PROMISSORY NOTE


$8,500,000.00                                                   Denver, Colorado
                                               Effective as of December 30, 1998

         FOR VALUE RECEIVED, the undersigned AIOP LOST DUTCHMAN NOTES, L.L.C., a
Delaware limited liability company ("Borrower")  promises to pay to the order of
U.S. BANK NATIONAL  ASSOCIATION ("Bank") at 918 Seventeenth Street, Fifth Floor,
Denver,  Colorado 80217;  Attn:  Real Estate Banking,  or at such other place as
Bank may,  from time to time  designate in writing,  the  principal sum of Eight
Million Five Hundred Thousand and No/100ths ($8,500,000.00),  or so much of that
sum  as may be  disbursed  from  time  to  time,  with  interest  on the  amount
disbursed, computed from the date of initial disbursement ("Disbursement Date"),
with  principal  and  interest  thereon  payable  as  specified  in  this  Note.
Capitalized  terms used but not defined herein shall have the meanings  assigned
to such terms in the Loan Agreement (defined below).

         1. Interest Rate. The outstanding  principal balance of this Note shall
bear interest at a variable rate equal to the one month Reserve  Adjusted  LIBOR
Rate plus Two Hundred  Fifty (250) Basis  Points,  reset daily,  (the  "Adjusted
Eurodollar  Rate").  The term "Reserve Adjusted LIBOR Rate" is defined and shall
be  determined  as provided in Exhibit A attached to this Note and  incorporated
herein by reference. The term "Basis Points" means an arithmetic expression of a
percentage  measured in  hundredths  of a percent  (i.e.  50 Basis Points equals
one-half of one percent).

         2. Payment and Maturity Dates. Interest shall be payable in arrears and
shall  be  calculated  on the  actual  days  outstanding  over a  360-day  year.
Principal and interest prior to the Conversion Date (defined in Section 3 below)
shall be payable as follows:

            (a) in arrears, monthly payments of interest only, commencing on the
first day of the first calendar month  following the  Disbursement  Date, and on
the first day of each month thereafter until the Maturity Date; and

            (b) on June 30,  1999  (the  "Maturity  Date"),  the  entire  unpaid
principal  amount and any interest  accrued but  remaining  unpaid and all other
sums due under this Note, subject to Borrower's  election to extend the Maturity
Date set forth in Section 3 below.

All  installments  of  principal  and  interest of this Note are payable only in
lawful money of the United States of America, at such place as the holder hereof
may designate in writing from time to time.  Any payments  received by Bank will
be applied in the following  order:  (a) any collection  costs the Bank may have
incurred  in  procuring  Borrower's  performance  hereunder;  (b) payment of the
interest then accrued and due on the unpaid principal  balance of this Note; (c)
any charges assessed by the Bank; and (d) principal, subject to the restrictions
on prepayment hereafter set forth.

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         3.  Extension  Period  Election.  Borrower  is  entitled  to extend the
Maturity Date to April 15, 2001  ("Extension  Period") upon  satisfaction of the
conditions  precedent set forth in Section 2.2 of the Loan  Agreement.  From and
after the first (1st) day of the Extension Period (the "Conversion  Date"),  the
principal  balance of this Note shall bear  interest at the Adjusted  Eurodollar
Rate.

         4. Extension Period Payment Terms.  From and after the Conversion Date,
the  outstanding  principal  balance  of the Note  shall  bear  interest  at the
Adjusted Eurodollar Rate and Borrower shall make consecutive monthly installment
payments of interest  accrued at the Adjusted  Eurodollar  Rate and  consecutive
monthly  installment   payments  of  principal.   The  amount  of  each  monthly
installment of principal shall be that amount which would be sufficient to fully
repay the  outstanding  principal on the Conversion  Date over twenty (20) years
from the Conversion Date if interest on the outstanding principal balance on the
Conversion  Date were also being paid  monthly at an interest  rate equal to Two
Hundred Fifty (250) Basis Points in excess of the  then-applicable  rate payable
on the  Conversion  Date on United States  Treasury bills having a maturity date
closest to (but not extending beyond) two (2) years from the Conversion Date and
if the total amount of such  principal  and interest paid each month were equal.
On the last day of the  Extension  Period  (the  "Extended  Maturity  Date") the
entire outstanding  principal balance of the Note, together with all accrued but
unpaid  interest and all other sums due  hereunder or under the Loan  Documents,
shall be due and payable in full.

