         Quarter 6 following Completion:             83.13% of the Units
         Quarters 7-10 following Completion:         83.13% of the Units

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         "Project  Revenues"  shall  mean all fixed  rent and  ancillary  income
(including  expense  reimbursements)   actually  received  by  the  Borrower  in
connection  with its  ownership  and  occupancy of the  Premises,  as reasonably
determined by Agent based upon the most current  Facility Summary Report then in
Agent's possession,  and such other information as Agent may receive,  including
current certified rent rolls and operating statements.

         2.     Guaranty. The Guarantor,  as a primary obligor and not merely as
a surety,  absolutely  unconditionally  and irrevocably  guaranties the Guaranty
Obligations to the Agent and the Lenders.

         3.     Guaranty Percentage.

         (a)    100% Guaranty.  The Guaranty  Percentage shall equal One Hundred
Percent  (100%) of the  amounts  set forth in clause  (i) of the  definition  of
Guaranty Obligations until reduced, if at all, as provided in this Section 3.

         (b)    75% Guaranty.  The Guaranty  Percentage shall equal Seventy Five
Percent  (75%) of the  amounts  set forth in  clause  (i) of the  definition  of
Guaranty  Obligations  (the  "First  Reduction")  at such time as the  following
requirements have been satisfied:

                (i)      at the time of the proposed  reduction,  there shall be
                         no  outstanding  Events of Default,  or any event which
                         with the giving of notice and the passage of time would
                         constitute a default under any Loan Document; and

                (ii)     Completion  shall  have  occurred  (including,  without
                         limitation,  the issuance of a temporary certificate of
                         occupancy),  and the last  disbursement  for Hard Costs
                         shall have been made and the Retainage  shall have been
                         released,  all in  accordance  with  Section 6.4 of the
                         Building Loan Agreement.

         (c)    50%  Guaranty.  At  the  commencement  of any  calendar  quarter
following  the First  Reduction,  the  Borrower and the  Guarantor  may submit a
written  request to the Agent (a  "Requested  Reduction  Notice"),  requesting a
reduction (the "Second  Reduction") of the Guaranty  Percentage to Fifty Percent
(50%), which Requested Reduction Notice may be submitted no more often than once
per calendar  quarter,  and shall be  accompanied  by  reasonable  evidence that
Guarantor has qualified for the Second Reduction. The Guaranty Percentage,  upon
the   determination   by  the  Agent  of  the   satisfaction  of  the  following
requirements,  shall equal Fifty Percent (50%).  The Guaranty  Percentage  shall
equal  Fifty  Percent  (50%)  of the  amounts  set  forth in  clause  (i) of the
definition of Guaranty  Obligations  when the following  requirements  have been
satisfied:

                (i)      at the time of the Requested  Reduction  Notice,  there
                         shall be no outstanding Events of Default, or any event
                         which with the giving of notice and the passage of time
                         would constitute a default under any Loan Document;

                (ii)     the  Intermediate  Threshold  shall have  occurred,  as
                         reasonably determined by Agent; and

                (iii)    all  requirements  for the First  Reduction  shall have
                         been, and remain, satisfied.

         (d)    The Guaranty  Percentage shall at all times during the existence
of this Guaranty  equal One Hundred  Percent  (100%) of the amounts set forth in
clause (ii) of the definition of Guaranty Obligations.

         4.     Representations,  Warranties  and  Covenants of  Guarantor.  The
Guarantor hereby represents, warrants and covenants:

                (a)      Guarantor is a corporation  duly  organized and validly
         existing under the laws of the State of Delaware and has full power and
         authority to consummate the transactions contemplated hereby.

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<PAGE>


                (b)      This Guaranty,  the Completion Guaranty,  the Operating
         Deficit Guaranty and the  Environmental  Indemnity  Agreement have been
         duly executed and delivered by the Guarantor and  constitute  the valid
         and binding  obligations of the Guarantor and are  enforceable  against
         the Guarantor in accordance with their respective terms.

                (c)      Guarantor is not  insolvent (as such term is defined in
         the Bankruptcy  Code), and Guarantor will not be rendered  insolvent by
         execution of this  Guaranty or any other Loan Document to which it is a
         party or by the consummation of the transactions contemplated thereby.

                (d)      The  consummation  of  the  transactions   contemplated
         hereby  and  the  performance  by  the  Guarantor  of  the  Guarantor's
         obligations under this Guaranty, the Completion Guaranty, the Operating
         Deficit Guaranty,  the Environmental  Indemnity  Agreement or any other
         Loan  Document to which the Guarantor is a party will not result in any
         breach of, give rise to a lien under,  or  constitute a default  under,
         any  mortgage,  deed of trust,  lease,  bank loan or credit  agreement,
         partnership agreement, corporate charter, by-laws or other agreement or
         instrument  to  which  the  Guarantor  is a party or by which it may be
         bound or affected.

