SECURITY AGREEMENT
                                    [Arizona]

DEBTORS:                         ASSET INVESTORS OPERATING PARTNERSHIP, L.P.,
                                 a Delaware limited partnership ("Operating
                                 Partnership")
                                 3410 South Galena Street, Suite 210
                                 Denver, Colorado 80231

                                 AIOP LOST DUTCHMAN NOTES, L.L.C., a Delaware
                                 limited liability company ("AIOP")
                                 3410 South Galena Street, Suite 210
                                 Denver, Colorado 80231


SECURED PARTY:                   U. S. BANK NATIONAL ASSOCIATION
                                 918 17th Street, Fifth Floor
                                 Denver, Colorado 80202

EFFECTIVE DATE:                  April 7, 2000

         1. Grant of Security Interest and Collateral Assignment.  As collateral
security for the due and punctual payment and performance of the Obligations (as
hereinafter  defined),  the Debtor hereby grants to the Secured Party, with full
power and  authority  to  exercise  all rights and powers  granted by the Debtor
hereunder,  a lien upon, and a security  interest  under the Uniform  Commercial
Code of Arizona,  as in effect in the State of Arizona [Arizona Revised Statutes
("A.R.S.") Sections 47-1101 through 47-11107,  as amended from time to time (the
"UCC")]  to the  extent  that  the  same  shall  apply,  in and to,  and  hereby
collaterally  assigns to the Secured Party, all right, title and interest of the
Debtor in and to the personal property, located in the County of Maricopa, State
of Arizona,  to be identified  as the "Lost  Dutchman  Mobile Home Park",  "Blue
Valley  Mobile Home Park" and "Sun Valley Mobile Home Park"  (collectively,  the
"Mobile Home  Parks") and more  particularly  described  on Exhibit A,  attached
hereto  (collectively the "Real  Property").  Debtor's personal property is more
particularly   described  on  Exhibit  B,  attached  hereto   (collectively  the
"Collateral").  The Real Property, together with the Collateral are collectively
referred to herein as the "Property".

         2. Obligations Secured.  "Obligations" shall mean the loan evidenced by
that certain  Revolving  Promissory  Note dated the date hereof in the principal
amount of $15,000,000.00  ("Note"),  payable by the Debtor and Community Savanna
Club Joint  Venture,  a  Delaware  general  partnership  ("CSC") to the order of
Secured Party,  including without limitation,  any future advances,  and any and
all interest, commissions, obligations, liabilities,  indebtedness, charges, and
expenses now or hereafter  chargeable  against Operating  Partnership by Secured
Party or owing by Operating Partnership to Secured Party in connection with such
loan, whether direct or indirect, joint or several, absolute or contingent,  due


                                       1
<PAGE>

or to become due, now existing or hereafter  arising,  and the  performance  and
fulfillment by Debtor of all of the terms, conditions,  promises, covenants, and
provisions  contained  in this  Agreement  or in the Note or in any  present  or
future  agreement or instrument  between Debtor and Secured Party  evidencing or
securing said Note, including the Deed of Trust,  Security Agreement,  Financing
Statement   and   Assignment   of  Rents  and   Revenues,   executed  by  Debtor
simultaneously  herewith  (the "Deed of Trust"),  the Line of Credit  Agreement,
executed by Debtor,  CSC,  AIOP  Florida  Partnership  I,  L.L.C.,  AIOP Florida
Properties II, L.L.C.  and Secured Party (the "Line of Credit  Agreement").  Any
capitalized  terms used and not otherwise defined herein have the meanings given
them in the  Line of  Credit  Agreement.  Any  capitalized  terms  used  and not
otherwise  defined  herein or in the Line of Credit  Agreement,  shall  have the
meanings given to them in the UCC.

         3. Warranties and Covenants of the Debtor.

             (a) The Debtor has all power,  statutory and otherwise,  to execute
and deliver this Agreement,  to perform its obligations hereunder and to subject
the Collateral to the security  interest  created hereby,  all of which has been
duly  authorized  by all  necessary  action.  The execution and delivery of this
Agreement,  and the  performance  of this  Agreement and the  enforcement of the
security  interest granted hereby,  will not result in any violation of or be in
conflict  with or  constitute  a  default  under  any term of any  agreement  or
instrument,  or,  to the best of the  knowledge  of the  Debtor,  any  judgment,
decree, order, law, statute, rule or governmental  regulation applicable to this
Debtor or the Collateral.