         5. Default Rate. Effective upon notice from the Bank whenever any Event
of Default  shall have  occurred  (whether or not the maturity of the Note shall
have accelerated),  interest shall accrue on the unpaid principal balance of the
Note from time to time  outstanding  at a rate per annum equal to the greater of
(a) eighteen  percent (18%) per annum,  or (b) the interest rate then applicable
plus five percent (5%) (the  "Default  Rate").  The Default Rate shall  continue
until such time as such Event of  Default  shall have been cured to the  written
satisfaction of the Bank, or if the Event of Default  consists of the Borrower's
failure to pay the Bank any amount due and owing under any Loan Document,  until
such amount  shall have been paid in full.  Failure to  exercise  such option or
charge such  increased  interest  shall not be a waiver of the right to do so at
any future time or with respect to any other default.

         6. Late Charges. If Borrower shall fail to make any payment of interest
or principal,  including the final combined principal and interest  installment,
within ten (10) days after the date the same is due and  payable,  a late charge
by way of damages shall be immediately due and payable. Borrower recognizes that
default by Borrower  in making the  payments  herein  agreed to be paid when due
will result in the holder incurring additional expense in servicing the Loan, in
loss to the holder of the use of the money due and in  frustration to the holder
in meeting its other  financial and loan  commitments.  Borrower agrees that, if
for any reason  Borrower fails to pay the amounts due under this Note within ten
(10) days after the date the same is due and payable, the holder hereof shall be
entitled to damages for the detriment  caused thereby,  and that it is extremely
difficult and  impractical  to ascertain  the extent of such  damages.  Borrower
therefore  agrees that a sum equal to four percent  (4%) of each  payment  which


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becomes  delinquent  is a  reasonable  estimate of said damages to the holder of
this Note, which sum Borrower agrees to pay on demand.

         7. Event of Default.  The  occurrence of any Event of Default set forth
in the Loan  Agreement  shall be deemed  to be an event of  default  ("Event  of
Default") hereunder.

         8. Acceleration.  Upon the occurrence of an Event of Default, at Bank's
option,  the unpaid  principal  amount of and accrued interest on the Note shall
become  due and  payable  automatically,  without  presentment,  demand or other
requirements of any kind, all of which are hereby expressly waived by Borrower.

         9. Remedies Cumulative.  The rights or remedies of the Bank as provided
in  this  Note  and any  instrument  securing  payment  of this  Note  shall  be
cumulative and concurrent and may be pursued singly,  successively,  or together
against the Borrower, and any other funds, property or security held by Bank for
the payment hereof or otherwise at the sole  discretion of the Bank. The failure
to exercise  any such right or remedy shall in no event be construed as a waiver
or release of such rights or remedies or the right to exercise them at any later
time.

         10.  Forbearance.  Any  forbearance  of Bank in exercising any right or
remedy  hereunder  or  under  the  Loan  Documents,  or  otherwise  afforded  by
applicable  law,  shall not be a waiver of or preclude the exercise of any right
or remedy.  The acceptance by Bank of payment of any sum payable hereunder after
the due date of such  payment  shall not be a waiver  of Bank's  right to either
require  prompt  payment  when due of all other  sums  payable  hereunder  or to
declare a default for failure to make  prompt  payment.  Bank shall at all times
have the right to proceed  against any portion of the  security  held herefor in
such order and in such manner as Bank may deem fit,  without  waiving any rights
with respect to any other security.  No delay or omission on the part of Bank in
exercising any right hereunder shall operate as a waiver of such right or of any
other right under this Note.

         11. Right of Setoff.  Borrower  hereby  grants to Bank (i) the right at
any time and from time to time after any Event of Default,  in the  absolute and
sole discretion of Bank and without demand or notice to Borrower, to set-off and
apply deposits  (whether  certificates  of deposit,  demand,  general,  savings,
special,  time, or other,  and whether  provisional or final) held and any other
liabilities or other obligations of Bank to Borrower in his individual  capacity
("Deposits, Liabilities, and Obligations") against or to the Loan, regardless of
whether the Deposits,  Liabilities,  or Obligations are contingent,  matured, or
unmatured,  and (ii) a  security  interest  in the  Deposits,  Liabilities,  and
Obligations to secure the Loan.

         12.  Borrower's  Waivers.  Borrower and any  sureties,  guarantors  and
endorsers  (severally,  each called a "Surety") waiver presentment,  protest and
demand, notice of protest,  demand and of dishonor and non-payment of this Note,
and expressly  agree that this Note, or any payment  hereunder,  may be extended
from time to time without in any way affecting the liability of the Borrower and
each Surety hereof.