                (e)      The Financial  Statements delivered by the Guarantor to
         the Agent at or prior to the Closing fairly and accurately  present the
         financial  condition of the  Guarantor as of the date  thereof,  and no
         material  adverse  change  has  occurred  in  the  financial  condition
         reflected therein since the date thereof. The Financial Statements have
         been prepared in accordance with sound accounting  methods,  principles
         and standards  consistently applied and do not omit facts, the omission
         of which would make such Financial Statements materially misleading.

                (f)      Except as  disclosed  on Schedule 1 annexed  hereto and
         made  a part  hereof,  there  are  no  actions,  suits  or  proceedings
         involving  claims  in  excess  of  $1,000,000  pending,  or to the best
         knowledge  of  the  Guarantor  threatened,  against  or  affecting  the
         Guarantor or the Premises,  or involving the validity or enforceability
         of the  Mortgage,  or the priority of the liens  thereof,  at law or in
         equity, before or by any Governmental  Authority;  and the Guarantor is
         not operating  under or subject to, in default of, or in violation with
         respect to, any order, writ, injunction,  decree or demand of any court
         or any Governmental  Authority involving claims in excess of $1,000,000
         that reasonably  could  materially and adversely  affect its ability to
         perform its obligations hereunder.

                (g)      The  Guarantor  shall  promptly  provide the Agent with
         written  notice of any  pending or  threatened  litigation  against the
         Guarantor or the Premises, with respect to which an adverse decision is
         reasonably  likely  involving  claims in excess of  $1,000,000;  or the
         commencement  against the Guarantor or the Premises of any  proceedings
         or  investigations  by a governmental  or regulatory  agency  involving
         claims in excess of $1,000,000  that  reasonably  could  materially and
         adversely affect its ability to perform its obligations hereunder.

                (h)      There is no default on the part of the Guarantor  under
         or  with  respect  to  this  Guaranty,  the  Completion  Guaranty,  the
         Operating Deficit Guaranty,  the Environmental  Indemnity  Agreement or
         any other Loan Document to which the Guarantor is a party, and no event
         has occurred and is continuing  which with the giving of notice and the
         passage of time  would  constitute  a default on the part of  Guarantor
         under any of the aforesaid documents.

                (i)      The Guarantor does not have any counterclaims,  offsets
         or defenses with respect to the Loan or with respect to its obligations
         under this Guaranty,  the Completion  Guaranty,  the Operating  Deficit
         Guaranty, the Environmental Indemnity Agreement, the Notes or any other
         Loan Document to which it is a party.

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                (j)      The Guarantor  will not join in any action,  or consent
         to amend,  terminate  or modify  the  organizational  documents  of the
         Borrower without the prior written consent of the Agent.

                (k)      The Guarantor will promptly  comply with all conditions
         of this Guaranty and the other Loan  Documents with which the Guarantor
         is required to comply. The Guarantor will promptly and fully respond to
         any inquiry of the Agent made with respect to the Loan,  the Land,  the
         Improvements, or any of the matters covered by this Guaranty.

                (l)      The  Guarantor  will not  modify or amend or  terminate
         (other than by full performance  thereof) any Loan Document without the
         prior written consent of the Agent.

                (m)      The  Guarantor  agrees to pay within ten (10)  Domestic
         Business  Days of any  written  demand  by the Agent to  Guarantor  all
         expenses (including, without limitation, reasonable legal expenses) of,
         or  incidental  to,  or in  any  way  relating  to the  enforcement  or
         protection of the rights of the Agent or the Lenders hereunder.

                (n)      The  Guarantor  is  deriving  or  expects  to  derive a
         financial or other advantage from each and every obligation incurred by
         the Borrower to the Agent or the Lenders.

                (o)      The Guarantor hereby acknowledges receipt of copies of,
         and hereby approves,  the Plans,  the Mortgage,  the Loan Agreement and
         the other Loan Documents.

                (p)      The  Guarantor  shall execute and deliver to the Agent,
         from  time to  time,  such  other  documents  as  shall  be  reasonably
         necessary  to give full  effect to the rights and  remedies  granted or
         provided by this Guaranty.

                (q)      The Guarantor  shall furnish to the Agent (i) quarterly
         internally-prepared  Financial  Statements,  certified by an officer of
         the  Guarantor,  within  forty-five  (45)  days  after  the end of each
         calendar quarter, (ii) annual audited Financial  Statements,  certified
         by an officer of the  Guarantor  within one hundred  twenty  (120) days
         after the end of each fiscal  year of the  Guarantor,  (iii)  quarterly
         internally- prepared  certificates  evidencing that the Guarantor's net
         worth is equal to at least $70,000,000,  certified by an officer of the
         Guarantor,  within  forty-five  days  after  the end of  each  calendar
         quarter,  (iv) quarterly  internally-prepared  certificates  evidencing
         that the  Guarantor  has Liquid  Assets  equal to at least  $5,000,000,
         certified by an officer of the Guarantor,  within  forty-five (45) days
         after the end of each calendar  quarter,  and (v) such other  financial
         information  relating to the Guarantor as may be  reasonably  requested
         from time to time by Agent.