             (b) AIOP is the sole record and beneficial owner of the Collateral,
and neither the Collateral  nor the proceeds  thereof are subject to any pledge,
lien,  security  interest,  charge or  encumbrance  except (i) the lien  created
pursuant to this  Agreement,  and (ii) the lien of the UCC  financing  statement
delivered by the Debtor to the Secured  Party with respect  thereto.  The Debtor
shall defend the Collateral against all claims and demands of all persons at any
time claiming any interest therein.

             (c) The Collateral  shall be located at Debtor's places of business
shown above or at the  Property.  Debtor  shall not remove the  Collateral  from
either of said locations  without the prior written consent of the Secured Party
except as  contemplated  by paragraph  3(g) below.  Debtor shall notify  Secured
Party of any change in its place of business prior to making the change.

             (d)  Debtor  shall pay all taxes and  assessments  of every  nature
which may be levied or assessed against the Collateral.

             (e) The  Debtor  shall  keep the  Collateral  at all times  insured
against risk of loss or damage by fire (including  so-called extended coverage),
theft and such other casualties as the Secured Party may reasonably require, all
in such amounts, under such forms of policies, upon such terms, for such periods
and written by such companies or  underwriters  as the Secured Party may approve
in its reasonable  discretion,  losses in all cases to be payable to the Secured
Party and the Debtor as their  interests  may appear.  All policies of insurance


                                       2
<PAGE>

shall  provide  for  at  least  fifteen  (15)  days'  prior  written  notice  of
cancellation  to the Secured  Party;  and the Debtor  shall  furnish the Secured
Party with an  appropriate  renewal  policy  certified by Debtor as complete and
accurate to assure compliance with the provisions of this paragraph.

             (f) The  Collateral  is in good  condition.  At  Debtor's  expense,
Debtor shall keep the same in good  condition,  ordinary wear and tear excepted,
and from time to time shall replace and repair all such parts of the  Collateral
as may be broken,  worn out, or damaged without  allowing any lien to be created
upon the  Collateral on account of such  replacement  or repairs,  and shall not
waste or destroy the  Collateral.  The Secured Party may examine and inspect the
Collateral at any time, wherever located.

             (g) Debtor shall not sell, lease, convey, encumber or in any manner
transfer,  without the prior  written  consent of Secured  Party,  any  tangible
personal  property now or hereafter owned by Debtor and attached to or contained
in and used in  connection  with the  operation  of the Mobile  Home  Parks,  or
otherwise  forming  a part of the  Collateral  (except  such  tangible  personal
property as is  discarded  as obsolete or damaged and is replaced by  substitute
items having equivalent or greater book value).

             (h)  Debtor  shall  not  use the  Collateral  in  violation  of any
applicable statutes, regulations or ordinances.

             (i) The  Debtor's  organization  and  governance  documents  do not
prohibit  any term or  condition  of this  Agreement,  and when  executed,  this
Agreement shall be a binding obligation of the Debtor.

             (j) Debtor shall notify  Secured  Party,  in writing,  prior to the
time Debtor changes its name, identity or limited liability company structure.

             (k) The Collateral is used or bought primarily for use in business.

             (l)  Debtor  shall  collect  its rents and  income in the  ordinary
course of business.

             (m) After an Event of  Default  as  defined in the Deed of Trust or
the  appointment of a receiver as provided  therein,  Debtor agrees that Secured
Party shall have full power to notify  tenants,  collect,  compromise,  endorse,
sell or  otherwise  deal with  proceeds in its own name or that of Debtor at any
time.  Secured Party may apply cash proceeds to the payment of any  Obligations,
or may release such cash proceeds to Debtor.