         In  addition,  the  Borrower  and each Surety  waives and agrees not to
assert: (a) any right to require holder to proceed against Borrower or any other


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Surety,  to proceed  against or exhaust any security for the Note, to pursue any
other  remedy  available  to holder,  or to pursue any remedy in any  particular
order or manner; (b) the right to a trial by jury on any issues between Borrower
and Bank and to any  matters  pertaining  to the acts of Bank  prior to the date
hereof;  (c) the benefit of any statute of  limitations  affecting its liability
hereunder or the enforcement  hereof; (d) the benefits of any legal or equitable
doctrine or principle of marshalling;  (f) notice of the existence,  creation or
incurring  of new or  additional  indebtedness  of Borrower  to holder;  (g) the
benefits of any statutory  provision  limiting the liability of a surety, to the
extent applicable;  (h) any defense arising by reason of any disability or other
defense of  Borrower  or by reason of the  cessation  from any cause  whatsoever
(other than  payment in full) of the  liability  of Borrower  for payment of the
Note;  and (i) the  benefits of any  statutory  provision  limiting the right of
holder to recover a deficiency  judgment,  or to otherwise  proceed  against any
person or entity  obligated for payment of the Note,  after any  foreclosure  or
trustee's sale of any security for the Note.  Until payment in full of the Note,
no Surety shall have any right of  subrogation  and each hereby waives any right
to enforce any remedy  which  holder now has,  or may  hereafter  have,  against
Borrower  or any other  Surety,  and  waives  any  benefit  of, and any right to
participate in, any security now or hereafter held by holder.

         13. Usury. In the event the interest provisions hereof or any exactions
provided for herein or in the Loan  Documents or any other  instrument  securing
this Note shall result, because of any reduction of principal, or for any reason
at any time  during the life of this Note,  in any  effective  rate of  interest
which,  for any  month,  transcends  the  limit of the  usury or any  other  law
applicable  to the Note,  all sums in excess of those  lawfully  collectible  as
interest for the period in question shall,  without further  agreement or notice
between or by any party  hereto,  be applied  upon  principal  immediately  upon
receipt  of such  monies by Bank,  with the same  force and effect as though the
payor had specifically  designated such extra sums to be so applied to principal
and Bank had agreed to accept such extra payment as a  premium-free  prepayment.
In no event  shall any agreed to or actual  exaction as  consideration  for this
Loan  transcend  the limits  imposed or provided by the laws  applicable to this
transaction  or the  Borrower  hereof in the  jurisdiction  in which the land is
located  for the use or  detention  of money or for  forbearance  in seeking its
collection.

         14. Loan  Documents.  This Note is  executed by Borrower in  connection
with that certain Loan Agreement between  Borrower,  Guarantor and Bank dated as
of the date hereof ("Loan Agreement") and with that certain Guarantee  Agreement
dated  as  of  the  date  hereof  ("Guarantee"),  executed  by  Asset  Investors
Corporation, a Maryland corporation,  and Asset Investors Operating Partnership,
L.P., a Delaware limited partnership (each, "Guarantor").

         15. Preferential  Payment.  Borrower agrees that to the extent Borrower
makes any payment to Bank in connection with the indebtedness  evidenced by this
Note, and all or any part of such payment is subsequently invalidated,  declared
to be fraudulent or preferential,  set aside or required to be repaid by Bank or
paid  over to a  trustee,  receiver  or any  other  entity,  whether  under  any
bankruptcy act or otherwise  (any such payment is  hereinafter  referred to as a
"Preferential Payment"), then the indebtedness of Borrower under this Note shall
continue or shall be reinstated,  as the case may be, and, to the extent of such


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payment or repayment by Bank,  the  indebtedness  evidenced by this Note or part
thereof intended to be satisfied by such  Preferential  Payment shall be revived
and continued in full force and effect as if said  Preferential  Payment had not
been made.