                (r)      The  Guarantor  has  implemented  a program  to assess,
         remediate  and  mitigate  the  potential  impact of the Year 2000 Issue
         throughout the Guarantor's  company.  The Guarantor's  program has been
         structured to address its internal  computer systems and  applications,
         network  services  operations,  facilities  operations and  third-party
         vendors and  suppliers.  The  Guarantor  believes that it is taking the
         necessary steps within its control to mitigate the potential  impact of
         the Year 2000 Issue on the Guarantor and shall continue to do so.

                (s)      The Guarantor  acknowledges and agrees,  subject to the
         limitations  set  forth  in the  succeeding  sentence,  that (i) in the
         calculation of the aggregate  outstanding principal balance of the Loan
         for purposes of  calculating  the Guaranty  Obligations  hereunder said
         aggregate outstanding principal balance of the Loan will not be reduced
         or deemed reduced,  either before or after an Event of Default,  by any
         payments or recoveries  received or deemed  received by the Lenders (or
         by the Agent on behalf of the Lenders) as a result of a foreclosure  or
         a sale of the  Premises;  and (ii) the Agent and the  Lenders may apply
         any payments  (other than payments made by the Guarantor  hereunder) or
         recoveries  received after a default under any of the Loan Documents to
         principal, interest, expenses and other sums due with respect

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         to the Loan in such order as may be provided in the Loan  Agreement  or
         the other Loan  Documents,  or, to the extent not so provided,  in such
         order as the Agent or any Lender,  in its sole  discretion,  may elect,
         regardless of the manner in which any such  payments or recoveries  are
         allocated or reflected in any foreclosure,  judgment,  or deficiency or
         allocation proceeding relative to the foreclosure of the Mortgage,  and
         any such payments or recoveries,  regardless of how applied,  shall not
         reduce  the  amount  of  principal  or other  sums  guaranteed  hereby.
         Notwithstanding  the foregoing,  (x) this provision  shall not obligate
         Guarantor to pay or reimburse  Lender or Agent for any expense item for
         which Lender has already received actual payment or reimbursement  from
         Borrower or Guarantor and (y) the liability of the Guarantor  hereunder
         shall  not  exceed  the  lesser  of (1)  the  amount  of  the  Guaranty
         Obligations  calculated in accordance with clause (i) of this paragraph
         4(r) and (2) the amount of a deficiency judgment determined to be owing
         following  a  foreclosure  pursuant  to the Loan  Documents;  provided,
         however,  that  nothing  herein or in any of the other  Loan  Documents
         shall  obligate  the Agent or the Lenders to  foreclose  on  collateral
         before or as a condition to or as part of  asserting  claims under this
         Guaranty.

         5.     Defaults.  The following  shall  constitute a default  hereunder
(each, an "Event of Default"):

                (a)      if  the  Guarantor   shall  (after  ten  (10)  Domestic
Business  Days have elapsed from date of written  notice to  Guarantor)  fail to
timely perform, or cause to be timely performed,  any Guaranty Obligation within
the  period  provided  for  performance  by the  Guarantor  hereunder  or by the
Borrower in the Loan Documents;

                (b)      if  the  Guarantor   shall  (after  ten  (10)  Domestic
Business  Days have elapsed from date of written  notice to  Guarantor)  fail to
comply with any of the covenants made by it in this Guaranty (including, without
limitation,  the provisions of Section 23 hereof) or in any other Loan Document,
including,  without limitation,  the Completion Guaranty,  or if at any time any
representation  or warranty made by the Guarantor to the Agent or the Lenders in
this Guaranty or in any other Loan Document or in any  certificate  or statement
delivered  in  connection  herewith  shall be false or  misleading  to an extent
deemed by the Agent, to be material, and, in any case, all required notices have
been given and all applicable cure periods have expired;

                (c)      if at any time the Guarantor  shall revoke,  or attempt
to revoke, this Guaranty;

                (d)      if at any time  Guarantor's  minimum  net  worth is not
equal to at least $70,000,000,  or if at any time Guarantor's  minimum liquidity
in the form of Liquid Assets is not equal to at least $5,000,000;

                (e)      if the Guarantor  shall (i) suspend or discontinue  its
business,  (ii) make an assignment for the benefit of creditors,  (iii) admit in
writing its inability to pay its debts as they become due, (iv) file a voluntary
petition in bankruptcy,  (v) become insolvent as defined in the Bankruptcy Code,
(vi)  file any  petition  or  answer  seeking  for  itself  any  reorganization,
arrangement,  composition,  readjustment of debt,  liquidation or dissolution or
similar  relief under any present or future  statute,  law or  regulation of any
jurisdiction,  (vii)  petition  or  apply  to any  tribunal  for  any  receiver,
custodian or any trustee for any substantial part of its property, (viii) be the
subject of any such proceeding  commenced  against it which remains  undismissed
for a period of 60 days,  (ix) file any answer  admitting or not  contesting the
material  allegations  of any such  petition  filed against it, or of any order,
judgment or decree approving such petition in any such proceeding,  or (x) seek,
approve, consent to, or acquiesce in any such proceeding,  or in the appointment
of any trustee, receiver, custodian,  liquidator, or fiscal agent for it, or any
substantial  part of its property or if an order is entered  appointing any such
trustee, receiver, custodian,  liquidator or fiscal agent and such order remains
in effect for 60 days; or