         4.  Events  of  Default.  The  occurrence  of any  one or  more  of the
following events shall constitute an Event of Default under this Agreement:

             (a)  Default  in  the  payment  or   performance  of  any  monetary
obligation  contained  or  referred  to  herein or in the Note or in the Deed of
Trust securing the same beyond any applicable grace period specified therein;

                                       3
<PAGE>

             (b) Uninsured loss,  theft,  damage, or destruction of any material
portion of the Collateral;  sale or encumbrance of any of the Collateral; or the
making of any levy, seizure or attachment thereof or thereon;

             (c)  Default  in the due  performance  or  observance  of any term,
covenant or agreement on Debtor's  part to be performed or observed  pursuant to
any of the provisions of this  Agreement,  other than payment and performance of
any monetary  obligation,  and such non-monetary default shall continue beyond a
period of thirty (30) days after  written  notice of the  Default  being sent to
Debtor by Secured Party; or

             (d) The  occurrence of an Event of Default under the Line of Credit
Agreement.

         5. Rights Upon and Event of Default. Upon the occurrence of an Event of
Default and at any time  thereafter,  and whether or not the Secured Party shall
declare any or all of the  Obligations to be immediately  due and payable in the
manner and with the effect stated in the Deed of Trust, then and in such event:

             (a) The Secured Party may foreclose upon and take possession of the
Collateral and may exclude the Debtor,  and all persons  claiming by, through or
under the Debtor,  from possession  thereof,  and may assign the Collateral to a
nominee or a third party. In connection  herewith the Secured Party or any third
party assignee or nominee of the Secured Party shall have the right to exercise,
in the name of the Debtor,  the  Debtor's  rights and powers with respect to the
Collateral.

             (b) The  Secured  Party  shall have all rights  and  remedies  of a
secured  party  available  under  the UCC  and any  other  rights  and  remedies
available  under  this  Agreement  and  under  the Deed of Trust  and any  other
documents securing the Note or at law or in equity.

             (c) The  Debtor  hereby  agrees  that if  notice  of sale or  other
disposition  of the  Collateral  is given in the  manner  and to the  address or
addresses then required pursuant to the Deed of Trust at least five (5) business
days  before the time of the sale or other  disposition,  such  notice  shall be
deemed reasonable and shall fully satisfy any requirement for the giving of said
notice,  whether  required by the UCC, any other law or  otherwise.  Any sale or
disposition may occur by private  proceedings at Secured Party's  election,  and
Debtor  acknowledges that, due to the nature of the Collateral and its essential
relationship to the operation of the facility, Secured Party may buy at any such
private sale.

             (d) Secured Party shall have the right, power and authority to sell
the  Collateral  or any part  thereof at public or private  sale for cash,  upon
credit, or for future delivery, and at such price or prices as Secured Party may
deem  best,  and  Secured  Party  may be the  purchaser  of any  and  all of the
Collateral  so sold,  in such manner and order as Secured  Party may in its sole
discretion  elect.  Upon any such sale,  Secured  Party  shall have the right to


                                       4
<PAGE>

deliver,  assign and transfer to the purchaser  thereof the  Collateral so sold.
Any such  public  sale  shall be held at such  time or  times,  within  ordinary
business  hours,  and at such place or places,  as Secured  Party may fix in the
notice of such  sale.  At any sale the  Collateral  may be sold in one lot as an
entirety or in separate  parcels as Secured Party may  determine.  Secured Party
shall not be  obligated to make any sale  pursuant to any such  notice.  Secured
Party may, without notice or publication,  adjourn any public or private sale or
cause the same to be adjourned from time to time by announcement at any time and
place  fixed  for the  sale,  and such  sale may be made at any time or place to
which  the same may be so  adjourned.  In case of any sale of all or any part of
the Collateral on credit or for future  delivery,  the Collateral so sold may be
retained  by Secured  Party  until the  selling  price is paid by the  purchaser
thereof,  but Secured  Party shall incur no  liability in case of the failure of
such purchaser to take up and pay for the Collateral so sold, and in case of any
such failure, such Collateral may again be sold upon like notice. Each and every
method of disposition  described in this paragraph shall constitute  disposition
in a commercially reasonable manner.

In conjunction therewith, in addition to or in substitution for those rights and
remedies and the rights and remedies provided for herein:

             (e) It  shall  not be  necessary  that the  Collateral  or any part
thereof be present at the location of such sale.