         16.  Governing  Law;  Jurisdiction.  This  Note is to be  governed  and
construed  according to the laws of Colorado,  without regard to conflict of law
principles.  Without  limiting  the  right of the Bank to bring  any  action  or
proceeding  against  Borrower or against any property of Borrower (an  "Action")
arising out of or relating to this Note or any indebtedness  evidenced hereby in
the courts of other  jurisdictions,  Borrower hereby irrevocably  submits to the
jurisdiction,  process and venue of any Colorado  State or Federal court sitting
in Denver,  Colorado, and hereby irrevocably agrees that any Action may be heard
and determined in such Colorado  State court or in such Federal court.  Borrower
hereby  irrevocably  waives, to the fullest extent it may effectively do so, the
defenses of lack of jurisdiction over any person, inconvenient forum or improper
venue, to the maintenance of any Action in any jurisdiction.

         17.  Binding  Effect.  This Note shall be binding upon Borrower and its
successors  and  assigns  and  shall  inure  to the  benefit  of  Bank,  and any
subsequent holders of this Note, and their successors and assigns.

         18. Notice.  All notices  required or permitted in connection with this
Note  shall  be  given  at the  place  and in the  manner  provided  in the Loan
Agreement for the giving of notices.

         19.  Attorneys'  Fees.  Borrower further promises to pay all reasonable
attorneys'  fees  incurred by the Bank in  connection  with any Event of Default
hereunder and in any proceeding brought to enforce any of the provisions of this
Note, provided the Bank prevails in such proceeding.

         20.  Interpretation and  Incorporation.  As used in this Note, the term
"Bank,"  shall  include each  subsequent  transferee  and/or owner of this Note,
whether  taking by  endorsement  or  otherwise.  As used in this Note,  the word
"include(s)"  means "include(s),  without  limitation," and the word "including"
means "including, but not limited to."

         21. Joint and Several  Obligations.  The  obligations  of each Borrower
under  this  Note are  joint  and  several.  The  obligations  of each  Borrower
hereunder are  independent of the  obligations of each of the other Borrowers or
any Guarantor who has executed and delivered a Guarantee. Release of one or more
of the  Borrowers  shall not impair or diminish the  liability of any  remaining
Borrowers,  except to the extent of monies  actually  received  by Bank from the
released  Borrower as a consequence  of such release.  Each Borrower  waives any
rights the  Borrower  might  otherwise  have  under  Colorado  Revised  Statutes
Sections  13-50-102 or 13-50-103 (or under any  corresponding  future statute or
rule of law in any  jurisdiction)  by reason of any release of fewer than all of
the Borrowers of the Indebtedness, all in such manner and upon such terms as the
Bank  may  deem  proper,  and  without  notice  to or  further  assent  from the
Borrowers,  and  all  without  affecting  this  Note or the  obligations  of the
Borrower hereunder.  In the event of any default hereunder, a separate action or
actions may be brought and prosecuted  against any of the Borrowers,  whether or
not a Borrower  is joined  therein or a separate  action or actions  are brought


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against any of the other  Borrowers.  Bank may maintain  successive  actions for
other  defaults.  The Bank's  rights  hereunder  shall not be  exhausted  by its
exercise  of any of its  rights  and  remedies  or by any such  action or by any
number of successive  actions until and unless Borrower's  obligations under the
Loan Documents have been paid and fully performed.

         22. JURY WAIVER.  THE UNDERSIGNED  AND BANK (BY ITS ACCEPTANCE  HEREOF)
HEREBY VOLUNTARILY,  KNOWINGLY, IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT
TO  HAVE A JURY  PARTICIPATE  IN  RESOLVING  ANY  DISPUTE  (WHETHER  BASED  UPON
CONTRACT,  TORT OR OTHERWISE)  BETWEEN OR AMONG THE UNDERSIGNED AND BANK ARISING
OUT OF OR IN ANY WAY  RELATED TO THIS  DOCUMENT OR ANY OTHER  RELATED  DOCUMENT.
THIS  PROVISION  IS A  MATERIAL  INDUCEMENT  TO BANK TO  PROVIDE  THE  FINANCING
DESCRIBED HEREIN AND IN THE LOAN AGREEMENT.

         IN WITNESS WHEREOF,  Borrower has duly executed this Note as of the day
and year first above written.

                                      BORROWER:

                                      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  Maryland corporation, General
                                               Partner


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

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STATE OF COLORADO    )
                     )     ss.
COUNTY OF DENVER     )

                  The foregoing  instrument was  acknowledged  before me this 30
day of December,  1998, by David M. Becker,  as Chief Financial Officer of Asset
Investors  Corporation,  a Maryland  corporation,  as  General  Partner of Asset
Investors  Operating  Partnership,  L.P.,  a Delaware  limited  partnership,  as
Manager  and Member 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 )



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