                (f)      if an order for relief is entered under the  Bankruptcy
Code  or  any  other  decree  or  order  is  entered  by a  court  of  competent
jurisdiction  (i)  adjudicating  the  Guarantor  bankrupt  or  insolvent,   (ii)
approving  as properly  filed a petition  seeking  reorganization,  arrangement,
adjustment or composition of or in respect of the Guarantor,  (iii) appointing a
receiver,  liquidator,  assignee,  trustee,  custodian,  sequestrator  (or other
similar  official) of the Guarantor or of any substantial  part of its property,
or (iv) ordering the winding up or  liquidation  of the affairs of the Guarantor
and any such decree or order continues unstayed and in effect for a period of 60
days.

                                       7

<PAGE>


         6.     Remedies.  Upon  the  occurrence  of  a  default  hereunder,  in
addition to any other remedy  provided  for under this  Guaranty or at law or in
equity,  the  Guarantor  hereby  authorizes  the  Agent,  in  the  Agent's  sole
discretion,  at any time, to foreclose  nonjudicially or judicially  against any
real or personal property security it holds for the Guaranty  Obligations or any
part thereof (it being  understood that Guarantor is not required to secure this
Guaranty with any assets of Guarantor), or exercise any other remedy against the
Borrower, the Guarantor and any security.

         7.     Waiver of Election of  Remedies.  The  Guarantor  waives (to the
extent  permitted by law) any right to require or compel the Agent or any Lender
to (a) proceed against the Borrower or any other guarantor;  (b) proceed against
or exhaust any security for the Loan or the Guaranty Obligations;  or (c) pursue
any other remedy in the Agent's or any Lender's power whatsoever; and failure of
the Agent or any Lender to do any of the foregoing shall not exonerate,  release
or discharge the  Guarantor  from its absolute,  unconditional  and  independent
liabilities to the Agent and the Lenders hereunder.  The Guarantor hereby waives
(to the extent permitted by law) any and all legal  requirements  that the Agent
or any Lender  shall  institute  any action or  proceedings  at law or in equity
against the Borrower or anyone else in respect of the Loan or the Loan Agreement
or any other Loan  Document  or resort to or seek to realize  upon the  security
held by the Agent or any of the Lenders, as a condition precedent to bringing an
action against the Guarantor upon this Guaranty.

         8.     Right of Separate  Actions.  The Agent may bring and prosecute a
separate  action  against any  guarantor to enforce its  liabilities  hereunder,
whether or not any action is brought against any other person and whether or not
any other person is joined in any such action or actions. Nothing shall prohibit
the Agent or any Lender from  exercising its rights  against the Guarantor,  the
Borrower,  any security for the Guaranty  Obligations or the Notes, or any other
person,  simultaneously,  jointly and/or severally. The Guarantor shall be bound
by each and every ruling, order and judgment obtained by the Agent or any Lender
against the Borrower in respect of the Loan and the Loan  Documents,  whether or
not the  Guarantor is a party to the action or  proceeding in which such ruling,
order or judgment is issued or rendered.

         9.     Waiver  of  Rights  of   Subrogation.   The   Guarantor   hereby
irrevocably waives any rights to be subrogated to the rights of the Agent or any
of the Lenders  with respect to the  Guaranty  Obligations  and the Notes or any
other Loan Document.  The Guarantor  hereby agrees that it will not institute or
take  any  action  seeking  reimbursement  against  the  Borrower  or any  other
guarantor  until  such time as the Agent and the  Lenders  shall  have  received
payment in full in cash in  satisfaction  of all the obligations of the Borrower
under the Notes and the other  Loan  Documents.  No  failure  on the part of the
Agent or any Lender to exercise,  and no delay in exercising,  any right, remedy
or power hereunder  shall operate as a waiver  thereof,  nor shall any single or
partial  exercise  by the  Agent or any  Lender  of any  right,  remedy or power
hereunder  preclude any other or future  exercise of any other right,  remedy or
power. The foregoing  provision is not intended to limit the Guarantor's  rights
under the  Development  Agreement  or the  Management  Agreement,  provided  all
relevant  provisions of the Loan Agreement  relative to Guarantor's  exercise of
said rights are satisfied.

         10.    Waiver of Notice, Consent, etc.

         (a)    This Guaranty  shall be construed as a continuing,  absolute and
unconditional guaranty of payment.

         (b)    The Guarantor hereby waives  acceptance and notice of acceptance
of this  Guaranty by the Agent or any of the Lenders and notice of  presentment,
demand, protest,  notice of protest and of dishonor,  notices of default and all
other  notices  relative to this Guaranty of every kind and  description  now or
hereafter provided by any agreement between the Borrower and the Agent or any of
the Lenders or any statute or rule of law except those specifically  required by
this Guaranty.