             (f) The  sale by  Secured  Party  of less  than  the  whole  of the
Collateral  shall not  exhaust  the rights of Secured  Party  hereunder  or with
respect to the Collateral,  and Secured Party is specifically  empowered to make
successive sale or sales  hereunder  until the whole of the Collateral  shall be
sold; and, if the proceeds of such sale of less than the whole of the Collateral
shall be less  than the  aggregate  of the  indebtedness  secured  hereby,  this
Agreement and the security  interest  created  hereby shall remain in full force
and effect as to the unsold portion of the Collateral just as though no sale had
been made.

             (g) In  the  event  any  sale  hereunder  is  not  completed  or is
defective  in the  opinion of Secured  Party,  such sale shall not  exhaust  the
rights of Secured  Party  hereunder  and  Secured  Party shall have the right to
cause a subsequent sale or sales to be made hereunder.

             (h) Any and all  statements  of fact or other  recitals made in any
bill of sale or assignment or other instrument  evidencing any sale hereunder as
to  nonpayment  of the  indebtedness  or as to the  occurrence  of an  Event  of
Default,  or as to Secured Party having declared all of such  indebtedness to be
due and  payable,  or as to  notice  of time,  place  and  terms of sale and the
properties  to be sold  having  been  duly  given,  as to any other act or thing
having been duly done by Secured Party shall be taken as prima facie evidence of
the truth of the facts so stated and recited.

             (i) Secured  Party may appoint or delegate  any one or more persons
as agent to perform any act or acts  necessary or incident to any such sale held
by Secured Party,  including the sending of notices and the conduct of sale, but
in the name and on behalf of Secured Party.

             (j) The proceeds of any sale or other  disposition or collection of
or other  realization upon all or any part of the Collateral shall be applied in
the  following  order of  priority:  first,  to pay the  costs and  expenses  of
collection,  custody, sale or other disposition or delivery (including,  without


                                       5
<PAGE>

limitation, reasonable legal costs and reasonable attorneys' fees) and all other
charges incurred by the Secured Party with respect to the Collateral; second, to
the payment of the  Obligations  in such order as the Secured  Party may, in its
sole  discretion,  determine;  and third, to pay any surplus to the Debtor or to
any  person  or party  lawfully  entitled  thereto,  or as a court of  competent
jurisdiction may direct.

             (k) Secured Party may use or operate the Collateral for the purpose
of preserving it or its value.  Secured Party may require Debtor to assemble the
Collateral and make it available to Secured Party at a place to be designated by
Secured  Party  which is  reasonably  convenient  to both  parties.  Expenses of
retaking,  holding,  preparing  for  sale,  selling,  or costs and  expenses  in
enforcing this Agreement,  or the like shall include Secured Party's  reasonable
attorneys'  fees and legal  expenses,  and the same,  together with all advances
made by Secured Party on behalf of the Debtor,  shall be part of the Obligations
secured hereby. Debtor shall be liable to Secured Party for any deficiency.

         6.  Release  of  Collateral.  If the  Obligations  are  fully  paid and
discharged, all Collateral held hereunder shall be returned to the Debtor by the
Secured Party promptly upon demand, all requisite  termination  statements under
the UCC shall be executed and delivered to the Debtor by the Secured Party,  and
the Secured Party shall take such other action in connection with such discharge
as the Debtor may reasonably request.

         7. Further Agreements. The Debtor has previously executed and delivered
to the Secured  Party  financing  statements  pursuant to the UCC covering  that
portion of the  Collateral  for which a security  interest  may be  perfected by
filing.  The Debtor shall,  upon request of the Secured  Party,  promptly  make,
execute and deliver to the Secured  Party,  from time to time,  a listing of the
specific Collateral, including personal property, goods, equipment, furnishings,
furniture  acquired and/or owned in connection  with the Mobile Home Parks,  and
such  other  and  further  financing  statements,   instruments,  documents  and
certificates,  and perform  such other and further acts and  assurances,  as the
Secured Party may request to perfect,  to maintain the priority of, or from time
to time, to renew, such security interests, to confirm or more fully perfect the
rights  granted  hereby,  or in any way to assure the  Secured  Party all of its
rights  hereunder.  The Debtor shall pay the costs of all filings and recordings
in public offices of record, and shall, upon request of the Secured Party, make,
execute and deliver such other and further instruments,  and take such other and
further  actions,  as the Secured  Party may deem  necessary or  appropriate  to
enable  it to  realize  upon  the  Collateral,  to  exercise  fully  its  rights
hereunder, and to ratify and confirm any sale hereunder.

         8.  Indemnification;  Waivers.  The  Debtor  shall  indemnify  and hold
harmless  the  Secured  Party  from any and all  liability  or damage  which the
Secured Party may incur in the exercise and  performance,  in good faith, of any
of its  powers  and  duties  specifically  set  forth  herein,  but  not for any
liability  or damage  incurred  on  account of the gross  negligence  or willful
misconduct  of the  Secured  Party  provided,  however,  that  Debtor  shall not
indemnify  Secured Party from and against claims  asserted by third parties as a
consequence  of the  Secured  Party's  negligence  or  misconduct.  No  delay or
omission  on the part of the Secured  Party in  exercising  any right  hereunder


                                       6
<PAGE>

shall  operate as a waiver of such right or of any other  right  hereunder.  Any
waiver of any such right on any one occasion  shall not be construed as a bar to
or waiver of any such right on any such  future  occasion.  No course of dealing
between the Debtor and the Secured  Party nor any failure to  exercise,  nor any
delay in  exercising,  on the part of the  Secured  Party,  any right,  power or
privilege  hereunder or under any of the Obligations,  shall operate as a waiver
thereof;  nor shall any  single  or  partial  exercise  of any  right,  power or
privilege hereunder or thereunder preclude any other or further exercise thereof
or in the exercise of any other right,  power or  privilege.  The Secured  party
shall be under no duty or liability with respect to the Collateral other than to
use reasonable care in the custody of any Collateral while in its possession and
shall not be liable for any failure to take action  necessary to preserve rights
against prior or other parties on any instrument constituting the Collateral.

         9. Further Transfers  Prohibited.  The Debtor covenants and agrees that
it  will  not,  at any  time  during  the  term  of this  Agreement,  except  as
contemplated by paragraph 3(g) hereof, further convey or encumber the Collateral
in any  manner  whatsoever;  and the  Debtor  agrees  that it will do all things
necessary to maintain  the  enforceability  and priority of the Secured  Party's
security interest in the Collateral.

         10.  Notices.  Any  and  all  notices,  demands,  consents,  and  other
communications  required  or  permitted  under  this  Agreement  shall be deemed
adequately  given only if given in the manner and to the  addresses  provided in
the Deed of Trust.

         11. General Provisions.

             (a) No waiver by Secured  Party of any default  shall  operate as a
waiver of any other  default or of the same  default on a future  occasion.  The
taking of this Security  Agreement  shall not waive or impair any other security
said Secured  Party may have or  hereafter  acquire for the payment of the above
indebtedness,  nor shall the  taking of any such  additional  security  waive or
impair  this  Security  Agreement;  but said  Secured  Party  may  resort to any
security it may have in the order it may deem proper,  and  notwithstanding  any
collateral  security,  Secured  Party shall retain its rights of setoff  against
Debtor.

             (b) At its  option,  but  without  obligation  to the  Debtor,  the
Secured  Party may  discharge  taxes,  liens,  or  security  interests  or other
encumbrances at any time levied or placed on the  Collateral,  may place and pay
for  insurance  thereon,  may  order  and pay for the  repair,  maintenance  and
preservation  thereof and may pay any necessary  filing or recording  fees.  The
Debtor  agrees to reimburse  the Secured Party on demand for payment made or any
expense incurred by the Secured Party pursuant to the foregoing authorization.

             (c) Until the  occurrence  of an Event of Default,  Debtor may have
possession of the  Collateral  and use it in any lawful manner not  inconsistent
with this Agreement or any policy of insurance thereon,  and upon the occurrence
of an Event of Default,  Secured Party shall have immediate  right to possession
of the  Collateral,  provided,  however,  that  Secured  Party may  perfect  its
interest in the Collateral by possession.