         (c)    Except for any notices to Guarantor specifically required by any
of the Loan Documents,  the Guarantor waives any and all notice of the creation,
renewal, extension or accrual of any of the obligations of the


                                       8
<PAGE>


Borrower under any of the Loan  Documents  (with the exception of (i) changes in
the Maturity Date unless  extended in accordance  with Section 2A.11 of the Loan
Agreement or unless  accelerated  by the Agent pursuant to the terms of the Loan
Agreement,  (ii) changes in the Maximum Loan  Amount,  and (iii)  changes in the
amount of  payments  of  principal  and/or  interest  as  scheduled),  or of the
reliance by the Agent or any of the Lenders upon this Guaranty or any other Loan
Document.  The obligations of the Borrower under any of the Loan Documents,  and
each of them, shall conclusively be deemed to have been created,  contracted, or
incurred in reliance upon this  Guaranty and all dealings  between the Borrower,
the Agent or any of the Lenders shall likewise be conclusively  presumed to have
been made or consummated in reliance upon this Guaranty.

         (d)    The  Guarantor  hereby  agrees  that the  terms,  covenants  and
provisions  contained in the Loan Agreement,  the Notes,  the Mortgage or in any
other Loan  Document may be altered,  extended,  modified,  waived,  released or
cancelled by the Agent or any of the Lenders, and the Guarantor agrees that this
Guaranty and its liability hereunder shall be in no way affected,  diminished or
released by any such alteration,  extension,  modification,  release,  waiver or
cancellation  (with the  exception  of (i) changes in the  Maturity  Date unless
extended  in  accordance  with  Section  2A.11 of the Loan  Agreement  or unless
accelerated  by the  Agent  pursuant  to the terms of the Loan  Agreement,  (ii)
changes in the Maximum Loan Amount,  and (iii) changes in the amount of payments
of principal and/or interest as scheduled).

         11.    Waiver of Priority of  Collateral.  The Guarantor  hereby agrees
that,  in the event  that any of its  property  is or may be  hypothecated  with
property of the Borrower,  as security for any obligations of the Borrower under
any other Loan Document,  any right of the Guarantor to have such other property
of the Borrower  first  applied to the discharge of such  obligations  is hereby
irrevocably waived by the Guarantor.

         12.    No Discharge;  Remedies  Cumulative.  The Guarantor shall not be
discharged, released or exonerated, in any way, from its absolute, unconditional
and independent liabilities hereunder,  even though any rights or defenses which
the  Guarantor may have against the Agent or any of the Lenders or others may be
destroyed, diminished or otherwise affected by:

                (a)      any declaration by the Agent or any Lender of a default
         in respect of any of the  obligations  of the Borrower under any of the
         Loan Documents;

                (b)      the  exercise  by the Agent or any Lender of any rights
         or remedies against the Borrower or any other person;

                (c)      the failure of the Agent or any Lender to exercise  any
         rights or remedies against the Borrower or any other person;

                (d)      the  sale  or  enforcement  of,  or  realization   upon
         (through  judicial  foreclosure,  power of sale or any other means) any
         security for any of the  obligations  of the Borrower  under any of the
         Loan  Documents,  or any security for any of the Guaranty  Obligations,
         even though (i) recourse may not thereafter be had against the Borrower
         or any other person for any deficiency, or (ii) the Agent or any Lender
         fails to pursue any such recourse  which might  otherwise be available,
         whether by way of deficiency judgment following judicial foreclosure or
         otherwise;

                (e)      any bankruptcy or reorganization of the Borrower or the
         voluntary  or  involuntary   participation   by  the  Borrower  in  any
         settlement or composition  for the benefit of the Borrower's  creditors
         either  in  liquidation,  readjustment,   receivership,  bankruptcy  or
         otherwise;

                (f)      the  release  of  any  other  guarantor  by  agreement,
         operation of law or otherwise; or

                (g)      any such action by the Agent or any Lender  which would
         release or limit the  liability of the Guarantor to the Agent or any of
         the Lenders even if the effect of that action is to deprive the

                                       9

<PAGE>



         Guarantor of the right to collect  reimbursement  from the Borrower for
         any sums paid to the Agent or any Lender.

All rights and  remedies of the Agent and the Lenders  hereunder or under any of
the Loan  Documents  shall be  cumulative  and may be  exercised  singularly  or
concurrently. The rights of the Agent and the Lenders under this Guaranty are in
addition  to and not in  diminution  of the rights of the Agent and the  Lenders
under any other Loan Document.