                                       7
<PAGE>

             (d) All rights of the Secured  Party  hereunder  shall inure to the
benefit of its  successors  and  assigns;  and all promises and duties of Debtor
shall bind its legal representatives, successors or assigns.

             (e)  Except  as  otherwise  provided  by the UCC,  Debtor  releases
Secured  Party from all claims for loss or damage  caused by any act or omission
on the part of Secured Party, its officers,  agents and employees,  except gross
negligence or willful misconduct.

             (f)  This  Agreement  shall  be  governed  by  and  interpreted  in
accordance  with the laws of the State of Colorado except to the extent that the
laws of the State of Arizona regarding the creation,  perfection and realization
upon the security  interests and liens hereunder  require the application of the
State in which the Property is located.  Further, the place where this Agreement
is entered into and the place of performance  and  transaction of business shall
be deemed to be the State of Colorado.

             (g) Unless the context  otherwise  requires,  all terms used herein
which are defined in the UCC, shall have the meaning therein stated.



                                       8
<PAGE>


         DATED effective the 7 day of April, 2000.


                                   DEBTORS:

                                   ASSET INVESTORS OPERATING PARTNERSHIP, L.P.,
                                   a Delaware limited partnership

                                   By:  ASSET INVESTORS CORPORATION, a Delaware
                                        corporation, General Partner


                                        By:  /s/David M. Becker
                                             -------------------------
                                              David M. Becker
                                              Chief Financial Officer


                                   AIOP LOST DUTCHMAN NOTES, L.L.C., a Delaware
                                   limited liability company

                                   By:  ASSET INVESTORS OPERATING PARTNERSHIP,
                                        L.P.,  a  Delaware limited partnership,
                                        Sole Member and Manager

                                        By:  ASSET INVESTORS CORPORATION, a
                                             Delaware corporation, General
                                             Partner


                                             By:  /s/David M. Becker
                                                 -------------------------
                                                  David M. Becker
                                                  Chief Financial Officer


                                       9
<PAGE>



                                   SECURED PARTY:

                                   U.S. BANK NATIONAL ASSOCIATION


                                    By:  /s/Cyd Petre
                                        --------------------------
                                         Cyd Petre, Vice President



                                       10
<PAGE>



STATE OF COLORADO                                    )
                                                     )    ss.
COUNTY OF DENVER                                     )

         The  foregoing  instrument  was  acknowledged  before  me this 7 day of
April,  2000, by David M. Becker as Chief  Financial  Officer of Asset Investors
Corporation,  a  Delaware  corporation,  as general  partner of Asset  Investors
Operating Partnership, L.P., a Delaware limited partnership.

         Witness my hand and official seal.

         My commission expires:     12/7/2000


                                                            /s/Pam J. Finch
                                                         -----------------------
                                                             Notary Public


( S E A L )

STATE OF COLORADO                                    )
                                                     )    ss.
COUNTY OF DENVER                                     )

         The  foregoing  instrument  was  acknowledged  before  me this 7 day of
April,  2000, by David M. Becker as Chief  Financial  Officer of Asset Investors
Corporation,  a  Delaware  corporation,  as general  partner of Asset  Investors
Operating Partnership,  L.P., a Delaware limited partnership, as Sole Member and
Manager  of AIOP Lost  Dutchman  Notes,  L.L.C.,  a Delaware  limited  liability
company.

         Witness my hand and official seal.

         My commission expires:     12/7/2000

                                                            /s/Pam J. Finch
                                                         -----------------------
                                                             Notary Public
( S E A L )


                                       11
<PAGE>


STATE OF COLORADO                                    )
                                                     )        ss.
CITY AND COUNTY OF DENVER                            )

     The foregoing  instrument was  acknowledged  before me this 7 day of April,
2000, by Cyd Petre as Vice President of U. S. BANK NATIONAL ASSOCIATION.

         Witness my hand and official seal.

         My Commission Expires:                      12/7/2000


                                                             /s/Pam J. Finch
                                                         -----------------------
                                                             Notary Public

[ S E A L ]


                                       12