         13.    Continuing Guaranty.  Subject to the terms of Section 20 hereof,
until all  obligations  of the  Borrower to the Agent and the Lenders  under the
Loan  Documents are fulfilled to the  satisfaction  of the Agent and the Lenders
and each and every of the terms,  covenants and  conditions of this Guaranty are
fully  performed  and the Loan is  fully  repaid,  the  Guarantor  shall  not be
released by any act or thing which might,  but for this  provision,  be deemed a
legal or equitable discharge of a surety, or by reason of any waiver, extension,
modification,  forbearance or delay or other act or omission of the Agent or any
Lender or its  failure to proceed  promptly  or  otherwise,  or by reason of any
action  taken or  omitted  or  circumstance  which may or might vary the risk or
affect the  rights or  remedies  of the  Guarantor  or by reason of any  further
dealings  between  the  Borrower  and the Agent or any of the  Lenders,  whether
relating to the Loan or otherwise, and the Guarantor hereby expressly waives and
surrenders  any  defenses  to its  liability  hereunder  based  upon  any of the
foregoing acts,  omissions,  things or agreements or waivers of the Agent or any
of the  Lenders;  it being the  purpose  and  intent of this  Guaranty  that the
obligations of the Guarantor  hereunder are absolute and unconditional under any
and all circumstances.  The Guarantor has also executed the Completion  Guaranty
and the Operating Deficit Guaranty in favor of the Agent and the Lenders and (a)
payment or performance by the Guarantor of its  obligations  under this Guaranty
shall not decrease the Guarantor's  liability  under the Completion  Guaranty or
the Operating Deficit Guaranty,  and (b) payment or performance by the Guarantor
under the  Completion  Guaranty  or the  Operating  Deficit  Guaranty  shall not
decrease or diminish the Guarantor's liability under this Guaranty.

         14.    Notices.   All   notices,   demands,   instructions   and  other
communications  required  or  permitted  to be given to or made  upon any  party
hereto or any other person shall be in writing and shall be personally delivered
or sent by  registered  or  certified  mail,  postage  prepaid,  return  receipt
requested,  or telegram  (with  messenger  delivery  specified  in the case of a
telegram), or by prepaid courier, and shall be deemed to be given for purpose of
this  Guaranty in regard to  registered  or certified  mail,  three (3) Domestic
Business Days after mailing,  and in regard to personal delivery,  telegram,  or
prepaid  courier,  on the day that such writing is delivered.  Unless  otherwise
specified  in a notice  sent or  delivered  in  accordance  with  the  foregoing
provisions  of  this  Section,   notices,   demands,   instructions   and  other
communications  in writing shall be given to or made upon the following  persons
at its addresses indicated below:

                  To Guarantor:

                           Brookdale Living Communities, Inc.
                           77 West Wacker Drive, Suite 4400
                           Chicago, Illinois 60601
                           Attention:       Darryl W. Copeland, Jr.
                           Telecopy:        (312) 977-3699

                           Brookdale Living Communities, Inc.
                           77 West Wacker Drive, Suite 4400
                           Chicago, Illinois 60601
                           Attention:       Robert J. Rudnik, Esq.
                           Telecopy:        (312) 977-3769


                  To the Agent:

                                       10

<PAGE>



                           KeyCorporate Capital, Inc., as Agent
                           127 Public Square
                           Cleveland, Ohio 44114-1306
                           Attention:       Ms. Nancy A. Herman
                                            Vice President

                  with a courtesy copy to:

                           Jones, Day, Reavis & Pogue
                           901 Lakeside Avenue
                           Cleveland, Ohio 44114
                           Attention:  Bernadette M. Mast, Esq.

                  with a courtesy copy to any Lender:

                           at its address specified in or pursuant
                           to the Loan Agreement

or at such other address as any of the persons identified above may from time to
time designate by written notice given as herein required.  Rejection or refusal
to accept or inability to deliver because of changed addresses or because notice
of changed  address was given shall be deemed a receipt of such notice.  Failure
to provide a courtesy copy of any notice required hereunder shall not invalidate
any notice otherwise given in accordance with this Section.

         If  any  day  on  which  any  notice,  demand,   instruction  or  other
communication  is given or sent by any party  hereto is not a Domestic  Business
Day, such notice, demand,  instruction or other communication shall be deemed to
have  been  given or sent on the  Domestic  Business  Day next  succeeding  such
non-Domestic Business Day.

         15.    Submission  to  Jurisdiction.   (a)  The  Guarantor  irrevocably
submits  to the  non-exclusive  jurisdiction  of the  courts of the State of New
York, the courts of the United States for the Southern  District of the State of
New York,  and  appellate  courts  from any  thereof,  over any suit,  action or
proceeding  arising out of or relating to this  Guaranty.  The Guarantor  hereby
irrevocably  waives, to the fullest extent permitted by law, any objection which
it may now or hereafter have to the laying of the venue of any such suit, action
or proceeding brought in any such court and any claim that any such suit, action
or proceeding brought in such a court has been brought in an inconvenient forum.
Without  limiting  the  Guarantor's  right to appeal any such final  judgment in
accordance  with  applicable  Requirements,  the  Guarantor  agrees that a final
judgment in any such suit, action or proceeding brought in such a court shall be
conclusive and binding upon the Guarantor.

         (b)    The Guarantor hereby irrevocably  appoints CT Corporation System
as its authorized agent to accept and  acknowledge,  on behalf of the Guarantor,
service  of any and all  process  which may be  served  in any  suit,  action or
proceeding  of the nature  referred  to above in any such court.  The  Guarantor
represents  and  warrants  that such agent has agreed in writing to accept  such
appointment  and that the  Guarantor  has  delivered to the Agent a true copy of
such  designation and  acceptance.  Said  designation  and appointment  shall be
irrevocable.  If such agent shall cease so to act, the  Guarantor  covenants and
agrees that it shall  irrevocably  designate  and appoint  without delay another
such agent  satisfactory  to the Agent and shall  promptly  deliver to the Agent
evidence in writing of such other agent's acceptance of such appointment.

         (c)    Process may be served in any suit,  action or  proceeding of the
nature  referred to above (i) by the mailing of copies  thereof by registered or
certified air mail, postage prepaid return receipt  requested,  to the Guarantor
at its address set forth above or to such other  address of which the  Guarantor
shall have given  written  notice to the Agent,  or (ii) without  affecting  the
efficacy of any service  made  pursuant  to clause (i) above,  if the  Guarantor
shall not have filed an appearance within twenty-one days after the date of such
mailing, by serving a

                                       11

<PAGE>


copy thereof upon CT Corporation  System,  at its office at 1633  Broadway,  New
York,  New York 10019,  as the  Guarantor's  agent for  service of process.  The
Guarantor  agrees that such service shall be deemed in every  respect  effective
service of process upon the  Guarantor in any such suit,  action or  proceedings
and shall, to the fullest extent permitted by law, be taken and held to be valid
personal  service upon and personal  delivery to the Guarantor.  Nothing in this
Section  shall  affect  the right of the Agent to serve  process  in any  manner
permitted  by law or limit the right of the Agent to bring  proceedings  against
the Guarantor in the courts of any other jurisdiction or jurisdictions.

         16.    Entire  Agreement;   Modification  and  Waiver.  This  Guaranty,
together with the Completion  Guaranty,  the Operating  Deficit Guaranty and the
Environmental  Indemnity  Agreement,  represent the entire agreement between the
Guarantor,  on the one hand,  and the Agent and the Lenders,  on the other hand,
with  respect to the  matters  referred  to herein and  therein and no waiver or
modification  hereof or thereof shall be effective  unless in writing and signed
by the Agent and the Guarantor. All approvals, consents and other actions by the
Agent  hereunder  shall be given or taken by the  Agent in  accordance  with the
provisions  regarding Agent powers provided in the Loan Agreement (including any
required  instructions or consents by any specified percentage of Lenders or all
Lenders).  No Lender shall have any power to amend,  discharge or terminate this
Guaranty,  all such  actions  being  within the  powers of the Agent  (acting on
behalf of the Lenders as provided  in Article VII of the Loan  Agreement).  This
Guaranty,  the  Completion  Guaranty,  the  Operating  Deficit  Guaranty and the
Environmental  Indemnity  Agreement are  independent  agreements and shall be so
construed in accordance with their respective  terms.  The Completion  Guaranty,
the Operating  Deficit Guaranty and the  Environmental  Indemnity  Agreement are
additional security and benefit to the Agent and the Lenders and are not in lieu
of and do not in any way  diminish  the Guaranty  Obligations  of the  Guarantor
hereunder.  The  Guarantor  shall be fully  liable to the Agent and the  Lenders
hereunder  whether or not the Agent or any Lender has or shall  obtain any other
or further guaranties,  security or agreements,  and irrespective of whether the
Completion  Guaranty,  the  Operating  Deficit  Guaranty  or  the  Environmental
Indemnity Agreement or other or further  guaranties,  security or agreements are
effective or  enforceable  or are released in whole or in part,  voluntarily  or
involuntarily  or by  operation of law or  otherwise.  Neither the Agent nor any
Lender  shall have any  obligation  to pursue or attempt to pursue any  remedies
under  the  Completion   Guaranty,   the  Operating   Deficit  Guaranty  or  the
Environmental  Indemnity Agreement or any other or further guaranties,  security
or agreement and may enforce all rights and obligations hereunder,  irrespective
of the existence or  nonexistence  of other or further  guaranties,  security or
agreements.

         17.    Governing  Law. THIS GUARANTY AND THE RIGHTS AND  OBLIGATIONS OF
THE PARTIES AND OTHER PERSONS BENEFITTED HEREUNDER SHALL BE CONSTRUED, ENFORCED,
AND  INTERPRETED  ACCORDING TO THE LAWS OF THE STATE OF NEW YORK  APPLICABLE  TO
CONTRACTS  MADE IN AND  PERFORMED  IN THE  STATE OF NEW YORK  WITHOUT  REGARD TO
PRINCIPLES OF CONFLICT OF LAWS.

         18.    Successors and Assigns.  This Guaranty shall be binding upon the
Guarantor and upon its  successors and assigns and shall inure to the benefit of
the Agent and the Lenders and their respective successors and assigns.

         19.    Time of the Essence. Time shall be of the essence with regard to
the performance by the Guarantor of its obligations under this Guaranty.

         20.    Termination of Guaranty.  This Guaranty shall terminate when all
of the Guaranty Obligations have been fully satisfied.

         21.    Singular  and Plural.  As used in this  Guaranty,  the  singular
shall include the plural as the context requires.

         22.    Waiver of Trial by Jury.  THE  GUARANTOR,  AND THE AGENT AND THE
LENDERS BY THEIR  ACCEPTANCE  OF THE BENEFITS  HEREOF,  EACH HEREBY  IRREVOCABLY
WAIVE


                                       12
<PAGE>


TRIAL BY JURY IN ANY ACTION,  PROCEEDING OR COUNTERCLAIM BETWEEN OR AMONG ANY OF
THEM, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE,  ARISING OUT OF OR IN ANY
WAY CONNECTED TO THE LOAN, THIS GUARANTY OR ANY OF THE OTHER LOAN DOCUMENTS.

         23.    Transfer  of  Property,   Mergers,  etc.  The  Guarantor  hereby
covenants and agrees,  that until this Guaranty is terminated in accordance with
its terms,  (a) the  Guarantor  shall not,  without  the Agent's  prior  written
consent,  directly or  indirectly,  convey,  transfer or assign any  property or
asset of any nature, whether real property, personal property or mixed, tangible
or intangible or any interest  therein,  for less than fair market value, if the
same would cause a reduction in  Guarantor's  net worth below  $70,000,000  or a
reduction in  Guarantor's  minimum  liquidity in the form of Liquid Assets below
$5,000,000,  and (b) the Guarantor shall not merge or consolidate with, or sell,
assign, lease or otherwise dispose of all or substantially all of its assets to,
any other person;  provided,  that the Guarantor  may  consolidate  with another
person, or merge with and into another person, or permit another person to merge
with and into the Guarantor,  if the transaction  complies with the requirements
of Section 4.2(m) of the Building Loan Agreement and the following  requirements
are satisfied:

         (i)    the Agent shall have been  provided by the  Guarantor  with such
                information   concerning  such  transaction  as  the  Agent  may
                reasonably request;

         (ii)   no Event of Default  hereunder or under the Loan  Agreement,  or
                event which with  notice and lapse of time would  become such an
                Event of Default, shall have occurred and be continuing;

         (iii)  the  effectiveness  and  priority  of  the  liens  and  security
                interests  created  pursuant  to  the  Loan  Documents  are  not
                impaired by reason of any such transaction; and

         (iv)   the resulting or surviving  person (if other than the Guarantor)
                shall  be  a  corporation,   partnership  or  limited  liability
                company, duly organized under the laws of the United States, any
                State  thereof,  or the District of Columbia,  and shall assume,
                pursuant to a written instrument or instruments, satisfactory in
                form and substance to the Agent,  all of the  obligations of the
                Guarantor  under this  Guaranty and each other Loan  Document to
                which the Guarantor is a party.

         24.    Severability.  If any term or provision of this  Guaranty or any
application thereof shall be held to be invalid,  illegal or unenforceable,  the
remainder of this Guaranty and any other  application  of such term or provision
shall not be affected thereby.

         25.    Agent to Act on Behalf of  Lenders,  etc.  The  Lenders  and the
Agent and their  respective  successors  and assigns are  beneficiaries  of this
Guaranty,  but any legal proceedings or other  enforcement  actions on behalf of
any  Lender  against  the  Guarantor  with  respect  to this  Guaranty  shall be
undertaken  and  maintained  by the Agent,  acting on behalf and for the ratable
benefit of the Agent and the Lenders,  with the proceeds of any such proceedings
or enforcement actions to be applied as provided in the Loan Documents.

         26.    Headings.  The  headings in this  Guaranty  are for  purposes of
reference only and shall not limit or define the meaning hereof.


                            [SIGNATURE PAGE FOLLOWS]


                                       13
<PAGE>


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


                                   BROOKDALE LIVING COMMUNITIES, INC.


                                   By:  /s/ Mark J. Schulte
                                        ------------------------------------
                                        Name:    Mark J. Schulte
                                        Title:   President and CEO


<PAGE>

State of ILLINOIS     )
                      ) SS.:
County of COOK        )


On the 24th day of August, in the year 1999 before me, the undersigned, a notary
public in the State of Illinois, personally appeared Mark J. Schulte, personally
known to me or  proved  to me on the basis of  satisfactory  evidence  to be the
individual whose name is subscribed to the within instrument and acknowledged to
me that he executed the same in his  capacity,  and that by his signature on the
instrument,  the  individual,  or the person upon behalf of which the individual
acted,  executed the  instrument,  and that such individual made such appearance
before the undersigned in the County of Cook, State of Illinois.


NOTARY SEAL


                                           /s/ Donna Jean Elrod
                                        ---------------------------
                                         Notary Public (affix seal)



<PAGE>


                                   Schedule 1
                                   ----------


1.       Complaint  filed in the Supreme  Court of the State of New York,  Kings
         County, on July 23, 1999,  having Index # 25973/99,  by John Oliver and
         Stephanie  Oliver,  as plaintiffs,  against Brookdale Living Community,
         HRH  Construction  Corp. and Maxim  Construction  Corp., as defendants,
         claiming  damages in the amount of $6,000,000,  resulting from injuries
         allegedly sustained by John Oliver while working on the construction of
         the Project.

                                       15